GUARANTEE AGREEMENT
EXECUTION VERSION
Dated as of July 21, 2022
among
VERIMARK RESORT PROPERTIES LLC, a Delaware limited liability company,
VHG MANAGEMENT SERVICES INC., a Delaware corporation,
VERIMARK CONVENTION HOLDINGS LLC, a Delaware limited liability company,
PALMETTO BEACHFRONT HOTELS LLC, a Florida limited liability company,
and
CASCADIA HOSPITALITY CORP., a Delaware corporation,
as Guarantors,
in favor of
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent and Collateral Agent for the Secured Parties
In connection with that certain Credit Agreement dated as of July 21, 2022 providing for a $700,000,000 Senior Secured Term Loan B Facility
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (as amended, restated, supplemented, or otherwise modified from time to time, this "Guarantee" or this "Guarantee Agreement") is made and entered into as of July 21, 2022, by and among:
(1) VERIMARK RESORT PROPERTIES LLC, a Delaware limited liability company ("VRP");
(2) VHG MANAGEMENT SERVICES INC., a Delaware corporation ("VHG Mgmt");
(3) VERIMARK CONVENTION HOLDINGS LLC, a Delaware limited liability company ("VCH");
(4) PALMETTO BEACHFRONT HOTELS LLC, a Florida limited liability company ("Palmetto"); and
(5) CASCADIA HOSPITALITY CORP., a Delaware corporation ("Cascadia" and, together with VRP, VHG Mgmt, VCH, and Palmetto, each a "Guarantor" and collectively, the "Guarantors"),
in favor of CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as Administrative Agent and Collateral Agent for the Secured Parties (as defined below) (in such capacities, the "Administrative Agent").
Reference is made to that certain Credit Agreement dated as of July 21, 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among Verimark Hospitality Group Inc., a Delaware corporation (the "Borrower" or "VHG"), the Guarantors party thereto, the Lenders from time to time party thereto, and Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent, providing for, among other things, a $700,000,000 Senior Secured Term Loan B Facility (the "Term Loan B Facility").
RECITALS
WHEREAS:
A. The Borrower, VHG, a Delaware corporation with its principal office at 8200 West Palmetto Park Road, Suite 1500, Boca Raton, Florida 33433, whose common stock is listed on the New York Stock Exchange under the ticker symbol "VMRK," has entered into the Credit Agreement with the Lenders and the Administrative Agent, pursuant to which the Lenders have agreed to extend credit to the Borrower in the form of a $700,000,000 Term Loan B facility, subject to the terms and conditions set forth therein;
B. Each Guarantor is a direct or indirect Subsidiary of the Borrower and, as such, will derive substantial direct and indirect economic benefit from the extensions of credit to the Borrower under the Credit Agreement and the availability of the Term Loan B Facility and the proceeds thereof;
C. Each Guarantor serves a distinct and material role within the Borrower's consolidated enterprise:
(i) Verimark Resort Properties LLC is the primary property-owning subsidiary of the Borrower and holds fee simple or leasehold interests in forty-two (42) of the seventy-four (74) hotel properties in the VHG portfolio, with an aggregate appraised value of approximately $2.18 billion as of June 30, 2022, as reflected in the appraisals delivered to the Administrative Agent on or prior to the date hereof;
(ii) VHG Management Services Inc. is the hotel management subsidiary of the Borrower and provides management, operational, and administrative services across substantially all of the VHG portfolio properties pursuant to intercompany management agreements;
(iii) Verimark Convention Holdings LLC is the convention center and event space subsidiary of the Borrower and holds and operates the convention center and large-format event space assets associated with the VHG portfolio;
(iv) Palmetto Beachfront Hotels LLC owns and operates a portfolio of twelve (12) hotel properties located along the Florida coast, representing a significant component of the Borrower's southeastern United States hospitality operations; and
(v) Cascadia Hospitality Corp. owns and operates a portfolio of eight (8) hotel properties located in the Pacific Northwest region of the United States, contributing meaningfully to the geographic diversification of the Borrower's consolidated hotel portfolio;
D. It is a condition precedent to the closing of the Credit Agreement and the making of the Term Loans thereunder that the Guarantors execute and deliver this Guarantee Agreement in favor of the Administrative Agent for the benefit of the Secured Parties, and each Guarantor has agreed to guarantee the Guaranteed Obligations (as defined below) on the terms and subject to the conditions set forth herein;
E. Reference is hereby made to that certain Amended and Restated Intercreditor Agreement dated as of July 21, 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Intercreditor Agreement"), among the Administrative Agent (in its capacity as Term Loan Agent), Crescent Harbor Bank, National Association (in its capacity as Revolving Credit Agent), the Borrower, and the Guarantors, governing the pari passu treatment of and relative priorities among the $700,000,000 Term Loan B Facility and the $400,000,000 revolving credit facility, with Crescent Harbor Bank, National Association serving as agent under both such facilities; and
F. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement, and the rules of construction set forth in Section 1.02 of the Credit Agreement shall apply to this Guarantee Agreement mutatis mutandis.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby agrees as follows:
Right-click to update Table of Contents
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Defined Terms
As used in this Guarantee Agreement, the following terms shall have the meanings set forth below:
"Administrative Agent" means Crescent Harbor Bank, National Association, a national banking association, in its capacity as Administrative Agent and Collateral Agent under the Credit Agreement, together with its successors and assigns in such capacities.
