EXHIBIT 10.1
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (the "AGREEMENT") is made effective the 31
day of August, 2004, by and among 2844 Associates, a Pennsylvania limited
partnership and HHLP Valley Forge Associates, a Pennsylvania limited partnership
(individually a "BORROWER" and collectively the "BORROWER") and SOVEREIGN BANK
("BANK").
BACKGROUND
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WHEREAS, each Borrower is the owner of a certain hotel property, which
property is the part of a certain real estate investment trust known as the
Hersha Hospitality Trust.
WHEREAS, each Borrower has requested and Bank has agreed to extend a line
of credit facility in the amount of $35,000,000 (the "Line").
WHEREAS, Hersha Hospitality Trust, a Maryland businesss trust ("Hersha")
and Hersha Hospitality Limited Partnership, a Pennsylvania limited partnership
("HHLP") are acting as guarantors and sureties for the Line.
WHEREAS, capitalized terms not otherwise defined herein will have the
following meanings:
"AFFILIATE", as to any Person, means each other Person that directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, the Person in question.
"APPRAISAL" means as an appraisal performed by an appraiser approved by
Bank and in form and substance satisfactory to Bank and otherwise conforming to
the requirements of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989. Bank reserves the right to make reasonable adjustments in the
assumptions and other variables used in such appraisals in order to conform to
the policies of Bank, which adjustments may result in a change in the appraised
value.
"APPRAISED VALUE" the fair market value of each property constituting or
proposed to constitute Real Estate as shown by an Appraisal of such property.
"ASSIGNMENTS" has the meaning given to such term in Section 10.1 hereof.
"BANK INDEBTEDNESS" shall mean all obligations and Indebtedness of Borrower
to Bank, whether now or hereafter owing or existing, including, without
limitation, all obligations under the Loan Documents, all obligations to
reimburse Bank for payments made by Bank pursuant to any letter of credit issued
for the account or benefit of Borrower by Bank, all other obligations or
undertakings now or hereafter made by or for the benefit of Borrower to or for
the benefit of Bank under any other agreement, promissory note or undertaking
now existing or hereafter entered into by Borrower with Bank, including, without
limitation, all obligations of Borrower to Bank under any guaranty or surety
agreement (including without limitation the Guaranty and Suretyship Agreement of
even date herewith pursuant to which Borrower guarantees and becomes surety to
Bank for all obligations of each Borrower to Bank arising under or in
connection with the Line and all obligations of Borrower to immediately pay to
Bank the amount of any overdraft on any deposit account maintained with Bank,
together with all interest and other sums payable in connection with any of the
foregoing.
"BORROWER" shall have the meaning given to such term in the preamble hereto
and shall also include any Replacement Borrower.
"BORROWING BASE" has the meaning given to such term in Section 1.4 herein.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in Pennsylvania are authorized by law to close.
"COLLATERAL" means (i) all real and personal property subject to the lien
of the Mortgages or any Substitute Mortgage (hereinafter the "COLLATERAL
PROPERTIES"), (ii) all monies, rights to monies, claims, causes of action,
rights and remedies with respect to licenses, permits, leases, agreements, and
construction and other contracts and assets which are the subject of the
Assignments or any Substitute Assignment, and (iii) all other property of
Borrower now or hereafter securing payment and performance of the Loan and the
Loan Documents.
"COLLATERAL DOCUMENT DEFAULT" has the meaning given to such term in Section
4.4 herein.
"COLLATERAL DOCUMENTS" means as to each property constituting or proposed
to constitute Real Estate all of the mortgages, agreements, certificates, and
other documents and instruments evidencing, securing and/or otherwise relating
to the Real Estate, as the same may be amended from time to time in accordance
with the terms hereof.
"CORPORATION" means a corporation, partnership, trust, unincorporated
organization, association or joint stock company.
"DEFAULT RATE" has the meaning given to such term in Section 2.2 herein.
"DEBT SERVICE COVERAGE RATIO" means the ratio of Person's (i) consolidated
Net Operating Income, calculated on an annualized basis, to (ii) the annual
interest payments due on the Line, calculated as if the full amount of the Line
was disbursed and outstanding on such date, at the interest rate in effect on
such date.
"DEFERRED COMPENSATION PLAN" means any plan described in Section 3(3) of
ERISA or any other plan or arrangement under which Borrower or any ERISA
Affiliate may become obligated to pay deferred, bonus, incentive, or other
compensation or health, life, medical, dental, or other welfare benefits,
excluding only any fully insured major medical, hospital, or dental program for
which Borrower or such ERISA Affiliate has no obligation other than the payment
of premiums.
"DEPOSIT ACCOUNTS" has the meaning given to such term in Section 5.22
herein.
"EBITDA" means a given Person's net income of the immediately preceding
quarter plus interest expense (per GAAP), income taxes, depreciation and
amortization expense and
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other non-cash charges. EBITDA shall also include such Person's ownership share
of EBITDA in unconsolidated affiliates. EBITDA shall exclude extraordinary gains
and losses.
"ENVIRONMENTAL AFFILIATE" means Borrower and any other Person for whom
Borrower at any time has any liability (contingent or otherwise) with respect to
any claims arising out of the failure of Borrower or such Person to comply with
all applicable Environmental Requirements.
"ENVIRONMENTAL CLEANUP SITE" means any location which is listed or proposed
for listing on the National Priorities List, on CERCLIS or on any similar state
list of sites requiring investigation or cleanup, or which is the subject of any
pending or threatened action, suit, proceeding or investigation related to or
arising from any alleged violation of any Environmental Requirements.
"ENVIRONMENTAL REQUIREMENTS" means any and all applicable federal, state or
local laws, statutes, ordinances, regulations or standards, administrative or
court orders or decrees, common law doctrines or private agreements, relating to
(i) pollution or protection of the environment and natural resources, (ii)
exposure of employees or other persons to Special Materials, (iii) protection of
the public health and welfare from the effects of Special Materials and their
products, by-products, wastes, emissions, discharges or releases, and (iv)
regulation, licensing, approval or authorization of the manufacture, generation,
use, formulation, packaging, labeling, transporting, distributing, handling,
storing or disposing of any Special Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations issued in connection therewith.
"ERISA AFFILIATE" means each trade or business (whether or not
incorporated) that, together with Borrower, would be treated as a single
employer under Section 4001(b)(1) of ERISA or Section 414(b) or 414(c) of the
Internal Revenue Code.
"EVENT OF DEFAULT" means each of the events specified in Section 12.1.
"EXPIRATION DATE" has the meaning given to such term in Section 1.1 herein.
"GAAP" means generally accepted accounting principles in the United States
of America, in effect from time to time, consistently applied and maintained.
"GROSS ASSET VALUE" will consist of the following: (a) Operating Real
Estate Value, plus (b) cash and equivalents (excluding any restricted cash),
plus (c) accounts receivable less than 90 days, plus (d) with respect to any
operating hotel acquired during the preceding fiscal quarter, the acquisition
costs of such property.
"GUARANTORS" means, collectively, Hersha and HHLP and any other Person that
has guaranteed the performance of the Borrower's obligation under the Loan
Documents, in whole or in part; each individually a "Guarantor"
"GUARANTY" has the meaning given to such term in Section 10.1 hereof.
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"HERSHA" shall have the meaning given to such term in the recitals hereto.
"HHLP" shall have the meaning given to such term in the recitals hereto.
"INDEBTEDNESS", as applied to a Person, means:
(a) all items (except items of capital stock or of surplus) which
in accordance with GAAP would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person as at the date as
of which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all indebtedness,
obligations, and liabilities secured by any mortgage, pledge, lien, conditional
sale or other title retention agreement or other security interest to which any
property or asset owned or held by such Person is subject, whether or not the
indebtedness, obligations or liabilities secured thereby shall have been assumed
by such Person; and
(c) to the extent not included in the foregoing, all indebtedness,
obligations and liabilities of others which such Person has directly or
indirectly guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business), sold with recourse, or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire or in respect of which
such Person has agreed to supply or advance funds (whether by way of loan, stock
purchase, capital contribution or otherwise) or otherwise to become directly or
indirectly liable.
Notwithstanding the foregoing, the term "Indebtedness" shall not include
any amounts that are non-recourse to Borrower (other than usual and customary
carveouts).
"INTEREST EXPENSE" means all of a Person's accrued, paid or capitalized
interest costs plus such Person's ownership share of interest expense of
unconsolidated affiliates or joint ventures, plus 100% of any accrued, paid or
capitalized interest incurred on any obligation for which such Person is wholly
or partially liable under repayment, interest carry, or performance guarantees,
or other relevant liabilities. Interest Expense shall also include fees paid on
letters of credit. Interest Expense will be calculated over the last four
rolling quarters.
"LINE" has the meaning given to such term in Section 1.1 herein.
"LINE NOTE" has the meaning given to such term in Section 1.1 herein.
"LINE REQUEST" has the meaning given to such term in Section 1.3 herein.
"LOAN DOCUMENTS" means this Agreement, the Line Note, the Assignments and
other documents and agreements referred to in Section 10.1(a) hereof, and all
other documents, executed or delivered by Borrower pursuant to this Agreement,
as they may be amended from time to time, and shall include any Substitute
Mortgage.
"MINIMUM TANGIBLE NET WORTH" means Total Assets less any Intangibles and
all Liabilities, each based on GAAP, plus 85% of future equity offerings,
measured quarterly.
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"MULTIEMPLOYER PLAN" means a plan described in Section 3(37) or 4001(a)(3)
of ERISA or Section 414 of the Internal Revenue Code of 1986, as amended from
time to time, which cover employees of Borrower or any ERISA Affiliate.
"NET OPERATING INCOME" means Borrower's consolidated gross revenues less
expenses (excluding depreciation, interest and amortization).
"NOI" means for any given period, the sum of the following: (a) rents and
other revenues received in the ordinary course from the Collateral Properties
(excluding pre-paid rents) minus (a) all expenses paid or accrued related to the
operation or maintenance of such Property minus, including a management fee and
(b) the Reserve for Replacements for such Property.
"OBLIGOR" means Borrower, Guarantors, any Person delivering to Bank a
Substitute Mortgage, any Replacement Borrower and/or any other Person that is a
borrower or guarantor under any of the Loan Documents.
"OPERATING REAL ESTATE VALUE" means the aggregate EBITDA generated by the
Borrower and its subsidiaries for the preceding fiscal quarter annualized and
capitalized at the higher of (a) 10.5%; or (b) the national average
capitalization rate as reported by the Korpacz Real Estate Investor Survey for
limited service hotels; the capitalization rate shall be adjusted not more than
annually. For the purposes of determining Operating Real Estate Value, EBITDA
from properties acquired during the prior quarter or disposed of during the
prior quarter shall be excluded.
"PERSON" means an individual, a corporation or a government or any agency
or subdivision thereof, or any other entity.
"POTENTIAL DEFAULT" means the occurrence of any event which with the giving
of notice or passage of time or both, without would constitute an Event of
Default.
"PRIME RATE" means the rate announced, from time to time, by Bank as its
Prime Rate. Bank's Prime Rate need not be the lowest rate charged by Bank, but
is the rate from which other rates are calculated.
"REAL ESTATE" means those parcels of real property, together with the
improvements thereon, including without limitation the real property listed on
Exhibit "A" attached hereto, as the same may be amended from time to time in
accordance with the provisions hereof.
"REPLACEMENT BORROWER" means any Person, reasonably acceptable to Bank, who
becomes a Borrower hereunder pursuant to Section 4.4 hereof or otherwise.
"SPECIAL MATERIALS" means any and all materials that, under Environmental
Requirements, require special handling in use, generation, collection, storage,
treatment or disposal, or payment of costs associated with responding to the
lawful directives of any court or agency of competent jurisdiction. Special
Materials shall include, without limitation: (i) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any
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Environmental Requirements (including but not limited to any "hazardous
substance" as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended or any similar state or local law), (ii)
any toxic chemical or other substance from or related to industrial, commercial
or institutional activities, and (iii) asbestos, gasoline, diesel fuel, motor
oil, waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon, urea formaldehyde and lead-containing
materials.
"SUBSIDIARY" means a Corporation (a) which is organized under the laws of
the United States or any state thereof, or any other county or jurisdiction, (b)
which conducts substantially all of its business and has substantially all of
its assets within the United States, and (c) of which more than fifty percent
(50%) of its outstanding voting stock of every class (or other voting equity
interest) is owned by Borrower or one or more of its Subsidiaries.
