AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of the
30th day of April, 2003 (the "Agreement"), is executed by and between ARLINGTON
HOSPITALITY, INC., a Delaware corporation (the "Borrower"), whose address is
2355 S. Arlington Heights Road, Arlington Heights, Illinois 60005, and LASALLE
BANK NATIONAL ASSOCIATION, a national banking association (the "Bank"), whose
address is 135 South La Salle Street, Chicago, Illinois 60603.
RECITALS
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WHEREAS, Bank and Borrower are parties to that certain Loan and
Security Agreement dated as of February 1, 2002 (the "Original Agreement"),
which Original Agreement was amended by that certain First Amendment to Loan and
Security Agreement dated as of August 9, 2002 (the "First Amendment") and by
that certain Second Amendment to Loan and Security Agreement dated as of
December 10, 2002 (the "Second Amendment") (the Original Agreement, as amended
by the First Amendment and the Second Amendment, referred to herein as the "Loan
Agreement");
WHEREAS, Borrower and Bank do desire to further amend and restate the
Loan Agreement for the purposes of extending the maturity of the Revolving Loan
and modifying certain other provisions of the Loan Agreement; and
WHEREAS, Borrower has requested that Bank waive Borrower's
non-compliance with certain covenant requirements more specifically described
below; and
WHEREAS, Bank is agreeable to such waiver, subject to adoption of the
amendments to the Loan Agreement and other terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the renewal by the Bank of the line
of credit and the mutual covenants and promises contained in this Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Borrower and Bank agree as follows:
1. DEFINITIONS.
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1.1 Defined Terms. For the purposes of this Agreement, the following
capitalized words and phrases shall have the meanings set forth below.
"Bankruptcy Code" shall mean the United States Bankruptcy
Code, as now existing or hereafter amended.
"Business Day" shall mean any day other than a Saturday,
Sunday or a legal holiday on which banks are authorized or required to be closed
for the conduct of commercial banking business in Chicago, Illinois.
"Capital Expenditures" shall mean expenditures (including
Capital Lease obligations which should be capitalized under GAAP) for the
acquisition of fixed assets which are required to be capitalized under GAAP.
"Capital Lease" shall mean, as to any Person, a lease of any
interest in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, by such Person as lessee that is, or should be, in
accordance with Financial Accounting Standards Board Statement No. 13, as
amended from time to time, or, if such Statement is not then in effect, such
statement of GAAP as may be applicable, recorded as a "capital lease" on the
balance sheet of the Borrower prepared in accordance with GAAP.
"Cendant" shall mean Cendant Finance Holding Corporation, a
Delaware corporation.
"Cendant Agreement" shall mean that certain Royalty Sharing
Agreement dated as of September 30, 2000 among Borrower, Cendant and AmeriHost
Franchise Systems, Inc. ("Franchisor").
"Closing Date" shall mean April 30, 2003 or such later date
which Borrower and the Bank shall agree.
"Collateral" shall have the meaning set forth in Section 6. 1.
"Contingent Liability" and "Contingent Liabilities" shall
mean, respectively, each obligation and liability of the Borrower or any of its
Subsidiaries and all such obligations and liabilities of the Borrower or any of
its Subsidiaries incurred pursuant to any agreement, undertaking or arrangement
by which the Borrower or any of its Subsidiaries: (a) guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor
against loss) the indebtedness, dividend, obligation or other liability of any
other Person in any manner (other than by endorsement of instruments in the
course of collection), including without limitation, any indebtedness, dividend
or other obligation which may be issued or incurred at some future time; (b)
guarantees the payment of dividends or other distributions upon the shares or
ownership interest of any other Person; (c) undertakes or agrees (whether
contingently or otherwise): (i) to purchase, repurchase, or otherwise acquire
any indebtedness, obligation or liability of any other Person or any or any
property or assets constituting security therefor, (ii) to advance or provide
funds for the payment or discharge of any indebtedness, obligation or liability
of any other Person (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, working capital or other financial condition of any other Person, or
(iii) to make payment to any other Person other than for value received; (d)
agrees to lease property or to purchase securities, property or services from
such other Person with the purpose or intent of assuring the owner of such
indebtedness or obligation of the ability of such other Person to make payment
of the indebtedness or obligation; (e) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of such
other Person; or (f) undertakes or agrees otherwise to assure a creditor against
loss. The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
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permitted principal amount, if larger) of the indebtedness, obligation or other
liability guaranteed or supported thereby.
"Debt Service Charges" shall mean, for any period, the sum of:
(a) all interest, charges and related expenses payable with respect to that
fiscal period to a lender in connection with borrowed money or the deferred
purchase price of assets that are treated as interest in accordance with GAAP,
plus (b) the aggregate amount of principal payable on Indebtedness with respect
to that fiscal period, plus (c) the portion of rent payable with respect to that
fiscal period under Capital Leases that should be treated as interest in
accordance with GAAP, plus (d) all charges paid or payable (without duplication)
during that period with respect to any Interest Rate Agreements.
"Default Rate" shall mean a per annum rate of interest equal
to the Prime Rate plus five percent (5%) per annum.
"Depreciation" shall mean the total amounts added to
depreciation, amortization, obsolescence, valuation and other proper reserves,
as reflected on the consolidated financial statement of Borrower and its
Subsidiaries and determined in accordance with GAAP.
"EBITDA" shall mean, for any period, the sum of the following:
(a) Net Income (excluding extraordinary and unusual items and income or loss
attributable to equity in any affiliated corporation or Subsidiary but including
net deferred incentive fees due from Cendant pursuant to the Cendant Agreement)
for such period, plus (b) Interest Charges, plus (c) income taxes payable or
accrued, plus (d) Depreciation for such period, plus (e) all other non-cash
charges, minus (f) that portion of net income arising out of the sale of assets
outside of the ordinary course of business (to the extent not previously
excluded under clause (a) of this definition), in each case to the extent
included in determining Net Income for such period.
"Employee Plan" includes any pension, stock bonus, employee
stock ownership plan, retirement, disability, medical, dental or other health
plan, life insurance or other death benefit plan, profit sharing, deferred
compensation, stock option, bonus or other incentive plan, vacation benefit
plan, severance plan or other employee benefit plan or arrangement, including,
without limitation, those pension, profit-sharing and retirement plans of the
Borrower and/or any of its Subsidiaries described from time to time in the
financial statements of the Borrower and any pension plan, welfare plan, defined
benefit pension plans (as defined in ERISA) or any multi-employer plan,
maintained or administered by the Borrower and/or any of its Subsidiaries or to
which the Borrower is a party or may have any liability or by which the Borrower
and/or any of its Subsidiaries is bound.
"Environmental Laws" shall mean all federal, state, district,
local and foreign laws, rules, regulations, ordinances, and consent decrees
relating to health, safety, hazardous substances. pollution and environmental
matters, as now or at any time hereafter in effect, applicable to the business
or facilities owned or operated by the Borrower or any of its subsidiaries,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contamination, chemicals, or hazardous, toxic or
dangerous substances, materials or wastes in the environment (including, without
limitation, ambient air, surface water, land surface or subsurface strata) or
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otherwise relating to the generation, manufacture, processing, distribution,
use, treatment. storage, disposal, transport or handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default" shall mean any of the events or conditions
set forth in Section 11 hereof.
"GAAP" shall mean generally accepted accounting principles,
using the accrual basis of accounting and consistently applied with prior
periods, provided, however, that GAAP with respect to any interim financial
statements or reports shall be deemed subject to fiscal yearend adjustments and
footnotes made in accordance with GAAP.
"Hazardous Materials" shall mean any hazardous, toxic or
dangerous substance, materials and wastes, including, without limitation,
hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation,
radioactive materials, biological substances, polychlorinated biphenyls,
pesticides, herbicides and any other kind and/or type of pollutants or
contaminants (including, without limitation, materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials or wastes that are or become regulated under any
Environmental Law (including without limitation, any that are or become
classified as hazardous or toxic under any Environmental Law).
"Indebtedness" shall mean at any time (a) all Liabilities of
the Borrower or any of its Subsidiaries, (b) all Capital Lease obligations of
the Borrower or any of its Subsidiaries, (c) all other debt, secured or
unsecured, created, issued, incurred or assumed by the Borrower or any of its
Subsidiaries for money borrowed or for the deferred purchase price of any fixed
or capital asset, (d) indebtedness secured by any Lien existing on property
owned by the Borrower or any of its Subsidiaries whether or not the Indebtedness
secured thereby has been assumed, and (e) all Contingent Liabilities of the
Borrower or any of its Subsidiaries whether or not reflected on its balance
sheet.
"Indemnified Party" and "Indemnified Parties" shall mean,
respectively, each of the Bank and any parent corporations, affiliated
corporations or subsidiaries of the Bank, and each of their respective officers,
directors, employees, attorneys and agents, and all of such parties and
entities.
"Letter of Credit" and "Letters of Credit" shall mean,
respectively, a letter of credit and all such letters of credit issued by the
Bank, in its sole discretion, upon the execution and delivery by the Borrower
and the acceptance by the Bank of a Master Letter of Credit Agreement and an
application for Letter of Credit, as set forth in SECTION 2.5 of this Agreement.
"Letter of Credit Obligations" shall mean, at any time, an
amount equal to the aggregate of the original face amounts of all Letters of
Credit minus the sum of (i) the amount of any reductions in the original face
amount of any Letter of Credit which did not result from a draw thereunder, (ii)
the amount of any payments made by the Bank with respect to any draws made under
a Letter of Credit for which the Borrower has reimbursed the Bank, (iii) the
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amount of any payments made by the Bank with respect to any draws made under a
Letter of Credit which have been converted to a Revolving Loan as set forth in
SECTION 2.5, and (iv) the portion of any issued but expired Letter of Credit
which has not been drawn by the beneficiary thereunder. For purposes of
determining the outstanding Letter of Credit Obligations at any time, the Bank's
acceptance of a draft drawn on the Bank pursuant to a Letter of Credit shall
constitute a draw on the applicable Letter of Credit at the time of such
acceptance.
"Liabilities" shall mean at all times all liabilities of the
Borrower or any of its Subsidiaries that would be shown as such on a
consolidated balance sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP.
"Lien" shall mean any mortgage, pledge, hypothecation,
judgment lien or similar legal process. title retention lien, or other lien or
security interest, including, without limitation, the interest of a vendor under
any conditional sale or other title retention agreement and the interest of a
lessor under a lease of any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, by such Person as lessee
that is, or should be, a Capital Lease on the consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP.
"Loans" shall mean, collectively, all Revolving Loans made by
the Bank to the Borrower and all Letter of Credit Obligations under and pursuant
to this Agreement.
"Loan Documents" shall mean the agreements and documents
delivered to the Bank as set forth in Sections 3.1 and 3.2.
"Loan-to-Value Ratio" shall mean (i) in respect of any
individual Mortgaged Premises, the ratio of (a) Indebtedness of the Borrower or
any Subsidiary secured by Lien on such Mortgaged Premises to (b) the value of
the Mortgaged Premises disclosed by the appraisal of such Mortgaged Premises
most recently accepted by the Bank, and (ii) in respect of all of the Mortgaged
Premises and Other Property of the Borrower and all Wholly-Owned Subsidiaries,
the ratio of (a) the aggregate consolidated Indebtedness of the Borrower and all
Wholly-Owned Subsidiaries secured by a Lien on any Mortgaged Premises or Other
Property to (b) the aggregate value of the Mortgaged Premises and Other Property
as determined by the Bank, in its sole discretion.
"Maturity Date" shall be April 30, 2004, unless extended by
the Bank pursuant to any modification, extension or renewal note executed by the
Borrower and accepted by the Bank in its sole and absolute discretion in
substitution for the Substitute Revolving Note.
"Maximum Letter of Credit Obligation" shall mean the Revolving
Loan Commitment less the aggregate amount of all Revolving Loans outstanding at
any time.
"Mortgage" shall mean those second or junior mortgages or
deeds of trust made by Borrower or any of its Subsidiaries in favor of the Bank.
"Mortgaged Premises" shall mean the real estate and
improvements described in Exhibit B attached hereto and the leasehold interests
and improvements owned by the Ohio Partnership.
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"Net Income" shall mean, with respect to any period, the
amount shown opposite the caption "Net Income" or a similar caption on the
consolidated financial statements of the Borrower, and its Subsidiaries prepared
in accordance with GAAP.
"Note" shall mean the Amended and Restated Revolving Note
referred to in Section 4.1.
"Obligation" shall mean the Loans, as evidenced by the Note,
all interest accrued thereon, any fees due the Bank hereunder, any expenses
incurred by the Bank hereunder and any and all other liabilities and obligations
of the Borrower (and of any partnership in which the Borrower is or may be a
partner) to the Bank, howsoever created, arising or evidenced, and howsoever
owned, held or acquired, whether now or hereafter existing, whether now due or
to become due, direct or indirect, absolute or contingent, and whether several,
joint or joint and several, including, but not limited to, any Interest Rate
Agreements.