"Borrower" means Verimark Hospitality Group Inc., a Delaware corporation, together with its successors and permitted assigns.
"Credit Agreement" means that certain Credit Agreement dated as of July 21, 2022, among the Borrower, the Guarantors party thereto, the Lenders from time to time party thereto, and Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent, providing for a $700,000,000 Senior Secured Term Loan B Facility bearing interest at Adjusted Term SOFR plus 375 basis points per annum, with a SOFR floor of 0.50% per annum and a maturity date of July 21, 2029, as such Credit Agreement may be amended, restated, supplemented, refinanced, replaced, or otherwise modified from time to time in accordance with its terms.
"Guaranteed Obligations" means all Obligations of the Borrower and each other Loan Party under the Credit Agreement and the other Loan Documents, whether now existing or hereafter arising, including, without limitation:
(a) the principal amount of all Term Loans outstanding under the Credit Agreement (the initial aggregate principal amount being $700,000,000);
(b) all interest accrued and accruing thereon (at the applicable rate of Adjusted Term SOFR plus 375 basis points per annum, or, upon the occurrence and during the continuance of an Event of Default, at the default rate equal to the applicable rate plus an additional 200 basis points per annum);
(c) all fees payable under or in connection with the Credit Agreement and the other Loan Documents, including the annual administrative agent fee of $150,000 payable to the Administrative Agent;
(d) all amounts payable in respect of indemnification obligations arising under the Credit Agreement and the other Loan Documents;
(e) all costs, expenses, and other amounts payable by the Borrower or any Guarantor under the Credit Agreement and the other Loan Documents (including reasonable and documented fees and expenses of counsel to the Administrative Agent and the Lenders); and
(f) all other amounts of whatever nature now or hereafter payable by the Borrower or any Guarantor to the Administrative Agent, the Collateral Agent, or any Lender under the Credit Agreement and the other Loan Documents.
"Guarantor" means each of VRP, VHG Mgmt, VCH, Palmetto, and Cascadia, together with any additional entity that becomes a Guarantor hereunder pursuant to a Joinder Agreement delivered in accordance with Section 4.05 of this Guarantee Agreement, and "Guarantors" means all of the foregoing, collectively.
"Intercompany Obligations" has the meaning set forth in Section 6.01 of this Guarantee Agreement.
"Intercreditor Agreement" means the Amended and Restated Intercreditor Agreement dated as of July 21, 2022, among the Administrative Agent (as Term Loan Agent), Crescent Harbor Bank, National Association (as Revolving Credit Agent), the Borrower, and the Guarantors, as may be amended, restated, supplemented, or otherwise modified from time to time.
"Joinder Agreement" means a joinder agreement in substantially the form attached hereto as Exhibit A, or such other form as shall be reasonably satisfactory to the Administrative Agent.
"Loan Documents" means the Credit Agreement, this Guarantee Agreement, the Pledge and Security Agreement dated as of July 21, 2022 (the "Pledge and Security Agreement"), the Intercreditor Agreement, the Mortgages, the Promissory Notes, and all other instruments, documents, certificates, and agreements executed and delivered in connection with any of the foregoing, in each case as amended, restated, supplemented, or otherwise modified from time to time.
"Mortgages" means, collectively, the deeds of trust, mortgages, deeds to secure debt, and similar instruments encumbering the real property assets of the Guarantors (including the forty-two (42) hotel properties owned by VRP) in favor of the Administrative Agent, as such instruments may be amended, restated, supplemented, or otherwise modified from time to time.
"Secured Parties" means, collectively, the Administrative Agent, the Collateral Agent, and each Lender party to the Credit Agreement from time to time, including the following initial Lenders and their respective initial Term Loan commitments:
together with each of their respective successors and assigns and any assignee or participant that becomes a party to the Credit Agreement from time to time in accordance with the terms thereof.
All capitalized terms used in this Guarantee Agreement and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement, including, without limitation, the terms "Adjusted EBITDA," "Adjusted Term SOFR," "Total Net Leverage Ratio," "Permitted Indebtedness," "Incremental Term Loans," "Material Adverse Effect," "Event of Default," "Required Lenders," "Collateral," "Lien," "Obligations," "Person," "Solvent," and "Subsidiary."
Section 1.02 — Rules of Interpretation
Unless the context otherwise requires:
(a) All references herein to the Credit Agreement, this Guarantee Agreement, and any other Loan Document shall be deemed to include all amendments, restatements, amendments and restatements, supplements, extensions, renewals, replacements, refinancings, and other modifications thereto.
(b) The article and section headings contained in this Guarantee Agreement are inserted for convenience of reference only and shall not affect in any manner the meaning or interpretation of any provision of this Guarantee Agreement.