"SUBSTITUTE ASSIGNMENT" has the meaning given to such term in Section 4.4
hereof.
"SUBSTITUTE COLLATERAL" means any Real Estate owned by an affiliate or
subsidiary of a Borrower or a Guarantor, where Bank shall have received an
Appraisal of such real property and such other reports, documents and
instruments as may be required by Bank pursuant to Section 4.4 hereof. Upon the
delivery of Substitute Collateral to Bank and the acceptance thereof by Bank,
all such documents and instruments shall constitute Collateral Documents and the
real property to which they relate shall constitute Real Estate (and Exhibit "A"
shall be amended accordingly).
"SUBSTITUTE MORTGAGE" has the meaning given to such term in Section 4.4
hereof.
"TOTAL FUNDED LIABILITIES" means all recourse and non-recourse mortgage
debt, letters of credit, margin debt, unsecured debt, and to the extent required
under GAAP to be reported as a liability, any lease obligations, guarantees of
indebtedness, and subordinated debt.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extensions of credit now or hereafter made to or for the
benefit of Borrower by Bank, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. THE LINE: USE OF PROCEEDS.
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1.1 LINE OF CREDIT. Bank will establish for Borrower for and
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during the period from the date hereof and until the date which is thirty-six
(36) months from the date hereof, or May ___, 2007 (the "Expiration Date"),
subject to the terms and conditions hereof (including without limitation the
Borrowing Base set forth in Section 1.4 herein), a revolving line of credit (the
"Line") pursuant to which Bank will from time to time make loans to Borrower in
an aggregate outstanding principal amount not to exceed at any time Thirty-Five
Million Dollars ($35,000,000). Within the limits of the Line, Borrower may
borrow, repay and reborrow under the Line. The Line shall be subject to all
terms and conditions set forth in all of the Loan Documents which terms and
conditions are incorporated herein. Borrower's obligation to repay advances
under the Line shall be evidenced by Borrower's promissory note (the "Line
Note") in the face amount of Thirty-Five Million Dollars ($35,000,000), dated
the date of this Agreement, payable to the order of Bank, and otherwise in form
and substance satisfactory to Bank.
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1.2 USE OF PROCEEDS. Borrower agrees to use advances under the
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Line (i) to acquire commercial real estate or an interest therein, (ii) for
working capital, (iii) for letters of credit, and (iv) for general corporate
purposes.
1.3 ADVANCES OF THE LINE. Borrower shall give Bank not less than 3
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Business Days prior written notice of a proposed advance of the Line (each a
"LINE REQUEST"). Each Line Request shall (i) state the use of the proceeds of
the Line being requested (including the real estate project to which such use
relates), (ii) contain a description of the economics of such real estate
project, and (iii) contain such other information as Bank may request in the
exercise of its reasonable discretion. Provided that all of the conditions
precedent to Bank making such advance have occurred, and provided further that
the making of such advance will not cause Borrower to be in default of the
covenants and conditions set forth in this Agreement (including without
limitation Sections 7.1 through 7.4 herein), Bank shall make the proceeds of
such advance available to Borrower by crediting the amount thereof to Borrower's
deposit account with Bank.
1.4 BORROWING BASE. Notwithstanding anything contained herein to the
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contrary, but subject to the provisions of Section 4.4(b) herein, the aggregate
outstanding principal balance of the Line shall not exceed at any time the
lesser of (i) sixty-seven percent (67%) of the Appraised Value of the Collateral
Properties, or (ii) an amount that would cause the Borrower to exceed the
Minimum Debt Service Coverage Ratio, as calculated pursuant to Section 7.4
hereof (the "BORROWING BASE"). The Borrowing Base shall be tested quarterly and
upon the request of Borrower to Bank to release any of the Collateral
properties, in accordance with Section 4.4 hereof. To the extent that the
outstanding principal balance of the Line exceeds the Borrowing Base, as
calculated by Bank, at the time of such testing, Borrower shall immediately
repay an aggregate amount of principal of the Line equal to the amount by which
the aggregate then unpaid principal balance of the Line exceeds the Borrowing
Base.
1.5 PARTICIPATION AGREEMENT. Borrower acknowledges and agrees that
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Bank intends to sell one or more participation interests in the Line to one or
more financial institutions. Notwithstanding anything to the contrary herein,
the outstanding principal balance of the Line may not exceed $20,000,000 until
such time as Bank enters into such a participation agreement with regard to the
Line, and, until such time, Bank shall have no obligation to advance amounts
hereunder that would cause the outstanding principal balance of the Line to
exceed $20,000,000.
2. INTEREST RATE.
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2.1 INTEREST ON THE LINE. Interest on the unpaid outstanding
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principal balance of the Line will accrue from the date of advance until final
payment thereof at a per annum rate equal to the Prime Rate in effect from time
to time (such interest rate to change immediately upon any change in the Prime
Rate).
2.2 DEFAULT INTEREST. From the maturity of the obligations evidenced
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by the Line Note, as well as upon the occurrence of an Event of Default, the
outstanding principal balance and all other sums due hereunder and under the
Line Note shall bear interest at a rate which is four percent (4%) in excess of
the non-default rate otherwise set forth herein ("Default Rate").
Notwithstanding the provisions of 42 Pa. C.S. Sec. 8101 to the contrary, the
Default Rate shall
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apply to all sums evidenced by the Line Note as set forth above, including after
entry of a judgment or judgments against Borrower, and said judgment or
judgments shall bear interest at the Default Rate until satisfied in full.
2.3 CALCULATION. Interest will be computed on the basis of a year of
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360 days and paid for the actual number of days elapsed.
2.4 LIMITATION OF INTEREST TO MAXIMUM LAWFUL RATE. In no event will
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the rate of interest payable hereunder exceed the maximum rate of interest
permitted to be charged by applicable law (including the choice of law rules)
and any interest paid in excess of the permitted rate will be refunded to
Borrower. Such refund will be made by application of the excessive amount of
interest paid against any sums outstanding hereunder and will be applied in such
order as Bank may determine. If the excessive amount of interest paid exceeds
the sums outstanding, the portion exceeding the sums outstanding will be
refunded in cash by Bank. Any such crediting or refunding will not cure or
waive any default by Borrower. Borrower agrees, however, that in determining
whether or not any interest payable hereunder exceeds the highest rate permitted
by law, any non-principal payment, including without limitation prepayment fees
and late charges, will be deemed to the extent permitted by law to be an
expense, fee, premium or penalty rather than interest.
3. PAYMENTS AND FEES.
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3.1 INTEREST PAYMENTS ON THE LINE. Borrower will pay interest on
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the outstanding principal balance of the Line monthly, on the first day of each
calendar month commencing on July 1, 2004.
3.2 PRINCIPAL PAYMENTS ON THE LINE. Borrower will pay the outstanding
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principal balance of the Line, together with any accrued and unpaid interest
thereon, and any other sums due pursuant to the terms hereof, on the Expiration
Date.
3.3 COMMITMENT FEE. Borrower shall pay to Bank a commitment fee of
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0.5% of the total amount of the Line to be paid as follows: 0.25% at Closing,
0.125% on the 1st anniversary of closing, and 0.125% on the 2nd anniversary.
3.4 UNUSED FEE. On each anniversary date of the date hereof, Borrower
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shall pay to Bank a fee based on the unused portion of the Line for the
preceding twelve (12) month period, which fee shall be calculated in accordance
with the remainder of this Section 3.4. Specifically, on the first (1st)
anniversary date of the date hereof, Borrower will pay to Bank a fee equal to
the product of 10 basis points multiplied by the Average Unused Line Amount for
the preceding 12 month period. On each anniversary date thereafter, Borrower
shall pay Bank a fee equal to the product of 15 basis points multiplied by the
Average Unused Line Amount for the immediately preceding twelve (12) month
period if the Average Unused Line Amount is equal to or greater than 50% of the
total amount of the Line; provided that if the Average Unused Line Amount for
the immediately preceding twelve (12) month period is less than 50% of the total
Line, the fee to be paid by Borrower shall be the product of 20 basis points
multiplied by the Average Unused Line Amount for the immediately preceding
twelve (12) month period. For the purposes of this
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Section 3,4, the term "Average Unused Line Amount" shall mean the total Lime
amount less the average daily outstanding balance of the Line.
3.5 LATE CHARGE. In the event that Borrower fails to pay any
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principal, interest or other fees or expenses payable hereunder for a period of
at least ten (10) days after the same shall become due, in addition to paying
such sums, Borrower will pay to Bank a late charge equal to four percent (4%),
of such past due payment as compensation for the expenses incident to such past
due payment.
3.6 PAYMENT METHOD. Borrower irrevocably authorizes Bank to debit all
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payments required to be made by Borrower hereunder or otherwise under the Line,
on the date due, from any deposit account maintained by Borrower with Bank
(other than escrow funds owned legally by Borrower but held in escrow for the
beneficial interest of another Person). Otherwise, Borrower will be obligated
to make such payments directly to Bank. All payments are to be made in
immediately available funds. If Bank accepts payment in any other form, such
payment shall not be deemed to have been made until the funds comprising such
payment have actually been received by or made available to Bank.
3.7 APPLICATION OF PAYMENTS. Prior to the occurrence of an Event of
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Default, any and all payments on account of the Line will be applied first, to
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any amounts due to Bank pursuant to the Loan Documents, other than principal and
interest on the Line; second, to accrued interest due under the Line; and third,
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to outstanding principal under the Line. Following the occurrence of an Event
of Default, any and all payments on account of the Line will be applied to
accrued and unpaid interest, outstanding principal and other sums due hereunder
or under the Loan Documents, in such order as Bank, in its discretion, elects.
If Borrower makes a payment or payments and such payment or payments, or any
part thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver, or
any other person under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or payments, the obligations
or part thereof hereunder intended to be satisfied shall be revived and
continued in full force and effect as if said payment or payments had not been
made.
3.8 LOAN ACCOUNT. Bank will open and maintain on its books a loan
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account with respect to advances made, repayments, prepayments, the computation
and payment of interest and fees and the computation and final payment of all
other amounts due and sums paid to Bank under this Agreement. Except in the
case of manifest error in computation, such account will be conclusive and
binding on the Borrower as to the amount at any time due to Bank from Borrower
under this Agreement or the Note.
3.9 INDEMNITY; LOSS OF MARGIN. Borrower will indemnify Bank against
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any reasonable loss or expense which Bank sustains or incurs as a consequence of
an Event of Default, including, without limitation, any failure of Borrower to
pay when due (at maturity, by acceleration or otherwise) any principal,
interest, fee or any other amount due under this Agreement or the other Loan
Documents. If Bank sustains or incurs any such loss or expense it will from
time to time notify Borrower in writing of the amount determined in good faith
by Bank to be necessary to indemnify Bank for the loss or expense. Such amount
will be due and payable by Borrower to Bank within ten (10) days after
presentation by Bank of a statement
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setting forth a brief explanation of and Bank's calculation of such amount,
which statement shall be conclusively deemed correct absent manifest error. Any
amount payable to Bank under this Section will bear interest at the default rate
payable under the Line from the due date until paid, both before and after
judgment.
In the event that any present or future law, rule, regulation, treaty or
official directive or the interpretation or application thereof by any central
bank, monetary authority or governmental authority, or the compliance with any
guideline or request of any central bank, monetary authority or governmental
authority (whether or not having the force of law):
(a) subjects Bank to any tax with respect to any amounts payable
under this Agreement or the other Loan Documents by Borrower or otherwise with
respect to the transactions contemplated under this Agreement or the other Loan
Documents (except for taxes on the overall net income and/or revenues of Bank
imposed by the United States of America, the Commonwealth of Pennsylvania, or
any political subdivision of either of them); or
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit, capital maintenance, capital adequacy, or similar
requirement against assets held by, or deposits in or for the account of, or
loans or advances or commitment to make loans or advances by, Bank; or
(c) imposes upon Bank any other condition with respect to advances or
extensions of credit or the commitment to make advances or extensions of credit
under this Agreement,
and the result of any of the foregoing is to increase the costs of Bank, reduce
the income receivable by or return on equity of Bank or impose any expense upon
Bank with respect to any advances or extensions of credit or commitments to make
advances or extensions of credit under this Agreement, Bank shall so notify
Borrower in writing. Borrower agrees to pay Bank the amount of such increase in
cost, reduction in income, reduced return on equity or capital, or additional
expense within ten (10) days after presentation by Bank of a statement
concerning such increase in cost, reduction in income, reduced return in equity
or capital, or additional expense. Such statement shall set forth a brief
explanation of the amount and Bank's calculation of the amount (in determining
such amount Bank may use any reasonable averaging and attribution methods),
which statement shall be conclusively deemed correct absent manifest error. If
the amount set forth in such statement is not paid within ten (10) days after
such presentation of such statement, interest will be payable on the unpaid
amount at the default rate payable under the Line from the due date until paid,
both before and after judgment.
