Hotel Loan Contract

I. Introduction

This Hotel Loan Contract ("Contract") is entered into on [Date], by and between:

[Your Company Name], a national banking association organized and existing under the laws of the [State], with its principal place of business located at [Your Company Address] (hereinafter referred to as the "Lender"),

and

[Second Party], a limited liability company organized and existing under the laws of the [State], with its principal place of business located at [Second Party Address] (hereinafter referred to as the "Borrower").

II. Definitions

A. The term "Loan Amount" refers to the principal amount which is specified as five million US dollars ($5,000,000) and is detailed in Section III(A) of this Contract.

B. The term "Interest Rate" as used in this Contract refers to a rate of five point two five percent (5.25%) per annum, which shall be compounded annually, in accordance with the provisions specified in Section III(B) of this Contract.

C. "Repayment Schedule" shall mean sixty (60) equal monthly installments of $100,000 (One Hundred Thousand US Dollars) each, commencing on [Date], and continuing on the 30th day of each subsequent month thereafter until the entire loan amount, together with accrued interest, is repaid in full.

III. Loan Details

A. Loan Amount

The Lender agrees to furnish the Borrower with a loan, the principal sum of which is stipulated to be five million US dollars ($5,000,000).

B. Interest Rate

The loan will accumulate interest at an annual rate of 5.25%, with this interest being calculated on the balance of the principal that remains outstanding and the accumulation will be compounded on an annual basis.

C. Repayment Schedule

The Borrower shall repay the loan in sixty (60) equal monthly installments of $100,000 (One Hundred Thousand US Dollars) each, commencing on June 30, 2024, and continuing on the 30th day of each subsequent month thereafter until the entire loan amount, together with accrued interest, is repaid in full.

IV. Collateral

A. Description of Collateral

The security for this loan will be the hotel property recognized as [Second Party], situated at [Second Party Address]. This includes all enhancements, fixtures, and relevant attachments to the property.

B. Valuation of Collateral

The value of the collateral will be ascertained through an evaluation performed by a licensed appraiser, who shall be chosen by the Lender. The expenses incurred in relation to this appraisal will be the responsibility of the Borrower and must be paid by them.

C. Terms of Collateral Release

The collateral that is specified and described within this agreement is set to be eligible for release after the complete repayment of the loan, which includes not only the initial principal amount but also the interest charges that have been detailed in Section III(C) of this Contract.

V. Loan Covenants

A. Borrower's Obligations

The Borrower shall maintain a debt service coverage ratio of at least 1.25, calculated annually, based on the hotel's net operating income, as determined by generally accepted accounting principles (GAAP). Failure to meet this ratio shall constitute an event of default under this Contract.
The Borrower shall maintain a minimum occupancy level of 70% throughout the term of the loan, as reported in monthly occupancy reports provided to the Lender. The Borrower agrees to promptly notify the Lender in writing if the occupancy falls below this threshold and to implement strategies to remedy the situation within a reasonable timeframe.

B. Lender's Rights and Remedies

In the event that the Borrower fails to adhere to any of the agreed-upon covenants, the Lender is entitled to exercise the right to accelerate the terms of the loan. Moreover, the Lender can declare the entirety of the loan immediately due and payable. Additionally, the Lender may avail itself of any other remedies that are available under the law or equitable remedies, which includes, but is not limited to, the right to initiate foreclosure proceedings on the collateral that has been pledged as security for the loan.

The Lender may also stipulate that the Borrower is required to submit regular reports detailing their financial and operational status in order to ascertain that they are in compliance with the terms and conditions of the loan covenants. Furthermore, should these reports reveal any deviations from the agreed-upon terms, the Borrower must take corrective measures to address these discrepancies as necessary.

VI. Representations and Warranties

A. Borrower's Representations and Warranties

The Borrower represents and warrants that it is duly organized, validly existing, and in good standing under the laws of the State of California and has the legal capacity and authority to execute and deliver this Contract and to perform its obligations hereunder. The Borrower further represents that the execution and delivery of this Contract do not violate any applicable law, regulation, or contractual obligation binding upon it.
The Borrower represents and warrants that all information provided to the Lender in connection with this Contract, including financial statements, projections, and occupancy reports, is true, accurate, and complete in all material respects. The Borrower agrees to promptly notify the Lender of any material adverse change in its financial condition or the operation of the hotel property.

B. Lender's Representations and Warranties

The Lender represents and warrants that it is a national banking association organized and existing under the laws of the United States and has full power and authority to execute and deliver this Contract and to perform its obligations hereunder. The Lender further represents that the execution and delivery of this Contract have been duly authorized by all necessary corporate action on its part.
The Lender represents and warrants that, to the best of its knowledge, there are no actions, suits, or proceedings pending or threatened against it that would materially adversely affect its ability to fulfill its obligations under this Contract. The Lender agrees to provide notice to the Borrower promptly if it becomes aware of any such actions, suits, or proceedings.

VII. Conditions Precedent

A. Conditions Precedent to Disbursement

The disbursement of the loan proceeds is subject to the satisfaction of the following conditions precedent:

The Borrower is required to furnish proof substantiating their ownership of the hotel property, ensuring that it is free from any claims, burdens, or other encumbrances, apart from those exceptions specifically allowed by the Lender.
The Borrower is required to secure all the necessary permits, licenses, and approvals that are mandated for the management and operation of the hotel property. Additionally, the Borrower must supply the Lender with copies of these documents.