(c) The words "herein," "hereof," "hereunder," and words of similar import, when used in this Guarantee Agreement, shall refer to this Guarantee Agreement as a whole and not to any particular provision hereof.
(d) The word "including" (and correlative words such as "include" and "includes") means "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(e) References to any statute, law, or regulation shall be deemed to refer to such statute, law, or regulation as amended, modified, supplemented, or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under such statutes), and references to any section of any statute, law, or regulation shall be deemed to include any successor to such section.
(f) References to "dollars" or "$" shall mean the lawful currency of the United States of America.
(g) Terms defined in the Uniform Commercial Code as in effect in the State of New York (the "UCC") that are not otherwise defined herein or in the Credit Agreement shall have the meanings set forth in such UCC.
Section 1.03 — Accounting Terms
All accounting terms not specifically defined herein or in the Credit Agreement shall be construed in accordance with generally accepted accounting principles in the United States of America ("GAAP") as in effect from time to time, applied on a basis consistent with the application thereof by the Borrower's independent registered public accounting firm, Clearmont & Wharton LLP, in the audit of the Borrower's most recently delivered consolidated financial statements; provided, however, that all references to GAAP shall be subject to the "frozen GAAP" and other accounting-related provisions set forth in the Credit Agreement to the extent applicable.
ARTICLE II — THE GUARANTEE
Section 2.01 — Guarantee of Payment and Performance
Each Guarantor hereby absolutely, unconditionally, and irrevocably guarantees to the Administrative Agent, for the ratable benefit of each Secured Party, the full and punctual payment and performance when due (whether at the stated maturity date of July 21, 2029, by acceleration pursuant to the terms of the Credit Agreement, by mandatory prepayment, by optional prepayment, or otherwise) of each and every one of the Guaranteed Obligations. This Guarantee constitutes a guarantee of payment and performance and not merely of collection, and each Guarantor specifically agrees that it shall not be necessary or required, as a condition to the enforcement of this Guarantee, that the Administrative Agent or any Secured Party exercise any right, assert any claim, or demand or enforce any remedy whatsoever against the Borrower or any other Person before or as a condition to enforcing the obligations of any Guarantor hereunder.
The liability of each Guarantor hereunder is joint and several with the liability of each other Guarantor and with the liability of the Borrower for the entire amount of the Guaranteed Obligations. Without limiting the generality of the foregoing, the Guaranteed Obligations guaranteed hereunder include, without limitation:
(a) all quarterly amortization payments in respect of the Term Loans in the amount of $1,750,000 per quarter (representing 1.00% per annum of the initial aggregate principal amount of $700,000,000, divided by four), payable on the last Business Day of each March, June, September, and December, commencing on September 30, 2022;
(b) the balloon payment of the remaining outstanding principal balance of the Term Loans (estimated at $651,000,000, subject to the effect of any voluntary or mandatory prepayments), due and payable on the Maturity Date of July 21, 2029;
(c) all interest on the Term Loans, whether at the applicable non-default rate (Adjusted Term SOFR plus 375 basis points per annum) or, upon the occurrence and during the continuance of an Event of Default, at the default rate (the applicable rate plus an additional 200 basis points per annum), including post-petition interest to the extent allowable under applicable law;
(d) all fees payable under or in connection with the Credit Agreement and the other Loan Documents;
(e) all costs, expenses, and indemnification obligations arising under the Loan Documents; and
(f) any repricing protection premium that may become payable, being 1.00% of the principal amount of Term Loans voluntarily prepaid or repriced within six (6) months of the Closing Date (i.e., through and including January 21, 2023), to the extent such premium is triggered and applicable under the terms of the Credit Agreement.
