Exhibit 10.3
EXECUTION COPY
UNCONDITIONAL GUARANTY
OF
PAYMENT AND
PERFORMANCE
THIS UNCONDITIONAL GUARANTY OF
PAYMENT AND PERFORMANCE (this “Guaranty”) is made as of
March 16, 2009 to be effective as of December 31, 2008,
by SUPERTEL HOSPITALITY, INC. , a Virginia corporation
(“Guarantor”), for the benefit of GENERAL ELECTRIC
CAPITAL CORPORATION , a Delaware corporation
(“Lender”).
1. For valuable consideration, the
receipt of which is hereby acknowledged, Guarantor,
unconditionally, absolutely and irrevocably guarantees and promises
to pay to Lender, or order, any and all amounts, including, without
limitation, principal and interest, taxes, insurance premiums,
impounds, reimbursements, late charges, default interest, damages,
indemnity obligations and all other amounts, costs, fees, expenses
and charges of any kind or type whatsoever, which may or at any
time be due to Lender pursuant to the loans from Lender to Supertel
Limited Partnership, a Virginia limited partnership (the
“Borrower”) described on Exhibit A hereto (the
“Loans”) and all other amounts due to the Lender under
the agreements set out on Exhibit A hereto relating to the Loans
(collectively, the “Documents”). The terms “Loan
Agreement,” “Note,” “Mortgage” and
“Premises” shall have the meanings ascribed thereto on
Exhibit A.
2. The Guarantor also
unconditionally guarantees the truthfulness and accuracy of all
representations, warranties and certifications of Borrower, the
satisfaction of all conditions by Borrower and the full and timely
performance of all obligations to be performed by Borrower, under
or pursuant to the Documents (the matters which are guaranteed
pursuant to Sections 1 and 2 are hereinafter collectively referred
to as the “Obligations”). The obligations of the
Guarantor under this Guaranty are primary, joint and several and
independent of the obligations of any and every other Guarantor or
of Borrower, and a separate action or actions may be brought and
executed against any one or more of the Guarantors, whether or not
such action is brought against Borrower or any other Guarantor and
whether or not Borrower or any other Guarantor be joined in such
action or actions.
3. This is an absolute and
unconditional guaranty of payment and performance and not of
collection and the Guarantor unconditionally (a) waives any
requirement that Lender first make demand upon, or seek to enforce
or exhaust remedies against, Borrower or any other person or entity
or any of the collateral or property of Borrower or such other
person or entity before demanding payment from, or seeking to
enforce this Guaranty against, such Guarantor; (b) waives and
agrees not to assert any and all rights, benefits and defenses
which might otherwise be available under the provisions of Ariz.
Rev. Stat. §§ 12-1641 and §§ 12-1642
et seq ., 44-141, 44-142 or 47-3605, Arizona Rules of Civil
Procedure Rule 17(f), or any other Arizona statutes or rules
(including any statutes or rules amending, supplementing or
supplanting same) which might operate, contrary to
Guarantor’s agreements in this Guaranty, to limit
Guarantor’s liability under, or the enforcement of, this
Guaranty; (c) waives the benefits of any statutory provision
limiting the right of Lender to recover a deficiency judgment, or
to otherwise proceed, against any person or entity obligated for
the payment of the Obligations, after any foreclosure or
trustee’s sale of any collateral securing payment of the
Obligations, including without limitation, the benefits, if any, of
Ariz. Rev. Stat. §§ 33-814; (d) covenants that
this Guaranty will not be discharged, unless otherwise provided
herein, until all of the Obligations are fully satisfied; and
(e) agrees that this Guaranty shall remain in full effect
without regard to, and shall not be affected or impaired by, any
invalidity, irregularity or unenforceability in whole or in part of
any of the Documents, or any limitation of the liability of
Borrower or Guarantor thereunder, or any limitation on the method
or terms of payment thereunder which may now or hereafter be caused
or imposed in any manner whatsoever.