4. COLLATERAL.
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4.1 As security for the performance of this Agreement and the
other Loan Documents and the payment of the Line Note and as security for the
performance of the Guaranty and all other liabilities of Borrower to Bank
(whether absolute or contingent, matured or unmatured, direct or indirect, sole,
joint, several or joint and several, similar or dissimilar, related or
unrelated, due or to become due or heretofore or hereafter contracted or
acquired), Borrower is
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contemporaneously with the execution hereof granting to Bank a security
interests and mortgage liens in and to the Collateral.
4.2 REPRESENTATIONS REGARDING COLLATERAL. Borrower represents and
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warrants that:
(a) Borrower has full right and title, free from any lien,
security interest, encumbrance or other right, title and interest of any other
person or entity.
(b) Borrower has not made any currently effective assignment of any
interest in the Collateral other than to Bank pursuant to the Loan Documents.
4.3 COVENANTS REGARDING COLLATERAL. So long as the Line Note
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remains unpaid or Bank has any commitment under the Line, without the prior
written consent of Bank, which consent shall not be unreasonably withheld or
delayed:
(a) Borrower shall not obtain, nor shall it permit any other
Obligor to obtain, any other loans or other financing secured by an encumbrance,
lien, mortgage, security interest or other interest in any of the Collateral, or
assign, sell, transfer (voluntarily or by operation of law), or otherwise
dispose of any interest in any of the Collateral or the Real Estate.
(b) Borrower shall not alter, amend, extend, cancel or otherwise
change (nor shall it permit any other obligor to do so) any terms or conditions
of the Collateral Documents if as a result thereof there would occur an Event of
Default or Potential Default. Following the occurrence of an Event of Default,
Borrower shall not alter, amend, cancel or otherwise change any provision of the
Collateral Documents.
4.4 RELEASE AND/OR SUBSTITUTION OF COLLATERAL AND OBLIGORS.
------------------------------------------------------
Subject to the terms and conditions of this Section 4.4, Bank may, upon request
of Borrower, allow for the release of Collateral and/or the release and
substitution of Collateral and any Borrower with Substitute Collateral and a
Replacement Borrower, respectively. Specifically, provided that Borrower shall
either (x) repay the outstanding principal amount of the Line in an amount equal
to the amount by which the then unpaid principal balance of the Line exceeds the
Borrowing Base, or (y) in lieu of such repayment, deliver to Bank Substitute
Collateral where the Appraised Value of the Collateral Property to which such
Substitute Collateral relates, when added to the Appraised Value of all other
Collateral Properties that will remain as Collateral for the Line following such
release, will cause the then outstanding principal balance of the Line to be not
greater than the Borrowing Base, Bank shall, upon receipt of such repayment or
Substitute Collateral, release its lien on the applicable Collateral Documents.
Notwithstanding the foregoing and, in addition to the foregoing requirements, in
connection with the addition of any Substitute Collateral and/or Replacement
Borrower, Borrower shall pay all costs and fees of Bank in connection with
addition of any Substitute Collateral and/or Replacement Borrower, including,
but not limited to the payment of lien searches, title insurance, appraisals,
environmental reports, recoding fees, mortgage satisfaction fees, lender's
attorney's fees and all other costs and expenses incurred directly by Bank or
payable to third parties in connection with the addition of any Substitute
Collateral and/or Replacement Borrower, and Borrower shall also provide the
following documentation to the Bank, as a condition to any such addition of any
Substitute Collateral and /or Replacement Borrower:
-11-
(i) An executive summary of the Substitute Collateral, including, at
a minimum, the following information:
(a) a description of such Substitute Collateral in form and
content reasonably acceptable to Bank;
(b) the purchase price paid or to be paid for such
Substitute Collateral, if such Substitute Collateral was acquired
within 12 months of the submission of such Substitute Collateral
hereunder;
(c) the current and projected condition of the regional
market and specific submarket in which such Substitute Collateral is
located (which may be satisfied with the submission of market reports
from Smith Travel Research or other acceptable 3rd party firm); and
(d) the current projected capital plans and, if applicable,
current renovation plans for such Substitute Collateral.
(ii) an Appraisal of the Substitute Collateral;
(iii) an open-end mortgage and security agreement with regard to
such Substitute Collateral, in form and content acceptable to Bank, whereby
Borrower grants to Bank a first priority mortgage lien in and to the
Substitute Collateral and all improvements, fixtures, furniture and
personal property related thereto (each such open-end mortgage and security
agreement being hereinafter referred to as a "SUBSTITUTE MORTGAGE").
(iv) with regard to such Substitute Collateral, the items set
forth in Section 10.2 (a), (b), (c),(e), (f), (h), (i) and (j), as
applicable;
(v) to the extent required by Bank, a Loan Modification Agreement by
and among Borrower and Bank and any Replacement Borrower, as may be
requested by Bank, in form and substance reasonably acceptable to Bank,
whereby the terms and conditions of this Agreement and the other Loan
Documents are modified and amended and the Replacement Borrower becomes an
Obligor;
(vi) an environmental indemnity agreement from the Replacement
Borrower, with regard to such Substitute Collateral;
(vii) a collateral assignment of leases and agreements affecting such
Substitute Collateral, in form and content satisfactory to Bank, from the
Replacement Borrower that owns such Substitute Collateral (each a
"SUBSTITUTE ASSIGNMENT");
(viii) operating statements for such Substitute Collateral in
accordance with GAAP for the previous two fiscal years and for the current
fiscal year through the fiscal quarter most recently ending, provided that,
if such Substitute Collateral has been
-12-
operating for less than two fiscal years, Borrower shall provide such
projections and other information concerning the anticipated operation of
such Substitute Collateral as Bank may reasonably request;
(ix) evidence satisfactory to Bank demonstrating the Substitute
Collateral's compliance with Section 7.5 hereof;
(x) organizational documents of the Replacement Borrower executing
and delivering a Substitute Mortgage to Bank, including, without
limitation, resolutions and/or unanimous consents of such entities'
partners, members or directors, as the case may be, authorizing the
execution and delivery of the Substitute Mortgage and the Substitute
Assignment and other documents required to be delivered pursuant to this
Section 4.4 and a good standing or subsistence certificate with respect to
all such entities, as the case may be, from the states of incorporation of
such entities and/or the states in which any Substitute Collateral is
located;
(xi) such other documentation and information as Bank may reasonably
request in order to (A) evaluate the Substitute Collateral, (B) to ensure
the appropriate amendment of the Loan Documents, (C) to ensure the due
authorization of the Obligor's execution and delivery of documents and
agreements in connection with the foregoing.
4.5 ADDITIONAL DOCUMENTS AND FUTURE ACTIONS. Borrower will, at
---------------------------------------
its sole cost, take such actions and provide Bank from time to time with such
agreements, financing statements and additional instruments, documents or
information as Bank may in its reasonable discretion deem necessary or advisable
to perfect, protect, maintain or enforce the security interests in the
Collateral, to permit Bank to protect or enforce its interest in the Collateral,
or to carry out the terms of the Loan Documents. Each Borrower hereby
authorizes and appoints Bank as its attorney-in-fact, with full power of
substitution, to take such actions as Bank may deem advisable to protect the
Collateral and its interests thereon and its rights hereunder, to execute on
such Borrower's behalf and file at such Borrower's expense financing statements
and assignments, and amendments thereto, in those public offices deemed
necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected security interest in the Collateral, and to execute on
such Borrower's behalf such other documents and notices as Bank may deem
advisable to protect the Collateral and its interests therein and its rights
hereunder. Such power being coupled with an interest is irrevocable. Each
Borrower irrevocably authorizes the filing of a carbon, photographic or other
copy of this Agreement, or of a financing statement, as a financing statement
and agrees that such filing is sufficient as a financing statement.
5. REPRESENTATIONS AND WARRANTIES. Each Borrower, each as applicable
------------------------------
to it, represents and warrants as follows:
5.1 VALID ORGANIZATION, GOOD STANDING AND QUALIFICATION.
---------------------------------------------------
(a) Each of Borrower and HHLP is a limited partnership duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, with full power and authority to execute, deliver
and comply with the Loan Documents, and to carry on its business as it is now
being conducted and is duly licensed or qualified as a foreign
-13-
limited partnership in good standing under the laws of each jurisdiction in
which the character or location of the properties owned by it or the business
transacted by it requires such licensing or qualification.
(b) Hersha is a Maryland business trust duly organized, validly
existing and in good standing under the laws of the state of Maryland, will full
power and authority to execute, deliver and comply with the Loan Documents to
which it is a party and to carry on its business that is now being conducted and
is duly licensed or qualified as a foreign trust in good standing under the laws
of each jurisdiction in which the character or location of the properties owned
by it or the business transacted by it requires such licensing or qualification.
5.2 LICENSES. Borrower has all licenses, registrations, approvals
--------
and other authority as may be necessary to enable it to own and operate its
business and perform all services and business which it has agreed to perform in
any state, municipality or other jurisdiction.
5.3 OWNERSHIP INTERESTS. The ownership of all partnership interests
-------------------
and other securities (debt and equity) of Borrower, and all pledges, proxies,
voting trusts, powers of attorney and other agreements affecting the ownership
or voting rights of said interests is as set forth on SCHEDULE 5.3 attached
------------
hereto.
5.4 SUBSIDIARIES. Except as set forth on SCHEDULE 5.4 attached hereto,
------------ ------------
Borrower does not own any shares of stock or other equity interests in any
Person, directly or indirectly (by any Subsidiary or otherwise).
5.5 FINANCIAL STATEMENTS. Borrower has furnished to Bank the audited
--------------------
consolidated financial statements of each Borrower and each Guarantor, certified
without qualification by independent public accountants as of December 31, 2003,
and all management and comment letters from such accountants in connection
therewith, and its internally prepared interim financial statements as of
December 31, 2003. Such financial statements of Borrower (together with the
related notes and comments), are correct and complete, fairly present the
financial condition and the assets and liabilities of Borrower at such date, and
have been prepared in accordance with GAAP. With respect to the interim
statements, such statements are subject to year-end adjustment and any
accompanying footnotes.
5.6 NO MATERIAL ADVERSE CHANGE IN FINANCIAL CONDITION. There has been
-------------------------------------------------
no material adverse change in the financial condition of Borrower or any
Guarantor since March 31, 2004.
5.7 PENDING LITIGATION OR PROCEEDINGS. Except as set forth on SCHEDULE
--------------------------------- --------
5.7 attached hereto, there are no judgments outstanding or actions, suits or
- ---
proceedings pending or, to the best of Borrower's knowledge, threatened against
or affecting Borrower, either Guarantor, or any of the Collateral, at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
5.8 DUE AUTHORIZATION; NO LEGAL RESTRICTIONS. The execution and
----------------------------------------
delivery by Borrower and the Guarantors of the Loan Documents, the consummation
of the transactions contemplated by the Loan Documents and the fulfillment and
compliance with the respective
-14-
terms, conditions and provisions of the Loan Documents: (a) have been duly
authorized by all requisite limited partnership action by Borrower and HHLP and
all trust action by Hersha, (b) will not conflict with or result in a breach of,
or constitute a default (or might, upon the passage of time or the giving of
notice or both, constitute a default) under, any of the terms, conditions or
provisions of (i) any applicable statute, law, rule, regulation or ordinance,
(ii) Borrowers' or HHLP's certificates of formation or limited partnership
agreements or Hersha's trust agreement, (iii) any indenture, mortgage, loan or
credit agreement or instrument to which any of Borrower, or Guarantors, is a
party or by which it may be bound or affected, or (iv) any judgment or order of
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and (c) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of any of Borrower or either of the Guarantors under
the terms or provisions of any such agreement or instrument, except liens in
favor of Bank.