Section 2.02 — Unconditional Nature of Guarantee
The obligations of each Guarantor under this Guarantee Agreement are unconditional, irrevocable, and absolute, and shall not be released, discharged, diminished, or otherwise affected by, and each Guarantor hereby consents to and agrees to be bound notwithstanding, any of the following (whether or not such Guarantor shall have notice or knowledge thereof):
(a) any lack of validity or enforceability of the Credit Agreement or any other Loan Document, or any provision thereof, for any reason whatsoever;
(b) any amendment, modification, supplement, extension, renewal, acceleration, or other change of or to any of the terms of the Credit Agreement or any other Loan Document, including, without limitation, any change to the applicable interest rate margin, any modification of the most-favored-nation ("MFN") provisions set forth in the Credit Agreement, any change to the benchmark rate or benchmark replacement, or any other change to the financial or operational covenants;
(c) any change in the time, manner, or place of payment or performance, or in any other term, of any of the Guaranteed Obligations, or any rescission, waiver, compromise, consolidation, or other modification of any of the terms or provisions of any of the Loan Documents;
(d) the incurrence by the Borrower of any Incremental Term Loans permitted under the Credit Agreement and any associated MFN adjustment, including, without limitation, any adjustments resulting from the application of the 50 basis point MFN threshold set forth in the Credit Agreement during the eighteen (18) month sunset period commencing on the Closing Date and expiring on January 21, 2024;
(e) any release, exchange, impairment, amendment, subordination, deterioration, waste, failure to protect, failure to insure, or non-perfection of any Collateral securing the Guaranteed Obligations, including, without limitation, the real property collateral constituting the forty-two (42) mortgaged hotel properties located across twelve (12) states, the equity interests pledged under the Pledge and Security Agreement, and any personal property security interests granted by the Loan Parties;
(f) any change in the corporate or organizational structure, name, ownership, or identity of the Borrower or any Guarantor, whether by merger, consolidation, reorganization, conversion, dissolution, or otherwise, including any change that results in the Borrower or any Guarantor ceasing to exist as a separate legal entity;
(g) any insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up, or similar proceeding involving or affecting the Borrower or any Guarantor;
(h) the existence of any claim, set-off, defense, counterclaim, or other right that any Guarantor may at any time have against the Borrower, the Administrative Agent, any Lender, or any other Person, whether in connection with the transactions contemplated by this Guarantee Agreement, the Credit Agreement, or any other Loan Document, or any unrelated transaction;
(i) any assignment or transfer by the Borrower of any of its rights or obligations under the Credit Agreement or any other Loan Document, or any assignment or transfer by any Lender of its rights or obligations thereunder; and
(j) any other circumstance, occurrence, action, or inaction that might otherwise constitute a legal or equitable discharge, release, or defense of a surety or guarantor, or that might otherwise limit the recourse of the Administrative Agent or any Secured Party against any Guarantor, it being the intent of each Guarantor that its obligations hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor hereby acknowledges and agrees that the foregoing enumeration of circumstances shall not be construed to limit the generality of the unconditional and absolute nature of each Guarantor's obligations hereunder.
Section 2.03 — Continuing Guarantee
This Guarantee is a continuing guarantee and shall remain in full force and effect until the first date on which (i) all Guaranteed Obligations have been indefeasibly paid in full in cash, (ii) all commitments of the Lenders under the Credit Agreement have been permanently terminated, and (iii) no Letter of Credit or other contingent obligation of any Secured Party remains outstanding under the Loan Documents (such date, the "Termination Date"). The stated maturity of the Term Loan B Facility is July 21, 2029, and, accordingly, this Guarantee shall remain effective for at least the period commencing on the date hereof and continuing through and including such date, and thereafter until the Termination Date. This Guarantee shall not be affected by any intermediate or temporary payment or settlement of the whole or any part of the Guaranteed Obligations.
Section 2.04 — Reinstatement
If at any time any payment or any part thereof made in respect of any of the Guaranteed Obligations is rescinded or must otherwise be returned, refunded, or restored by the Administrative Agent or any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, conservator, intervenor, or trustee, or for any other reason, this Guarantee and the obligations of each Guarantor hereunder shall be reinstated and restored to the same extent as though the payment so rescinded, returned, refunded, or restored had not been made, and each Guarantor shall be liable for the full amount thereof as if such payment had never been made. Each Guarantor further agrees that, in the event of any such rescission, return, refund, or restoration, this Guarantee shall be effective and enforceable as if it had never been released or discharged, and each Guarantor's obligations hereunder shall not be affected by any such rescission, return, refund, or restoration. The provisions of this Section 2.04 shall survive the termination of this Guarantee Agreement and any satisfaction and discharge of the Borrower by virtue of any payment, court order, or any applicable law.
Section 2.05 — Demand and Payment
Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement (as defined and described in Article VIII of the Credit Agreement), the Administrative Agent may, acting at the direction of the Required Lenders and in accordance with the terms of the Credit Agreement, make demand upon any one or more of the Guarantors for payment of any or all of the Guaranteed Obligations then due and owing. Such demand may be made against any one or more Guarantors, jointly or severally, in any order and without regard to whether any demand has been made upon the Borrower or any other Guarantor.
Payment by any Guarantor in respect of any demand made pursuant to this Section 2.05 shall be made promptly and in immediately available funds in the lawful currency of the United States of America, by wire transfer to the account of the Administrative Agent at such bank or financial institution and at such account number as shall be specified in the Administrative Agent Notice Designations maintained pursuant to the Credit Agreement, or as otherwise directed by the Administrative Agent in writing.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS
Each Guarantor hereby makes the following representations and warranties to the Administrative Agent and each Secured Party as of the date hereof and as of each date on which such representations and warranties are required to be restated or reaffirmed under the Credit Agreement:
Section 3.01 — Organization and Good Standing
Each Guarantor is duly organized or formed, validly existing, and in good standing under the laws of its respective jurisdiction of organization or formation, as set forth below:
Each Guarantor is duly qualified and authorized to do business and is in good standing in each jurisdiction where the character of its properties or the nature of its business makes such qualification necessary, except where the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.02 — Power and Authority
Each Guarantor has full corporate, limited liability company, or other organizational power and authority to execute, deliver, and perform this Guarantee Agreement and each of the other Loan Documents to which it is a party, and to carry out the transactions contemplated hereby and thereby. The execution, delivery, and performance of this Guarantee Agreement and each other Loan Document to which such Guarantor is a party have been duly authorized by all necessary corporate, limited liability company, or other organizational action on the part of such Guarantor, including all necessary approvals of its board of directors, board of managers, members, shareholders, or other governing persons, and no further authorization, consent, or approval of any type is required in connection therewith.