"Obligor" shall mean the Borrower, any Subsidiary which makes
a Mortgage in favor of the Bank, any guarantor, accommodation endorser, third
party pledgor, or any other party liable with respect to the Obligations.
"Ohio Partnership" shall mean Athens Motel Associates Limited
Partnership II, an Ohio limited partnership.
"Other Properties" shall mean any and all real property
heretofore presently or hereafter, owned by Borrower or any Subsidiary,
excluding the Mortgaged Premises, and any interest of any kind in improvements
thereon.
"Person" shall mean any individual, partnership, limited
liability company, corporation, trust, joint venture, joint stock company,
association, unincorporated organization, government or agency or political
subdivision thereof, or other entity.
"Prime Rate" shall mean the floating per annum rate of
interest which at any time, and from time to time, shall be most recently
announced by the Bank as its Prime Rate, which is not intended to be the Bank's
lowest or most favorable rate of interest at any one time. The effective date of
any change in the Prime Rate shall for purposes hereof be the date the Prime
Rate is changed by the Bank. The Bank shall not be obligated to give notice of
any change in the Prime Rate.
"Regulatory Change" shall mean the introduction of, or any
change in any applicable law, treaty, rule, regulation or guideline or in the
interpretation or administration thereof by any governmental authority or any
central bank or other fiscal, monetary or other authority having jurisdiction
over the Bank or its lending office.
"Revolving Interest Rate" shall mean the Prime Rate plus two
and 50/100ths percent 2.5% per annum; provided, however, that the Revolving
Interest Rate shall never be less than six and 75/100ths percent (6.75%) per
annum.
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"Revolving Loan" and "Revolving Loans" shall mean,
respectively, each direct advance and the aggregate of all such direct advances,
from time to time made by the Bank to the Borrower under and pursuant to this
Agreement, as set forth in SECTION 2.1 of this Agreement.
"Revolving Loan Availability" shall mean at any time, the
Revolving Loan Commitment less the Letter of Credit Obligations.
"Revolving Loan Commitment" shall mean (a) Six Million Five
Hundred Thousand and 00/100 Dollars ($6,500,000.00) until September 29, 2003,
(b) Six Million and 00/100 Dollars ($6,000.000.00) from September 30, 2003 to
February 27, 2004 and (c) Five Million Five Hundred Thousand and 00/100 Dollars
($5,500,000.00) from and after February 28, 2004; in each case, as may be
further reduced by (i) an amount equal to the net proceeds to Borrower or any
Subsidiary from the sale of any Mortgaged Premises, after payment of the Senior
Mortgage Indebtedness thereon and costs of sale of such Mortgaged Premises
(except to the extent the Bank, in its sole discretion, agrees to accept a
Mortgage on a Substitute Mortgaged Premises in lieu of a further reduction of
its commitment hereunder) or (ii) such other reserves as the Bank determines in
its sole discretion.
"Revolving Note" shall have the meanings set forth in Section
4.1 hereof.
"Senior Mortgage Indebtedness" shall mean the Indebtedness of
Borrower or any Subsidiary existing on the date hereof which is disclosed on the
financial statements referred to in Section 7 and secured by one of the Senior
Mortgages.
"Senior Mortgages" shall mean those (i) first priority
mortgages on the Mortgaged Premises listed on Exhibit B attached hereto or (ii)
any other Indebtedness of Borrower or any Subsidiary existing on the date hereof
which is disclosed on the financial statements referred to in Section 7 and
secured by a Lien on any Other Property.
"Subordinated Debt" shall mean that portion of the Liabilities
of the Borrower or any Subsidiary which is subordinated to the Obligations in a
manner satisfactory to the Bank, including, but not limited to, right and time
of payment of principal and interest.
"Substitute Mortgaged Premises" shall mean such real estate
and/or improvements, if any, and Mortgage in favor of the Bank thereon, as may
be accepted by the Bank, in its sole discretion, in lieu of a further reduction
of the Revolving Loan Commitment.
"Subsidiary" and "Subsidiaries" shall mean, respectively, each
and all such corporations, partnerships, limited partnerships, limited liability
companies, limited liability partnerships or other entities of which or in which
the Borrower owns directly or indirectly fifty percent (50.00%) or more of (i)
the combined voting power of all classes of stock having general voting power
under ordinary circumstances to elect a majority of the board of directors of
such entity if a corporation, (ii) the management authority and capital interest
or profits interest of such entity, if a partnership, limited partnership,
limited liability company, limited liability partnership, joint venture or
similar entity, or (iii) the beneficial interest of such entity, if a trust,
association or other unincorporated organization.
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"Tangible Assets" shall mean the total of all assets appearing
on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP (with Inventory being valued at the lower of cost or
market), after deducting all proper reserves (including reserves for
Depreciation, obsolescence and amortization) less the sum of (i) goodwill,
patents, trademarks, prepaid expenses, deposits held as security deposits on
lease contracts, franchise fees and other similar assets, deferred charges and
other personal property which is classified as intangible property in accordance
with GAAP, and (ii) any amounts due from shareholders, affiliates, officers or
employees of the Borrower or any Subsidiary.
"Tangible Net Worth" shall mean at any time the total of
Tangible Assets less Liabilities plus Subordinated Debt.
"Total Liabilities to Worth Ratio" shall mean a ratio of (a)
consolidated Liabilities minus deferred income to (b) consolidated Tangible Net
Worth plus the sum of (i) deferred taxes, (ii) deferred income, including
deferred loan costs and deferred lease costs, and (iii) deposits held as
security deposits on lease contracts, franchise fees and other similar assets,
in each case of Borrower and its Subsidiaries.
"UCC" shall mean the Uniform Commercial Code in effect in
Illinois from time to time.
"Wholly-Owned Subsidiary" shall mean any Subsidiary of which
or in which the Borrower owns directly or indirectly 100% of (i) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (ii) the capital interest or profits interest of such
Persons, if it is a partnership, joint venture or similar entity, or (iii) the
beneficial interest of such Persons, if it is a trust, association or other
unincorporated organization.
1.2 Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined herein shall have the meanings customarily given
them in accordance with GAAP. Calculations and determinations of financial and
accounting terms used and not otherwise specifically defined hereunder and the
preparation of financial statements to be furnished to the Bank pursuant hereto
shall be made and prepared, both as to classification of items and as to amount,
in accordance with GAAP as used in the preparation of the financial statements
of the Borrower on the date of this Agreement. If any changes in accounting
principles or practices from those used in the preparation of the financial
statements are hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or any
successor thereto or agencies with similar functions), which results in a
material change in the method of accounting in the financial statements required
to be furnished to the Bank hereunder or in the calculation of financial
covenants, standards or terms contained in this Agreement, the parties hereto
agree to enter into good faith negotiations to amend such provisions so as
equitably to reflect such changes to the end that the criteria for evaluating
the financial condition and performance of the Borrower will be the same after
such changes as they were before such changes; and if the parties fail to agree
on the amendment of such provisions, the Borrower will furnish financial
statements in accordance with such changes but shall provide calculations for
all financial covenants, perform all financial covenants and otherwise observe
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all financial standards and terms in accordance with applicable accounting
principles and practices in effect immediately prior to such changes.
Calculations with respect to financial covenants required to be stated in
accordance with applicable accounting principles and practices in effect
immediately prior to such changes shall be reviewed and certified by the
Borrower's accountants.
1.3 Other Terms Defined in UCC. All other capitalized words and phrases
used herein and not otherwise specifically defined shall have the respective
meanings assigned to such terms in the UCC, as amended from time to time, to the
extent the same are used or defined therein.
1.4 Other Definitional Provisions; Construction. Whenever the context
so requires, the neuter gender includes the masculine and feminine, the single
number includes the plural, and vice versa, and in particular the word
"Borrower" shall be so construed. The words "hereof', "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
references to Article, Section, Subsection, Annex, Schedule, Exhibit and like
references are references to this Agreement unless otherwise specified. An Event
of Default shall "continue" or be "continuing" until such Event of Default has
been waived in accordance with SECTION 13.3 hereof. References in this Agreement
to any party shall include such party's successors and permitted assigns.
References to any "Section" shall be a reference to such Section of this
Agreement unless otherwise stated. To the extent any of the provisions of the
other Loan Documents are inconsistent with the terms of this Loan Agreement, the
provisions of this Loan Agreement shall govern.
2. COMMITMENT OF THE BANK.
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2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and
conditions of this Agreement and the other Loan Documents,
and in reliance upon the representations and warranties of
the Borrower set forth herein and in the other Loan
Documents, the Bank agrees to make such Revolving Loans at
such times as the Borrower may from time to time request
until, but not including, the Maturity Date, and in such
amounts as the Borrower may from time to time request,
provided, however, that the aggregate principal balance of
all Revolving Loans outstanding at any time shall not exceed
the Revolving Loan Availability. Borrower acknowledges that
the amount of the Revolving Loan Commitment was determined
by the Bank based on the Bank's analysis of the value of the
Collateral as of Closing, including the aggregate net equity
in respect of the Mortgaged Premises which, due to the
nature of such Collateral, may be difficult to establish or
highly variable. Accordingly, notwithstanding any other term
or provision hereof to the contrary, Bank has the right from
time to time to periodically determine and redetermine the
value of the Collateral, to establish (based on advance
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percentages and eligibility criteria established by the Bank
and communicated to Borrower from time to time) borrowing
base formulas in respect of Accounts and Equipment (as
defined in the UCC) and to establish reserves, to require
borrowing base certificates and to require such other
actions on the part of Borrower as Bank in its discretion
may deem necessary or appropriate. Revolving Loans made by
the Bank may be repaid and, subject to the terms and
conditions hereof, borrowed again up to, but not including
the Maturity Date unless the Revolving Loans are otherwise
terminated or extended as provided in this Agreement. The
Revolving Loans shall be used by the Borrower for the
purpose of supporting the working capital and letter of
credit needs of the Borrower.
(b) Revolving Loan Interest and Payments. Except as otherwise
provided in this SECTION 2.1(B), the principal amount of the
Revolving Loans outstanding from time to time shall bear
interest at the Revolving Interest Rate. Accrued and unpaid
interest on the unpaid principal balance of all Revolving
Loans outstanding from time to time, shall be due and
payable monthly, in arrears, commencing on May 1, 2003 and
continuing on the first day of each calendar month
thereafter, and on the Maturity Date. Any amount of
principal or interest on the Revolving Loans which is not
paid when due, whether at stated maturity, by acceleration
or otherwise, shall bear interest payable on demand at the
Default Rate.
(c) Revolving Loan Principal Repayments.
(i) Mandatory Principal Prepayments. All Revolving Loans
hereunder shall be repaid by the Borrower on the Maturity Date, unless
payable sooner pursuant to the provisions of this Agreement. In the
event the aggregate outstanding principal balance of all Revolving
Loans and Letter of Credit Obligations hereunder exceed the Revolving
Loan Availability, the Borrower shall, without notice or demand of any
kind, immediately make such repayments of the Revolving Loans or take
such other actions as shall be necessary to eliminate such excess. In
the event the Borrower or any Wholly-Owned Subsidiary shall sell,
transfer or otherwise dispose of any of the Mortgaged Premises, the
Bank may, in its sole discretion, require that Borrower make a
mandatory repayment of the Revolving Loans in an amount equal to the
proceeds of the sale of such Mortgaged Premises, after payment of the
Senior Mortgage Indebtedness thereon and costs of sale of the
Mortgaged Premises.
(ii) Optional Prepayments. The Borrower may from time to time
prepay the Revolving Loans, in whole or in part, without any
prepayment penalty whatsoever, subject to the following conditions:
(i) each partial prepayment shall be in an amount equal to $10,000.00
or a higher integral multiple of $5,000; and (ii) any prepayment of
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the entire principal balance of the Loans shall include accrued
interest on such Loans to the date of such prepayment and payment in
full of all other Obligations (including payment in full of the fees
described in Section 3.6 below) due and payable under this Agreement.
2.2 [INTENTIONALLY OMITTED]
2.3 [INTENTIONALLY OMITTED]
2.4 Interest and Fee Computation; Collection of Funds. Except as
otherwise set forth herein, all interest and fees shall be calculated on the
basis of a year consisting of 360 days and shall be paid for the actual number
of days elapsed. Principal payments submitted in funds not immediately available
shall continue to bear interest until collected. If any payment to be made by
the Borrower hereunder or under the Note shall become due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing any interest in respect of
such payment.