5.9 ENFORCEABILITY. The Loan Documents have been duly executed by
--------------
Borrower and Guarantors and delivered to Bank and constitute legal, valid and
binding obligations of Borrower and Guarantors, enforceable in accordance with
their terms.
5.10 NO DEFAULT UNDER OTHER OBLIGATIONS, ORDERS OR GOVERNMENTAL
----------------------------------------------------------
REGULATIONS. Borrower and HHLP are not in violation of their respective
- -----------
certificates of formation or limited partnership agreements or in default in the
performance or observance of any of its obligations, covenants or conditions
contained in any indenture or other agreement creating, evidencing or securing
any Indebtedness or pursuant to which any such Indebtedness is issued, nor is
Borrower or either Guarantor in violation of or in default under any other
agreement or instrument or any judgment, decree, order, statute, rule or
governmental regulation, applicable to any of them or by which any of their
properties may be bound or affected.
5.11 GOVERNMENTAL CONSENTS. No consent, approval or authorization of
---------------------
or designation, declaration or filing with any governmental authority on the
part of Borrower or any Guarantor is required in connection with the execution,
delivery or performance by Borrower or any Guarantor of the Loan Documents or
the consummation of the transactions contemplated thereby.
5.12 TAXES. Borrower and each Guarantor have filed all tax returns,
-----
which any of them are required to file and have paid, or made provision for the
payment of, all taxes, which have or may have become due pursuant to such
returns or pursuant to any assessment received by them. Such tax returns are
complete and accurate in all respects. Borrower does not know of any proposed
additional assessment or basis for any assessment of additional taxes.
5.13 ADDRESSES. During the past five (5) years, Borrower has not been
---------
known by any names (including tradenames) other than those set forth in SCHEDULE
--------
5.13 attached hereto and has been located at any addresses other than those set
- ----
forth on SCHEDULE 5.13 attached hereto. Borrower's books and records pertaining
-------------
to the Collateral will at all times be located at the addresses set forth on
SCHEDULE 5.13; or such other location determined by Borrower after prior notice
- -------------
to Bank and delivery to Bank of any items requested by Bank to maintain
perfection and priority of Bank's security interests and access to Borrower'
books and records. SCHEDULE 5.13 identifies the chief executive office of each
-------------
Borrower.
-15-
5.14 CURRENT COMPLIANCE. Borrower and each Guarantor are currently in
------------------
compliance with all of the terms and conditions of the Loan Documents.
5.15 DEFERRED COMPENSATION PLANS. Borrower, any Guarantor and any
---------------------------
ERISA Affiliate have never been a participant in or has in any way provided or
maintained, any Deferred Compensation Plan for the benefit of Borrowers', any
Guarantors', or any ERISA Affiliate's employees, or has ever contributed to a
Multiemployer Plan.
5.16 LEASES AND CONTRACTS. Borrower has complied with the provisions
--------------------
of all material leases, contracts or commitments of any kind to which it is a
party and is not in default thereunder. No other party is in default under any
such leases, contracts or other commitments and no event has occurred which, but
for the giving of notice or the passage of time or both, would constitute an
event of default thereunder.
5.17 CONTINGENT LIABILITIES. There are no suretyship agreements,
----------------------
guarantees or other contingent liabilities of Borrower or any Guarantor that are
not disclosed by the financial statements mentioned in SECTION 5.5 herein.
-----------
5.18 ENCUMBRANCES. The Collateral and other property and assets of
------------
Borrower are not subject to any lien, encumbrance or security interest except as
set forth on EXHIBIT 5.18 attached.
------------
5.19 SECURITIES ACT. Borrower has not, directly or through any agent,
--------------
offered the Line Note or any part thereof or any similar security for sale to,
or solicited offers to buy the same from, or otherwise approached or negotiated
in respect thereof with, anyone other than Bank so as to bring the issue or sale
of the Line Note or any part thereof within the provisions of Section S of the
Securities Act 1933, as amended.
5.20 DISCLOSURE. Neither this Agreement, nor the schedules attached to
----------
this Agreement, nor the financial statements referred to in this Agreement, nor
any certificate, statement, report or other document furnished or to be
furnished by Borrower to Bank in connection with this Agreement, contain any
untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements contained in any of the foregoing not
misleading. Borrower has disclosed to Bank in wilting every fact that
materially and adversely affects the business or financial condition of Borrower
or its ability to perform its obligations under this Agreement, the Line Note,
or any other documents or instruments required hereby.
5.21 MARGIN STOCK. Borrower is not engaged in, nor does it have as one
------------
of its substantial activities, the business of extending or obtaining credit for
the purpose of purchasing or carrying "margin stock" (as that term is defined in
Regulation U, G, T, or X of the Board of Governors of the Federal Reserve
System) and no proceeds of any advance of the Line will be used for such purpose
of for the purpose of purchasing or carrying any shares of margin stock.
5.22 BANK ACCOUNTS. Other than the bank accounts set forth on SCHEDULE
------------- --------
5.22 attached (the "Deposit Accounts"), neither any Borrower nor any Guarantor
- ----
maintains any accounts with any bank or other financial institution.
-16-
6. GENERAL COVENANTS. So long as the Line Note remains unpaid or Bank
-----------------
has any obligation hereunder with respect to the Line, unless Bank otherwise
consents in writing, which consent shall not be unreasonably withheld or
delayed:
6.1 LIMITATION ON INDEBTEDNESS. Borrower shall not have at any
--------------------------
time outstanding to any Person other than Bank, any Indebtedness for borrowed
money or any outstanding letters of credit, except:
(a) current accounts payable incurred in the ordinary course of
Borrower's business, accrued expenses and other current items arising out of
transactions (other than borrowings) in the ordinary course of Borrower's
business;
(b) existing Indebtedness for borrowed money described on SCHEDULE
--------
6.1; and
---
(c) future Indebtedness incurred in connection with individual
project financing, and excluding specifically lines of credit or loans relating
to a pool of collateral.
6.2 INTENTIONALLY OMITTED.
6.3 GUARANTIES. Borrower shall not, directly or indirectly, guarantee,
----------
endorse (other than for collection or deposit in the ordinary course of
business), discount, sell with recourse or for less than the face value or agree
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
otherwise become directly or indirectly liable for, or agree (contingently or
otherwise) to supply or advance funds (whether by loan, stock purchase, capital
contribution or otherwise) in respect of, any Indebtedness, obligations or
liabilities of any Person other than an Affiliate.
6.4 DISPOSITION OF ASSETS. Borrower shall not sell, lease, transfer or
---------------------
otherwise dispose of (i) all or substantially all of its property or assets, or
(ii) any material portion of its property or assets unless, in the case of (ii)
herein, following any such sale, lease, transfer or other disposition, Borrower
shall be in compliance with the covenants contained in Sections 7.1 and 7.2
--------------------
herein calculated as of the date immediately following such sale, lease,
transfer or other disposition.
6.5 INTENTIONALLY DELETED.
6.6 TAXES; CLAIMS FOR LABOR AND MATERIALS. Borrower will pay or cause
-------------------------------------
to be paid when due all taxes, assessments, governmental charges or levies
imposed upon it or its income, profits, payroll or any property belonging to it,
including without limitation all withholding taxes, and all claims for labor,
materials and supplies which, if unpaid, might become a lien or charge upon any
of its properties or assets.
6.7 LIENS. Borrower shall not create, incur or permit to exist any
-----
mortgage, pledge, encumbrance, lien, security interest or charge of any kind
(including liens or charges upon properties acquired or to be acquired under
conditional sales agreements or other title retention devices) on its property
or assets, whether now owned or hereafter acquired, or upon any income, profits
or proceeds therefrom, except:
-17-
(a) Security interests and other liens held by Bank;
(b) Liens incurred or deposits made in the ordinary course of
business (i) in connection with worker's compensation, unemployment insurance,
social security and other like laws or (ii) to secure the performance of
statutory obligations, not incurred in connection with either (A) the borrowing
of money or (B) the deferred purchase price of goods or inventory;
(c) Encumbrances consisting of zoning restrictions, easements,
restrictions on the use of real property or minor irregularities of title
thereto, none of which impairs the use of such property by that Obligor in the
operation of its business; or
(d) Liens and security interests listed on SCHEDULE 6.7 attached
------------
hereto.
(e) Liens and security interests securing Indebtedness permitted by
SECTION 6.1 herein.
- -----------
Borrower shall not enter into any agreement with any other Person which
shall prohibit Borrower from granting, creating or suffering to exist, or
otherwise restrict in any way (whether by covenant, by identifying such event as
a default under such agreement or otherwise) the ability of Borrower to grant,
create or suffer to exist, any lien, security interest or other charge or
encumbrance upon or with respect to any of its assets in favor of Bank.
6.8 EXISTENCE; APPROVALS; QUALIFICATION; BUSINESS OPERATIONS;
---------------------------------------------------------
COMPLIANCE WITH LAWS. Borrower and each Guarantor (a) will obtain, preserve and
- --------------------
keep in full force and effect its separate corporate existence and all rights,
licenses, registrations and franchises necessary to the proper conduct of their
respective businesses or affairs; (b) will qualify and remain qualified as a
foreign corporation, in each jurisdiction in which the character or location of
the properties owned by any of them, respectively, or the business transacted by
any of them requires such qualification; (c) will continue to operate their
respective businesses as presently operated and will not engage in any new
businesses without the prior written consent of Bank; and (d) will comply with
the requirements of all applicable laws and all rules, regulations (including
environmental regulations) and orders of regulatory agencies and authorities
having jurisdiction over it.
6.9 MAINTENANCE OF PROPERTIES. Borrower will maintain, preserve,
-------------------------
protect and keep or cause to be maintained, preserved, protected and kept its
real and personal property used or useful in the conduct of its business in good
working order and condition, reasonable wear and tear excepted, and will pay and
discharge when due the cost of repairs to and maintenance of the same.
6.10 INSURANCE. Borrower will carry adequate insurance issued by an
---------
insurer acceptable to Bank, in amounts acceptable to Bank (at least adequate to
comply with any co-insurance provisions) and against all such liability and
hazards as are usually carried by entities engaged in the same or a similar
business similarly situated or as may be required by Bank, and shall cause Bank
to be named as loss payee (with a lender's loss payable endorsement) with
respect to all personal property, and additional insured with respect to all
liability insurance, as its interests may appear with thirty (30) days' notice
to be given Bank by the insurance carrier prior to cancellation or material
modification of such insurance coverage.
-18-
Borrower shall cause to be delivered to Bank the insurance policies
therefor or in the alternative, evidence of insurance, and at least thirty (30)
business days prior to the expiration of any such insurance, additional policies
or duplicates thereof or in the alternative, evidence of insurance evidencing
the renewal of such insurance and payment of the premiums therefor. Borrower
shall direct all insurers that in the event of any loss thereunder or the
cancellation of any insurance policy, the insurers shall make payments for such
loss and pay all return or unearned premiums directly to Bank and not to
Borrower and Bank jointly.
Borrower shall not take out any insurance without having Bank named as loss
payee, mortgagee and additional insured thereon.
6.11 INSPECTIONS; EXAMINATIONS. Borrower hereby irrevocably
-------------------------
authorizes and directs all accountants and auditors employed by Borrower at any
time to exhibit and deliver to Bank copies of any and all of Borrower's
financial statements, or other accounting records of any sort in the
accountant's or auditor's possession and copies of all reports submitted to
Borrower by such accountants or auditors, including management letters,
"comment" letters and audit reports, and to disclose to Bank any information
they may have concerning Borrower's financial status and business operations.
Borrower further authorizes all federal, state and municipal authorities to
furnish to Bank copies of reports or examinations relating to any Borrower,
whether made by Borrower or otherwise.
The officers of Bank, or such Persons as any of them may designate, may
visit and inspect any of the properties of Borrower, examine (either by Bank's
employees or by independent accountants) any of the Collateral or other assets
of Borrower, including the books of account of Borrower, and discuss the
affairs, finances and accounts of Borrower with its officers and with its
independent accountants, at such times as Bank may desire.