4. This Guaranty is a continuing
guaranty, and the obligations, undertakings and conditions to be
performed or observed by the Guarantor under this Guaranty shall
not be affected or impaired by reason of the happening from time to
time of the following with respect to the Documents, all
without
notice to, or the further consent of, the
Guarantor: (a) the waiver by Lender of the observance or
performance by Borrower or Guarantor of any of the obligations,
undertakings, conditions or other provisions contained in any of
the Documents, except to the extent of such waiver; (b) the
extension, in whole or in part, of the time for payment of any
amount owing or payable under the Documents; (c) the
modification or amendment (whether material or otherwise) of any of
the obligations of Borrower under, or any other provisions of, any
of the Documents, except to the extent of such modification or
amendment; (d) the taking or the omission of any of the
actions referred to in any of the Documents (including, without
limitation, the giving of any consent referred to therein);
(e) any failure, omission, delay or lack on the part of Lender
to enforce, assert or exercise any provision of the Documents,
including any right, power or remedy conferred on Lender in any of
the Documents or any action on the part of Lender granting
indulgence or extension in any form; (f) the assignment to or
assumption by any third party of any or all of the rights or
obligations of Borrower under all or any of the Documents;
(g) the release or discharge of Borrower from the performance
or observance of any obligation, undertaking or condition to be
performed by Borrower under any of the Documents by operation of
law, including any rejection or disaffirmance of any of the
Documents in any bankruptcy or similar proceedings; (h) the
receipt and acceptance by Lender or any other person or entity of
notes, checks or other instruments for the payment of money and
extensions and renewals thereof; (i) any action, inaction or
election of remedies by Lender which results in any impairment or
destruction of any subrogation, indemnity, reimbursement or
contribution rights of Guarantor, or any rights of Guarantor to
proceed against any other person or entity for reimbursement;
(j) any setoff, defense, counterclaim, abatement, recoupment,
reduction, change in law or any other event or circumstance which
might otherwise constitute a legal or equitable discharge or
defense of a guarantor, indemnitor or surety under the laws of the
State of Arizona, the state in which the Premises is located or any
other jurisdiction; and (k) the termination or renewal of any
of the Obligations or any other provision thereof.
5. The Guarantor represents and
warrants to Lender that: (a) neither the execution nor
delivery of this Guaranty nor fulfillment of nor compliance with
the terms and provisions hereof will conflict with, or result in a
breach of the terms or conditions of, or constitute a default
under, any agreement or instrument to which Guarantor is now a
party or by which Guarantor may be bound, or result in the creation
of any lien, charge or encumbrance upon any property or assets of
Guarantor, which conflict, breach, default, lien, charge or
encumbrance would result in a material adverse change in the
financial condition of Guarantor; (b) no further consents,
approvals or authorizations are required for the execution and
delivery of this Guaranty by Guarantor or for Guarantor’s
compliance with the terms and provisions of this Guaranty;
(c) this Guaranty is the legal, valid and binding agreement of
Guarantor and is enforceable against Guarantor in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, liquidation, reorganization and
other laws affecting the rights of creditors generally and subject
to general principles of equity; (d) Guarantor has the full
power, authority, capacity and legal right to execute and deliver
this Guaranty, and, to the extent Guarantor is a corporation,
partnership, limited liability company or other form of entity, the
parties executing this Guaranty on behalf of Guarantor are fully
authorized and directed to execute the same to bind Guarantor;
(e) Guarantor is not a “foreign individual,”
“foreign corporation,” “foreign
partnership,” “foreign limited liability
company,” “foreign trust,” or “foreign
estate,” as those terms are defined in the U.S. Internal
Revenue Code and the regulations promulgated thereunder;
Guarantor’s Social Security Number or Federal Tax
Identification Number is accurately set forth herein next to the
signature of Guarantor; (f) Guarantor has delivered to Lender
either audited financial statements or, if Guarantor does not have
audited financial statements, certified financial statements; such
financial statements and other information relating to Guarantor
heretofore delivered to Lender are true, correct and complete in
all material respects as of the date of this Guaranty; Guarantor
understands that Lender is relying upon such information, and
Guarantor represents that such reliance is reasonable; and the
financial statements of Guarantor delivered by Borrower to Lender
pursuant to the Loan Agreement have been prepared in accordance
with generally accepted accounting principles (except as otherwise
noted) consistently applied and accurately reflect, as of the date
thereof, the financial condition of Guarantor; (f) during the
term of this Guaranty, Guarantor will not transfer or dispose of
any material part of its assets except in the ordinary course of
business for full and fair consideration and reasonably equivalent
value; furthermore, Guarantor will furnish Lender annually, within
ninety (90) days after the close of each calendar year,
a
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financial statement consisting of a balance
sheet and such other financial information as Lender may reasonably
request; and (g) the Documents are conclusively presumed to
have been signed in reliance on this Guaranty and the assumption by
the Guarantor of its obligations under this Guaranty results in
direct financial benefit to Guarantor.