2.5 Letters of Credit. Subject to the terms and conditions of this
Agreement and the Master Letter of Credit Agreement dated as of February 1, 2002
between Bank and Borrower ("the Master Letter of Credit Agreement") and, upon
the execution and delivery by the Borrower, and the acceptance by the Bank, in
its sole and absolute discretion, of an application for letter of credit, the
Bank agrees to issue for the account of the Borrower out of the Revolving Loan
Availability, such Letters of Credit in the standard form of the Bank and
otherwise inform and substance acceptable to the Bank from time to time during
the term of this Agreement, provided that the Letter of Credit Obligations may
not at any time exceed the Maximum Letter of Credit Obligation and provided,
further, that no Letter of Credit shall have an expiration date later than
twenty five (25) days prior to the Maturity Date. The amount of any payments
made by the Bank with respect to draws made by a beneficiary under a Letter of
Credit for which the Borrower has failed to reimburse the Bank upon the earlier
of (i) the Bank's demand for repayment, or (ii) five (5) days from the date of
such payment to such beneficiary by the Bank, shall be deemed to have been
converted to a Revolving Loan as of the date such payment was made by the Bank
to such beneficiary. Upon the occurrence of an Event of a Default and at the
option of the Bank, all Letter of Credit Obligations shall be converted to Prime
Loans, all without demand, presentment, protest or notice of any kind, all of
which are hereby waived by the Borrower.
3. CONDITIONS OF BORROWING.
-----------------------
Notwithstanding any other provision of this Agreement, the Bank shall
not be required to disburse or make all or any portion of the Loans if any of
the following conditions shall have occurred.
3.1 Closing Documents. The Borrower shall have failed to execute and
deliver to the Bank any of the following Loan Documents at or prior to the
Closing Date, all of which must be satisfactory to the Bank and the Bank's
counsel in form, substance and execution:
(a) Loan Agreement. This Agreement duly executed by the
Borrower.
11
(b) Revolving Note. An Amended and Restated Revolving Note duly
executed by the Borrower in the form attached hereto as
Exhibit "A".
(c) Constitutive Documents. Certified copies of Borrower's and
each Obligor's articles of incorporation and by-laws, or a
certificate of Borrower's and each Obligor's Secretary,
confirming that there have been no changes or describing any
changes to the articles of organization and by-laws of
Borrower or such Obligor since February 1, 2002;
(d) Resolutions. Certified resolutions of the board of directors
and/or shareholders of the Borrower and each Obligor
authorizing the execution, delivery and performance of this
Agreement and/or the Loan Documents to which each is a
party.
(e) Borrower's Attorney's Opinion. An opinion of counsel to the
Borrower and each Obligor in form and substance acceptable
to the Bank.
(f) Amendments to Mortgages. Amendments to the Mortgages to and
for the benefit of the Bank on each of the Mortgaged
Premises, executed by Borrower or the Subsidiary of Borrower
which is the record fee owner of such Mortgaged Premises, in
form and substance acceptable to the Bank, conforming each
such Mortgage to the terms of this Agreement.
(g) Appraisals. If requested by Bank, updated appraisals on any
one or more of the Mortgaged Premises prepared by an
appraiser acceptable to Bank.
(h) Updates to Title Insurance Commitments. Updates to title
insurance commitments issued by First American Title Company
or other title insurance company acceptable to Bank
(collectively, the "Title Insurance Company"), indicating
that no judgments, tax or other liens (other than the Liens
permitted under Section 8.2 and Liens in favor of the Bank)
are of record or on file encumbering any portion of such
Mortgaged Premises and that no foreclosure or other adverse
proceedings have been commenced in respect of any such
Mortgaged Premises.
(i) Consent. Consent satisfactory to the Bank from the mortgagee
having a Senior Mortgage on the Mortgaged Premises located
in Niles, Illinois, consenting to the second mortgage on
such Mortgaged Premises in favor of the Bank, in form and
substance acceptable to the Bank.
(j) UCC Searches. Uniform Commercial Code searches, confirming
the Bank's first priority security interests in the
Collateral and indicating that no judgments, tax or other
liens (other than the Liens permitted under Section 8.2 and
Liens in favor of the Bank) are of record or on file
encumbering any portion of the Collateral.
(k) Insurance. Insurance policies (or binders acceptable to the
Bank) with premiums prepaid in companies, forms, amounts and
coverage satisfactory to the Bank, identifying the Bank as
lender's loss payee or mortgagee's loss payee and as an
additional insured and containing waiver of subrogation and
mortgage clauses in favor of the Bank. Without limiting the
generality of the foregoing, such policies shall include all
insurance required to be carried by the Borrower under the
Mortgages. The Borrower will also provide casualty insurance
against loss and damage by all risks of physical loss or
12
damage, including fire, windstorm, flood, earthquake and
other risks covered by the so-called extended coverage
endorsement in amounts not less than the full insurable
replacement value of all improvements, fixtures and
equipment from time to time on the land and bearing a
replacement cost agreed amount endorsement.
(l) Additional Documents. Such other certificates, financial
statements, schedules, resolutions, opinions of counsel,
notes and other documents which are provided for hereunder
or which the Bank may require, including, but not limited
to, evidence acceptable to the Bank that there are no
defaults, or events which would be defaults upon the passage
of time or the giving of notice, under the Cendant
Agreement.
3.2 Event of Default. Any Event of Default, or any event which, with
notice or lapse of time or both would constitute an Event of Default, shall have
occurred and be continuing.
3.3 Adverse Changes. A material adverse change in the financial
condition or affairs of the Borrower, as determined in the Bank's sole and
complete discretion, shall have occurred.
3.4 Litigation. Any litigation or governmental proceeding shall have
been instituted against the Borrower or any of its officers or shareholders
which in the discretion of the Bank, reasonably exercised, materially adversely
affects the financial condition or continued operation of the Borrower.
3.5 Representations and Warranties. Any representation or warranty of
the
Borrower contained herein or in any Loan Document shall be untrue or incorrect
in any material way as of the date of any Loan as though made on such date,
except to the extent such representation or warranty expressly relates to an
earlier date.
3.6 Fees. The Borrower shall have failed to pay to the Bank a renewal
fee in the amount of One Hundred Thirty Thousand and 00/100 Dollars
($130,000.00), payable as follows: (a) $30,000 upon execution of this Agreement,
(b) $50,000 on August 1, 2003, and (c) $50,000 on December 1, 2003. Bank
acknowledges receipt of a waiver fee in the amount of Twenty Thousand Dollars
($20,000) in respect of the waivers described in Section 13.19 below.
4. NOTES EVIDENCING LOANS.
----------------------
4.1 Revolving Note. The Revolving Loans and the Letter of Credit
Obligations shall be evidenced by a single Amended and Restated Revolving Note
(together with any and all renewal, extension, modification or replacement notes
executed by the Borrower and delivered to the Bank and given in substitution
therefor, the "Revolving Note") in the form of Exhibit "A" attached hereto, duly
executed by the Borrower and payable to the order of the Bank. At the time of
the initial disbursement of a Revolving Loan and at each time an additional
Revolving Loan shall be requested hereunder or a repayment made in whole or in
part thereon, an appropriate notation thereof shall be made on the books and
records of the Bank. All amounts recorded shall be, absent demonstrable error,
conclusive and binding evidence of (i) the principal amount of the Revolving
Loans advanced hereunder and the amount of all Letter of Credit Obligations,
(ii) any unpaid interest owing on the Revolving Loans, and (iii) all amounts
repaid on the Revolving Loans or the Letter of Credit Obligations. The failure
to record any such amount or any error in recording such amounts shall not,
13
however, limit or otherwise affect the obligations of the Borrower under the
Revolving Note to repay the principal amount of the Revolving Loans, together
with all interest accruing thereon.
5. MANNER OF BORROWING.
-------------------
Each Loan shall be made available to the Borrower upon its request,
from any Person whose authority to so act has not been revoked by the Borrower
in writing previously received by the Bank. A request for a Loan must be
received by no later than 11:00 a.m. Chicago, Illinois time, on the day it is to
be funded. The proceeds of each Loan shall be made available at the office of
the Bank by credit to the account of the Borrower or by other means requested by
the Borrower and acceptable to the Bank.
Each Letter of Credit shall be issued by the Bank pursuant to the
Master Letter of Credit Agreement, and the execution and delivery by the
Borrower and the acceptance by the Bank, in its sole discretion, of the Bank's
standard application for Letter of Credit and the payment by the Borrower of the
Bank's fees charged in connection therewith. In addition to all other applicable
fees, charges and/or interest payable by the Borrower pursuant to the Master
Letter of Credit Agreement or otherwise payable in accordance with the Bank's
standard letter of credit fee schedule, all standby Letters of Credit issued
under and pursuant to this Agreement shall bear an annual fee equal to one and
one-quarter percent (1.25%) of the face amount of such standby Letter of Credit,
payable by the Borrower on or before the issuance of such Letter of Credit by
the Bank and annually thereafter on the same date unless and until (i) such
Letter of Credit has expired or has been returned to the Bank, or (ii) the Bank
has paid the beneficiary thereunder the full face amount of such Letter of
Credit. All Letters of Credit other than standby Letters of Credit shall bear
such fees, costs and interest as charged by the Bank and shall contain such
other terms as set forth in the Master Letter of Credit Agreement and the Bank's
standard letter of credit fee schedule.
The Bank is authorized to rely on any written, verbal, electronic,
telephonic or telecopy loan requests which the Bank believes in its good faith
judgment to emanate from a properly authorized representative of the Borrower,
whether or not that is in fact the case. The Borrower does hereby irrevocably
confirm, ratify and approve all such advances by the Bank and does hereby
indemnify the Bank against losses and expenses (including court costs,
attorneys' and paralegals' fees) and shall hold the Bank harmless with respect
thereto.
6. SECURITY FOR THE OBLIGATIONS.
----------------------------
6.1 Security for Obligations. As security for the payment of the
Obligations, the Borrower does hereby pledge, assign, transfer and deliver to
the Bank and does hereby grant to the Bank a continuing and unconditional
security interest in and to any and all property of the Borrower, of any kind or
description, tangible or intangible, whether now existing or hereafter arising
or acquired, including, but not limited to, the following (all of which
property, along with the products and proceeds therefrom, and the additional
collateral referred to in Section 6.2 below, are individually and collectively
referred to as the "Collateral"):
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(a) all property of, or for the account of, the Borrower now or
hereafter coming into the possession, control or custody of,
or in transit to, the Bank or any agent or bailee for the
Bank or any parent, affiliate or subsidiary of the Bank or
any participant with the Bank in the Loans (whether for
safekeeping, deposit, collection, custody, pledge,
transmission or otherwise), including all earnings,
dividends, interest, or other rights in connection therewith
and the products and proceeds therefrom, including the
proceeds of insurance thereon; and
(b) the additional property of the Borrower, whether now
existing or hereafter arising or acquired, and wherever now
or hereafter located, together with all additions and
accessions thereto, substitutions for, and replacements,
products and proceeds therefrom, and all of the Borrower's
books and records and recorded data relating thereto
(regardless of the medium of recording or storage), together
with all of the Borrower's right, title and interest in and
to all computer software required to utilize, create,
maintain and process any such records or data on electronic
media, identified and set forth as follows:
(i) All Accounts and all Goods whose sale, lease or other
disposition by the Borrower has given rise to Accounts and
have been returned to, or repossessed or stopped in transit
by, the Borrower, or rejected or refused by an Account
Debtor;
(ii) All Inventory, including, without limitation, raw
materials, work-in-process and finished goods;
(iii) All Goods (other than Inventory), including, without
limitation, embedded software, Equipment, vehicles,
furniture and Fixtures;
(iv) All Software and computer programs;
(v) All Securities, Investment Property, Financial Assets
and Deposit Accounts;
(vi) All Chattel Paper, Electronic Chattel Paper,
Instruments, Documents, Letter of Credit Rights, all
proceeds of letters of credit, Health care insurance
Receivables, Supporting Obligations, notes secured by real
estate, Commercial Tort Claims and General Intangibles,
including Payment Intangibles; and
(vii) All insurance policies and proceeds insuring the
foregoing property or any part thereof, including unearned
premiums.
6.2 Additional Collateral. In addition, the Obligations are also
secured by the Mortgages, a Collateral Assignment, Security Agreement and Pledge
Agreement made by Arlington Inns of Ohio, Inc. and API/Athens, OH , Inc. dated
15
as of February 1, 2002 pledging certain partnership interests in the Ohio
Partnership and a Collateral Assignment and Security Agreement dated as of
February 1, 2002 collaterally assigning to Bank Borrower's rights under the
Cendant Agreement.
6.3 [INTENTIONALLY OMITTED]
-----------------------
6.4 Possession and Transfer of Collateral. Until an Event of Default
has occurred hereunder, the Borrower shall be entitled to possession or use of
the Collateral. The cancellation or surrender of the Revolving Note, upon
payment or otherwise, shall not affect the right of the Bank to retain the
Collateral for any other of the Obligations. The Borrower shall not sell, assign
(by operation of law or otherwise), license, lease or otherwise dispose of, or
grant any option with respect to any of the Collateral, except that (a) the
Borrower may sell Inventory in the ordinary course of business and (b) Borrower
or any Subsidiary may sell one or more hotel properties in accordance with the
provisions of Section 6.11 hereof.