B. Conditions Precedent to Closing

The closing of the loan transaction is subject to the satisfaction of the following conditions precedent:

The Borrower is required to execute and deliver all documentation related to the loan as stipulated by the Lender, which includes this Contract, a promissory note, and either a mortgage or a deed of trust, which serve to secure the loan.
The Lender shall be entitled to obtain an appraisal of the hotel property, which must be conducted by a licensed appraiser. Furthermore, the appraised value of the hotel property should meet or exceed the total amount of the loan.

VIII. Events of Default

A. Events of Default

The following events shall constitute an event of default under this Contract:

Failure by the Borrower to make any payment of principal or interest when due, and such failure continues for a period of [number] days after written notice from the Lender.
Breach by the Borrower of any covenant, representation, or warranty contained in this Contract, and such breach is not cured within [number] days after written notice from the Lender.

B. Remedies

Upon the occurrence of an event of default, the Lender may exercise any one or more of the following remedies:

Proceed to expedite the process of the loan by declaring that the total amount of the outstanding principal balance, in addition to any interest that has accrued, is to be considered immediately due and payable in full.
Proceed to foreclose upon the collateral and proceed with the sale of the hotel property, which may be conducted either through a public auction or a private sale. Subsequently, the funds garnered from this sale should be applied to the remaining balance of the outstanding loan.

IX. Fees and Expenses

A. Loan Origination Fees

The Borrower is obligated to remit payment to the Lender for a loan origination fee, which is determined to be [00]% of the total amount of the loan; this payment is required to be made at the point of the loan transaction's closure.

B. Closing Costs

The Borrower shall be responsible for covering all costs and expenses that are incurred in relation to the closing of the loan transaction. This includes, but is not limited to, expenses such as attorney fees, premiums for title insurance, and fees associated with the recording of documents.

X. Indemnification

A. Borrower's Indemnification

The Borrower agrees to indemnify, defend, and hold harmless the Lender and its officers, directors, employees, and agents from and against any and all losses, liabilities, damages, costs, and expenses, including reasonable attorneys' fees, arising out of or in connection with:

Any violation or breach of the representations, warranties, or covenants that has been committed by the Borrower according to the stipulations outlined under the terms of this Contract.
Any claims, lawsuits, or legal actions that are initiated by third parties against the Lender due to matters related to the ownership, operation, or use of the hotel property.

B. Exceptions to Indemnification

The Borrower shall not be required to provide compensation or reimbursement to the Lender for any kind of losses, liabilities, damages, costs, or expenses that arise due to the gross negligence or deliberate wrongful actions of the Lender.

XI. Insurance

A. Insurance Requirements

The Borrower is obligated to secure and maintain a comprehensive property insurance policy that covers the hotel property. This insurance must provide protection against all potential risks of physical loss or damage, which includes, but is not limited to, risks arising from fire, theft, vandalism, and various natural disasters. Additionally, the coverage amounts of the insurance policy must be sufficient and satisfactory to the Lender.

B. Obligations of the Borrower

The Borrower is obligated to furnish proof of insurance coverage to the Lender on an annual basis. Additionally, the Borrower must immediately inform the Lender of any significant alterations to the insurance coverage, which includes any cancellations or any reductions in the extent of the coverage provided.

XII. Governing Law and Jurisdiction

A. Governing Law

The terms and provisions of this Contract shall be interpreted and governed exclusively by the laws applicable within the State of California. In determining the applicable legal principles, no consideration shall be given to the principles of conflict of laws that might require the application of the laws of another jurisdiction.

B. Jurisdiction

Any and all disputes that emerge from or are related to this Contract are to be exclusively filed and resolved within the judicial boundaries of the state or federal courts situated in the County of [County], in the state of [DC]. Furthermore, each party to this Contract unequivocally agrees to submit to the authority and jurisdiction of these courts for the purpose of resolving such disputes.

XIII. Miscellaneous Provisions

A. Amendments and Modifications

This Contract may only be modified or amended through a formally executed written document that has been duly signed by all parties involved in this agreement.

B. Entire Agreement Clause

This Contract represents the complete and exclusive agreement between the parties concerning the subject matter covered herein and it replaces and nullifies all previous agreements and understandings, both written and verbal, that have been made contemporaneously or prior to this agreement.

C. Severability Clause

Should it be determined that any provision of this Contract is invalid, illegal, or unenforceable, such determination will not impact or compromise the validity, legality, and enforceability of the other remaining provisions of the Contract. The remaining clauses will continue to be fully operational and effective, notwithstanding the invalidity, illegality, or unenforceability of any individual provision.

D. Waiver of Rights

The fact that either party does not enforce any part or provision of this Contract at any time should not be interpreted or understood as a waiver of that particular provision or any other provision contained within this Contract.

E. Notices

All notices and other communications required or permitted under this Contract shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid.

XIV. Signatures

In attestation to the terms outlined in this agreement, the parties referenced herein have properly executed and endorsed this Contract on the date initially specified at the beginning of this document.

[Representative's Name]

[Second Party]

[Date]

[Your Name]

[Your Company Name]

[Date]