6.12 DEFAULT UNDER OTHER INDEBTEDNESS. Borrower shall not permit
--------------------------------
any of its material Indebtedness to be in default. If any Indebtedness of
Borrower is declared or becomes due and payable before its expressed maturity by
reason of default or otherwise or to the knowledge of Borrower, the holder of
any such Indebtedness shall have the right (or upon the giving of notice or the
passage of time, or both, shall have the right) to declare such Indebtedness to
be so due and payable, Borrower will immediately give Bank written notice of
such declaration, acceleration or right of declaration.
6.13 DEFERRED COMPENSATION PLANS. Borrower, Guarantors and any ERISA
---------------------------
Affiliate shall not become a participant in, or in any way provide or maintain,
any Deferred Compensation Plan for the benefit of any of Borrower's, any
Guarantor's or any ERISA Affiliates' employees, or shall contribute to any
Multiemployer Plan, without giving Bank prior written notice of such action and
executing such related amendments to this Agreement as Bank may request.
6.14 BANK ACCOUNTS. As additional compensation to Bank, and in
-------------
consideration of the rate of interest being charged by Bank to Borrower,
Borrower will maintain deposit accounts with Bank.
-19-
6.15 MAINTENANCE OF MANAGEMENT. Borrower will cause its business to be
-------------------------
continuously managed by its present management or such other persons (serving in
such management positions) as may be reasonably satisfactory to Bank.
6.16 TRANSACTIONS WITH AFFILIATES. Borrower shall not enter into or
----------------------------
conduct any transaction with any Affiliate except on terms that would be usual
and customary in a similar transaction between Persons not affiliated with each
other and except as disclosed to Bank. Borrower shall not make any loans or
extensions of credit to any of its Affiliates, shareholders, directors or
officers, except for the existing loans described in SCHEDULE 6.16 attached
-------------
hereto. Borrower will cause all of its Indebtedness at any time owed to its
Affiliates, partners, directors and officers to be subordinated in all respects
to all present and future Bank Indebtedness and will not make any payments
thereon, except as approved by Bank in writing.
6.17 RESTRICTION ON TRANSFER. Borrower shall not permit the transfer
-----------------------
or assignment of any general or limited partnership interest or, as applicable,
any other ownership interest in any Borrower without the prior written consent
of Bank.
6.18 NAME OR ADDRESS CHANGE. Borrower shall not change its name or
-----------------------
address except upon thirty (30) days prior written notice to Bank and delivery
to Bank of any items requested by Bank to maintain perfection and priority of
Bank's security interests and access to Borrower's books and records.
6.19 NOTICES. Borrower will promptly notify Bank of (a) any action or
-------
proceeding brought against Borrower wherein such action or proceeding would, if
determined adversely to Borrower result in liability of Borrower in excess of
$25,000 individually, or $50,000 in the aggregate, (b) the occurrence of any
Event of Default, (c) any fact, condition or event which, with the giving of
notice or the passage of time or both, could become an Event of Default, (d) the
failure of Borrower to observe any of its undertakings under the Loan Documents,
or (e) any material adverse change in the assets, business, operations or
financial condition of Borrower.
6.20 MATERIAL ADVERSE CONTRACTS. Borrower shall not become or be a
--------------------------
party to any contract or agreement which has a materially adverse impact on
Borrower's ability to perform under this Agreement or any other agreement with
Bank to which Borrower is a party.
6.21 APPRAISALS. Bank shall have the right, in the exercise of its
----------
reasonable discretion, and/or as required by any applicable governmental
authority, at Borrower's cost and expense, to obtain additional or updated
Appraisals on any or all of the Real Estate.
6.22 BANK ACCOUNTS.
-------------
(a) Except as otherwise permitted herein, no Borrower or Guarantor
shall open or maintain any bank accounts with respect to the Collateral, the
Collateral Documents or the Real Estate other than Borrower's deposit accounts
and bank accounts maintained with Bank. Each Borrower and Guarantor shall
deposit or cause to be deposited into the Deposit Accounts or such other
accounts as may be maintained with Bank from time to the time the rentals and
other income from the Real Estate and all other Payments. Any income received
with respect to the balance from time to time standing to the credit of the
Deposit
-20-
accounts and any other deposit accounts maintained with Bank, including any
interest, shall remain, or be deposited in the Deposit Accounts or such other
accounts.
(b) All right, title and interest in and to the cash amounts on
deposit from time to time in the Deposit Accounts shall vest in Bank, shall
constitute part of the Collateral hereunder and shall not constitute payment of
Bank Indebtedness until applied thereto as hereinafter provided. Each Borrower
and Guarantor shall as promptly as possible deposit the proceeds of any
Collateral and all payments received by it into the Deposit Accounts. Until so
deposited, all such proceeds shall be held in trust by the Borrower and/or
Guarantor for and as the property of Bank and shall not be commingled with any
other funds or property of either of them.
(c) If an Event of Default shall have occurred and Bank shall have
given notice to the Borrower and/or Guarantor of its intent to exercise
exclusive control over the Deposit Accounts, then (i) the Borrower and/or
Guarantor, as applicable, shall instruct all Obligors and other Persons
obligated in respect of any Collateral Documents or Real Estate to make all
payments in respect of the Collateral Documents, and shall use its best efforts
to cause them to do so, directly to the Deposit Accounts, and (ii) neither the
Borrower nor Guarantor shall be entitled to receive any distribution from the
Deposit Accounts.
7. FINANCIAL COVENANTS. So long as the Line Note remains unpaid or
-------------------
Bank has any obligation hereunder with respect to the Line:
7.1 MINIMUM TANGIBLE NET WORTH. Hersha and HHLP shall maintain a
--------------------------
combined Minimum Tangible Net Worth of $___, 000,000.00.
7.2 LEVERAGE: Hersha will be required to maintain a leverage ratio of
--------
no more than 67% and defined as Total Funded Liabilities divided by Gross Asset
Value, measured quarterly.
7.3 CASH FLOW COVERAGE: Hersha shall maintain an EBITDA/Debt Service
------------------
ratio of not less than 1.40x, measured quarterly. For the Hersha's fixed rate
funded debt (or floating rate debt that has been hedged via a swap) with
maturities of greater than two years, Debt Service shall mean the actual
Interest Expense plus scheduled amortization on Indebtedness. For the Hersha's
other funded debt, Debt Service shall mean the greater of: (a) Interest Expense
plus scheduled amortization on Indebtedness; or (b) the hypothetical annual debt
service calculated using Hersha's then outstanding funded debt, an interest rate
of the greater of (i) 8% or (ii) 250 basis points over the 10-year Treasury
rate, and a 20 year amortization schedule.
7.4 COLLATERAL POOL DEBT SERVICE COVERAGE: Borrower shall maintain a
-------------------------------------
minimum Debt Service Coverage ratio of 1.35x (the "MINIMUM DEBT SERVICE COVERAGE
RATIO"), measured semi-annually and calculated using the then immediately
preceding 4 quarters' NOI for the Collateral Properties, a 20-year amortization
schedule and a interest rate equal to the greatest of: (i) the actual interest
rate; (ii) 8.0%; or (iii) 250 basis points over the 10-year Treasury rate. If
the Collateral Property has been owned for less than 4 quarters, NOI will be
calculated by annualizing for the period owned. Borrowers shall have the right
to paydown the facility or substitute collateral approved by Bank in order to
remain in compliance with this covenant.
-21-
7.5 PURCHASE OF COLLATERAL PROPERTY: If Borrower uses the
-------------------------------
proceeds of the Line to acquire or cause to be acquired a proposed Substitute
Collateral property, then Borrower must demonstrate that such proposed
Collateral Property provides at least a 1.0x Debt Service Coverage Ratio on the
operating results with regard to such proposed Collateral Property for the
previous 12 months (or annualized, if the property does not have 12 months'
history). Within 12 months from the acquisition of such proposed Collateral
Property, Borrower must demonstrate to the reasonable satisfaction of Bank that
such Collateral Property has a 1.35x Debt Service Coverage Ratio.
8. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS. Borrower will
----------------------------------------------------
maintain, and cause Guarantors to maintain, books of record and accounts in
which full, correct and current entries in accordance with GAAP will be made of
all of its dealings, business and affairs, and Borrower will deliver, or cause
to be delivered, to Bank the following:
8.1 ANNUAL STATEMENTS. As soon as available and in any event
-----------------
within one hundred twenty (120) days after the end of each fiscal year of
Borrower or the Guarantors, the audited consolidated (a) income and retained
earnings statements of Borrower and Guarantors for such fiscal year, (b) balance
sheet of Borrower and Guarantors as at the end of such fiscal year, and (c)
statement of cash flow of Borrower and Guarantors for such fiscal year, all
setting forth in comparative form the corresponding figures as at the end of the
previous fiscal year, all in reasonable detail, including all supporting
schedules and comments. The foregoing statements and balance sheets shall be
prepared in accordance with GAAP and shall be audited by independent certified
public accountants of recognized standing acceptable to Bank in the reasonable
exercise of its discretion with respect to which such accountants shall deliver
their unqualified opinion.
8.2 ANNUAL PROPERTY STATEMENTS. As soon as available and in any event
--------------------------
within sixty (60) days after the end of each calendar year, rent rolls and
operating statements for each property constituting a portion of any of the
Collateral Properties, including without limitation a portfolio summary relating
to the Collateral Properties in the form approved by Bank.
8.3 QUARTERLY STATEMENTS. As soon as available and in any event within
--------------------
sixty (60) days after the close of each fiscal quarter of Borrower and
Guarantors, (a) the consolidated income and retained earnings statements of
Borrower and Guarantors for such quarter, (b) the consolidated balance sheet of
Borrower and Guarantors as of the end of such quarter, (c) the consolidated
statement of cash flow of Borrower and Guarantors for such quarter, and (d) a
portfolio summary of each property constituting the Real Estate, all setting
forth in comparative form the corresponding figures as at the end of the
corresponding quarter of the previous fiscal year (if applicable) all in
reasonable detail, subject to year end adjustments and certified by the chief
financial officer of Borrower and Guarantors to be accurate and to have been
prepared in accordance with GAAP.
8.4 QUARTERLY PROPERTY STATEMENTS. As soon as available and in any
-----------------------------
event within thirty (30) days after the end of each fiscal quarter of Borrower,
rent rolls and operating statements for each property constituting a portion of
the Real Estate, including without limitation a portfolio summary relating to
the Real Estate in the form approved by Bank.
-22-
8.5 REQUESTED INFORMATION. With reasonable promptness, all such other
---------------------
data and information in respect of the condition, operation and affairs of
Borrower as Bank may reasonably request from time to time.
8.6 COMPLIANCE CERTIFICATES. Together with the annual statements
-----------------------
required by SECTION 8.1 above, a certificate of the chief financial officer of
Borrower: (a) stating that Borrower has observed, performed and complied with
each and every undertaking contained herein, (b) setting forth the information
and computations (in sufficient detail) required in order to establish whether
Borrower was operating in compliance with the financial covenants in Sections
7.1 through 7.4 of this Agreement, and (c) certifying that as of the date of
such certification, there does not exist any Event of Default or any occurrence
or state of affairs which with the giving of notice, passage of time or both
would constitute an Event of Default.
8.7 ACCOUNTANT'S CERTIFICATE. Together with the annual statements
------------------------
required by SECTION 8.1, a report of the independent public accountants who
render an opinion with respect to the financial statements referred to therein,
stating that they have reviewed the terms of this Agreement and that in making
the examinations necessary to their certification mentioned in SECTION 8.1, they
have reviewed the accounts and condition of Borrower and Guarantors during the
accounting period covered by their certificate and that such review did not
disclose the existence of any condition or event which constitutes an Event of
Default or a Potential Default (or that such conditions or events existed,
describing them).
9. ENVIRONMENTAL REPRESENTATIONS AND COVENANTS.
-------------------------------------------
9.1 REPRESENTATIONS. Borrower, to the best of its knowledge after
---------------
due investigation, including without limitation a review of environmental
reports previously furnished to Bank, represents to Bank as follows: (a)
Borrower is in compliance with all Environmental Requirements and Borrower has
no knowledge of any circumstances which may prevent or interfere with such
compliance in the future; (b) Borrower has all licenses, permits, approvals and
authorizations required under applicable Environmental Requirements; (c) there
are no pending or threatened claims against any Borrower or any Obligor related
to the failure to comply with any Environmental Requirements, or any facts or
circumstances which could give rise to such a claim; (d) no facility or property
now or previously owned, operated or leased by any Obligor is an Environmental
Cleanup Site; (e) there are no liens or claims for cost reimbursement
outstanding or threatened against Borrower or any Obligor or any of their assets
(including without limitation the Collateral Properties), or any facts or
circumstances which could give rise to such a lien or claim; and (f) there are
no facts or circumstances which, under the provisions of any Environmental
Requirements, could restrict the use, occupancy or transferability of any of the
Collateral or any of the Collateral Properties.
9.2 REAL PROPERTY. Borrower represents and warrants to Bank that there
-------------
are no Special Materials presently located on or, to the best of its knowledge,
near any Real Estate except for Special Materials which are and have at all
times been treated, stored, transported, handled and disposed of in compliance
with all Environmental Requirements. Borrower represents to Bank that the Real
Estate is not now being used nor, to the best of its knowledge, has it ever been
used in the past for activities involving Special Materials, including but not
limited to the use, generation, collection, storage, treatment, or disposal of
any Special Materials
-23-
except for Special Materials which are and have at all times been treated,
stored, transported, handled and disposed of in compliance with all
Environmental Requirements.
9.3 COVENANT REGARDING COMPLIANCE. Borrower shall take or cause all
-----------------------------
Obligors to take, at Borrower's and such Obligor's sole expense, such actions as
may be necessary to comply with all Environmental Requirements, as hereinafter
defined. If Borrower or any such Obligor shall fail to take such action, Bank
may make advances or payments towards performance or satisfaction of the same
but shall be under no obligation to do so. All sums so advanced or paid,
including all sums advanced or paid by Bank in connection with any judicial or
administrative investigation or proceeding relating thereto, including, without
limitation, attorney's fees, fines, or other penalty payments, shall be at once
repayable by Borrower and all sums so advanced or paid shall become a part of
Bank Indebtedness.
Borrower shall cause all Obligors to maintain all licenses, permits,
approvals and authorizations required under applicable Environmental
Requirements. In connection with offsite treatment, storage, handling,
transportation or disposal of Special Materials, Borrower shall cause all
Obligors to conduct such activities only at facilities and with carriers who
operate in compliance with all Environmental Requirements and will obtain
certificates of compliance or disposal from all contractors retained in
connection with such activities.
9.4 NOTICES. In the event Borrower becomes aware of any past,
-------
present or future facts or circumstances which have given rise or could give
rise to a claim against any Borrower or any Obligor related to a failure to
comply with any Environmental Requirements, Borrower will promptly give Bank
notice thereof, together with a written statement of an officer of Borrower
setting forth the details thereof and the action with respect thereto taken or
proposed to be taken with respect thereto.
9.5 INDEMNITY. Borrower agrees to indemnify, defend and hold harmless
---------
Bank, its parents, subsidiaries, successors and assigns, and any officer,
director, shareholder, employee, Affiliate or agent of Bank, for all loss,
liability, damage, cost and expenses, including, without limitation, attorney's
fees and disbursements (including the reasonable allocated cost of in-house
counsel and staff) arising from or related to (a) the release of any Special
Materials at any of the Collateral Properties, (b) the release of any Special
Materials treated, stored, transported, handled, generated or disposed of by or
on behalf of Borrower at any third party owned site, failed to comply with all
Environmental Requirements, and (c) the breach by Borrower of any representation
or covenant in this SECTION 9.
9.6 TESTING. Bank shall have the right from time to time to designate
-------
such persons ("ENVIRONMENTAL CONSULTANTS") as Bank may select to visit, inspect,
examine and test any or all of the Collateral Properties, for the purpose of
investigating compliance with Environmental Requirements, any actual or
potential claims related thereto, and any condition which could result in
potential liability, cost or expenses to Bank. Borrower will permit, and will
use its best efforts to cause all Obligors to permit, such Environmental
Consultants to have access to the Collateral Properties and all books, records
and reports related to compliance by the Environmental Affiliates with all
Environmental Requirements. Borrower will supply, and will use its best efforts
to cause all Obligors to supply, Bank or the Environmental Consultants with all
information, records, correspondence, audits, reviews and materials related to
compliance by
-24-
Borrower and such Obligors with alt Environmental Requirements and will make
available to Bank or the Environments Consultants appropriate personnel employed
by such Environmental Consultants retained by Borrower or such Obligors having
knowledge of such matters.
The cost of such visits, inspections, examination and tests shall be borne
by the Borrower. In the event Bank pays such costs, such sums shall be at once
repayable by Borrower and all sums so advanced or paid by Bank shall become part
of Bank Indebtedness. Notwithstanding the foregoing, Bank shall have no
obligation to perform any tests, examinations or inspections or to monitor the
compliance of the Real Property with all Environmental Requirements.
9.7 SURVIVAL. The representations and covenants of Borrower
--------
contained in this Section 9, including without limitation the indemnification
obligation of Borrower, shall survive the occurrence of any event whatsoever,
including the payment of the Bank Indebtedness or any investigation by or
knowledge of Bank.
10. CONDITIONS OF CLOSING. The obligation of Bank to make available
---------------------
the Line is subject to the performance by Borrower of all of its agreements to
be performed hereunder and to the following further conditions:
10.1 LOAN DOCUMENTS. Simultaneously with the execution and
--------------
delivery of this Agreement, and from time to time thereafter, Borrower shall
execute and deliver, or cause to be executed and delivered, to Bank the
following documents and instruments, in form and content satisfactory to Bank
(collectively, including this Agreement, the "LOAN DOCUMENTS")::
(a) The Line Note;
(b) Open-End Mortgages and Security Agreements (collectively the
"MORTGAGES") from each Borrower in favor of Bank whereby such Borrower grants to
Bank a first priority mortgage in and to the Real Estate;
(c) An Assignment of Interest in Leases and Agreements Affecting Real
Estate (collectively the "ASSIGNMENTS") from each Borrower in favor of Bank
whereby such Borrower grants to Bank a first priority security interest in all
leases, rents and other agreements relating to the Real Estate;
(d) Security Agreements (collectively the "SECURITY AGREEMENTS") from
each Borrower in favor of Bank whereby such Borrower grants to Bank a first
priority security interest in all personal property relating to or located in
the Real Estate;
(e) Environmental Indemnity Certificates from each Borrower in favor
of Bank;
(f) Guaranty and Suretyship agreements (the "GUARANTY AGREEMENTS")
from the Guarantors pursuant to which Guarantors become a surety to Bank for all
present and future liabilities and obligations of Borrower to Bank
-25-
(g) Disclosures for Confession of Judgment executed by Borrower and
Guarantors;
(h) Such additional assignments, agreements, documents and
instruments as Bank may now or hereafter require, including, without limitation
UCC-1 Financing Statements.
10.2 ADDITIONAL ITEMS. Simultaneously with the execution and
----------------
delivery of this Agreement, and from time to time thereafter, Borrower shall
deliver, or cause to be delivered, to Bank the following items, in form and
content satisfactory to Bank:
(a) An opinion of counsel for Borrower and Guarantors as to the
validity and enforceability of the Loan Documents, the authority and capacity of
the Borrower and Guarantors to execute the Loan Documents and such other matters
as Bank may request
(b) Policies of title insurance (together with an insured closing
protection letter) in the form of the standard loan policy adopted by the
Commonwealth Land Title Insurance Company or such other form as may be approved
by Bank and which shall: (i) insure Bank that the title to the Real Estate is
marketable and all existing and future structures, additions, fixtures, and
improvements on the Real Estate are free and clear of all liens, encumbrances
and exceptions to title except as may be approved by Bank; (ii) contain such
endorsements as Bank may reasonably require including, but not limited to, the
following: public access, survey, variable rate, future advances, usury, and no
violation of conditions or covenants; and (iii) provide affirmative insurance
against mechanics' liens on terms acceptable to Bank;
(c) A certificate or other evidence of fire and general liability
insurance meeting the requirements of the Mortgages;
(d) Certified copies of Borrowers' and each Guarantors'
organizational documents (and all amendments thereto) and a certificate of good
standing evidencing the subsistence or good standing, as the case may be of
Borrower and each Guarantor under the laws of the Commonwealth of Pennsylvania
and the state of incorporation of such Borrower or Guarantor, as applicable, and
certified copy of the resolutions or consents adopted or other actions taken, if
any, by the members, partners or directors or Borrower and Guarantors, as the
case may be authorizing the execution, delivery, and performance of the Loan
Documents to which Borrower is a party;
(e) An independent flood certification (with provision for
life-of-loan monitoring) of the Collateral Properties that indicates whether or
not the Collateral Properties are located in a flood hazard area as defined by
the Federal Insurance Administration. Such certification shall contain, at a
minimum, the date and complete parcel number of the applicable Federal Emergency
Management Agency map;
(f) Satisfactory (phase I) environmental assessment of the Collateral
Properties conducted by an independent and competent environmental consultant or
engineering firm satisfactory to Bank, at the expense of Borrower, indicating
that the Collateral Properties are not now being used, and have not been used in
the past, for any activities involving, directly or indirectly, the use,
generation, treatment, storage, or disposal of any hazardous or toxic chemical,
material, substance, or waste, of any kind or nature, except for that
underground storage tank
-26-
discussed in such report. Additionally, Borrower shall deliver to the Bank
within thirty (30) days an update of the Phase I Environmental Assessments for
the Real Estate (specifically, the November 12, 1997 report from TETHYS
Consultants, Project No. T-1966, and the May 27, 1998 report from Dawood
Engineering, Inc. ) and provide a reliance letter for the benefit of the Bank;
(g) Satisfactory Appraisals of the Collateral Properties;
(h) A survey of the Collateral Properties (the "SURVEY"), showing the
locations of all improvements, driveways, fences, encroachments, and easements,
recorded and unrecorded, of every nature and kind, (including, without
limitation, all easements and encroachments raised as exceptions on the title
report) and indicating the sideline, density, and other requirements of all
zoning and all other applicable statutes, ordinances, and building codes (as the
same may pertain to the location of the improvements). The survey shall be in
compliance with the standards of the American Land Title Association, with a
certificate of the surveyor of the legal description, and shall be in favor of
the title company and Bank;
(i) Certified copies of all leases, agreements, contracts, including
property management and franchise agreements, relating to the Collateral
Properties;
(j) Subordination, Non-Disturbance and Attornment Agreements in form
and content satisfactory to Bank, in its sole discretion, executed by any
commercial tenant of the Collateral Properties; and
(k) Such additional certificates, agreements and instruments
customarily provided in commercial loan transactions of this type, scope and
magnitude.
10.3 REPRESENTATIONS AND WARRANTIES. All representations and
------------------------------
warranties of Borrower set forth in the Loan Documents will be true at and as of
the date hereof.
10.4 NO DEFAULT. No condition or event shall exist or have occurred
----------
which would constitute an Event of Default or a Potential Default.
10.5 ENVIRONMENTAL MATTERS. Bank shall have received a report from an
---------------------
environmental consultant or engineer acceptable to Bank, satisfactory in form
and substance to Bank as to such environmental matters pertaining to the
Collateral Properties as Bank may require.
10.6 ADDITIONAL DOCUMENTS. Copies of record searches (including UCC
--------------------
searches and judgments, suits, tax and other lien searches) confirming that Bank
has a first priority security interest in the Collateral, acceptable to Bank,
shall have been delivered to Bank.
10.7 NO MATERIAL ADVERSE CHANGE. Bank shall have received evidence
--------------------------
satisfactory to it that no material adverse change has occurred with respect to
Borrower or any Guarantor since December 31, 2003.
10.8 COMMITMENT FEE. Borrower shall have paid to Bank in full the
--------------
commitment fee referred to in SECTION 3.3 herein.
-----------
-27-
10.9 OTHER DOCUMENTS. Such other documents and instruments as Bank may
---------------
reasonably request.
11. CERTAIN CONDITIONS TO SUBSEQUENT ADVANCES. Subsequent advances
-----------------------------------------
shall be conditioned upon the following conditions and each Line Request shall
constitute a representation by borrower to bank that each condition has been met
or satisfied:
11.1 REPRESENTATIONS AND WARRANTIES. All representations and
------------------------------
warranties of Borrower contained herein or in the Loan Documents shall be true
at and as of the date of such advance as if made on such date, and each Line
Request shall constitute reaffirmation by Borrower that such representations and
warranties are then true.
11.2 NO DEFAULT. No condition or event shall exist or have occurred at
----------
or as of the date of such advance that would constitute an Event of Default
hereunder or a Potential Default.
11.3 OWNERSHIP OF COLLATERAL PROPERTIES. At all times, any Collateral
----------------------------------
Properties must be wholly owned by either the Borrowers or Guarantors (which
must be majority-owned subsidiaries of the Borrowers).
11.4 ENVIRONMENTAL ASSESSMENTS. Phase I, and if necessary, Phase II
-------------------------
environmental site assessments shall be ordered in advance and reviewed by Bank
prior to any substitution of Collateral.
11.5 ENTITY QUALIFICATION. Hersha shall at all times be a qualified
--------------------
real estate investment trust pursuant to United States Internal Revenue Services
standards and codes
11.6 OTHER REQUIREMENTS. Bank shall have received all certificates,
------------------
authorizations, affidavits, schedules and other documents which are provided for
hereunder or under the Loan Documents, or which Bank may reasonably request.
12. DEFAULT AND REMEDIES.
--------------------
12.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
-----------------
following events shall constitute an Event or Events of Default hereunder:
(a) The failure of any Obligor to pay any amount of principal or
interest on the Line Note when due, or any fee or other sums payable hereunder
and the continuation of such failure for five (5) Business Days following notice
thereof from Bank, or the failure to pay any other Bank Indebtedness on the date
on which such payment is due, whether on demand, at the stated maturity or due
date thereof, or by reason of any requirement for the prepayment thereof, by
acceleration or otherwise;
(b) The failure of any Obligor to duly perform or observe any
obligation, covenant or agreement on its part contained herein or in any other
Loan Document not otherwise specifically constituting an Event of Default under
this Section 12.1 and such failure continues unremedied for a period of thirty
(30) days after the earlier of (i) notice from Bank to Borrower of the existence
of such failure, or (ii) any officer or principal of Borrower knows or should
have known of the existence of such failure, provided that, in the event such
failure is incapable of
-28-
remedy or consists of a default of any of the financial covenants in Sections
7.1 through 7.4 herein, or was willfully caused or permitted by Borrower shall
not be entitled to any notice or grace hereunder;
(c) The failure of any Obligor to pay any Indebtedness for borrowed
money due to any third Person or the existence of any other event of default
under any loan, security agreement, mortgage or other agreement pertaining
thereto binding such Obligor after the expiration of any notice and/or grace
periods permitted in such documents;
(d) The failure of any Obligor to pay or perform any other obligation
to Bank under any other agreement or note or otherwise arising, whether or not
related to this Agreement, after the expiration of any notice and/or grace
periods, if any, permitted in such documents;
(e) The adjudication of any Obligor as a bankrupt or insolvent, or
the entry of an Order for Relief for any Obligor or the entry of an order
appointing a receiver or trustee for any Obligor of any of its property or
approving a petition seeking reorganization or other similar relief under the
bankruptcy or other similar laws of the United States or any state or any other
competent jurisdiction;
(f) A proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law is filed by or
(unless dismissed within 75 days) against any Obligor or any Obligor makes an
assignment for the benefit of creditors, or Borrower takes any action to
authorize any of the foregoing;
(g) The suspension of the operation of any Obligor's present
business, or any Obligor becoming unable to meet its debts as they mature, or
the admission in writing by any Obligor to such effect, or any Obligor calling
any meeting of all or any material portion of its creditors for the purpose of
debt restructure;
(h) All or any part of the Collateral or the assets of any Obligor
are attached, seized, subjected to a writ or distress warrant, or levied upon,
or come within the possession or control of any receiver, trustee, custodian or
assignee for the benefit of creditors;
(i) The entry of a final judgment for the payment of money against
any Obligor which, within ten (10) days after such entry, shall not have been
discharged or execution thereof stayed pending appeal or shall not have been
discharged within five (5) days after the expiration of any such stay;
(j) Any representation or warranty of any Obligor in any of the Loan
Documents is discovered to be untrue in any material respect or any statement,
certificate or data furnished by any Obligor pursuant hereto is discovered to be
untrue in any material respect as of the date as of which the facts therein set
forth are stated or certified;
(k) Any Obligor voluntarily or involuntarily dissolves or is
dissolved, terminates or is terminated;
-29-
(l) Any Obligor is enjoined, restrained, or in any way prevented by
the order of any court or any administrative or regulatory agency, the effect of
which order restricts an Obligor from conducting all or any material part of its
business;
(m) A breach by any Obligor occurs under any material agreement,
document or instrument, whether heretofore, now or hereafter existing between
any such Obligor and any other Person;
(n) A material and adverse change occurs in any Obligor's operations,
management or financial condition or in the value of the Collateral; or
(o) The loss, suspension, revocation or failure to renew any license
or permit now held or hereafter acquired by any Obligor, which loss, suspension,
revocation or failure to renew might have a material adverse effect on the
business profits, assets or financial condition of any such Obligor.
Additionally, any termination of the Franchise Agreements for the Real Estate
(specifically, the Mainstay Suites Franchise Agreement dated November 30, 1997;
the Sleep Inn Franchise Agreement dated November 30, 1997; and the Holiday Inn
Express Hotel & Suites Conversion and License Agreement dated December 22,
1999), or any other franchise agreement relating to the Real Estate without the
prior written consent of the Bank.
12.2 REMEDIES. At the option of Bank, upon the occurrence of an
--------
Event of Default, or at any time thereafter:
(a) The entire unpaid principal of the Line, all other Bank
Indebtedness, or any part thereof, all interest accrued thereon, all fees due
hereunder and all other obligations of Borrower to Bank hereunder or under any
other agreement, note or otherwise arising will become immediately due and
payable without any further demand or notice;
(b) The Line will immediately terminate and the Borrower will receive
no further extensions of credit thereunder;
(c) Bank may increase the interest rate on the Line to the Default
Rate, without notice;
(d) Bank may exercise all of the rights and remedies set forth in
Section 4 herein.
(e) Bank may enter the premises occupied by Borrower and take
possession of the Collateral and any records relating thereto; and/or
(f) Bank may exercise each and every right and remedy granted to it
under the Loan Documents, under the Uniform Commercial Code and under any other
applicable law or at equity.
If an Event of Default occurs under SECTION 12.1(e), (f) OR (g), all Bank
---------------------------
Indebtedness shall become immediately due and payable.
-30-
12.3 SALE OR OTHER DISPOSITION OF COLLATERAL. The sale or other
---------------------------------------
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then owing. Any
sales of the Collateral may be adjourned from time to time with or without
notice. Bank shall have the right to conduct such sales at Borrower's premises,
at Borrower's expense, or elsewhere, on such occasion or occasions as Bank may
see fit. Any notice required to be given by Bank of a sale or other disposition
or other intended action by Bank with respect to any of the Collateral which is
deposited in the United States mail, postage prepaid and duly addressed to
Borrower at the address specified in SECTION 13.1 below, at least five (5)
------------
business days prior to such proposed action, shall constitute, fair and
reasonable notice to Borrower of any such action. The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of holding, preparing for sale, selling or otherwise disposing of the Collateral
incurred by Bank in connection therewith and all other costs and expenses
related thereto including attorney fees, shall be applied in such order as Bank,
in its sole discretion, elects, toward satisfaction of the Bank Indebtedness.
Bank shall account to Borrower for any surplus realized upon such sale or other
disposition, and Borrower shall remain liable for any deficiency. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect Bank's security interest in the
Collateral. Borrower agrees that Bank has no obligation to preserve rights to
the Collateral against any other parties. Bank shall be under no obligation to
marshall any assets in favor of Borrower or any other party or against or in
payment of any or all of the Bank Indebtedness.
12.4 SET-0FF. Without limiting the rights of Bank under applicable
-------
law, Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Borrower now or at any time in Bank's possession in
any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, as
security for all Bank Indebtedness. At any time and from time to time following
the occurrence of an Event of Default or a Potential Default, or Bank may
without notice or demand, set off and apply any and all deposits {general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Bank to or for the credit of Borrower against
any or all of the Bank Indebtedness and Borrower's obligations under the Loan
Documents.
If any bank account of Borrower with Bank is attached or otherwise liened
or levied upon by any third party, Bank need not await the running of any
applicable grace period hereunder, but Bank shall have and be deemed to have the
immediate right of set-off and may apply the funds or amount thus set-off
against Borrower's obligations to Bank.
12.5 DELAY OR OMISSION NOT WAIVER. Neither the failure nor any
----------------------------
delay on the part of Bank to exercise any right, remedy, power or privilege
under the Loan Documents upon the occurrence of any Event of Default or
otherwise shall operate as a waiver thereof or impair any such right, remedy,
power or privilege. No waiver of any Event of Default shall affect any later
Event of Default or shall impair any rights of Bank. No single, partial or full
exercise of any rights, remedies, powers and privileges by Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and
Borrower shall operate as or be deemed to constitute a
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waiver of Bank's rights under the Loan Documents or affect the duties or
obligations of Borrower.
12.6 REMEDIES CUMULATIVE; CONSENTS. The rights, remedies, powers and
-----------------------------
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
12.7 CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Borrower agrees
----------------------------------------------
to pay on demand all costs and expenses of Bank, including without limitation:
(a) all costs and expenses in connection with the preparation,
review, negotiation, execution, delivery and administration of the Loan
Documents, and the other documents to be delivered in connection therewith, or
any amendments, extensions and increases to any of the foregoing (including,
without limitation, attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
(b) all losses, costs and expenses in connection with the
enforcement, protection and preservation of Bank's rights or remedies under the
Loan Documents, or any other agreement relating to any Bank Indebtedness, or in
connection with legal advice relating to the rights or responsibilities of Bank
(including without limitation court costs, attorney's fees and expenses of
accountants and appraisers); and
(c) any and alt stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Borrower shall fail to pay taxes, insurance, assessments,
costs or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
discretion, may make expenditures for such purposes and the amount so expended
(including attorney's fees and expenses, filing fees and other charges) shall be
payable by Borrower on demand and shall constitute part of the Bank
Indebtedness.
With respect to any amount required to be paid by Borrower under this
Section, in the event Borrower fails to pay such amount on demand, Borrower
shall also pay to Bank interest thereon at the Default Rate. Borrower's
obligations under this Section shall survive termination of this Agreement.
12.8 TIME IS OF THE ESSENCE. Time is of the essence in Borrower's
----------------------
performance of their obligations under the Loan Documents.
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13. COMMUNICATIONS AND NOTICES.
--------------------------
13.1 COMMUNICATIONS AND NOTICES. All notices, requests and other
--------------------------
communications made or given in connection with the Loan Documents shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, or registered or certified mail, return receipt requested, or
by telecopy with the original forwarded by first-class mail, in all cases, with
charges prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Borrower:
Hersha Hospitality Trust
Penn Mutual Towers
510 Walnut Street, 9th Floor
Philadelphia, PA 19106
Attention: Ashish Parikh
Phone: 215-238-1046
Fax: 215-238-0157
With a copy to:
Shah & Byler, LLP
Penn Mutual Towers
510 Walnut Street, 9th Floor
Philadelphia, PA 19106
Attention: Lok Mohapatra
Phone: 215-238-1045
Fax: 215-238-0157
To Bank:
Sovereign Bank
1500 Market Street
Concourse Level
Philadelphia, PA 19103
Attention: Matthew A. Anzideo
Phone: 267-256-2856
Fax: 267-256-2823
With a copy to:
Stradley Ronon Stevens & Young, LLP
Great Valley Corporate Center
30 Valley Stream Parkway
Malvern, PA 19355
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Attention: Valentino F. DiGiorgio, III, Esquire
Phone: 610-640-5800
Fax: 610-640-1965
14. WAIVERS.
-------
14.1 WAIVERS. IN CONNECTION WITH ANY PROCEEDINGS UNDER THE LOAN
-------
DOCUMENTS, INCLUDING WITHOUT LIMITATION ANY ACTION BY BANK IN REPLEVIN,
FORECLOSURE OR OTHER COURT PROCESS OR IN CONNECTION WITH ANY OTHER ACTION
RELATED TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREUNDER,
BORROWER WAIVES:
(a) ALL ERRORS, DEFECTS AND IMPERFECTIONS IN SUCH PROCEEDINGS;
(b) ALL BENEFITS UNDER ANY PRESENT OR FUTURE LAWS EXEMPTING ANY
PROPERTY, REAL OR PERSONAL, OR ANY PART OF ANY PROCEEDS THEREOF FROM ATTACHMENT,
LEVY OR SALE UNDER EXECUTION, OR PROVIDING FOR ANY STAY OF EXECUTION TO BE
ISSUED ON ANY JUDGMENT RECOVERED UNDER ANY OF THE LOAN DOCUMENTS OR IN ANY
REPLEVIN OR FORECLOSURE PROCEEDING, OR OTHERWISE PROVIDING FOR ANY VALUATION,
APPRAISAL OR EXEMPTION;
(c) ALL RIGHTS TO INQUISITION ON ANY REAL ESTATE, WHICH REAL ESTATE
MAY BE LEVIED UPON PURSUANT TO A JUDGMENT OBTAINED UNDER ANY OF THE LOAN
DOCUMENTS AND SOLD UPON ANY WRIT OF EXECUTION ISSUED THEREON IN WHOLE OR IN
PART, IN ANY ORDER DESIRED BY BANK;
(d) PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF DEMAND, NOTICE OF
NONPAYMENT, PROTEST AND NOTICE OF PROTEST OF ANY OF THE LOAN DOCUMENTS,
INCLUDING THE LINE NOTE;
(e) ANY REQUIREMENT FOR BONDS, SECURITY OR SURETIES REQUIRED BY
STATUTE, COURT RULE OR OTHERWISE;
(f) ANY DEMAND FOR POSSESSION OF COLLATERAL PRIOR TO COMMENCEMENT OF
ANY SUIT; AND
(g) ALL RIGHTS TO CLAIM OR RECOVER ATTORNEY'S FEES AND COSTS IN THE
EVENT THAT BORROWER IS SUCCESSFUL IN ANY ACTION TO REMOVE, SUSPEND OR ENFORCE A
JUDGMENT ENTERED BY CONFESSION.
14.2 FORBEARANCE. Bank may release, compromise, forbear with
-----------
respect to, waive, suspend, extend or renew any of the terms of the Loan
Documents, without notice to Borrower.
14.3 LIMITATION ON LIABILITY. Borrower shall be responsible for
-----------------------
and Bank is hereby released from any claim or liability in connection with:
(a) Safekeeping any Collateral;
(b) Any loss or damage to any Collateral;
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(c) Any diminution in value of the Collateral; or
(d) Any act or default of another Person.
Bank shall only be liable for any act or omission on its part constituting
willful misconduct. In the event that Bank breaches its required standard of
conduct, Borrower agrees that Bank's liability shall be only for direct damages
suffered and shall not extend to consequential or incidental damages. In the
event Borrower brings suit against Bank in connection with the transactions
contemplated hereunder and Bank is found not to be liable, Borrower will
indemnify and hold Bank harmless from all costs and expenses, including
attorney's fees, incurred by Bank in connection with such suit. This Agreement
is not _ intended to obligate Bank to take any action with respect to the
Collateral or to incur expenses or perform any obligation or duty of Borrower.
15. SUBMISSION TO JURISDICTION.
--------------------------
15.1 SUBMISSION TO JURISDICTION. Borrower hereby consents to the
--------------------------
exclusive jurisdiction of any state or federal court located within the
Commonwealth of Pennsylvania, and irrevocably agrees that, subject to Bank's
election, all actions or proceedings relating to the Loan Documents or the
transactions contemplated hereunder shall be litigated in such courts, and
Borrower waives any objection which they may have based on lack of personal
jurisdiction, improper venue or forum non conveniens to the conduct of any
--------------------
proceeding in any such court and waives personal service of any and all process
upon it, and consents that all such service of process be made by mail or
messenger directed to it at the address set forth in SECTION 13.1. Borrower
------------
hereby irrevocably appoints any officer, trustee, or partner of either of them
as their agent for the purpose of accepting service of any process within the
Commonwealth of Pennsylvania. Nothing contained in this SECTION 15.1 shall
------------
affect the right of Bank to serve legal process in any other manner permitted by
law or affect the right of Bank to bring any action or proceeding against
Borrower or its property in the courts of any other jurisdiction.
16. MISCELLANEOUS.
-------------
16.1 BROKERS. The transaction contemplated hereunder was brought
-------
about and entered into by Bank and Borrower acting as principals and without any
brokers, agents or finders being the effective procuring cause hereof. Borrower
represents to Bank that Borrower has not committed Bank to the payment of any
brokerage fee or commission in connection with this transaction. Whether any
such claim is made against Bank by any broker, finder or agent or any other
Person, Borrower agrees to indemnify, defend and hold Bank harmless against any
such claim, at Borrower's own cost and expense, including Bank's attorneys'
fees. Borrower further agrees that until any such claim or demand is
adjudicated in Bank's favor, the amount claimed and/or demanded shall be deemed
part of the Bank Indebtedness secured by the Collateral.
16.2 NO JOINT VENTURE. Nothing contained herein is intended to permit
----------------
or authorize Borrower to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Borrower.
16.3 SURVIVAL. All covenants, agreements, representations and
--------
warranties made by Borrower in the Loan Documents or made by or on its behalf in
connection with the transactions
-35-
contemplated here shall be true at all times this Agreement is in effect and
shall survive the execution and delivery of the Loan Documents, any
investigation at any time made by Bank or on its behalf and the making by Bank
of the loans or advances to Borrower. All statements contained.in any
certificate, statement or other document delivered by or on behalf of Borrower
pursuant hereto or in connection with the transactions contemplated hereunder
shall be deemed representations and warranties by Borrower.
16.4 NO ASSIGNMENT BY BORROWER. Borrower may not assign any of its
-------------------------
rights hereunder without the prior written consent of Bank, and Bank shall not
be required to lend hereunder except to Borrower as it presently exists.
16.5 ASSIGNMENT OR SALE BY BANK. Bank may sell, assign or participate
--------------------------
all or a portion of its interest in the Loan Documents and in connection
therewith may make available to any prospective purchaser, assignee or
participant any information relative to Borrower in its possession.
16.6 BINDING EFFECT. This Agreement and all rights and powers granted
--------------
hereby will bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
16.7 SEVERABILITY. The provisions of this Agreement and all other Loan
------------
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
16.8 NO THIRD PARTY BENEFICIARIES. The rights and benefits of this
----------------------------
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
16.9 MODIFICATIONS. No modification of this Agreement or any of the
-------------
Loan Documents shall be binding or enforceable unless in writing and signed by
or on behalf of the party against whom enforcement is sought.
16.10 HOLIDAYS. If the day provided herein for the payment of any
--------
amount or the taking of any action falls on a Saturday, Sunday or public holiday
at the place for payment or action, then the due date for such payment or action
will be the next succeeding Business Day.
16.11 LAW GOVERNING. This Agreement has been made, executed and
-------------
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
16.12 INTEGRATION. The Loan Documents shall be construed as integrated
-----------
and complementary of each other, and as augmenting and not restricting Bank's
rights, powers, remedies and security. The Loan Documents contain the entire
understanding of the parties thereto with respect to the matters contained
therein and supersede all prior agreements and understandings between the
parties with respect to the subject matter thereof and do not require parol or
extrinsic evidence in order to reflect the intent of the parties. In the event
of any inconsistency between the terms of this Agreement and the terms of the
other Loan Documents, the terms of this Agreement shall prevail.
-36-
16.13 EXHIBITS AND SCHEDULES. All exhibits and schedules attached
----------------------
hereto are hereby made a part of this Agreement.
16.14 HEADINGS. The headings of the Articles, Sections, paragraphs and
--------
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
16.15 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
16.16 WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER AND BANK WAIVE ANY
--------------------------------
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER OR BANK WITH RESPECT TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWER AND BANK AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WTTH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF BORROWER AND BANK TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY. BORROWER ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT
WTTH COUNSEL REGARDING THIS SECTION, THAT IT FULLY UNDERSTANDS ITS TERMS,
CONTENT AND EFFECT, AND THAT IT VOLUNTARILY AND KNOWINGLY AGREES TO THE TERMS OF
THIS SECTION.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Witness/Attest: MAKER:
2844 ASSOCIATES, a Pennsylvania limited
partnership
By: Hersha Hospitality, LLC, a Virginia
limited liability company, its
sole general partner
By:
- ---------------------- -------------------------------------
Jay H. Shah, Manager
HHLP VALLEY FORGE ASSOCIATES, a
Pennsylvania limited partnership
By: Hersha Hospitality, LLC, a Virginia
limited liability company, its
sole general partner
By:
- ---------------------- -------------------------------------
Jay H. Shah, Manager
BANK
SOVEREIGN BANK, a national banking
association
By:
-------------------------------------
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COMMONWEALTH OF PENNSYLVANIA :
: SS
COUNTY OF PHILADELPHIA :
ON THIS, the ______ day of July, 2004, before me, a Notary Public, the
undersigned officer, personally appeared Jay H. Shah, who acknowledged himself
to be Manager of Hersha Hospitality, LLC, a Virginia limited liability company,
the sole general partner of 2844 Associates, a Pennsylvania limited partnership,
and that he, as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
------------------------------------
Notary Public
My Commission Expires:
-39-
COMMONWEALTH OF PENNSYLVANIA :
: SS
COUNTY OF PHILADELPHIA :
ON THIS, the ______ day of July, 2004, before me, a Notary Public, the
undersigned officer, personally appeared Jay H. Shah, who acknowledged himself
to be Manager of Hersha Hospitality, LLC, a Virginia limited liability company,
the sole general partner of HHLP Valley Forge Associates, a Pennsylvania limited
partnership, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing the name
of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
------------------------------------
Notary Public
My Commission Expires:
-40-
CONSENT
The undersigned, as Guarantors, consent to all terms and conditions
contained in this Agreement and agree to be bound by all terms and provisions of
this Agreement.
The undersigned agrees to observe and perform all covenants and
agreements in this Agreement to be observed or performed by the undersigned.
The undersigned have executed this consent with the intent to be legally
bound and in order to induce Sovereign Bank to enter into this Agreement.
Witness: GUARANTORS:
HERSHA HOSPITALITY TRUST, a
Maryland real estate investment trust
By:
---------------------------------------
Name:
Title:
HERSHA HOSPITALITY LIMITED
PARTNERSHIP, a Virginia limited partnership
By: Hersha Hospitality Trust, a
Maryland Real Estate Investment Trust
By:
---------------------------------------
Name:
Title:
-41-
COMMONWEALTH OF PENNSYLVANIA :
: SS
COUNTY OF PHILADELPHIA :
ON THIS, the ______ day of July, 2004, before me, a Notary Public, the
undersigned officer, personally appeared ___________, who acknowledged himself
to be the ________ of Hersha Hospitality Trust, a Maryland real estate
investment trust, and that he, as such officer, being authorized so to do,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
------------------------------------
Notary Public
My Commission Expires:
-42-
COMMONWEALTH OF PENNSYLVANIA :
: SS
COUNTY OF PHILADELPHIA :
ON THIS, the ______ day of July, 2004, before me, a Notary Public, the
undersigned officer, personally appeared _______________, who acknowledged
himself to be the ________ of Hersha Hospitality Trust, a Maryland real estate
investment trust, sole general partner of Hersha Hospitality Limited
Partnership, a Virginia limited partnership, and that he, as such officer, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
------------------------------------
Notary Public
My Commission Expires:
-43-
SCHEDULES
---------
Schedule 5.3 Ownership Interests, Pledges, etc. of Borrower
Schedule 5.4 Stock owned by Borrower
Schedule 5.7 Pending or Threatened Litigation or Proceedings Against or
Affecting Borrower
Schedule 5.13 Names (including tradenames) and Addresses of Borrower,
identifying chief executive office
Schedule 5 .18 Liens and Encumbrances
Schedule 5.22 Permitted Bank Accounts (including name and address of
depository bank)
Schedule 6.1 Permitted Indebtedness for Borrowed Money
Schedule 6.7 Permitted Liens and Security Interests
Schedule 6.16 Permitted Loans to Affiliates, Shareholders, Officers or
Directors
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