6.5 Financing Statements. The Borrower shall, at the Bank's request, at
any time and from time to time, execute and deliver to the Bank such financing
statements, amendments and other documents and do such acts as the Bank deems
necessary in order to establish and maintain valid, attached and perfected first
security interests in the Collateral in favor of the Bank, free and clear of all
Liens and claims and rights of third parties whatsoever (except as otherwise
specifically set forth in Section 8 hereof). The Borrower hereby irrevocably
authorizes the Bank at any time, and from time to time, to file in any
jurisdiction any initial financing statements and amendments thereto that (a)
indicate the Collateral (i) as all assets of the Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of the
jurisdiction wherein such financing statement or amendment is filed, or (ii) as
being of an equal or lesser scope or within greater detail, and (b) contain any
other information required by Section 5 of Article 9 of the Uniform Commercial
Code of the jurisdiction wherein such financing statement or amendment is filed
regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including (i) whether the Borrower is an organization, the type of
organization and any organization identification number issued to the Borrower,
and (ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. The
Borrower agrees to furnish any such information to the Bank promptly upon
request. The Borrower further ratifies and affirms its authorization for any
financing statements and/or amendments thereto, executed and filed by the Bank
in any jurisdiction prior to the date of this Agreement.
6.6 Additional Collateral. The Borrower shall deliver to the Bank
immediately upon its demand, following the occurrence of an Event of Default,
such other collateral as the Bank may from time to time request, should the
value of the Collateral, in the Bank's sole and absolute discretion, decline,
deteriorate, depreciate or become impaired, and does hereby grant to the Bank a
continuing security interest in such other collateral, which, when pledged,
assigned and transferred to the Bank shall be and become part of the Collateral.
The Bank's security interests in each of the foregoing Collateral shall be
valid, complete and perfected whether or not covered by a specific assignment.
6.7 Preservation of the Collateral. The Bank may, but is not required
to, take such action from time to time as the Bank deems appropriate to maintain
or protect the Collateral. The Bank shall have exercised reasonable care in the
16
custody and preservation of the Collateral if it takes such action as the
Borrower shall reasonably request in writing; provided, however, that such
request shall not be inconsistent with the Bank's status as a secured party, and
the failure of the Bank to comply with any such request shall not be deemed a
failure to exercise reasonable care. In addition, any failure of the Bank to
preserve or protect any rights with respect to the Collateral against prior or
third parties, or to do any act with respect to preservation of the Collateral,
not so requested by the Borrower, shall not be deemed a failure to exercise
reasonable care in the custody or preservation of the Collateral. The Borrower
shall have the sole responsibility for taking such action as may be necessary,
from time to time, to preserve all rights of the Borrower and the Bank in the
Collateral against prior or third parties. Without limiting the generality of
the foregoing, where Collateral consists in whole or in part of securities, the
Borrower represents to, and covenants with, the Bank that the Borrower has made
arrangements for keeping informed of changes or potential changes affecting the
securities (including, but not limited to, rights to convert or subscribe,
payment of dividends, reorganization or other exchanges, tender offers and
voting rights), and the Borrower agrees that the Bank shall have no
responsibility or liability for informing the Borrower of any such or other
changes or potential changes or for taking any action or omitting to take any
action with respect thereto.
6.8 Other Actions as to any and all Collateral. The Borrower further
agrees to take any other action reasonably requested by the Bank to insure the
attachment, perfection and first priority of, and the ability of the Bank to
enforce, the Bank's security interest in any and all of the Collateral
including, without limitation, (a) executing, delivering and, where appropriate,
filing financing statements and amendments relating thereto under the Uniform
Commercial Code, to the extent, if any, that the Borrower's signature thereon is
required therefor, (b) causing the Bank's name to be noted as secured party on
any certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the bank to enforce, the
Bank's security interest in such Collateral, (c) complying with any provision of
any statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of the Bank to enforce, the Bank's security interest in
such Collateral, (d) obtaining governmental and other third party consents and
approvals, including without limitation any consent of any licensor, lessor or
other Person obligated on Collateral, (e) obtaining waivers from mortgagees and
landlords in form and substance satisfactory to the Bank, and (f) taking all
actions required by the UCC in effect from time to time or by other law, as
applicable in any relevant UCC jurisdiction, or by other law as applicable in
any foreign jurisdiction.
6.9 Collateral in the Possession of a Warehouseman or Bailee. If any of
the Collateral at any time is in the possession of a warehouseman or bailee, the
Borrower shall promptly notify the Bank thereof, and if requested by the Bank,
shall promptly obtain an acknowledgement from the warehouseman or bailee, in
form and substance satisfactory to the Bank, that the warehouseman or bailee
holds such Collateral for the benefit of the Bank and shall act upon the
instructions of the Bank, without the further consent of the Borrower.
6.10 Partial Release of Mortgaged Premises. Upon the written request of
the Borrower at any time and from time to time, Borrower or any Subsidiary may
sell one or more Mortgaged Premises and the Bank shall execute and deliver to
Borrower a release of the Mortgage on any of the Mortgaged Premises so long as
no Event of Default shall have occurred and be continuing; provided, however,
17
that the Bank may, in its sole discretion, require that the proceeds of the sale
of such Mortgaged Premises, after repayment of the Senior Mortgage Indebtedness
and costs of sale, be applied to repayment of the Revolving Loans.
6.11 Sale of Hotel Properties. Without limiting the provisions of
Section 6.10 above, and so long as no Event of Default shall have occurred and
be continuing or, after giving effect to the proposed sale, would occur, with
the giving of notice or lapse of time or both, Borrower or any Subsidiary may
sell one or more hotel properties in the ordinary course of business subject to
satisfaction of the following conditions:
(a) Borrower shall give the Bank no less than thirty (30) days'
prior written notice of each such sale;
(b) Each notice of proposed sale of a hotel property shall
include (i) the location and a description of the property
being sold, (ii) the sales price for the property in
question, and (iii) the identity of the buyer; and
(c) Upon the written request of the Bank, Borrower shall provide
such additional information concerning the transaction as
the Bank may thereafter request.
7. REPRESENTATIONS AND WARRANTIES.
------------------------------
To induce the Bank to make the Revolving Loans, the Borrower makes the
following representations and warranties to the Bank, each of which shall be
true and correct as of the date of the execution and delivery of this Agreement,
and which shall survive the execution and delivery of this Agreement:
7.1 Borrower Organization and Name. The Borrower and each Subsidiary is
a corporation duly organized, existing and in good standing under the laws of
its state of incorporation, with full and adequate corporate power to carry on
and conduct its business as presently conducted. The Borrower and each
Subsidiary is duly licensed or qualified in all foreign jurisdictions wherein
the nature of its activities require such qualification or licensing. The exact
legal name of the Borrower is as set forth in the first paragraph of this
Agreement, and the Borrower currently does not conduct, nor has it during the
last five (5) years conducted, business under any other name or trade name,
except for the names "AmeriHost Properties, Inc.," "AmeriHost Inn," "AmeriHost
Inn and Suites," "AmeriHost Hotel" and "AmeriHost Suites." The Borrower's state
issued organizational identification number is 204441.
7.2 Authorization; Validity. The Borrower and each Subsidiary which is
a party to any of the Loan Documents has full right, power and authority to
enter into this Agreement and/or each Loan Document to which it is a party, to
make the borrowings and execute and deliver the Loan Documents as provided
herein and to perform all of its duties and obligations under this Agreement and
each Loan Document to which it is a party. The execution and delivery of this
Agreement and/or the Loan Documents will not, nor will the observance or
performance of any of the matters and things herein or therein set forth,
violate or contravene any provision of law or of the articles of incorporation
or bylaws of the Borrower or any Subsidiary which is a party to any Loan
18
Document. All necessary and appropriate corporate action has been taken on the
part of the Borrower and each Subsidiary which is a party to any Loan Document
to authorize the execution and delivery of this Agreement and/or the Loan
Documents to which it is a party. This Agreement and the Loan Documents to which
it is a party are valid and binding agreements and contracts of the Borrower and
each Subsidiary which is a party to any Loan Document in accordance with their
respective terms.
7.3 Compliance With Laws. To the best knowledge of Borrower, the nature
and transaction of the business and operations of Borrower and each Subsidiary
and the use of their respective properties and assets, including, but not
limited to, the Collateral or any real estate owned or occupied by any of them,
do not and during the term of the Loans shall not, violate or conflict with any
applicable law, statute, ordinance, rule, regulation or order of any kind or
nature, including, without limitation, the provisions of the Fair Labor
Standards Act or any zoning, land use, building, noise abatement, occupational
health and safety or other laws, any building permit or any condition, grant,
easement, covenant, condition or restriction, whether recorded or not.
7.4 Environmental Laws and Hazardous Substances. The Borrower
represents, warrants and agrees with the Bank that (i) to the best knowledge of
Borrower, neither the Borrower nor any Subsidiary has generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off any of the premises of the Borrower (whether or
not owned by it) or Subsidiary in any manner which at any time violates any
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder, (ii) to the best knowledge of Borrower, the operations
of the Borrower and each Subsidiary comply in all material respects with all
Environmental Laws and all licenses, permits certificates, approvals and similar
authorizations thereunder, (iii) to the best knowledge of Borrowers, there has
been no investigation, proceeding, complaint, order, directive, claim, citation
or notice by any governmental authority or any other Person, nor is any pending
or, to the best of the Borrower's knowledge, threatened, and the Borrower shall
immediately notify the Bank upon becoming aware of any such investigation,
proceeding, complaint, order, directive, claim, citation or notice, and shall
take prompt and appropriate actions to respond thereto, with respect to any
non-compliance with, or violation of, the requirements of any Environmental Law
by the Borrower or any Subsidiary or the release, spill or discharge, threatened
or actual, of any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Material or any other environmental, health or safety matter, which affects the
Borrower or its business, operations or assets or any properties at which the
Borrower or any Subsidiary has transported, stored or disposed of any Hazardous
Materials, (iv) to the best knowledge of Borrower, neither the Borrower nor any
Subsidiary has any material liability, contingent or otherwise, in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material; and (v)
without limiting the generality of the foregoing, the Borrower shall, following
determination by the Bank that there is non-compliance, or any condition which
requires any action by or on behalf of the Borrower or any Subsidiary in order
to avoid any non-compliance, with any Environmental Law, at the Borrower's sole
expense, cause an independent environmental engineer acceptable to the Bank to
conduct such tests of the relevant site as are appropriate, and prepare and
19
deliver a report setting forth the result of such tests, a proposed plan for
remediation and an estimate of the costs thereof.
7.5 Absence of Breach. The execution, delivery and performance of this
Agreement, the Loan Documents and any other documents or instruments to be
executed and delivered by the Borrower or any Subsidiary in connection with the
Loans shall not: (i) violate any provisions of law or any applicable regulation,
order, writ, injunction or decree of any court or governmental authority, or
(ii) conflict with, be inconsistent with, or result in any breach or default of
any of the terms, covenants, conditions, or provisions of any indenture,
mortgage, deed of trust, instrument, document, agreement or contract of any kind
to which the Borrower or any Subsidiary is a party or by which the Borrower or
any Subsidiary or any of their respective property or assets may be bound.
7.6 Collateral Representations. The Borrower or, in the case of the
Mortgaged Premises, a Subsidiary, is the sole owner of the Collateral, free from
any Lien of any kind, other than the Lien of the Bank and the Liens permitted by
Section 8.2 of this Agreement.
7.7 Financial Statements. All financial statements submitted to the
Bank have been prepared in accordance with GAAP on a basis, except as otherwise
noted therein, consistent with the previous fiscal year and truly and accurately
reflect the consolidated financial condition of the Borrower and its
Subsidiaries and the consolidated results of the operations for the Borrower and
its Subsidiaries as of such date and for the periods indicated. Since the date
of the most recent financial statement submitted by the Borrower to the Bank,
there has been no material adverse change in the financial condition or in the
consolidated assets or liabilities of the Borrower and its Subsidiaries, or any
changes except those occurring in the ordinary course of business.
7.8 Litigation and Taxes. There is no litigation, demand, charge,
claim, petition or governmental investigation or proceeding pending, or to the
best knowledge of the Borrower, threatened, against the Borrower and/or any
Subsidiary, which, if adversely determined, would result in any material adverse
change in the financial condition or properties, business or operations of the
Borrower or Subsidiary. The Borrower and each Subsidiary have duly filed all
applicable income or other tax returns and to the best knowledge of Borrower,
have paid all income or other taxes when due. There is no controversy or
objection pending, or to the best knowledge of the Borrower, threatened in
respect of any tax returns of the Borrower or any Subsidiary, except for
extensions of time and pending audits being conducted by certain state revenue
departments in the ordinary course of business, none of which is (are) expected
to result in any material liability, either singly or in the aggregate.
7.9 Event of Default. No Event of Default has occurred and is
continuing, and no event has occurred and is continuing which, with the lapse of
time, the giving of notice, or both, would constitute such an Event of Default
under this Agreement or any of the Loan Documents and neither the Borrower nor
any Subsidiary is in default (without regard to grace or cure periods) under any
contract or agreement to which it is a party.
