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