6. Guarantor shall provide quarterly
Debt Service Coverage covenant calculations to Lender commencing
with the quarter ending March 31, 2009. The required Debt
Service Coverage ratio for Supertel Hospitality, Inc. as of the end
of each quarter period in fiscal year 2009 will be 1.40:1, the
required Debt Service Coverage level for each quarter period in
fiscal year 2010 will be 1.50:1, and for each quarter period
thereafter the required Debt Service Coverage level will be 1.50:1.
“Debt Service Coverage” shall mean adjusted EBITDA
divided by the sum of interest payments and payments of principal
on amortizable debt during the fiscal quarter testing period. All
calculations of Debt Service Coverage for quarterly testing shall
be based upon a prior rolling twelve-month period and, in the case
of EBITDA and interest payments amounts, shall be based upon
Guarantor’s Forms 10-Q and 10-K for the applicable period
and, in the case of principal payment amounts, such amounts shall
be set out in detail by an officer of the Guarantor. The quarterly
calculations of the Debt Service Coverage level submitted to Lender
shall be accompanied by a certificate executed by an authorized
officer of Guarantor stating that the calculations of Debt Service
Coverage were prepared in accordance with the provisions of the
Debt Service Coverage covenant set out in this Guaranty (each, a
“Debt Service Coverage Compliance Certificate”).
Guarantor shall submit the Debt Service Coverage covenant
calculations to Lender, together with the Debt Service Coverage
Compliance Certificate, no later than 45 days after the end of each
fiscal quarter of Guarantor ending March 31, June 30
and September 30, and no later than 120 days after each fiscal
year end of Guarantor.
This Guaranty shall be deemed an
“Other Agreement” under each Loan Agreement. Any breach
of the required Debt Service Coverage level by Guarantor hereunder
shall be an event of default hereunder and an Event of Default
under each of the Loan Agreements.
7. This Guaranty shall commence upon
execution and delivery of any of the Documents and shall continue
in full force and effect until the earlier of Termination and when
all of the Obligations are duly, finally and permanently paid,
performed and discharged and are not subject to any right of
reborrowing or extension by Borrower, and Lender gives Guarantor
written notice of the full and final satisfaction of the
Obligations. The Obligations shall not be considered fully paid,
performed and discharged unless and until all payments by Borrower
to Lender are no longer subject to any right on the part of any
person whomsoever, including but not limited to Borrower, Borrower
as a debtor-in-possession or any trustee in bankruptcy, to disgorge
such payments or seek to recoup the amount of such payments or any
part thereof. This Guaranty shall remain in full force and effect
and continue to be effective in the event that (i) any
petition is filed by or against Borrower or Guarantor for
liquidation or reorganization, including, without limitation, under
Title 11 of the United States Code, 11 U.S.C. Sec. 101 et
seq. (the “Code”), (ii) Borrower or Guarantor
becomes insolvent or makes an assignment for the benefit of
creditors or (iii) a receiver or trustee is appointed for all
or any significant part of Borrower’s or Guarantor’s
assets. This Guaranty shall continue to be effective or be
reinstated, as applicable, if at any time payment and performance
of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored
or returned by Lender, whether as a “voidable
preference”, “fraudulent conveyance” or
otherwise, all as though such payment or performance had not been
made. In the event that any payment of the Obligations, or any part
thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such
amount paid to Lender and not so rescinded, reduced, restored or
returned.
8. Guarantor shall neither have any
right of subrogation, indemnity or reimbursement nor hold any other
claim against Borrower, and does hereby release Borrower from any
and all claims by such Guarantor now or hereafter arising against
Borrower. Furthermore, the Guarantor hereby unconditionally and
irrevocably waives (a) any right to participate in any
security now or hereafter held by Lender or in any claim or remedy
of Lender or any other person against Borrower with respect to the
Obligations, (b) any statute of limitations affecting
Guarantor’s liability hereunder, (c) all principles
and
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provisions of law which conflict with the terms
of this Guaranty and (d) diligence, presentment, protest,
demand for performance, notice of nonperformance, notice of intent
to accelerate, notice of acceleration, notice of protest, notice of
dishonor, notice of execution of any Documents, notice of
extension, renewal, alteration or amendment, notice of acceptance
of this Guaranty, notice of defaults under any of the Documents and
all other notices whatsoever.
9. Notwithstanding the preceding
Section 8, in the event that Guarantor shall have any claims
against Borrower, any indebtedness of Borrower now or hereafter
held by any or all Guarantor is hereby subordinated to the
indebtedness of Borrower to Lender. Any such indebtedness of
Borrower to Guarantor, if Lender so requests, shall be collected,
enforced and received by Guarantor as trustee for Lender and be
paid over to Lender on account of the Obligations, but without
reducing or affecting in any manner the liability of Guarantor
under the other provisions of this Guaranty.