7.10 ERISA Obligations. All Employee Plans of the Borrower and its
Subsidiaries meet the minimum funding standards of Section 302 of ERISA where
applicable and each such Employee Plan that is intended to be qualified within
20
the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No
withdrawal liability has been incurred under any such Employee Plans and no
"Reportable Event" or "Prohibited Transaction" (as such terms are defined in
ERISA), has occurred with respect to any such Employee Plans, unless approved by
the appropriate governmental agencies. The Borrower and each Subsidiary have
promptly paid and discharged all obligations and liabilities arising under the
Employee Retirement Income Security Act of 1974 ("ERISA") of a character which
if unpaid or unperformed might result in the imposition of a Lien against any of
its properties or assets.
7.11 Adverse Circumstances. To the best knowledge of Borrower, no
condition, circumstance, event, agreement, document, instrument, restriction,
litigation or proceeding (or threatened litigation or proceeding or basis
therefor) exists which (a) could adversely affect the validity or priority of
the Liens granted to the Bank under the Loan Documents, (b) could materially
adversely affect the ability of the Borrower to perform its obligations under
the Loan Documents, (c) would constitute a default under any of the Loan
Documents, or (d) would constitute such a default with the giving of notice or
lapse of time or both.
7.12 Lending Relationship. The Borrower acknowledges and agrees that
the relationship hereby created with the Bank is and has been conducted on an
open and arm's length basis in which no fiduciary relationship exists and that
the Borrower has not relied and is not relying on any such fiduciary
relationship in executing this Agreement and in consummating the Loans. The Bank
represents that it will receive the Note payable to its order as evidence of a
bank loan.
7.13 Business Loan. The Loans, including interest rate, fees and
charges as contemplated hereby, (i) are business loans within the purview of 815
ILCS 205/4(l)(c), as amended from time to time, (ii) are an exempted transaction
under the Truth In Lending Act, 12 v.S.C. 1601 et seq., as amended from time to
time, and (iii) do not, and when disbursed shall not, violate the provisions of
the Illinois usury laws, any consumer credit laws or the usury laws of any state
which may have jurisdiction over this transaction, the Borrower or any property
securing the Loans.
7.14 Compliance with Regulation U. No portion of the proceeds of the
Loans shall
be used by the Borrower, or any affiliates of the Borrower, either directly or
indirectly, for the purpose of purchasing or carrying any margin stock, within
the meaning of Regulation U as adopted by the Board of Governors of the Federal
Reserve System.
7.15 Governmental Regulation. The Borrower and its Subsidiaries are
not, or after giving effect to any loan, will not be, subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur indebtedness for borrowed money.
7.16 Bank Accounts. All Deposit accounts and other bank accounts of the
Borrower (but not the Subsidiaries) are maintained by Borrower at the Bank.
21
7.17 Place of Business. The principal place of business of the Borrower
is 2355 S. Arlington Heights Road, Arlington Heights, Illinois 60005 and the
Borrower shall promptly notify the Bank of any change in such location. The
Borrower will not remove or permit the Collateral to be removed from such
location without the prior written consent of the Bank, except for Inventory
sold in the usual and ordinary course of the Borrower's business.
7.18 Complete Information. This Agreement and all financial statements,
schedules, certificates, confirmations, agreements, contracts, and other
materials submitted to the Bank in connection with or in furtherance of this
Agreement by or on behalf of the Borrower fully and fairly state the matters
with which they purport to deal, and neither misstate any material fact nor,
separately or in the aggregate, fail to state any material fact necessary to
make the statements made not misleading.
8. NEGATIVE COVENANTS.
------------------
8.1 Indebtedness. The Borrower shall not, and shall cause each of its
Subsidiaries to not, either directly or indirectly, create, assume, incur or
have outstanding any Indebtedness (including purchase money indebtedness), or
become liable, whether as endorser, guarantor, surety or otherwise, for any debt
or obligation of any other Person, except:
(a) the Obligations;
(b) endorsement for collection or deposit of any commercial
paper secured in the ordinary course of business;
(c) obligations of the Borrower or any of its Subsidiaries for
taxes, assessments, municipal or other governmental charges;
(d) obligations of the Borrower or any of its Subsidiaries for
accounts payable, other than for money borrowed, incurred in
the ordinary course of business; and
(e) obligations, including the Senior Mortgage Indebtedness,
existing on the date hereof which are disclosed on the
financial statements referred to in Section 7;
(f) obligations in respect of Indebtedness issued to refinance
the Senior Mortgage Indebtedness (the "Senior Refinancing
Indebtedness"); provided, however, that the issuance of such
Senior Refinancing Indebtedness shall not cause or result in
a violation of any covenant set forth in Section 10;
(g) obligations in respect of Indebtedness secured by a Lien on
any Other Property developed by Borrower or any Subsidiary
(i) after the sales by Borrower or its Subsidiary of the
Kenton, Ohio and Fontana, California hotel properties (or
the sale of other hotel properties generating substantially
equivalent net proceeds of sale, after repayment of Senior
22
Mortgage Indebtedness thereon and costs of sale of such
properties) or (ii) in connection with a joint venture
project in which Borrower and/or any Subsidiary own less
than fifty percent (50%) of the equity interests and
Borrower is the project developer; provided that the
issuance of such Indebtedness shall not cause or result in a
violation of any covenant set forth in Section 10;
(h) obligations arising under Capital Leases for property
acquired (or deemed to be acquired) by the Borrower or any
of its Subsidiaries or claims arising from the use or loss
of, or damage to, such property; and
(i) Indebtedness for Capital Expenditures (exclusive of
Indebtedness as incurred by a Lien on any Other Property
permitted under Section 8.1(g) above) incurred after the
date of this Agreement not to exceed One Million and 00/100
Dollars ($1,000,000.00) in the aggregate in any one calendar
year.
8.2 Encumbrances. The Borrower shall not, and shall cause each of its
Subsidiaries to not, either directly or indirectly, create, assume, incur or
suffer or permit to exist any Lien or charge of any kind or character upon any
asset of the Borrower or any Subsidiary, whether owned at the date hereof or
hereafter acquired except:
(a) Liens for taxes, assessments or other governmental
charges not yet due or which are being contested in
good faith by appropriate proceedings in such a manner
as not to make the property forfeitable;
(b) Liens or charges incidental to the conduct of its
business or the ownership of its property and assets
which were not incurred in connection with the
borrowing of money or the obtaining of an advance or
credit, and which do not in the aggregate materially
detract from the value of its property or assets or
materially impair the use thereof in the operation of
its business;
(c) Liens arising out of judgments or awards against the
Borrower with respect to which it shall concurrently
therewith be prosecuting a timely appeal or proceeding
for review and with respect to which it shall have
secured a stay of execution pending such appeal or
proceedings for review;
(d) pledges or deposits to secure obligations under
worker's compensation laws or similar legislation;
(e) good faith deposits in connection with lending
contracts or leases to which the Borrower is a party;
(f) deposits to secure public or statutory obligations of
the Borrower;
23
(g) Liens, including the Senior Mortgages, existing on the
date hereof and disclosed on the financial statements
referred to in Section 7;
(h) Liens securing obligations permitted under Section
8.1(f), Section 8.1(g) and/or Section 8.1(h); and
(i) Liens granted to the Bank.
Without limiting the generality of the foregoing, Borrower shall not,
and shall cause each Subsidiary not to, mortgage or otherwise encumber
Borrower's or such Subsidiary's fee or leasehold interest in any Mortgaged
Premises or Other Property, except as expressly permitted pursuant to (g) or (h)
above or as consented to by the Bank in writing.
8.3 Investments. The Borrower shall not, and shall cause each
Subsidiary to not, either directly or indirectly, make or have outstanding any
new investments (whether through purchase of stocks, obligations or otherwise)
in, or loans or advances to, any other Person, or acquire all or any substantial
part of the assets, business, stock or other evidence of beneficial ownership of
any other Person except:
(a) investments in direct obligations of the United States;
(b) investments in certificates of deposit issued by the
Bank or any bank with assets greater than One Hundred
Million Dollars ($100,000,000.00); or
(c) investments in Prime Commercial Paper (for purposes
hereof, Prime Commercial Paper shall mean short-term
unsecured promissory notes sold by large corporations
and rated A-I/P-1 by Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc., and Moody's Investment
Service, Inc.); or
(d) deposits held by the Bank or by any affiliate of ABN
AMRO Incorporated.
Without limiting the generality of the foregoing, except in connection
with a joint venture project in which Borrower and/or any Subsidiary owns less
than fifty percent (50%) of the equity interests and Borrower is the developer,
Borrower shall not, and shall cause each Subsidiary not to invest in or commence
development of any new hotel property(ies) until the sale by Borrower and/or a
Subsidiary of the Kenton, Ohio and Fontana, California hotel properties (or the
sale of other hotel properties generating substantially equivalent net proceeds
of sale, after repayment of Senior Mortgage Indebtedness thereon and costs of
sale of such properties).
8.4 Transfer; Merger. The Borrower shall not, and shall cause each
Subsidiary to not, either directly or indirectly, merge, consolidate, sell,
transfer, license, lease, encumber or otherwise dispose of all or any part of
its property or business or all or any substantial part of its assets, or sell
or discount (with or without recourse) any of its Promissory Notes, Chattel
Paper, Payment Intangibles or Accounts, except that Borrower or any Subsidiary
may sell one or more hotel properties in accordance with the provisions of
Sections 6.10 and 6.11.
24
8.5 Distributions. Except for purchases of Borrower's stock in an
amount not to exceed One Million Dollars ($1,000,000.00) in any fiscal year of
Borrower, none of which, individually or in the aggregate would cause or result
in the occurrence of an Event of Default, the Borrower shall not, either
directly or indirectly, purchase or redeem any shares of its stock or, except
with the prior written consent of the Bank, declare or pay any dividends,
whether in cash or otherwise, or set aside any funds for any such purpose or
make any distribution to its shareholders.
8.6 Use of Proceeds. Neither the Borrower nor any of its Subsidiaries
or affiliates shall use any portion of the proceeds of the Loans, either
directly or indirectly, for the purpose of purchasing any securities
underwritten by ABN AMRO Incorporated, an affiliate of the Bank.
8.7 Bank Accounts. The Borrower shall not, and shall cause each
Subsidiary to not, establish any new Deposit accounts or other bank accounts,
other than local bank accounts maintained by the Subsidiaries or bank accounts
established at or with the Bank without the prior written consent of the Bank.
8.8 Change of Legal Status. Neither the Borrower nor any Subsidiary
which is a party to any of the Loan Documents shall change its name, its
organizational identification number, if it has one, its type of organization,
its jurisdiction of organization or other legal structure without the prior
written consent of the Bank.
9. AFFIRMATIVE COVENANTS.
---------------------
9.1 Compliance with Bank Regulatory Requirements. Upon demand by the
Bank, the Borrower shall reimburse the Bank for the Bank's additional costs
and/or reductions in the amount of principal or interest received or receivable
by the Bank if at any time after the date of this Agreement any law, treaty or
regulation or any change in any law, treaty or regulation or the interpretation
thereof by any governmental authority charged with the administration thereof or
any central bank or other fiscal, monetary or other authority having
jurisdiction over the Bank or the Loans, whether or not having the force of law,
shall impose, modify or deem applicable any reserve (except reserve requirements
taken into account in calculating the Revolving Interest Rate) and/or special
deposit requirement against or in respect of assets held by or deposits in or
for the account of the Loans by the Bank or impose on the Bank any other
condition with respect to this Agreement or the Loans, the result of which is to
either increase the cost to the Bank of making or maintaining the Loans or to
reduce the amount of principal or interest received or receivable by the Bank
with respect to such Loans. Said additional costs and/or reductions will be
those which directly result from the imposition of such requirement or condition
on the making or maintaining of such Loans. All Loans shall be deemed to be
match funded for the purposes of the Bank's determination in the previous
sentence. Notwithstanding the foregoing, the Borrower shall not be required to
pay any such additional costs which could be avoided by the Bank with the
exercise of reasonable conduct and diligence.
9.2 Corporate Existence. The Borrower shall, and shall cause each
Subsidiary to, at all times preserve and maintain its corporate existence,
rights, franchises and privileges, and shall at all times continue as a going
concern in the business which the Borrower or such Subsidiary is presently
conducting. If the Borrower does not have a state issued identification number
25
and later obtains one, the Borrower shall promptly notify the Bank of such
organizational identification number.
9.3 Maintain Property. The Borrower shall, and shall cause each
Subsidiary to, at all times maintain, preserve and keep its plant, properties
and Equipment, including, but not limited to, any Collateral, in good repair,
working order and condition, and shall from time to time make all needful and
proper repairs, renewals, replacements, and additions thereto so that at all
times the efficiency thereof shall be fully preserved and maintained. The
Borrower shall, and shall cause each Subsidiary to, permit the Bank to examine
and inspect such plant, properties and Equipment, including, but not limited to,
any Collateral, at all reasonable times.