Section 3.03 — Enforceability
This Guarantee Agreement has been duly executed and delivered by each Guarantor and constitutes the legal, valid, and binding obligation of each Guarantor, enforceable against each Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws of general applicability affecting creditors' rights and to general equitable principles (whether enforcement is sought by proceedings in equity or at law).
Section 3.04 — No Conflict
The execution, delivery, and performance by each Guarantor of this Guarantee Agreement and the other Loan Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not:
(a) violate or conflict with any provision of the certificate of incorporation, certificate of formation, bylaws, limited liability company agreement, operating agreement, or other organizational documents of such Guarantor;
(b) violate or conflict with any law, statute, rule, regulation, order, judgment, injunction, decree, or governmental directive applicable to such Guarantor or any of its properties or assets;
(c) result in a breach of, or constitute a default (or an event that, with the giving of notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, amendment, acceleration, or cancellation under, any material agreement, indenture, instrument, or other arrangement to which such Guarantor is a party or by which any of its properties or assets are bound, including, without limitation, the existing $245,000,000 aggregate principal amount of senior unsecured notes due 2028 issued by the Borrower, for which Atlantic Standard Trust Company acts as indenture trustee (the "Existing Senior Unsecured Notes"); or
(d) result in or require the creation or imposition of any Lien on any of the properties or assets of such Guarantor (other than Liens created under the Loan Documents and Permitted Liens (as defined in the Credit Agreement)).
Section 3.05 — Governmental Approvals
No authorization, consent, approval, license, exemption of, or filing or registration with, any governmental authority or any other Person is required for the due execution, delivery, and performance by any Guarantor of this Guarantee Agreement or any other Loan Document to which it is a party, or for the validity or enforceability hereof or thereof, except (a) filings that have already been made on or prior to the date hereof, including Uniform Commercial Code financing statements filed with the Delaware Secretary of State and the Florida Secured Transaction Registry, and (b) such authorizations, consents, approvals, licenses, exemptions, filings, and registrations that the failure to obtain or make could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.06 — Litigation
There is no action, suit, proceeding, claim, investigation, or arbitration pending or, to the knowledge of any Guarantor, threatened in writing against or affecting any Guarantor before any court, governmental authority, arbitrator, or other tribunal that (a) could reasonably be expected to have a Material Adverse Effect, or (b) purports to affect the legality, validity, or enforceability of this Guarantee Agreement, any other Loan Document, or any of the transactions contemplated hereby or thereby.
Section 3.07 — Solvency
After giving effect to the transactions contemplated by the Credit Agreement and the other Loan Documents (including, without limitation, the borrowing of $700,000,000 under the Term Loan B Facility, the payoff in full of the approximately $627,916,667 in aggregate outstanding indebtedness owed to Greystone Federal Credit Corp. from the proceeds thereof, and the payment of all fees, costs, and expenses incurred in connection with the foregoing), each Guarantor, individually and together with its Subsidiaries on a consolidated basis, is Solvent (as such term is defined in the Credit Agreement). This representation is made in reliance upon, and is consistent with, the Solvency Certificate delivered by Renata Haines, Chief Financial Officer of the Borrower, dated as of July 21, 2022, and delivered to the Administrative Agent on or prior to the date hereof in connection with the closing of the Credit Agreement.
Section 3.08 — Benefit
Each Guarantor hereby acknowledges and agrees that it will derive substantial direct and indirect benefit from the extensions of credit to the Borrower under the Credit Agreement and from the availability of the Term Loan B Facility. Each Guarantor further acknowledges and agrees that this Guarantee is given in consideration of such direct and indirect benefit and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Guarantor. Each Guarantor has independently and without reliance upon the Administrative Agent or any Secured Party, and based on such information as each Guarantor has deemed appropriate, made its own analysis and decision to enter into this Guarantee Agreement.
ARTICLE IV — COVENANTS OF THE GUARANTORS
Each Guarantor hereby covenants and agrees with the Administrative Agent and the Secured Parties as follows:
Section 4.01 — Compliance with Credit Agreement
Each Guarantor shall observe and perform, and shall cause each of its Subsidiaries to observe and perform, all of the covenants, obligations, conditions, and restrictions applicable to it under the Credit Agreement and the other Loan Documents, including, without limitation:
(a) the financial covenant set forth in the Credit Agreement requiring the Borrower and its Restricted Subsidiaries (including the Guarantors) to maintain, on a consolidated basis, a springing maximum Total Net Leverage Ratio of not more than 4.50 to 1.00, tested on a quarterly basis at the end of each fiscal quarter on a trailing four-quarter (last twelve months) basis, at any time when the aggregate revolving credit exposure under the revolving credit facility exceeds 35% of the total revolving commitments thereunder;
(b) all negative covenants set forth in the Credit Agreement, including, without limitation, limitations on indebtedness, liens, fundamental changes, restricted payments, investments, asset dispositions, transactions with affiliates, and restrictive agreements; and
(c) all affirmative covenants set forth in the Credit Agreement, including, without limitation, those relating to the delivery of financial statements and compliance certificates, the maintenance of insurance, the payment of taxes and other obligations, and the preservation of rights.