10. It is not necessary for Lender
to inquire into the powers of Borrower or its officers, directors,
partners or agents acting or purporting to act on its behalf, and
Guarantor shall be liable for the Obligations in accordance with
their terms notwithstanding any lack of authorization or defect in
execution or delivery by Borrower.
11. In addition to the amounts
guaranteed under this Guaranty, Guarantor agrees to pay
(i) all of Lender’s reasonable attorneys’ fees and
other costs and expenses which may be incurred by Lender in the
enforcement of this Guaranty and (ii) interest (including
postpetition interest to the extent a petition is filed by or
against Borrower under the Code) at the Default Rate (as defined in
the Note) on any Obligations not paid when due. Guarantor hereby
agrees to indemnify and hold harmless Lender for, from and against
any loss, cause of action, claim, cost, expense or fee, including
but not limited to reasonable attorney’s fees and court
costs, suffered or occasioned by (1) the failure of Borrower
to satisfy its obligations under the Documents, or (2) any
disclosures of information, financial or otherwise, (x) made
by Lender or Lender’s employees, officers, agents and
designees to any third party as contemplated by the Loan Agreement,
or (y) obtained from any credit reporting agency with respect
to Guarantor, Borrower, any other guarantor of the Loan, any
Affiliate (as defined in the Loan Agreement) of Borrower, any of
the other Borrower Parties (as defined in the Loan Agreement) or
any operator or lessee of the Premises. The agreement to indemnify
Lender contained in this paragraph shall be enforceable
notwithstanding the invalidity or unenforceability of the Documents
or any of them or the invalidity or unenforceability of any other
paragraph contained in this Guaranty. All moneys available to
Lender for application in payment or reduction of the liabilities
of Borrower under the Documents may be applied by Lender to the
payment or reduction of such liabilities of Borrower, in such
manner, in such amounts and at such time or times as Lender may
elect.
12. All notices, demands, requests,
consents, approvals or other instruments required or permitted to
be given pursuant to this Guaranty shall be in writing and given by
(i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered
mail, return receipt requested, and shall be deemed to have been
delivered upon (a) receipt, if hand delivered,
(b) transmission, if delivered by facsimile, (c) the next
Business Day (as defined in the Loan Agreement), if delivered by
express overnight delivery service, or (d) the third Business
Day following the day of deposit of such notice with the
United States Postal Service, if sent by certified or
registered mail, return receipt requested. Notices shall be
provided to the Guarantor at the address (or facsimile number, as
applicable) specified on the signature page of this Guaranty and to
Lender at the following address (or facsimile number, as
applicable): 8377 East Hartford Drive, Suite 200, Scottsdale, AZ
85255, Attention: Collateral Management, Telephone:
(480) 585-4500, Facsimile: (480) 585-2225, or to such
other address or such other person as either Guarantor or Lender
may from time to time hereafter specify to the other party in a
notice delivered in the manner provided above.
13. This Guaranty is delivered in
the State of Arizona, and it is the intent of Guarantor and Lender
that this Guaranty shall be deemed to be a contract made under and
governed by the internal laws of the State of Arizona, without
regard to its principles of conflicts of law. For purposes of any
action
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or proceeding involving this Guaranty, Guarantor
submits to the jurisdiction of all federal and state courts located
in the State of Arizona and consent that they may be served with
any process or paper by registered mail or by personal service
within or without the State of Arizona in accordance with
applicable law. Furthermore, Guarantor waives and agrees not to
assert in any such action, suit or proceeding that they are not
personally subject to the jurisdiction of such courts, that the
action, suit or proceeding is brought in an inconvenient forum or
that venue of the action, suit or proceeding is improper. Nothing
contained in this section shall limit or restrict the right of
Lender to commence any proceeding in the federal or state courts
located in the state in which the Premises is located or where
Guarantor resides and maintains its chief executive office, as
applicable, to the extent Lender deems such proceeding necessary or
advisable to exercise remedies available under the
Documents.
14. (a) The Guarantor intends that
the business relationship created between Borrower and Lender by
the Loan Agreement, the Note, the Mortgage and the other Documents
is solely that of creditor and Borrower and has been entered into
by such parties in reliance upon the economic and legal bargains
contained in the Documents. Furthermore, Guarantor shall support
the intent of Guarantor, Borrower and Lender that the Loan, the
Note and the Mortgage do not create a joint venture, partnership,
trust, trust agreement or the like, if, and to the extent that, any
challenge occurs, and Guarantor shall not assert that the Loan, the
Note or the Mortgage creates a joint venture, partnership, trust,
trust agreement or the like. Guarantor acknowledges that Lender did
not prepare or assist in the preparation of any of the projected
financial figures used by Borrower in analyzing the economic
viability and feasibility of the transactions contemplated by the
Loan Agreement. Furthermore, Guarantor acknowledges that Borrower
has not relied upon, nor may it hereafter rely upon, the analysis
undertaken by Lender in determining the amount of the Loan and that
such analysis will not be made available to Borrower.
(b) Guarantor shall provide to
Lender and its representatives any and all information they may
reasonably request from time to time regarding any depository, loan
or other credit account of Guarantor and the affairs and financial
condition of Guarantor. Guarantor also authorizes Lender and its
representatives to obtain business credit reports and asset reports
with respect to Guarantor and to answer questions about its credit
experience with Guarantor. All of the information which Lender or
its representatives obtain from time to time in accordance with the
foregoing authorization, together with any and all other
information which Lender or its representatives now possess or in
the future may acquire with respect to Guarantor is referred to
collectively as the “ Guarantor Information
.” Guarantor authorizes Lender to disclose the Guarantor
Information to Lender’s Affiliates (as defined in the Loan
Agreement) and professional advisors and consultants; and to any
proposed transferee, purchaser, assignee, servicer, participant,
investor, or ratings agency, with respect to any proposed Lender
Transfer (as hereinafter defined). Guarantor will indemnify,
defend, and hold Lender and each of the other Indemnified Parties
(as defined in the Loan Agreement) harmless for, from and against,
any and all Losses (as hereinafter defined), other than Excluded
Losses (as hereinafter defined), incurred by Lender in connection
with any such disclosures. For the purposes of this section, the
following terms shall be defined as indicated:
“ Excluded
Losses ” means Losses suffered by an Indemnified
Party to the extent directly arising out of the gross negligence or
willful misconduct of such Indemnified Party; provided,
however , that the term “gross
negligence” shall not include gross negligence imputed as a
matter of law to any of the Indemnified Parties solely by reason of
Lender’s interest in the Collateral or Lender’s failure
to act in respect of matters which are or were the obligation of
Borrower.
“Lender
Transfer” means
all assignments, sales, or transfers in whole or in part of
Lender’s interests in the Note, the Loan, or any of its
rights under any of the Loan Documents, including servicing rights,
whether as part of a securitization transaction or by
participation, assignment, sale or other transfer.
“ Losses ”
means all claims, suits, liabilities (including strict
liabilities), actions, proceedings, obligations, debts, damages,
losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, judgments, awards, amounts paid in settlement, and
damages of whatever kind or nature (including reasonable
attorneys’ fees, court costs and other costs of
defense).
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15. All of Lender’s rights and
remedies under the Documents and this Guaranty are intended to be
distinct, separate and cumulative and no such right and remedy is
intended to be in exclusion of or a waiver of any of the others. If
under applicable law, Lender proceeds to realize benefits under any
Document granting Lender a lien upon any collateral pledged under
such Document, either by judicial foreclosure or by non-judicial
sale or enforcement, Lender may, at its sole option, determine
which of such remedies or rights it may pursue without affecting
any of such rights and remedies under this Guaranty. If, in the
exercise of any of its rights and remedies, Lender shall forfeit
any of its rights or remedies, including its right to enter a
deficiency judgment against Borrower or any pledgor, whether
because of any applicable laws pertaining to “election of
remedies” or the like, Guarantor hereby consents to such
action by Lender and waive any claim upon such action, even if such
action by Lender shall result in a full or partial loss of any
rights of subrogation which Guarantor might otherwise have had but
for such action by Lender. Any election of remedies which results
in the denial or impairment of the right of Lender to seek a
deficiency judgment against Borrower or any pledgor shall not
impair the Guarantor’s obligation to pay the full amount of
the Obligations. In the event Lender shall bid at any foreclosure
or trustee’s sale or at any private or public sale permitted
by law or under the Document, Lender may bid all or less than the
amount of the Obligations and the amount of such bid need not be
paid by Lender but shall be credited against the Obligations. The
amount of the successful bid at any such sale shall be conclusively
deemed to be the fair market value of the collateral and the
difference between such bid amount and the remaining balance of the
Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Guaranty, notwithstanding that
any present or future law or court decision or rul