9.4 Maintain Insurance. The Borrower shall, and shall cause each
Subsidiary to, at all times insure and keep insured in insurance companies
acceptable to the Bank, all insurable property owned by it which is of a
character usually insured by companies similarly situated and operating like
properties, against loss or damage from fire and such other hazards or risks as
are customarily insured against by companies similarly situated and operating
like properties; and shall similarly insure employers', public and professional
liability risks. Prior to the date of the funding of the Note the Borrower shall
deliver to the Bank a certificate setting forth in summary form the nature and
extent of the insurance maintained by the Borrower and its Subsidiaries pursuant
to this SECTION 9. All such policies of insurance must be satisfactory to the
Bank in relation to the amount and term of the Obligations and type and value of
the Collateral and assets of the Borrower and each Subsidiary, shall identify
the Bank as lender's loss payee or mortgagee and as an additional insured. In
the event the Borrower either fails to provide the Bank with evidence of the
insurance coverage required by this Section or at any time hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
any premium in whole or in part relating thereto, then the Bank, without waiving
or releasing any obligation or default by the Borrower hereunder, may at any
time (but shall be under no obligation to so act), obtain and maintain such
policies of insurance and pay such premium and take any other action with
respect thereto, which the Bank deems advisable. This insurance coverage (i)
may, but need not, protect the Borrower's and each Subsidiary's interest in the
such property, including, but not limited to the Collateral, and (ii) may not
pay any claim made by, or against, the Borrower or any Subsidiary in connection
with such property, including, but not limited to the Collateral. The Borrower
may later cancel any such insurance purchased by the Bank, but only after
providing the Bank with evidence that the Borrower has obtained the insurance
coverage required by this Section. The costs of such insurance obtained by the
Bank, through and including the effective date such insurance coverage is
canceled or expires, shall be payable on demand by the Borrower to the Bank,
together with interest at the Default Rate on such amounts until repaid and any
other charges by the Bank in connection with the placement of such insurance.
The costs of such insurance, which may be greater than the cost of insurance
which the Borrower may be able to obtain on its own, together with interest
thereon at the Default Rate and any other charges by the Bank in connection with
the placement of such insurance may be added to the total Obligations due and
owing.
9.5 Tax Liabilities. The Borrower shall, and shall cause each
Subsidiary to, at all times pay and discharge all property and other taxes,
assessments and governmental charges upon, and all claims (including claims for
labor, materials and supplies) against the Borrower and each Subsidiary or any
of its properties, Equipment or Inventory, before the same shall become
26
delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith by appropriate proceedings and are
insured against or bonded over to the satisfaction of the Bank.
9.6 ERISA Liabilities; Employee Plans. The Borrower shall, and shall
cause each Subsidiary to, (i) keep in full force and effect any and all Employee
Plans which are presently in existence or may, from time to time, come into
existence under ERISA, and not withdraw from any such Employee Plans, unless
such withdrawal can be effected or such Employee Plans can be terminated without
liability to the Borrower or any Subsidiary; (ii) make contributions to all of
such Employee Plans in a timely manner and in a sufficient amount to comply with
the standards of ERISA; including the minimum funding standards of ERISA; (iii)
comply with all material requirements of ERISA which relate to such Employee
Plans; (iv) notify the Bank immediately upon receipt by the Borrower or any
Subsidiary of any notice concerning the imposition of any withdrawal liability
or of the institution of any proceeding or other action which may result in the
termination of any such Employee Plans or the appointment of a trustee to
administer such Employee Plans; (v) promptly advise the Bank of the occurrence
of any "Reportable Event" or "Prohibited Transaction" (as such terms are defined
in ERISA), with respect to any such Employee Plans; and (vi) amend any Employee
Plan that is intended to be qualified within the meaning of Section 401 of the
Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan
qualified, and to cause the Employee Plan to be administered and operated in a
manner that does not cause the Employee Plan to lose its qualified status.
9.7 Financial Statements. The Borrower shall, and shall cause each
Subsidiary to, at all times maintain a standard and modern system of accounting,
on the accrual basis of accounting and in all respects in accordance with GAAP,
and shall furnish to the Bank or its authorized representatives such information
regarding the business affairs, operations and financial condition of the
Borrower and its Subsidiaries, including, but not limited to:
(a) as soon as available, and in any event, within ninety
(90) days after the close of each of its fiscal years,
a copy of the annual audited consolidated financial
statements of the Borrower and its Subsidiaries,
including balance sheet, statement of income and
retained earnings, statement of cash flows for the
fiscal year then ended and such other information
(including nonfinancial information) as the Bank may
request, in reasonable detail, prepared and certified
by an independent certified public accountant
acceptable to the Bank, containing an unqualified
opinion; and
(b) as soon as available, and in any event, within forty
five (45) days following the end of each fiscal
quarter, a copy of the consolidated financial
statements of the Borrower and its Subsidiaries
regarding such fiscal quarter, including balance sheet,
statement of income and retained earnings, statement of
cash flows for the fiscal quarter then ended and such
other information (including nonfinancial information)
27
as the Bank may request, in reasonable detail, prepared
and certified as accurate by the Borrower.
No change with respect to such accounting principles shall be made by
the Borrower without giving prior notification to the Bank. The Borrower
represents and warrants to the Bank that the financial statements delivered to
the Bank at or prior to the execution and delivery of this Agreement and to be
delivered at all times thereafter accurately reflect and will accurately reflect
the consolidated financial condition of the Borrower and its Subsidiaries. The
Bank shall have the right at all times during business hours to inspect the
books and records of the Borrower and make extracts therefrom. The Borrower
agrees to advise the Bank immediately of any adverse change in the financial
condition, the operations or any other status of the Borrower.
9.8 Supplemental Financial Statements. The Borrower shall immediately
upon receipt thereof, provide to the Bank copies of interim and supplemental
reports if any, submitted to the Borrower by independent accountants in
connection with any interim audit or review of the books of the Borrower or any
Subsidiary.
9.9 Covenant Compliance Report. The Borrower shall, within thirty (30)
days after the end of each fiscal quarter, deliver to the Bank (a) a computation
in such detail as the Bank shall specify, showing compliance by the Borrower
with the covenants set forth in SECTION 10, and (b) a certificate that neither
the Borrower nor any Subsidiary is in default under the terms of or has
otherwise breached the terms of any of the Senior Mortgages or received any
notice(s) with respect to a default or breach of any of the foregoing, in each
case certified as accurate by the Borrower. 9.10 Field Audits. The Borrower
shall allow the Bank, at the Borrower's sole expense, to conduct an annual field
examination of the Accounts of the Borrower and its Subsidiaries, the results of
which must be satisfactory to the Bank in the Bank's sole and absolute
discretion.
9.11 Other Reports. The Borrower shall, within such period of time as
the Bank may specify deliver to the Bank such other schedules and reports as the
Bank may require.
9.12 Collateral Records. Borrower shall keep full and accurate books
and records relating to the Collateral and shall mark such books and records to
indicate the Bank's Lien in the Collateral.
9.13 Notice of Proceedings. The Borrower shall, immediately after
knowledge thereof shall have come to the attention of any officer of the
Borrower, give written notice to the Bank of all threatened or pending actions,
suits, and proceedings before any court or governmental department, commission,
board or other administrative agency which may have a material effect on the
business, property or operations of the Borrower or any Subsidiary.
9.14 Notice of Default. The Borrower shall, immediately after the
commencement thereof, give notice to the Bank in writing of the occurrence of an
Event of Default or of any event which, with the lapse of time, the giving of
notice or both, would constitute an Event of Default hereunder.
28
9.15 Banking Relationship. The Borrower covenants and agrees, at all
times during the term of this Agreement, to utilize the Bank as its primary bank
of account and depository for all financial services, including all receipts,
disbursements, cash management and related service, of Borrower and its
Subsidiaries.
10. FINANCIAL COVENANTS.
-------------------
10.1 Tangible Net Worth. As of the end of each of its fiscal quarters,
the Borrower and its Subsidiaries shall maintain consolidated Tangible Net Worth
in an amount not less than Nine Million Five Hundred Thousand and 00/100 Dollars
($9,500,000.00).
10.2 Total Liabilities to Worth. As of the end of each of its fiscal
quarters, the Borrower and its Subsidiaries shall maintain a Total Liabilities
to Worth Ratio of not greater than the following:
Fiscal Quarter Ended Total Liabilities to Worth
-------------------- --------------------------
March 31, 2003 3.75 to 1.0
June 30, 2003 3.75 to 1.0
September 30, 2003 3.75 to 1.0
December 31, 2003 3.50 to 1.0
March 31, 2004 3.50 to 1.0
10.3 Debt Service Coverage Ratio. As of the end of each of its fiscal
quarters, the Borrower and its Subsidiaries shall maintain a ratio of (a)
consolidated EBITDA to (b) consolidated Debt Service Charges of not less than
1.20 to 1.0, measured on a trailing twelve (12) month basis for the twelve (12)
fiscal month period immediately preceding the end of such fiscal quarter.
10.4 Aggregate Loan-to-Value Ratio. The Bank may from time to time
order reappraisals on any of the Mortgaged Premises and/or appraisals, in form
and substance acceptable to the Bank, on any one or more of the Other
Properties. At all times, the Borrower and its Subsidiaries shall maintain an
aggregate Loan-to-Value Ratio for the Mortgaged Properties, as determined by the
Bank, not exceeding sixty-five percent (65%).
10.5 Aggregate Revenue Per Room. As of the end of each month, aggregate
gross room receipts for all hotel properties owned solely by any Wholly Owned
Subsidiary shall not have declined as of two consecutive months' end by more
than five percent (5%) from the aggregate gross room receipts attributable to
the same hotel rooms as of the end of the two (2) immediately preceding fiscal
months' end.
29
10.6 Annual Net Income. Borrower's Net Income for the fiscal year
ending December 31, 2003 shall be no less than Two Hundred and 00/100 Thousand
Dollars ($200,000.00).
11. EVENTS OF DEFAULT.
-----------------
The Borrower, without notice or demand of any kind, shall be in default
under this Agreement upon the occurrence of any of the following events (each an
"Event of Default").
11.1 Nonpayment of Obligations. Any amount due and owing on the Note or
any of the Obligations, whether by its terms or as otherwise provided herein, is
not paid within ten (10) days after notice from the Bank that such amount was
not paid when due.
11.2 Misrepresentation. Any oral or written warranty, representation,
certificate or statement in this Agreement, the Loan Documents or any other
agreement with the Bank shall be false when made or at any time.
11.3 Nonperformance. Any failure to perform or default in the
performance of any covenant, condition or agreement contained in this Agreement
and, if capable of being cured, such failure to perform or default in
performance continues for a period of thirty (30) days after the Borrower
receives notice or knowledge from any source of such failure to perform or
default in performance.
11.4 Default under Loan Documents. A default by Borrower or any Obligor
under any of the other Loan Documents, which continues beyond any applicable
grace or cure period, all of which covenants, conditions and agreements
contained therein are hereby incorporated in this Agreement by express
reference, shall be and constitute an Event of Default under this Agreement and
any other of the Obligations.
11.5 Default under Other Agreements. Any default in the payment of
principal, interest or any other sum for any other obligation beyond any period
of grace provided with respect thereto or in the performance of any other term,
condition or covenant contained in any agreement (including, but not limited to
any capital or operating lease or any agreement in connection with the deferred
purchase price of property) under which any such obligation is created, the
effect of which default is to cause or permit the holder of such obligation (or
the other party to such other agreement) to cause such obligation to become due
prior to its stated maturity or terminate such other agreement.
11.6 Assignment for Creditors. Any Obligor makes an assignment for the
benefit of creditors, fails to pay, or admits in writing its inability to pay
its debts as they mature; or if a trustee of any substantial part of the assets
of any Obligor is applied for or appointed, and in the case of such trustee
being appointed in a proceeding brought against such Obligor, the Obligor, by
any action or failure to act indicates its approval of, consent to, or
acquiescence in such appointment and such appointment is not vacated, stayed on
appeal or otherwise shall not have ceased to continue in effect within thirty
(30) days after the date of such appointment.
11.7 Bankruptcy. Any proceeding involving any Obligor, is commenced by
or against such Obligor under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law or statute of
30
the federal government or any state government, and in the case of any such
proceeding being instituted against such Obligor, (i) such Obligor, by any
action or failure to act indicates its approval of, consent to or acquiescence
therein, or (ii) an order shall be entered approving the petition in such
proceedings and such order is not vacated, stayed on appeal or otherwise shall
not have ceased to continue in effect within thirty (30) days after the entry
thereof.
11.8 Judgments. The entry of any judgment, decree, levy, attachment,
garnishment or other process, or the filing of any Lien against any Obligor
which is not fully covered by insurance, and such judgment or other process
shall not have been, within thirty (30) days from the entry thereof, (i) bonded
over to the satisfaction of the Bank and appealed, (ii) vacated, or (iii)
discharged.
