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Section 1: 8-K (8-K)

8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

November 18, 2020

Date of report (Date of earliest event reported)

 

 

Condor Hospitality Trust, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

(State or Other Jurisdiction of Incorporation)

 

1-34087   52-1889548

(Commission

File Number)

 

(IRS Employer

Identification No.)

1800 West Pasewalk Avenue, Suite 120  
Norfolk, Nebraska   68701
(Address of Principal Executive Offices)   (Zip Code)

(301) 861-3305

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

symbol

 

Name of each exchange

on which registered

Common stock, par value $0.01 per share   CDOR   NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01    Entry into a Material Definitive Agreement.

Modification of KeyBank Credit Facility

On November 19, 2020, Condor Hospitality Trust, Inc. (the “Company”) entered into a Ninth Amendment to Credit Agreement among Condor Hospitality Limited Partnership, as borrower, the Company and the subsidiary guarantors party thereto, as guarantors, KeyBank National Association and the other lenders party thereto, as lenders, and KeyBank National Association, as administrative agent (the “Ninth Amendment”). The Ninth Amendment amends the Credit Agreement dated as of March 1, 2017, as amended by the First Amendment dated as of May 11, 2017, Second Amendment dated as of December 13, 2017, Third Amendment dated as of March 8, 2019, Fourth Amendment dated as of May 3, 2019, Fifth Amendment dated as of August 9, 2019, Sixth Amendment dated as of March 30, 2020, Seventh Amendment dated as of May 13, 2020 and Eighth Amendment dated as of November 16, 2020 (collectively, the “Credit Agreement”). The Credit Agreement is described in the Company’s Current Reports on Form 8-K dated March 1, 2017, May 11, 2017, December 13, 2017 and March 5, 2019, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019, March 31, 2020 and September 30, 2020 and Annual Report on Form 10-K for the year ended December 31, 2019, and is incorporated herein by reference.

The Ninth Amendment, among other things, makes the following changes to the Credit Agreement:

 

   

Sets the size of the credit facility provided under the Credit Agreement at $130.0 million (of which $4.0 million is reserved for the payment of interest under the credit facility) and reinstates the ability to reborrow under the credit facility for (a) payment of interest and fees due under the credit facility and (b) funding any shortfalls to an approved budget for the Company. The Ninth Amendment requires that $10.0 million of proceeds from subordinated debt and $2.0 million of released FF&E reserves be used to repay loans outstanding under the credit facility, thereby reducing the balance outstanding under the credit facility to approximately $116.6 million. As a result, approximately $13.4 million is currently available for borrowing under the credit facility (of which $4.0 million is reserved for the payment of interest under the credit facility).

 

   

Extends the maturity date of the credit facility to January 2, 2023.

 

   

Implements a borrowing base debt service coverage ratio (ratio of adjusted net operating income from borrowing base properties to debt service for the credit facility (assuming a 30 year amortization)) equal to (a) 1.00 to 1 as of the end of the fiscal quarters ending September 30, 2021 and December 31, 2021, (b) 1.25 to 1 as of the end of the fiscal quarters ending March 31, 2022 and June 30, 2022 and (c) 1.50 to 1 as of the end of the fiscal quarter ending September 30, 2022 and each fiscal quarter thereafter. For purposes of calculating compliance with the covenant, annualized results are used until June 30, 2022 when the calculation is based on the most recently ended four fiscal quarters.

 

   

Modifies the fixed charge coverage ratio (ratio of adjusted consolidated EBITDA to consolidated fixed charges) to (a) 1.00 to 1 as of the end of the fiscal quarters ending September 30, 2021 and December 31, 2021, (b) 1.25 to 1 as of the end of the fiscal quarters ending March 31, 2022 and June 30, 2022 and (c) 1.50 to 1 as of the end of the fiscal quarter ending September 30, 2022 and each fiscal quarter thereafter. For purposes of calculating compliance with the covenant, annualized results are used until June 30, 2022 when the calculation is based on the most recently ended four fiscal quarters.

 

   

Modifies the maximum borrowing base leverage ratio (ratio of indebtedness outstanding under the credit facility to borrowing base asset value (based on updated as-stabilized appraisals) of 65%. The covenant is first tested on March 31, 2022.

 

   

Implements a minimum liquidity covenant of $3.0 million. In addition, the Ninth Amendment provides that if liquidity is below $6.0 million, (a) the agent may engage a financial advisor to advise it with respect to the Company and the credit facility, (b) a $2.0 million interest reserve must be maintained, (c) certain reporting must be completed on a weekly basis and (d) advances under the credit facility can only be made and applied pursuant to a cash flow waterfall. The Ninth Amendment also permits the incurrence of subordinated debt to increase liquidity.

 

   

Eliminates a previously implemented cash flow sweep / cash flow waterfall with respect to the use of available cash.

 

   

Eliminates the financial covenants regarding debt yield and consolidated leverage ratio.

 

   

Expands certain reporting obligations.

Some of the lenders in the Credit Agreement and /or their affiliates have other business relationships with the Company involving the provision of financial and bank-related services, including cash management and treasury services, and have participated in the Company’s prior debt financings and sales of securities.

The foregoing summary of the Ninth Amendment does not purport to be complete and is qualified in its entirety by reference to the Ninth Amendment, a copy of which is attached as Exhibits 10.1, 10.2 and 10.3 and is incorporated herein by reference.


Convertible Promissory Notes and Voting Agreements

On November 19, 2020, the Company entered into separate Convertible Promissory Notes and Loan Agreements (the “Notes”) in favor of (a) SREP III Flight—Investco 2, L.P. (“SREP”), an affiliate of StepStone Group LP (“StepStone”), for $7,220,443, and (b) Efanur S.A. (“Efanur”), an affiliate of IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”), for $2,779,557. Pursuant to the Notes, the Company borrowed $10,000,000 from SREP and Efanur and used the proceeds to repay loans outstanding under the Credit Agreement. Each of the Notes matures upon the earliest to occur of (a) the closing of a Rights Offering (as defined below) or a Non-Rights Offering Conversion (as defined below) in an amount equal to the outstanding principal balance of the respective Note, (b) the acceleration of the respective Note on or after the occurrence of an Event of Default (as defined in the respective Note) and (c) January 2, 2023.

Each of the Notes accrues interest at 10.00% per annum (exclusive of any portion of the principal that is used in a Rights Offering and, in the case of the Note in favor of SREP, any backstop commitment), provides for the interest rate to increase to 20% upon an Event of Default or if any amounts under the applicable Note are outstanding after May 31, 2021, provides for the capitalization of interest and provides for the payment of all accrued and unpaid interest and principal on the maturity date. Each of the Notes also provides, subject to a Make Whole Fee (as defined in the respective Note) payable to SREP and Efanur, as applicable, for the interest rate to increase to 25% upon a determination by the disinterested members of the board of directors of the Company (a) not to proceed with, or to terminate, a Rights Offering, (b) to prohibit a Non-Rights Offering Conversion or (c) not to seek shareholder approval of the transactions contemplated by the Notes, including the issuance of shares of common stock of the Company and the conversion price (“Shareholder Approval”), because the failure to make any such determination would reasonably be expected to constitute a breach of the directors’ duties under Maryland law (a “Board Decision”).

Subject to receipt of Shareholder Approval or a Board Decision, SREP and Efanur may elect to convert the principal due under the applicable Note into common stock of the Company in connection with any future rights offering commenced by the Company for 4,000,000 shares of common stock of the Company at a price of $2.50 per share (a “Rights Offering”). Pursuant to the Note in favor of SREP, the Company has committed to offer to SREP the option to purchase any shares of common stock of the Company underlying any unexercised rights in any such Rights Offering.

If any amounts remain unpaid on the applicable Note after May 31, 2021 (or, if earlier, the termination, rescission or rejection of the Rights Offering), subject to receipt of Shareholder Approval or a Board Decision, SREP and Efanur may elect to convert the principal due under the applicable Note into 4,000,000 shares of common stock of the Company at a price of $2.50 per share (a “Non-Rights Offering Conversion”).

The issuance of shares in a Rights Offering or Non-Rights Offering Conversion is subject to receipt of the Shareholder Approval, which the Company has committed to seek at a special meeting of shareholders expected to be held no later than January 31, 2021.

In the event of a Board Decision in order to accept an unsolicited cash offer for newly issued common stock or securities convertible into common stock of the Company, then upon consummation of any such sale, the Company is required to pay SREP and Efanur a Make Whole Fee as set forth in their respective Note.

SREP and Efanur have entered into separate subordination and standstill agreements with KeyBank National Association that govern the rights of SREP and Efanur, as applicable, to seek payment under and enforce remedies under the applicable Note.

The foregoing summary of the respective Notes does not purport to be complete and is qualified in its entirety by reference to the Notes, copies of which are attached as Exhibits 10.4 and 10.5 and are incorporated herein by reference.

In connection with the entry into of the Notes, on November 19, 2020, the Company entered into separate voting agreements (the “Voting Agreements”) with (a) StepStone Group Real Estate LP, StepStone Rep III (GP), LLC, StepStone Group Real Estate Holdings LLC and SREP Flight-Investco, L.P. (collectively, the “StepStone Shareholders”), which are affiliates of SREP and StepStone, and (b) the Real Estate Investment Group VII L.P., Real Estate Strategies L.P. and Efanur S.A. (collectively, the “IRSA Shareholders”), which are affiliates of Efanur and IRSA. Pursuant to the Voting Agreements, each of the StepStone Shareholders and IRSA Shareholders separately committed to vote their voting securities in the Company at a special meeting of shareholders to approve the issuance of the common stock, and any change of control that could result from the issuance of the common stock, in a Rights Offering or a Non-Rights Offering Conversion, as required pursuant to NYSE American Company Guide Rule 713. The aggregate voting power of the StepStone Shareholders and IRSA Shareholders committed to vote affirmatively for such matters is sufficient to assure approval of such matters at a shareholders meeting.


The foregoing summary of the respective Voting Agreements does not purport to be complete and is qualified in its entirety by reference to the Voting Agreements, copies of which are attached as Exhibits 10.6 and 10.7 and are incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities

Item 1.01 is incorporated herein by reference.

The Notes were issued to SREP and Efanur in transactions exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof, as such issuances of securities were not made in a public offering, the Company did not engage in general solicitation or advertising and SREP and Efanur are accredited investors.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Exhibit
Number
  

Description

10.1    Ninth Amendment to Credit Agreement dated as of November  18, 2020 among Condor Hospitality Limited Partnership, as Borrower, the Company and the subsidiary guarantors party thereto, as Guarantors, KeyBank National Association and the other lenders party thereto, as Lenders, and KeyBank National Association, as Administrative Agent.
10.2    Exhibit A to Ninth Amendment to Credit Agreement dated as of November  18, 2020 among Condor Hospitality Limited Partnership, as Borrower, the Company and the subsidiary guarantors party thereto, as Guarantors, KeyBank National Association and the other lenders party thereto, as Lenders, and KeyBank National Association, as Administrative Agent.
10.3    Exhibit B to Ninth Amendment to Credit Agreement dated as of November  18, 2020 among Condor Hospitality Limited Partnership, as Borrower, the Company and the subsidiary guarantors party thereto, as Guarantors, KeyBank National Association and the other lenders party thereto, as Lenders, and KeyBank National Association, as Administrative Agent.
10.4    Convertible Promissory Note and Loan Agreement dated as of November 18, 2020 by Condor Hospitality Trust, Inc. in favor of SREP III Flight-Investco 2, L.P.
10.5    Convertible Promissory Note and Loan Agreement dated as of November 18, 2020 by Condor Hospitality Trust, Inc. in favor of Efanur S.A.
10.6    Voting Agreement dated as of November  18, 2020 between StepStone Group Real Estate LP, StepStone Rep III (GP), LLC, StepStone Group Real Estate Holdings LLC, SREP Flight-Investco, L.P. and Condor Hospitality Trust, Inc.
10.7    Voting Agreement dated as of November 18, 2020 between Real Estate Investment Group VII L.P., Real Estate Strategies L.P., Efanur S.A. and Condor Hospitality Trust, Inc.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Condor Hospitality Trust, Inc.
Date: November 19, 2020     By:  

/s/ Jill Burger

    Name:   Jill Burger
    Title:   Interim Chief Financial Officer
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Section 2: EX-10.1 (EX-10.1)

EX-10.1

Exhibit 10.1

NINTH AMENDMENT TO CREDIT AGREEMENT AND

OTHER LOAN DOCUMENTS

THIS NINTH AMENDMENT TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS (this “Amendment”), dated as of November 18, 2020, by and among CONDOR HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership (“Borrower”), the undersigned parties to this Amendment executing as “Guarantors” (hereinafter referred to individually as “Guarantor” and collectively as “Guarantors”), KEYBANK NATIONAL ASSOCIATION (“KeyBank”), THE HUNTINGTON NATIONAL BANK (“Huntington”), BMO HARRIS BANK N.A. (“BMO”; KeyBank, Huntington and BMO collectively, the “Lenders”), and KeyBank as Agent for itself and the other Lenders from time to time a party to the Credit Agreement (as hereinafter defined) (KeyBank, in its capacity as Agent, is hereinafter referred to as “Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower, Agent, KeyBank and the lenders party thereto are parties to that certain Credit Agreement dated as of March 1, 2017, as amended by that certain First Amendment to Credit Agreement and Other Loan Documents dated as of May 11, 2017 (the “First Amendment”), as amended by that certain Second Amendment to Credit Agreement dated as of December 13, 2017 (the “Second Amendment”), as amended by that certain Third Amendment to Credit Agreement dated as of March 8, 2019 (the “Third Amendment”), as amended by that certain Fourth Amendment to Credit Agreement dated as of May 3, 2019 (the “Fourth Amendment”), as amended by that certain Fifth Amendment to Credit Agreement dated as of August 9, 2019 (the “Fifth Amendment”), as amended by that certain Sixth Amendment to Credit Agreement and Other Loan Documents dated as of March 30, 2020 (the “Sixth Amendment”), as amended by that certain Seventh Amendment to Credit Agreement and Other Loan Documents dated as of May 13, 2020 (the “Seventh Amendment”), and as amended by that certain Eighth Amendment to Credit Agreement dated as of November 16, 2020 (the “Eighth Amendment”) (such Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment and the Eighth Amendment, may be further varied, extended, supplemented, consolidated, replaced, increased, renewed, modified or amended from time to time, the “Credit Agreement”);

WHEREAS, certain of the Guarantors executed and delivered to Agent that certain Unconditional Guaranty of Payment and Performance dated as of March 1, 2017, as amended by the First Amendment, the Sixth Amendment and the Seventh Amendment (as such Guaranty, as amended by the First Amendment, the Sixth Amendment and the Seventh Amendment, may be further varied, extended, supplemented, consolidated, replaced, increased, renewed, modified or amended from time to time, the “Guaranty”);

WHEREAS, Borrower and certain of the Guarantors executed and delivered to Agent that certain Cash Collateral Account Agreement dated as of March 1, 2017, as amended by that certain First Amendment to Cash Collateral Account Agreement dated as of March 24, 2017, as amended by the First Amendment, as amended by that certain Second Amendment to Cash Collateral Account Agreement dated as of June 21, 2017, as amended by that certain Third Amendment to Cash Collateral Account Agreement dated as of August 31, 2017, as amended by that certain Fourth Amendment to Cash Collateral Account Agreement dated as of January 17, 2018, and as amended by that certain Fifth Amendment to Cash Collateral Account Agreement dated as of February 21, 2018, as amended by the Sixth Amendment, and as amended by the Sixth Amendment to Cash Collateral Account Agreement dated as of May 13, 2020 (as the same may be further varied, extended, supplemented, consolidated, replaced, increased, renewed, modified or amended from time to time, the “Cash Collateral Agreement”);


WHEREAS, CDOR TLH Magnolia, LLC, TRS TLH Magnolia, LLC, CDOR LEX Lowry, LLC, TRS LEX Lowry, LLC, CDOR AUS Louis, LLC and TRS AUS Louis, LLC have become a party to the Guaranty and the Cash Collateral Agreement pursuant to that certain Joinder Agreement dated March 24, 2017; and

WHEREAS CDOR MCO Village, LLC and TRS MCO Village, LLC have become a party to the Guaranty and the Cash Collateral Agreement pursuant to that certain Joinder Agreement dated June 21, 2017; and

WHEREAS, CDOR ELP Edge, LLC, TRS ELP Edge, LLC, CDOR AUS Casey, LLC and TRS AUS Casey, LLC have become a party to the Guaranty and the Cash Collateral Agreement pursuant to that certain Joinder Agreement dated August 31, 2017; and

WHEREAS, CDOR AUS Tech, LLC and TRS AUS Tech, LLC have become a party to the Guaranty and the Cash Collateral Agreement pursuant to that certain Joinder Agreement dated January 17, 2018; and

WHEREAS, CDOR CHS Holiday, LLC and TRS CHS Holiday, LLC have become a party to the Guaranty and the Cash Collateral Agreement pursuant to that certain Joinder Agreement dated February 21, 2018; and

WHEREAS, Spring Street Hotel Property LLC and Spring Street Hotel OPCO LLC have become a party to the Guaranty and the Cash Collateral Agreement pursuant to that certain Joinder Agreement dated May 13, 2020; and

WHEREAS, the Borrower and the Guarantors have requested that the Agent and the Lenders make certain modifications to the Credit Agreement, and Agent and the undersigned Lenders have consented to such modifications, subject to the execution and delivery of this Amendment.

NOW, THEREFORE, for and in consideration of the sum of TEN and NO/100 DOLLARS ($10.00), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby covenant and agree as follows:

1. Definitions. Capitalized terms used in this Amendment, but which are not otherwise expressly defined in this Amendment, shall have the respective meanings given thereto in the Credit Agreement.

2. Modifications of the Credit Agreement. The Borrower, Agent and the Lenders do hereby modify and amend the Credit Agreement by deleting from the Credit Agreement the text that is shown as a deletion or strike-through in the form of the Credit Agreement attached hereto as Exhibit “A” and made a part hereof (the “Revised Credit Agreement”), and by inserting in the Credit Agreement the text shown as an insertion or underlined text in the Revised Credit Agreement, such that from and after the Effective Date (as hereinafter defined) the Credit Agreement is amended to read as set forth in the Revised Credit Agreement. Notwithstanding the

 

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foregoing, the calculation templates attached to the Borrowing Base Certificate and Compliance Certificate shall be the templates attached to the Revised Credit Agreement regardless that those templates are not marked by deletion, strike-through, insertion or underline. From and after the Effective Date, the Credit Agreement shall be the Credit Agreement, as amended by this Amendment.

3. Modifications of the Cash Collateral Agreement.

(a) Borrower, Guarantors, Agent and the Lenders do hereby modify and amend the Cash Collateral Agreement by deleting from the Cash Collateral Agreement the text that is shown as a deletion or strike-through in the form of the Cash Collateral Agreement attached hereto as Exhibit “B” and made a part hereof (the “Revised Cash Collateral Agreement”), and by inserting in the Cash Collateral Agreement the text shown as an insertion or underlined text in the Revised Cash Collateral Agreement, such that from and after the Effective Date the Cash Collateral Agreement is amended to read as set forth in the Revised Cash Collateral Agreement. From and after the Effective Date, the Cash Collateral Agreement shall be the Cash Collateral Agreement, as amended by this Amendment.

(b) As security for the prompt payment and performance by Assignors (as defined in the Cash Collateral Agreement) of the Obligations (as defined in the Cash Collateral Agreement), each Assignor does hereby transfer, assign, pledge, convey, and grant to Agent, and does hereby grant a security interest to Agent in, all of such Assignor’s right, title and interest in and to all Collateral (as defined in the Cash Collateral Agreement, as amended by this Amendment).

(c) Except as otherwise expressly provided herein, nothing herein contained shall in any way (a) impair or affect the validity and priority of the lien of the Cash Collateral Agreement, as amended by this Amendment, as to the Collateral (as defined in the Cash Collateral Agreement, as amended by this Amendment) encumbered prior to the date of this Amendment, (b) alter, waive, annul or affect any provision, condition or covenant in the Loan Documents, or (c) affect or impair any rights, powers or remedies under the Loan Documents.

(d) In furtherance of the foregoing, Assignors hereby acknowledge, represent and agree that the Cash Collateral Agreement, as amended by this Amendment, creates a continuing security interest in the Collateral and shall (x) remain in full force and effect until the payment in full of the Obligations and the Lenders have no further obligation to make any advances or issue Letters of Credit under the Credit Agreement, (y) be binding upon Assignors and their permitted heirs, successors and assigns, and (z) inure, together with the rights and remedies of Agent hereunder and thereunder, to the benefit of Agent and the Lenders and their respective successors, transferees and assigns.

4. Reduction of Total Commitment. Upon the effectiveness of this Amendment, (a) the Commitment and the Total Commitment shall be reduced as provided in the Revised Credit Agreement and the Lenders shall have no further obligations to advance Loans except as provided in the Revised Credit Agreement, and (b) the Swing Loan Commitment, the Letter of Credit Commitment and the obligations of the Swing Loan Lender and the Issuing Lender to make Swing Loans and issue Letters of Credit shall continue to be terminated and be of no force or effect. Each Loan of a Lender shall continue to be held by such Lender and be evidenced by the Credit Agreement and such Lenders’ Revolving Credit Note. After giving effect to the prepayment of

 

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the Loans by Borrower with the proceeds of the Initial Subordinate Debt (as defined in the Revised Credit Agreement) contributed by REIT to Borrower and the $2,000,000.00 released by the Lenders from the FF&E Reserve Account (as defined in the Revised Cash Collateral Agreement) contemporaneously herewith at the request of Borrower and used to prepay the Loans, the outstanding principal balance of the Loans made by each Lender as of the date hereof equals the amount shown on Exhibit “C” attached hereto and made a part hereof. The Commitment of each Lender shall be as set forth in Schedule 1.1 of the Revised Credit Agreement, notwithstanding that the face amount of each Lender’s Revolving Credit Note exceeds the amount of such Lender’s Commitment.

5. References to Credit Agreement, Guaranty and Cash Collateral Agreement. All references in the Loan Documents to the Credit Agreement, Guaranty and Cash Collateral Agreement shall be deemed a reference to the Credit Agreement, Guaranty and Cash Collateral Agreement as modified and amended herein.

6. Consent of Guarantors. By execution of this Amendment, Guarantors hereby expressly consent to the modifications and amendments relating to the Credit Agreement, Guaranty and Cash Collateral Agreement as set forth herein and the execution and delivery of and any other agreements contemplated in hereby, and Borrower and Guarantors hereby acknowledge, represent and agree that the Credit Agreement, Guaranty and Cash Collateral Agreement, as modified and amended herein, and the other Loan Documents, as the same may be modified in connection with this Amendment, remain in full force and effect and constitute the valid and legally binding obligation of Borrower and Guarantors, respectively, enforceable against such Persons in accordance with their respective terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and the effect of general principles of equity, and that the Guaranty extends to and applies to the foregoing documents as modified and amended.

7. Representations. Borrower and Guarantors represent and warrant to Agent and the Lenders as follows as of the date of this Amendment:

(a) Authorization. The execution, delivery and performance by the Borrower and the Guarantors of this Amendment and any other agreements contemplated hereby and the transactions contemplated hereby and thereby (i) are within the authority of Borrower and Guarantors, (ii) have been duly authorized by all necessary proceedings on the part of such Persons, (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which any of such Persons is subject or any judgment, order, writ, injunction, license or permit applicable to such Persons, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement, operating agreement, articles of incorporation or other charter documents or bylaws of, or any agreement or other instrument binding upon, any of such Persons or any of its properties, (v) do not and will not result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of such Persons other than the liens and encumbrances in favor of the Agent contemplated by this Amendment and the other Loan Documents, and (vi) do not require any approval or consent of any Person other than those already obtained and delivered to the Agent.

 

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(b) Enforceability. This Amendment and each other document executed and delivered in connection with this Amendment are the valid and legally binding obligations of Borrower and Guarantors, enforceable in accordance with the respective terms and provisions hereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and the effect of general principles of equity.

(c) Approvals. The execution, delivery and performance by the Borrower and the Guarantors of this Amendment and any other agreements contemplated hereby and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing or registration with, or the giving of any notice to, any court, department, board, governmental agency or authority other than those already obtained.

(d) Reaffirmation. Each of the representations and warranties made by or on behalf of Borrower, Guarantors or any of their respective Subsidiaries contained in this Amendment, the Credit Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with the Credit Agreement or this Amendment are true in all material respects as of the date as of which they were made and are true in all material respects as of the date hereof, with the same effect as if made at and as of that time, except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date).

(e) No Default. By execution hereof, the Borrower and Guarantors certify that the Borrower and Guarantors are and will be in compliance with all covenants under the Loan Documents immediately after the execution and delivery of this Amendment and the other documents executed in connection herewith, and that no Default or Event of Default has occurred and is continuing.

8. Waiver of Claims. Borrower and Guarantors acknowledge, represent and agree that Borrower and Guarantors as of the date hereof have no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever with respect to the Loan Documents, the administration or funding of the Loans or Letters of Credit or with respect to any acts or omissions of Agent or any Lender, or any past or present officers, agents or employees of Agent or any Lender, and each of Borrower and Guarantors does hereby expressly waive, release and relinquish any and all such defenses, setoffs, claims, counterclaims and causes of action, if any.

9. Ratification. Except as hereinabove set forth, all terms, covenants and provisions of the Credit Agreement, the Guaranty, the Cash Collateral Agreement and the other Loan Documents remain unaltered and in full force and effect, and the parties hereto do hereby expressly ratify and confirm the Credit Agreement, the Guaranty, the Cash Collateral Agreement and the other Loan Documents. Nothing in this Amendment or any other document executed in connection herewith shall be deemed or construed to constitute, and there has not otherwise occurred, a novation, cancellation, satisfaction, release, extinguishment or substitution of the indebtedness evidenced by the Notes or the other obligations of Borrower and Guarantors under the Loan Documents (including without limitation the Guaranty). This Amendment shall constitute a Loan Document.

10. Counterparts. This Amendment may be executed in any number of counterparts which shall together constitute but one and the same agreement.

 

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11. Miscellaneous. THIS AMENDMENT SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors, successors-in-title and assigns as provided in the Credit Agreement.

12. Amendments of Other Loan Documents. The Lenders authorized Agent to execute and deliver amendments to the other Loan Documents as Agent deems appropriate contemporaneously with the execution and delivery of this Amendment.

13. Effective Date. This Amendment shall be deemed effective and in full force and effect (the “Effective Date”) upon confirmation by the Agent of the satisfaction of the following conditions:

(a) the execution and delivery of this Amendment by Borrower, Guarantors, Agent, and the Lenders;

(b) Borrower shall have paid to Agent for the account of Arranger and each Lender the fees payable upon the date hereof;

(c) the Initial Subordinate Lenders (as defined in the Revised Credit Agreement) shall have funded the Initial Subordinate Debt (as defined in the Revised Credit Agreement) in an amount not less than $10,000,000.00, and Agent, the REIT and the Initial Subordinate Lenders shall have executed and delivered the Initial Subordination and Standstill Agreement (as defined in the Revised Credit Agreement);

(d) the Agent shall have ordered updated Appraisals of the Borrowing Base Properties;

(e) delivery to Agent of a current Compliance Certificate and Borrowing Base Certificate acceptable to Agent;

(f) receipt by Agent of such other consents, resolutions, certificates, documents, instruments, amendments to Loan Documents and agreements as the Agent may reasonably request; and

(g) the Borrower shall have paid the reasonable fees and expenses of Agent in connection with this Amendment and the transactions contemplated hereby.

14. Amendment as a Loan Document. The Amendment shall constitute a Loan Document.

[CONTINUED ON NEXT PAGE]

 

6


IN WITNESS WHEREOF, the parties hereto, acting by and through their respective duly authorized officers and/or other representatives, have duly executed this Amendment under seal as of the day and year first above written.

 

BORROWER:
CONDOR HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership
By:   Condor Hospitality REIT Trust, a Maryland real estate investment trust, its general partner
  By:  

/s/ Jill Burger

  Name: Jill Burger
  Title: Vice President
GUARANTORS:
CONDOR HOSPITALITY REIT TRUST, a
Maryland real estate investment trust
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CONDOR HOSPITALITY TRUST, INC., a
Maryland corporation
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Interim Chief Financial Officer
TRS LEASING, INC., a Virginia corporation
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President

(Signatures Continued On Next Page)

Signature Page to Ninth Amendment to Credit Agreement - KeyBank/Condor


CDOR AUS LOUIS, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CDOR LEX LOWRY, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CDOR TLH MAGNOLIA, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
TRS AUS LOUIS, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
TRS LEX LOWRY, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President

 

(Signatures Continued On Next Page)

Signature Page to Ninth Amendment to Credit Agreement - KeyBank/Condor


TRS TLH MAGNOLIA, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CDOR MCO VILLAGE, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
TRS MCO VILLAGE, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CDOR ELP EDGE, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
TRS ELP EDGE, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CDOR AUS CASEY, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President

 

(Signatures Continued On Next Page)

Signature Page to Ninth Amendment to Credit Agreement - KeyBank/Condor


TRS AUS CASEY, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CDOR AUS TECH, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
TRS AUS TECH, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
CDOR CHS HOLIDAY, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
TRS CHS HOLIDAY, LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President

 

(Signatures Continued On Next Page)

Signature Page to Ninth Amendment to Credit Agreement - KeyBank/Condor


SPPR-DOWELL, LLC, a Delaware limited liability company
By:   SPPR-Dowell Holdings, Inc., a Delaware corporation, its manager
  By:  

/s/ Jill Burger

  Name: Jill Burger
  Title: Vice President
SPPR-DOWELL TRS SUBSIDIARY, LLC, a Delaware limited liability company
By:   Condor Hospitality REIT Trust, a Maryland real estate investment trust, its manager
  By:  

/s/ Jill Burger

  Name: Jill Burger
  Title: Vice President
SPPR-DOWELL HOLDINGS, INC., a Delaware corporation
By:  

/s/ Jill Burger

  Name: Jill Burger
  Title: Vice President

 

(Signatures Continued On Next Page)

Signature Page to Ninth Amendment to Credit Agreement - KeyBank/Condor


SPRING STREET HOTEL PROPERTY LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President
SPRING STREET HOTEL OPCO LLC, a Delaware limited liability company
By:  

/s/ Jill Burger

Name: Jill Burger
Title: Vice President

 

(Signatures Continued On Next Page)

Signature Page to Ninth Amendment to Credit Agreement - KeyBank/Condor


LENDERS:
KEYBANK NATIONAL ASSOCIATION, individually and as Agent
By:  

/s/ Thomas Z. Schmitt

Name: Thomas Z. Schmitt
Title: Assistant Vice President
THE HUNTINGTON NATIONAL BANK
By:  

/s/ Rebecca Stirnkorb

Name: Rebecca Stirnkorb
Title: Assistant Vice President
BMO HARRIS BANK N.A.
By:  

/s/ Gwendolyn Gatz

Name: Gwendolyn Gatz
Title: Director

 

Signature Page to Ninth Amendment to Credit Agreement - KeyBank/Condor


EXHIBIT “A”

REVISED CREDIT AGREEMENT


EXHIBIT “B”

REVISED CASH COLLATERAL AGREEMENT


EXHIBIT “C”

OUTSTANDING BALANCE OF LOANS

 

Banks

   Outstanding Loans  

KeyBank National Association

   $ 59,260,181.24  

The Huntington National Bank

   $ 28,676,596.88  

BMO Harris Bank N.A.

   $ 28,676,596.88  
  

 

 

 

TOTAL:

   $ 116,613,375.00  
  

 

 

 
(Back To Top)

Section 3: EX-10.2 (EX-10.2)

EX-10.2

Exhibit 10.2

(Composite Credit Agreement (including amendments 1-8))

EXHIBIT A

REVISED CREDIT AGREEMENT

CREDIT AGREEMENT

DATED AS OF MARCH 1, 2017

by and among

CONDOR HOSPITALITY LIMITED PARTNERSHIP,

AS THE BORROWER,

KEYBANK NATIONAL ASSOCIATION,

THE OTHER LENDERS WHICH ARE PARTIES TO THIS AGREEMENT

AND

OTHER LENDERS THAT MAY BECOME

PARTIES TO THIS AGREEMENT,

KEYBANK NATIONAL ASSOCIATION,

AS THE AGENT,

AND

KEYBANC CAPITAL MARKETS INC.,

THE HUNTINGTON NATIONAL BANK,

AND

BMO CAPITAL MARKETS CORP.,

AS JOINT LEAD ARRANGERS

AND

THE HUNTINGTON NATIONAL BANK,

AS SYNDICATION AGENT


Table of Contents

 

              Page  

§1.

  DEFINITIONS AND RULES OF INTERPRETATION.      1  
  §1.1    Definitions      1  
  §1.2    Rules of Interpretation      3640  

§2.

  THE CREDIT FACILITY      3842  
  §2.1    Revolving Credit Loans      3842  
  §2.2    [Intentionally Omitted]      3943  
  §2.3    Unused Fee      3943  
  §2.4    Reduction and Termination of the Commitments      3944  
  §2.5    Swing Loan Commitment      3944  
  §2.6    Interest on Loans      4246  
  §2.7    Requests for Revolving Credit Loans      4247  
  §2.8    Funds for Loans      4348  
  §2.9    Use of Proceeds      4348  
  §2.10    Letters of Credit      4348  
  §2.11    Increase in Total Commitment [Intentionally Omitted]      4752  
  §2.12    Extension of Maturity Date [Intentionally Omitted]      4954  
  §2.13    Defaulting Lenders      5156  

§3.

  REPAYMENT OF THE LOANS      5559  
  §3.1    Stated Maturity      5559  
  §3.2    Mandatory Prepayments ; Commitment Reductions      5560  
  §3.3    Optional Prepayments      5661  
  §3.4    Partial Prepayments      62  
  §3.5    Effect of Prepayments      62  

§4.

  CERTAIN GENERAL PROVISIONS      62  
  §4.1    Conversion Options      62  
  §4.2    Fees      63  
  §4.3    Funds for Payments      63  
  §4.4    Computations      68  
  §4.5    Suspension of LIBOR Rate Loans      68  
  §4.6    Illegality      6368  
  §4.7    Additional Interest      6369  
  §4.8    Additional Costs, Etc.      69  
  §4.9    Capital Adequacy      70  
  §4.10    Breakage Costs      6571  
  §4.11    Default Interest; Late Charge      6571  
  §4.12    Certificate      71  
  §4.13    Limitation on Interest      71  
  §4.14    Certain Provisions Relating to Increased Costs      6672  
  §4.15    Effect of Benchmark Transition Event Replacement Setting      6773  

 

-i-


Table of Contents

(continued)

 

              Page  

§5.

  COLLATERAL SECURITY; GUARANTORS      7080  
  §5.1    Collateral      7080  
 

§5.2

   Appraisal      7080  
 

§5.3

   Additional Collateral      7181  
 

§5.4

   Additional Guarantors; Release of Guarantors      7383  
 

§5.5

   Partial Release of Collateral      7484  
 

§5.6

   Release of Collateral      7585  

§6.

  REPRESENTATIONS AND WARRANTIES      7585  
 

§6.1

   Corporate Authority, Etc.      7585  
 

§6.2

   Governmental Approvals      7686  
 

§6.3

   Title to Properties      7687  
 

§6.4

   Financial Statements      7787  
 

§6.5

   No Material Changes      7787  
 

§6.6

   Franchises, Patents, Copyrights, Etc.      7788  
 

§6.7

   Litigation      7888  
 

§6.8

   No Material Adverse Contracts, Etc.      7889  
 

§6.9

   Compliance with Other Instruments, Laws, Etc.      7889  
 

§6.10

   Tax Status      7889  
 

§6.11

   No Event of Default      7989  
 

§6.12

   Investment Company Act      7989  
 

§6.13

   Setoff; Absence of UCC Financing Statements      7989  
 

§6.14

   Certain Transactions      7990  
 

§6.15

   Employee Benefit Plans      7990  
 

§6.16

   Disclosure      8090  
 

§6.17

   Trade Name; Place of Business      8191  
 

§6.18

   Regulations T, U and X      8191  
 

§6.19

   Environmental Compliance      8192  
 

§6.20

   Subsidiaries; Organizational Structure      8394  
 

§6.21

   Leases      8394  
 

§6.22

   Property      8495  
 

§6.23

   Brokers      8697  
 

§6.24

   Other Debt      8697  
 

§6.25

   Solvency      8697  
 

§6.26

   No Bankruptcy Filing      8698  
 

§6.27

   No Fraudulent Intent      8698  
 

§6.28

   Transaction in Best Interests of the Borrower and Guarantors; Consideration      8698  
 

§6.29

   Contribution Agreement      8798  
 

§6.30

   Representations and Warranties of Guarantors      8798  
 

§6.31

   OFAC      8799  
 

§6.32

   Labor Matters      8899  
 

§6.33

   Ground Lease      8899  
 

§6.34

   Material Contracts      89100  
 

§6.35

   Intellectual Property      89100  
 

§6.36

   EEA Financial Institutions      89101  
 

§6.37

   Initial Borrowing Base Properties      89101  

 

-ii-


Table of Contents

(continued)

 

             Page  
§7.   AFFIRMATIVE COVENANTS      89101  
 

§7.1

  Punctual Payment      89101  
 

§7.2

  Maintenance of Office      89101  
 

§7.3

  Records and Accounts      90101  
 

§7.4

  Financial Statements, Certificates and Information      90101  
 

§7.5

  Notices      94106  
 

§7.6

  Existence; Maintenance of Properties      96108  
 

§7.7

  Insurance; Condemnation      96109  
 

§7.8

  Taxes; Liens      102114  
 

§7.9

  Inspection of Properties and Books      102115  
 

§7.10

  Compliance with Laws, Contracts, Licenses, and Permits      103115  
 

§7.11

  Further Assurances      103116  
 

§7.12

  Leases of the Property      103116  
 

§7.13

  Material Contracts      104117  
 

§7.14

  Business Operations      105117  
 

§7.15

  Registered Service Mark      105117  
 

§7.16

  Ownership of Real Estate      105118  
 

§7.17

  Distributions of Income to the Borrower      105118  
 

§7.18

  Plan Assets      106118  
 

§7.19

  Completion of Renovations      106118  
 

§7.20

  Borrowing Base Properties      107119  
 

§7.21

  Sanctions Laws and Regulations      110123  
 

§7.22

  Assignment of Interest Rate Protection      110123  
 

§7.23

  Post-Closing ItemsLiquidity Trigger Event      110123  

§8.

  NEGATIVE COVENANTS      111125  
 

§8.1

  Restrictions on Indebtedness      111125  
 

§8.2

  Restrictions on Liens, Etc.      112127  
 

§8.3

  Restrictions on Investments      114128  
 

§8.4

  Merger, Consolidation      116130  
 

§8.5

  Sale and Leaseback      116131  
 

§8.6

  Compliance with Environmental Laws      117131  
 

§8.7

  Distributions      118133  
 

§8.8

  Asset Sales      118133  
 

§8.9

  Restriction on Prepayment of Indebtedness      118134  
 

§8.10

  Zoning and Contract Changes and Compliance      119134  
 

§8.11

  Derivatives Contracts      119134  
 

§8.12

  Transactions with Affiliates      119134  
 

§8.13

  Management Fees      119134  
 

§8.14

  Changes to Organizational Documents      119135  
 

§8.15

  Equity Pledges      120135  
 

§8.16

  Non-Encumbrance      120135  
 

§8.17

  Subordinate Debt      135  

§9.

  FINANCIAL COVENANTS      120136  
 

§9.1

  Debt YieldBorrowing Base Implied DSCR      120136  

 

-iii-


Table of Contents

(continued)

 

            Page  
 

§9.2

  Leverage [Intentionally Omitted]     120136  
 

§9.3

  Borrowing Base Leverage     120137  
 

§9.4

  [Intentionally Omitted] Liquidity     120137  
 

§9.5

  Adjusted Consolidated EBITDA to Fixed Charges     120137  
 

§9.6

  [Intentionally Omitted]     121138  
 

§9.7

  [Intentionally Omitted]     121138  
 

§9.8

  [Intentionally Omitted]     121138  

§10.

 

CLOSING CONDITIONS

    121138  
 

§10.1

  Loan Documents     121138  
 

§10.2

  Certified Copies of Organizational Documents     121138  
 

§10.3

  Resolutions     121138  
 

§10.4

  Incumbency Certificate; Authorized Signers     121138  
 

§10.5

  Opinion of Counsel     122139  
 

§10.6

  Payment of Fees     122139  
 

§10.7

  Performance; No Default     122139  
 

§10.8

  Representations and Warranties     122139  
 

§10.9

  Proceedings and Documents     122139  
 

§10.10

  Borrowing Base Qualification Documents     122139  
 

§10.11

  Compliance Certificate and Borrowing Base Certificate     122139  
 

§10.12

  Appraisals     122139  
 

§10.13

  Consents     122139  
 

§10.14

  Contribution Agreement     122139  
 

§10.15

  Insurance     123140  
 

§10.16

  Other     123140  

§11.

 

CONDITIONS TO ALL BORROWINGS

    123140  
 

§11.1

  Prior Conditions Satisfied     123140  
 

§11.2

  Representations True; No Default     123140  
 

§11.3

  Borrowing Documents     123140  
 

§11.4

  Endorsement to Title Policy     123140  
 

§11.5

  Future Advances Tax Payment     124141  

§12.

 

EVENTS OF DEFAULT; ACCELERATION; ETC.

    124141  
 

§12.1

  Events of Default and Acceleration     124141  
 

§12.2

  Certain Cure Periods; Limitation of Cure Periods     127145  
 

§12.3

  Termination of Commitments     128145  
 

§12.4

  Remedies     128146  
 

§12.5

  Distribution of Collateral Proceeds     128146  
 

§12.6

  Collateral Account     129147  

§13.

 

SETOFF

    130148  

§14.

  THE AGENT     131149  
 

§14.1

  Authorization     131149  
 

§14.2

  Employees and Agents     131149  
 

§14.3

  No Liability     131149  
 

§14.4

  No Representations     132150  

 

-iv-


Table of Contents

(continued)

 

             Page  
 

§14.5

  Payments      132151  
 

§14.6

  Holders of Notes      133151  
 

§14.7

  Indemnity      133151  
 

§14.8

  The Agent as Lender      133151  
 

§14.9

  Resignation      133152  
 

§14.10

  Duties in the Case of Enforcement      134152  
 

§14.11

  Request for Agent Action      135153  
 

§14.12

  Bankruptcy      135153  
 

§14.13

  Reliance by the Agent      135154  
 

§14.14

  Approvals      135154  
 

§14.15

  The Borrower Not Beneficiary      136154  
 

§14.16

  Reliance on Hedge Provider      136154  
 

§14.17

  Comfort Letters      136155  
 

§14.18

  Subordination and Standstill Agreements      155  

§15.