Section 4.02 — Preservation of Corporate Existence
Each Guarantor shall preserve, renew, and maintain in full force and effect its corporate, limited liability company, or other organizational existence and its rights, franchises, privileges, qualifications, licenses, and permits necessary or desirable in the normal conduct of its business, except where the failure to preserve or maintain the same (other than with respect to organizational existence) could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; provided, however, that the foregoing shall not prohibit any transaction permitted under the Credit Agreement, including mergers, consolidations, or other transactions expressly permitted by the terms thereof.
Section 4.03 — Payment of Taxes and Claims
Each Guarantor shall pay and discharge, and shall cause each of its Subsidiaries to pay and discharge, all taxes, assessments, and governmental charges or levies imposed upon it or upon its income, profits, or property before the same shall become delinquent or in default, as well as all lawful claims for labor, materials, and supplies that, if unpaid, might by law become a Lien upon the property of such Guarantor or any of its Subsidiaries; provided, however, that neither any Guarantor nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge, levy, or claim the amount, applicability, or validity of which is being contested in good faith by appropriate proceedings diligently pursued and for which adequate reserves have been established in accordance with GAAP on the books of such Guarantor or the applicable Subsidiary.
Section 4.04 — Further Assurances
Each Guarantor shall, at its own cost and expense, promptly execute and deliver to the Administrative Agent, or cause to be executed and delivered to the Administrative Agent, such additional documents, instruments, agreements, and certificates as the Administrative Agent may from time to time reasonably request in order to carry out more effectively the purposes of this Guarantee Agreement and the other Loan Documents, including, without limitation:
(a) additional Uniform Commercial Code financing statements and continuation statements, and amendments to existing financing statements, as may be necessary or advisable to maintain the perfection and priority of the security interests created under the Pledge and Security Agreement;
(b) amendments, modifications, or supplements to the Mortgages or additional mortgage instruments, in each case in recordable form, as may be necessary or advisable to maintain the validity, enforceability, perfection, and priority of the Liens on the real property assets of the Guarantors;
(c) intellectual property security agreement filings with the United States Patent and Trademark Office, the United States Copyright Office, or any other applicable governmental authority, as may be necessary or advisable to perfect security interests in intellectual property assets; and
(d) such other documents and instruments as the Administrative Agent may reasonably request to further evidence, confirm, or perfect the rights and remedies of the Administrative Agent and the Secured Parties under this Guarantee Agreement and the other Loan Documents.
Section 4.05 — Additional Guarantors
If, at any time after the date hereof, any Subsidiary of the Borrower is required to become a Guarantor under the Credit Agreement (whether because such Subsidiary becomes a Material Subsidiary, acquires material assets, or otherwise), such Subsidiary shall promptly (and in any event within the time period specified in the Credit Agreement) execute and deliver to the Administrative Agent a Joinder Agreement in substantially the form attached hereto as Exhibit A, or in such other form as shall be reasonably satisfactory to the Administrative Agent, together with such supporting documentation (including organizational documents, resolutions, incumbency certificates, legal opinions, and perfection certificates) as the Administrative Agent may reasonably request. Upon the execution and delivery of a Joinder Agreement by any such Subsidiary and the acceptance thereof by the Administrative Agent, such Subsidiary shall thereupon become a "Guarantor" for all purposes under this Guarantee Agreement and shall be bound by all of the terms, conditions, covenants, representations, warranties, and obligations set forth herein with the same force and effect as if such Subsidiary had been an original signatory hereto.
ARTICLE V — WAIVERS
Section 5.01 — Waiver of Defenses
Each Guarantor hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all defenses based upon or arising out of:
(a) any disability, incapacity, lack of authority, or other defense of the Borrower, any other Guarantor, or any other Person;
(b) the application by the Borrower of the proceeds of the Term Loans for any purpose, whether or not such application is consistent with the stated purposes set forth in the Credit Agreement;
(c) any act or omission by the Administrative Agent, the Collateral Agent, or any Secured Party that changes the scope of the risks to such Guarantor under this Guarantee Agreement;
(d) any statute of limitations affecting the liability of such Guarantor hereunder or the enforcement of this Guarantee Agreement; and
(e) any other defense that might otherwise be available to a guarantor or surety under applicable law.
