|
Exhibit 4.2
UNCONDITIONAL GUARANTY
January 30, 2007
Apple REIT Eight, Inc.
814 East Main Street
Richmond, Virginia 23219
(Hereinafter referred to as "Borrower")
Glade M. Knight
814 East Main Street
Richmond, Virginia 23219
(Hereinafter referred to as "Guarantor")
Wachovia Bank, National Association
Roanoke, Virginia 24011
(Hereinafter referred to as "Bank")
IMPORTANT NOTICE
THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION
WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS
GUARANTOR AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU
WITHOUT ANY FURTHER NOTICE.
To induce Bank to make, extend or renew loans, advances, credit,
or other financial accommodations to or for the benefit of
Borrower, which are and will be to the direct interest and
advantage of the Guarantor, and in consideration of loans,
advances, credit, or other financial accommodations made, extended
or renewed to or for the benefit of Borrower, which are and will be
to the direct interest and advantage of the Guarantor, Guarantor
hereby absolutely, irrevocably and unconditionally guarantees to
Bank and its successors, assigns and affiliates the timely payment
and performance of all liabilities and obligations of Borrower to
Bank and its affiliates, including, but not limited to, all
obligations under any notes, loan agreements, security agreements,
letters of credit, instruments, accounts receivable, contracts,
drafts, leases, chattel paper, indemnities, acceptances, repurchase
agreements, overdrafts, and the Loan Documents, as defined below,
and all obligations of Borrower to Bank or any of its affiliates
under any swap agreement (as defined in 11 U.S.C. § 101, as in
effect from time to time), however and whenever incurred or
evidenced, whether primary, secondary, direct, indirect, absolute,
contingent, due or to become due, now existing or hereafter
contracted or acquired, and all modifications, extensions and
renewals thereof, (collectively, the "Guaranteed Obligations").
Guarantor further covenants and agrees:
GUARANTOR’S LIABILITY . This Guaranty is a
continuing and unconditional guaranty of payment and performance
and not of collection. The parties to this Guaranty are jointly and
severally obligated together with all other parties obligated for
the Guaranteed Obligations. This Guaranty does not impose any
obligation on Bank to extend or continue to extend credit or
otherwise deal with Borrower at any subsequent time. This Guaranty
shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of the Guaranteed Obligations is
rescinded, avoided or for any other reason must be returned by
Bank, and the returned payment shall remain payable as part of the
Guaranteed Obligations, all as though such payment had not been
made. Except to the extent the provisions of this Guaranty give
Bank additional rights, this Guaranty shall not be deemed to
supersede or replace any other guaranties given to Bank by
Guarantor; and the obligations guaranteed hereby shall be in
addition to any other obligations guaranteed by Guarantor pursuant
to any other agreement of guaranty given to Bank and other
guaranties of the Guaranteed Obligations.
TERMINATION OF GUARANTY . Guarantor may
terminate this Guaranty only by written notice, delivered
personally to or received by certified or registered United States
Mail by an authorized officer of Bank at the address for notices
provided herein. Such termination shall be effective only with
respect to Guaranteed Obligations arising more than 15 days after
the date such written notice is received by said Bank officer. Such
termination shall not be effective with respect to Guaranteed
Obligations (including any subsequent extensions, modifications or
compromises of the Guaranteed Obligations) then existing, or
Guaranteed Obligations arising subsequent to receipt by Bank of
said notice if such Guaranteed Obligations are a result of
Bank’s obligation to make advances pursuant to a commitment,
or are based on Borrower’s obligations to make payments
pursuant to any swap agreement (as defined in 11 U.S.C. § 101,
as in effect from time to time), entered into prior to expiration
of the 15 day notice period, or are a result of advances which are
necessary for Bank to protect its collateral or otherwise preserve
its interests. Termination of this Guaranty by any single Guarantor
will not affect the existing and continuing obligations of any
other Guarantor hereunder.
CONSENT TO MODIFICATIONS . Guarantor consents and
agrees that Bank (and, with respect to swap obligations, its
affiliates) may from time to time, in its sole discretion, without
affecting, impairing, lessening or releasing the obligations of
Guarantor hereunder: (a) extend or modify the time,
manner, place or terms of payment or performance and/or otherwise
change or modify the credit terms of the Guaranteed Obligations;
(b) increase, renew, or enter into a novation of the
Guaranteed Obligations; (c) waive or consent to the departure
from terms of the Guaranteed Obligations; (d) permit any
change in the business or other dealings and relations of Borrower
or any other guarantor with Bank; (e) proceed against,
exchange, release, realize upon, or otherwise deal with in any
manner any collateral that is or may be held by Bank in connection
with the Guaranteed Obligations or any liabilities or obligations
of Guarantor; and (f) proceed against, settle, release, or
compromise with Borrower, any insurance carrier, or any other
person or entity liable as to any part of the Guaranteed
Obligations, and/or subordinate the payment of any part of the
Guaranteed Obligations to the payment of any other obligations,
which may at any time be due or owing to Bank; all in such manner
and upon such terms as Bank may deem appropriate, and without
notice to or further consent from Guarantor. No invalidity,
irregularity, discharge or unenforceability of, or action or
omission by Bank relating to any part of the Guaranteed Obligations
or any security therefor shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGEMENTS . Guarantor waives and
releases the following rights, demands, and defenses Guarantor
may have with respect to Bank (and, with respect to swap
obligations, its affiliates) and collection of the Guaranteed
Obligations; (a) promptness and diligence in collection of any
of the Guaranteed Obligations from Borrower or any other person
liable thereon, and in foreclosure of any security interest and
sale of any property serving as collateral for the Guaranteed
Obligations; (b) any law or statute that requires that Bank
(and, with respect to swap obligations, its affiliates) make demand
upon, assert claims against, or collect from Borrower or other
persons or entities, foreclose any security interest, sell
collateral, exhaust any remedies, or take any other action against
Borrower or other persons or entities prior to making demand upon,
collecting from or taking action against Guarantor with respect to
the Guaranteed Obligations, including any such rights Guarantor
might otherwise have had under Va. Code §§ 49-25 and
49-26, et seq. , N.C.G.S. §§ 26-7, et seq.
, Tenn. Code Ann. § 47-12-101, O.C.G.A. § 10-7-24,
Mississippi Code Ann. Section 87-5-1, California Civil Code
Section §§ 2787 to 2855 inclusive, and any successor
statute and any other applicable law; (c) any law or statute
that requires that Borrower or any other person be joined in,
notified of or made part of any action against Guarantor;
(d) that Bank or its affiliates preserve, insure or perfect
any security interest in collateral or sell or dispose of
collateral in a particular manner or at a particular time, provided
that Bank’s obligation to dispose of Collateral in a
commercially reasonable manner is not waived hereby;
(e) notice of extensions, modifications, renewals, or
novations of the Guaranteed Obligations, of any new transactions or
other relationships between Bank, Borrower and/or any guarantor,
and of changes in the financial condition of, ownership of, or
business structure of Borrower or any other guarantor; (f)
Page 2
USURY. If at any time the effective
interest rate under this Note would, but for this paragraph, exceed
the maximum lawful rate, the effective interest rate under this
Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then
to fees and expenses, or, if no such amounts are owing, returned to
Borrower.
DEFAULT . If any of the following occurs, a default
("Default") under this Note shall exist: Nonpayment;
Nonperformance. The failure of timely payment or performance of
the Obligations or Default under this Note or any other Loan
Documents. False Warranty. A warranty or representation made
or deemed made in the Loan Documents or furnished Bank in
connection with the loan evidenced by this Note proves materially
false, or if of a continuing nature, becomes materially false.
Cross Default. At Bank’s option, any default in
payment or performance of any obligation under any other loans,
contracts or agreements of Borrower, any Subsidiary or Affiliate of
Borrower, any general partner of or the holder(s) of the majority
ownership interests of Borrower with Bank or its affiliates
("Affiliate" shall have the meaning as defined in 11 U.S.C. §
101, as in effect from time to time, except that the term
"Borrower" shall be substituted for the term "Debtor" therein;
"Subsidiary" shall mean any business in which Borrower holds,
directly or indirectly, a controlling interest). Cessation;
Bankruptcy. The death of, appointment of a guardian for,
dissolution of, termination of existence of, loss of good standing
status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or
insolvency proceeding by or against Borrower, its Subsidiaries or
Affiliates, if any, or any general partner of or the holder(s) of
the majority ownership interests of Borrower, or any party to the
Loan Documents. Material Capital Structure or Business
Alteration. Without prior written consent of Bank, (i) a
material alteration in the kind or type of Borrower’s
business or that of Borrower’s Subsidiaries or Affiliates, if
any; (ii) the sale of substantially all of the business or
assets of Borrower, any of Borrower’s Subsidiaries or
Affiliates or any guarantor, or a material portion (10% or more) of
such business or assets if such a sale is outside the ordinary
course of business of Borrower, or any of Borrower’s
Subsidiaries or Affiliates or any guarantor, or more than 50% of
the outstanding stock or voting power of or in any such entity in a
single transaction or a series of transactions; (iii) the
acquisition of substantially all of the business or assets or more
than 50% of the outstanding stock or voting power of any other
entity; or (iv) should any Borrower or any of Borrower’s
Subsidiaries or Affiliates or any guarantor enter into any merger
or consolidation. Material Adverse Change. Bank d
|