 

EXPENSES

     136155  

§16.

 

INDEMNIFICATION

     137156  

§17.

 

SURVIVAL OF COVENANTS, ETC.

     138157  

§18.

 

ASSIGNMENT AND PARTICIPATION

     139157  
 

§18.1

  Conditions to Assignment by Lenders      139157  
 

§18.2

  Register      140159  
 

§18.3

  New Notes      140159  
 

§18.4

  Participations      140160  
 

§18.5

  Pledge by Lender      141160  
 

§18.6

  No Assignment by the Borrower      141161  
 

§18.7

  Disclosure      141161  
 

§18.8

  Mandatory Assignment      142162  
 

§18.9

  Amendments to Loan Documents      143162  
 

§18.10

  Titled Agents      143163  

§19.

 

NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS

     143163  

§20.

 

RELATIONSHIP

     145165  

§21.

 

GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE

     146165  

§22.

 

HEADINGS

     146166  

§23.

 

COUNTERPARTS

     146166  

§24.

 

ENTIRE AGREEMENT, ETC.

     147166  

§25.

 

WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS

     147167  

§26.

 

DEALINGS WITH THE BORROWER

     147167  

§27.

 

CONSENTS, AMENDMENTS, WAIVERS, ETC.

     148168  

§28.

 

SEVERABILITY

     149169  

§29.

 

TIME OF THE ESSENCE

     149169  

§30.

 

NO UNWRITTEN AGREEMENTS

     149169  

§31.

 

REPLACEMENT NOTES

     149169  

§32.

 

NO THIRD PARTIES BENEFITED

     150169  

§33.

 

PATRIOT ACT

     150170  

§34.

 

ACKNOWLEDGEMENT AND CONSENT TO BAIL-IN OF EEA FINANCIAL INSTITUTIONS

     150170  

 

-v-


EXHIBITS AND SCHEDULES

 

Exhibit A    FORM OF JOINDER AGREEMENT
Exhibit B    FORM OF REVOLVING CREDIT NOTE
Exhibit C    FORM OF SWING LOAN NOTE
Exhibit D    FORM OF REQUEST FOR REVOLVING CREDIT LOAN
Exhibit E    FORM OF LETTER OF CREDIT REQUEST
Exhibit F    FORM OF LETTER OF CREDIT APPLICATION
Exhibit G    FORM OF COMPLIANCE CERTIFICATE
Exhibit H    FORM OF BORROWING BASE CERTIFICATE
Exhibit I    FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
Exhibits J    FORMS OF U.S. TAX COMPLIANCE CERTIFICATES
Exhibit K    RESERVEDFORM OF CONVERTIBLE PROMISSORY NOTE AND LOAN AGREEMENT
Schedule 1.1    LENDERS AND COMMITMENTS
Schedule 1.3    INITIAL BORROWING BASE PROPERTIES, TIER I PROPERTIES AND TIER II PROPERTIES
Schedule 2.9(a)    PERMITTED ACQUISITIONS
Schedule 2.9(b)    PERMITTED REFINANCES
Schedule 4.3    ACCOUNTS
Schedule 5.3    BORROWING BASE QUALIFICATION DOCUMENTS
Schedule 5.5    MINIMUM RELEASE PRICES
Schedule 6.3    TITLE TO PROPERTIES
Schedule 6.5    NO MATERIAL CHANGES
Schedule 6.7    PENDING LITIGATION
Schedule 6.10    TAX STATUS
Schedule 6.14    CERTAIN TRANSACTIONS
Schedule 6.20(a)    SUBSIDIARIES OF REIT
Schedule 6.20(b)    UNCONSOLIDATED AFFILIATES OF REIT AND ITS SUBSIDIARIES
Schedule 6.21    LEASES
Schedule 6.22    PROPERTY
Schedule 6.24    OTHER DEBT
Schedule 6.34    MATERIAL CONTRACTS
Schedule 6.37    INITIAL BORROWING BASE PROPERTIES
Schedule 7.23    RESERVED

 

-vi-


CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”) is made as of March 1, 2017, by and among CONDOR HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership (the “Borrower”), KEYBANK NATIONAL ASSOCIATION (“KeyBank”), the other lending institutions which are parties to this Agreement as “Lenders”, and the other lending institutions that may become parties hereto as “Lenders” pursuant to §18, and KEYBANK NATIONAL ASSOCIATION, as Agent for the Lenders (the “Agent”).

R E C I T A L S

WHEREAS, the Borrower has requested that the Lenders provide a revolving credit facility to the Borrower; and

WHEREAS, the Agent and the Lenders are willing to provide such revolving credit facility to the Borrower on and subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the recitals herein and mutual covenants and agreements contained herein, the parties hereto hereby covenant and agree as follows:

 

§1.

DEFINITIONS AND RULES OF INTERPRETATION.

 

  §1.1

Definitions. The following terms shall have the meanings set forth in this §l or elsewhere in the provisions of this Agreement referred to below:

Additional Commitment Request Notice. See §2.11(a).

Additional Guarantor. Each additional Subsidiary of the Borrower which becomes a Subsidiary Guarantor pursuant to §5.4.

Adjusted Consolidated EBITDA. On any date of determination, the sum of (i) Consolidated EBITDA for the four (4) fiscal quarters most recently ended less, less (ii) except for any test period occurring in 2021 or 2022, the FF&E Reserve for all Real Estate of the REIT and its Subsidiaries and, less (iii) the Franchise Fees of the REIT and its Subsidiaries and less (iv) the Management Fees of the REIT and its Subsidiaries (to the extent not previously included in Consolidated EBITDA), in each case for the four (4) fiscal quarters most recently ended. Adjusted Consolidated EBITDA for the period shall be adjusted on a proforma basis to account for properties acquired or sold in the period in a manner satisfactory to the Agent. Notwithstanding the foregoing, in connection with the determination of whether the Distribution Conditions exist and at any time following a Distribution Event, the amounts excluded from the calculation of Adjusted Consolidated EBITDA pursuant to clause (ii) above shall be included in the calculation of Adjusted Consolidated EBITDA.

Adjusted Net Operating Income. On any date of determination Net Operating Income from the Borrowing Base Properties or other Real Estate, as applicable, for the prior four (4) fiscal quarters most recently ended less the FF&E Reserve applicable to the Borrowing Base Properties or other Real Estate, as applicable, for such period. Adjusted Net Operating Income for the period shall be adjusted on a pro forma basis to account for properties acquired in the period in a manner satisfactory to the Agent.

 

1


Affected Lender. See §4.14.

Affiliate. An Affiliate, as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means (a) the possession, directly or indirectly, of the power to vote ten percent (10%) or more of the stock, shares, voting trust certificates, beneficial interest, partnership interests, member interests or other interests having voting power for the election of directors of such Person or otherwise to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise, or (b) the ownership of (i) a general partnership interest, (ii) a managing member’s or manager’s interest in a limited liability company or (iii) a limited partnership interest or preferred stock (or other ownership interest) representing ten percent (10%) or more of the outstanding limited partnership interests, preferred stock or other ownership interests of such Person.

Agent. KeyBank National Association, acting as administrative agent for the Lenders, and its successors and assigns.

Agent’s Head Office. The Agent’s head office located at 127 Public Square, Cleveland, Ohio 44114-1306, or at such other location as the Agent may designate from time to time by notice to the Borrower and the Lenders.

Agent’s Special Counsel. Dentons US LLP or such other counsel as selected by the Agent.

Agreement. This Credit Agreement, including the Schedules and Exhibits hereto.

Agreement Regarding Fees. See §4.2.

Aloft Atlanta Term Loan. A term loan in the original principal face amount of up to $34,080,000.00 from KeyBank now or hereafter made, jointly and severally, to Condor Hospitality Limited Partnership, Spring Street Hotel Property LLC, a Delaware limited liability company (“Spring Street Fee Owner”), and Spring Street Hotel OpCo LLC, a Delaware limited liability company (“Spring Street Operating Lessee”), which term loan will be secured by, among other things, the real property and improvements commonly known as the Aloft Atlanta Downtown located at 300 Ted Turner Drive NW, Atlanta, Georgia 30308.

Applicable Law. All applicable provisions of constitutions, statutes, rules, regulations, guidelines and orders of all Governmental Authorities and all orders and decrees of all courts, tribunals and arbitrators.

 

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Applicable Margin. The Applicable Margin for LIBOR Rate Loans and Base Rate Loans shall be a percentage per annum as set forth below:

 

Period:

   Applicable Margin for
LIBOR Rate Loans
    Applicable Margin for
Base Rate Loans
 

From March 30, 2020 through and including October 1, 2020

     3.25 %      2.25 % 

From October 2, 2020 through and including April 1, 2021

     3.50     2.50

From April 2, 2021 through and including October 1, 2021

     3.75     2.75

For the period from October 2, 2021 and thereafter

     4.00     3.00

In the event that, with respect to any period when the Applicable Margin was determined based upon the Leverage Ratio, the Agent, REIT or the Borrower determine that any financial statements previously delivered were incorrect or inaccurate (regardless of whether this Agreement or the Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, then (a) the Borrower shall as soon as practicable deliver to the Agent the corrected financial statements for such Applicable Period, (b) the Applicable Margin shall be determined as if the Pricing Level for such higher Applicable Margin were applicable for such Applicable Period, and (c) the Borrower shall within three (3) Business Days of demand thereof by the Agent pay to the Agent the accrued additional amount owing as a result of such increased Applicable Margin for such Applicable Period, which payment shall be promptly applied by the Agent in accordance with this Agreement.

Appraisal. An MAI appraisal reasonably acceptable to the Agent of the value of Real Estate, determined on an “as-is” value or “as-stabilized” value basis, as applicable, performed by an independent appraiser and ordered, with respect to the Borrowing Base Properties, by the Agent, and with respect to any Real Estate that is not a Borrowing Base Property, by the Agent, or with Agent’s prior approval, another Person.

Appraised Value. The “as-is” value of a parcel of Real Estate determined by the most recent Appraisal of such Real Estate, obtained pursuant to §2.12, §5.2, §5.3 or §10.12; subject, however, to such changes or adjustments to the value determined thereby as may be required by the appraisal department of the Agent in its good faith business judgment as a result of errors, inconsistencies or flaws in methodology or assumptions.

Approved Brand. Any of the hotel brands owned by the following hotel companies: (a) Marriott (including Starwood Hotels), (b) Hilton, (c) Hyatt or (d) International Hotels Group.

 

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Approved Budget. The annual budget of the REIT and its Subsidiaries, which budget shall be prepared by REIT and approved by the Required Lenders (such approval not to be unreasonably withheld, conditioned or delayed) and shall be a detailed estimate of projected income, cash flow, corporate overhead, general and administrative expense, operating costs, FF&E and other planned or required capital expenditures, fees payable to Franchisors and Managers, and debt service of the REIT and its Subsidiaries for each month and quarter of the calendar year in question, the projected cash flows for such year, a summary of the significant assumptions upon which such projections are based, and any proposed items to be included in Permitted Borrowings. Each budget shall be prepared by the REIT in good faith and in accordance with GAAP (adjusted to remove non-cash items) applied on a consistent basis.

Arranger. KCM, The Huntington National Bank and BMO Capital Markets.

Assignment and Acceptance Agreement. See §18.1.

Assignment of Leases and Rents. Each of the assignments of leases and rents from Borrower or a Subsidiary Guarantor that is an owner of a Borrowing Base Property to the Agent, as it may be modified or amended, pursuant to which there shall be assigned to the Agent for the benefit of the Lenders a security interest in the interest of Borrower or such Subsidiary Guarantor as lessor with respect to all leases of all or any part of each Borrowing Base Property (to which Borrower or such Subsidiary Guarantor is a lessor), each such assignment entered into after the date hereof to be substantially in the form as the initial Assignment of Leases and Rents executed and delivered by each of Borrower or the Subsidiary Guarantors on the Closing Date, with such changes thereto as Agent may reasonably require as a result of state law or practice.

As-Stabilized Appraised Value. The “as-stabilized” value of a parcel of Real Estate determined by the most recent Appraisal of such Real Estate, obtained pursuant to §5.2 or §5.3; subject, however, to such changes or adjustments to the value determined thereby as may be required by the appraisal department of the Agent in its good faith business judgment as a result of errors, inconsistencies or flaws in methodology or assumptions. For purposes of §9.3(a), the As-Stabilized Appraised Value shall be based upon new Appraisals or updates to existing Appraisals, in either case, obtained after January 1, 2022.

Authorized Officer. Any of the following Persons: J. William Blackham, Arinn Cavey, Jill Burger and such other Persons as the Borrower shall designate in a written notice to the Agent.

Bail-In Action. The exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

Bail-In Legislation. With respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

Balance Sheet Date. September 30, 2016.December 31, 2019.

Bankruptcy Code. Title 11, U.S.C.A., as amended from time to time or any successor statute thereto.

 

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Base Rate. The greater of (a) the fluctuating annual rate of interest announced from time to time by the Agent at the Agent’s Head Office as its “prime rate”, (b) one half of one percent (0.5%) above the Federal Funds Effective Rate, and (c) LIBOR for an Interest Period of one (1) month plus one percent (1.0%). The Base Rate is a reference rate used by the lender acting as Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged by the lender acting as the Agent or any other lender on any extension of credit to any debtor. Any change in the rate of interest payable hereunder resulting from a change in the Base Rate shall become effective as of 12:01 a.m. on the Business Day on which such change in the Base Rate becomes effective, without notice or demand of any kind.

Base Rate Loans. Collectively, (a) the Revolving Credit Loans bearing interest calculated by reference to the Base Rate and (b) the Swing Loans.

Borrower. As defined in the preamble hereto.

Borrower Security Agreement. The Security Agreement dated as of the date hereof among the Agent, the Borrower and the REIT.

Borrowing Availability. The Borrowing Availability shall equal the amount by which (a) the lesser of (1) the Total Commitment and (2) the maximum principal amount of Revolving Credit Loans, Swing Loans and Letter of Credit Liabilities that would cause compliance with the covenants in §9.1 and §9.3 (as and when compliance with such covenant is determined, which amount determined thereunder shall also thereafter constitute a limit on the outstanding principal balance of the Revolving Credit Loans, Swing Loans and Letter of Credit Liabilities), exceeds (b) the aggregate outstanding principal balance of the Revolving Credit Loans, Swing Loans and Letter of Credit Liabilities. The Borrowing Availability that may be utilized for purposes other than the payment of interest and fees due under this Agreement shall further be reduced by the amount of the Interest Holdback.

Borrowing Base Certificate. See §7.4(c).

Borrowing Base Property or Borrowing Base Properties. The Real Estate owned (or leased pursuant to a Ground Lease) by Borrower or a Subsidiary Guarantor and leased by a Subsidiary Guarantor pursuant to an Operating Lease that is security for the Obligations pursuant to the Mortgages, as required by the terms of this Agreement.

Borrowing Base Qualification Documents. See Schedule 5.3 attached hereto.

Breakage Costs. The cost to any Lender of re-employing funds bearing interest at LIBOR incurred (or reasonably expected to be incurred) in connection with (a) any payment of any portion of the Loans bearing interest at LIBOR prior to the termination of any applicable Interest Period, (b) the conversion of a LIBOR Rate Loan to any other applicable interest rate on a date other than the last day of the relevant Interest Period, or (c) the failure of the Borrower to draw down, on the first day of the applicable Interest Period, any amount as to which the Borrower has elected a LIBOR Rate Loan.

 

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Building. With respect to any Real Estate, all of the buildings, structures and improvements now or hereafter located thereon.

Business Day. Any day on which banking institutions located in the same city and State as the Agent’s Head Office are located are open for the transaction of banking business and, in the case of LIBOR Rate Loans, which also is a LIBOR Business Day.

Capitalization Rate. The Capitalization Rate shall be (a) eight and one-half percent (8.5%) for Real Estate that is not a Borrowing Base Property and that satisfies the requirements of §7.20(a)(v) (except that Agent shall not be required to approve the Franchise Agreement and Management Agreement), and (b) twelve percent (12%) for all other Real Estate that is not a Borrowing Base Property.

Capitalization Value. As of any date of determination with respect to Real Estate that is not a Borrower Base Property, as applicable, the amount equal to the Adjusted Net Operating Income for such Real Estate for the prior four (4) fiscal quarters most recently ended, divided by the Capitalization Rate.

Capitalized Lease. A lease under which the discounted future rental payment obligations of the lessee or the obligor are required to be capitalized on the balance sheet of such Person in accordance with GAAP.

Cash Collateral Agreement. The Cash Collateral Account Agreement, by and among the Borrower, the Subsidiary Guarantors, each Additional Subsidiary Guarantor that may hereafter become a party thereto and Agent, in its capacity as administrative agent, providing for the deposit of revenues from the Borrowing Base Properties into the Collection Account, and the granting of a security interest in and control of such account to Agent for the benefit of the Lenders, such agreement to be in form and substance reasonably satisfactory to Agent.

Cash Flow Waterfall. The cash flow waterfall described in Section 6.2(b) of the Cash Collateral Agreement.

Cash Equivalents. As of any date, (a) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than one year from such date, (b) time deposits and certificates of deposits having maturities of not more than one (1) year from such date and issued by (i) any Lender or (ii) any domestic commercial bank having (A) senior long term unsecured debt rated at least A or the equivalent thereof by S&P or A2 or the equivalent thereof by Moody’s and (B) capital and surplus in excess of $100,000,000.00, (c) commercial paper rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing within one hundred twenty (120) days from such date, and (d) shares of any money market mutual fund rated at least AAA or the equivalent thereof by S&P or at least Aaa or the equivalent thereof by Moody’s.

CERCLA. The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time, and regulations promulgated thereunder.

 

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Change of Control. A Change of Control shall exist upon the occurrence of any of the following:

(a) any Person (including a Person’s Affiliates and associates) or group (as that term is understood under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of a percentage (based on voting power, in the event different classes of stock or interests shall have different voting powers) of the voting stock or voting interests of REIT equal to at least thirty percent (30%) (excluding the existing and future interests of the Existing Shareholders as of the date hereof and the interests in the REIT into which the Existing Shareholders may convert, provided that in no event shall any Existing Shareholder have beneficial ownership of the voting stock or voting interests of REIT greater than forty-nine and 9/10ths percent (49.9%); or

(b) as of any date a majority of the Board of Directors or Trustees or similar body (the “Board”) of REIT consists of individuals who were not either (i) directors or trustees of REIT as of the corresponding date of the previous year, or (ii) selected or nominated to become directors or trustees by the Board of REIT of which a majority consisted of individuals described in clause (i) above, or (iii) selected or nominated to become directors or trustees by the Board of REIT which majority consisted of individuals described in clause (i) above and individuals described in clause (ii) above; or

(c) [Intentionally Omitted];

(d) J. William Blackham shall cease to be Chief Executive Officer of the REIT, provided that if J. William Blackham shall not be the Chief Executive Officer of the REIT as a result of his death or disability or termination by the Board, then no Change of Control shall occur under this clause (d) if a competent and experienced officer to replace him as Chief Executive Officer is approved by the Required Lenders within ninety (90) days of his death or disability, which approval the Required Lenders shall not unreasonably withhold, condition or delay; or

(e) REIT, General Partner or the Borrower consolidates with, is acquired in whole by, or merges into or with any Person (other than a merger permitted by §8.4); or

(f) General Partner fails to (i) be the sole general partner of Borrower, (ii) own directly, free of any lien, encumbrance or other adverse claim, at least eighty-five percent (85%) of the economic, voting and beneficial interest of the Borrower (other than any Lien of the Agent granted pursuant to the Loan Documents), or (iii) hold all management powers over the business and affairs of the Borrower and control the Borrower; or

(g) REIT fails to (i) own directly, free of any lien, encumbrance or other adverse claim (other than any Lien of the Agent granted pursuant to the Loan Documents), one hundred percent (100%) of the economic, voting and beneficial interest of the General Partner, or (ii) hold all management powers over the business and affairs of the Borrower and General Partner and control the Borrower and General Partner; or

 

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(h) the Borrower fails to (i) own, directly or indirectly, free of any lien, encumbrance or other adverse claim (other than any Lien of the Agent granted pursuant to the Loan Documents), at least ninety-nine percent (99%) of the economic, voting and beneficial interest of each Subsidiary Guarantor (other than TRS and the other TRS Lessees) (the other one percent (1%) of which shall be owned, directly or indirectly, free of any lien, encumbrance or other adverse claim (other than any Lien of the Agent granted pursuant to the Loan Documents), by the REIT); or (ii) hold all management powers over the business and affairs of the Subsidiary Guarantors (other than TRS and the other TRS Lessees) and control the Subsidiary Guarantors (other than TRS and the other TRS Lessees); or

(i) General Partner fails to (i) own directly, free of any lien, encumbrance or other adverse claim (other than any Lien of the Agent granted pursuant to the Loan Documents), one hundred percent (100%) of the economic, voting and beneficial interest of TRS, or (ii) hold all management powers over the business and affairs of TRS and control TRS; or

(j) TRS fails to (i) own directly, free of any lien, encumbrance or other adverse claim (other than any Lien of the Agent granted pursuant to the Loan Documents), at least one hundred percent (100%) of the economic, voting and beneficial interest of each other TRS Lessee, or (ii) hold all management powers over the business and affairs of each other TRS Lessee and control each other TRS Lessee.

Closing Date. The date of this Agreement.

Code. The Internal Revenue Code of 1986, as amended, and all regulations and formal guidance issued thereunder.

Collateral. All of the property, rights and interests of the Borrower or the Guarantors which are or are intended to be subject to the security interests, liens and mortgages created by the Security Documents, including, without limitation, the Borrowing Base Properties.

Collateral Account. A special deposit account established by the Agent pursuant to §12.6 and under its sole dominion and control.

Collection Account. A deposit account maintained initially at Huntington, and thereafter at Agent or another depository approved by Agent more particularly described in the Cash Collateral Agreement, or any successor deposit accounts approved by Agent.

Commitment. With respect to each Lender, the amount set forth on Schedule 1.1 hereto as the amount of such Lender’s commitment to make or maintain Loans to the Borrower and to participate in Letters of Credit for the account of the Borrower, as the same may be changed from time to time in accordance with the terms of this Agreement.

Commitment Increase. An increase in the Total Commitment to not more than the amount permitted pursuant to §2.11.

Commitment Increase Date. See §2.11(a).

 

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Commitment Percentage. With respect to each Lender, the percentage set forth on Schedule 1.1 hereto as such Lender’s percentage of the Total Commitment, as the same may be changed from time to time in accordance with the terms of this Agreement; provided that if the Commitments of the Lenders have been terminated as provided in this Agreement, then the Commitment of each Lender shall be determined based on the Commitment Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.

Commodity Exchange Act. The Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

Communications. See §7.4.

Compliance Certificate. See §7.4(c).

Condemnation Proceeds. All compensation, awards, damages, judgments and proceeds awarded to the Borrower or a Subsidiary Guarantor by reason of any Taking, net of all reasonable and customary amounts actually expended to collect the same, including, without limitation, reasonable and customary amounts expended in negotiating, litigating, if appropriate, or investigating the amount of such compensation, awards, damages, judgments and proceeds.

Connection Income Taxes. Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

Consolidated. With reference to any term defined herein, that term as applied to the accounts of a Person and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

Consolidated EBITDA. For any period, for the REIT and its Subsidiaries on a consolidated basis (and without double-counting), consolidated Net Income for such period, adjusted by (x) adding thereto (i) to the extent actually deducted in determining said consolidated Net Income, Consolidated Interest Expense, minority interest and provision for income taxes for such period (excluding, however, Consolidated Interest Expense and income taxes attributable to non-Wholly-Owned Subsidiaries and Unconsolidated Affiliates of the REIT and any of its Subsidiaries), and (ii) the amount of all amortization of intangibles and depreciation that were deducted determining consolidated Net Income for such period, and (iii) any non-recurring non-cash charges in such period to the extent that (A) such non-cash charges do not give rise to a liability that would be required to be reflected on the consolidated balance sheet of the REIT (and so long as no cash payments or cash expenses will be associated therewith (whether in the current period or for any future period)) and (B) the same were deducted in determining consolidated Net Income for such period, and (y) subtracting therefrom, to the extent included in determining consolidated Net Income for such period, the amount of non-recurring non-cash gains during such period; provided that Consolidated EBITDA shall be determined without giving effect to any extraordinary gains or losses (including any taxes attributable to any such extraordinary gains or losses) or gains or losses (including any taxes attributable to such gains or losses) from sales of assets other than from sales of inventory (excluding real property) in the ordinary course of business. Consolidated EBITDA shall be adjusted to include only the REIT’s or its Subsidiaries’ Equity Percentage of Consolidated EBITDA from any non-Wholly-Owned Subsidiary and Unconsolidated Affiliate.

 

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Consolidated Interest Expense. As of any date of determination and for any applicable period, with respect to REIT and its Subsidiaries, without duplication, total interest expense accruing or paid on Indebtedness of REIT and its Subsidiaries, on a consolidated basis, during such period (including interest expense attributable to Capitalized Leases and amounts attributable to interest incurred under Derivatives Contracts, but excluding, to the extent non-cash, amortization of defeasance financing costs and charges), determined in accordance with GAAP, and including (without duplication) the Equity Percentage of the foregoing items for the Unconsolidated Affiliates and non-Wholly-Owned Subsidiaries of REIT and its Subsidiaries. Consolidated Interest Expense shall not include capitalized interest funded under a construction loan by an interest reserve.Consolidated Tangible Net Worth. As of any date of determination, for the REIT and its Subsidiaries, an amount determined by subtracting the Consolidated Total Indebtedness from the Consolidated Total Asset Value. Interest expense accruing on any PPP Loan, the IRSA Note and any Subordinate Debt of the REIT, to the extent such expense is subject to a Subordination and Standstill Agreement, shall be excluded from the calculation of Consolidated Interest Expense.

Consolidated Total Asset Value. As of any date of determination, with respect to REIT and its Subsidiaries on a consolidated basis, the sum of:

(a) The amount of Unrestricted Cash and Cash Equivalents of the Borrower; plus

(b) The amount of Restricted Cash of the Borrower and its Subsidiaries; plus

(c) With respect to any Real Estate of the REIT and its Subsidiaries which is a Borrowing Base Property as of the date of determination, the most recent Appraised Value thereof; plus

(d) The book value determined in accordance with GAAP of all Development Properties owned by REIT and its Subsidiaries; plus

(e) With respect to all Real Estate (other than Development Properties and assets included under subparagraph (c) above), the most recent Appraised Value thereof; plus

(f) The Borrower’s pro rata share of such assets described in subparagraphs (c), (d) and (e) above held by a non-Wholly-Owned Subsidiary or Unconsolidated Affiliate (determined based upon its Equity Percentage in such non-Wholly-Owned Subsidiary and Unconsolidated Affiliate), the value of which shall be determined consistent with the above-described treatment for wholly owned assets.

 

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Consolidated Total Asset Value will be adjusted, as appropriate, for acquisitions, dispositions and other changes to the portfolio during the fiscal quarter most recently ended prior to a date of determination. All income, expense and value associated with assets included in Consolidated Total Asset Value disposed of during the fiscal quarter period most recently ended prior to a date of determination will be eliminated from calculations. To the extent that Consolidated Total Asset Value attributable to Development Properties would exceed ten percent (10%) of Consolidated Total Asset Value, then such excess shall be excluded.

Consolidated Total Indebtedness. All Indebtedness and, to the extent not included in Indebtedness, all liabilities (determined in accordance with GAAP) (but excluding trade debt incurred in the ordinary course of business which is not more than sixty (60) days past due) of the REIT and its Subsidiaries determined on a Consolidated basis and shall include (without duplication), such Person’s Equity Percentage of the Indebtedness of its non-Wholly-Owned Subsidiaries and Unconsolidated Affiliates. Any PPP Loan, the IRSA Note and, to the extent any Subordinate Debt of the REIT is subject to a Subordination and Standstill Agreement, such Subordinate Debt, shall be excluded from the calculation of Consolidated Total Indebtedness.

Contribution Agreement. The Contribution Agreement dated as of even date herewith among the Borrower, General Partner, REIT and the Subsidiary Guarantors that are a party thereto as of the Closing Date, and each Additional Guarantor which may hereafter become a party thereto, as the same may be modified, amended or ratified from time to time.

Conversion/Continuation Request. A notice given by the Borrower to the Agent of its election to convert or continue a Loan in accordance with §4.1.

Debt Yield. The ratio (expressed as a percentage) of (i) Adjusted Net Operating Income (determined solely for the Borrowing Base Properties) to (ii) the Outstanding Loans. For the purposes of calculating Adjusted Net Operating Income, Adjusted Net Operating Income shall be calculated (i) for the fiscal quarter ending September 30, 2020, by multiplying the Adjusted Net Operating Income for the period from July 1, 2020 through and including September 30, 2020, by four (4), (ii) for the fiscal quarter ending December 31, 2020, by multiplying the Adjusted Net Operating Income for the period from July 1, 2020 through and including December 31, 2020, by two (2), (iii) for the fiscal quarter ending March 31, 2021, by multiplying the Adjusted Net Operating Income for the period from July 1, 2020 through and including March 31, 2021, by one and one-third (1.33), and (iv) for each calendar quarter thereafter, Adjusted Net Operating Income shall be calculated for the prior four (4) consecutive fiscal quarters most recently ended.

Default. See §12.1.

Default Rate. See §4.11.

Defaulting Lender. Any Lender that, as reasonably determined by the Agent, (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded by it hereunder unless such Lender notifies the Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent, any Issuing Lender, any Swing Loan Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Loans) within two (2) Business Days of the date when due, (b) has notified the Borrower, the Agent or

 

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any Lender that it does not intend to comply with its funding obligations hereunder or has made a public statement to that effect unless with respect to this clause (b), such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied, (c) has failed, within three (3) Business Days after request by the Agent, to confirm in a manner reasonably satisfactory to the Agent that it will comply with its funding obligations; provided that, notwithstanding the provisions of §2.13, such Lender shall cease to be a Defaulting Lender upon the Agent’s receipt of confirmation that such Defaulting Lender will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any bankruptcy, insolvency, reorganization, liquidation, conservatorship, assignment for the benefit of creditors, moratorium, receivership, rearrangement or similar debtor relief law of the United States or other applicable jurisdictions from time to time in effect, including any law for the appointment of the Federal Deposit Insurance Corporation or any other state or federal regulatory authority as receiver, conservator, trustee, administrator or any similar capacity, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such capacity, charged with reorganization or liquidation of its business or a custodian appointed for it, (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment or (iv) is the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a governmental authority (including any agency, instrumentality, regulatory body, central bank or other authority) so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts of the United States or from the enforcement of judgments or writs of attachment of its assets or permit such Lender (or such governmental authority or instrumentality) to reject, repudiate, disavow, or disaffirm any contracts or agreements made with such Person). Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to §2.13(g)) upon delivery of written notice of such determination to the Borrower and each Lender.

Derivatives Contract. Any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement. Not in limitation of the foregoing, the term “Derivatives Contract” includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement of similar type, including any such obligations or liabilities under any such master agreement.

 

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Derivatives Termination Value. In respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Derivatives Contracts, (a) for any date on or after the date such Derivatives Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) above, the amount(s) determined as the mark-to-market value(s) for such Derivatives Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Derivatives Contracts (which may include the Agent or any Lender).

Designated Person. See §6.31.

Development Property. Any Real Estate owned or acquired by the REIT, any Subsidiary of REIT or any Unconsolidated Affiliate and on which such Person is pursuing construction of one or more buildings for use as a Hotel Property of the type permitted by §8.3(h)(i) and for which construction is proceeding to completion without undue delay from permit denial, construction delays or otherwise, all pursuant to the ordinary course of business of the REIT, any Subsidiary of REIT or any Unconsolidated Affiliate; provided that any Real Estate will no longer be considered to be a Development Property at the date on which all improvements related to the development of such Development Property have been substantially completed and a certificate of occupancy has been issued for twelve (12) months (provided that following such substantial completion, the REIT may by delivering written notice to Agent elect to no longer treat such property as a Development Property).

Directions. See §14.14.

Distribution. Any (a) dividend or other distribution, direct or indirect, on account of any Equity Interest of REIT or any of its Subsidiaries now or hereafter outstanding, except a dividend payable solely in Equity Interests of identical class to the holders of that class; (b) redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interest of REIT or any of its Subsidiaries now or hereafter outstanding; and (c) payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interests of REIT or any of its Subsidiaries now or hereafter outstanding. Distributions from any Subsidiary of the Borrower to, directly or indirectly, the Borrower shall be excluded from this definition. Any conversion of Subordinate Debt to common equity of the REIT or payment of the Subordinate Debt in accordance with the terms of this Agreement and the terms of the applicable Subordination and Standstill Agreement shall not constitute a Distribution.

Distribution Conditions. The Distribution Conditions shall be deemed to have occurred from and after the date of the Ninth Amendment to Credit Agreement and to exist when (a) no Default or Event of Default has occurred and is continuing or would occur as the result of the making of a Distribution pursuant to §8.7(b), (b) the Agent shall have obtained new Appraisals or updates to existing Appraisals with respect to the Borrowing Base Properties in order to determine compliance with §9.3 as the same would be in effect upon the occurrence of a

 

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Distribution Event, (c) any Preferred Distributions paid or to be paid shall be included in the calculation of Fixed Charges as if paid in the preceding fiscal quarter, (d) Agent shall have received and approved a Compliance Certificate and supporting calculations showing that (i) after making the Distribution, the REIT and its Subsidiaries shall have Liquidity of not less than $10,000,000.00, (ii) the ratio of Adjusted Consolidated EBITDA determined separately for each of the three (3) preceding most recently ended fiscal quarters to Fixed Charges determined separately for each of the three (3) preceding most recently ended fiscal quarters shall not be less than 1.50 to 1, and (iii) Borrower shall be in compliance with the covenant set forth in §9.3 (determined as if the Distribution Event had occurred) and the sum of the aggregate outstanding principal amount of the Revolving Credit Loans, the Swing Loans and the Letter of Credit Liabilities shall not exceed the amount that would cause compliance with the covenant in §9.3 as so determined.

Distribution Event. The making of a Distribution pursuant to §8.7(b).

Dollars or $. Dollars in lawful currency of the United States of America.

Domestic Lending Office. Initially, the office of each Lender designated as such on Schedule 1.1 hereto; thereafter, such other office of such Lender, if any, located within the United States that will be making or maintaining Base Rate Loans.

Drawdown Date. The date on which any Loan is made or is to be made, and the date on which any Loan which is made prior to the Maturity Date, as applicable, is converted in accordance with §4.1.

EEA Financial Institution. (a) Any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country. Any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority. Any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Electronic System. See §7.4.

Eligible Real Estate. Real Estate:

(a) which is located within the continental United States;

(b) which is improved by an operating income-producing Hotel Property;

(c) as to which all of the representations set forth in §6 of this Agreement concerning the subject Borrowing Base Property are true and correct in all material respects;

 

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(d) as to which the Agent and the Required Lenders, as applicable, have received and approved all Borrowing Base Qualification Documents, or will receive and approve them prior to inclusion of such Real Estate as a Borrowing Base Property; and

(e) as to which, notwithstanding anything to the contrary contained herein, the Agent and the Required Lenders have approved for inclusion as a Borrowing Base Property.

Employee Benefit Plan. Any employee benefit plan within the meaning of Section 3(3) of ERISA maintained or contributed to by REIT or any ERISA Affiliate, other than a Multiemployer Plan.

Environmental Engineer. Any firm of independent professional engineers or other scientists generally recognized as expert in the detection, analysis and remediation of Hazardous Substances and related environmental matters and acceptable to the Agent in its reasonable discretion.

Environmental Laws. As defined in the Indemnity Agreement.

Environmental Reports. See §6.19.

EPA. See §6.19(b).

Equity Interests. With respect to any Person, (a) any share of capital stock of (or other ownership or profit interests in) such Person, (b) any warrant, option or other right for the purchase or other acquisition from such Person of (i) any share of capital stock of (or other ownership or profit interests in) such Person, or (ii) any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests) and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination, and (c) any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting.

Equity Offering. The issuance and sale after the Closing Date by REIT or any of its Subsidiaries of any equity securities of such Person (other than equity securities issued to REIT or any one or more of its Subsidiaries in their respective Subsidiaries), and the contribution of additional equity capital to Borrower.

Equity Percentage. The aggregate ownership percentage of REIT or its Subsidiaries in each Unconsolidated Affiliate or Subsidiary that is not a Wholly-Owned Subsidiary, which shall be calculated as the greater of (a) such Person’s direct or indirect nominal capital ownership interest in the Unconsolidated Affiliate or Subsidiary that is not a Wholly-Owned Subsidiary as set forth in the Unconsolidated Affiliate’s or Subsidiaries’ organizational documents, and (b) such Person’s direct or indirect economic ownership interest in the Unconsolidated Affiliate or Subsidiary that is not a Wholly-Owned Subsidiary reflecting such Person’s current allocable share of income and expenses of the Unconsolidated Affiliate Subsidiary that is not a Wholly-Owned Subsidiary.

 

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ERISA. The Employee Retirement Income Security Act of 1974, as amended and in effect from time to time and all regulations and formal guidelines issued thereunder.

ERISA Affiliate. Any Person which is treated as a single employer with REIT or its Subsidiaries under Section 414 of the Code or Section 4001 of ERISA and any predecessor entity of any of them.

ERISA Reportable Event. A reportable event with respect to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived or any other event with respect to which the Borrower, a Guarantor or an ERISA Affiliate could have liability under Section 4062(e) or Section 4063 of ERISA.

EU Bail-In Legislation Schedule. The EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Event of Default. See §12.1.

Excess Offering Proceeds. Net proceeds from an “Unsolicited Cash Offer” (as defined in the Initial Subordination and Standstill Agreement) in excess of the outstanding principal balance of the Initial Subordinate Debt.

Excluded Hedge Obligation. With respect to any Guarantor, any Hedge Obligation, if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Hedge Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Hedge Obligation. If a Hedge Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Hedge Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

Excluded Subsidiary. Any Subsidiary of the Borrower which is prohibited from guaranteeing the Indebtedness of any other Person pursuant to (i) any document, instrument or agreement evidencing Secured Indebtedness permitted by this Agreement or (ii) a provision of such Subsidiary’s organizational documents, which provision is included as a condition to the extension of such Secured Indebtedness. Notwithstanding the foregoing, the Excluded Subsidiaries as of the date hereofMarch 1, 2017 also include: Supertel Hospitality Management, Inc.; E&P Financing Limited Partnership; and E&P REIT Trust; provided that any of such Subsidiaries shall no longer be an Excluded Subsidiary if it shall own any asset (other than immaterial assets) or engage in any business operations.

 

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Excluded Taxes. Any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or its Commitment pursuant to an Applicable Law in effect on the date on which (i) such Lender acquires such interest in the Loan or its Commitment (other than pursuant to an assignment request by the Borrower under §4.14 as a result of costs sought to be reimbursed pursuant to §4.3) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to §4.3, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with §4.3(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

Existing Shareholders. IRSA Inversiones y Representaciones Sociedad Anónima, Real Estate Strategies, L.P., StepStone Group LP, SREP III Flight-Investco, L.P., and as to each such Person its respective Affiliates.

Extension Request See §2.12(a)(i).

FATCA. Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

Federal Funds Effective Rate. For any day, the rate per annum (rounded upward to the nearest one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of Cleveland on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate.”

Fee Owner. See §6.33(a).

FF&E. All fixtures, furnishings, equipment, furniture, and other items of tangible personal property now or hereafter located on a Borrowing Base Property or other Real Estate or used in connection with the ownership, use, occupancy, operation or maintenance of all or any part of such Borrowing Base Property or other Real Estate, other than stocks of food and other supplies held for consumption in normal operation but including, without limitation, appliances, machinery, equipment, signs, artwork, office furnishings and equipment, guest room furnishings, beds, linens, televisions, radios, telephones, specialized equipment for kitchens, dishware, utensils, tables, chairs, laundries, bars, restaurants, public rooms, health and recreational facilities, all partitions, screens, awnings, shades, blinds, floor coverings, hall and lobby equipment, heating, lighting, plumbing, ventilating, refrigerating, incinerating, elevators, escalators, air conditioning and communication plants or systems with appurtenant fixtures, vacuum cleaning systems, call or beeper systems, security systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, reservation system computer and related equipment, and vehicles.

 

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FF&E Reserve. For any period and with respect to any of the Real Estate for the most recently completed four (4) fiscal quarters, an amount equal to four percent (4%) of Gross Hotel Revenues from such Real Estate for such period.

Fixed Charges. As of any date of determination for any applicable period for REIT and its Subsidiaries, determined on a consolidated basis, an amount equal to (i) Consolidated Interest Expense for such period plus (ii) the aggregate amount of scheduled principal or amortization payments of Indebtedness (excluding balloon payments at maturity) required to be made during such period by the REIT and its Subsidiaries on a consolidated basis plus (iii) the Preferred Distributions, if any, paid or required to be included in the calculation of Fixed Charges pursuant to the definition of Distribution Conditions or paid during such period following a Distribution Event plus (iv) the REIT’s or its Subsidiaries pro rata share (based upon their Equity Percentage in such Unconsolidated Affiliate) of all Fixed Charges from any non-Wholly-Owned Subsidiary and Unconsolidated Affiliate of REIT and its Subsidiaries. Fixed Charges shall not include the amount of any Preferred Distributions, if any, required to be paid during such period except as provided in clause (iii) above or the amount of any debt service payable with respect to any PPP Loan, the IRSA Note or Subordinate Debt of the REIT, to the extent subject to a Subordination and Standstill Agreement. Fixed Charges for the period shall be adjusted on a proforma basis to account for properties acquired or sold in the period in a manner satisfactory to the Agent.

Foreign Lender. If the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.

Franchise Agreement. A license or franchise agreement between the Borrower (as to Borrower only with respect to the Initial Borrowing Base Properties, as applicable) or a Subsidiary Guarantor and a Franchisor for the operation of a Hotel Property using the brand of the Franchisor.

Franchise Fees. For any Real Estate, a deemed franchise fee in an amount equal to the greater of (i) the actual franchise fees payable with respect to such Real Estate for the period of determination and (ii) an amount equal to four percent (4%) of Gross Hotel Revenues from such Real Estate for such period.

Franchisor. A person that licenses or franchises its hotel brand to hotel owners or operators, including the Borrower, the REIT (as to Borrower and the REIT only with respect to the Initial Borrowing Base Properties, as applicable) or a Subsidiary Guarantor.

Fronting Exposure. At any time there is a Defaulting Lender, (a) with respect to the Issuing Lender, such Defaulting Lender’s Commitment Percentage of the outstanding Letter of Credit Liabilities other than Letter of Credit Liabilities as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or cash collateral or other credit support acceptable to the Issuing Lender shall have been provided in accordance with the terms

 

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hereof and (b) with respect to the Swing Loan Lender, such Defaulting Lender’s Commitment Percentage of Swing Loans other than Swing Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders, repaid by the Borrower or for which cash collateral or other credit support acceptable to the Swing Loan Lender shall have been provided in accordance with the terms hereof.

Funds Available for Distribution. As of any date of determination, an amount equal to the sum of (a) Consolidated EBITDA for the prior three (3) consecutive fiscal quarters most recently ended (for the initial Distribution pursuant to §8.7(b), and thereafter the prior four (4) consecutive fiscal quarters most recently ended minus (b) all Fixed Charges for such applicable period, minus (c) Recurring Capital Expenditures for such applicable period.

Future Subordinate Debt. The unsecured debt provided by any Future Subordinate Lender to the REIT, the documentation for which shall be in accordance with the Subordinate Debt Terms.

Future Subordinate Lenders. Any lender or lenders which provide Future Subordinate Debt to the REIT, the identity of such Future Subordinate Lenders (if not an Existing Shareholder) to be acceptable to the Required Lenders in their sole, absolute and unfettered discretion.

Future Subordination and Standstill Agreements. Each Subordination and Standstill Agreement by and among the REIT, the Agent and each Future Subordinate Lender evidencing the subordination of amounts payable by the REIT to such Future Subordinate Lender with respect to the applicable Future Subordinate Debt to the Obligations, the agreement of such Future Subordinate Lender to standstill in the taking of actions or exercising remedies and evidencing other agreements and protections in favor of the Agent and the Lenders, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms hereof and thereof.

GAAP. Principles that are (a) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time and (b) consistently applied with past financial statements of the Person adopting the same principles.

General Partner. Condor Hospitality REIT Trust, a Maryland real estate investment trust.

Governmental Authority. Any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau, commission, board, department or other entity (including, without limitation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law, and including any supra-national bodies such as the European Union or the European Central Bank.

 

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Gross Hotel Revenues. All revenues and receipts of every kind derived from operating a Hotel Property and parts thereof, including, without limitation, income (from both cash and credit transactions), before commissions and discounts for prompt or cash payments, from rentals or sales of rooms, stores, offices, meeting space, exhibit space, or sales space of every kind; license, lease, and concession fees and rentals (not including gross receipts of licensees, lessees, and concessionaires); net income from vending machines; health club membership fees; food and beverage sales; parking; sales of merchandise (other than proceeds from the sale of FF&E no longer necessary to the operation of such Hotel Property); service charges, to the extent not distributed to the employees at such Hotel Property as, or in lieu of, gratuities; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that, Gross Hotel Revenues shall not include gratuities to employees of such Hotel Property; federal, state, or municipal excise, sales, use, or similar taxes collected directly from tenants, patrons, or guests or included as part of the sales price of any goods or services; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); condemnation proceeds; or any proceeds from any sale of such Hotel Property. Gross Hotel Revenues shall not include any rents, reimbursements or other payments by a tenant under a Lease which is in default of any monetary or other material obligation or which is the subject of any bankruptcy, insolvency or similar debtor relief proceeding.

Ground Lease. A ground lease relating to a Borrowing Base Property as to which no default or event of default has occurred or with the passage of time or the giving of notice would occur and which Agent determines in its reasonable discretion is a financeable ground lease and that contains the following terms and conditions (in the ground lease or, if approved by Agent, in any other agreement in favor of Agent): (a) a remaining term (exclusive of any unexercised extension options that are subject to terms or conditions not yet agreed upon and specified in such ground lease or an amendment thereto, other than a condition that the lessee not be in default under such ground leases) of at least thirty (30) years or more from the date such asset becomes a Borrowing Base Property; (b) the right of the lessee to mortgage and encumber its interest in the leased property without the consent of the lessor; (c) the obligation of the lessor to give the holder of any mortgage lien on such leased property written notice of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosure, and fails to do so; (d) reasonable transferability of the lessee’s interest under such lease, including the ability to sublease; and (e) such other rights customarily required by mortgagees making a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease.

Ground Lease Default. See §6.33(d).

Guaranteed Pension Plan. Any employee pension benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by REIT or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.

Guarantor. Collectively, REIT, General Partner, each Subsidiary Guarantor and each Additional Guarantor, and individually any one of them.

 

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Guaranty. The Unconditional Guaranty of Payment and Performance dated of even date herewith made by REIT, General Partner, the Subsidiary Guarantors that are a party thereto as of the Closing Date, and each Additional Guarantor in favor of the Agent and the Lenders, as the same may be modified, amended, restated or ratified, such Guaranty to be in form and substance reasonably satisfactory to the Agent.

Hazardous Substances. As defined in the Indemnity Agreement.

Hedge Obligations. All obligations of Borrower to any Lender Hedge Provider to make any payments under any agreement with respect to an interest rate swap, collar, cap or floor or a forward rate agreement or other agreement regarding the hedging of interest rate risk exposure relating to the Obligations, and any confirming letter executed pursuant to such hedging agreement, and which shall include, without limitation, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act, all as amended, restated or otherwise modified. Under no circumstances shall any of the Hedge Obligations secured or guaranteed by any Loan Document as to a Guarantor include any obligation that constitutes an Excluded Hedge Obligation of such Guarantor.

Hotel Property. Any Real Estate that operates or, in the case of Land Assets or a Development Property is intended to be operated, as a hotel or similar lodging for transient uses of rooms.

Huntington. The Huntington National Bank.

Increase Notice. See §2.11(a).

Indebtedness. With respect to a Person, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed (other than trade debt incurred in the ordinary course of business which is not more than sixty (60) days past due); (b) all obligations of such Person, whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or services rendered; (c) obligations of such Person as a lessee or obligor under a Capitalized Lease; (d) all reimbursement obligations of such Person under any letters of credit or acceptances (whether or not the same have been presented for payment); (e) all Off-Balance Sheet Obligations of such Person; (f) all obligations of such Person in respect of any purchase obligation, repurchase obligation, takeout commitment or forward equity commitment, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be satisfied solely by the issuance of Equity Interests); (g) net obligations under any Derivatives Contract not entered into as a hedge against existing Indebtedness, in an amount equal to the Derivatives Termination Value thereof; (h) all Indebtedness of other Persons which such Person has guaranteed or is otherwise recourse to such Person (except for guaranties of customary exceptions for fraud, misapplication of funds, environmental indemnities, violations of “special purpose entity” covenants, bankruptcy and other similar exceptions to non-recourse liability until

 

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a claim is made with respect thereto, and then shall be included only to the extent of the amount of such claim), including liability of a general partner in respect of liabilities of a partnership in which it is a general partner which would constitute “Indebtedness” hereunder, any obligation to supply funds to or in any manner to invest directly or indirectly in a Person, to maintain working capital or equity capital of a Person or otherwise to maintain net worth, solvency or other financial condition of a Person, to purchase indebtedness, or to assure the owner of indebtedness against loss, including, without limitation, through an agreement to purchase property, securities, goods, supplies or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise; (i) all Indebtedness of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness or other payment obligation; (j) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Mandatorily Redeemable Stock issued by such Person or any other Person, valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and (k) such Person’s pro rata share of the Indebtedness (based upon its Equity Percentage) of any Unconsolidated Affiliate or non-Wholly-Owned Subsidiary of such Person. For the avoidance of doubt, if a Person has guaranteed Indebtedness of an Unconsolidated Affiliate or non-Wholly-Owned Subsidiary, the greater of the Indebtedness guaranteed or the Equity Percentage of such Indebtedness shall be included in Indebtedness. Indebtedness shall be adjusted to remove any impact of intangibles pursuant to FAS 141, as issued by the Financial Accounting Standards Board in June of 2001. Any PPP Loan, the IRSA Note and any Subordinate Debt of the REIT shall not constitute “Indebtedness” for purposes of §9 of this Agreement; provided, that in the case of Subordinate Debt, such Subordinate Debt is subject to a Subordination and Standstill Agreement.

Indemnified Taxes. (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower or any Guarantor under any Loan Document and (b) to the extent not otherwise described in the immediately preceding clause (a), Other Taxes.

Indemnity Agreement. The Indemnity Agreement Regarding Hazardous Materials made by the Borrower and Guarantors, in favor of the Agent and the Lenders, as the same may be modified, amended or ratified, pursuant to which each of the Borrower and the Guarantors agrees to indemnify the Agent and the Lenders with respect to Hazardous Substances and Environmental Laws.

Information Materials. See §7.4.

Initial Borrowing Base Properties. The Initial Borrowing Base Properties shall include those properties described on Schedule 1.3 hereto.

Initial Subordinate Debt. The unsecured debt provided by the Initial Subordinate Lender to the REIT pursuant to (a) that certain Convertible Promissory Note and Loan Agreement dated November 18, 2020 by the REIT to SREP III Flight – Investco 2, L.P. as an Initial Subordinate Lender in the principal amount of $7,220,443.00 and (b) that certain Convertible Promissory Note and Loan Agreement dated November 18, 2020 by the REIT to Efanur S.A. as an Initial Subordinate Lender in the principal amount of $2,779,557.00 (as the same may be increased by capitalized interest), which documentation shall be in accordance with the Subordinate Debt Terms.

 

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Initial Subordinate Lender. Individually and collectively, SREP III Flight – Investco 2, L.P. and Efanur S.A..

Initial Subordination and Standstill Agreement. Those certain Subordination and Standstill Agreements dated as of the date of the Ninth Amendment to Credit Agreement by and among REIT, the Agent and each Initial Subordinate Lender evidencing the subordination of amounts payable by the REIT to such Initial Subordinate Lender with respect to the Initial Subordinate Debt to the Obligations, the agreement of such Initial Subordinate Lender to standstill in the taking of actions or exercising remedies and evidencing other agreements and protections in favor of the Agent and the Lenders, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms hereof and thereof.

Insurance Proceeds. All insurance proceeds, damages and claims and the right thereto under any insurance policies relating to any portion of any Borrowing Base Property, net of all reasonable and customary amounts actually expended to collect the same, including, without limitation, reasonable and customary amounts expended in negotiating, litigating, if appropriate, or investigating the amount of such insurance, proceeds, damages and claims.

Interest Hedge. See §7.22.

Interest Holdback. As of the date of the Ninth Amendment to Credit Agreement, the sum of $4,000,000.00, as the same may be reduced through use thereof or replenished as provided in this Agreement. The Interest Holdback may be used by Borrower only through and including November 1, 2021 or upon the occurrence of a Liquidity Trigger Event and solely to pay interest due under this Agreement.

Interest Payment Date. As to each Loan, the first day of each calendar month during the term of such Loan.

Interest Period. With respect to each LIBOR Rate Loan (a) initially, the period commencing on the Drawdown Date of such LIBOR Rate Loan and ending one (1), two (2) or three (3) months thereafter, and (b) thereafter, each period commencing on the day following the last day of the next preceding Interest Period applicable to such Loan and ending on the last day of one (1) of the periods set forth above, as selected by the Borrower in a Loan Request or Conversion/Continuation Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period with respect to a LIBOR Rate Loan would otherwise end on a day that is not a LIBOR Business Day, such Interest Period shall end on the next succeeding LIBOR Business Day, unless such next succeeding LIBOR Business Day occurs in the next calendar month, in which case such Interest Period shall end on the next preceding LIBOR Business Day, as determined conclusively by the Agent in accordance with the then current bank practice in London;

 

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(ii) if the Borrower shall fail to give notice as provided in §4.1, the Borrower shall be deemed to have requested a continuation of the affected LIBOR Rate Loan as a Base Rate Loan on the last day of the then current Interest Period with respect thereto;

(iii) any Interest Period pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the applicable calendar month; and

(iv) no Interest Period relating to any LIBOR Rate Loan shall extend beyond the Maturity Date.

Inventory. All inventory as defined in the Uniform Commercial Code, and including within the term items which would be entered on a balance sheet under the line items for “Inventories” or “China, glassware, silver, linen and uniforms” under the Uniform Systems of Accounts.

Investments. With respect to any Person, all shares of capital stock, evidences of Indebtedness and other securities issued by any other Person and owned by such Person, all loans, advances, or extensions of credit to, or contributions to the capital of, any other Person, all purchases of the securities or business or integral part of the business of any other Person and commitments and options to make such purchases, all interests in real property, and all other investments; provided, however, that the term “Investment” shall not include (x) equipment, inventory and other tangible personal property acquired in the ordinary course of business, or (y) current trade and customer accounts receivable for services rendered in the ordinary course of business and payable in accordance with customary trade terms. In determining the aggregate amount of Investments outstanding at any particular time: (a) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (b) there shall be deducted in respect of each Investment any amount received as a return of capital; (c) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (a) shall be deducted when paid; and (d) there shall not be deducted in respect of any Investment any decrease in the value thereof.

IRSA Note. The convertible note described as item 2 on Schedule 6.24 hereto (without any increases, amendments or modifications thereto).

Issuing Lender. KeyBank, in its capacity as the Lender issuing the Letters of Credit and any successor thereto.

Joinder Agreement. The Joinder Agreement with respect to the Guaranty, the Contribution Agreement, the Indemnity Agreement and the Cash Collateral Agreement to be executed and delivered pursuant to §5.4 by any Additional Guarantor, such Joinder Agreement to be substantially in the form of Exhibit A hereto.

KCM. KeyBanc Capital Markets Inc.

 

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KeyBank. As defined in the preamble hereto.

Land Assets. Land to be used as a Hotel Property with respect to which the commencement of grading, construction of improvements (other than improvements that are not material and are temporary in nature) or infrastructure has not yet commenced and for which no such work is reasonably scheduled to commence within the following twelve (12) months.

Lease. Each lease entered into or assumed by Borrower or a Guarantor with respect to a Borrowing Base Property, as amended, extended or restated. A lease shall not include agreements permitting users to occupy a Hotel Property in the ordinary course of business.

Lender Hedge Provider. With respect to any Hedge Obligations, any counterparty thereto that, at the time the applicable hedge agreement was entered into, was a Lender or an Affiliate of a Lender.

Lenders. KeyBank, the other lending institutions which are party hereto and any other Person which becomes an assignee of any rights of a Lender pursuant to this Agreement (but not including any participant as described in §18). The Issuing Lender shall be a Lender, as applicable. The Swing Loan Lender shall be a Lender.

Letter of Credit. Any standby letter of credit issued at the request of the Borrower and for the account of the Borrower in accordance with §2.10.

Letter of Credit Commitment. An amount equal to Zero and No/100 Dollars ($0.00), as the same may be changed from time to time in accordance with the terms of this Agreement. For the avoidance of doubt, from and after the effectiveness of the Sixth Amendment to Credit Agreement, Issuing Lender has no obligation to issue Letters of Credit.

Letter of Credit Liabilities. At any time and in respect of any Letter of Credit, the sum of (a) the maximum undrawn face amount of such Letter of Credit plus (b) the aggregate unpaid principal amount of all drawings made under such Letter of Credit which have not been repaid (including repayment by a Revolving Credit Loan). For purposes of this Agreement, a Lender (other than the Lender acting as the Issuing Lender) shall be deemed to hold a Letter of Credit Liability in an amount equal to its participation interest in the related Letter of Credit under §2.10, and the Lender acting as the Issuing Lender shall be deemed to hold a Letter of Credit Liability in an amount equal to its retained interest in the related Letter of Credit after giving effect to the acquisition by the Lenders other than the Lender acting as the Issuing Lender of their participation interests under §2.10.

Letter of Credit Request. See §2.10(a).

LIBOR. For any LIBOR Rate Loan for any Interest Period, the average rate as shown in Reuters Screen LIBOR 01 Page (or any successor service, or if such Person no longer reports such rate as determined by the Agent, by another commercially available source providing such quotations approved by the Agent) at which deposits in U.S. dollars are offered by first class banks in the London Interbank Market at approximately 11:00 a.m. (London time) on the day that is two (2) LIBOR Business Days prior to the first day of such Interest Period with a maturity

 

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approximately equal to such Interest Period and in an amount approximately equal to the amount to which such Interest Period relates, adjusted for reserves and taxes if required by future regulations. If such service or such other Person approved by the Agent described above no longer reports such rate or the Agent determines in good faith that the rate so reported no longer accurately reflects the rate available to the Agent in the London Interbank Market, Loans shall accrue interest at the Base Rate plus the Applicable Margin for such Loan. For any period during which a Reserve Percentage shall apply, LIBOR with respect to LIBOR Rate Loans shall be equal to the amount determined above divided by an amount equal to 1 minus the Reserve Percentage. Notwithstanding the foregoing, if the rate shown on Reuters Screen LIBOR01 Page (or any successor service designated pursuant to this definition) shall be less than positive 0.50%, such rate shall be deemed to be positive 0.50% for the purposes of this Agreement.

LIBOR Business Day. Any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London, England.

LIBOR Lending Office. Initially, the office of each Lender designated as such on Schedule 1.1 hereto; thereafter, such other office of such Lender, if any, that shall be making or maintaining LIBOR Rate Loans.

LIBOR Rate Loans. Those Loans bearing interest calculated by reference to LIBOR.

Licenses. All certifications, permits, licenses and approvals, including certificates of completion, certificates of occupancy, and food and beverage and liquor licenses, required for the legal use, occupancy and operation of a Borrowing Base Property as used at the time at which it is added to the Borrowing Base Property and from time to time thereafter.

Lien. See §8.2.

Liquidity. As of any date of determination, the sum of (i) Unrestricted Cash and Cash Equivalents of the REIT and its Subsidiaries plus (ii) the amount of Revolving Credit Loans (including the unfunded Interest Holdback) which may be borrowed under this Agreement by Borrower.

Liquidity Trigger Event. A Liquidity Trigger Event shall be deemed to have occurred if at any time the Liquidity of Borrower shall be less than $6,000,000.00 and such deficiency is not cured by the infusion of new Subordinate Debt within fifteen days of such occurrence; provided if thereafter the Borrower shall deliver evidence reasonably satisfactory to Agent that Liquidity is equal to or greater than $6,000,000.00, then such Liquidity Trigger Event shall terminate until Liquidity shall thereafter be less than $6,000,000.00.

LLC Division. In the event Borrower or any Guarantor is a limited liability company, (i) the division of Borrower or any such Guarantor into two or more newly formed limited liability companies (whether or not Borrower or any such Guarantor is a surviving entity following any such division) pursuant to, in the event Borrower or any such Guarantor is organized under the laws of the State of Delaware, Section 18-217 of the Delaware Limited Liability Company Act or, in the event Borrower or any such Guarantor is organized under the laws of a

 

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State or Commonwealth of the United States (other than Delaware) or of the District of Columbia, any similar provision under any similar act governing limited liability companies organized under the laws of such State or Commonwealth or of the District of Columbia, or (ii) the adoption of a plan contemplating, or the filing of any certificate with any applicable Governmental Authority that results or may result in, any such division.

Loan Documents. This Agreement, the Notes, the Guaranty, each Letter of Credit Request, the Security Documents, and all other documents, instruments or agreements now or hereafter executed or delivered by or on behalf of the Borrower or any Guarantor in connection with the Loans.

Loan Request. See §2.7.

Loan and Loans. An individual loan or the aggregate loans (including a Revolving Credit Loan and a Swing Loan (or Loans)), as the case may be, in the maximum principal amount of the Total Commitment. All Loans shall be made in Dollars. Amounts drawn under a Letter of Credit shall also be considered Revolving Credit Loans as provided in §2.10.

Make Whole Fee. As defined in Convertible Promissory Notes and Loan Agreements described in the definition of Initial Subordinate Debt.

Management Agreements. An agreement entered into by any Subsidiary Guarantor pursuant to which it engages a Manager to manage and operate a Hotel Property.

Management Fees. For any Borrowing Base Property for any period of determination, a deemed base management fee in an amount equal to the greater of (i) the actual base management fees payable with respect to such Borrowing Base Property for such period and (ii) an amount equal to four percent (4%) of Gross Hotel Revenues from such Borrowing Base Property for such period.

Management Projections. In the event that under this Agreement REIT or any of its Subsidiaries is required to provide a budget projection for the following four (4) calendar quarters, and to the extent property level budgets from Managers or capital expenditure requirements from Franchisors are not available, then such projections as to such matters at such Real Estate shall be made by the REIT on a best efforts basis based upon information available to it and market conditions and prospects.

Manager. The management company that manages and operates a Hotel Property pursuant to the Management Agreement for such Hotel Property.

Mandatorily Redeemable Stock. With respect to any Person, any Equity Interest of such Person which by the terms of such Equity Interest (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than an Equity Interest to the extent redeemable in exchange for common stock or other equivalent common Equity Interests), (b) is convertible into or exchangeable or exercisable for Indebtedness or Mandatorily Redeemable Stock, or (c) is redeemable at the option of the holder thereof, in whole or in part (other than an Equity Interest which is redeemable solely in exchange for common stock or other equivalent common Equity Interests).

 

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Material Adverse Effect. A material adverse effect on (a) the business, properties, assets, condition (financial or otherwise), prospects or results of operations of REIT and its Subsidiaries, taken as a whole; (b) the ability of the Borrower or any Guarantor to perform any of its material obligations under the Loan Documents; (c) the validity or enforceability of any of the Loan Documents or the creation, perfection and priority of any Liens of the Agent in the Collateral; or (d) the rights or remedies of the Agent or the Lenders thereunder. For the avoidance of doubt, the effects of the outbreak of the novel coronavirus (COVID-19) shall not constitute a Material Adverse Effect.

Material Contract. Collectively, (i) each contract (excluding purchase and sale contracts for Real Estate) to which the REIT or any of its Subsidiaries is a party involving aggregate consideration payable to or by the REIT or such Subsidiary in an amount of Three Million and No/100 Dollars ($3,000,000.00) or more, and (ii) each Operating Lease, each Management Agreement and each Franchise Agreement. For the avoidance of doubt, any contract to which the REIT is a party or which otherwise relates to the purchase or sale of securities (including, but not limited to, underwriting agreements and private placement agreements) shall not constitute a Material Contract.

Material Renovation. Any Renovation to any Hotel Property (whether separately or as part of an overall plan or other similar related renovations, even if not performed at the same time) that has resulted, or is reasonably expected to result in, twenty percent (20%) or more of the rooms in such Hotel Property not being available for occupancy for a period of forty-five (45) days or more.

Material Subsidiary. Material Subsidiaries shall mean (i) any Wholly-Owned Subsidiary of Borrower or REIT that directly or indirectly owns or leases an interest in a Borrowing Base Property and (ii) any Wholly-Owned Subsidiary of Borrower or REIT which is not an Excluded Subsidiary.

Maturity Date. April 1, 2021, as the same may be extended as provided in §2.12,January 2, 2023, or such earlier date on which the Loans shall become due and payable pursuant to the terms hereof.

Merger Agreement. See §3.2(c)(ii).

Moody’s. Moody’s Investor Service, Inc., and any successor thereto.

Mortgage Constant. As of any date of determination, the monthly factoran amount determined by the Agent by reference to a standard level constant payment table for a fully amortizing loan with a maturity of thirty (30) years based upon an assumedto be equal to the annual principal and interest payment sufficient to amortize in full over a thirty (30) year period a loan amount equal to the aggregate Outstanding principal balance of all Loans and Swing Loans and Letter of Credit Liabilities calculated using a per annum interest rate equal to the greatest of (i) the ten-year U.S. Treasury rate plus 3.0%2.5% and (ii) 6.50% and (iii) the weighted average interest rate then applicable to outstanding Loans5.0%.

 

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Mortgage Note Receivables. A first priority mortgage loan on a completed Hotel Property of the type permitted by §8.3(o), and which Mortgage Note Receivable includes, without limitation, the indebtedness secured by a related first priority security instrument.

Mortgages. The Mortgages, Deeds to Secure Debt and/or Deeds of Trust from Borrower or a Subsidiary Guarantor (which shall include at the Agent’s option the applicable TRS Lessee) to the Agent for the benefit of the Lenders (or to trustees named therein acting on behalf of the Agent for the benefit of the Lenders), as the same may be modified or amended, pursuant to which Borrower or a Subsidiary Guarantor has conveyed or granted a mortgage lien upon or a conveyance in fee simple (or of a leasehold under a Ground Lease, as applicable) (or with respect to a TRS Lessee, its leasehold interest under the Operating Lease and its other assets) of a Borrowing Base Property as security for the Obligations, each such mortgage entered into after the date hereof to be substantially in the form of the initial Mortgages executed and delivered by Borrower or the Subsidiary Guarantors on the Closing Date, with such changes thereto as Agent may reasonably require as a result of state law or practice.

Multiemployer Plan. Any multiemployer plan within the meaning of Section 3(37) of ERISA maintained or contributed to by REIT or any ERISA Affiliate.

Net Cash Flow. The amount of cash available to be disbursed pursuant to Section 6.2(b)(vii) of the Cash Flow Waterfall.

Net Income (or Loss). With respect to any Person (or any asset of any Person) with respect to any period, the net income (or loss) of such Person (or attributable to such asset), determined in accordance with GAAP.

Net Offering Proceeds. The total gross cash proceeds received by REIT or any of its Subsidiaries as a result of an Equity Offering or as a result of receipt of any contribution of capital less the customary and reasonable costs, expenses and discounts paid by REIT or such Subsidiary in connection therewith. Net Offering Proceeds shall include any and all amounts advanced by the Subordinate Lenders to the REIT as Subordinate Debt.

Net Operating Income. For any Real Estate as of any date of determination, an amount equal to (A) the total Gross Hotel Revenues of such Real Estate during such period; minus (B) the sum of all expenses and other proper charges incurred in connection with and directly attributable to the ownership and operation of such Real Estate during such period (including real estate taxes, Management Fees, Franchise Fees, payments under ground leases, insurance premiums, and bad debt expenses, but excluding any general and administrative expense, impairment charges, and any non-cash charges (such as depreciation or amortization of financing costs) related to the operation of the Borrower.

 

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Net Sale Proceeds. With respect to any sale, conveyance, transfer or other disposition of any Real Estate by the Borrower or any of its Subsidiaries (each referred to for the purposes of this definition as a “disposition”), the aggregate cash payments or other cash equivalent financial instruments received by Borrower or such Subsidiary from such disposition (including, without limitation, cash received by way of deferred payment pursuant to a note receivable, conversion of non-cash consideration, cash payments in respect of purchase price adjustments or otherwise, but only as and when such cash is received), minus the direct out-of-pocket costs and expenses paid to unaffiliated third parties incurred in connection with such disposition.

Ninth Amendment to Credit Agreement. The Ninth Amendment to Credit Agreement and Other Loan Documents dated November 18, 2020 among Borrower, Guarantors, Agent and the Lenders.

Non-Consenting Lender. See §18.8.

Non-Defaulting Lender. At any time, any Lender that is not a Defaulting Lender at such time.

Non-Recourse Exclusions. With respect to any Non-Recourse Indebtedness of any Person, any usual and customary exclusions from the non-recourse limitations governing such Indebtedness, including, without limitation, exclusions for claims that (a) are based on fraud, intentional or material misrepresentation, misapplication of funds, gross negligence or willful misconduct, (b) result from intentional mismanagement of or waste at the Real Property securing such Non-Recourse Indebtedness, (c) arise from the presence of Hazardous Substances on the Real Property securing such Non-Recourse Indebtedness, (d) are the result of any unpaid real estate taxes and assessments (whether contained in a loan agreement, promissory note, indemnity agreement or other document) or (e) result from the borrowing Subsidiary and/or its assets becoming the subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding.

Non-Recourse Indebtedness. With respect to a Person, (a) Indebtedness for borrowed money in respect of which recourse for payment (except for Non-Recourse Exclusions until a claim is made with respect thereto, and then such Indebtedness shall not constitute Non-Recourse Indebtedness only to the extent of the amount of such claim) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness or (b) if such Person is a Single Asset Entity, any Indebtedness solely of such Person (except for guarantees of Non-Recourse Exclusions by another Person).

Notes. Collectively, the Revolving Credit Notes and the Swing Loan Note.

Notice. See §19.

Obligations. All indebtedness, obligations and liabilities of the Borrower or any Guarantor to any of the Lenders or the Agent, individually or collectively, under this Agreement or any of the other Loan Documents or in respect of any of the Loans, the Notes or the Letters of Credit, or other instruments at any time evidencing any of the foregoing, whether existing on the date of this Agreement or arising or incurred hereafter, or whether arising before or after any bankruptcy or insolvency proceeding, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise.

 

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OFAC. Office of Foreign Asset Control of the Department of the Treasury of the United States of America, or any successor thereto carrying out similar functions.

Off-Balance Sheet Obligations. Liabilities and obligations of REIT or any of its Subsidiaries or any other Person in respect of “off-balance sheet arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act, which REIT would be required to disclose in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of REIT’s report on Form 10-Q or Form 10-K (or their equivalents) which REIT is required to file with the SEC or would be required to file if it were subject to the jurisdiction of the SEC (or any Governmental Authority substituted therefor).

Operating Lease. The operating lease of a Borrowing Base Property between the Borrower or applicable Subsidiary Guarantor that owns such Borrowing Base Property (whether in fee simple or subject to a Ground Lease) and the applicable TRS Lessee that leases such Borrowing Base Property, as each may be amended, restated, supplemented or otherwise modified from time to time.

Other Connection Taxes. With respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

Other Taxes. All present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to §4.14 as a result of costs sought to be reimbursed pursuant to §4.3).

Outstanding. With respect to the Loans, the aggregate unpaid principal thereof as of any date of determination. With respect to Letters of Credit, the aggregate undrawn face amount of issued Letters of Credit.

Participant Register. See §18.4.

Patriot Act. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.

PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of ERISA and any successor entity or entities having similar responsibilities.

Permits. With respect to any Person, any permit, approval, authorization, license, registration, certificate, concession, grant, franchise, variance or permission from, and any other contractual obligations with, any Governmental Authority, in each case whether or not having the force of law and applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

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Permitted Borrowings. The uses for which the Borrowing Availability may be used by Borrower, which shall be limited to (a) payment of interest and fees due and payable under this Agreement, (b) such other items as approved by the Required Lenders and set forth in the Approved Budget, (c) payment of items set forth in the Approved Budget for which there is insufficient cash due to unanticipated revenue shortfalls not covered by cost savings, (d) new items not included in the Approved Budget and approved by the Required Lenders, and (e) to the extent not included in the Approved Budget, payment of up to $500,000.00 of the Make Whole Fee (less any amount paid from funds of the Borrower or the REIT). Permitted Borrowings shall be further subject to the terms of §7.23.

Permitted Liens. Liens, security interests and other encumbrances permitted by §8.2.

Person. Any individual, corporation, limited liability company, partnership, trust, unincorporated association, business, or other legal entity, and any government or any governmental agency or political subdivision thereof.

PIP. A property improvement plan for a Hotel Property prepared by a Franchisor or a Manager of such Hotel Property.

Plan Assets. Assets of any employee benefit plan subject to Part 4, Subtitle B, Title I of ERISA.

Potential Collateral. Any Real Estate which is not at the time included in the Collateral and which Real Estate consists of (i) Eligible Real Estate and the related rights under an Operating Lease, or (ii) Real Estate which is capable of becoming Eligible Real Estate through the approval of the Required Lenders and the related rights under the Operating Lease, and the completion and delivery of Borrowing Base Qualification Documents as required by the Agent and the related rights under an Operating Lease.

PPP Loan. See §8.1.

Preferred Distributions. With respect to any period and without duplication, all Distributions paid, declared but not yet paid or otherwise due and payable during such period on Preferred Securities issued by REIT or any of its Subsidiaries, whether now issued and outstanding or hereafter issued and outstanding. Preferred Distributions shall not include dividends or distributions: (a) paid or payable solely in Equity Interests (other than Mandatorily Redeemable Stock) of identical class payable to holders of such class of Equity Interests; or (b) paid or payable to the Borrower or any of its Subsidiaries.

Preferred Securities. With respect to any Person, Equity Interests in such Person which are entitled to preference or priority over any other Equity Interest in such Person in respect of the payment of dividends or distribution of assets upon liquidation, or both.

 

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Project Approvals. See §6.23(a)(v).

Qualified Capital Raise. The Qualified Capital Raise shall be deemed to have occurred at such time as Agent shall have received from Borrower evidence reasonably satisfactory to Agent of the occurrence after May 11, 2017 of one or more Equity Offerings of common shares of the REIT that shall have resulted in REIT receiving not less than $50,000,000.00 in gross equity proceeds and that the net proceeds thereof have been contributed to Borrower.

Publicly Available Information. See §18.7.

Real Estate. All real property, including, without limitation, the Borrowing Base Properties, at the time of determination then owned or leased (as lessee or sublessee) in whole or in part or operated by REIT or any of its Subsidiaries, or an Unconsolidated Affiliate of the Borrower and which is located in the United States of America or the District of Columbia.

Recipient. The Agent and any Lender.

Record. The grid attached to any Note, or the continuation of such grid, or any other similar record, including computer records, maintained by the Agent with respect to any Loan referred to in such Note.

Recourse Indebtedness. As of any date of determination, any Indebtedness (whether secured or unsecured) which is recourse to REIT or any of its Subsidiaries. Recourse Indebtedness shall not include Non-Recourse Indebtedness, but shall include any Non-Recourse Exclusions at such time a written claim is made with respect thereto.

Recurring Capital Expenditures. Items that would be reflected in the “hotel and property operations” line item of REIT’s financial statements for repairs and maintenance in accordance with GAAP and the Uniform System of Accounts, and consistent with the financial statements delivered to the Agent prior to the date of this Agreement.

Register. See §18.2.

REIT. Condor Hospitality Trust, Inc., a Maryland corporation.

REIT Status. With respect to a Person, its status as a real estate investment trust as defined in Section 856(a) of the Code.

Related Fund. With respect to any Lender which is a fund that invests in loans, any Affiliate of such Lender or any other fund that invests in loans that is managed by the same investment advisor as such Lender or by an Affiliate of such Lender or such investment advisor.

Release. Any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping (other than (i) storing of materials in reasonable quantities to the extent necessary for the operation of property in the ordinary course of business, and in any event in compliance with all Environmental Laws and (ii) any isolated and de minimis spills or other dispositions of Hazardous Substances which do not give rise to any obligation to notify or report to any Governmental Authority and which do not violate any Environmental Law) of Hazardous Substances.

 

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Renovations. Any renovations, remodeling, expansion, refurbishment or other capital improvements to a Hotel Property.

Representative. See §14.16.

Required Lenders. As of any date, the Lender or Lenders whose aggregate Commitment Percentage is equal to or greater than sixty-six and 67/100 percent (66.67%) of the Total Commitment; provided that in determining said percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded and the Commitment Percentages of the Lenders shall be redetermined for voting purposes only to exclude the Commitment Percentages of such Defaulting Lenders; provided that if there are three (3) or fewer Lenders, then Required Lenders shall mean all Lenders that are Non-Defaulting Lenders.

Requirements. See §6.22(a)(iii).

Reserve Percentage. For any Interest Period, that percentage which is specified three (3) Business Days before the first day of such Interest Period by the Board of Governors of the Federal Reserve System (or any successor) or any other Governmental Authority with jurisdiction over the Agent or any Lender for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirement) for the Agent or any Lender with respect to liabilities constituting of or including (among other liabilities) Eurocurrency liabilities in an amount equal to that portion of the Loan affected by such Interest Period and with a maturity equal to such Interest Period.

Restricted Cash. As of any date of determination, the aggregate amount of cash that is subject to any escrow, cash trap, reserves, Liens or claims of any kind in favor of any Person.

Revolving Credit Loan or Loans. An individual Revolving Credit Loan or the aggregate Revolving Credit Loans, as the case may be, in the maximum principal amount of the Total Commitment to be made by the Lenders hereunder as more particularly described in §2. Without limiting the foregoing, Revolving Credit Loans shall also include Revolving Credit Loans made pursuant to §2.10(f).

Revolving Credit Notes. See §2.1(b).

Sanctions Laws and Regulations. Any applicable sanctions, prohibitions or requirements imposed by any applicable executive order or by any applicable sanctions program administered by OFAC, the United Nations Security Council, the European Union or Her Majesty’s Treasury.

S&P. S&P Global, Inc.

SEC. The federal Securities and Exchange Commission.

 

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Secured Indebtedness. With respect to REIT and its Subsidiaries as of any given date, the aggregate principal amount of all Indebtedness of such Persons outstanding at such date and that is secured in any manner by any Lien.

Securities Act. The Securities Act of 1933, as amended from time to time, together with all rules and regulations issued thereunder.

Security Agreement. The Security Agreement dated as of the date hereof among the Agent and the TRS Lessees now or hereafter a party thereto, and any joinder thereto.

Security Documents. Collectively, the Joinder Agreements, the Mortgages, the Assignments of Leases and Rents, the Security Agreement, the Borrower Security Agreement, the Indemnity Agreement, the Guaranty, the UCC-1 financing statements and any further collateral assignments to the Agent for the benefit of the Lenders.

Series D Preferred Stock. The REIT’s 6,245,156 shares of 6.25% Series D Preferred Stock issued on March 16, 2016 pursuant to the Amended and Restated Articles of Incorporation of the REIT, as amended.

Single Asset Entity. A bankruptcy remote, single purpose entity which is a Subsidiary of the Borrower and which is not a Subsidiary Guarantor or an owner of a direct or indirect interest in a Subsidiary Guarantor which owns real property and related assets which are security for Indebtedness of such entity, and which Indebtedness does not constitute Indebtedness of any other Person except as provided in the definition of Non-Recourse Indebtedness (except for Non-Recourse Exclusions).

Sixth Amendment to Credit Agreement. The Sixth Amendment to Credit Agreement and Other Loan Documents dated March 30, 2020 among Borrower, Guarantors, Agent and the Lenders.

Stabilized Properties. Hotel Properties that are open for business, have at least one (1) full year of operating history, and are not subject to a Material Renovation.

State. A state of the United States of America and the District of Columbia.

Submarket. Submarket shall have the meaning as used by Smith Travel Research in its STAR Report (or if such report shall no longer be available to Agent or such term shall no longer be used in such report, then such other definition as Agent may reasonably determine).

Subordinate Debt. Collectively the Initial Subordinate Debt and any Future Subordinate Debt.

Subordinate Debt Terms. Any Subordinate Debt (and related note) issued or made by the REIT (a) shall have a minimum remaining term of not less than the then effective Maturity Date or any earlier date approved by the Super-Required Lenders in connection with the Initial Subordinate Debt, (b) shall be Unsecured Indebtedness and not guaranteed by any other Person, (c) shall impose no financial, negative or other covenants (or other covenants, representations or

 

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defaults which have the same practical effect thereof) on the REIT, the Borrower or their respective Subsidiaries, (d) pursuant to which all claims and liabilities of the REIT with respect thereto are subordinate to the payment of the Obligations of the Borrower, the REIT and the Guarantors on terms acceptable to the Agent pursuant to a Subordination and Standstill Agreement, and (e) which is otherwise approved in writing by the Required Lenders in their sole, exclusive and unfettered discretion (provided that the Required Lenders shall not withhold their approval of any document evidencing Future Subordinate Debt in the event that it is in the form of the Convertible Promissory Note and Loan Agreement attached hereto as Exhibit K (except that the interest rate may vary and there may be other modifications that are immaterial to the Lenders (it being agreed that, for example, the addition of covenants, required payments and defaults shall be material)), provided that such document evidencing Future Subordinate Debt shall not contain any requirement to pay any interest or fees other than on the maturity date thereof which is in accordance with clause (a) of this definition above).

Subordinate Lenders. Collectively, the Initial Subordinate Lender and the Future Subordinate Lenders.

Subordination and Standstill Agreements. Collectively, the Initial Subordination and Standstill Agreement and each Future Subordination and Standstill Agreement.

Subsidiary. For any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons the accounts of which are consolidated with those of such Person pursuant to GAAP. Notwithstanding any ownership interest in the Borrower, the Borrower shall at all times be considered a Subsidiary of REIT.

Subsidiary Guarantor. Each Person, other than REIT and General Partner that is a party to the Guaranty as of the date of this Agreement and each Additional Guarantor.

Super-Required Lenders. As of any date, the Lender or Lenders whose aggregate Commitment Percentage is equal to or greater than eighty percent (80.0%) of the Total Commitment; provided that if there are three (3) or more Non-Defaulting Lenders, then the Super-Required Lenders shall also be not less than three (3) Non-Defaulting Lenders; and provided further that in determining said percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded and the Commitment Percentages of the Lenders shall be redetermined for voting purposes only to exclude the Commitment Percentages of such Defaulting Lenders.

Survey. An instrument survey of each parcel of Borrowing Base Property prepared by a registered land surveyor which shall show the location of all buildings, structures, easements and utility lines on such property, shall be sufficient to remove with respect to the Tier I Properties the standard survey exception from the Title Policy, shall show that all buildings and structures

 

36


are within the lot lines of the Borrowing Base Property and shall not show any encroachments by others (or to the extent any encroachments are shown, such encroachments shall be acceptable to the Agent in its reasonable discretion), shall show rights of way, adjoining sites, establish building lines and street lines, the distance to and names of the nearest intersecting streets and such other details as the Agent may reasonably require; and shall show whether or not the Borrowing Base Property is located in a flood hazard district as established by the Federal Emergency Management Agency or any successor agency or is located in any flood plain, flood hazard or wetland protection district established under federal, state or local law, shall contain a certification satisfactory to Agent, and shall otherwise be in form and substance reasonably satisfactory to the Agent.

Swing Loan. See §2.5(a).

Swing Loan Commitment. An amount equal to Zero and No/100 Dollars ($0.00), as the same may be changed from time to time in accordance with the terms of this Agreement. For the avoidance of doubt, from and after the effectiveness of the Sixth Amendment to Credit Agreement, Swing Loan Lender has no obligation to make Swing Loans.

Swing Loan Lender. KeyBank, in its capacity as Swing Loan Lender and any successor thereof.

Swing Loan Note. See §2.5(b).

Taking. The taking or appropriation (including by deed in lieu of condemnation) of any Borrowing Base Property, or any part thereof or interest therein, whether permanently or temporarily, for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation proceeding, or in any other manner or any damage or injury or diminution in value through condemnation, inverse condemnation or other exercise of the power of eminent domain.

Taxes. All present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Tier I Properties. Collectively the Hotel Properties owned or leased under a Ground Lease by a Wholly-Owned Subsidiary of Borrower that is Eligible Real Estate and leased under an Operating Lease by a TRS Lessee and which satisfy the requirements of §7.20(a) (other than §7.20(a)(vi)) that have been included as Borrowing Base Properties and not removed from the calculation of Debt Yield. The initial Tier I Properties as of the date of this Agreement are described on Schedule 1.3 hereto.

Tier II Properties. Collectively the Hotel Properties owned or leased under a Ground Lease by Borrower or a Wholly-Owned Subsidiary of Borrower that is Eligible Real Estate and leased under an Operating Lease by a TRS Lessee and which satisfy the requirements of §7.20 (a) (other than §7.20(a)(v)) that have been included as Borrowing Base Properties and not removed from the calculation of Debt Yield. The initial Tier II Properties as of the date of this Agreement are described on Schedule 1.3 hereto.

 

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Title Insurance Company. Any title insurance company or companies approved by the Agent and the Borrower.

Title Policy. With respect to each of the Borrowing Base Properties, an ALTA standard form title insurance policy (or, if such form is not available, an equivalent, legally promulgated form of mortgagee title insurance policy reasonably acceptable to the Agent) issued by a Title Insurance Company (with such reinsurance as the Agent may reasonably require, any such reinsurance to be with direct access endorsements to the extent available under Applicable Law) in an amount as the Agent may reasonably require based upon the fair market value of the applicable Borrowing Base Property (but in any event not to exceed 110% of fair market value) insuring the priority of the Mortgage thereon and that the Borrower or a Subsidiary Guarantor, as applicable, holds marketable or indefeasible (with respect to Texas) fee simple title or a valid and subsisting leasehold interest to such parcel, subject only to the encumbrances acceptable to Agent in its reasonable discretion and which shall not contain standard exceptions for mechanics liens, persons in occupancy (other than tenants as tenants only under Leases) or matters which would be shown by a survey (other than with respect to any Tier II Properties as to which the survey delivered in connection with the closing under this Agreement has not been updated), shall not insure over any matter except to the extent that any such affirmative insurance is acceptable to the Agent in its reasonable discretion, and shall contain (a) a revolving credit endorsement and (b) such other endorsements and affirmative insurance as the Agent may reasonably require and is available in the State in which the Borrowing Base Property is located, including but not limited to (i) a comprehensive endorsement, (ii) a variable rate of interest endorsement, (iii) a usury endorsement, (iv) a doing business endorsement, (v) if required by Agent, an ALTA form 3.1 zoning endorsement, (vi) a “tie-in” endorsement relating to all Title Policies issued by such Title Insurance Company in respect of other Borrowing Base Properties, (vii) “first loss” and “last dollar” endorsements, and (viii) a utility location endorsement. With respect to each Borrowing Base Property as to which Agent does not receive a Mortgage, an ALTA standard form owner’s title insurance policy (or, if such form is not available, an equivalent, legally promulgated form of owner’s title insurance policy reasonably acceptable to the Agent) issued by a Title Insurance Company (with such reinsurance as the Agent may reasonably require, any such reinsurance to be with direct access endorsements to the extent available under Applicable Law) in an amount approved by the Agent insuring that the Subsidiary Guarantor holds marketable or indefeasible (with respect to Texas) fee simple title or a valid and subsisting leasehold interest to such parcel, subject only to the encumbrances acceptable to Agent in its reasonable discretion and which shall not contain standard exceptions for mechanics liens, persons in occupancy (other than tenants as tenants only under Leases) or matters which would be shown by a survey, and shall not insure over any matter except to the extent that any such affirmative insurance is acceptable to the Agent in its reasonable discretion.

Titled Agents. The Arranger, and any syndication agent or documentation agent.

Total Commitment. The sum of the Commitments of the Lenders, as in effect from time to time. As of May 13,November 18, 2020, the Total Commitment is One Hundred Thirty-Six Million Eighty Thousand and No/100 Dollars ($136,080,000.00). The Total Commitment may increase in accordance with §2.11.130,000,000.00).

 

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TRS. TRS Leasing, Inc., a Virginia corporation.

TRS Lessee. TRS and each Wholly-Owned Subsidiary of TRS that is a lessee of a Borrowing Base Property pursuant to an Operating Lease. Each TRS Lessee shall be a Subsidiary Guarantor.

Type. As to any Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.

Unconsolidated Affiliate. In respect of any Person, any other Person in whom such Person holds an Investment, which Investment is accounted for in the financial statements of such Person on an equity basis of accounting and whose financial results would not be consolidated under GAAP with the financial results of such first Person on the consolidated financial statements of such first Person if such financial statements were prepared in accordance with the full consolidation method of GAAP as of such date.

Unhedged Variable Rate Debt. Any Indebtedness with respect to which the interest is not fixed (or hedged to a fixed rate) for the entire term of such Indebtedness to maturity.

Uniform System of Accounts. The Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition, 2014, as published by the Educational Institute of the American Hotel & Motel Association, as revised from time to time to the extent such revision has been or is in the process of being generally implemented within such Uniform System of Accounts.

Unrestricted Cash and Cash Equivalents. As of any date of determination, the sum of (a) the aggregate amount of Unrestricted cash and (b) the aggregate amount of Unrestricted Cash Equivalents (valued at fair market value). As used in this definition, “Unrestricted” means the specified asset is not subject to any escrow, cash trap, reserves, Liens or claims of any kind in favor of any Person.

Unsecured Indebtedness. Indebtedness of a Person outstanding at any time which is not Secured Indebtedness.

Unused Fee. See §2.3.

Unused Fee Percentage. With respect to any day during a calendar quarter, (a) 0.20% per annum, if the sum of the Revolving Credit Loans, Swing Line Loans and Letter of Credit Liabilities outstanding on such day is more than 50% of the Total Commitment, or (b) 0.25% per annum if the sum of the Revolving Credit Loans, Swing Line Loans and Letter of Credit Liabilities outstanding on such day is less than or equal to 50% of the Total Commitment.

U.S. Person. Any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate. See §4.3(g)(ii)(B)(iii).

West Virginia Lease. The Lease dated March 24, 2016 between Solomons Beacon Inn Limited Partnership as landlord and Beanery 119, LLC as tenant.

 

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Wholly-Owned Subsidiary. As to the Borrower, REIT or TRS, any Subsidiary of the Borrower, REIT or TRS that is directly or indirectly owned one hundred percent (100%) by the Borrower, REIT or TRS, respectively. For the purposes of this Agreement, the Borrower shall be deemed to be a Wholly-Owned Subsidiary of the REIT. Also for purposes of this Agreement, any Subsidiary owned ninety-nine percent (99%) by the Borrower and one percent (1%), directly or indirectly, by the REIT, shall be deemed to be a Wholly-Owned Subsidiary of the Borrower.

Withholding Agent. The REIT, the Borrower, any other Guarantor and the Agent, as applicable.

Write-Down and Conversion Powers. With respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

§1.2 Rules of Interpretation.

(a) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and the terms of this Agreement.

(b) The singular includes the plural and the plural includes the singular.

(c) A reference to any law includes any amendment or modification of such law.

(d) A reference to any Person includes its permitted successors and permitted assigns, and in the event Borrower or a Guarantor is a limited liability company and shall undertake an LLC Division (any such LLC Division being a violation of this Agreement), shall be deemed to include each limited liability company resulting from any such LLC Division.

(e) Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer.

(f) The words “include”, “includes” and “including” are not limiting.

(g) The words “approval” and “approved”, as the context requires, means an approval in writing given to the party seeking approval after full and fair disclosure to the party giving approval of all material facts necessary in order to determine whether approval should be granted.

(h) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the State of New York, have the meanings assigned to them therein.

(i) Reference to a particular “§”, refers to that section of this Agreement unless otherwise indicated.

 

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(j) The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement.

(k) In the event of any change in GAAP after the date hereof or any other change in accounting procedures pursuant to §7.3 which would affect the computation of any financial covenant, ratio or other requirement set forth in any Loan Document, then upon the request of the Borrower or the Agent, the Borrower, the Guarantors, the Agent and the Lenders shall negotiate promptly, diligently and in good faith in order to amend the provisions of the Loan Documents such that such financial covenant, ratio or other requirement shall continue to provide substantially the same financial tests or restrictions of the Borrower and the Guarantors as in effect prior to such accounting change, as determined by the Required Lenders in their good faith judgment. Until such time as such amendment shall have been executed and delivered by the Borrower, the Guarantors, the Agent and the Required Lenders, such financial covenants, ratio and other requirements, and all financial statements and other documents required to be delivered under the Loan Documents, shall be calculated and reported as if such change had not occurred.

(l) Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the REIT or any of its Subsidiaries at “fair value”, as defined therein, (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof

(m) To the extent that any of the representations and warranties contained in this Agreement or any other Loan Document is qualified by “Material Adverse Effect” or any other materiality qualifier, then any further qualifier as to representations and warranties being true and correct “in all material respects” contained elsewhere in the Loan Documents shall not apply with respect to any such representations and warranties.

(n) Notwithstanding the terms of the definitions of Consolidated EBITDA, Fixed Charges, Consolidated Interest Expense, Consolidated Total Asset Value, Consolidated Total Indebtedness, Adjusted Consolidated EBITDA and Funds Available for DistributionLiquidity when determining any results under such definitions which are to be done on a Consolidated Basis, the results of any non-Wholly-Owned Subsidiaries shall not be Consolidated but only the REIT’s Equity Percentage of such Persons shall be included.

(o) If a certain action or event is not prohibited by the terms of this Agreement or the other Loan Documents, such action or event shall be deemed to be expressly permitted under the terms of this Agreement or the other Loan Documents provided that such action or event would not otherwise create or cause a Default or Event of Default.

 

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(p) The interest rate on LIBOR Rate Loans is determined by reference to the LIBOR, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on LIBOR Rate. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. In the event that the London interbank offered rate is no longer available or in certain other circumstances as set forth in §4.16 of this Agreement, such §4.16 provides a mechanism for determining an alternative rate of interest. The Agent will notify the Borrower, pursuant to §4.16, in advance of any change to the reference rate upon which the interest rate on LIBOR Loans is based. However, the Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBOR” or with respect to any alternative or successor rate thereto, or replacement rate therefor or thereof, including, without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjusted pursuant to §4.16, will be similar to, or produce the same value or economic equivalence of, the LIBOR or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

 

§2.

THE CREDIT FACILITY.

 

  §2.1

Revolving Credit Loans.

(a) Subject to the terms and conditions set forth in this Agreement, each of the Lenders severally agrees to lend to the Borrower, and the Borrower may borrow (and repay and reborrow) from time to time between the Closing Date and the Maturity Date upon notice by the Borrower to the Agent given in accordance with §2.7, such sums as are requested by the Borrower for the purposes set forth in §2.9 up to a maximum aggregate principal amount outstanding (after giving effect to all amounts requested) at any one time equal to the lesser of (i) such Lender’s Commitment and (ii) [reserved]; provided, that, in all events no Default or Event of Default shall have occurred and be continuing or would occur; and provided, further, that the outstanding principal amount of the Revolving Credit Loans (after giving effect to all amounts requested), Swing Loans and Letter of Credit Liabilities shall not at any time exceed the Total Commitment or cause a breach of §9.1 or §9.3; and provided further that any Loans on or after the effectiveness of the Sixth Amendment to Credit Agreement shall be limited to (x) the funding of the Interest Reserve Account (as defined in the Cash Collateral Agreement) and (y) if the Commitment Increase is exercised and the property securing the Aloft Atlanta Term Loan becomes a Borrowing Base Property, the repayment of the Aloft Atlanta Term Loan. The Lenders shall have no further obligation to make Loans, but if all of the Lenders elect in their sole, absolute and unfettered discretion to make additional Loans, such Loans shall only be for the purposes approved by all

 

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ofPermitted Borrowings; and provided further that the maximum aggregate principal amount of any Loans on or after the effectiveness of the Ninth Amendment to Credit Agreement shall not exceed the Borrowing Availability. Notwithstanding anything in this Agreement to the contrary, Borrower shall not be entitled to request or obtain an advance of a Revolving Credit Loan more often than one (1) time per calendar month unless approved by the LendersAgent in theirits sole, absolute and unfettered discretion. (excluding any advances to pay interest and fees due and payable under this Agreement). The Revolving Credit Loans shall be made pro rata in accordance with each Lender’s Commitment Percentage. Each request for a Revolving Credit Loan hereunder shall constitute a representation and warranty by the Borrower that all of the conditions required of the Borrower set forth in §§10 and 11 have been satisfied on the date of such request. The Agent may assume that the conditions in §§10 and 11 have been satisfied unless it receives prior written notice from a Lender that such conditions have not been satisfied. No Lender shall have any obligation to make Revolving Credit Loans to the Borrower or participate in Letter of Credit Liabilities in the maximum aggregate principal outstanding balance of more than the lesser of the amount equal to its Commitment Percentage of the Commitments and the principal face amount of its Revolving Credit Note.

(b) The Revolving Credit Loans shall be evidenced by separate promissory notes of the Borrower in substantially the form of Exhibit B hereto (collectively, the “Revolving Credit Notes”), dated of even date with this Agreement (except as otherwise provided in §18.3) and completed with appropriate insertions. One Revolving Credit Note shall be payable to the order of each Lender in the principal amount equal to such Lender’s Commitment or, if less, the outstanding amount of all Revolving Credit Loans made by such Lender, plus interest accrued thereon, as set forth below. The Borrower irrevocably authorizes the Agent to make or cause to be made, at or about the time of the Drawdown Date of any Revolving Credit Loan or the time of receipt of any payment of principal thereof, an appropriate notation on the Agent’s Record reflecting the making of such Revolving Credit Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Revolving Credit Loans set forth on the Agent’s Record shall be prima facie evidence of the principal amount thereof owing and unpaid to each Lender, but the failure to record, or any error in so recording, any such amount on the Agent’s Record shall not limit or otherwise affect the obligations of the Borrower hereunder or under any Revolving Credit Note to make payments of principal of or interest on any Revolving Credit Note when due.

 

  §2.2

[Intentionally Omitted].

§2.3 Unused Fee. The Borrower agrees to pay to the Agent for the account of the Lenders (other than a Defaulting Lender for such period of time as such Lender is a Defaulting Lender) in accordance with their respective Commitment Percentages a facility unused fee (the “Unused Fee”) calculated by multiplying the Unused Fee Percentage applicable to such day, calculated as a per diem rate, times the excess of the Total Commitment over the outstanding principal amount of Revolving Credit Loans, Swing Loans and the face amount of Letters of Credit Outstanding on such day. The Unused Fee shall be payable quarterly in arrears on the first (1st) day of each calendar quarter for the immediately preceding calendar quarter or portion thereof, and on any earlier date on which the Commitments shall be reduced or shall terminate as provided in §2.10, with a final payment on the Maturity Date.

 

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§2.4 Reduction and Termination of the Commitments. The Borrower shall have the right at any time and from time to time upon five (5) Business Days’ prior written notice to the Agent to reduce by $5,000,000.00 or an integral multiple of $1,000,000.00 in excess thereof or to terminate entirely the Commitments, whereupon the Commitments of the Lenders shall be reduced pro rata in accordance with their respective Commitment Percentages of the amount specified in such notice or, as the case may be, terminated, any such termination or reduction to be without penalty except as otherwise set forth in §4.7; provided, however, that no such termination or reduction shall be permitted if, after giving effect thereto, the sum of Outstanding Revolving Credit Loans, the Outstanding Swing Loans and the Letter of Credit Liabilities would exceed the Commitments of the Lenders as so terminated or reduced. The Commitments shall also be reduced as provided in §3.2(cd) and (e). Promptly after receiving any notice from the Borrower delivered pursuant to this §2.4, the Agent will notify the Lenders of the substance thereof. Any reduction of the Commitments shall also result in a proportionate reduction (rounded to the next lowest integral multiple of $100,000.00) in the maximum amount of Swing Loans and Letters of Credit. Upon the effective date of any such reduction or termination, the Borrower shall pay to the Agent for the respective accounts of the Lenders the full amount of any fee under §2.3 then accrued on the amount of the reduction. No reduction or termination of the Commitments may be reinstated.

 

  §2.5

Swing Loan Commitment.

(a) Subject to the terms and conditions set forth in this Agreement, the Swing Loan Lender agrees to lend to the Borrower (the “Swing Loans”), and the Borrower may borrow (and repay and reborrow) from time to time between the Closing Date and the date which is five (5) Business Days prior to the Maturity Date upon notice by the Borrower to the Swing Loan Lender given in accordance with this §2.5, such sums as are requested by the Borrower for the purposes set forth in §2.9 in an aggregate principal amount at any one time outstanding not exceeding the Swing Loan Commitment; provided that in all events (i) no Default or Event of Default shall have occurred and be continuing; and (ii) the outstanding principal amount of the Revolving Credit Loans and Swing Loans (after giving effect to all amounts requested) plus Letter of Credit Liabilities shall not at any time exceed the Total Commitment. Notwithstanding anything to the contrary contained in this §2.5, the Swing Loan Lender shall not be obligated to make any Swing Loan at a time when any other Lender is a Defaulting Lender, unless the Swing Loan Lender is satisfied that the participation therein will otherwise be fully allocated to the Lenders that are Non-Defaulting Lenders consistent with §2.13(c) and the Defaulting Lender shall not participate therein, except to the extent the Swing Loan Lender has entered into arrangements with the Borrower or such Defaulting Lender that are satisfactory to the Swing Loan Lender in its good faith determination to eliminate the Swing Loan Lender’s Fronting Exposure with respect to any such Defaulting Lender, including the delivery of cash collateral. Swing Loans shall constitute “Revolving Credit Loans” for all purposes hereunder. The funding of a Swing Loan hereunder shall constitute a representation and warranty by the Borrower that all of the conditions set forth in §§10 and 11 have been satisfied on the date of such funding. The Swing Loan Lender may assume that the conditions in §§10 and 11 have been satisfied unless the Swing Loan Lender has received written notice from a Lender that such conditions have not been satisfied. Each Swing Loan shall be due and payable within one (1) Business Day of demand by Agent but in any event no later than five (5) Business Days of the date such Swing Loan was provided and the Borrower hereby agrees (to the extent not repaid as contemplated by §2.5(d)) to repay each Swing Loan on or before the date that is five (5) Business Days from the date such Swing Loan was provided. A Swing Loan may not be refinanced with another Swing Loan.

 

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(b) The Swing Loans shall be evidenced by a separate promissory note of the Borrower in substantially the form of Exhibit C hereto (the “Swing Loan Note”), dated the date of this Agreement and completed with appropriate insertions. The Swing Loan Note shall be payable to the order of the Swing Loan Lender in the principal face amount equal to the Swing Loan Commitment, or, if less, the outstanding amount of all Swing Loans, and shall be payable as set forth below. The Borrower irrevocably authorizes the Swing Loan Lender to make or cause to be made, at or about the time of the Drawdown Date of any Swing Loan or at the time of receipt of any payment of principal thereof, an appropriate notation on the Swing Loan Lender’s Record reflecting the making of such Swing Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Swing Loans set forth on the Swing Loan Lender’s Record shall be prima facie evidence of the principal amount thereof owing and unpaid to the Swing Loan Lender, but the failure to record, or any error in so recording, any such amount on the Swing Loan Lender’s Record shall not limit or otherwise affect the obligations of the Borrower hereunder or under the Swing Loan Note to make payments of principal of or interest on any Swing Loan Note when due.

(c) The Borrower shall request a Swing Loan by delivering to the Swing Loan Lender a Loan Request executed by an Authorized Officer no later than 11:00 a.m. (Cleveland time) on the requested Drawdown Date specifying the amount of the requested Swing Loan (which shall be in the minimum amount of $1,000,000.00 or an integral multiple of $250,000.00 in excess thereof) and providing the wire instructions for the delivery of the Swing Loan proceeds. The Loan Request shall also contain the statements and certifications required by §2.7(a) and (b). Each such Loan Request shall be irrevocable and binding on the Borrower and shall obligate the Borrower to accept such Swing Loan on the Drawdown Date. Notwithstanding anything herein to the contrary, a Swing Loan shall be a Base Rate Loan and shall bear interest at the Base Rate plus the Applicable Margin. The proceeds of the Swing Loan will be disbursed by wire by the Swing Loan Lender to the Borrower no later than 1:00 p.m. (Cleveland time).

(d) The Swing Loan Lender shall, within two (2) Business Days after the Drawdown Date with respect to such Swing Loan, request each Lender to make a Revolving Credit Loan pursuant to §2.1 in an amount equal to such Lender’s Commitment Percentage of the amount of the Swing Loan outstanding on the date such notice is given. In the event that the Borrower does not notify the Agent in writing otherwise on or before noon (Cleveland Time) on the Business Day of the Drawdown Date with respect to such Swing Loan, the Agent shall notify the Lenders that such Loan shall be a LIBOR Rate Loan with an Interest Period of one (1) month, provided that the making of such LIBOR Rate Loan will not be in contravention of any other provision of this Agreement, or if the making of a LIBOR Rate Loan would be in contravention of this Agreement, then such notice shall indicate that such loan shall be a Base Rate Loan. The Borrower hereby irrevocably authorizes and directs the Swing Loan Lender to so act on its behalf, and agrees that any amount advanced to the Agent for the benefit of the Swing Loan Lender pursuant to this §2.5(d) shall be considered a Revolving Credit Loan pursuant to §2.1. Unless any of the events described in §§12.1(g), 12.1(h) or 12.1(i) shall have occurred (in which event the procedures of §2.5(e) shall apply), each Lender shall make the proceeds of its Revolving Credit Loan available

 

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to the Swing Loan Lender for the account of the Swing Loan Lender at the Agent’s Head Office prior to 12:00 noon (Cleveland time) in funds immediately available no later than one (1) Business Day after the date such request was made by the Swing Line Lender just as if the Lenders were funding directly to the Borrower, so that thereafter such Obligations shall be evidenced by the Revolving Credit Notes. The proceeds of such Revolving Credit Loan shall be immediately applied to repay the Swing Loans.

(e) If for any reason a Swing Loan cannot be refinanced by a Revolving Credit Loan pursuant to §2.5(d), each Lender will, on the date such Revolving Credit Loan pursuant to §2.5(d) was to have been made, purchase an undivided participation interest in the Swing Loan in an amount equal to its Commitment Percentage of such Swing Loan. Each Lender will immediately transfer to the Swing Loan Lender in immediately available funds the amount of its participation and upon receipt thereof the Swing Loan Lender will deliver to such Lender a Swing Loan participation certificate dated the date of receipt of such funds and in such amount.

(f) Whenever at any time after the Swing Loan Lender has received from any Lender such Lender’s participation interest in a Swing Loan, the Swing Loan Lender receives any payment on account thereof, the Swing Loan Lender will distribute to such Lender its participation interest in such amount (appropriately adjusted in the case of interest payments to reflect the period of time during which such Lender’s participating interest was outstanding and funded); provided, however, that in the event that such payment received by the Swing Loan Lender is required to be returned, such Lender will return to the Swing Loan Lender any portion thereof previously distributed by the Swing Loan Lender to it.

(g) Each Lender’s obligation to fund a Loan as provided in §2.5(d) or to purchase participation interests pursuant to §2.5(e) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (a) any setoff, counterclaim, recoupment, defense or other right which such Lender or the Borrower may have against the Swing Loan Lender, the Borrower or anyone else for any reason whatsoever; (b) the occurrence or continuance of a Default or an Event of Default; (c) any adverse change in the condition (financial or otherwise) of REIT or any of its Subsidiaries; (d) any breach of this Agreement or any of the other Loan Documents by the Borrower or any Guarantor or any Lender; or (e) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. Any portions of a Swing Loan not so purchased or converted may be treated by the Agent and the Swing Loan Lender as against such Lender as a Revolving Credit Loan which was not funded by the non-purchasing Lender, thereby making such Lender a Defaulting Lender. Each Swing Loan, once so sold or converted, shall cease to be a Swing Loan for the purposes of this Agreement, but shall be a Revolving Credit Loan made by each Lender under its Commitment.

 

  §2.6

Interest on Loans.

(a) Each Base Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the date on which such Base Rate Loan is repaid or converted to a LIBOR Rate Loan at the rate per annum equal to the sum of the Base Rate plus the Applicable Margin.

 

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(b) Each LIBOR Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of each Interest Period with respect thereto at the rate per annum equal to the sum of LIBOR determined for such Interest Period plus the Applicable Margin.

(c) The Borrower promises to pay interest on each Loan in arrears on each Interest Payment Date with respect thereto.

(d) Base Rate Loans and LIBOR Rate Loans may be converted to Loans of the other Type as provided in §4.1.

 

  §2.7

Requests for Revolving Credit Loans. The Borrower shall give to the Agent written notice executed by an Authorized Officer in the form of Exhibit D hereto (or telephonic notice confirmed in writing in the form of Exhibit D hereto) of each Revolving Credit Loan requested hereunder (a “Loan Request”) by 11:00 a.m. (Cleveland time) one (1) Business Day prior to the proposed Drawdown Date with respect to Base Rate Loans and three (3) Business Days prior to the proposed Drawdown Date with respect to LIBOR Rate Loans. Each such notice shall specify with respect to the requested Revolving Credit Loan the proposed principal amount of such Revolving Credit Loan, the Type of Revolving Credit Loan, the initial Interest Period (if applicable) for such Revolving Credit Loan and the Drawdown Date, the Drawdown Date, the intended use of the funds (which shall be permitted by this Agreement) and a reconciliation to the Approved Budget through the date of the requested advance, for the balance of the calendar year and for the next four (4) calendar quarters (which as for the next four (4) calendar quarters may in part be based upon the Management Projections). In the event that a Liquidity Trigger Event has occurred, Borrower shall also deliver as part of the Loan Request (a) the specific items for which such advance is requested and the amount thereof, (b) an identification of where such requested items fit within the waterfall set forth in §7.23(d), and (c) evidence satisfactory to the Agent that all other items of higher priority set forth in the waterfall in §7.23(d) have been paid for the month to which such requested advance relates. Promptly upon receipt of any such notice, the Agent shall notify each of the Lenders thereof. Each such Loan Request shall be irrevocable and binding on the Borrower and shall obligate the Borrower to accept the Revolving Credit Loan requested from the Lenders on the proposed Drawdown Date. Nothing herein shall prevent the Borrower from seeking recourse against any Lender that fails to advance its proportionate share of a requested Revolving Credit Loan as required by this Agreement. Each Loan Request shall be (a) for a Base Rate Loan in a minimum aggregate amount of $1,000,000.00 or an integral multiple of $250,000.00 in excess thereof; or (b) for a LIBOR Rate Loan in a minimum aggregate amount of $1,000,000.00 or an integral multiple of $250,000.00 in excess thereof; provided, however, that there shall be no more than six (6) LIBOR Rate Loans outstanding at any one time.

 

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  §2.8

Funds for Loans.

(a) Not later than 1:00 p.m. (Cleveland time) on the proposed Drawdown Date of any Revolving Credit Loans, each of the Lenders, will make available to the Agent, at the Agent’s Head Office, in immediately available funds, the amount of such Lender’s Commitment Percentage of the amount of the requested Loans which may be disbursed pursuant to §2.1. Upon receipt from each such Lender of such amount, and upon receipt of the documents required by §§10 and 11 and the satisfaction of the other conditions set forth therein, to the extent applicable, the Agent will make available to the Borrower the aggregate amount of such Revolving Credit Loans made available to the Agent by the Lenders, as applicable, by crediting such amount to the account of the Borrower maintained at the Agent’s Head Office. The failure or refusal of any Lender to make available to the Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Loans shall not relieve any other Lender from its several obligation hereunder to make available to the Agent the amount of such other Lender’s Commitment Percentage of any requested Loans, including any additional Revolving Credit Loans that may be requested subject to the terms and conditions hereof to provide funds to replace those not advanced by the Lender so failing or refusing.

(b) Unless the Agent shall have been notified by any Lender prior to the applicable Drawdown Date that such Lender will not make available to the Agent such Lender’s Commitment Percentage of a proposed Loan, the Agent may in its discretion assume that such Lender has made such Loan available to the Agent in accordance with the provisions of this Agreement and the Agent may, if it chooses, in reliance upon such assumption make such Loan available to the Borrower, and such Lender shall be liable to the Agent for the amount of such advance. If such Lender does not pay such corresponding amount upon the Agent’s demand therefor, the Agent will promptly notify the Borrower, and the Borrower shall promptly pay such corresponding amount to the Agent. The Agent shall also be entitled to recover from the Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Borrower to the date such corresponding amount is recovered by the Agent at a per annum rate equal to (i) from the Borrower at the applicable rate for such Loan or (ii) from a Lender at the Federal Funds Effective Rate plus one percent (1%).

 

  §2.9

Use of Proceeds. The Borrower will use the proceeds of the Loans solely for (a) payment of interest and fees due under this Agreement, and (b) as permitted in the Sixth Amendment to Credit AgreementPermitted Borrowings.

 

  §2.10

Letters of Credit.

(a) Subject to the terms and conditions set forth in this Agreement, at any time and from time to time from the Closing Date through the day that is ninety (90) days prior to the Maturity Date, the Issuing Lender shall issue such Letters of Credit as the Borrower may request upon the delivery of a written request in the form of Exhibit E hereto (a “Letter of Credit Request”) to the Issuing Lender, provided that (i) no Default or Event of Default shall have occurred and be continuing, (ii) upon issuance of such Letter of Credit, the Letter of Credit Liabilities shall not exceed the Letter of Credit Commitment, (iii) in no event shall the sum of the outstanding principal amount of the Revolving Credit Loans, Swing Loans and Letter of Credit Liabilities (after giving effect to any requested Letters of Credit) exceed the Total Commitment, (iv) the conditions set

 

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forth in §§10 and 11 shall have been satisfied, and (v) in no event shall any amount drawn under a Letter of Credit be available for reinstatement or a subsequent drawing under such Letter of Credit. Notwithstanding anything to the contrary contained in this §2.10, the Issuing Lender shall not be obligated to issue, amend, extend, renew or increase any Letter of Credit at a time when any other Lender is a Defaulting Lender, unless the Issuing Lender is satisfied that the participation therein will otherwise be fully allocated to the Lenders that are Non-Defaulting Lenders consistent with §2.13(c) and the Defaulting Lender shall have no participation therein, except to the extent the Issuing Lender has entered into arrangements with the Borrower or such Defaulting Lender which are satisfactory to the Issuing Lender in its good faith determination to eliminate the Issuing Lender’s Fronting Exposure with respect to any such Defaulting Lender, including the delivery of cash collateral. The Issuing Lender may assume that the conditions in §§10 and 11 have been satisfied unless it receives written notice from a Lender that such conditions have not been satisfied. Each Letter of Credit Request shall be executed by an Authorized Officer of the Borrower. The Issuing Lender shall be entitled to conclusively rely on such Person’s authority to request a Letter of Credit on behalf of the Borrower. The Issuing Lender shall have no duty to verify the authenticity of any signature appearing on a Letter of Credit Request. The Borrower assumes all risks with respect to the use of the Letters of Credit. Unless the Issuing Lender and the Required Lenders otherwise consent, the term of any Letter of Credit shall not exceed a period of time commencing on the issuance of the Letter of Credit and ending one year after the date of issuance thereof (or such longer period as Issuing Lender may approve); provided, however, that a Letter of Credit may contain a provision providing for the automatic extension of the expiration date in the absence of a notice of non-renewal from the Issuing Lender but in no event shall any such provision permit the extension of the expiration date of such Letter of Credit beyond the Maturity Date. The amount available to be drawn under any Letter of Credit shall reduce on a dollar-for-dollar basis the amount available to be drawn under the Total Commitment as a Revolving Credit Loan.

(b) Each Letter of Credit Request shall be submitted to the Issuing Lender at least five (5) Business Days (or such shorter period as the Issuing Lender may approve) prior to the date upon which the requested Letter of Credit is to be issued. The Borrower shall further deliver to the Issuing Lender such additional applications (which application as of the date hereof is in the form of Exhibit F attached hereto) and documents as the Issuing Lender may require, in conformity with the then standard practices of its letter of credit department, in connection with the issuance of such Letter of Credit; provided that in the event of any conflict, the terms of this Agreement shall control.

(c) The Issuing Lender shall, subject to the conditions set forth in this Agreement, issue the Letter of Credit on or before five (5) Business Days following receipt of the documents last due pursuant to §2.10(b). Each Letter of Credit shall be in form and substance reasonably satisfactory to the Issuing Lender in its reasonable discretion.

(d) Upon the issuance of a Letter of Credit, each Lender shall be deemed to have purchased a participation therein from the Issuing Lender in an amount equal to its respective Commitment Percentage of the amount of such Letter of Credit. No Lender’s obligation to participate in a Letter of Credit shall be affected by any other Lender’s failure to perform as required herein with respect to such Letter of Credit or any other Letter of Credit.

 

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(e) Upon the issuance of each Letter of Credit, the Borrower shall pay to the Issuing Lender (i) for its own account, a Letter of Credit fronting fee calculated at the rate equal to one-eighth of one percent (0.125%) per annum of the face amount of such Letter of Credit (which fee shall not be less than $1,500 in any event) and an administrative charge of $250, and (ii) for the accounts of the Lenders (including the Issuing Lender) in accordance with their respective percentage shares of participation in such Letter of Credit, a Letter of Credit fee calculated at the rate per annum equal to the Applicable Margin then applicable to LIBOR Rate Loans on the face amount of such Letter of Credit. Such fees shall be payable in quarterly installments in arrears with respect to each Letter of Credit on the first day of each calendar quarter following the date of issuance and continuing on each quarter or portion thereof thereafter, as applicable, or on any earlier date on which the Commitments shall terminate and on the expiration or return of any Letter of Credit. In addition, the Borrower shall pay to the Issuing Lender for its own account within five (5) days of demand of the Issuing Lender the standard issuance, documentation and service charges for Letters of Credit issued from time to time by the Issuing Lender.

(f) In the event that any amount is drawn under a Letter of Credit by the beneficiary thereof, the Borrower shall reimburse the Issuing Lender by having such amount drawn treated as an outstanding Base Rate Loan under this Agreement (the Borrower being deemed to have requested a Base Rate Loan on such date in an amount equal to the amount of such drawing and such amount drawn shall be treated as an outstanding Base Rate Loan under this Agreement) and the Agent shall promptly notify each Lender by telecopy, email, telephone (confirmed in writing) or other similar means of transmission, and each Lender shall promptly and unconditionally pay to the Agent, for the Issuing Lender’s own account, an amount equal to such Lender’s Commitment Percentage of such Letter of Credit (to the extent of the amount drawn). If and to the extent any Lender shall not make such amount available on the Business Day on which such draw is funded, such Lender agrees to pay such amount to the Agent forthwith on demand, together with interest thereon, for each day from the date on which such draw was funded until the date on which such amount is paid to the Agent, at the Federal Funds Effective Rate until three (3) days after the date on which the Agent gives notice of such draw and at the Federal Funds Effective Rate plus one percent (1%) for each day thereafter. Further, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Revolving Credit Loans, amounts due with respect to its participations in Letters of Credit and any other amounts due to it hereunder to the Agent to fund the amount of any drawn Letter of Credit which such Lender was required to fund pursuant to this §2.10(f) until such amount has been funded (as a result of such assignment or otherwise). In the event of any such failure or refusal, the Lenders not so failing or refusing shall be entitled to a priority secured position for such amounts as provided in §12.5. The failure of any Lender to make funds available to the Agent in such amount shall not relieve any other Lender of its obligation hereunder to make funds available to the Agent pursuant to this §2.10(f).

(g) If after the issuance of a Letter of Credit pursuant to §2.10(c) by the Issuing Lender, but prior to the funding of any portion thereof by a Lender, for any reason a drawing under a Letter of Credit cannot be refinanced as a Revolving Credit Loan, each Lender will, on the date such Revolving Credit Loan pursuant to §2.10(f) was to have been made, purchase an undivided participation interest in the Letter of Credit in an amount equal to its Commitment Percentage of the amount of such Letter of Credit. Each Lender will immediately transfer to the Issuing Lender in immediately available funds the amount of its participation and upon receipt thereof the Issuing Lender will deliver to such Lender a Letter of Credit participation certificate dated the date of receipt of such funds and in such amount.

 

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(h) Whenever at any time after the Issuing Lender has received from any Lender any such Lender’s payment of funds under a Letter of Credit and thereafter the Issuing Lender receives any payment on account thereof, then the Issuing Lender will distribute to such Lender its participation interest in such amount (appropriately adjusted in the case of interest payments to reflect the period of time during which such Lender’s participation interest was outstanding and funded); provided, however, that in the event that such payment received by the Issuing Lender is required to be returned, such Lender will return to the Issuing Lender any portion thereof previously distributed by the Issuing Lender to it.

(i) The issuance of any supplement, modification, amendment, renewal or extension to or of any Letter of Credit shall be treated in all respects the same as the issuance of a new Letter of Credit.

(j) The Borrower assumes all risks of the acts, omissions, or misuse of any Letter of Credit by the beneficiary thereof. Neither the Agent, the Issuing Lender nor any Lender will be responsible for (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any Letter of Credit or any document submitted by any party in connection with the issuance of any Letter of Credit, even if such document should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the form, validity, sufficiency, accuracy, genuineness or legal effect of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of any beneficiary of any Letter of Credit to comply fully with the conditions required in order to demand payment under a Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telecopy, email or otherwise; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document or draft required by or from a beneficiary in order to make a disbursement under a Letter of Credit or the proceeds thereof; (vii) for the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (viii) for any consequences arising from causes beyond the control of the Agent or any Lender. None of the foregoing will affect, impair or prevent the vesting of any of the rights or powers granted to the Agent, the Issuing Lender or the Lenders hereunder. In furtherance and extension and not in limitation or derogation of any of the foregoing, any act taken or omitted to be taken by the Agent, the Issuing Lender or the other Lenders in good faith will be binding on the Borrower and will not put the Agent, the Issuing Lender or the other Lenders under any resulting liability to the Borrower; provided nothing contained herein shall relieve the Issuing Lender for liability to the Borrower arising as a result of the gross negligence or willful misconduct of the Issuing Lender as determined by a court of competent jurisdiction after the exhaustion of all applicable appeal periods.

 

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  §2.11

Increase in Total Commitment[Intentionally Omitted].

(a) Provided that no Default or Event of Default has occurred and is continuing, subject to the terms and conditions set forth in this §2.11, the Borrower shall have the option at any time and from time to time prior to the Maturity Date to request an increase in the Total Commitment by an amount of not more than $34,080,000.00 by giving written notice to the Agent (an “Increase Notice”; and the amount of such requested increase is the “Commitment Increase”). Upon receipt of any Increase Notice, the Agent shall consult with KCM and shall notify the Borrower of the amount of the facility fees to be paid to any Lenders who provide an additional Commitment in connection with such increase in addition to the fees to be paid pursuant to the Agreement Regarding Fees. If the Borrower agrees to pay the facility fees so determined, the Agent shall send a notice to all Lenders (the “Additional Commitment Request Notice”) informing them of the Borrower’s request to increase the Total Commitment and of the facility fees to be paid with respect thereto. Each Lender who desires to provide an additional Commitment upon such terms shall provide Agent with a written commitment letter specifying the amount of the additional Commitment which it is willing to provide prior to such deadline as may be specified in the Additional Commitment Request Notice. If the requested increase is oversubscribed then the Agent and KCM shall allocate the Commitment Increase among the Lenders who provide such commitment letters on such basis as the Agent and KCM, shall determine in their sole discretion. If the additional Commitments so provided are not sufficient to provide the full amount of the Commitment Increase requested by the Borrower, then the Agent, KCM, or the Borrower may, but shall not be obligated to, invite one or more banks or lending institutions (which banks or lending institutions shall be acceptable to Agent, KCM, and the Borrower) to become a Lender and provide an additional Commitment. The Agent shall provide all Lenders with a notice setting forth the amount, if any, of the additional Commitment to be provided by each Lender and the revised Commitment Percentages which shall be applicable after the effective date of the Commitment Increase specified therein (the “Commitment Increase Date”). In no event shall any Lender be obligated to provide an additional Commitment.

(b) On any Commitment Increase Date the outstanding principal balance of the Revolving Credit Loans shall be reallocated among the Lenders such that after the applicable Commitment Increase Date the outstanding principal amount of Revolving Credit Loans owed to each Lender shall be equal to such Lender’s Commitment Percentage (as in effect after the applicable Commitment Increase Date) of the outstanding principal amount of all Revolving Credit Loans. The participation interests of the Lenders in Swing Loans and shall be similarly adjusted. On any Commitment Increase Date, those Lenders whose Commitment Percentage is increasing shall advance the funds to the Agent and the funds so advanced shall be distributed among the Lenders whose Commitment Percentage is decreasing as necessary to accomplish the required reallocation of the outstanding Revolving Credit Loans. The funds so advanced shall be Base Rate Loans until converted to LIBOR Rate Loans which are allocated among all Lenders based on their Commitment Percentages.

(c) Upon the effective date of each increase in the Total Commitment pursuant to this §2.11, the Agent may unilaterally revise Schedule 1.1 to reflect the name and address, Commitment and Commitment Percentage of each Lender following such increase and the Borrower shall execute and deliver to the Agent new Revolving Credit Notes for each Lender whose Commitment has changed so that the principal amount of such Lender’s Revolving Credit Note shall equal its Commitment. The Agent shall deliver such replacement Revolving Credit

 

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Note to the respective Lenders in exchange for the Revolving Credit Notes replaced thereby which shall be surrendered by such Lenders. Such new Revolving Credit Notes shall provide that they are replacements for the surrendered Revolving Credit Notes and that they do not constitute a novation, shall be dated as of the Commitment Increase Date and shall otherwise be in substantially the form of the replaced Revolving Credit Notes. In connection with the issuance of any new Revolving Credit Notes pursuant to this §2.11(c), the Borrower shall deliver an opinion of counsel, addressed to the Lenders and the Agent, relating to the due authorization, execution and delivery of such new Revolving Credit Notes the enforceability thereof, in form and substance substantially similar to the opinion delivered in connection with the first disbursement under this Agreement. The surrendered Revolving Credit Notes shall be canceled and returned to the Borrower.

(d) Notwithstanding anything to the contrary contained herein, the obligation of the Agent and the Lenders to increase the Total Commitment pursuant to this §2.11 shall be conditioned upon satisfaction of the following conditions precedent which must be satisfied prior to the effectiveness of any increase of the Total Commitment:

(i) Payment of Activation Fee. The Borrower shall pay (A) to the Agent and KCM those fees described in and contemplated by the Agreement Regarding Fees with respect to the applicable Commitment Increase, and (B) to KCM such facility fees as the Lenders who are providing an additional Commitment may require to increase the aggregate Commitment, which fees shall, when paid, be fully earned and non-refundable under any circumstances. KCM shall pay to the Lenders acquiring the increased Commitment certain fees pursuant to their separate agreement; and

(ii) No Default. On the date any Increase Notice is given and on the date such increase becomes effective, both immediately before and after the Total Commitment is increased, there shall exist no Default or Event of Default; and

(iii) Representations True. The representations and warranties made by the Borrower in the Loan Documents or otherwise made by or on behalf of the Borrower in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the date of such Increase Notice and on the date the Total Commitment is increased, both immediately before and after the Total Commitment is increased, except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date); and

(iv) Additional Documents and Expenses. The Borrower shall execute and deliver to Agent and the Lenders such additional documents (including, without limitation, amendments to the Security Documents), instruments, certifications and opinions as the Agent may reasonably require in its sole and absolute discretion (including, without limitation, in the case of the Borrower, a Compliance Certificate and Borrowing Base Certificate, demonstrating compliance with all covenants, representations and warranties set forth in the Loan Documents after giving effect to the increase) and the Borrower shall pay the cost of any updated UCC searches, all recording costs and fees, and any and all intangible taxes or other documentary or mortgage taxes, assessments or charges or any similar fees, taxes or expenses which are required to be paid in connection with such increase; and

 

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(v) Other. The Borrower shall satisfy such other conditions to such increase as Agent may require in its reasonable discretion.

 

  §2.12

Extension of Maturity Date[Intentionally Omitted].

(a) The Borrower shall have the one-time right and option to extend the Maturity Date to October 1, 2021 upon satisfaction of the following conditions precedent, which must be satisfied prior to the effectiveness of any extension of the Maturity Date:

(i) Extension Request. The Borrower shall deliver written notice of such request (the “Extension Request”) to the Agent not earlier than the date which is one hundred twenty (120) days and not later than the date which is sixty (60) days prior to the Maturity Date (as determined without regard to such extension). Any such Extension Request shall be irrevocable and binding on the Borrower.

(ii) Payment of Extension Fee. The Borrower shall pay to the Agent for the pro rata accounts of the Lenders in accordance with their respective Commitments an extension fee in an amount equal to forty (40) basis points on the Total Commitment in effect on the Maturity Date (as determined without regard to such extension), which fee shall, when paid, be fully earned and non-refundable under any circumstances.

(iii) No Default. On the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension) there shall exist no Default or Event of Default.

(iv) Representations and Warranties. The representations and warranties made by the Borrower and the Guarantors in the Loan Documents or otherwise made by or on behalf of the Borrower and the Guarantors in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension), except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date).

(v) Pro Forma Covenant Compliance. Borrower shall have delivered to Agent evidence reasonably satisfactory to Agent that Borrower will be in pro forma compliance with §9.1 and the other covenants set forth in §9 immediately after giving effect to the extension.

(vi) Appraisals. At the option of Agent, Agent shall have obtained at Borrower’s expense new Appraisals or an update to the existing Appraisals of the Borrowing Base Properties and determined the current Appraised Value of the Borrowing Base Properties.

 

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(vii) Additional Documents and Expenses. The Borrower and the Guarantors shall execute and deliver to Agent and Lenders such additional consents and affirmations and other documents (including, without limitation, amendments to the Security Documents) as the Agent may reasonably require, and the Borrower shall pay the cost of any title endorsement or update thereto or any update of UCC searches, recordings costs and fees, and any and all intangible taxes or other documentary or mortgage taxes, assessments or charges or any similar fees, taxes or expenses which are required to be paid in connection with such extension.

(b) In the event that the Maturity Date has been extended as provided in §2.12(a), the Borrower shall have the one-time right and option to extend the Maturity Date to March 1, 2022 upon satisfaction of the following conditions precedent, which must be satisfied prior to the effectiveness of any extension of the Maturity Date:

(i) Extension Request. The Borrower shall deliver the Extension Request to the Agent not earlier than the date which is one hundred twenty (120) days and not later than the date which is sixty (60) days prior to the Maturity Date (as determined without regard to such extension). Any such Extension Request shall be irrevocable and binding on the Borrower.

(ii) Payment of Extension Fee. The Borrower shall pay to the Agent for the pro rata accounts of the Lenders in accordance with their respective Commitments an extension fee in an amount equal to fifty (50) basis points on the Total Commitment in effect on the Maturity Date (as determined without regard to such extension), which fee shall, when paid, be fully earned and non-refundable under any circumstances.

(iii) No Default. On the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension) there shall exist no Default or Event of Default.

(iv) Representations and Warranties. The representations and warranties made by the Borrower and the Guarantors in the Loan Documents or otherwise made by or on behalf of the Borrower and the Guarantors in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension), except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date).

(v) Pro Forma Covenant Compliance. Borrower shall have delivered to Agent evidence reasonably satisfactory to Agent that Borrower will be in pro forma compliance with §9.1 and the other covenants set forth in §9 immediately after giving effect to the extension.

(vi) Appraisals. If Agent has not obtained an updated Appraisal pursuant to §2.12(a), then at Agent’s option, Agent shall have obtained at Borrower’s expense new Appraisals or an update to the existing Appraisals of the Borrowing Base Properties and determined the current Appraised Value of the Borrowing Base Properties.

 

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(vii) Additional Documents and Expenses. The Borrower and the Guarantors shall execute and deliver to Agent and Lenders such additional consents and affirmations and other documents (including, without limitation, amendments to the Security Documents) as the Agent may reasonably require, and the Borrower shall pay the cost of any title endorsement or update thereto or any update of UCC searches, recordings costs and fees, and any and all intangible taxes or other documentary or mortgage taxes, assessments or charges or any similar fees, taxes or expenses which are required to be paid in connection with such extension.

 

  §2.13

Defaulting Lenders.

(a) If for any reason any Lender shall be a Defaulting Lender, then, in addition to the rights and remedies that may be available to the Agent or the Borrower under this Agreement or Applicable Law, such Defaulting Lender’s right to participate in the administration of the Loans, this Agreement and the other Loan Documents, including without limitation, any right to vote in respect of, to consent to or to direct any action or inaction of the Agent or to be taken into account in the calculation of the Required Lenders, all of the Lenders or affected Lenders, shall, except as specifically provided in §27, be suspended during the pendency of such failure or refusal. If a Lender is a Defaulting Lender because it has failed to make timely payment to the Agent of any amount required to be paid to the Agent hereunder (without giving effect to any notice or cure periods), in addition to other rights and remedies which the Agent or the Borrower may have under the immediately preceding provisions or otherwise, the Agent shall be entitled (i) to collect interest from such Defaulting Lender on such delinquent payment for the period from the date on which the payment was due until the date on which the payment is made at the Federal Funds Effective Rate plus one percent (1%), (ii) to withhold or setoff and to apply in satisfaction of the defaulted payment and any related interest, any amounts otherwise payable to such Defaulting Lender under this Agreement or any other Loan Document and (iii) to bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest. Any amounts received by the Agent in respect of a Defaulting Lender’s Loans shall be applied as set forth in §2.13(d).

(b) Any Non-Defaulting Lender may, but shall not be obligated, in its sole discretion, to acquire all or a portion of a Defaulting Lender’s Commitments. Any Lender desiring to exercise such right shall give written notice thereof to the Agent and the Borrower no sooner than two (2) Business Days and not later than five (5) Business Days after such Defaulting Lender became a Defaulting Lender. If more than one Lender exercises such right, each such Lender shall have the right to acquire an amount of such Defaulting Lender’s Commitments in proportion to the Commitments of the other Lenders exercising such right. If after such fifth Business Day, the Lenders have not elected to purchase all of the Commitments of such Defaulting Lender, then the Borrower (so long as no Default or Event of Default exists) or the Required Lenders may, by giving written notice thereof to the Agent, such Defaulting Lender and the other Lenders, demand that such Defaulting Lender assign its Commitments to an eligible assignee subject to and in accordance with the provisions of §18.1 for the purchase price provided for below. No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an eligible assignee. Upon any such purchase or assignment, and any such demand with respect to which the conditions specified in §18.1 have been satisfied, the Defaulting Lender’s interest in the Loans and its rights hereunder (but not its liability in respect thereof or under the Loan Documents

 

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or this Agreement to the extent the same relate to the period prior to the effective date of the purchase) shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest to the purchaser or assignee thereof, including an appropriate Assignment and Acceptance Agreement. The purchase price for the Commitments of a Defaulting Lender shall be equal to the amount of the principal balance of the Loans outstanding and owed by the Borrower to the Defaulting Lender plus any accrued but unpaid interest thereon and accrued but unpaid fees. Prior to payment of such purchase price to a Defaulting Lender, the Agent shall apply against such purchase price any amounts retained by the Agent pursuant to §2.13(d).

(c) During any period in which there is a Defaulting Lender, all or any part of such Defaulting Lender’s obligation to acquire, refinance or fund participations in Letters of Credit pursuant to §2.10(g) or Swing Loans pursuant to §2.5(e) shall be reallocated among the Lenders that are Non-Defaulting Lenders in accordance with their respective Commitment Percentages (computed without giving effect to the Commitment of such Defaulting Lender; provided that (i) each such reallocation shall be given effect only if, at the date the applicable Lender becomes a Defaulting Lender, no Default or Event of Default exists, (ii) the conditions set forth in §§10 and 11 are satisfied at the time of such reallocation (and, unless the Borrower shall have notified the Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at the time), (iii) the representations and warranties in the Loan Documents shall be true and correct in all material respects on and as of the date of such reallocation with the same effect as though made on and as of such date, except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date), and (iv) the aggregate obligation of each Lender that is a Non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swing Loans shall not exceed the positive difference, if any, of (a) the Commitment of that Non-Defaulting Lender minus (b) the sum of (1) the aggregate outstanding principal amount of the Revolving Credit Loans of that Lender plus (2) such Lender’s pro rata portion in accordance with its Commitment Percentage of outstanding Letter of Credit Liabilities and Swing Loans. Subject to §34, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(d) Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, or otherwise, and including any amounts made available to the Agent for the account of such Defaulting Lender pursuant to §13), shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Agent (other than with respect to Letter of Credit Liabilities) hereunder; second, to the payment of any amounts owing by such Defaulting Lender to the Issuing Lender (with respect to Letter of Credit Liabilities) and/or the Swing Loan Lender hereunder; third, if so determined by the Agent or requested by the Issuing Lender or the Swing Loan Lender, to be held as cash collateral for future funding obligations of such Defaulting Lender of any participation in any Letter of Credit or Swing Loan; fourth, as the Borrower may request (so long as no Default or

 

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Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; fifth, if so determined by the Agent and the Borrower, to be held in a non-interest bearing deposit account and released pro rata in order to (x) satisfy obligations of such Defaulting Lender to fund Loans or participations under this Agreement and (y) be held as cash collateral for future funding obligations of such Defaulting Lender of any participation in any Letter of Credit or Swing Loan; sixth, to the payment of any amounts owing to the Agent or the Lenders (including the Issuing Lender and the Swing Loan Lender) as a result of any judgment of a court of competent jurisdiction obtained by the Agent or any Lender (including the Issuing Lender and the Swing Loan Lender) against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (i) such payment is a payment of the principal amount of any Revolving Credit Loans or funded participations in Letters of Credit or Swing Loans in respect of which such Defaulting Lender has not fully funded its appropriate share and (ii) such Revolving Credit Loans or funded participations in Letters of Credit or Swing Loans were made at a time when the conditions set forth in §§10 and 11, to the extent required by this Agreement, were satisfied or waived, such payment shall be applied solely to pay the Revolving Credit Loans of, and funded participations in Letters of Credit or Swing Loans owed to, all Non-Defaulting Lenders on a pro rata basis until such time as all Revolving Credit Loans and funded and unfunded participations in Letters of Credit and Swing Loans are held by the Lenders pro rata in accordance with their Commitment Percentages without regard to §2.13(c), prior to being applied to the payment of any Revolving Credit Loans of, or funded participations in Letters of Credit or Swing Loans owed to, such Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this §2.13(d) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto, and to the extent allocated to the repayment of principal of the Loan, shall not be considered outstanding principal under this Agreement.

(e) Within five (5) Business Days of demand by the Issuing Lender or the Swing Loan Lender from time to time, the Borrower shall deliver to the Agent for the benefit of the Issuing Lender and the Swing Loan Lender cash collateral in an amount sufficient to cover all Fronting Exposure with respect to the Issuing Lender and the Swing Loan Lender (after giving effect to §§2.5(a), 2.10(a) and 2.13(c)) on terms satisfactory to the Issuing Lender and/or the Swing Loan Lender in its good faith determination (and such cash collateral shall be in Dollars). Any such cash collateral shall be deposited in the Collateral Account as collateral (solely for the benefit of the Issuing Lender and/or the Swing Loan Lender) for the payment and performance of each Defaulting Lender’s pro rata portion in accordance with their respective Commitment Percentages of outstanding Letter of Credit Liabilities and Swing Loans. Moneys in the Collateral Account deposited pursuant to this §2.13(e) shall be applied by the Agent to reimburse the Issuing Lender and/or the Swing Loan Lender immediately for each Defaulting Lender’s pro rata portion in accordance with their respective Commitment Percentages of any funding obligation with respect to a Letter of Credit or Swing Loan which has not otherwise been reimbursed by the Borrower or such Defaulting Lender.

 

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(f) (i) Each Lender that is a Defaulting Lender shall not earn and shall not be entitled to receive any Unused Fee pursuant to §2.3 for any period during which that Lender is a Defaulting Lender.

(ii) Each Lender that is a Defaulting Lender shall not earn and shall not be entitled to receive Letter of Credit fees pursuant to §2.10(e) for any period during which that Lender is a Defaulting Lender.

(iii) With respect to any Unused Fee or Letter of Credit fees not required to be paid to any Defaulting Lender pursuant to clause (i) or (ii) above, the Borrower shall (x) pay to each Non-Defaulting Lender that is a Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letter of Credit Liabilities or Swing Loans that has been reallocated to such Non-Defaulting Lender pursuant to §2.13(c), (y) pay to the Issuing Lender and the Swing Loan Lender the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to the Issuing Lender’s or the Swing Loan Lender’s Fronting Exposure to such Defaulting Lender and (z) not be required to pay any remaining amount of any such fee.

(g) If the Borrower (so long as no Default or Event of Default exists) and the Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swing Loans to be held on a pro rata basis by the Lenders in accordance with their Commitments (without giving effect to §2.13(c)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while such Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.

 

§3.

REPAYMENT OF THE LOANS.

 

  §3.1

Stated Maturity. The Borrower promises to pay on the Maturity Date and there shall become absolutely due and payable on the Maturity Date all of the Revolving Credit Loans, Swing Loans and other Letter of Credit Liabilities Outstanding on such date, together with any and all accrued and unpaid interest thereon.

 

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  §3.2

Mandatory Prepayments; Commitment Reductions.

(a) If at any time the sum of the aggregate outstanding principal amount of the Revolving Credit Loans, the Swing Loans and the Letter of Credit Liabilities exceeds the lesser of (i) the Total Commitment or (ii) the amount that would cause compliance with the covenant in §9.1, then the Borrower shall, within five (5) Business Days of such occurrence, pay the amount of such excess to the Agent for the respective accounts of the Lenders for application to the Revolving Credit Loans as provided in §3.4, together with any additional amounts payable pursuant to §4.7, except that the amount of any Swing Loans shall be paid solely to the Swing Loan Lender.

(b) In the event there shall have occurred a casualty or Taking with respect to any Borrowing Base Property, the Borrower shall prepay the Loans concurrently with the date of receipt by Borrower, such Subsidiary Guarantor or the Agent of any Insurance Proceeds or Condemnation Proceeds in respect of such casualty or Taking to the extent required by §7.7.

(c) The Borrower shall give notice to Agent one (1) Business Days’ prior written notice of the expected date of the occurrence of any event described in this §3.2(c), and shall prepay the Loans within one (1) Business Day after the date of receipt by Borrower, any Guarantor or any of their respective Subsidiaries in an amount equal to:

(i) one hundred percent (100%) of the net proceeds of all capital events by the REIT, the Borrower or any of their respective Subsidiaries including, without limitation, all asset sales, refinancings and financings (secured, unsecured or otherwise) (but excluding any Subordinate Debt), recapitalizations, equity issuances (but excluding (A) any conversion of Subordinate Debt into common equity of the REIT, (B) the proceeds of any issuance of common equity in connection with a rights offering of common equity of the REIT to the extent used to convert the Subordinate Debt of the applicable Subordinate Lender to common equity of the REIT or to repay the Subordinate Debt as permitted by the applicable Subordination and Standstill Agreement, (C) the proceeds of any issuance of common equity or securities convertible into common equity (other than Indebtedness or Subordinate Debt) to a Person other than a Subordinate Lender permitted to be made pursuant to the agreements evidencing the applicable Subordinate Debt (and not made as part of a rights offering), in connection with an offering of common equity or securities convertible into common equity (other than Indebtedness or Subordinate Debt) of the REIT to the extent promptly used to satisfy the Subordinate Debt in full as permitted by the applicable Subordinate Debt and Subordination and Standstill Agreement, (D) the portion of Excess Offering Proceeds which may be used to pay the Make Whole Fee pursuant to §8.17 and the Initial Subordination and Standstill Agreement, and (E) any proceeds of an Equity Offering received during any period for cure of Defaults under this Agreement) and other similar capital transactions consummated by the REIT, the Borrower or any Subsidiary thereof. For the purposes of this §3.4(c), net proceeds shall be an amount equal to the gross proceeds of such transaction less payment of all usual and customary closing costs incurred in closing such transactions and the repayment of any Indebtedness (if any) securing the subject asset(s) (provided that for the avoidance of doubt, the provisions of §5.5 shall govern the release of Borrowing Base Properties);

 

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(ii) fifty percent (50%) of the netgross proceeds (less reasonable expenses of collection not previously deducted) of any “breakup fees” or other proceeds from contractual obligations (including without limitation any such amounts received pursuant to the Agreement and Plan of Merger dated as of July 19, 2019 by and among NHT Operating Partnership, LLC, NHT REIT Merger Sub, LLC, NHT Operating Partnership II, LLC, Borrower and REIT, as amended (the “Merger Agreement”), regardless of when paid);

(iii) fifty percent (50%) of the Net Cash Flow; provided that if the Borrower, the Guarantors and their Subsidiaries in the aggregate have in excess of $6,000,000.00 of Unrestricted Cash and Cash Equivalents, then one hundred percent (100%) of the Net Cash Flow shall be paid to Agent pursuant to this clause (iii); and[Intentionally Omitted]; and

(iv) one hundred percent (100%) of the amount of Unrestricted Cash and Cash Equivalents of Borrower, the Guarantors and their Subsidiaries which in the aggregate is in excess of $6,000,000.00.

(d) Any prepayment pursuant to this §3.2, §3.3§3.2(b), §3.2(c)(i) or §5.5 shall result in a dollar-for-dollar permanent reduction of the Commitments (provided that any prepayment pursuant to §3.2(c)(i) solely as a result of a new Equity Offering shall only result in a permanent reduction of the Commitments in an amount equal to fifty percent (50%) of the net proceeds of such new Equity Offering), which reduction shall be allocated to the Lenders pro rata in accordance with their respective Commitment Percentages.

(e) If the sum of the aggregate outstanding principal amount of the Revolving Credit Loans, the Swing Loans and the Letter of Credit Liabilities exceeds the amount that would cause compliance with the covenant in §9.3, then the Borrower shall, within thirty (30) days of such occurrence, pay the amount of such excess to the Agent for the respective accounts of the Lenders for application to the Revolving Credit Loans as provided in §3.4, together with any additional amounts payable pursuant to §4.7.

 

  §3.3

Optional Prepayments.

(a) The Borrower shall have the right, at its election, to prepay the outstanding amount of the Revolving Credit Loans and Swing Loans, as a whole or in part, at any time without penalty or premium; provided, that if any prepayment of the outstanding amount of any LIBOR Rate Loans pursuant to this §3.3 is made on a date that is not the last day of the Interest Period relating thereto, such prepayment shall be accompanied by the payment of any amounts due pursuant to §4.7.

(b) The Borrower shall give the Agent, no later than 10:00 a.m. (Cleveland time) at least three (3) Business Days prior written notice of any prepayment of any LIBOR Rate Loans, or at least one (1) Business Day prior written notice of any prepayment of a Base Rate Loan, pursuant to this §3.3, in each case specifying the proposed date of prepayment of the Loans and the principal amount to be prepaid (provided that any such notice may be revoked or modified upon one (1) day’s prior notice to the Agent). Notwithstanding the foregoing, no prior notice shall be required for the prepayment of any Swing Loan.

 

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  §3.4

Partial Prepayments . Each prepayment of the Loans under §3.3 shall be in a minimum amount of $500,000.00100,000.00 or an integral multiple of $100,000.00 in excess thereof. Each partial payment under §§3.2 and 3.3 shall be applied first to the principal of any Outstanding Swing Loans, then, in the absence of instruction by the Borrower and then to the principal of Revolving Credit Loans (and with respect to each category of Loans, first to the principal of Base Rate Loans, and then to the principal of LIBOR Rate Loans).

 

  §3.5

Effect of Prepayments . Amounts of the Revolving Credit Loans prepaid under §§3.2 and 3.3 prior to the Maturity Date may not be reborrowed but only up to the amount of the undisbursed Borrowing Availability and for Permitted Borrowings.

 

§4.

CERTAIN GENERAL PROVISIONS.

 

  §4.1

Conversion Options.

(a) The Borrower may elect from time to time to convert any of its outstanding Revolving Credit Loans to a Revolving Credit Loan of another Type and such Revolving Credit Loans shall thereafter bear interest as a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided that (i) with respect to any such conversion of a LIBOR Rate Loan to a Base Rate Loan, the Borrower shall give the Agent at least one (1) Business Day’s prior written notice of such election, and such conversion shall only be made on the last day of the Interest Period with respect to such LIBOR Rate Loan; (ii) with respect to any such conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrower shall give the Agent at least three (3) LIBOR Business Days’ prior written notice of such election and the Interest Period requested for such Loan, the principal amount of the Loan so converted shall be in a minimum aggregate amount of $1,000,000.00 or an integral multiple of $250,000.00 in excess thereof and, after giving effect to the making of such Loan, there shall be no more than six (6) LIBOR Rate Loans outstanding at any one time; and (iii) no Loan may be converted into a LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing. All or any part of the outstanding Revolving Credit Loans of any Type may be converted as provided herein, provided that no partial conversion shall result in a Base Rate Loan in a principal amount of less than $1,000,000.00 or an integral multiple of $250,000.00 or a LIBOR Rate Loan in a principal amount of less than $1,000,000.00 or an integral multiple of $250,000.00. On the date on which such conversion is being made, each Lender shall take such action as is necessary to transfer its Commitment Percentage of such Loans to its Domestic Lending Office or its LIBOR Lending Office, as the case may be. Each Conversion/Continuation Request relating to the conversion of a Base Rate Loan to a LIBOR Rate Loan shall be irrevocable by the Borrower.

(b) Any LIBOR Rate Loan may be continued as such Type upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the terms of §4.1; provided that no LIBOR Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Loan on the last day of the Interest Period relating thereto ending during the continuance of any Default or Event of Default.

(c) In the event that the Borrower does not notify the Agent of its election hereunder with respect to any LIBOR Rate Loan, such Loan shall be automatically converted at the end of the applicable Interest Period to a Base Rate Loan.

 

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  §4.2

Fees. The Borrower agrees to pay to KeyBank, the Agent and KCM for their own account certain fees for services rendered or to be rendered in connection with the Loans as provided pursuant to the fee letter or letters among the Borrower, KeyBank and KCM (, and the agreement regarding fees executed on or about the date of the Ninth Amendment to Credit Agreement among Borrower, the Lenders and KCM (collectively, the “Agreement Regarding Fees”). Without duplication, in addition, on October 1, 2020 the Borrower shall pay to the Agent for the pro rata accounts of all of the Lenders in accordance with their respective Commitments an amendment fee in an amount equal to thirty (30) basis points on the Total Commitment in effect on such date. All such fees shall be fully earned when paid and nonrefundable under any circumstances. The Borrower agrees to pay to Huntington for its own account certain fees for services rendered or to be rendered in connection with the Loans as provided pursuant to the fee letter among the Borrower and Huntington.

 

  §4.3

Funds for Payments.

(a) All payments of principal, interest, facility fees, Letter of Credit fees, closing fees and any other amounts due hereunder or under any of the other Loan Documents shall be made to the Agent, for the respective accounts of the Lenders and the Agent, as the case may be, at the Agent’s Head Office, not later than 2:00 p.m. (Cleveland time) on the day when due, in each case in lawful money of the United States in immediately available funds. The Agent is hereby authorized to charge the accounts of the Borrower with KeyBank set forth on Schedule 4.3, on the dates when the amount thereof shall become due and payable, with the amounts of the principal of and interest on the Loans and all fees, charges, expenses and other amounts owing to the Agent and/or the Lenders (including the Swing Loan Lender) under the Loan Documents. Subject to the foregoing, all payments made to the Agent on behalf of the Lenders, and actually received by the Agent, shall be deemed received by the Lenders on the date actually received by the Agent.

(b) All payments by the Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim, and free and clear of and without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower or other applicable Guarantor shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this §4.3) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c) The Borrower and the Guarantors shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

 

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(d) The Borrower and the Guarantors shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this §4.3) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error; provided that the determinations in such statement are made on a reasonable basis and in good faith.

(e) Each Lender shall severally indemnify the Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower or a Guarantor has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower and the Guarantors to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of §18.4 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this subsection.

(f) As soon as practicable after any payment of Taxes by the Borrower or any Guarantor to a Governmental Authority pursuant to this §4.3, the Borrower or such Guarantor shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

(g) (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in the immediately following clauses (ii)(A), (ii)(B) and (ii)(D)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

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(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person:

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), an electronic copy (or an original if requested by the Borrower or the Agent) of an executed IRS Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), whichever of the following is applicable:

(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, an electronic copy (or an original if requested by the Borrower or the Agent) of an executed IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(II) an electronic copy (or an original if requested by the Borrower or the Agent) of an executed IRS Form W-8ECI;

(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or W-8BEN-E; or

(IV) to the extent a Foreign Lender is not the beneficial owner, an electronic copy (or an original if requested by the Borrower or the Agent) of an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;

 

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(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), an electronic copy (or an original if requested by the Borrower or the Agent) of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Agent at the time or times prescribed by Applicable Law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.

(h) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this §4.3 (including by the payment of additional amounts pursuant to this §4.3), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this §4.3 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund has not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it reasonably deems confidential) to the indemnifying party or any other Person.

 

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(i) Each party’s obligations under this §4.3 shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

(j) The obligations of the Borrower to the Lenders under this Agreement with respect to Letters of Credit (and of the Lenders to make payments to the Issuing Lender with respect to Letters of Credit and to the Swing Loan Lender with respect to Swing Loans) shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including, without limitation, the following circumstances: (i) any lack of validity or enforceability of this Agreement, any Letter of Credit or any of the other Loan Documents; (ii) any improper use which may be made of any Letter of Credit or any improper acts or omissions of any beneficiary or transferee of any Letter of Credit in connection therewith; (iii) the existence of any claim, set-off, defense or any right which the Borrower or any of its Subsidiaries or Affiliates may have at any time against any beneficiary or any transferee of any Letter of Credit (or persons or entities for whom any such beneficiary or any such transferee may be acting) or the Lenders (other than the defense of payment to the Lenders in accordance with the terms of this Agreement) or any other person, whether in connection with any Letter of Credit, this Agreement, any other Loan Document, or any unrelated transaction; (iv) any draft, demand, certificate, statement or any other documents presented under any Letter of Credit proving to be insufficient, forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (v) any breach of any agreement between the Borrower or any of its Subsidiaries or Affiliates and any beneficiary or transferee of any Letter of Credit; (vi) any irregularity in the transaction with respect to which any Letter of Credit is issued, including any fraud by the beneficiary or any transferee of such Letter of Credit; (vii) payment by the Issuing Lender under any Letter of Credit against presentation of a sight draft, demand, certificate or other document which does not comply with the terms of such Letter of Credit, provided that such payment shall not have constituted gross negligence or willful misconduct on the part of the Issuing Lender as determined by a court of competent jurisdiction after the exhaustion of all applicable appeal periods; (viii) any non-application or misapplication by the beneficiary of a Letter of Credit of the proceeds of such Letter of Credit; (ix) the legality, validity, form, regularity or enforceability of the Letter of Credit; (x) the failure of any payment by the Issuing Lender to conform to the terms of a Letter of Credit (if, in the Issuing Lender’s good faith judgment, such payment is determined to be appropriate); (xi) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; (xii) the occurrence of any Default or Event of Default; and (xiii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

(k) For purposes of this §4.3, the term “Lender” includes any Issuing Lender and the term “Applicable Law” includes FATCA.

 

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  §4.4

Computations. All computations of interest on the Base Rate Loans to the extent applicable shall be based on a three hundred sixty-five (365) or three hundred sixty-six (366)-day year, as applicable, and paid for the actual number of days elapsed. All other computations of interest on the Loans and of other fees to the extent applicable shall be based on a 360-day year and paid for the actual number of days elapsed. Except as otherwise provided in the definition of the term “Interest Period” with respect to LIBOR Rate Loans, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The Outstanding Loans and Letter of Credit Liabilities as reflected on the records of the Agent from time to time shall be considered prima facie evidence of such amount absent manifest error.

 

  §4.5

Suspension of LIBOR Rate Loans. In the event that, prior to the commencement of any Interest Period relating to any LIBOR Rate Loan, the Agent shall determine that adequate and reasonable methods do not exist for ascertaining LIBOR for such Interest Period, or the Agent shall reasonably determine that LIBOR will not accurately and fairly reflect the cost of the Lenders making or maintaining LIBOR Rate Loans for such Interest Period, the Agent shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower and the Lenders absent manifest error) to the Borrower and the Lenders. In such event (a) any Loan Request with respect to a LIBOR Rate Loan shall be automatically withdrawn and shall be deemed a request for a Base Rate Loan and (b) each LIBOR Rate Loan will automatically, on the last day of the then current Interest Period applicable thereto, become a Base Rate Loan, and the obligations of the Lenders to make LIBOR Rate Loans shall be suspended until the Agent determines that the circumstances giving rise to such suspension no longer exist, whereupon the Agent shall so notify the Borrower and the Lenders.

 

  §4.6

Illegality. Notwithstanding any other provisions herein, if any present or future law, regulation, treaty or directive or the interpretation or application thereof shall make it unlawful, or any central bank or other Governmental Authority having jurisdiction over a Lender or its LIBOR Lending Office shall assert that it is unlawful, for any Lender to make or maintain LIBOR Rate Loans, such Lender shall forthwith give notice of such circumstances to the Agent and the Borrower and thereupon (a) the commitment of the Lenders to make LIBOR Rate Loans shall forthwith be suspended and (b) the LIBOR Rate Loans then outstanding shall be converted automatically to Base Rate Loans on the last day of each Interest Period applicable to such LIBOR Rate Loans or within such earlier period as may be required by law. Notwithstanding the foregoing, before giving such notice, the applicable Lender shall designate a different lending office if such designation will void the need for giving such notice and will not, in the judgment of such Lender, be otherwise materially disadvantageous to such Lender or increase any costs payable by the Borrower hereunder.

 

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  §4.7

Additional Interest. If any LIBOR Rate Loan or any portion thereof is repaid or is converted to a Base Rate Loan for any reason on a date which is prior to the last day of the Interest Period applicable to such LIBOR Rate Loan, or if repayment of the Loans has been accelerated as provided in §12.1, or if the Borrower fails to draw down on the first day of the applicable Interest Period any amount as to which the Borrower has elected a LIBOR Rate Loan, the Borrower will pay to the Agent upon demand for the account of the applicable Lenders in accordance with their respective Commitment Percentages (or to the Swing Loan Lender with respect to a Swing Loan), in addition to any amounts of interest otherwise payable hereunder, the Breakage Costs. The Borrower understands, agrees and acknowledges the following: (a) no Lender has any obligation to purchase, sell and/or match funds in connection with the use of LIBOR as a basis for calculating the rate of interest on a LIBOR Rate Loan; (b) LIBOR is used merely as a reference in determining such rate; and (c) the Borrower has accepted LIBOR as a reasonable and fair basis for calculating such rate and any Breakage Costs. The Borrower further agrees to pay the Breakage Costs, if any, whether or not a Lender elects to purchase, sell and/or match funds.

 

  §4.8

Additional Costs, Etc. Notwithstanding anything herein to the contrary, if any present or future Applicable Law, which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time (or from time to time) hereafter made upon or otherwise issued to any Lender or the Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law), shall:

(a) subject any Lender or the Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Agreement, the other Loan Documents, such Lender’s Commitment, a Letter of Credit or the Loans (other than for Indemnified Taxes, Taxes described in clauses (b) through (d) of the definition of Excluded Taxes, and Connection Income Taxes), or

(b) impose on any Lender or Issuing Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein, or

(c) impose or increase or render applicable any special deposit, compulsory loan, insurance charge, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law and which are not already reflected in any amounts payable by the Borrower hereunder) against assets held by, or deposits in or for the account of, or loans by, or commitments of an office of any Lender, or

(d) impose on any Lender or the Agent any other conditions or requirements with respect to this Agreement, the other Loan Documents, the Loans, such Lender’s Commitment, a Letter of Credit or any class of loans or commitments of which any of the Loans or such Lender’s Commitment forms a part; and the result of any of the foregoing is:

 

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(i) to increase the cost to any Lender of making, continuing, converting to, funding, issuing, renewing, extending or maintaining any of the Loans, the Letters of Credit or such Lender’s Commitment, or

(ii) to reduce the amount of principal, interest or other amount payable to any Lender or the Agent hereunder on account of such Lender’s Commitment or any of the Loans or the Letters of Credit, or

(iii) to require any Lender or the Agent to make any payment or to forego any interest or other sum payable hereunder, the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Lender or the Agent from the Borrower hereunder,

then, and in each such case, the Borrower will, within fifteen (15) days of demand made by such Lender or (as the case may be) the Agent at any time and from time to time and as often as the occasion therefor may arise, pay to such Lender or the Agent such additional amounts as such Lender or the Agent shall determine in good faith to be sufficient to compensate such Lender or the Agent for such additional cost, reduction, payment or foregone interest or other sum. Each Lender and the Agent in determining such amounts may use any reasonable averaging and attribution methods generally applied by such Lender or the Agent.

 

  §4.9

Capital Adequacy. If after the date hereof any Lender determines that (a) the adoption of or change in any Applicable Law regarding liquidity or capital requirements for banks or bank holding companies or any change in the interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (b) compliance by such Lender or its parent bank holding company with any guideline, request or directive of any such entity regarding liquidity or capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s commitment to make Loans or participate in Letters of Credit hereunder to a level below that which such Lender or holding company could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender may notify the Borrower thereof. The Borrower agrees to pay to such Lender the amount of such reduction in the return on capital as and when such reduction is determined, upon presentation by such Lender of a statement of the amount setting forth the Lender’s calculation thereof. In determining such amount, such Lender may use any reasonable averaging and attribution methods generally applied by such Lender. For purposes of §4.8 and this §4.9, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, publications, orders, guidelines and directives thereunder or issued in connection therewith and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to have been adopted and gone into effect after the date hereof regardless of when adopted, enacted or issued.

 

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  §4.10

Breakage Costs. The Borrower shall pay all Breakage Costs required to be paid by it pursuant to this Agreement and incurred from time to time by any Lender upon demand within fifteen (15) days from receipt of written notice from the Agent, or such earlier date as may be required by this Agreement.

 

  §4.11

Default Interest; Late Charge. Following the occurrence and during the continuance of any Event of Default, and regardless of whether or not the Agent or the Lenders shall have accelerated the maturity of the Loans, all Loans shall bear interest payable on demand at a rate per annum equal to the sum of the Base Rate plus the Applicable Margin plus four percent (4.0%) (the “Default Rate”), until such amount shall be paid in full (after as well as before judgment) and the fee payable with respect to Letters of Credit shall be increased to a rate equal to four percent (4.0%) above the Letter of Credit fee that would otherwise be applicable to such time, if any of such amounts shall exceed the maximum rate permitted by law, then at the maximum rate permitted by law. In addition, the Borrower shall pay a late charge equal to four percent (4%) of any amount of interest and/or principal payable on the Loans or any other amounts payable hereunder or under the other Loan Documents, which is not paid by the Borrower within ten (10) days of the date when due (or, in the case of amounts due at the Maturity Date, within fifteen (15) Business Days of such date).

 

  §4.12

Certificate. A certificate setting forth any amounts payable pursuant to §4.7, §4.8, §4.9, §4.10 or §4.11 and a reasonably detailed explanation of such amounts which are due, submitted by any Lender or the Agent to the Borrower, shall be conclusive in the absence of manifest error, and shall be promptly provided to the Agent and the Borrower upon their written request.

 

  §4.13

Limitation on Interest. Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, all agreements between or among the Borrower, the Guarantors, the Lenders and the Agent, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of acceleration of the maturity of any of the Obligations or otherwise, shall the interest contracted for, charged or received by the Lenders exceed the maximum amount permissible under Applicable Law. If, from any circumstance whatsoever, interest would otherwise be payable to the Lenders in excess of the maximum lawful amount, the interest payable to the Lenders shall be reduced to the maximum amount permitted under Applicable Law; and if from any circumstance the Lenders shall ever receive anything of value deemed interest by Applicable Law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal balance of the Obligations and to the payment of interest or, if such excessive interest exceeds the unpaid balance of principal of the Obligations, such excess shall be refunded to the

 

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  Borrower. All interest paid or agreed to be paid to the Lenders shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal of the Obligations (including the period of any renewal or extension thereof) so that the interest thereon for such full period shall not exceed the maximum amount permitted by Applicable Law. This §4.13 shall control all agreements between or among the Borrower, the Guarantors, the Lenders and the Agent.

 

  §4.14

Certain Provisions Relating to Increased Costs. If a Lender gives notice of the existence of the circumstances set forth in §4.8 or any Lender requests compensation for any losses or costs to be reimbursed pursuant to any one or more of the provisions of §4.3 (as a result of the imposition of U.S. withholding taxes on amounts paid to such Lender under this Agreement), §4.8 or §4.9, then, upon request of the Borrower, such Lender, as applicable, shall use reasonable efforts in a manner consistent with such institution’s practice in connection with loans like the Loan of such Lender to eliminate, mitigate or reduce amounts that would otherwise be payable by the Borrower under the foregoing provisions, provided that such action would not be otherwise prejudicial to such Lender, including, without limitation, by designating another of such Lender’s offices, branches or affiliates; the Borrower agreeing to pay all reasonably incurred costs and expenses incurred by such Lender in connection with any such action. Notwithstanding anything to the contrary contained herein, if no Default or Event of Default shall have occurred and be continuing, and if any Lender has given notice of the existence of the circumstances set forth in §4.8 or has requested payment or compensation for any losses or costs to be reimbursed pursuant to any one or more of the provisions of §4.3 (as a result of the imposition of U.S. withholding taxes on amounts paid to such Lender under this Agreement), §4.8 or §4.9 and following the request of the Borrower has been unable to take the steps described above to mitigate such amounts (each, an “Affected Lender”), then, within thirty (30) days after such notice or request for payment or compensation, the Borrower shall have the one-time right as to such Affected Lender, to be exercised by delivery of written notice delivered to the Agent and the Affected Lender within thirty (30) days of receipt of such notice, to elect to cause the Affected Lender to transfer its Commitment, provided that the Borrower shall pay to the Agent the assignment fee (if any) specified in §18.2, such assignment will result in a reduction in such compensation or payments thereafter, and such assignment does not conflict with Applicable Law. The Agent shall promptly notify the remaining Lenders that each of such Lenders shall have the right, but not the obligation, to acquire a portion of the Commitment, pro rata based upon their relevant Commitment Percentages, of the Affected Lender (or if any of such Lenders does not elect to purchase its pro rata share, then to such remaining Lenders in such proportion as approved by the Agent). In the event that the Lenders do not elect to acquire all of the Affected Lender’s Commitment, then the Agent shall endeavor to obtain a new Lender to acquire such remaining Commitment. Upon any such purchase of the Commitment of the Affected Lender, the Affected Lender’s interest in the Obligations and its rights hereunder and under the Loan Documents shall terminate at the date of purchase, and the Affected Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest. The purchase price for the Affected Lender’s Commitment shall equal any and all amounts outstanding and owed by the Borrower to the Affected Lender including principal, prepayment premium or fee, and all accrued and unpaid interest or fees.

 

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  §4.15

Effect of Benchmark Transition EventReplacement Setting.

(a) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, (i) upon the determination of the Agent (which shall be conclusive absent manifest error) thatif a Benchmark Transition Event has occurred or (ii) upon the occurrence ofor an Early Opt-in Election, as applicable, the Agent and the Borrower may amend this Agreement to replace LIBOR with a Benchmark Replacement, by a written document executed by the Borrower and the Agent, subject to the requirements of this §4.15. Notwithstandingand its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, in each instance notwithstanding the requirements of §27 or anything else to the contrarycontained herein or in any other Loan Document, any such amendment with respect to a Benchmark Transition Event will become effective and binding upon the Agent, the Borrower and the Lenders atsuch Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the Agent has posted such proposed amendment to all Lenders and the Borrowerdate notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Agent has not received, by such time, written notice of objection to such amendmentBenchmark Replacement from Lenders comprising the Required Lenders, and any such amendment with respect to an Early Opt-in Election will become effective and binding upon the Agent, the Borrower and the Lenders on the date that Lenders comprising the Required Lenders have delivered to the Agent written notice that such Required Lenders accept such amendment. No replacement of LIBOR with a Benchmark Replacement pursuant to this §4.15 will occur prior to the applicable Benchmark Transition Start Date. .

(b) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or theany other Loan DocumentsDocument .

 

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(c) Notices; Standards for Decisions and Determinations. The Agent will promptly notify the Borrower and the Lenders in writing of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (d) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Agent or, if applicable, any Lender (or group of Lenders) pursuant to this §4.15,4.16 including, without limitation, any determination with respect to a tenor, comparable replacement rate or adjustment, or implementation of any Benchmark Replacement Rate Conforming Changes, or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding on all parties hereto or to the other Loan Documents absent manifest error and may be made in its or their sole discretion and without consent from any other party heretoto this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this §4.154.16 and shall not be a basis of any claim of liability of any kind or nature by any party hereto or thereto, all such claims being hereby waived individually bybe each party hereto and thereto.

(d) Benchmark Unavailability Period.Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark or a Relevant Governmental Body has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

(e) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a borrowing of Loans that is to be a LIBOR Rate Loan, conversion to or continuation of LIBOR Rate Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans. During any Benchmark Unavailability Period, the components or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon LIBORthe then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.

 

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  (f)

(e)  Certain Defined Terms. As used in this §4.154.16:

Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (d) of this Section titled “Benchmark Replacement Setting.”

Benchmark ” means, initially, USD LIBOR; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to USD LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of this §4.16.

Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Agent for the applicable Benchmark Replacement Date:

 

  (1)

the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

 

  (2)

the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;

 

  (3)

“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by the Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate of interest as a replacement to LIBORfor the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than positive 0.50%

provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion. If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be positive 0.50%the Floor for the purposes of this Agreement and the other Loan Documents.

 

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Benchmark Replacement Adjustment” means, with respect to any replacement of LIBORthe then- current Benchmark with an Unadjusted Benchmark Replacement for eachany applicable Interest Period, and Available Tenor for any setting of such Unadjusted Benchmark Replacement:

 

  (1)

for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Agent:

 

  (a)

the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;

 

  (b)

the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and

 

  (2)

for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBORsuch Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBORsuch Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar- denominated syndicated credit facilities at such time;

provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Agent in its reasonable discretion.

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “LIBOR Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the

 

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administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of thesuch Benchmark Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

Benchmark Replacement Date” means the earlierearliest to occur of the following events with respect to LIBORthe then-current Benchmark:

 

  (1)

in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of LIBORsuch Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide LIBOR; orall Available Tenors of such Benchmark (or such component thereof);

 

  (2)

in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.; or

“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to LIBOR:

 

  (3)

in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

  (1)

a public statement or publication of information by or on behalf of the administrator of LIBORsuch Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide LIBORall Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBORany Available Tenor of such Benchmark (or such component thereof);

 

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  (2)

a public statement or publication of information by the regulatory supervisor for the administrator of LIBOR, the U.S.such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for LIBORsuch Benchmark (or such component), a resolution authority with jurisdiction over the administrator for LIBORsuch Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for LIBORsuch Benchmark (or such component), which states that the administrator of LIBORsuch Benchmark (or such component) has ceased or will cease to provide LIBORall Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBORany Available Tenor of such Benchmark (or such component thereof); or

 

  (3)

a public statement or publication of information by the regulatory supervisor for the administrator of LIBORsuch Benchmark (or the published component used in the calculation thereof) or a Relevant Governmental Body announcing that LIBOR isall Available Tenors of such Benchmark (or such component thereof) are no longer representative.

“Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Agent or the Required Lenders, as applicable, by notice to the Borrower, the Agent (in the case of such notice by the Required Lenders) and the Lenders.For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to LIBOR and solely to the extent that LIBOR has not been replaced with a Benchmark Replacement, the period (if any) (x) beginning at the time that sucha Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced LIBORthe then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this §4.154.16 and (y) ending at the time that a Benchmark Replacement has replaced LIBORthe then-current Benchmark for all purposes hereunder pursuant toand under any Loan Document in accordance with this §4.15.4.16.

 

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Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Agent decides that any such convention is not administratively feasible for the Agent, then the Agent may establish another convention in its reasonable discretion.

Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of:

 

  (1)

(i) a determination by the Agent thatnotification by the Agent to (or the request by the Borrower to the Agent to notify) each of the other parties hereto that at least five (5) currently outstanding U.S. dollar-denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in this §4.15 are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace LIBOR, and at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and

 

  (2)

the joint election by the Agent to declare that an Early Opt-in Election has occurredand the Borrower to trigger a fallback from USD LIBOR and the provision by the Agent of written notice of such election to the Borrower and the Lenders.

“Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

Floor ” means the benchmark rate floor (i.e. positive 0.50%) provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR.

ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time determined by the Agent in its reasonable discretion.

 

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Relevant Governmental Body” means the Board of Governors of the Federal Reserve Board and/System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve Board and/System or the Federal Reserve Bank of New York, or any successor thereto, including without limitation the Alternative Reference Rates Committee.

SOFR means, with respect to any day meansBusiness Day, a rate per annum equal to the secured overnight financing rate for such Business Day published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New Yorkby the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.

SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

USD LIBOR” means the London interbank offered rate for U.S. dollars.

 

§5.

COLLATERAL SECURITY; GUARANTORS.

 

  §5.1

Collateral. The Obligations shall be secured by a perfected first priority lien and security interest (subject to Liens permitted with respect thereto by §8.2) to be held by the Agent for the benefit of the Lenders on the Collateral, pursuant to the terms of the Security Documents.

 

  §5.2

Appraisal.

(a) The Agent may obtain new Appraisals or an update to existing Appraisals with respect to the Borrowing Base Properties, or any of them, as the Agent or the Required Lenders shall determine (i) at any time that the regulatory requirements of any Lender generally applicable to real estate loans of the category made under this Agreement as reasonably interpreted by such Lender shall require more frequent Appraisals, (ii) at any time following a Default or Event of Default, (iii) if there is change in the Franchisor of a Borrowing Base Property or if the Agent reasonably believes that there has been a casualty, Taking or material adverse change or deterioration with respect to any Borrowing Base Property, including, without limitation, a material change in the market in which any Borrowing Base Property is located, (iv) one (1) time during the term of the Loans at the request of Agent or the Required Lenders, which may be in

 

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connection with the Borrower’s exercise of the option to extend the Maturity Date as provided in §2.12(a) and (b),(v) to determine compliance with §9.3, or (vvi ) at any time that Agent or the Required Lenders determine that a more updated Appraisal is required by Applicable Law. Notwithstanding the foregoing, Agent shall obtainorder on or before October  1,31, 2020 new Appraisals or updates to existing Appraisals with respect to the Borrowing Base Properties (provided that for the avoidance of doubt no new Appraised Value obtained pursuant to this sentence shall be included in the calculation of Consolidated Total Asset Value prior to April 2, 2021March 31, 2022). The expense of such Appraisals and/or updates performed pursuant to this §5.2(a) shall be borne by the Borrower and payable to the Agent within ten (10) days of demand; provided the Borrower shall not be obligated to pay for an Appraisal of a Borrowing Base Property obtained pursuant to this §5.2(a) more often than once in any period of twelve (12) months if no Event of Default exists. After determination of the covenant in §9.3, the Borrower shall have the one-time right to request that Agent obtain new Appraisals or updates to existing Appraisals with respect to all of the Borrowing Base Properties for the purpose of increasing the Borrowing Availability under clause (a)(2) of such definition as if the covenant in §9.3 was being re-determined based on such new or updated Appraisals (provided that such re-determination shall not affect any prior payments that may have been required pursuant to §9.3).

(b) The Borrower shall deliver to the Agent an Appraisal with respect to any Real Estate that is not a Borrowing Base Property on or prior to the date such Real Estate is acquired by Borrower or any of its Subsidiaries or Unconsolidated Affiliates.

(c) The Borrower acknowledges that the Agent has the right to approve any Appraisal performed pursuant to this Agreement. The Borrower further agrees that the Lenders and the Agent do not make any representations or warranties with respect to any such Appraisal and shall have no liability as a result of or in connection with any such Appraisal for statements contained in such Appraisal, including without limitation, the accuracy and completeness of information, estimates, conclusions and opinions contained in such Appraisal, or variance of such Appraisal from the fair value of such property that is the subject of such Appraisal given by the local tax assessor’s office, or the Borrower’s idea of the value of such property.

 

  §5.3

Additional Collateral.

Provided no Default or Event of Default exists, the Borrower shall have the right, subject to consent of the Agent and the Required Lenders (which consent may be withheld in its sole and absolute discretion) and the satisfaction by the Borrower of the conditions set forth in this §5.3, to add Potential Collateral as a Borrowing Base Property and to the calculation of Debt Yield.the covenants set forth in §9.1 and §9.3. In the event the Borrower desires to add additional Potential Collateral as a Borrowing Base Property and to the calculation of Debt Yieldthe covenants set forth in §9.1 and §9.3 as aforesaid, the Borrower shall provide written notice to the Agent of such request. The Required Lenders shall have ten (10) Business Days following receipt of all items required under this Agreement to add Real Estate as a Borrowing Base Property to grant or deny approval for such proposed Potential Collateral. If a Lender shall fail to respond within such ten (10) Business Day period, such Lender shall be deemed to have approved such proposed Potential Collateral. Agent shall notify Borrower if and when the Required Lenders have granted such approval. For the avoidance of doubt, only Real Estate that satisfies the requirement to be a Tier 1 Property may be included as Borrowing Base Properties after the date of this Agreement. Notwithstanding the foregoing, Potential Collateral shall not be included as a Borrowing Base Property and in the calculation of Debt Yieldthe covenants set forth in §9.1 and §9.3 unless and until the following conditions precedent shall have been satisfied as determined by Agent (or as required by this Agreement, the Required Lenders):

 

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(a) such Potential Collateral shall be Eligible Real Estate and shall not cause a Default under §7.20;

(b) such Real Estate shall be owned (or leased under a Ground Lease) by a Wholly-Owned Subsidiary of the Borrower and leased pursuant to an Operating Lease to a TRS Lessee, and said Wholly-Owned Subsidiary, TRS Lessee and any other Persons required by §5.4 shall have executed a Joinder Agreement and satisfied the conditions of §5.4;

(c) prior to or contemporaneously with such addition, the Borrower shall have submitted to the Agent a Compliance Certificate prepared using the financial statements of the Borrower most recently provided or required to be provided to the Agent under §6.4 or §7.4 and a Borrowing Base Certificate, both prepared on a pro forma basis and adjusted to give effect to such addition, and shall certify that after giving effect to such addition, no Default or Event of Default shall exist;

(d) the Borrower, its Wholly-Owned Subsidiary, REIT, TRS Lessee and any other Wholly-Owned Subsidiary of Borrower or REIT owning an interest therein, as applicable, which is the owner and/or lessee (whether under a Ground Lease or Operating Lease) of the Real Estate, as applicable, shall have executed and delivered to the Agent all Borrowing Base Qualification Documents, all of which instruments, documents or agreements shall be in form and substance reasonably satisfactory to the Agent;

(e) after giving effect to the inclusion of such Eligible Real Estate, each of the representations and warranties made by or on behalf of the Borrower or the Guarantors or any of their respective Subsidiaries contained in this Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connections with this Agreement shall be true in all material respects both as of the date of which it was made and shall also be true as of the time of the addition of such Borrowing Base Property with the same effect as if made at and as of that time, except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date), and no Default of Event of Default shall have occurred and be continuing and the Agent shall have received a certificate of the Borrower to such effect; and

(f) the Agent and the Required Lenders as required above shall have consented to the inclusion of such Real Estate as a Borrowing Base Property and to the calculation of Debt Yield,the covenants set forth in §9.1 and §9.3, which consent may be granted in the Agent’s and the Required Lender’s sole and absolute discretion. The Required Lenders approve the Real Estate securing the Aloft Atlanta Term Loan as a Borrowing Base Property, subject to the other requirements for the addition of a Borrowing Base Property. In the event that the Real Estate securing the Aloft Atlanta Term Loan becomes a Borrowing Base Property, Agent and Borrower shall revise Schedule 5.5 to include the minimum release price for such property, which shall be an amount equal to ninety percent (90%) of its Appraised Value.

 

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  §5.4

Additional Guarantors; Release of Guarantors.

(a) In the event that the Borrower shall request that certain Real Estate owned (or leased under a Ground Lease) by a Wholly-Owned Subsidiary of the Borrower be included as a Borrowing Base Property as contemplated by §5.3 and such Real Estate is included as a Borrowing Base Property in accordance with the terms hereof, the Borrower shall, as a condition to such Real Estate being included as a Borrowing Base Property, cause each such Wholly-Owned Subsidiary of Borrower that owns or leases under a Ground Lease such Real Estate and any TRS Lessee that leases such Real Estate under an Operating Lease and each other Wholly-Owned Subsidiary of Borrower or TRS that owns a direct or indirect interest in any of such Subsidiaries, to execute and deliver to the Agent a Joinder Agreement, and such Subsidiary shall become a Guarantor hereunder and thereunder. In addition, in the event any Subsidiary of the Borrower shall constitute a Material Subsidiary, the Borrower shall promptly cause such Subsidiary to execute and deliver to Agent a Joinder Agreement, and such Subsidiary shall become a Guarantor hereunder and thereunder. Each such Subsidiary shall be specifically authorized, in accordance with its respective organizational documents, to be a Guarantor hereunder and thereunder and to execute the Contribution Agreement and such Security Documents as the Agent may require. The Borrower shall further cause all representations, covenants and agreements in the Loan Documents with respect to the Guarantors to be true and correct with respect to each such Subsidiary. In connection with the delivery of such Joinder Agreement, the Borrower shall deliver to the Agent such organizational agreements, resolutions, consents, opinions and other documents and instruments as the Agent may reasonably require.

(b) In the event that all Borrowing Base Properties owned or leased by a Subsidiary Guarantor shall have been removed as Borrowing Base Properties and from the calculation of Debt Yieldthe covenants set forth in §9.1 and §9.3 and released as Collateral for the Obligations and Hedge Obligations in accordance with the terms of this Agreement, then such Subsidiary Guarantor shall be released by Agent from liability under this Agreement and the other Loan Documents, provided that such Subsidiary Guarantor is not otherwise required to be a Guarantor.

(c) The Borrower may request in writing that the Agent release, and upon receipt of such request the Agent shall release (subject to the terms hereof), a Subsidiary Guarantor that is a Guarantor solely by virtue of being a Material Subsidiary pursuant to clause (ii) of the definition thereof from the Guaranty so long as: (i) no Default or Event of Default shall then be in existence or would occur as a result of such release; (ii) the Agent shall have received such written request at least five (5) Business Days prior to the requested date of release; (iii) such Subsidiary Guarantor is not the direct or indirect owner or lessee of a Borrowing Base Property; and (iv) the Borrower shall deliver to Agent evidence reasonably satisfactory to Agent that (A) the Borrower has disposed of or simultaneously with such release will dispose of its entire interest in such Guarantor or that all of the assets of such Guarantor will be disposed of in compliance with the terms of this Agreement, and if such transaction involves the disposition by such Guarantor of all of its assets, the net cash proceeds, if any, from such disposition are being distributed to the

 

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Borrower in connection with such disposition and applied as provided in §3.2(c), or (B) such Guarantor will be the borrower with respect to Secured Indebtedness that is not prohibited under this Agreement, which Indebtedness will be secured by a Lien on the assets of such Guarantor, or (C) the Borrower has contributed or simultaneously with such release will contribute its entire direct or indirect interest in such Guarantor to an Unconsolidated Affiliate or a Subsidiary which is not a Wholly-Owned Subsidiary or that such Guarantor will be contributing all of its assets to an Unconsolidated Affiliate or a Subsidiary which is not a Wholly-Owned Subsidiary in compliance with the terms of this Agreement and the proceeds therefrom are applied as provided in §3.2(c), or (C) [reserved], or (D) such Guarantor is an Excluded Subsidiary. Delivery by the Borrower to the Agent of any such request for a release shall constitute a representation by the Borrower that the matters set forth in the preceding sentence (both as of the date of the giving of such request and as of the date of the effectiveness of such request) are true and correct with respect to such request.

(d) The provisions of §5.4 shall not entitle Borrower, REIT, General Partner or TRS to any release from the Loan Documents.

 

  §5.5

Partial Release of Collateral. Provided no Default or Event of Default shall have occurred hereunder and be continuing (or would exist immediately after giving effect to the transactions contemplated by this §5.5), the Agent shall release a Borrowing Base Property and the personal property solely used on or with respect to such Borrowing Base Property pledged under the Security Agreement or Borrower Security Agreement applicable thereto upon the request of the Borrower in connection with a sale or other permanent disposition or refinancing of such Borrowing Base Property, subject to and upon the following terms and conditions:

(a) the Borrower shall deliver to the Agent written notice of its desire to obtain such release no later than ten (10) days prior to the date on which such release is to be effected;

(b) the Borrower shall submit to the Agent with such request a Compliance Certificate and Borrowing Base Certificate prepared using the financial statements of the Borrower most recently provided or required to be provided to the Agent under §6.4 or §7.4 adjusted in the best good faith estimate of the Borrower to give effect to the proposed release and demonstrating that no Default or Event of Default with respect to the covenants referred to therein shall exist after giving effect to such release;

(c) all release documents to be executed by the Agent shall be in form and substance reasonably satisfactory to the Agent;

(d) the Borrower shall pay all reasonable costs and expenses of the Agent in connection with such release, including without limitation, reasonable attorney’s fees;

(e) the Required Lenders shall have approved such release in writing, provided that said approval shall not be required if (i) such property is being sold to a third party that is not Borrower, a Guarantor, or a Subsidiary, Unconsolidated Affiliate or Affiliate of Borrower or any Guarantor, (ii) the Net Sales Proceeds from such sale are not less than the minimum release price for such a Borrowing Base Property set forth in Schedule 5.5, and (iii) such Net Sales Proceeds are paid to the Agent for the account of the Lenders as a release price to the extent required by §5.5(f), which is applied to reduce the outstanding principal balance of the Loans as provided in §3.4; and

 

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(f) the Borrower shall pay to the Agent for the account of the Lenders a release price, which payment shall be applied to reduce the outstanding principal balance of the Loans as provided in §3.4 and permanently reduce the Commitments as provided in §3.4,, in an amount equal the greater of (i) the amount necessary to reduce the outstanding principal balance of the Loans and Letter of Credit Liabilities so that no violation of the covenantcovenants set forth in §9.1 and §9.3 shall occur, and (ii) the Net Sales Proceeds described in §5.5(e)(ii). The release price paid under this §5.5(f) shall reduce the net proceeds to Borrower and the Guarantors for the purposes of amounts to be paid under §3.2(c)(i) (for sales of Borrowing Base Properties).

Notwithstanding the foregoing, in the event that any Borrowing Base Property is to be released from a Mortgage, Agent may condition such release upon (x) the increase of the coverages under the Title Policies for the remaining Borrowing Base Properties subject to Mortgages to 110% of the Appraised Value attributed to such remaining Borrowing Base Properties, and (y) the Borrower paying to the Agent or the Person entitled thereto any mortgage, recording, intangible, documentary stamp or other similar taxes and charges which the Agent reasonably determines to be payable with respect to the remaining Borrowing Base Properties subject to Mortgages as a result of such release to any state or any county or municipality thereof in which any of the Borrowing Base Properties subject to a Mortgage is located, and the Borrower delivering to the Agent such affidavits or other information which the Agent reasonably determines to be necessary in connection with such payment in order to insure that the Mortgages on the Borrowing Base Properties located in such state secure the Borrower’s obligation with respect to the Obligations.

 

  §5.6

Release of Collateral. Upon the refinancing or repayment of the Obligations in full and termination of the obligation to provide additional Loans or issue Letters of Credit to Borrower, then the Agent shall release the Collateral from the lien and security interest of the Security Documents and release the Borrower and Guarantors (other than with respect to obligations that survive termination of this Agreement), provided that Agent has not received a notice from the Representative or the holder of the Hedge Obligations that any Hedge Obligation is then due and payable to the holder thereof.

 

§6.

REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Agent and the Lenders as follows.

 

  §6.1

Corporate Authority, Etc..

(a) Incorporation; Good Standing. REIT is a Maryland corporation duly organized pursuant to articles of incorporation filed with the Maryland Secretary of State, and is validly existing and in good standing under the laws of Maryland. REIT conducts its business in a manner which enables it to qualify as a real estate investment trust under, and to be entitled to the benefits of, Section 856 of the Code, and has elected to be treated as and is entitled to the benefits of a real estate investment trust thereunder. The Borrower is a Virginia limited partnership

 

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duly organized pursuant to its certificate of limited partnership filed with the Virginia State Corporation Commission, and is validly existing and in good standing under the laws of Virginia. The Borrower (i) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated, and (ii) is in good standing and is duly authorized to do business in the jurisdiction of its organization and where any of the Borrowing Base Properties owned or leased by it are located and in each other jurisdiction where a failure to be so qualified in such other jurisdiction could reasonably be expected to have a Material Adverse Effect.

(b) Subsidiaries. Each of the Guarantors and each of the Subsidiaries of the Borrower and the Guarantors (i) is a corporation, limited partnership, general partnership, limited liability company or trust duly organized under the laws of its State of organization and is validly existing and in good standing under the laws thereof, (ii) has all requisite power to own or lease its property and conduct its business as now conducted and as presently contemplated and (iii) is in good standing and is duly authorized to do business in each jurisdiction where it is organized and where any of the Borrowing Base Properties owned or leased by it are located and in each other jurisdiction where a failure to be so qualified could reasonably be expected to have a Material Adverse Effect.

(c) Authorization. The execution, delivery and performance of this Agreement and the other Loan Documents to which any of the Borrower or any Guarantor is a party and the transactions contemplated hereby and thereby (i) are within the authority of such Person, (ii) have been duly authorized by all necessary proceedings on the part of such Person, (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Person is subject or any judgment, order, writ, injunction, license or permit applicable to such Person, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement, operating agreement, articles of incorporation or other charter documents or bylaws of, or any agreement or other instrument binding upon, such Person or any of its properties, (v) do not and will not result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of such Person other than the liens and encumbrances in favor of the Agent contemplated by this Agreement and the other Loan Documents, and (vi) do not require the approval or consent of any Person other than those already obtained and delivered to the Agent.

(d) Enforceability. This Agreement and the other Loan Documents to which any of the Borrower or any Guarantor is a party are valid and legally binding obligations of such Person enforceable in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and general principles of equity.

 

  §6.2

Governmental Approvals. The execution, delivery and performance of this Agreement and the other Loan Documents to which the Borrower or any Guarantor is a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing or registration with, or the giving of any notice to, any court, department, board, governmental agency or authority other than those already obtained, and the filing of the Security Documents in the appropriate records office with respect thereto.

 

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  §6.3

Title to Properties. Except as indicated on Schedule 6.3 hereto, REIT and its Subsidiaries own or lease all of the assets reflected in the consolidated balance sheet of the REIT as of the Balance Sheet Date or acquired or leased since that date (except property and assets sold or otherwise disposed of in the ordinary course of business since that date) subject to no rights of others, including any mortgages, leases pursuant to which REIT or any of its Subsidiaries or any of their respective Affiliates is the lessee, conditional sales agreements, title retention agreements, liens or other encumbrances except Permitted Liens and otherwise with respect to any Indebtedness being repaid with the proceeds of Loans on the date hereof.

 

  §6.4

Financial Statements. The Borrower has furnished to the Agent: (a) the consolidated balance sheet of REIT and its Subsidiaries as of the Balance Sheet Date and the related consolidated statement of operations and cash flow as of the Balance Sheet Date certified by the chief financial officer of REIT, (b) an unaudited statement of Net Operating Income for the period ending SeptemberJune 30, 2016,2020, reasonably satisfactory in form to the Agent and certified by the chief financial officer of REIT as fairly presenting the Net Operating Income for such periods, and (c) certain other financial information relating to the Borrower, the Guarantors, the Borrowing Base Properties and the Collateral. The balance sheet and statements referred to in clauses (a) and (b) above have been prepared in accordance with generally accepted accounting principles and fairly present the consolidated financial condition of REIT and its Subsidiaries as of such dates and the consolidated results of the operations of REIT and its Subsidiaries for such periods. There are no liabilities, contingent or otherwise, of REIT or any of its Subsidiaries involving material amounts not disclosed in said financial statements and the related notes thereto.

 

  §6.5

No Material Changes. Since the Balance Sheet Date or the date of the most recent financial statements delivered pursuant to §7.4 (with the date which is the most recent being applicable), there has occurred no materially adverse change in the financial condition, operations, prospects, business or assets of REIT and its Subsidiaries taken as a whole (excluding the effects of the outbreak of the novel coronavirus (COVID-19)) as shown on or reflected in the consolidated balance sheets of REIT as of the Balance Sheet Date, or its consolidated statement of income or cash flows as of the Balance Sheet Date, other than changes in the ordinary course of business that have not and could not reasonably be expected to have a Material Adverse Effect. As of the date hereof, except as set forth on Schedule 6.5 hereto, there has occurred no materially adverse change in the financial condition, operations, prospects, business or assets of REIT, its Subsidiaries or any of the Real Estate from the condition shown on the financial statements delivered to the Agent pursuant to §6.4 (excluding the effects of the outbreak of the novel coronavirus (COVID-19)) other than changes in the ordinary course of business that have not had any materially adverse effect either individually or in the aggregate on the business, assets, operations, prospects or financial condition of REIT and its Subsidiaries, considered as a whole, or of any of the Borrowing Base Properties.

 

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  §6.6

Franchises, Patents, Copyrights, Etc.. The Borrower, the Guarantors and their respective Subsidiaries possess all franchises, patents, copyrights, trademarks, trade names, service marks, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of their business substantially as now conducted without known conflict with any rights of others. Except for any rights granted pursuant to any approved Franchise Agreement for a Borrowing Base Property, none of the Borrowing Base Properties is owned or operated by the Borrower or its Subsidiaries under or by reference to any trademark, trade name, service mark or logo (provided that the Borrowing Base Properties may have signs or other indications that such properties are owned or operated by REIT or its Subsidiaries), and except for any rights granted pursuant to any approved Franchise Agreement for a Borrowing Base Property, none of the trademarks, tradenames, service marks or logos (other than those indications that such property is owned or operated by REIT or one of its Subsidiaries) are registered or subject to any license or provision of law limiting their assignability or use.

 

  §6.7

Litigation. Except as stated on Schedule 6.7, there are no actions, suits, proceedings or investigations of any kind pending or to the knowledge of the Borrower threatened against the Borrower, any Guarantor or any of their respective Subsidiaries before any court, tribunal, arbitrator, mediator or administrative agency or board which question the validity of this Agreement or any of the other Loan Documents, any action taken or to be taken pursuant hereto or thereto, the Borrowing Base Properties, the Collateral (provided that with respect to the Initial Borrowing Base Properties and the Collateral, this representation is only made as of the Closing Date and as of the date of the Ninth Amendment to Credit Agreement and excludes matters that are fully insured (other than deductibles)) or any lien, security title or security interest created or intended to be created pursuant hereto or thereto, or which if adversely determined could reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 6.7, as of the Closing Datedate of the Ninth Amendment to Credit Agreement there are no judgments, final orders or awards outstanding against or affecting the Borrower, any Guarantor, any of their respective Subsidiaries, any Collateral, any Material Contract or any Borrowing Base Property which are not fully covered by insurance (other than deductibles). No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided.

 

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  §6.8

No Material Adverse Contracts, Etc.. None of the Borrower, any Guarantor or any of their respective Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation that has or is expected in the future to have a Material Adverse Effect. None of the Borrower, any Guarantor or any of their respective Subsidiaries is a party to any contract or agreement that has or could reasonably be expected to have a Material Adverse Effect.

 

  §6.9

Compliance with Other Instruments, Laws, Etc.. None of the Borrower, any Guarantor or any of their respective Subsidiaries is in violation of any provision of its charter or other organizational documents, bylaws, or any agreement or instrument to which it is subject or by which it or any of its properties is bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that has had or could reasonably be expected to have a Material Adverse Effect.

 

  §6.10

Tax Status. Each of the Borrower, the Guarantors and their respective Subsidiaries (a) has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject or has obtained an extension for filing, (b) has paid prior to delinquency all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations except those which are being contested in good faith and by appropriate proceedings as permitted by this Agreement, and (c) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. Except as set forth on Schedule 6.10, there are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers or partners of such Person know of no basis for any such claim. Except as set forth on Schedule 6.10, there are no audits pending or to the knowledge of the Borrower threatened with respect to any tax returns filed by the Borrower, any Guarantor or their respective Subsidiaries. The taxpayer identification number for REIT is 52-1889548, and the taxpayer identification number for the Borrower is 52-1889549.

 

  §6.11

No Event of Default. No Default or Event of Default has occurred and is continuing.

 

  §6.12

Investment Company Act. None of the Borrower, the Guarantors or any of their respective Subsidiaries is an “investment company”, or an “affiliated company” or a “principal underwriter” of an “investment company”, as such terms are defined in the Investment Company Act of 1940.

 

  §6.13

Setoff; Absence of UCC Financing Statements.

(a) The Collateral and the rights of the Agent and the Lenders with respect to the Collateral are not subject to any setoff, claims (except for Liens with respect thereto permitted by §8.2), withholdings or other defenses by REIT, the Borrower or any of their Subsidiaries or Affiliates or, to the best knowledge of the Borrower, any other Person.

 

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(b) Except with respect to Liens with respect to such Person permitted by §8.2 or as disclosed on the lien search reports delivered to and approved by the Agent, there is no financing statement (but excluding any financing statements that may be filed against Borrower or any Guarantor thereof without the consent or agreement of such Persons), security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any applicable filing records, registry, or other public office, that purports to cover, affect or give notice of any present or possible future lien on, or security interest or security title in, any property of Borrower or any Guarantor or rights thereunder.

 

  §6.14

Certain Transactions. Except as disclosed on Schedule 6.14 hereto, none of the partners, officers, trustees, managers, members, directors, or employees of the Borrower, any Guarantor or any of their respective Subsidiaries is, nor shall any such Person become, a party to any transaction with the Borrower, any Guarantor or any of their respective Subsidiaries or Affiliates (other than for services as partners, managers, members, employees, officers and directors), including any agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any partner, officer, trustee, director or such employee or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any partner, officer, trustee, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, which are on terms less favorable to the Borrower, a Guarantor or any of their respective Subsidiaries than those that would be obtained in a comparable arms-length transaction.

 

  §6.15

Employee Benefit Plans. The Borrower, each Guarantor and each ERISA Affiliate has fulfilled its obligation, if any, under the minimum funding standards of ERISA and the Code with respect to each Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan. Neither the Borrower, any Guarantor nor any ERISA Affiliate has (a) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan, (b) failed to make any contribution or payment to any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan, or made any amendment to any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Code, or (c) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. None of the assets of REIT or any of its Subsidiaries, including, without limitation, any Borrowing Base Property or other Collateral, constitutes a “plan asset” of any Employee Plan, Multiemployer Plan or Guaranteed Pension Plan.

 

  §6.16

Disclosure. All of the representations and warranties made by or on behalf of the Borrower, the Guarantors and their respective Subsidiaries in this Agreement and the other Loan Documents or any document or instrument delivered to the Agent or the Lenders pursuant to or in connection with any of such Loan Documents are true and correct in all material respects, except to the extent of changes resulting

 

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  from transactions permitted by the Loan Documents (it being, understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date), and neither the Borrower nor any Guarantor has failed to disclose such information as is necessary to make such representations and warranties not misleading. All information contained in this Agreement, the other Loan Documents or otherwise furnished to or made available to the Agent or the Lenders by or on behalf of the Borrower, any Subsidiary or any Guarantor, as supplemented to date, taken as a whole, is and, when delivered, will be true and correct in all material respects and, as supplemented to date, does not, and when delivered will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading. The written information, reports and other papers and data with respect to the Borrower, any Subsidiary, any Guarantor, the Borrowing Base Properties or the Collateral, including, without limitation, the Borrowing Base Properties (other than projections and estimates) furnished to the Agent or the Lenders in connection with this Agreement or the obtaining of the Commitments of the Lenders hereunder was, at the time so furnished, taken as a whole, complete and correct in all material respects, or has been subsequently supplemented by other written information, reports or other papers or data, to the extent necessary to give in all material respects a true and accurate knowledge of the subject matter in all material respects; provided that such representation shall not apply to (a) the accuracy of any appraisal, title commitment, survey, or engineering and environmental reports prepared by third parties or legal conclusions or analysis provided by the Borrower’s or the Guarantors’ counsel (although the Borrower and the Guarantors have no reason to believe that the Agent and the Lenders may not rely on the accuracy thereof) or (b) budgets, projections and other forward-looking speculative information prepared in good faith by the Borrower (except to the extent the related assumptions were when made manifestly unreasonable).

 

  §6.17

Trade Name; Place of Business. Neither the Borrower nor any Guarantor uses any trade name or conducts business under any name other than its actual name set forth in the Loan Documents or names licensed to them by Franchisors. The principal place of business of the Borrower is 4800 Montgomery Lane1800 West Pasewalk Avenue, Suite 220, Bethesda, Maryland 20814.120, Norfolk, Nebraska 68701.

 

  §6.18

Regulations T, U and X. No portion of any Loan is to be used for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 220, 221 and 224. Neither the Borrower nor any Guarantor is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 220, 221 and 224.

 

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  §6.19

Environmental Compliance. The Borrower has obtained and provided to the Agent, or in the case of Borrowing Base Properties acquired after the date hereof will obtain and provide to the Agent, written environmental site assessment reports of the Environmental Engineer, which reports shall be in form and substance satisfactory to the Agent (collectively, the “Environmental Reports”). Except as set forth in the Environmental Reports with respect to Borrowing Base Properties, the Borrower makes the following representations and warranties:

(a) None of the Borrower, the Guarantors or their respective Subsidiaries nor any manager of the Real Estate, nor any tenant or operations thereon, is in violation, or alleged violation, of any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation, those arising under any Environmental Law, which violation (i) involves Real Estate (other than the Borrowing Base Properties) and has had or could reasonably be expected to have a Material Adverse Effect or (ii) involves a Borrowing Base Property and has had or could reasonably be expected, when taken together with other matters covered by this §6.19 and §8.6, to result in liability, clean up, remediation, containment, correction or other costs to the Borrower or any Guarantor individually or in the aggregate with other Borrowing Base Properties in excess of $250,000.00 or could reasonably be expected to materially adversely affect the operation of or ability to use such property.

(b) None of the Borrower, any Guarantor nor any of their respective Subsidiaries has received notice from any third party including, without limitation, any Governmental Authority, (i) that it has been identified by the United States Environmental Protection Agency (“EPA”) as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any Hazardous Substance(s) which it has generated, transported or disposed of have been found at any site at which a federal, state or local agency or other third party has conducted or has ordered that the Borrower, any Guarantor or any of their respective Subsidiaries conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; or (iii) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding (in each case, contingent or otherwise) arising out of any third party’s incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the release of Hazardous Substances, which in any case (i) involves Real Estate (other than the Borrowing Base Properties) and has had or could reasonably be expected to have a Material Adverse Effect or (ii) involves a Borrowing Base Property.

(c) (i) no portion of the Real Estate has been used for the handling, processing, storage or disposal of Hazardous Substances except in accordance with applicable Environmental Laws, and no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Real Estate except those which are being operated and maintained in compliance with Environmental Laws; (ii) in the course of any activities conducted by the Borrower, the Guarantors, their respective Subsidiaries or the users or operators of their properties, no Hazardous Substances have been generated or are being used on the Real Estate except in the ordinary course of the Borrower’s, the Guarantors’ and their respective Subsidiaries’ respective businesses and in accordance with applicable Environmental Laws; (iii) there has been no past or present Release or threatened Release of Hazardous Substances on, upon, into or from the Real

 

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Estate; (iv) there have been no Releases on, upon, from or into any real property in the vicinity of any of the Real Estate which, through soil or groundwater contamination, may have come to be located on the Real Estate; and (v) any Hazardous Substances that have been generated on any of the Real Estate have been transported off-site in accordance with all applicable Environmental Laws (except with respect to the foregoing in this §6.19(c) as to (A) any Real Estate (other than the Borrowing Base Properties) where the foregoing has not had or could not reasonably be expected to have a Material Adverse Effect) and (B) any Borrowing Base Property where the foregoing has not had or could not reasonably be expected, when taken together with other matters covered by this §6.19 and §8.6, to result in liability, clean up, remediation, containment, correction or other costs to the Borrower or any Guarantor individually or in the aggregate with other Borrowing Base Properties in excess of $250,000.00 and could not reasonably be expected to materially adversely affect the operation of or ability to use such property.

(d) none of the Borrower, the Guarantors, their respective Subsidiaries nor the Borrowing Base Properties is subject to any applicable Environmental Law requiring the performance of Hazardous Substances site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any governmental agency or the recording or delivery to other Persons of an environmental disclosure document or statement in each case by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the recording of the Mortgages or to the effectiveness of any other transactions contemplated hereby, except for such matters with which the Borrower, the Guarantors, their respective Subsidiaries shall have complied with as of the Closing Date.

(e) There are no existing or closed sanitary landfills, solid waste disposal sites, or hazardous waste treatment, storage or disposal facilities (i) on or affecting the Real Estate (other than the Borrowing Base Properties) except where such existence has not had or could not be reasonably be expected to have a Material Adverse Effect, or (ii) on or affecting a Borrowing Base Property.

(f) There has been no claim by any party that any use, operation, or condition of the Real Estate has caused any nuisance or any other liability or adverse condition on any other property, nor is there any basis for such a claim, except where such existence (1) as to any Real Estate other than a Borrowing Base Property has not had or could not be reasonably be expected to have a Material Adverse Effect or (2) with respect to any Borrowing Base Property has not had or could not reasonably be expected, when taken together with other matters covered by this §6.19 and §8.6, to result in liability, clean up, remediation, containment, correction or other costs to the Borrower or any Guarantor individually or in the aggregate with other Borrowing Base Properties in excess of $250,000.00 or could not reasonably be expected to materially adversely affect the operation of or ability to use such property.

(g) Except as disclosed in a report of an Environmental Engineer delivered to Agent in connection with the inclusion of Real Estate as a Borrowing Base Property, no asbestos is located in or on any Building, except for nonfriable asbestos or contained friable asbestos which is being monitored and/or remediated in accordance with the recommendations of an Environmental Engineer.

 

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  §6.20

Subsidiaries; Organizational Structure . Schedule 6.20(a) sets forth, as of the date hereofof the Ninth Amendment to Credit Agreement, all of the Subsidiaries of REIT, the form and jurisdiction of organization of each of the Subsidiaries, and REIT’s direct and indirect ownership interests therein. Schedule 6.20(b) sets forth, as of the date hereofof the Ninth Amendment to Credit Agreement, all of the Unconsolidated Affiliates of the REIT and its Subsidiaries, the form and jurisdiction of organization of each of the Unconsolidated Affiliates, REIT’s or its Subsidiary’s ownership interest therein and the other direct owners of the applicable Unconsolidated Affiliate. No Person owns any legal, equitable or beneficial interest in any of the Persons set forth on Schedules 6.20(a) and 6.20(b) except (i) as to Borrower, the limited partners of Borrower, (ii) as to any interests not owned by REIT or its Wholly-Owned Subsidiaries, the indirect owners of any Unconsolidated Affiliate, and (iii) as set forth on such Schedules. Each Subsidiary Guarantor is a Wholly-Owned Subsidiary of Borrower, General Partner (as to TRS) or TRS (as to the other TRS Lessees).

 

  §6.21

Leases. Except as set forth on Schedule 6.21 with respect to the Initial Borrowing Base Properties or as disclosed in writing to Agent prior to the acceptance of any additional Borrowing Base Properties, none of the Borrowing Base Properties is subject to any Lease or other occupancy agreement, other than an Operating Lease to a Subsidiary Guarantor and a Ground Lease, as applicable. The Borrower has delivered to the Agent true copies of the Leases and any amendments thereto relating to each Borrowing Base Property required to be delivered as a part of the Borrowing Base Qualification Documents (other than the boat slip leases with respect to the Borrowing Base Properties located at 255 Lore Road, Solomons, Maryland and 201 Ocean Drive, Key Largo, Florida). Such Leases constitute as of such date thereof the sole leases or licenses or other agreements pertaining to the occupancy or use of space (except for occupants of the Hotel Property in the ordinary course of business) at such Borrowing Base Property and in the Building relating thereto. Except as reflected on Schedule 6.21, no tenant under any Lease (i) is entitled to any free rent, partial rent, rebate of rent payments, credit, offset or deduction in rent, including, without limitation, lease support payments, lease buy-outs or abatements or credits, and (ii) has made any prepayments of rent or other payments due under such Lease for more than one (1) month in advance of the due date of such payment. Except as set forth in Schedule 6.21 and except with respect to defaults under the West Virginia Lease as set forth in the tenant estoppel certificate delivered on or about the date hereof,6.21, the Leases reflected therein are, as of the date of inclusion of the applicable Borrowing Base Property as a Borrowing Base Property, in full force and effect in accordance with their respective terms, without basic rental payments or other payments to the landlord thereunder being in default beyond any applicable cure period or, to the best of Borrower’s knowledge, any other material default thereunder, nor are there any defenses, counterclaims, offsets, concessions, rebates, or tenant improvement allowances, contributions or landlord construction obligations available to any tenant thereunder, and, except as reflected in Schedule 6.21 and except with respect to defaults under the West Virginia Lease as set forth in the tenant estoppel certificate delivered on or about the date hereof,6.21, neither the Borrower nor any Guarantor has given or made, any notice of any payment or other material default, or any claim, which remains uncured or unsatisfied, with respect to any of the Leases, and to the best of the knowledge and belief of the Borrower, there is no basis for any such claim or notice of default by any tenant under a Lease.

 

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  §6.22

Property. Except as set forth on Schedule 6.22, (i) all of the Borrowing Base Properties, and all major building systems located thereon, are structurally sound, in good condition and working order and free from material defects, subject to ordinary wear and tear, (ii) all of the other Real Estate of the Borrower, the Guarantors and their respective Subsidiaries is structurally sound, in good condition and working order, subject to ordinary wear and tear, except where such defects have not had and could not reasonably be expected to have a Material Adverse Effect, (iii) the Real Estate, and the use and operation thereof, is in material compliance with all applicable federal and state law and governmental regulations and any local ordinances, orders or regulations, including without limitation, laws, regulations and ordinances relating to zoning, building codes, parking, subdivision, fire protection, health, safety, handicapped access, historic preservation and protection, wetlands, tidelands and flood control, including without limitation, the American With Disabilities Act or any state laws regarding disability requirements, and any agreement, declaration, covenant or instrument to which Borrower, any Subsidiary Guarantor or its respective Borrowing Base Property may be subject (hereinafter referred to collectively as the “Requirements”) (but excluding for purposes of this §6.22, Environmental Laws) except where a failure to so comply as to Real Estate other than Borrowing Base Properties has not and could not reasonably be expected to have a Material Adverse Effect, and no Building located on a Borrowing Base Property is a so-called non-conforming use in violation of applicable zoning regulations, (iv) except as shown on the Survey for such Borrowing Base Property, such Borrowing Base Property is not located in a flood hazard area as defined by the Federal Insurance Administration, and such Borrowing Base Property is not located in Zone 3 or Zone 4 of the “Seismic Zone Map of the U.S.,” (v) neither Borrower nor any Subsidiary Guarantor has received any written notice of, and has no knowledge of, any approvals, consents, licenses, permits, utility installations and connections (including, without limitation, drainage facilities), curb cuts and street openings, required by Applicable Laws or any agreement affecting such Borrowing Base Property for the maintenance, operation, servicing and use of such Borrowing Base Property or any Building for its current use (hereinafter referred to as the “Project Approvals”) which have not been granted, effected, or performed and completed (as the case may be), in accordance with the timeline required thereunder, or any fees or charges therefor which have not been fully paid before becoming delinquent, or which are no longer in full force and effect, and no Project Approvals will terminate, or become void or voidable or terminable on any foreclosure sale of such Borrowing Base Property pursuant to the applicable Mortgage, (vi) there are no outstanding notices, suits, orders, decrees or judgments relating to zoning, building use and occupancy, fire, health, sanitation or other violations affecting, against, or with respect to, such

 

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  Borrowing Base Property or any part thereof for any material matter (including any matter that could affect the use or operation of the Property for its intended purposes), (vii) neither Borrower nor any Subsidiary Guarantor has received any written notice of, nor has any knowledge of, any material violation of any applicable Requirements or Project Approvals or any other material violation of restrictions or agreements by which Borrower, such Subsidiary Guarantor or such Borrowing Base Property is bound; (viii) all utilities necessary for the use and operation of the Borrowing Base Properties are installed to the property lines of the Borrowing Base Properties through dedicated public rights of way or through perpetual private easements approved by the Agent with respect to which, as applicable, any applicable Mortgage creates a valid and enforceable first lien and, except in the case of drainage facilities, are connected to the Building located thereon with valid permits and are adequate to service the Building in compliance with Applicable Law, (ix) the streets abutting the Borrowing Base Properties are dedicated and accepted public roads, to which the Borrowing Base Properties in each case has direct access or are perpetual private ways (with direct access to public roads) to which the Borrowing Base Properties have direct access approved by the Agent and with respect to which, as applicable, any applicable Mortgage creates a valid and enforceable first lien (subject to Liens permitted by §8.2(ix)), (x) there are no unpaid or outstanding real estate or other taxes (including payments in lieu of taxes) or assessments on or against any of the Borrowing Base Properties which are payable by the Borrower, any Guarantor or any of their respective Subsidiaries (except only real estate or other taxes or assessments, that are not yet delinquent or are being protested as permitted by this Agreement), (xi) there are no unpaid or outstanding gross receipts, rent or sales taxes payable by Borrower or any Subsidiary Guarantor, with respect to the use and operation of such Borrowing Base Property which are due and payable, (xii) Borrower has delivered to Agent a true, correct and complete copy of the Management Agreement and Franchise Agreement relating to such Borrowing Base Property, (xiii) neither the improvements located on such Borrowing Base Property nor any operations therein, is now or has been damaged, impacted, or otherwise affected in any material respect by or subject to the growth or existence of a Mold Condition (as defined in the Indemnity Agreement); (xiv) except as set forth on Schedule 6.22 with respect to the Borrowing Base Properties as of the date of this Agreement or with respect to additional Borrowing Base Properties as disclosed in writing to Agent and the Lenders prior to acceptance of such Real Estate as a Borrowing Base Property, Borrower or the Subsidiary Guarantors have completed all PIP or other work required to be performed or completed under the Franchise Agreements with respect to each Borrowing Base Property by the date of acceptance of such Real Estate as a Borrowing Base Property, (xv) each Borrowing Base Property is separately assessed for purposes of real estate tax assessment and payment, (xvi) there are no pending, or to the knowledge of the Borrower, threatened or contemplated, eminent domain proceedings against any Borrowing Base Property except as disclosed to Agent pursuant to §7.7,

 

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  (xvii) none of the Borrowing Base Property is now damaged in any material respect as a result of any fire, explosion, accident, flood or other casualty except as disclosed to Agent pursuant to §7.7, (xviii) none of the Borrower, the Guarantors or any of their respective Subsidiaries has received any outstanding notice from any insurer or its agent requiring performance of any work with respect to any of the Borrowing Base Property (other than with respect to outstanding claims in the ordinary course of business that are not material), or canceling or threatening to cancel any policy of insurance, and each of the Borrowing Base Properties complies with the material requirements of all of the Borrower’s, Guarantors’ and their respective Subsidiaries’ insurance carriers, and (xix) no person or entity has any right or option to acquire any Borrowing Base Property or any portion thereof or interest therein. There have been no changes to any of the Tier II Properties that are Borrowing Base Properties (including, without limitation, changes or additions to the improvements, condemnations, changes in ingress, egress or parking, easements or encroachments) that would be shown by a current and accurate Survey from these conditions shown on the Surveys for the Tier II Properties provided to the Agent prior to the Closing Date.

 

  §6.23

Brokers. None of REIT nor any of its Subsidiaries has engaged or otherwise dealt with any broker, finder or similar entity in connection with this Agreement or the Loans contemplated hereunder.

 

  §6.24

Other Debt. As of the date of this Agreement and as of the date of the Ninth Amendment to Credit Agreement, (a) none of the Borrower, any Guarantor nor any of their respective Subsidiaries is in default of the payment of any Indebtedness, the performance of any related agreement, mortgage, deed of trust, security agreement, financing agreement, indenture or lease to which any of them is a party, and (b) no Indebtedness of the Borrower, any Guarantor or any of their respective Subsidiaries has been accelerated. Neither the Borrower nor any Guarantor is a party to or bound by any agreement, instrument or indenture that may require the subordination in right or time or payment of any of the Obligations to any other indebtedness or obligation of the Borrower or any Guarantor. Schedule 6.24 hereto sets forth all agreements, mortgages, deeds of trust, financing agreements or other material agreements binding upon the Borrower and each Guarantor or their respective properties and entered into by the Borrower and/or such Guarantor as of the date of thisthe Ninth Amendment to Credit Agreement with respect to any Indebtedness of the Borrower or any Guarantor in an amount greater than $1,000,000.00 (other than with respect to any Indebtedness being repaid with the proceeds of Loans on the date hereof), and the Borrower has provided the Agent with such true, correct and complete copies thereof.

 

  §6.25

Solvency. After giving effect to the transactions contemplated by this Agreement and the other Loan Documents, including all Loans made or to be made hereunder, neither the Borrower nor any Guarantor is insolvent on a balance sheet basis such that the sum of such Person’s assets exceeds the sum of such Person’s liabilities, the Borrower and each Guarantor is able to pay its debts as they become due, and the Borrower and each Guarantor has sufficient capital to carry on its business.

 

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  §6.26

No Bankruptcy Filing. Neither the Borrower nor any Guarantor is contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or for the liquidation of its assets or property, and the Borrower has no knowledge of any Person contemplating the filing of any such petition against it or any Guarantor.

 

  §6.27

No Fraudulent Intent. Neither the execution and delivery of this Agreement or any of the other Loan Documents nor the performance of any actions required hereunder or thereunder is being undertaken by the Borrower, any Guarantor or any of their respective Subsidiaries with or as a result of any actual intent by any of such Persons to hinder, delay or defraud any entity to which any of such Persons is now or will hereafter become indebted.

 

  §6.28

Transaction in Best Interests of the Borrower and Guarantors; Consideration. The transaction evidenced by this Agreement and the other Loan Documents is in the best interests of the Borrower, each Guarantor and their respective Subsidiaries. The Borrower and the Guarantors are engaged in common business enterprises related to those of the Borrower and each Guarantor will derive substantial direct and indirect benefit from the effectiveness and existence of this Agreement. The direct and indirect benefits to inure to the Borrower, each Guarantor and their respective Subsidiaries pursuant to this Agreement and the other Loan Documents constitute substantially more than “reasonably equivalent value” (as such term is used in Section 548 of the Bankruptcy Code) and “valuable consideration,” “fair value,” and “fair consideration” (as such terms are used in any applicable state fraudulent conveyance law), in exchange for the benefits to be provided by the Borrower, the Guarantors and their respective Subsidiaries pursuant to this Agreement and the other Loan Documents, and but for the willingness of each Guarantor to guaranty the Loan, the Borrower would be unable to obtain the financing contemplated hereunder which financing will enable the Borrower, each Guarantor and their respective Subsidiaries to have available financing to conduct and expand their business.

 

  §6.29

Contribution Agreement. The Borrower and the Guarantors have executed and delivered the Contribution Agreement, and the Contribution Agreement constitutes the valid and legally binding obligations of such parties enforceable against them in accordance with the terms and provisions thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

 

  §6.30

Representations and Warranties of Guarantors. The Borrower has no knowledge that any of the representations or warranties of any Guarantor contained in any Loan Document to which such Guarantor is a party are untrue or inaccurate in any material respect.

 

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  §6.31

OFAC. None of the Borrower, the Guarantors, any of their Subsidiaries or any of their respective officers or, to the knowledge of any Borrower, their respective directors, employees, agents, advisors or Affiliates (a) is (or will be) a Person: (i) that is, or is owned or controlled by Persons that are: (x) the subject or target of any Sanctions Laws and Regulations or (y) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions Laws and Regulations, which includes, as of the Closing Date, Crimea, Cuba, Iran, North Korea, Sudan and Syria or (ii) listed in any list related to or otherwise designated under any Sanctions Laws and Regulations maintained under OFAC (including, those Persons named on OFAC’s Specially Designated and Blocked Persons list), the U.S. Department of State or by the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom or under the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (any such Person described in clauses (i) or (ii), a “Designated Person”) and (b) is not and shall not engage in any dealings or transactions or otherwise be associated with a Designated Person. In addition, the Borrower hereby agrees to provide to the Lenders any additional information that a Lender reasonably deems necessary from time to time in order to ensure compliance with Sanctions Laws and Regulations and all Applicable Laws concerning money laundering and similar activities. Neither Borrower, any Guarantor, nor any Subsidiary, director or officer of Borrower or Guarantor or, to the knowledge of Borrower, any Affiliate, agent or employee of Borrower or any Guarantor, has engaged in any activity or conduct which would violate any applicable anti-bribery, anti-corruption or anti-money laundering laws or regulations in any applicable jurisdiction, including without limitation, any Sanctions Laws and Regulations.

 

  §6.32

Labor Matters. Except as, in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against REIT or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and payment made to employees of the REIT or any of its Subsidiaries have not been in material violation of the Fair Labor Standards Act or any other applicable requirement of law dealing with such matters; and (c) all payments due from REIT or any of its Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the REIT or such Subsidiary.

 

  §6.33

Ground Lease.

(a) Each Ground Lease with respect to a Borrowing Base Property, if any, contains the entire agreement of the Borrower or applicable Subsidiary Guarantor and the applicable owner of the fee interest in such Borrowing Base Property (the “Fee Owner”), pertaining to the Borrowing Base Property covered thereby. The Borrower or applicable Subsidiary Guarantors have no estate, right, title or interest in or to the Borrowing Base Property affected by a Ground Lease except under and pursuant to the Ground Lease. The Borrower has delivered a true and correct copy of the Ground Lease to the Agent and the Ground Lease has not been modified, amended or assigned, with the exception of written instruments that have been recorded in the applicable real estate records and referenced in the Title Policy for such Borrowing Base Property.

 

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(b) The applicable Fee Owner is the exclusive fee simple owner of the Borrowing Base Property, subject only to the Ground Lease and all Liens and other matters disclosed in the applicable Title Policy for such Borrowing Base Property subject to the Ground Lease, and the applicable Fee Owner is the sole owner of the lessor’s interest in the Ground Lease.

(c) There are no rights to terminate the Ground Lease other than the applicable Fee Owner’s right to terminate by reason of default, casualty, condemnation or other reasons, in each case as expressly set forth in the Ground Lease.

(d) Each Ground Lease is in full force and effect and no breach or default or event that with the giving of notice or passage of time would constitute a breach or default under any Ground Lease (a “Ground Lease Default”) exists or has occurred on the part of Borrower a Subsidiary Guarantor or, to Borrower’s knowledge, on the part of a Fee Owner under any Ground Lease. All base rent and additional rent, if any, due and payable under each Ground Lease has been paid through the date hereof and neither Borrower nor a Subsidiary Guarantor is required to pay any deferred or accrued rent after the date hereof under any Ground Lease. Neither Borrower nor a Subsidiary Guarantor has received any written notice that a Ground Lease Default has occurred or exists, or that any Fee Owner or any third party alleges the same to have occurred or exist.

(e) The Borrower or applicable Subsidiary Guarantor is the exclusive owner of the ground lessee’s interest under and pursuant to each Ground Lease and has not assigned, transferred or encumbered its interest in, to, or under the Ground Lease, except to Agent under the Loan Documents or the lender of any Indebtedness being repaid with the proceeds of Loans on the date hereof and which is to be released in connection with the closing under this Agreement.

 

  §6.34

Material Contracts. Schedule 6.34 is, as of the date of thisthe Ninth Amendment to Credit Agreement, a true, correct and complete listing of all Material Contracts. Each of the Material Contracts is valid and enforceable in accordance with its terms and is in full force and effect. Each Borrower or Guarantor that is a party to any Material Contract has performed and is in compliance in all material respects with all of the terms of such Material Contract, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute such a default or event of default, exists with respect to any such Material Contract.

 

  §6.35

Intellectual Property. The Borrower and the Guarantors own or have the right to use, under valid license agreements or otherwise, all patents, licenses, franchises, trademarks, trademark rights, trade names, trade name rights, trade secrets and copyrights, if any, necessary to the conduct of its businesses, without known conflict with any patent, license, franchise, trademark, trade secret, trade name, copyright, or other proprietary right of any other Person.

 

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  §6.36

EEA Financial Institutions. None of the Borrower, any Guarantor, nor their respective Subsidiaries is an EEA Financial Institution.

 

  §6.37

Initial Borrowing Base Properties. Schedule 6.37 is, as of the date of thisthe Ninth Amendment to Credit Agreement, a true, correct and complete listing of the owners, TRS Lessees, Managers and franchisees or licensees under the Franchise Agreements for the Initial Borrowing Base Properties. The rights of the franchisee or licensee under the Franchise Agreements for the Borrowing Base Properties and of the Borrower or Subsidiary Guarantor under the Management Agreements for the Borrowing Base Properties are included in the Collateral.

 

§7.

AFFIRMATIVE COVENANTS.

The Borrower covenants and agrees that, so long as any Loan, Note or Letter of Credit is outstanding or any Lender has any obligation to make any Loans or issue Letters of Credit:

 

  §7.1

Punctual Payment. The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Loans and all interest and fees provided for in this Agreement, all in accordance with the terms of this Agreement and the Notes, as well as all other sums owing pursuant to the Loan Documents.

 

  §7.2

Maintenance of Office. The Borrower and each Guarantor will maintain their respective chief executive office at 4800 Montgomery Lane1800 W. Pasewalk Avenue, Suite 220, Bethesda, Maryland 20814,120, Norfolk, Nebraska 68701, or at such other place in the United States of America as the Borrower or any Guarantor shall designate upon thirty (30) days prior written notice to the Agent and the Lenders, where notices, presentations and demands to or upon the Borrower or such Guarantor in respect of the Loan Documents may be given or made.

 

  §7.3

Records and Accounts. The Borrower and each Guarantor will (a) keep, and cause each of their respective Subsidiaries to keep true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP and (b) maintain adequate accounts and reserves for all taxes (including income taxes), depreciation and amortization of its properties and the properties of their respective Subsidiaries, contingencies and other reserves. Neither the Borrower, any Guarantor nor any of their respective Subsidiaries shall, without the prior written consent of the Agent, (x) make any material change to the accounting policies/principles used by such Person in preparing the financial statements and other information described in §6.4 or §7.4, unless such change is required by GAAP or is mandated by GAAP to became effective, or (y) change its fiscal year. The Agent and the Lenders acknowledge that REIT’s fiscal year is a calendar year.

 

  §7.4

Financial Statements, Certificates and Information. The Borrower will deliver or cause to be delivered to the Agent, in form and substance reasonably satisfactory to the Agent, with sufficient copies for each of the Lenders:

 

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(a) not later than ninety (90) days after the end of each calendar year, the audited consolidated balance sheet of REIT and its Subsidiaries at the end of such year, and the related audited consolidated statements of operations, equity, and cash flows for such year, setting forth in comparative form the figures for the previous fiscal year and all such statements to be in reasonable detail, prepared in accordance with GAAP, together with a certification by the chief financial officer, chief executive officer, treasurer or chief accounting officer of the REIT, that the information contained in such financial statements fairly presents the financial position of REIT and its Subsidiaries, and accompanied by an auditor’s report prepared without qualification as to the scope of the audit by an independent nationally recognized accounting firm reasonably approved by the Agent and who shall have authorized REIT to deliver such financial statements and certifications thereof to the Agent and the Lenders (notwithstanding the foregoing and for the avoidance of doubt, a going concern qualification within such auditor’s report shall not constitute a default hereunder);

(b) not later than forty-five (45) days after the end of each of the first three (3) fiscal quarters of each year, copies of the unaudited consolidated balance sheet of REIT and its Subsidiaries, at the end of such quarter, and the related unaudited consolidated statements of operations, equity and cash flows for the portion of REIT’s fiscal year then elapsed, all in reasonable detail and prepared in accordance with GAAP, together with a certification by the chief financial officer, chief executive officer, treasurer or chief accounting officer of REIT that the information contained in such financial statements fairly presents the financial position of REIT and its Subsidiaries on the date thereof (subject to year-end adjustments);

(c) simultaneously with the delivery of the financial statements referred to in §§7.4(a) and 7.4(b), (i) a statement (a “Compliance Certificate”) certified by the chief financial officer, chief executive officer, treasurer or chief accounting officer of REIT in the form of Exhibit G hereto (or in such other form as the Agent may approve from time to time) setting forth in reasonable detail computations evidencing compliance or non-compliance (as the case may be) with the covenants contained in §9 and the other covenants described in such certificate and (if applicable) setting forth reconciliations to reflect changes in GAAP since the Balance Sheet Date, and (ii) a projection for the current and next three (3) succeeding fiscal quarters of compliance with the covenants described in the Compliance Certificate. The Borrower shall submit with the Compliance Certificate a Borrowing Base Certificate in the form of Exhibit H attached hereto (a “Borrowing Base Certificate”) pursuant to which the Borrower shall calculate the Debt Yieldcovenants set forth in §9.1 and §9.3, as applicable, and the components thereof as of the end of the immediately preceding fiscal quarter, together with such supporting information as Agent may request, if reasonably available. Such Borrowing Base Certificate shall specify whether there are any monetary or other defaults under Ground Leases at a Borrowing Base Property. All income, expense and value associated with Real Estate or other Investments disposed of during any quarter will be eliminated from calculations, where applicable. All income, expense and value associated with Real Estate or other Investments acquired during any quarter will be added to calculations, where applicable, in a manner reasonably acceptable to Agent. The Compliance Certificate shall be accompanied by copies of the statements of the Consolidated EBITDA, Consolidated Adjusted EBITDA, Funds Available for Distribution, Net Operating Income, Liquidity (as of Monday and Thursday of each week) and Adjusted Net Operating Income for such fiscal quarter, prepared on a basis consistent with the statements furnished to the Agent prior to the date hereof and otherwise in form and substance reasonably satisfactory to the Agent, together with a certification by the chief financial officer, chief executive officer, treasurer or chief accounting officer of REIT that

 

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the information contained in such statement fairly presents the Consolidated EBITDA, Consolidated Adjusted EBITDA, Funds Available for Distribution, Net Operating Income, Liquidity and Adjusted Net Operating Income for such periods. Such statements shall also include (i) a report on the average daily rate, occupancy levels and revenues per available room for each Borrowing Base Property individually and in the aggregate and for all Real Estate of the REIT and its Subsidiaries in the aggregate for (A) the current month (as compared to the current budgetApproved Budget and comparable period for the prior year), (B) on a year-to-date basis (as compared to the current budgetApproved Budget and the comparable period of the prior year), (C) on a trailing 12-month basis (on a month-by-month basis), and (ii) a budget reforecast (expressed on a month-by-month fiscal year basis, showing year-to-date actual results (including operations, debt service, capital expenditures and extraordinary expenses) plus projections for the remainder of the year); and the next four (4) calendar quarters) (which as to the next four (4) calendar quarters may in part be based upon the Management Projections), and (iii) a statement showing the amounts excluded from the calculation of Adjusted Consolidated EBITDA pursuant to clause (ii) of the definition thereof and the amounts excluded from the calculation of Fixed Charges pursuant to the definition thereof;

(d) simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, (i) an operating statement for each of the Borrowing Base Properties for each such fiscal quarter and year to date, together with a comparison against the operating statement for the prior year, and a consolidated operating statement for the Borrowing Base Properties for each such fiscal quarter and year to date, together with a comparison against the consolidated operating statement for the prior year (such statements and reports to be in form reasonably satisfactory to Agent), (ii) a consolidated operating statement for all of the Real Estate of the Borrower and its Subsidiaries for each such fiscal quarter and year to date (such statements and reports to be in form reasonably satisfactory to Agent), (iii) an updated twelve (12) month cash flow projection including details of the taxes, insurance, and capital expenditures, and (iv) the status of any PIP or any Renovations at any Borrowing Base Property;

(e) simultaneously with the delivery of the financial statements referred to in §§7.4(a) and 7.4(b) above, a statement (i) listing the Real Estate owned or leased by REIT and its Subsidiaries (or in which REIT or any of its Subsidiaries owns an interest) and stating the location thereof, the date acquired and the acquisition cost, the number of rooms and occupancy, and whether such Real Estate constitutes a Land Asset or a Development Property, and (ii) listing the Indebtedness of REIT and its Subsidiaries (excluding Indebtedness of the type described in §§8.1(a), 8.1(c), 8.1(d) and 8.1(f)), which statement shall include, without limitation, a statement of the original principal amount of such Indebtedness and the current amount outstanding, the holder thereof, the maturity date and any extension options, the interest rate, the collateral provided for such Indebtedness and whether such Indebtedness is Recourse Indebtedness or Non-Recourse Indebtedness;

(f) contemporaneously with the filing or mailing thereof, copies of all material of a financial nature, reports, proxy statements and all other material information sent to the owners of the Borrower or REIT (other than personal tax information);

 

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(g) promptly following the Agent’s request, after they are filed with the Internal Revenue Service, copies of all annual federal income tax returns and amendments thereto of the Borrower and REIT;

(h) notice of any audits pending or threatened in writing with respect to any tax returns filed by REIT or any of its Subsidiaries promptly following notice of such audit;

(i) promptly following the occurrence thereof, written notice to the Agent of any new or additional Indebtedness in excess of $1,000,000 or monetary Liens on any Real Estate directly or indirectly owned or leased by Borrower;

(j) within five (5) Business Days of receipt, copies of any written claim made with respect to any Non-Recourse Exclusion;

(k) not earlier than November 30 and not later than JanuaryDecember 31 of each year, a budget and business plan for the REIT and its Subsidiaries and each Borrowing Base Property for the then-currentfollowing calendar year, which shall include a budget of planned capital expenditures on both an individual and a consolidated basis for each Hotel Property of REIT and its Subsidiaries and a marketing plan for each Hotel Property of the REIT and its Subsidiaries, and Borrower shall obtain Required Lender’s approval of such budget on or before thirty (30) days after delivery thereof to the Required Lenders (such approval not to be unreasonably withheld, conditioned or delayed), and following such approval such budget shall be the Approved Budget for the following calendar year (provided that for the avoidance of doubt, no advances for Permitted Borrowings pursuant to clause (b) of the definition thereof shall be permitted for the calendar year subject to such proposed budget until such budget is approved by the Required Lenders);

(l) within forty-five (45) days after the end of each fiscal quarter, for each Borrowing Base Property, a group booking pace report and market segmentation report, if reasonably available;

(m) upon the request of Agent, the most current Smith Travel Research STR Report available, comparing such Borrowing Base Property to its primary competitive set;

(n) prompt notice of (i) any change in the senior management of the REIT, and (ii) any change in the business, assets, liabilities, financial condition, results of operations or business prospects of Borrower, any Guarantor, or any of their respective Subsidiaries which has had or could have a Material Adverse Effect;

(o) evidence reasonably satisfactory to Agent of the timely payment of all real estate taxes for the Borrowing Base Properties;

(p) Within twenty-five (25) days after the end of each calendar month, (i) individual and consolidated operating statements prepared in accordance with GAAP and containing (iA) a report on the average daily rate, occupancy levels and revenues per available room for each Borrowing Base Property for (A(individually and in the aggregate) and other Real Estate (in the aggregate) for (1) the current month (as compared to the current budget and

 

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comparable period for the prior year), (B2) on a year-to-date basis (as compared to the current budgetApproved Budget and the comparable period of the prior year), (C3) on a trailing 12-month basis (on a month-by-month basis), (iiB) a budget reforecast (expressed on a month-by-month fiscal year basis, showing year-to-date actual results plus projections for the remainder of the year), (iii and the next four (4) calendar quarters) (which as to the next four (4) calendar quarters may in part be based upon the Management Projections), (C) a reconciliation of all cash balances, including deposit accounts, reserve accounts, escrow accounts, and other Restricted Cash and Unrestricted Cash and Cash Equivalents, (iv) an accounting of amounts funded, disbursed and applied pursuant to the Cash Flow Waterfall and ofand (D) at the request of Agent, an explanation of any variances in excess of five percent (5%) of the Approved Budget, (ii) an accounting of accrued expenses and amounts described in §3.2(c), (viii) the most current Smith Travel Research STR Report available, comparing such Borrowing Base Property to its primary competitive set; and (vi, (iv) a reconciliation for the previous month and year to date to the Approved Budget, (v) a statement showing the Liquidity of the Borrower as of each Monday and Thursday together with reasonably detailed supporting calculations, (vi) a description of any capital-raising events (including sales, financings and Equity Offerings) during the preceding month, (vii) a description of any amounts received by the REIT or Borrower under the Merger Agreement, and (viii) such other information as Agent or the Required Lenders may reasonably request for the REIT and its Subsidiaries and each Borrowing Base Property or other Real Estate, including a group booking pace report and market segmentation report, if reasonably available; and

(q) from time to time, such other financial data and information in the possession of REIT or its Subsidiaries (including without limitation auditors’ management letters, status of litigation or investigations against REIT or any of its Subsidiaries and any settlement discussions relating thereto, property inspection and environmental reports and information as to zoning and other legal and regulatory changes affecting REIT or any of its Subsidiaries) as the Agent may reasonably request.

The Borrower shall cooperate with the Agent in connection with the publication of certain materials and/or information provided by or on behalf of the Borrower. Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of the Borrower to the Agent and the Lenders (collectively, “Information Materials”) pursuant to this Section and the Borrower shall designate Information Materials (a) that are either available to the public or not material with respect to the Borrower and its Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information.”. Any material to be delivered pursuant to this §7.4 may be delivered electronically directly to Agent and the Lenders provided that such material is in a format reasonably acceptable to Agent, and such material shall be deemed to have been delivered to Agent and the Lenders upon Agent’s receipt thereof. Upon the request of Agent, the Borrower shall deliver paper copies thereof to Agent and the Lenders. The Borrower and the Guarantors authorize Agent and Arranger to disseminate any such materials, including without limitation the Information Materials through the use of Intralinks, SyndTrak or any other electronic information dissemination system (an “Electronic System”). Any such Electronic System is provided “as is” and “as available.” The Agent and the Arranger do not warrant the adequacy of any Electronic System and expressly disclaim liability for errors or omissions in any notice, demand, communication, information or other material provided by or on behalf of Borrower that

 

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is distributed over or by any such Electronic System (“Communications”). No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by Agent or the Arranger in connection with the Communications or the Electronic System. In no event shall the Agent, the Arranger or any of their directors, officers, employees, agents or attorneys have any liability to the Borrower or the Guarantors, any Lender or any other Person for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s, any Guarantors’, the Agent’s or any Arranger’s transmission of Communications through the Electronic System, and the Borrower and the Guarantors release Agent, the Arranger and the Lenders from any liability in connection therewith. Certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower, its Subsidiaries or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market related activities with respect to such Persons’ securities. The Borrower hereby agrees that it will identify that portion of the Information Materials that may be distributed to the Public Lenders and that (i) all such Information Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Information Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Agent, the Lenders and the Arranger to treat suchall Publicly Available Information Materials as not containing any material non-public information with respect to the Borrower, its Subsidiaries, its Affiliates or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Information Materials constitute confidential information, they shall be treated as provided in §18.7); (iii) all Publicly Available Information Materials marked “PUBLIC” areis permitted to be made available through a portion of any electronic dissemination system designated “Public Investor” or a similar designation; and (iv) the Agent and the Arranger shall be entitled to treat any Information Materials that are not marked “PUBLIC”Publicly Available Information as being suitable only for posting on a portion of any electronic dissemination system not designated “Public Investor” or a similar designation.

 

  §7.5

Notices.

(a) Defaults. The Borrower will promptly upon becoming aware of same notify the Agent in writing of the occurrence of any Default or Event of Default, which notice shall describe such occurrence with reasonable specificity and shall state that such notice is a “notice of default”. If any Person shall give any notice of the existence of a claimed default or take any other action in respect of a claimed default (whether or not constituting an Event of Default) under this Agreement or under any note, evidence of indebtedness, indenture or other obligation to which or with respect to which the Borrower, any Guarantor or any of their respective Subsidiaries is a party or obligor, whether as principal or surety, and such default would permit the holder of such note or obligation or other evidence of indebtedness to accelerate the maturity thereof, which acceleration would either cause a Default or have a Material Adverse Effect, the Borrower shall forthwith give written notice thereof to the Agent and each of the Lenders, describing the notice or action and the nature of the claimed default.

 

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(b) Environmental Events. The Borrower will give notice to the Agent within five (5) Business Days of becoming aware of (i) any potential or known Release, or threat of Release, of any Hazardous Substances in violation of any applicable Environmental Law; (ii) any violation of any Environmental Law that the Borrower, any Guarantor or any of their respective Subsidiaries reports in writing or is reportable by such Person in writing (or for which any written report supplemental to any oral report is made) to any federal, state or local environmental agency or (iii) any inquiry, proceeding, investigation, or other action, including a notice from any agency of potential environmental liability, of any federal, state or local environmental agency or board, that in any case involves (A) any Borrowing Base Property, (B) any other Real Estate and could reasonably be expected to have a Material Adverse Effect or (C) the Agent’s liens or security title on the Collateral pursuant to the Security Documents.

(c) Notification of Claims Against Collateral. The Borrower will give notice to the Agent in writing within five (5) Business Days of becoming aware of any material setoff, claims (including, with respect to any Borrowing Base Property, environmental claims), withholdings or other defenses to which any of the Collateral, or the rights of the Agent or the Lenders with respect to the Collateral, are subject (other than Liens permitted with respect thereto pursuant to §8.2).

(d) Notice of Litigation and Judgments. The Borrower will give notice to the Agent in writing within five (5) Business Days of becoming aware of any litigation, government investigations or proceedings threatened in writing or any pending litigation, government investigations and proceedings affecting the Borrower, any Guarantor or any of their respective Subsidiaries or to which the Borrower, any Guarantor or any of their respective Subsidiaries is or is to become a party involving an uninsured claim against the Borrower, any Guarantor or any of their respective Subsidiaries that could either reasonably be expected to cause a Default or could reasonably be expected to have a Material Adverse Effect and stating the nature and status of such litigation, government investigations or proceedings. The Borrower will give notice to the Agent, in writing, in form and detail reasonably satisfactory to the Agent and each of the Lenders, within ten (10) days of any judgment not covered by insurance, whether final or otherwise, against the REIT or any of its Subsidiaries in an amount in excess of $1,000,000.00.

(e) Notice of Defaults Under Organizational Agreements. The Borrower will, within five (5) Business Days of notice or receipt, provide to the Agent copies of any and all written notices of default under any partnership agreement, operating agreement or other organizational agreement to which Borrower or any of its Subsidiaries is a party or of any failure by the Borrower or any of its Subsidiaries to perform any material obligation under any such partnership agreement, operating agreement or other organizational agreement.

(f) ERISA. The Borrower will give notice to the Agent within five (5) Business Days after REIT or any ERISA Affiliate (i) gives or is required to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any Guaranteed Pension Plan, Multiemployer Plan or Employee Benefit Plan, or knows that the plan administrator of any such plan has given or is required to give notice of any such reportable event; (ii) gives a copy of any notice of complete or partial withdrawal liability under Title IV of ERISA; or (iii) receives any notice from the PBGC under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any such plan.

 

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(g) Notices of Default Under Management Agreements, Franchise Agreements and Operating Leases. The Borrower will give notice to the Agent in writing within three (3) Business Days after the Borrower or any Guarantor (i) receives written notice from a Manager, Franchisor or TRS Lessee pursuant to a Management Agreement, Franchise Agreement or Operating Lease relating to a Borrowing Base Property of a default by the Borrower or Subsidiary Guarantor under such Management Agreement, Franchise Agreement or Operating Lease, or a termination of any such agreement, or (ii) delivers a written notice to any Manager, Franchisor or TRS Lessee under a Management Agreement, Franchise Agreement or Operating Lease of a Borrowing Base Property of a default by such Manager, Franchisor or TRS Lessee under a Management Agreement, Franchise Agreement or Operating Lease or a termination of any such agreement.

(h) [Intentionally Omitted];

(i) Notification of Lenders. Within five (5) Business Days after receiving any notice under this §7.5, the Agent will forward a copy thereof to each of the Lenders, together with copies of any certificates or other written information that accompanied such notice.

 

  §7.6

Existence; Maintenance of Properties.

(a) Except as permitted under §§8.4 and 8.8, the Borrower and each Guarantor will (i) preserve and keep in full force and effect their legal existence in the jurisdiction of its incorporation or formation and (ii) will cause each of their respective Subsidiaries that are not Guarantors to preserve and keep in full force and effect their legal existence in the jurisdiction of its incorporation or formation except where such failure has not had and could not reasonably be expected to have a Material Adverse Effect. The Borrower and each Guarantor will preserve and keep in full force all of their rights and franchises and those of their respective Subsidiaries, the preservation of which is necessary to the conduct of their business (except with respect to Subsidiaries of the Borrower that are not Guarantors, where such failure has not had and could not reasonably be expected to have a Material Adverse Effect). REIT shall at all times comply with all requirements and applicable laws and regulations necessary to maintain REIT Status and shall continue to receive REIT Status. The common stock of REIT shall at all times during the term of this Agreement be listed for trading and be traded on the New York Stock Exchange, NASDAQ or another nationally recognized exchange. The REIT, Borrower, General Partner or TRS shall continue to own directly or indirectly one hundred percent (100%) of the Subsidiary Guarantors. In the event the Borrower or any Guarantor is a limited liability company, the Borrower and each Guarantor shall not, nor shall any of its members or managers, take any action in furtherance of, or consummate, an LLC Division.

(b) The Borrower and each Guarantor (i) will cause all of its properties and those of its Subsidiaries used or useful in the conduct of its business or the business of its Subsidiaries to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted) and supplied with all necessary equipment, provided, that the foregoing, shall not prohibit the sale of properties in the ordinary course of business in accordance with the terms of this Agreement, and (ii) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof.

 

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  §7.7

Insurance; Condemnation.

(a) The Borrower and each Subsidiary Guarantor will, at its expense, procure and maintain for the benefit of the Borrower, each such Subsidiary Guarantor and the Agent, insurance policies issued by such insurance companies, in such amounts, in such form and substance, and with such coverages, endorsements, deductibles and expiration dates as are acceptable to the Agent, providing the following types of insurance covering each Borrowing Base Property:

(i) “Cause of Loss-Special Form” property insurance (including broad form flood, broad form earthquake, coverage from loss or damage arising from acts of terrorism, and comprehensive boiler and machinery coverages) on each Building and the contents therein of the Borrower and its Subsidiaries in an amount not less than one hundred percent (100%) of the full replacement cost of each Building and the contents therein of the Borrower and its Subsidiaries or such other amount as the Agent may approve, with deductibles not to exceed $100,000.00 for any one occurrence, with a replacement cost coverage endorsement, an agreed amount endorsement, and, if requested by the Agent, a contingent liability from operation of building laws endorsement in such amounts as the Agent may require. Full replacement cost as used herein means the cost of replacing the Building (exclusive of the cost of excavations, foundations and footings below the lowest basement floor) and the contents therein of the Borrower and its Subsidiaries without deduction for physical depreciation thereof;

(ii) During the course of construction or repair of any Building, the insurance required by clause (i) above shall be written on a builders risk, completed value, non-reporting form, meeting all of the terms required by clause (i) above, covering the total value of work performed, materials, equipment, machinery and supplies furnished, existing structures, and temporary structures being erected on or near the Borrowing Base Property, including coverage against collapse and damage during transit or while being stored off-site, and containing a soft costs (including loss of rents) coverage endorsement and a permission to occupy endorsement;

(iii) Flood insurance if at any time any Building is located in any federally designated “special hazard area” (including any area having special flood, mudslide and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map published by the Federal Emergency Management Agency as Zone A, AO, Al-30, AE, A99, AH, VO, V1-30, VE, V, M or E) and the broad form flood coverage required by clause (i) above is not available, in an amount equal to the full replacement cost or the maximum amount then available under the National Flood Insurance Program;

(iv) Business interruption insurance in an amount sufficient to recover at least the total estimated gross receipts from all sources of income for the Borrowing Base Property for a twelve (12) month period with an extended period of recovery provision covering at least 180 days following the resumption of operations;

 

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(v) Commercial general liability insurance against claims for personal injury (to include, without limitation, bodily injury and personal and advertising injury) and property damage liability, all on an occurrence basis, if commercially available, with such coverages as the Agent may reasonably request (including, without limitation, contractual liability coverage, completed operations coverage for a period of two (2) years following completion of construction of any improvements on the Borrowing Base Property, and coverages equivalent to an ISO broad form endorsement), with a general aggregate limit of not less than $2,000,000.00, a completed operations aggregate limit of not less than $2,000,000.00, and a combined single “per occurrence” limit of not less than $1,000,000.00 for bodily injury and property damage;

(vi) During the course of construction or repair of any improvements on the Borrowing Base Property, the general contractor selected to oversee such improvements shall provide commercial general liability insurance (including completed operations coverage) naming Borrower as an additional insured, or in lieu thereof, may provide for such coverage by

way of an owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the insurance required by clause (v) above;

(vii) Employer’s liability insurance with respect to the Borrower’s employees (or if the Borrower have no employees, with respect to the employees of the managers under the Management Agreements);

(viii) Umbrella liability insurance with limits of not less than $25,000,000.00 to be in excess of the limits of the insurance required by clauses (v), (vi) and (vii) above, with coverage at least as broad as the primary coverages of the insurance required by clauses (v), (vi) and (vii) above, with any excess liability insurance to be at least as broad as the coverages of the lead umbrella policy. All such policies shall be endorsed to provide defense coverage obligations;

(ix) Workers’ compensation insurance for all employees of the Borrower or its Subsidiaries engaged on or with respect to the Borrowing Base Property with limits as required by Applicable Law (or if Borrower have no employees, for all employees of the managers under the Management Agreements); and

(x) If the Borrower or a Subsidiary Guarantor is directly engaged in operating the businesses of the Hotel Properties, the Borrower shall maintain such additional insurance appropriate to the nature of the operations in such forms and amounts as the Agent may reasonably require, including but not limited to innkeeper/bailee legal liability coverage, general liability coverages for restaurant and food service operations, liquor legal liability coverage, garagekeepers legal liability coverage, and automobile liability coverage. If the Borrower or a Subsidiary Guarantor contracts with a third party operator or manager to conduct the business operations of the Hotel Properties, the Borrower or such Subsidiary Guarantor shall cause its contracts to require these coverages to be maintained by the operator or manager. In either case, the insurance shall be written with appropriate extensions of coverage for the Borrower, the Subsidiary Guarantors, and the Agent and Lenders as additional insureds; and

 

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(xi) Such other insurance in such form and in such amounts as may from time to time be reasonably required by the Agent against other insurable hazards and casualties which at the time are commonly insured against in the case of properties of similar character and location to the Borrowing Base Property.

The Borrower shall pay all premiums on insurance policies. The insurance policies with respect to all Borrowing Base Properties provided for in clauses (v), (vi) and (viii) above shall name the Agent as an additional insured and shall contain a cross liability/severability endorsement. The insurance policies provided for in clauses (i), (ii), (iii), (iv) and (vi) above shall name the Agent as mortgagee (with respect to each Borrowing Base Property subject to a Mortgage) and loss payee, shall be first payable in case of loss to the Agent, and shall contain mortgage clauses (with respect to each Borrowing Base Property subject to a Mortgage) and lender’s loss payable endorsements in form and substance acceptable to the Agent. The Borrower shall deliver certificates of insurance evidencing all such policies to the Agent, and the Borrower shall promptly furnish to the Agent all renewal notices and evidence that all premiums or portions thereof then due and payable have been paid. Borrower shall provide to Agent a duplicate original or certified copy of the insurance policies required hereunder promptly after the original policy is received by Borrower. Not less than ten (10) days prior to the expiration date of the policies, as the same may be reduced by Agent, the Borrower shall deliver to the Agent evidence of continued coverage, as may be satisfactory to the Agent, and within five (5) Business Days after the renewal date of such policies, the Borrower shall deliver a certificate of insurance to Agent, in form and substance satisfactory to the Agent.

(b) All policies of insurance required by this Agreement shall contain clauses or endorsements to the effect that (i) no act or omission of the Borrower or any Subsidiary or anyone acting for the Borrower or any Subsidiary (including, without limitation, any representations made in the procurement of such insurance), which might otherwise result in a forfeiture of such insurance or any part thereof, no occupancy or use of the Borrowing Base Property for purposes more hazardous than permitted by the terms of the policy, and no foreclosure or any other change in title to the Borrowing Base Property or any part thereof, shall affect the validity or enforceability of such insurance insofar as the Agent is concerned, (ii) the insurer waives any right of set off, counterclaim, subrogation, or any deduction in respect of any liability of the Borrower or any Subsidiary and the Agent, (iii) such insurance is primary and without right of contribution from any other insurance which may be available, (iv) such policies shall not be modified so as to reduce or in any way negatively affect insurance coverage on any Mortgaged Property, canceled or terminated prior to the scheduled expiration date thereof without the insurer thereunder giving at least thirty (30) days prior written notice to the Agent by certified or registered mail; provided, however, that only ten (10) days prior written notice to Agent shall be required if such cancellation or termination is due to non-payment of any insurance premium, and (v) that the Agent or the Lenders shall not be liable for any premiums thereon or subject to any assessments thereunder, and shall in all events be in amounts sufficient to avoid any coinsurance liability.

(c) The insurance required by this Agreement may be effected through a blanket policy or policies covering additional locations and property of the Borrower and other Persons not included in the Borrowing Base Properties, provided that such blanket policy or policies comply with all of the terms and provisions of this §7.7, and contain endorsements or clauses assuring that any claim or recovery will not be less than that which a separate policy would provide.

 

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(d) All policies of insurance required by this Agreement shall be issued by companies licensed to do business in the State where the policy is issued and also in the States where the Real Estate is located and shall be issued by companies having a rating in Best’s Key Rating Guide of at least “A” and a financial size category of at least “X”.

(e) Neither the Borrower nor any Subsidiary shall carry separate insurance, concurrent in kind or form or contributing in the event of loss, with any insurance required under this Agreement unless such insurance complies with the terms and provisions of this §7.7.

(f) In the event of any loss or damage to or Taking of any Borrowing Base Property, the Borrower or the applicable Guarantor shall give prompt written notice to the insurance carrier and the Agent. Each of the Borrower and the Guarantors hereby irrevocably authorizes and empowers the Agent, at the Agent’s option and in the Agent’s sole discretion or at the request of the Required Lenders in their sole discretion, as its attorney in fact, to make proof of such loss, to adjust and compromise any claim under insurance policies or as a result of a Taking, to appear in and prosecute any action arising from such insurance policies or as a result of a Taking, to collect and receive Insurance Proceeds and Condemnation Proceeds, and to deduct therefrom the Agent’s reasonable expenses incurred in the collection of such Insurance Proceeds and Condemnation Proceeds; provided, however, that so long as no Default or Event of Default has occurred and is continuing and so long as the Borrower or any Guarantor shall in good faith diligently pursue such claim, the Borrower or such Guarantor may make proof of loss and appear in any proceedings or negotiations with respect to the adjustment of such claim, except that the Borrower or such Guarantor may not settle, adjust or compromise any such claim without the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed; provided, further, that the Borrower or such Guarantor may make proof of loss and adjust and compromise any claim under casualty insurance policies which is in an amount less than $500,000.00 so long as no Default or Event of Default has occurred and is continuing and so long as the Borrower or such Guarantor shall in good faith diligently pursue such claim. The Borrower and each Guarantor further authorize the Agent, at the Agent’s option, to (i) apply the balance of such Insurance Proceeds and Condemnation Proceeds to the payment of the Obligations whether or not then due, or (ii) if the Agent shall require the reconstruction or repair of the Borrowing Base Property, to hold the balance of such proceeds as trustee to be used to pay taxes, charges, sewer use fees, water rates and assessments which may be imposed on the Borrowing Base Property and the Obligations as they become due during the course of reconstruction or repair of the Borrowing Base Property and to reimburse the Borrower or such Guarantor, in accordance with such terms and conditions as the Agent may prescribe, for, or to pay directly, the costs of reconstruction or repair of the Borrowing Base Property, and upon completion of such reconstruction or repair to pay any excess Insurance Proceeds to the Borrower, provided that (i) upon completion of such reconstruction or repair, such Borrowing Base Property is in compliance with all applicable state, federal and local laws, ordinances and regulations, including, without limitation, all building and zoning laws, ordinances and regulations and (ii) no Defaults or Events of Default exist or are continuing under this Agreement on the date of such payment to the Borrower.

 

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(g) Notwithstanding the foregoing or anything to the contrary contained in the Mortgages, the Agent shall make net Insurance Proceeds and Condemnation Proceeds available to the Borrower or such Guarantor to reconstruct and repair the Borrowing Base Property, in accordance with such terms and conditions as the Agent may prescribe in the Agent’s discretion for the disbursement of the proceeds, provided that (i) the cost of such reconstruction or repair is not estimated by the Agent to exceed twenty-five percent (25%) of the replacement cost of the damaged Building (as reasonably estimated by the Agent), (ii) no Default or Event of Default shall have occurred and be continuing, (iii) the Borrower or such Guarantor shall have provided to the Agent additional cash security in an amount equal to the amount reasonably estimated by the Agent to be the amount in excess of such proceeds which will be required to complete such repair or restoration, (iv) the Agent shall have approved the plans and specifications, construction budget, construction contracts, and construction schedule for such repair or restoration and reasonably determined that the repaired or restored Borrowing Base Property will provide the Agent with adequate security for the Obligations (provided that the Agent shall not disapprove such plans and specifications if the Building is to be restored to substantially its condition immediately prior to such damage), (v) the Borrower or such Guarantor shall have delivered to the Agent written agreements binding upon the Franchisor and Manager agreeing upon a date for delivery of possession of the Borrowing Base Property to permit time which is sufficient in the judgment of the Agent for such repair or restoration and approving the plans and specifications for such repair or restoration, or other evidence satisfactory to the Agent that none of the Franchisor or Manager may terminate the Franchise Agreement or the Management Agreement as a result of such casualty or as a result of having a right to approve the plans and specifications for such repair or restoration and prior to the expiration of any business interruption coverage, (vi) the Agent shall reasonably determine that such repair or reconstruction can be completed prior to the Maturity Date, (vii) the Agent shall receive evidence reasonably satisfactory to it that any such restoration, repair or rebuilding complies in all respects with the Franchise Agreement, the Management Agreement and any and all applicable state, federal and local laws, ordinances and regulations, including without limitation, zoning laws, ordinances and regulations, and that all required permits, licenses and approvals relative thereto have been or will be issued in a manner so as not to materially impede the progress of restoration, (viii) the Agent shall receive evidence reasonably satisfactory to it that the insurer under such policies of fire or other casualty insurance does not assert any defense to payment under such policies against the Borrower, any Guarantor or the Agent, and (ix) with respect to any Taking, (a) the value of the land taken under such condemnation is less than $500,000.00; (b) less than five percent (5%) of the land is taken; (c) the land that is taken is located along the perimeter or periphery of the land; (d) access to the Borrowing Base Property is not affected in any way by the Taking; (e) no portion of the improvements are taken; and (f) Agent shall determine that following such repair or restoration there shall be no reduction in occupancy or income from the Borrowing Base Property so affected by such specific condemnation or taking (excluding any proceeds from business interruption insurance or proceeds from such award allocable to such income). Any excess Insurance Proceeds shall be paid to the Borrower, or if a Default or Event of Default has occurred and is continuing, such proceeds shall be applied to the payment of the Obligations, unless in either case by the terms of the applicable insurance policy the excess proceeds are required to be returned to such insurer. Any excess Condemnation Proceeds shall be applied to the payment of the Obligations. In no event shall the provisions of this Section be construed to extend the Maturity Date or to limit in any way any right or remedy of the Agent upon the occurrence of an Event of Default hereunder. If the Borrowing Base Property is acquired by the Agent, all right, title and interest of the Borrower and any Guarantor in and to any insurance policies to the extent that they relate to Borrowing Base Properties and unearned premiums thereon and in and to the proceeds thereof resulting from loss or damage to the Borrowing Base Property prior to the acquisition shall pass to the Agent or any other successor in interest to the Borrower or purchaser of the Borrowing Base Property.

 

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(h) The Borrower, the Guarantors and their respective Subsidiaries (as applicable) will, at their expense, procure and maintain insurance covering the Borrower, the Guarantors and their respective Subsidiaries (as applicable) and the Real Estate other than the Borrowing Base Properties in such amounts and against such risks and casualties as are customary for properties of similar character and location, due regard being given to the type of improvements thereon, their construction, location, use and occupancy.

(i) The Borrower and the Guarantors will provide to the Agent for the benefit of the Lenders Title Policies for all of the Borrowing Base Properties.

 

  §7.8

Taxes; Liens. The Borrower and the Guarantors will, and will cause their respective Subsidiaries to, duly pay and discharge, or cause to be paid and discharged, before the same shall become delinquent, all taxes, assessments and other governmental charges imposed upon them or upon the Borrowing Base Properties or the other Real Estate, sales and activities, or any part thereof, or upon the income or profits therefrom as well as all claims for labor, materials or supplies that if unpaid might by law become a lien or charge upon any of its property or other Liens affecting any of the Collateral, any Borrowing Base Property or any other property of the Borrower, the Guarantors or their respective Subsidiaries and all non-governmental assessments, levies, maintenance and other charges, whether resulting from covenants, conditions and restrictions or otherwise, water and sewer rents and charges assessments on any water stock, utility charges and assessments and owner association dues, fees and levies, provided that any such tax, assessment, charge or levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings which shall suspend the collection thereof with respect to such property and the Borrower or applicable Guarantor shall not be subject to any fine, suspension or loss of privileges or rights by reason of such proceeding, neither such property nor any portion thereof or interest therein would be in any danger of sale, forfeiture, loss or suspension of operation by reason of such proceeding and the Borrower, such Guarantor or any such Subsidiary shall have set aside on its books adequate reserves in accordance with GAAP (or if such aggregate amount so contested relates to a Borrowing Base Property and equals or exceeds $500,000, then Borrower shall have deposited with Agent as additional Collateral adequate reserves as reasonably determined by Agent); and provided, further, that forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor, the Borrower, such Guarantor or any such Subsidiary either (i) will provide a bond issued by a surety reasonably acceptable to the Agent and sufficient to stay all such proceedings or (ii) if no such bond is provided, will pay each such tax, assessment, charge or levy. Borrower shall deliver to the Agent evidence of payment of taxes, other assessments, levies and charges described in this §7.8 with respect to the Borrowing Base Properties not later than ten (10) Business Days prior to the date upon which such amounts are due and payable unless the same are being contested in accordance with the terms hereof and the other Loan Documents.

 

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  §7.9

Inspection of Properties and Books. The Borrower and the Guarantors will, and will cause their respective Subsidiaries to, permit the Agent and the Lenders, at the Borrower’s expense and upon reasonable prior notice, to visit and inspect any of the properties of the Borrower, each Guarantor or any of their respective Subsidiaries (subject to the rights of tenants under their leases), to examine the books of account of the Borrower, any Guarantor and their respective Subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of the Borrower, any Guarantor and their respective Subsidiaries with, and to be advised as to the same by, their respective officers, partners or members, all at such reasonable times and intervals as the Agent or any Lender may reasonably request, provided that so long as no Default or Event of Default shall have occurred and be continuing, the Borrower shall not be required to pay for such visits and inspections more often than once in any twelve (12) month period. The Lenders shall use good faith efforts to coordinate such visits and inspections so as to minimize the interference with and disruption to the normal business operations of such Persons.

 

  §7.10

Compliance with Laws, Contracts, Licenses, and Permits. The Borrower and the Guarantors will, and will cause each of their respective Subsidiaries to, comply in all respects with (a) all applicable laws and regulations now or hereafter in effect wherever its business is conducted, including all Environmental Laws, (b) the provisions of its corporate charter, partnership agreement, limited liability company agreement or declaration of trust, as the case may be, and other charter documents and bylaws, (c) all agreements and instruments to which it is a party or by which it or any of its properties may be bound, (d) all applicable decrees, orders, and judgments, and (e) all licenses and permits required by applicable laws and regulations for the conduct of its business or the ownership, use or operation of its properties, except where failure to so comply with either clause (a), (c) or (e) would not result in the material non-compliance with the items described in such clauses. If any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that the Borrower, any Guarantor or their respective Subsidiaries may fulfill any of its obligations hereunder, the Borrower, such Guarantor or such Subsidiary will promptly take or cause to be taken all steps necessary to obtain such authorization, consent, approval, permit or license and furnish the Agent and the Lenders with evidence thereof. The Borrower shall develop and implement such programs, policies and procedures as are necessary to comply with the Patriot Act and shall promptly advise the Agent in writing in the event that the Borrower shall determine that any investors in the Borrower are in violation of such act.

 

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  §7.11

Further Assurances. The Borrower and each Guarantor will and will cause each of their respective Subsidiaries to, cooperate with the Agent and the Lenders and execute such further instruments and documents as the Lenders or the Agent shall reasonably request to carry out to their reasonable satisfaction the transactions contemplated by this Agreement and the other Loan Documents.

 

  §7.12

Leases of the Property. Neither Borrower nor any Guarantor will without the prior written consent of the Agent, such approval to not be unreasonably withheld, (i) enter into a new Lease of all or any portion of a Borrowing Base Property (other than with respect to the Leases of boat slips at the Borrowing Base Properties located at 255 Lore Road, Solomons, Maryland and 201 Ocean Drive, Key Largo, Florida), (ii) amend, supplement or otherwise modify any Lease in a manner materially adverse to the interest of the Lenders (it being understood that, without limitation, any shortening of a lease term, reduction of rents or other payment obligations, granting of abatements, increasing allowances, contributions or otherwise providing economic concessions to the tenant hereunder, creating economic obligations of the landlord thereunder, increasing the landlord’s obligations or decreasing the landlord’s rights, altering the “triple net” or “double net” (as applicable) nature of any Lease, decreasing the tenant’s obligations, creating additional remedies, rights of self-help, offset, termination, co-tenancy or other similar provisions for the benefit of the tenant thereunder, or creating rights of first offer or first refusal, shall be deemed to be materially adverse to the Lenders), (iii) terminate or cancel, or accept the surrender of, any Lease, (iv) if Borrower’s or such Guarantor’s consent is required under the terms of such Lease) consent to the assignment or subletting of, any Lease, or (v) grant any concessions to or waive the performance of any material obligations of any tenant, lessee or licensee under, any now existing or future Lease. Agent consents to Borrower or the applicable Guarantor pursuing remedies against the tenant under the West Virginia Lease and terminating the West Virginia Lease, provided that, as provided above in this §7.12, any new Lease shall be subject to the approval of Agent, such approval to not be unreasonably withheld. The Lenders acknowledge that the existence of defaults under the West Virginia Lease in and of themselves shall not be a Default or Event of Default. Any new Lease (other than with respect to the Leases of boat slips at the Borrowing Base Properties located at 255 Lore Road, Solomons, Maryland and 201 Ocean Drive, Key Largo, Florida)Any new Lease shall contain customary mortgagee provisions (including the ability of the landlord to assign its interest without consent and the subordination of the Lease and the tenant’s rights thereunder to any mortgage, deed of trust or deed to secure debt encumbering such property). Borrower shall promptly deliver to Agent a copy of any amendment to a Lease (other than with respect to the Leases of boat slips at the Borrowing Base Properties located at 255 Lore Road, Solomons, Maryland and 201 Ocean Drive, Key Largo, Florida).

 

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  §7.13

Material Contracts.

(a) The Borrower and the Guarantors shall perform each and all of their obligations under each Material Contract. Borrower shall not, and shall not permit a Guarantor to, directly or indirectly cause or permit to exist any condition which could result in the termination or cancellation of, or which would relieve the performance of any obligations of any other party thereto under, any Material Contract for all or any portion of the Borrowing Base Properties.

(b) Neither the Borrower nor any Guarantor shall do any of the following without the AgentRequired Lender’s prior written consent (which as to clause (i) shall not be unreasonably withheld, conditioned or delayed): (i) enter into, surrender or terminate any Material Contract, including any new or replacement Operating Lease, Franchise Agreement or Management Agreement; (ii) be or become a party to a Management Agreement that provides for base management fees in excess of 4.0% of Gross Hotel Revenues; or (iii) reduce the term of, increase the charges or fees payable by such Person under, decrease the charges or fees payable to such Person under, or otherwise modify or amend in any material respect, any Material Contract. Borrower shall cause each Borrowing Base Property to be managed by a third party manager approved by the Required Lenders and operated under a Management Agreement reasonably satisfactory to the Required Lenders which is in full force and effect, and operated under an Approved Brand pursuant to a Franchise Agreement which is in full force and effect and approved by the Required Lenders. As a condition to any approval of a new Manager, Borrower shall deliver to Agent upon Agent’s request a collateral assignment of such Management Agreement to Agent and a subordination of the Manager’s rights thereunder to the rights of the Agent and the Lenders under the Loan Documents. AgentThe Required Lenders may condition the approval of any Franchise Agreement upon the execution and delivery by the Franchisor to Agent of a “comfort letter” in form and substance reasonably satisfactory to Agent.

(c) The Borrower shall upon the request of the Agent obtain updated comfort letters from such Franchisors as the Agent may request.

 

  §7.14

Business Operations. REIT and its Subsidiaries shall operate their respective businesses in substantially the same manner and in substantially the same fields and lines of business as such business is now conducted and such other lines of business that are reasonably related or incidental thereto and in compliance with the terms and conditions of this Agreement and the Loan Documents. Neither REIT nor the Borrower will, or permit any of their respective Subsidiaries to, directly or indirectly, engage in any line of business other than the acquisition, ownership, operation and development of Hotel Properties.

 

  §7.15

Registered Service Mark. Without prior written notice to the Agent, except for such rights as are granted pursuant to the approved Franchise Agreement for a Borrowing Base Property or, only with respect to the Borrowing Base Property located at 800 Laurel Street, Creston, Iowa, those owned by the REIT or its Subsidiaries, none of the Borrowing Base Properties shall be owned or operated by the Borrower or any Guarantor under any trademark, tradename, service mark or logo (provided that the foregoing shall not preclude signs or other indications that a Borrowing Base Property is owned or operated by REIT or one of its Subsidiaries). In the event any of the Borrowing Base Properties shall be owned or operated under

 

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  any tradename, trademark, service mark or logo, except those pursuant to a permitted Franchise Agreement or, only with respect to the Borrowing Base Property located at 800 Laurel Street, Creston, Iowa, those owned by the REIT or its Subsidiaries and excluding any such item that simply indicates that the property is owned or operated by REIT or a Subsidiary, the Borrower or the applicable Guarantor shall enter into such agreements with the Agent in form and substance reasonably satisfactory to the Agent, as the Agent may reasonably require to grant the Agent a perfected first priority security interest therein and to grant to the Agent or any successful bidder at a foreclosure sale of such Borrowing Base Property the right and/or license to continue operating such Borrowing Base Property under such tradename, trademark, service mark or logo as determined by the Agent.

 

  §7.16

Ownership of Real Estate. Without the prior written consent of the Agent, all Real Estate and all interests (whether direct or indirect) of REIT or the Borrower in any Real Estate assets now owned or leased or acquired or leased after the date hereof shall be owned or leased directly by the Borrower or TRS or a Wholly-Owned Subsidiary of the Borrower or TRS; provided, however that the Borrower shall be permitted to own or lease interests in Real Estate through non-Wholly-Owned Subsidiaries and Unconsolidated Affiliates of the Borrower as permitted by §8.3(m).

 

  §7.17

Distributions of Income to the Borrower. The Borrower shall cause all of its Subsidiaries (subject to the terms of any loan documents under which such Subsidiary is the borrower) to distribute to the Borrower (but not less frequently than once each calendar quarter, unless otherwise approved by the Agent), whether in the form of dividends, distributions or otherwise, all profits, proceeds or other income relating to or arising from its Subsidiaries’ use, operation, financing, refinancing, sale or other disposition of their respective assets and properties after (a) the payment by each Subsidiary of its debt service, operating expenses, capital improvements and leasing commissions for such quarter and (b) the establishment of reasonable reserves for the payment of operating expenses not paid on at least a quarterly basis and capital improvements and tenant improvements to be made to such Subsidiary’s assets and properties approved by such Subsidiary in the course of its business consistent with its past practices.

 

  §7.18

Plan Assets. The Borrower, the Guarantors and each of their respective Subsidiaries will do, or cause to be done, all things necessary to ensure that none of its Real Estate or other assets will be deemed to be Plan Assets at any time.

 

  §7.19

Completion of Renovations.

(a) In the event that Borrower or any Subsidiary Guarantor shall undertake any Renovations to a Borrowing Base Property pursuant to a PIP or otherwise, the Borrower shall (i) obtain the prior written approval of Agentthe Required Lenders (which approval shall not be unreasonably withheld, conditioned or delayed) of such Renovation if the total budgeted cost for such Renovation (together with any related Renovations at such Borrowing Base Property) exceeds $500,000.00; (ii) cause the same to be performed diligently and promptly and to be

 

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commenced, performed and completed within the time limits set forth in the PIP (if applicable) and any Material Contract; (iii) cause to be obtained all governmental permits required for such Renovations; (iv) cause such Renovations to be constructed, performed and completed in compliance, in all material respects, with Applicable Law and all applicable requirements of the Manager and Franchisor, in a good and workmanlike manner, with materials of high quality, free of defects, and in accordance with the plans and specifications therefor and the PIP (if applicable), without substantial deviation therefrom unless approved by the Agent (which approval shall not be unreasonably withheld, conditioned or delayed) and by the Manager or Franchisor, as applicable; (v) cause such Renovations to be constructed and completed free and clear of any mechanic’s liens, materialman’s liens and equitable liens; (vi) pay or cause to be paid all costs of such Renovations when due; (vii) subject to Borrower’s or Subsidiary Guarantor’s rights pursuant to §7.19(c), fully pay and discharge, or cause to be fully paid and discharged, all claims for labor performed and material and services furnished in connection with such Renovations; and (viii) subject to Borrower’s or Subsidiary Guarantor’s rights pursuant to §7.19(c), promptly release and discharge, or cause to be released and discharged, all claims of stop notices, mechanic’s liens, materialman’s liens and equitable liens that may arise in connection with such Renovations.

(b) Borrower shall notify the Agent of any Material Renovations that are scheduled or planned for any Borrowing Base Property and shall, if reasonably requested by the Agent, promptly furnish or cause to be furnished to the Agent (i) copies of any plans and specifications, contracts and governmental permits for such Material Renovations, and (ii) upon substantial completion of such Material Renovations (A) a written statement or certificate executed by the architect designated or shown on the plans and specifications (or, if no architect has been retained, from the general contractor for such Material Renovations) certifying, without qualification or exception, that such Material Renovations are substantially completed, (B) all required occupancy permit(s) for the Borrowing Base Property issued by the local government agency having jurisdiction and authority to issue same, and (C) such other evidence of lien free completion as the Agent deems satisfactory in its reasonable discretion.

(c) The Borrower shall not suffer or permit any mechanics’, materialmen’s, suppliers’ or other Lien claims to be filed or otherwise asserted against any Borrowing Base Property, subject to Borrower’s rights pursuant to §7.19(c). If a claim of lien is recorded which affects any Borrowing Base Property, the Borrower shall, within fifteen (15) days of such recording, or within ten (10) days of the Agent’s demand, whichever occurs first: (i) pay and discharge, or cause to be paid and discharged, the claim of Lien; or (ii) provide the Agent with other assurances (which may include a bond) which the Agent deems, in its reasonable discretion, to be satisfactory for the payment of such claim of Lien and for the full and continuous protection of the Agent and the Lenders from the effect of such Lien.

 

  §7.20

Borrowing Base Properties.

(a) Borrower shall cause the Eligible Real Estate included in the calculation of the Debt Yieldcovenants set forth in §9.1 and §9.3 and inclusion as Borrowing Base Properties to at all times satisfy all of the following conditions:

 

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(i) Such Real Estate shall be Eligible Real Estate, and the Eligible Real Estate shall be owned one hundred percent (100%) in fee simple or leased under a Ground Lease by Borrower or a Subsidiary Guarantor (provided that notwithstanding anything to the contrary in this Agreement, from and after the date of this Agreement, the Borrowing Base Properties shall only be owned by Subsidiary Guarantors) and leased to a Subsidiary Guarantor that is a TRS Lessee pursuant to an Operating Lease, free and clear of all Liens other than the Liens permitted by §8.2(ix) (provided that with respect to any Real Estate that becomes a Borrowing Base Property on or after the Closing Date, such TRS Lessee shall be a Wholly-Owned Subsidiary of TRS), and such Eligible Real Estate and all assets of the TRS Lessee shall not have applicable to it any negative pledge or restriction on the sale, pledge, transfer, mortgage or assignment of such property (including any restrictions contained in any applicable organizational documents);

(ii) none of the Eligible Real Estate shall have any material environmental, structural or other defects, and not be subject to any condemnation proceeding, that in any event would give rise to a materially adverse effect as to the value, use of, operation of or ability to sell or finance such property, and such property shall be in compliance with federally mandated flood insurance requirements (including the maintenance of flood insurance if all or any portion of any Building is located within a federally designated flood hazard zone);

(iii) the only assets of such Subsidiary Guarantor (including the TRS Lessee) shall be the Eligible Real Estate included in the calculation of the Debt Yieldcovenants set forth in §9.1 and §9.3 and as a Borrowing Base Property together with related fixtures and personal property;

(iv) no strike, lockout, labor dispute, embargo, injunction or other proceeding has occurred which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities of the Borrower or any Guarantor at such Borrowing Base Property;

(v) to qualify as a Tier IBorrowing Base Property:

(A) such Eligible Real Estate is used as a limited service, select service or full service, in each case of upscale or midscale quality or better;

(B) such Eligible Real Estate is (1) managed by a third party manager approved by the AgentRequired Lenders; and (2) operated under a Management Agreement reasonably satisfactory to the AgentRequired Lenders which is in full force and effect;

(C) such Eligible Real Estate is operated under an Approved Brand pursuant to a Franchise Agreement which is in full force and effect and approved by Agentthe Required Lenders;

(D) such Eligible Real Estate was first acquired by such Subsidiary Guarantor after September 30, 2015 (other than the Hilton Garden Inn located in Dowell, Maryland); and

(E) the construction of the Hotel Property on such Eligible Real Estate was either substantially completed or has undergone a complete renovation consistent with the applicable PIP within fifteen (15) years of the date such Eligible Real Estate is first included as a Borrowing Base Property;

 

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(vi) with respect to any Tier II Property, such Eligible Real Estate is managed by a third-party manager approved by the Agent and operated under a Management Agreement reasonably satisfactory to Agent;[Intentionally Omitted];

(vii) [Intentionally Omitted];

(viii) (A) at least ninety percent (90%) of the aggregate hotel rooms in the Borrowing Base Properties must be open for business, not under Material Renovation, and have at least one year of operating history; and

(B) not more than ten percent (10%) of the total Adjusted Net Operating Income of the Borrowing Base Properties shall be attributable to Hotel Properties which are recently-completed developments or assets undergoing Material Renovation, but which assets included as Borrowing Base Properties shall in any event have at least three (3) months of operating history (notwithstanding the foregoing, a failure to satisfy the requirements of this clause (viii) (B) shall not result in any Real Estate not being included as a Borrowing Base Property, but any such Adjusted Net Operating Income in excess of such limitation shall be excluded for purposes of calculating Debt Yieldthe covenant set forth in §9.1;

(ix) no Person other than the Borrower, the REIT or another Subsidiary Guarantor (and excluding for the purposes hereof ownership of other Persons in the Borrower or the REIT) has any direct or indirect ownership of any legal, equitable or beneficial interest in such Subsidiary Guarantors, and no direct or indirect ownership or other interests or rights in any such Subsidiary Guarantor shall be subject to any Lien (other than Liens in favor of Agent);

(x) [Intentionally Omitted];

(xi) no more than fifteen percent (15%) of the total Adjusted Net Operating Income shall be attributable to Tier IBorrowing Base Properties which are subject to Ground Leases (notwithstanding the foregoing, a failure to satisfy the requirements of this clause (xi) shall not result in any such Real Estate not being included as a Borrowing Base Property, but any such Adjusted Net Operating Income in excess of such limitation shall be excluded for purposes of calculating Debt Yieldthe covenant set forth in §9.1;

(xii) [Intentionally Omitted]; and

(xiii) such Eligible Real Estate has not been removed as a Borrowing Base Property and from the calculation of the Debt Yieldcovenants set forth in §9.1 and §9.3 pursuant to §5.4 or §7.20(c) or (d).

Notwithstanding the foregoing, the provisions of §7.20(a)(x), (xi) and (xii) and §9.7 shall not be applicable until June 30, 2018 and then shall be applicable at all times thereafter.

(b) The Borrower shall, and shall cause each Subsidiary Guarantor to:

 

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(i) operate each Borrowing Base Property in compliance with Applicable Law in all material respects;

(ii) promptly perform and/or observe (or cause to be performed and/or observed) in all material respects the covenants and agreements required to be performed and observed by it under the Material Contracts to which it is a party and do all things necessary to preserve and to keep unimpaired their rights thereunder;

(iii) enforce in all respects the performance and observance of all of the material covenants and agreements required to be performed or observed by the other parties to each Material Contract;

(iv) promptly deliver to the Agent a copy of each PIP, and any other material written notice or report received by it or to it under any Management Agreement or Franchise Agreement;

(v) maintain Inventory at the applicable Borrowing Base Property in amounts reasonably required to meet the standards from time to time required by the applicable Manager and Franchisor; and

(vi) maintain all Licenses required to operate the applicable Borrowing Base Property in full force and effect and promptly comply with all material conditions thereof.

(c) In the event that all or any material portion of any Eligible Real Estate included as a Borrowing Base Property shall be damaged in any material respect or taken by condemnation, then such property shall no longer be included in the calculation of the Debt Yieldcovenants set forth in §9.1 and §9.3 unless and until (i) any damage to such real estate is repaired or restored, such real estate becomes fully operational and the Agent shall receive evidence satisfactory to the Agent of the value of such real estate following such repair or restoration (both at such time and prospectively) or (ii) the Agent shall receive evidence satisfactory to the Agent (which evidence may include the availability of business interruption insurance) that the value of such real estate (both at such time and prospectively) shall not be materially adversely affected by such damage or condemnation. In the event that such damage or condemnation only partially affects such Eligible Real Estate included as a Borrowing Base Property, then the Agent may in good faith reduce the Adjusted Net Operating Income attributable thereto based on such damage until such time as the Agent receives evidence satisfactory to the Agent that the value of such real estate (both at such time and prospectively) shall no longer be materially adversely affected by such damage or condemnation.

(d) Upon any asset ceasing to qualify to be included as a Borrowing Base Property, such asset shall no longer be included in the calculation of the Debt Yieldcovenants set forth in §9.1 and §9.3 unless otherwise approved in writing by the Required Lenders. Within five (5) Business Days of any such disqualification, the Borrower shall deliver to the Agent a certificate reflecting such disqualification, together with the identity of the disqualified asset, a statement as to whether any Default or Event of Default arises as a result of such disqualification, and a calculation of the Adjusted Net Operating Income attributable to such asset. Simultaneously with the delivery of the items required pursuant above, the Borrower shall deliver to the Agent an updated Borrowing Base Certificate demonstrating, after giving effect to such removal or disqualification, compliance with the conditions and covenants contained in §§7.20, 9.1 and 9.7.9.3 (provided that for the avoidance of doubt, a Borrowing Base Property shall not be released from the Collateral except in compliance with §5.5).

 

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  §7.21

Sanctions Laws and Regulations. The Borrower shall not, directly or indirectly, use the proceeds of the Loans or any Letter of Credit or lend, contribute or otherwise make available such proceeds to any Guarantor, Subsidiary, Unconsolidated Affiliate or other Person (i) to fund any activities or business of or with any Designated Person, or in any country or territory, that at the time of such funding is itself the subject of territorial sanctions under applicable Sanctions Laws and Regulations, (ii) in any manner that would result in a violation of applicable Sanctions Laws and Regulations by any party to this Agreement, or (iii) in any manner that would cause the Borrower, the Guarantors or any of their respective Subsidiaries to violate the United States Foreign Corrupt Practices Act. None of the funds or assets of the Borrower or Guarantors that are used to pay any amount due pursuant to this Agreement shall constitute funds obtained from transactions with or relating to Designated Persons or countries which are themselves the subject of territorial sanctions under applicable Sanctions Laws and Regulations. Borrower shall maintain policies and procedures designed to promote and achieve compliance with Sanctions Laws and Regulations.

 

  §7.22

Assignment of Interest Rate Protection. In the event that the Borrower or any Guarantor shall enter into an interest rate cap, swap, collar or other interest rate protection agreement with a Lender Hedge Provider (the “Interest Hedge”), then as a condition to the obligations of Borrower or such Guarantor with respect thereto constituting Hedge Obligations for the purposes of the Loan Documents, Borrower or such Guarantor shall execute and deliver to Agent a collateral assignment of such Interest Hedge in form and substance reasonably satisfactory to Agent, and shall further deliver such legal opinions as to Borrower or such Guarantor, and consents to and acknowledgments of such pledge by the provider of the Interest Hedge, as Agent may reasonably require. For the avoidance of doubt, unless the provisions of this §7.22 are complied with, no Lender Hedge Provider shall have any right or benefit under or from the Loan Documents or the Collateral.

 

  §7.23

Post-Closing ItemsLiquidity Trigger Event. Borrower has been unable, as of the date hereof, to satisfy all of the conditions precedent to the acceptance of certain assets for the calculation of Borrowing Base Availability under this Agreement but Agent and the Lenders are willing to enter into this Agreement and accept certain Loan Documents subject to the terms of this Section. Borrower shall cause each of the items described on Schedule 7.23 attached hereto and made a part hereof to be delivered to and approved by Agent on or before March 15, 2017, as such period may be extended by Agent in its discretion. All such items shall be in form and substance reasonably satisfactory to Agent. Borrower further acknowledges that with respect to the each of the Initial Borrowing Base Properties identified as numbers 3 (Creston, Iowa - Supertel), 4 (Billings, Montana - Super 8), 7 (Creston,

 

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  Iowa - Super 8) and 14 (Bossier City, Louisiana - Days Inn) on Schedule 1.3 hereto, notwithstanding the delivery to Agent and recording of Security Documents with respect to such properties, such property shall not be included in the calculation of Borrowing Base Availability until the items described in Item 2 on Schedule 7.23 hereto with respect to such property are satisfied in accordance with the terms of this §7.23.In the event that a Liquidity Trigger Event shall occur, then:

(a) The Agent may engage a financial advisor to advise Agent and the Lenders with respect to the REIT and its Subsidiaries and the Loans, such advisor to be subject to the reasonable approval of the Required Lenders, and the Borrower shall pay within ten (10) days of demand the fees (provided that such fees are market fees) and expenses of such financial advisor as the same may be incurred (which fees and expense may be funded through advances of Loans to the extent of availability);

(b) In the event that the Interest Holdback shall then be less than $2,000,000.00, such Interest Holdback shall be increased up to the sum of $2,000,000.00;

(c) The reporting required pursuant to §7.4(p) shall be provided on a weekly basis, and the Borrower shall deliver to the Agent within ten (10) days of the occurrence of such Liquidity Trigger Event a budget reforecast (expressed on a month-by-month fiscal year basis, showing year-to-date actual results (including operations, debt service, capital expenditures and extraordinary expenses) plus projections for the remainder of the year and the next four (4) calendar quarters) (which as to the next four (4) calendar quarters may in part be based upon the Management Projections);

(d) Any proceeds of the Loans advanced during or following the occurrence of a Liquidity Trigger Event shall, subject to §2.7, only be advanced for the following purposes and in the following order of priority;

(i) First, to pay interest and other amounts due under the Loan Documents;

(ii) Next, to fund the Tax and Insurance Reserve Account (as defined in the Cash Collateral Agreement):

(iii) Next, to fund the FF&E Reserve Account (as defined in the Cash Collateral Agreement);

(iv) Next, to pay for any Borrowing Base Property level operating expenses directly attributable to the ownership and operation of the Borrowing Base Properties (and excluding items which can be paid from the FF&E Reserve Account and the Taxes and Insurance Reserve Account) for the current month in accordance with the Approved Budget;

(v) Next, to the payment of the current month’s corporate overhead and general and administrative expense of REIT in accordance with the Approved Budget;

 

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(vi) Next, to pay for any property level operating expenses or capital expenditures (excluding any amounts for principal or interest) directly attributable to the ownership and operation of Hotel Properties other than Borrowing Base Properties of the Borrower and its Subsidiaries (and excluding any items which can paid from any reserves or loan proceeds maintained or available with respect to such properties) for the current month in accordance with the Approved Budget; and

(vii) Next, to pay for any interest for the current month due with respect to any Hotel Property that is not Borrowing Base Property of the Borrower and its Subsidiaries as approved by the Lenders in their sole and absolute discretion.

 

§8.

NEGATIVE COVENANTS.

The Borrower covenants and agrees that, so long as any Loan, Note or Letter of Credit is outstanding or any of the Lenders has any obligation to make any Loans or issue any Letter of Credit:

 

  §8.1

Restrictions on Indebtedness. The Borrower will not, and will not permit any Guarantor or their respective Subsidiaries to, create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other than:

(a) Indebtedness to the Lenders arising under any of the Loan Documents;

(b) Indebtedness to the Lender Hedge Providers in respect of any Hedge Obligations;

(c) current liabilities of the Borrower, the Guarantors or their respective Subsidiaries incurred in the ordinary course of business but not incurred through (i) the borrowing of money, or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services;

(d) Indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of §7.8;

(e) Indebtedness in respect of judgments only to the extent, for the period and for an amount not resulting in a Default;

(f) endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business;

(g) subject to the provisions of §9, Non-Recourse Indebtedness;

(h) [Intentionally Omitted]; and subject to the terms of this §8.1, any PPP Loan; and

 

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(i) subject to the provisions of §9, Recourse Indebtedness of the REIT and its Subsidiaries, provided that the aggregate amount of such Recourse Indebtedness (excluding the Obligations) shall not at any time exceed ten percent (10%) of Consolidated Total Asset Value; provided further, however, that the Aloft Atlanta Term Loan shall be excluded for the purposes of determining the amount of Recourse Indebtedness in this §8.1(i) during the period beginning on the date of the incurrence of the Aloft Atlanta Term Loan, and ending six (6) calendar months thereafter.

Notwithstanding anything in this Agreement to the contrary, except as provided in clause (x) below of this paragraph, (i) none of the Indebtedness described in §8.1(g), (h) or (i) above shall have any of the Borrowing Base Properties or any interest therein or any direct or indirect ownership interest in the Borrower or any Subsidiary Guarantor as collateral, a borrowing base, asset pool or any similar form of credit support for such Indebtedness, and (ii) none of the Subsidiary Guarantors or any other Subsidiary of Borrower which, directly or indirectly, owns or leases (whether pursuant to a Ground Lease or an Operating Lease) a Borrowing Base Property shall create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness (including, without limitation, pursuant to any conditional or limited guaranty or indemnity agreement creating liability with respect to usual and customary exclusions from the non-recourse limitations governing the Non-Recourse Indebtedness of any Person, or otherwise) other than Indebtedness described in §§8.1(a), 8.1(b), 8.1(c), 8.1(d), 8.1(e) and 8.1(f); provided further that (x) a Subsidiary Guarantor may be liable with respect to Capital Leases and purchase money Liens financing equipment used solely at such Subsidiary Guarantor’s Hotel Property (whether owned or leased), provided that the aggregate of all such obligations for all Subsidiary Guarantors shall not exceed $250,000.00 at any time.

Notwithstanding anything to the contrary in this Agreement, including without limitation, this §8.1, neither the Borrower, Guarantor, nor any of their respective Subsidiaries shall create, incur, assume, guarantee or become liable, contingently or otherwise, (A) on or after March 30, 2020 with respect to any Recourse Indebtedness expect for (i) Recourse Indebtedness under this Agreement and, (ii) a Paycheck Protection Program loanloans under the Coronavirus Aid, Relief, and Economic Security Act in an aggregate amount not to exceed $2,700,000.00 (individually and collectively, the “PPP Loan”) (provided that for the purposes of calculating compliance with the financial covenants, such Paycheck Protection Program loan shall not be considered Indebtedness for so long as no principal and interest is payable with respect thereto), (iii) the Initial Subordinate Debt provided that such Indebtedness is recourse solely to the REIT, is Unsecured Indebtedness and otherwise complies with the terms of §8.17, and such Indebtedness is subject to a Subordination and Standstill Agreement, (iv) Future Subordinate Debt provided that such Indebtedness is recourse solely to the REIT, such Indebtedness is Unsecured Indebtedness, such Indebtedness otherwise complies with the terms of §8.17, and such Indebtedness is subject to a Subordination and Standstill Agreement, and (v) the IRSA Note, or (B) on or after the date of the Ninth Amendment to Credit Agreement, with respect to any other Indebtedness except (i) as permitted by cause (A) above of this paragraph, and (ii) the refinancing of existing Indebtedness (but for the avoidance of doubt, specifically excluding Subordinate Debt and the IRSA Note) permitted by this Agreement provided that the amount of such refinancing Indebtedness shall not exceed the principal amount of the Indebtedness being refinanced (plus reasonable costs and expenses related thereto), the collateral, if any, for such refinancing Indebtedness shall be limited

 

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only to the collateral security the Indebtedness being refinanced, and no Person shall have any direct or indirect liability with respect to such refinancing Indebtedness except those Persons directly liable with respect to the Indebtedness being refinanced and only to the extent of such liability with respect to the original Indebtedness being refinanced.

 

  §8.2

Restrictions on Liens, Etc.. The Borrower will not, and will not permit any Guarantor or their respective Subsidiaries to (a) create or incur or suffer to be created or incurred or to exist any lien, security title, encumbrance, mortgage, deed of trust, security deed, pledge, negative pledge, charge, restriction or other security interest of any kind upon any of their respective property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) transfer any of their property or assets or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement (or any financing lease having substantially the same economic effect as any of the foregoing); (d) suffer to exist for a period of more than thirty (30) days after the same shall have been incurred any Indebtedness or claim or demand against any of them that if unpaid could by law or upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever over any of their general creditors; (e) sell, assign, pledge or otherwise transfer any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse; or (f) incur or maintain any obligation to any holder of Indebtedness of any of such Persons which prohibits the creation or maintenance of any lien securing the Obligations (collectively, “Liens”); provided that notwithstanding anything to the contrary contained herein, the Borrower, any Guarantor or any such Subsidiary may create or incur or suffer to be created or incurred or to exist:

(i) Liens on properties to secure taxes, assessments and other governmental charges (excluding any Lien imposed pursuant to any of the provisions of ERISA or pursuant to any Environmental Laws) or claims for labor, material or supplies incurred in the ordinary course of business in respect of obligations not then delinquent or which are being contested as permitted under this Agreement;

(ii) Liens on assets other than (A) the Collateral, (B) the Borrowing Base Properties and any Material Contracts that are not Collateral, or (C) any direct or indirect interest of the Borrower, any Guarantor or any Subsidiary of the Borrower in any Guarantor which owns or leases a Borrowing Base Property or in any other Subsidiary, in respect of judgments permitted by §8.1(e);

(iii) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, old age pensions or other social security obligations;

(iv) encumbrances on Real Estate other than Borrowing Base Properties consisting of easements, rights of way, zoning restrictions, leases and other occupancy agreements, restrictions on the use of real property and defects and irregularities in the title thereto, and other minor non-monetary liens or encumbrances none of which interferes materially with the use of the property affected in the ordinary conduct of the business of the Borrower or any such Subsidiary, which defects do not individually or in the aggregate have a Material Adverse Effect;

 

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(v) Liens on Real Estate and incidental personal property used in connection therewith (other than the Borrowing Base Properties or other Collateral or any direct or indirect interest therein) to secure Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors or owners of interests in Subsidiary Guarantors permitted by §8.1(g), (h)(i)(B), (h)(ii), (h)(iii) and (i);

(vi) rights of setoff or bankers’ liens upon deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business;

(vii) Liens of Capitalized Leases on the property leased thereby and Liens with respect to property financed pursuant to §8.1(h)(iii) and §8.1(i);

(viii) Liens in favor of the Agent and the Lenders under the Loan