Section 5.02 — Waiver of Presentment, Demand, Protest
Each Guarantor hereby irrevocably waives, to the fullest extent permitted by applicable law:
(a) presentment and demand for payment of any of the Guaranteed Obligations;
(b) protest and notice of protest, notice of dishonor, and notice of nonpayment or nonperformance with respect to any of the Guaranteed Obligations;
(c) notice of the acceptance of this Guarantee by the Administrative Agent or any Secured Party;
(d) notice of any indebtedness or obligation contracted or incurred by the Borrower with any Secured Party;
(e) notice of the existence or creation of any new Guaranteed Obligations; and
(f) all other notices and demands of any kind and nature to which any Guarantor might otherwise be entitled under applicable law, in each case in connection with this Guarantee Agreement, the Guaranteed Obligations, or the transactions contemplated by the Loan Documents.
Section 5.03 — Waiver of Subrogation
Until the Termination Date (being the first date on which all Guaranteed Obligations have been indefeasibly paid in full in cash and all commitments under the Credit Agreement have been permanently terminated), each Guarantor hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all rights of subrogation, reimbursement, contribution, exoneration, indemnification, or any similar right against the Borrower, any other Guarantor, or any other Person, or against any Collateral, that may arise by reason of any payment or performance by such Guarantor under this Guarantee Agreement.
Each Guarantor further irrevocably waives, until the Termination Date, any claim, right, or remedy that such Guarantor may now have or hereafter acquire against the Borrower or any other Guarantor that arises from the existence, payment, performance, or enforcement of such Guarantor's obligations under this Guarantee Agreement, including, without limitation, any claim of unjust enrichment or subrogation, any right to enforce any remedy that the Administrative Agent or any Secured Party now has or may hereafter have against the Borrower, and any benefit of, and any right to participate in, any security or Collateral given to or for the benefit of the Administrative Agent or any Secured Party. If, notwithstanding the foregoing, any amount is paid to any Guarantor on account of any such subrogation, reimbursement, contribution, or similar right at any time prior to the Termination Date, such amount shall be held in trust for the benefit of the Secured Parties and shall be promptly turned over to the Administrative Agent for application to the Guaranteed Obligations (whether or not then due) in accordance with the terms of the Credit Agreement.
Section 5.04 — Waiver of Rights to marshaling
Each Guarantor hereby irrevocably waives, to the fullest extent permitted by applicable law, any right to require the Administrative Agent or any Secured Party to:
(a) proceed against the Borrower or any other Person before proceeding against such Guarantor;
(b) proceed against any other Guarantor before or concurrently with proceeding against such Guarantor;
(c) proceed against, marshal, or realize upon any Collateral securing any of the Guaranteed Obligations before enforcing this Guarantee against such Guarantor, including, without limitation, the forty-two (42) mortgaged hotel properties, the equity pledges granted under the Pledge and Security Agreement, and any personal property security interests granted by the Loan Parties;
(d) pursue any other remedy in the Administrative Agent's or any Secured Party's power before proceeding against such Guarantor; or
(e) make demand upon or otherwise pursue the Borrower, any other Guarantor, or any other Person, or marshal or apply any Collateral, in any particular manner or order.
Section 5.05 — Waiver of Notices
Each Guarantor hereby irrevocably waives, to the fullest extent permitted by applicable law:
(a) notice of the acceptance of this Guarantee Agreement by the Administrative Agent or any Secured Party;
(b) notice of the creation, renewal, extension, modification, or accrual of any of the Guaranteed Obligations;
(c) notice of the occurrence of any Event of Default or any other default under the Credit Agreement or any other Loan Document; and
(d) any other notice that any Guarantor may otherwise be entitled to receive under applicable law in connection with this Guarantee Agreement, the Guaranteed Obligations, or the enforcement of any rights or remedies hereunder or under any other Loan Document.
Nothing in this Section 5.05 shall be construed to waive any Guarantor's right to receive notices specifically required to be delivered to the Guarantors under the express provisions of the Credit Agreement.
Section 5.06 — Election of Remedies
The exercise by the Administrative Agent or any Secured Party of any right or remedy under this Guarantee Agreement, the Credit Agreement, the Pledge and Security Agreement, the Intercreditor Agreement, any Mortgage, or any other Loan Document, or under applicable law, whether or not such exercise is adverse to the interests of any Guarantor, shall not impair, reduce, release, or otherwise extinguish the liability of any Guarantor under this Guarantee Agreement. The Administrative Agent and the Secured Parties may exercise their rights and remedies hereunder and under the other Loan Documents in any order and combination, and the exercise of any one remedy shall not preclude the simultaneous or subsequent exercise of any other remedy. Without limiting the generality of the foregoing, the Administrative Agent's and the Secured Parties' enforcement of any security interest or Lien, or any foreclosure upon or sale of any Collateral, whether resulting in a deficiency or surplus, shall not release, diminish, or otherwise affect any Guarantor's obligations under this Guarantee Agreement.
