Term Sheet between M&T Bank and Orange Hospitality, Inc.



 Exhibit 10.5 
  
 

 
  
 January 19, 2005 
  
 Jeffery Davidson 
 Orange Hospitality 
 11 Penn Plaza – 5th Floor 
 New York, NY 10001 
  
 RE: $35 Million Revolving Line of Credit to Orange Hospitality

  
 Dear Brad: 
  
 Thank you for the opportunity to present the following financing proposal. This term sheet is for discussion purposes only. It is not
intended to be, nor should it be construed as, a commitment of M&T Bank to lend, but merely serves as an initial description of the possible terms of the proposed financing, which terms are subject to further review, analysis, consideration, and
final approval by the Bank. Additional terms and conditions may be required prior to submitting this request for approval. 
  

			
	Borrower:	  	Orange Hospitality, Inc.
		
	Facility:	  	$35,000,000 Revolving Credit Facility.
		
	Purpose:	  	To initially facilitate the purchase of flagged hotel properties including those located in Somerset, NJ, Mt. Olive, NJ, Wallingford, CT, Farmington, CT and Rocky Hill, CT. Thereafter, the
facility may be utilized to purchase flagged hotel properties in the continental United States subject to the Bank’s sole discretion.
		
	Term:	  	Three (3) years.
		
	Rate:	  	One Month LIBOR plus 225 basis points.
		
	Fee:	  	0.50% ($91,170 on the $18,234,000 in new funds) for origination and 0.25% commitment fee based on the average quarterly unused amount of the credit facility.
		
	Repayment:	  	Interest only.
		
	Collateral:	  	Secured by first mortgages on the five properties being purchased with the initial funding plus an assignment of rents, leases, management agreements, franchise agreements,
etc...
		
	Guarantors:	  	Orange Hospitality, Inc.









			
		
	Option:	  	Upon the payment of a 0.25% fee and no event of default, the borrower shall have the two, one-year extension options at the same rate and terms.
		
	Prepayment	  	 
	Penalty:	  	LIBOR breakage.
		
	Covenants:	  	1). All properties purchased with the line of credit must report no less than 1.30x pro-forma debt service coverage ratio on the debt utilized to purchase the property. In the event the
property does not achieve the above debt service coverage requirements, the borrower must contribute sufficient equity to bring the debt service coverage in compliance.
		
	 	  	2). Orange Hospitality, Inc. must maintain debt to tangible book net worth of no greater than 1.5:1.
		
	Conditions:	  	1) Subject to satisfactory appraisal, environmental and engineering reports on properties purchased with the facility. Subject to a maximum loan to value of 50% on an
“as-stabilized” appraised value.
		
	 	  	2). The borrower must raise at least $12 million in equity prior to usage of the facility.
		
	 	  	3) The Borrower is responsible for all of the Bank’s closing costs, including, but not limited to, appraisal, attorney, tax certification, and flood search fees. An estimate of legal
fees shall be provided prior to loan approval.
		
	 	  	4). Brad Honigfeld or Jeffrey Davidson must remain active in the management of Orange Hospitality, Inc.
		
	 	  	5). The Borrower and Guarantor agree to provide M&T Bank with audited financial statements, tax returns, and supporting documentation on an annual basis, quarterly financial statements
within 45-days of quarter end and an annual budget for the following year by December 1 of each year. The borrower shall also provide quarterly income and expense statements, including ADR and occupancy and market comparison reports on the five
properties serving as collateral for the facility.
		
	 	  	6) All aspects of the loan are subject to satisfactory legal review by M&T Bank’s counsel.
		
	 	  	7) No further encumbrances will be permitted on the five properties financed with the revolving credit facility.
		
	 	  	8) Orange Hospitality, Inc will maintain their primary cash management relationship with M&T Bank so long as the Bank provides the majority of Orange’s loan
facilities.

  
  








			
	 	  	In order to proceed with analyzing this request and seeking approval, we request that you sign and return this letter along with a $15,000 good faith deposit, which will be retained by the
Bank as partial payment of the origination fee upon approval of the request by the Bank. In the event that (a) the request as outlined in this letter is approved by the Bank, or (b) you insist upon material modification to the request and proposed
terms, or c) you withdraw the application, then, in any of the above circumstances, the entire amount of the good faith deposit plus any interest earned thereon shall be deemed to be a loan origination fee earned by the Bank in consideration for
processing the request. In the event that the loan is not approved by the Bank, the good faith deposit, less out-of-pocket costs, shall be refunded to the borrower. If we have not received a fully signed copy of this letter and the good faith
deposit on or before January 28, 2005 this proposal will expire. Please feel free to call me at (212) 350-2432 should you have any questions or would like to discuss any of the terms outlined above.
		
	 	  	Thank you and I look forward to hearing from you soon.

  

							
	Very truly yours,	  	 
	Manufacturers and Traders	  	 
	Trust Company	  	Agreed to and Accepted
				
	By:	  	 /s/ Jason W. Lipiec

	  	By:	  	 /s/ Jeffrey Davidson


	 	  	Jason W. Lipiec	  	Date:	  	January 21, 2005
	 	  	Vice President	  	Title:	  	Chief Executive Officer