11.9 Change in Control. Subject to Section 6.11 hereof, any sale,
conveyance, assignment or other transfer, directly or indirectly, of any
ownership interest of the Borrower in any Subsidiary which owns any of the
Mortgaged Premises.
11.10 Collateral Impairment. (a) The entry of any judgment, decree,
levy, attachment, garnishment or other process, or the filing of any Lien
against, any of the Collateral or any collateral under a separate security
agreement securing any of the Obligations and such judgment or other process
shall not have been, within thirty (30) days from the entry thereof, (i) bonded
over to the satisfaction of the Bank and appealed, (ii) vacated, or (iii)
discharged, or (b) the loss, theft, destruction, seizure or forfeiture, or the
occurrence of any deterioration or impairment of any of the Collateral or any of
the collateral under any security agreement securing any of the Obligations, or
any decline or depreciation in the value or market price thereof (whether actual
or reasonably anticipated), which causes the Collateral, in the sole opinion of
the Bank acting in good faith, to become unsatisfactory as to value or
character, or which causes the Bank to reasonably believe that it is insecure
and that the likelihood for repayment of the Obligations is or will soon be
impaired, time being of the essence, which loss, deterioration, decline,
depreciation, or other source of insecurity or impairment continues for a period
of thirty (30) days after the Borrower receives written notice from the Bank.
The cause of such deterioration, impairment, decline or depreciation shall
include, but is not limited to, the failure by the Borrower to do any act deemed
necessary by the Bank to preserve and maintain the value and collectability of
the Collateral.
12. REMEDIES.
--------
Upon the occurrence of an Event of Default, the Bank shall have all
rights, powers and remedies set forth in the Loan Documents, in any written
agreement or instrument (other than this Agreement or the Loan Documents)
relating to any of the Obligations or any security therefor, or as otherwise
provided at law or in equity. Without limiting the generality of the foregoing,
the Bank may, at its option upon the occurrence of an Event of Default, declare
its commitments to the Borrower to be terminated and all Obligations to be
immediately due and payable, provided, however, that upon the occurrence of an
Event of Default under either Section 11.6, "Assignment for Creditors", or
Section 11.7, "Bankruptcy", all commitments of the Bank to the Borrower shall
immediately terminate and all Obligations shall be automatically due and
payable, all without demand, notice or further action of any kind required on
31
the part of the Bank. The Borrower hereby waives any and all presentment,
demand, notice of dishonor, protest, and all other notices and demands in
connection with the enforcement of Bank's rights under the Loan Documents, and
hereby consents to, and waives notice of release, with or without consideration,
of any Collateral, notwithstanding anything contained herein or in the Loan
Documents to the contrary. In addition to the foregoing:
12.1 Possession and Assembly of Collateral. The Bank may, without
notice, demand or legal process of any kind, take possession of any or all of
the Collateral (in addition to Collateral of which the Bank already has
possession), wherever it may be found, and for that purpose may pursue the same
wherever it may be found, and may enter into any of the Borrower's premises
where any of the Collateral may be or is supposed to be, and search for, take
possession of, remove, keep and store any of the Collateral until the same shall
be sold or otherwise disposed of and the Bank shall have the right to store the
same in any of the Borrower's premises without cost to the Bank. At the Bank's
request, the Borrower will, at the Borrower's sole expense, assemble the
Collateral and make it available to the Bank at a place or places to be
designated by the Bank which is reasonably convenient to the Bank and the
Borrower.
12.2 Sale of Collateral. The Bank may sell any or all of the Collateral
at public or private sale, upon such terms and conditions as the Bank may deem
proper, and the Bank may purchase any or all of the Collateral at any such sale.
The Bank may apply the net proceeds, after deducting all costs, expenses,
attorneys' and paralegals' fees incurred or paid at any time in the collection,
protection and sale of the Collateral and the Obligations, to the payment of the
Note and/or any of the other Obligations, returning the excess proceeds, if any,
to the Borrower. The Borrower shall remain liable for any amount remaining
unpaid after such application, with interest. Any notification of intended
disposition of the Collateral required by law shall be conclusively deemed
reasonably and properly given if given by the Bank at least five (5) calendar
days before the date of such disposition. The Borrower hereby confirms, approves
and ratifies all acts and deeds of the Bank relating to the foregoing, and each
part thereof.
12.3 Standards for Exercising Remedies. To the extent that applicable
law imposes duties on the Bank to exercise remedies in a commercially reasonable
manner, the Borrower acknowledges and agrees that it is not commercially
unreasonable for the Bank (a) to fail to incur expenses reasonably deemed
significant by the Bank to prepare Collateral for disposition or otherwise to
complete raw material or work-in-process into finished goods or other finished
products for disposition. (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account Debtors
and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
32
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
including, without limitation, any warranties of title, (k) to purchase
insurance or credit enhancements to insure the Bank against risks of loss,
collection or disposition of Collateral or to provide to the Bank a guaranteed
return from the collection or disposition of Collateral, or (1) to the extent
deemed appropriate by the Bank, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Bank in
the collection or disposition of any of the Collateral. The Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by the Bank would not be commercially
unreasonable in the Bank's exercise of remedies against the Collateral and that
other actions or omissions by the Bank shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation upon the foregoing, nothing contained in this Section shall be
construed to grant any rights to the Borrower or to impose any duties on the
Bank that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section.
12.4 UCC and Offset Rights. The Bank may exercise, from time to time,
any and all rights and remedies available to it under the UCC or under any other
applicable law in addition to, and not in lieu of, any rights and remedies
expressly granted in this Agreement or in any other agreements between any
Obligor and the Bank, and may, without demand or notice of any kind, appropriate
and apply toward the payment of such of the Obligations, whether matured or
unmatured, including costs of collection and attorneys' and paralegals' fees,
and in such order of application as the Bank may, from time to time, elect, any
indebtedness of the Bank to any Obligor, however created or arising, including,
but not limited to, balances, credits, deposits, accounts or moneys of such
Obligor in the possession, control or custody of, or in transit to the Bank. The
Borrower, on behalf of itself and each Obligor, hereby waives the benefit of any
law that would otherwise restrict or limit the Bank in the exercise of its
right, which is hereby acknowledged, to appropriate at any time hereafter any
such indebtedness owing from the Bank to any Obligor.
12.5 Additional Remedies. The Bank shall have the right and power to:
(a) instruct the Borrower, at its own expense, to notify
any parties obligated on any of the Collateral,
including, but not limited to, any Account Debtors, to
make payment directly to the Bank of any amounts due or
to become due thereunder, or the Bank may directly
notify such obligors of the security interest of the
Bank, and/or of the assignment to the Bank of the
Collateral and direct such obligors to make payment to
the Bank of any amounts due or to become due with
respect thereto, and thereafter, collect any such
amounts due on the Collateral directly from such
Persons obligated thereon;
(b) enforce collection of any of the Collateral, including,
but not limited to, any Accounts, by suit or otherwise,
or make any compromise or settlement with respect to
any of the Collateral, or surrender, release or
exchange all or any part thereof, or compromise, extend
33
or renew for any period (whether or not longer than the
original period) any indebtedness thereunder;
(c) take possession or control of any proceeds and products
of any of the Collateral, including the proceeds of
insurance thereon;
(d) extend, renew or modify for one or more periods
(whether or not longer than the original period) the
Note, any other of the Obligations, any obligation of
any nature of any other obligor with respect to the
Note or any of the Obligations;
(e) grant releases, compromises or indulgences with respect
to the Note, any of the Obligations, any extension or
renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to the
Note or any of the Obligations;
(f) transfer the whole or any part of securities which may
constitute Collateral into the name of the Bank or the
Bank's nominee without disclosing, if the Bank so
desires, that such securities so transferred are
subject to the security interest of the Bank, and any
corporation, association, or any of the managers or
trustees of any trust issuing any of said securities,
or any transfer agent, shall not be bound to inquire,
in the event that the Bank or said nominee makes any
further transfer of said securities, or any portion
thereof, as to whether the Bank or such nominee has the
right to make such further transfer, and shall not be
liable for transferring the same;
(g) vote the Collateral;
(h) make an election with respect to the Collateral under
Section 1111 of the Bankruptcy Code or take action
under Section 364 or any other section of the
Bankruptcy Code; provided, however, that any such
action of the Bank as set forth herein shall not, in
any manner whatsoever, impair or affect the liability
of the Borrower hereunder, nor prejudice, waive, nor be
construed to impair, affect, prejudice or waive the
Bank's rights and remedies at law, in equity or by
statute, nor release, discharge, nor be construed to
release or discharge, the Borrower, any guarantor or
other Person liable to the Bank for the Obligations;
and
(i) at any time, and from time to time, accept additions
to, releases, reductions, exchanges or substitution of
the Collateral, without in any way altering, impairing,
diminishing or affecting the provisions of this
Agreement, the Loan Documents, or any of the other
Obligations, or the Bank's rights hereunder, under the
Note or under any of the other Obligations.
34
The Borrower hereby ratifies and confirms whatever the Bank may do with
respect to the Collateral and agrees that the Bank shall not be liable for any
error of judgment or mistakes of fact or law with respect to actions taken in
connection with the Collateral.
12.6 Attorney-in-Fact. The Borrower hereby irrevocably makes,
constitutes and appoints the Bank (and any officer of the Bank or any Person
designated by the Bank for that purpose) as the Borrower's true and lawful proxy
and attorney-in-fact (and agent-in-fact) in the Borrower's name, place and
stead, with full power of substitution, to (i) take such actions as are
permitted in this Agreement, (ii) execute such financing statements and other
documents and to do such other acts as the Bank may require to perfect and
preserve the Bank's security interest in, and to enforce such interests in the
Collateral, and (iii) carry out any remedy provided for in this Agreement,
including, without limitation, endorsing the Borrower's name to checks, drafts,
instruments and other items of payment, and proceeds of the Collateral,
executing change of address forms with the postmaster of the United States Post
Office serving the address of the Borrower, changing the address of the Borrower
to that of the Bank, opening all envelopes addressed to the Borrower and
applying any payments contained therein to the Obligations. The Borrower hereby
acknowledges that the constitution and appointment of such proxy and
attorney-in-fact are coupled with an interest and are irrevocable. The Borrower
hereby ratifies and confirms all that said attorney-in-fact may do or cause to
be done by virtue of any provision of this Agreement.
12.7 No Marshaling. The Bank shall not be required to marshal any
present or future collateral security (including but not limited to this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order. To the extent that it lawfully
may, the Borrower hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement of
the Bank's rights under this Agreement or under any other instrument creating or
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, the Borrower hereby
irrevocably waives the benefits of all such laws.
12.8 Application of Proceeds. The Bank will within three (3) business
days after receipt of cash or solvent credits from collection of items of
payment, proceeds of Collateral or any other source, apply the whole or any part
thereof against the Obligations secured hereby. The Bank shall further have the
exclusive right to determine how, when and what application of such payments and
such credits shall be made on the Obligations, and such determination shall be
conclusive upon the Borrower. Any proceeds of any disposition by the Bank of all
or any part of the Collateral may be first applied by the Bank to the payment of
expenses incurred by the Bank in connection with the Collateral, including
attorneys' fees and legal expenses as provided for in SECTION 13 hereof.
12.9 No Waiver. No Event of Default shall be waived by the Bank except
in writing. No failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder shall operate as a waiver of the exercise of the same
or any other right at any other time; nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. There
35
shall be no obligation on the part of the Bank to exercise any remedy available
to the Bank in any order. The remedies provided for herein are cumulative and
not exclusive of any remedies provided at law or in equity. The Borrower agrees
that in the event that the Borrower fails to perform, observe or discharge any
of its Obligations or liabilities under this Agreement or any other agreements
with the Bank, no remedy of law will provide adequate relief to the Bank, and
further agrees that the Bank shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
13. MISCELLANEOUS.
-------------
13.1 Obligations Absolute. None of the following shall affect the
Obligations of the Borrower to the Bank under this Agreement or the Bank's
rights with respect to the Collateral:
(a) acceptance or retention by the Bank of other property
or any interest in property as security for the
Obligations;
(b) release by the Bank of all or any part of the
Collateral or of any party liable with respect to the
Obligations;
(c) release, extension, renewal, modification or
substitution by the Bank of the Note, or any note
evidencing any of the Obligations, or the compromise of
the liability of the Obligations; or
(d) failure of the Bank to resort to any other security or
to pursue the Borrower or any other obligor liable for
any of the Obligations before resorting to remedies
against the Collateral.
13.2 Entire Agreement. This Agreement (i) is valid, binding and
enforceable against the Borrower and the Bank in accordance with its provisions
and no conditions exist as to its legal effectiveness; (ii) constitutes the
entire agreement between the parties; and (iii) is the final expression of the
intentions of the Borrower and the Bank. No promises, either expressed or
implied, exist between the Borrower and the Bank, unless contained herein. This
Agreement supersedes all negotiations, representations, warranties, commitments,
offers, contracts (of any kind or nature, whether oral or written) prior to or
contemporaneous with the execution hereof.
13.3 Amendments; Waivers. No amendment, modification, termination,
discharge or waiver of any provision of this Agreement or of the Loan Documents,
or consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only for the specific purpose for
which given.
13.4 WAIVER OF DEFENSES. THE BORROWER, ON BEHALF OF ITSELF AND ANY
GUARANTORS OF ANY OF THE OBLIGATIONS, WAIVES EVERY PRESENT AND FUTURE DEFENSE,
CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE BORROWER MAY NOW HAVE OR
HEREAFTER MAY HAVE TO ANY ACTION BY THE BANK IN ENFORCING THIS AGREEMENT. THE
BORROWER WAIVES ANY IMPLIED COVENANT OF GOOD FAITH AND RATIFIES AND CONFIRMS
WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS PROVISION
36
IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO
THE BORROWER.
13.5 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER, AFTER CONSULTING
OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER OBLIGATIONS, THE
COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING
IN WHICH THE BANK AND THE BORROWER ARE ADVERSE PARTIES. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE
BORROWER.
13.6 LITIGATION. TO INDUCE THE BANK TO MAKE THE LOANS, THE BORROWER
IRREVOCABLY AGREES THAT ALL ACTIONS ARISING, DIRECTLY OR INDIRECTLY, AS A RESULT
OR CONSEQUENCE OF THIS AGREEMENT, THE NOTE[S], ANY OTHER AGREEMENT WITH THE BANK
OR THE COLLATERAL, SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING THEIR
SITUS IN THE CITY OF CHICAGO, ILLINOIS. THE BORROWER HEREBY CONSENTS TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS
IN SAID CITY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE
BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO THE BORROWER AS SET FORTH HEREIN IN THE MANNER PROVIDED
BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
13.7 Assignability. The Bank may at any time assign the Bank's rights
in this Agreement, the Note, the Obligations, or any part thereof and transfer
the Bank's rights in any or all of the Collateral, and the Bank thereafter shall
be relieved from all liability with respect to such Collateral. In addition, the
Bank may at any time sell one or more participations in the Loans. The Borrower
may not sell or assign this Agreement, or any other agreement with the Bank or
any portion thereof, either voluntarily or by operation of law, without the
prior written consent of the Bank. This Agreement shall be binding upon the Bank
and the Borrower and their respective legal representatives and successors. All
references herein to the Borrower shall be deemed to include any successors,
whether immediate or remote. In the case of a joint venture or partnership, the
term "Borrower" shall be deemed to include all joint venturers or partners
thereof, who shall be jointly and severally liable hereunder.
13.8 Confidentiality. The Borrower and the Bank hereby agree and
acknowledge that any and all information relating to the Borrower which is (i)
furnished by the Borrower to the Bank (or to any affiliate of the Bank), and
(ii) non-public, confidential or proprietary in nature, shall be kept
confidential by the Bank or such affiliate in accordance with applicable law,
provided, however, that such information and other credit information relating
to the Borrower may be distributed by the Bank or such affiliate to the Bank's
37
or such affiliate's directors, officers. employees, attorneys, affiliates,
auditors and regulators, and upon the order of a court or other governmental
agency having jurisdiction over the Bank or such affiliate, to any other party.
The Borrower and the Bank further agree that this provision shall survive the
termination of this Agreement.
13.9 Binding Effect. This Agreement shall become effective upon
execution by the Borrower and the Bank. If this Agreement is not dated or
contains any blanks when executed by the Borrower, the Bank is hereby
authorized, without notice to the Borrower, to date this Agreement as of the
date when it was executed by the Borrower, and to complete any such blanks
according to the terms upon which this Agreement is executed.
13.10 Governing Law. This Agreement, the Loan Documents and the Note
shall be delivered and accepted in and shall be deemed to be contracts made
under and governed by the internal laws of the State of Illinois (but giving
effect to federal laws applicable to national banks), and for all purposes shall
be construed in accordance with the laws of such State, without giving effect to
the choice of law provisions of such State.
13.11 Enforceability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
13.12 Survival of Borrower Representations. All covenants, agreements,
representations and warranties made by the Borrower herein shall,
notwithstanding any investigation by the Bank, be deemed material and relied
upon by the Bank and shall survive the making and execution of this Agreement
and the Loan Documents and the issuance of the Note[S], and shall be deemed to
be continuing representations and warranties until such time as the Borrower has
fulfilled all of its Obligations to the Bank, and the Bank has been paid in
full. The Bank, in extending financial accommodations to the Borrower, is
expressly acting and relying on the aforesaid representations and warranties.
13.13 Extensions of Bank's Commitment and Note. This Agreement shall
secure and govern the terms of any extensions or renewals of the Bank's
commitment hereunder and the Note pursuant to the execution of any modification,
extension or renewal note executed by the Borrower and accepted by the Bank in
its sole and absolute discretion in substitution for the Note.
13.14 Time of Essence. Time is of the essence in making payments of all
amounts due the Bank under this Agreement and in the performance and observance
by the Borrower of each covenant, agreement, provision and term of this
Agreement.
13.15 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.
38
13.16 Facsimile Signatures. The Bank is hereby authorized to rely upon
and accept as an original any Loan Documents or other communication which is
sent to the Bank by facsimile, telegraphic or other electronic transmission
(each, a "Communication") which the Bank in good faith believes has been signed
by Borrower and has been delivered to the Bank by a properly authorized
representative of the Borrower, whether or not that is in fact the case.
Notwithstanding the foregoing, the Bank shall not be obligated to accept any
such Communication as an original and may in any instance require that an
original document be submitted to the Bank in lieu of, or in addition to, any
such Communication.
13.17 Notices. Except as otherwise provided herein, the Borrower waives
all notices and demands in connection with the enforcement of the Bank's rights
hereunder. All notices, requests, demands and other communications provided for
hereunder shall be in writing, sent by certified or registered mail, postage
prepaid, by facsimile, telegram or delivered in person, and addressed as
follows:
If to the Borrower: Arlington Hospitality, Inc.
2355 South Arlington Heights Road
Arlington Heights, Illinois 60005
Attention: Legal Department
If to the Bank: LaSalle Bank National Association
2355 South Arlington Heights Road
Arlington Heights, Illinois 60005
Attention: Alan L. Clark
First Vice President
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this subsection. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.
13.18 Indemnification. The Borrower agrees to defend (with counsel
satisfactory to the Bank), protect, indemnify and hold harmless each Indemnified
Party from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and distributions
of any kind or nature (including, without limitation, the disbursements and the
reasonable fees of counsel for each Indemnified Party thereto, which shall also
include, without limitation, attorneys' fees and time charges of attorneys who
may be employees of the Bank, any parent corporation or affiliated corporation
of the Bank), which may be imposed on, incurred by, or asserted against, any
Indemnified Party (whether direct, indirect or consequential and whether based
on any federal, state or local laws or regulations, including, without
limitation, securities, Environmental Laws and commercial laws and regulations,
under common law or in equity, or based on contract or otherwise) in any manner
relating to or arising out of this Agreement or any of the Loan Documents, or
any act, event or transaction related or attendant thereto, the preparation,
execution and delivery of this Agreement and the Loan Documents, including, but
not limited to, the making or issuance and management of the Loans, the use or
intended use of the proceeds of the Loans, the enforcement of the Bank's rights
and remedies under this Agreement, the Loan Documents, the Note[S], any other
instruments and documents delivered hereunder, or under any other agreement
39
between the Borrower and the Bank; provided, however, that the Borrower shall
not have any obligations hereunder to any Indemnified Party with respect to
matters caused by or resulting from the willful misconduct or gross negligence
of such Indemnified Party. To the extent that the undertaking to indemnify set
forth in the preceding sentence may be unenforceable because it violates any law
or public policy, the Borrower shall satisfy such undertaking to the maximum
extent permitted by applicable law. Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment, shall, together with
interest thereon at the Default Rate from the date incurred by each Indemnified
Party until paid by the Borrower, be added to the Obligations of the Borrower
and be secured by the Collateral. The provisions of this SECTION 13.18 shall
survive the satisfaction and payment of the other Obligations and the
termination of this Agreement.
13.19 Waiver of Existing Defaults. Bank waives Borrower's failure as of
December 31, 2002 to be in compliance with its covenants regarding Total
Liabilities to Net Worth and consolidated EBITDA to consolidated Debt Service
Charges as set forth in Sections 10.2 and 10.3 of the Loan Agreement and any
Event of Default created thereby solely as of such date. This shall be a limited
waiver and shall not constitute a waiver of any subsequent covenant violations
or any other defaults of Borrower, if any, not expressly described herein,
whether of a different or like nature, nor shall it constitute a course of
conduct or dealing.
40
IN WITNESS WHEREOF, the Borrower and the Bank have executed this
Amended and Restated Loan and Security Agreement as of the date first above
written.
ARLINGTON HOSPITALITY, INC., a Delaware
corporation
ATTEST:
By:
By: Name:
---------------------
Name: Title:
---------------------
Title:
--------------------- and
By:
Name:
Title:
Agreed and accepted:
LASALLE BANK NATIONAL ASSOCIATION,
a national banking association
By:
Name:
Title:
41
EXHIBIT A
---------
AMENDED AND RESTATED
--------------------
REVOLVING NOTE
--------------
Chicago, Illinois
$6,500,000.00 Dated: April 30, 2003
Due: April 30, 2004
FOR VALUE RECEIVED, ARLINGTON HOSPITALITY, INC., a Delaware
corporation (together with its respective successors and assigns, individually
and collectively, the "Borrower"), promises to pay to the order of LASALLE BANK
NATIONAL ASSOCIATION, a national banking association (the "Bank"), the principal
sum of SIX MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($6,500,000.00), or,
if less, the aggregate unpaid principal amount of all advances made by the Bank
to the Borrower hereunder, on April 30, 2004.
This Note constitutes the Amended and Restated Revolving Note
issued pursuant to an Amended and Restated Loan and Security Agreement dated as
of April 30, 2003, which amended and restated a certain Loan and Security
Agreement dated as of February 1, 2002, as amended by a certain First Amendment
to Loan and Security Agreement dated as of August 9, 2002 and a certain Second
Amendment to Loan and Security Agreement dated as of December 10, 2002
(collectively, the "Loan Agreement") by and between the Borrower and the Bank,
to which Loan Agreement reference is hereby made for a statement of the terms
and conditions under which the Revolving Loans evidenced hereby may be made and
a description of the terms and conditions upon which this Note may be prepaid in
whole or in part, but shall not constitute payment of the Revolving Note dated
February 1, 2002, as replaced by a Substitute Revolving Note dated December 10,
2002, or constitute a novation thereof. In case an Event of Default, as defined
in the Loan Agreement, shall occur, the entire unpaid principal and accrued
interest may be automatically due and payable or may be declared due and payable
as provided in the Loan Agreement.
The unpaid principal shall bear interest from the date hereof
until paid as set forth in the Loan Agreement. Interest shall be payable in
accordance with the terms of the Loan Agreement.
This Note is subject to optional and mandatory prepayment in
certain circumstances, all as set forth in the Loan Agreement.
In the event that any installment of the principal of, or
interest on, this Note, is not paid when due (whether at stated maturity, by
acceleration or otherwise), the entire principal amount outstanding shall bear
interest at an annual rate equal to the Prime Rate (as defined in the Loan
Agreement) plus five percent (5%) per annum, from the due date until all overdue
amounts have been paid in full.
Payments of both principal and interest are to be made in
lawful money of the United States of America at the offices of the Bank at 135
South LaSalle Street, Chicago, Illinois 60603, or at such other place as the
holder shall designate in writing to the maker.
This Note is secured by a security interest in Collateral (as
defined in the Loan Agreement) and by those certain Mortgages (as defined in the
Loan Agreement) dated of even date herewith, each made by a Subsidiary (as
defined in the Loan Agreement) for the benefit of the Bank.
The maker and all endorsers hereby severally waive presentment
for payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note. Borrower hereby agrees to pay all reasonable fees and
expenses incurred by the Bank or any subsequent holder, including the reasonable
fees of counsel, in connection with protection and enforcement of the rights of
the Bank or any subsequent holder under this Note, including without limitation
the collection of any amounts due under this Note and the protection and
enforcement of such rights in any bankruptcy, reorganization or insolvency
proceeding involving the Borrower.
This Note is binding upon Borrower and its successors and
assigns and shall inure to the benefit of the Bank and its successors and
assigns. This Note is made under and governed by the laws of the State of
Illinois, without regard to conflicts of laws principles.
IN WITNESS WHEREOF, Borrower has executed this Amended and
Restated Revolving Note as of the day and year first above written.
ARLINGTON HOSPITALITY, INC.
a Delaware corporation
By:_______________________________
Its:_______________________________
and
By:_______________________________
Its:_______________________________
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