ARTICLE VI — SUBORDINATION
Section 6.01 — Subordination of Intercompany Obligations
Each Guarantor hereby subordinates all present and future indebtedness, liabilities, and other obligations (whether for principal, interest, fees, expenses, or otherwise, and whether on account of loans, advances, management fees, dividends, tax sharing arrangements, or otherwise) that may be owing to such Guarantor by the Borrower, any other Guarantor, or any other Subsidiary of the Borrower (collectively, "Intercompany Obligations") to the prior indefeasible payment in full of all Guaranteed Obligations. Until the Termination Date, the Intercompany Obligations shall in all respects be junior and subordinate to the Guaranteed Obligations, and no Guarantor shall exercise any right to collect, enforce, or receive payment of any Intercompany Obligations except to the extent expressly permitted hereunder or under the Credit Agreement.
So long as no Event of Default has occurred and is continuing under the Credit Agreement, each Guarantor may receive and retain payments on account of Intercompany Obligations in the ordinary course of business; provided, however, that if an Event of Default has occurred and is continuing, no Guarantor shall demand, accept, receive, or retain any payment on account of any Intercompany Obligations (whether in cash, property, securities, by set-off, or otherwise) without the prior written consent of the Administrative Agent (acting at the direction of the Required Lenders).
Section 6.02 — Turnover
If any Guarantor receives any payment, distribution, or other value on account of any Intercompany Obligations at a time when an Event of Default has occurred and is continuing (whether or not such payment is made in violation of Section 6.01), such Guarantor shall:
(a) hold such payment, distribution, or other value in trust for the ratable benefit of the Secured Parties;
(b) segregate such payment, distribution, or other value from such Guarantor's other funds and property and not commingle such payment with any other funds or property of such Guarantor; and
(c) promptly (and in any event within two (2) Business Days of receipt thereof) turn over and deliver such payment, distribution, or other value to the Administrative Agent, in the form received (with any necessary endorsement or assignment), for application to the Guaranteed Obligations (whether or not then due) in accordance with the terms of the Credit Agreement.
Each Guarantor agrees that the provisions of this Section 6.02 shall constitute an irrevocable assignment and pledge of all Intercompany Obligations to the Administrative Agent for the benefit of the Secured Parties, and the Administrative Agent shall be entitled to enforce such assignment and pledge in accordance with the terms hereof.
ARTICLE VII — LIMITATION ON GUARANTOR LIABILITY
Section 7.01 — Savings Clause
Notwithstanding any provision of this Guarantee Agreement to the contrary, the obligations of each Guarantor under this Guarantee Agreement shall be limited to the maximum amount that would not render this Guarantee, or any obligation of such Guarantor hereunder, void, voidable, or unenforceable under applicable fraudulent transfer, fraudulent conveyance, or similar law, including, without limitation, Section 548 of Title 11 of the United States Code (the "Bankruptcy Code"), Section 544(b) of the Bankruptcy Code (in conjunction with applicable state fraudulent transfer or fraudulent conveyance statutes), the Uniform Fraudulent Transfer Act, the Uniform Voidable Transactions Act, and any applicable state law equivalents (collectively, "Fraudulent Transfer Laws").
In determining the maximum liability of each Guarantor under this Section 7.01, there shall be taken into account, among other things:
(a) the fair value of the assets of such Guarantor at the time of the relevant determination;
(b) the fair consideration received, directly or indirectly, by such Guarantor as a result of the transactions contemplated by the Credit Agreement and the other Loan Documents;
(c) the amount of all other present and future liabilities of such Guarantor, contingent or otherwise; and
(d) the amount by which the total consideration received by such Guarantor exceeds or falls short of the total liabilities of such Guarantor, including, without limitation, the liabilities arising under this Guarantee Agreement.
Each Guarantor's maximum liability hereunder shall be reduced (but not below zero) to the maximum extent necessary to ensure that the obligations of such Guarantor under this Guarantee Agreement do not constitute a fraudulent transfer or fraudulent conveyance as to such Guarantor under any applicable Fraudulent Transfer Law. To the extent that any obligation of any Guarantor under this Guarantee Agreement is determined to constitute a fraudulent transfer or fraudulent conveyance, such obligation shall be reduced to the maximum amount that would be enforceable without causing such obligation to be a fraudulent transfer or fraudulent conveyance.
Section 7.02 — Contribution Among Guarantors
Each Guarantor agrees that, in the event any Guarantor (a "Paying Guarantor") makes a payment under this Guarantee Agreement in excess of such Paying Guarantor's "Proportionate Share" (as defined below) of the Guaranteed Obligations, such Paying Guarantor shall be entitled to contribution from each other Guarantor (each, a "Contributing Guarantor") in respect of such excess, in an amount equal to such Contributing Guarantor's Proportionate Share of such excess payment.
For purposes of this Section 7.02, "Proportionate Share" means, with respect to any Guarantor, a fraction (expressed as a percentage), the numerator of which is the net worth (or, if greater, the fair value of the assets minus the liabilities other than those arising under this Guarantee Agreement) of such Guarantor and the denominator of which is the aggregate net worth (or, if greater, the aggregate fair value of the assets minus the aggregate liabilities other than those arising under this Guarantee Agreement) of all Guarantors. For reference purposes only, and without limiting the generality of the foregoing, the approximate relative asset bases of the Guarantors as of the date hereof are as follows: