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SENIOR SUBORDINATED CREDIT AGREEMENT
DATED AS OF DECEMBER 13, 1996
AMONG
CAPSTAR MANAGEMENT COMPANY, L.P.,
AS BORROWER,
CAPSTAR HOTEL COMPANY,
AS GUARANTOR,
THE LENDERS PARTY HERETO
AND
BANKERS TRUST COMPANY,
AS ARRANGER AND AGENT
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CAPSTAR MANAGEMENT COMPANY, L.P.
CAPSTAR HOTEL COMPANY
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1 INTERPRETATION.......................................... 1
1.1 Certain Defined Terms................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement; Pro Forma............ 45
1.3 References to Articles, Sections, Exhibits, Schedules
and Attachments....................................... 46
1.4 Captions................................................ 46
1.5 Drafter................................................. 46
1.6 References to Persons Include Permitted Successors
and Assigns........................................... 46
1.7 References to Applicable Law and Contracts.............. 47
1.8 Herein.................................................. 47
1.9 Including Without Limitation............................ 47
1.10 Gender.................................................. 47
1.11 Singular and Plural..................................... 47
1.12 Knowledge............................................... 47
SECTION 2 AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.............. 48
2.1 Commitments; Loans; Notes; the Register................. 48
A. Commitments....................................... 48
B. Notice of Borrowing............................... 48
C. Disbursement of Funds............................. 49
D. The Register...................................... 50
E. Extension of Maturity Date........................ 50
2.2 Interest on the Loans................................... 52
A. Rate of Interest.................................. 52
B. Interest Periods.................................. 53
C. Interest Payments................................. 53
D. Conversion/Continuation........................... 54
E. Default Rate Interest............................. 54
F. Computation of Interest........................... 55
2.3 Fees.................................................... 55
2.4 Repayments and Prepayments; General Provisions
Regarding Payments.................................... 55
A. Scheduled Payments of the Loans................... 55
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B. Prepayments and Termination of Commitments........ 55
C. Application of Payments to Principal and Interest. 56
D. General Provisions Regarding Payments............. 56
2.5 Use of Proceeds......................................... 57
A. Loans............................................. 57
B. Margin Regulations................................ 57
2.6 Special Provisions Governing Eurodollar Rate Loans...... 58
A. Determination of Applicable Interest Rate......... 58
B. Inability to Determine Applicable Interest Rate... 58
C. Illegality or Impracticability of Eurodollar Rate
Loans........................................... 58
D. Compensation For Breakage or Non-Commencement
of Interest Periods............................. 59
E. Booking of Eurodollar Rate Loans.................. 60
F. Assumptions Concerning Funding of Eurodollar
Rate Loans...................................... 60
2.7 Increased Costs; Taxes; Capital Adequacy................ 60
A. Compensation for Increased Costs and Taxes........ 60
B. Withholding of Taxes.............................. 61
C. Capital Adequacy Adjustment....................... 63
2.8 Obligation of the Lenders to Mitigate................... 64
2.9 Acquisition of Properties............................... 64
A. Acquisition and Addition of Pool A Properties..... 64
B. Acquisition of Pool B Properties.................. 65
C. Atlanta Property.................................. 66
2.10 Sales of Pool A Properties.............................. 66
SECTION 3 CONDITIONS PRECEDENT.................................... 67
3.1 Conditions to Closing Date and Effectiveness
of Commitments........................................ 67
A. Corporate Documents............................... 67
B. Partnership and LLC Documents..................... 68
C. Financial Statements; Certificates................ 69
D. No Material Adverse Effect........................ 69
E. Opinions of the Borrower's Counsel................ 69
F. Solvency Certificate.............................. 69
G. Amendment to the Senior Credit Agreement.......... 69
H. No Adverse Litigation............................. 70
I. Contingent Obligations............................ 70
J. Payment of Fees and Expenses...................... 70
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K. Completion of Proceedings......................... 70
L. Other Documents................................... 70
3.2 Conditions to the Loans on the Funding Date............. 70
A. Notice of Borrowing............................... 71
B. Other Conditions Precedent........................ 71
SECTION 4 REPRESENTATIONS AND WARRANTIES.......................... 72
4.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries............................. 72
A. Organization and Powers........................... 72
B. Qualification and Good Standing................... 73
C. Conduct of Business............................... 73
D. Subsidiaries...................................... 73
E. Acquisitions...................................... 73
4.2 Authorization of Borrowing, etc......................... 74
A. Authorization of Borrowing........................ 74
B. No Conflict....................................... 74
C. Governmental Consents............................. 74
D. Binding Obligation................................ 75
E. Valid Issuance of Common Stock.................... 75
F. New York Stock Exchange Listing................... 75
4.3 Financial Condition; Contingent Obligations............. 75
A. Financial Condition............................... 75
B. Contingent Obligations............................ 76
4.4 Properties; Agreements; Licenses........................ 76
A. Title to Properties; Liens........................ 76
B. Pool A Ground Leases.............................. 76
C. Pool B Documents.................................. 77
D. Management Agreements............................. 77
E. Servicing Agreements.............................. 77
F. Franchise Agreements.............................. 77
G. Material Leases................................... 77
H. Liquor Licenses................................... 78
4.5 Litigation; Adverse Facts............................... 78
4.6 Taxes................................................... 78
A. Payment of Taxes.................................. 78
B. Classification as a Partnership................... 79
4.7 Performance of Agreements; Materially Adverse
Agreements............................................ 79
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4.8 Governmental Regulation; Securities Activities.......... 79
4.9 Employee Benefit Plans.................................. 80
A. ERISA............................................. 80
B. ERISA Event....................................... 80
C. Unfunded Benefit Liabilities...................... 80
D. Potential Withdrawal Liability.................... 80
4.10 Certain Fees............................................ 81
4.11 Solvency................................................ 81
4.12 Disclosure.............................................. 81
4.13 Zoning; Authorizations.................................. 82
A. Zoning............................................ 82
B. Authorizations.................................... 82
4.14 Physical Condition; Encroachment; Capital Expenditures.. 83
A. Physical Condition; Encroachment.................. 83
B. Capital Expenditures.............................. 83
4.15 Insurance............................................... 83
4.16 Leases.................................................. 83
4.17 No Condemnation or Casualty............................. 84
4.18 Utilities and Access.................................... 84
4.19 Intellectual Property................................... 84
A. Ownership......................................... 84
B. No Adverse Claims................................. 85
4.20 Wetlands................................................ 85
4.21 Labor Matters........................................... 85
4.22 Employment and Labor Agreements......................... 86
SECTION 5 AFFIRMATIVE COVENANTS................................... 86
5.1 Financial Statements and Other Reports.................. 86
5.2 Common Stock............................................ 93
5.3 Corporate Existence; Corporate Separateness etc......... 93
A. Corporate Existence............................... 93
B. Financial Matters................................. 93
C. Independent Business.............................. 93
D. Business Dealings................................. 94
5.4 Taxes and Claims; Tax Consolidation..................... 94
A. Taxes and Claims.................................. 94
B. Tax Consolidation................................. 95
5.5 Maintenance of Properties; Repair....................... 95
5.6 Inspection.............................................. 95
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5.7 Compliance with Laws, Authorizations, etc............... 95
5.8 Performance of Loan Documents and Acquisition Agreements 96
A. Loan Documents.................................... 96
B. Acquisition Agreements............................ 96
5.9 Insurance............................................... 96
5.10 Casualty and Condemnation; Restoration.................. 96
A. Notice of Casualty................................ 96
B. Notice of Condemnation............................ 97
C. Reduction of Borrowing Base; Payment of
Release Price................................... 97
5.11 Management of Properties................................ 97
SECTION 6 NEGATIVE COVENANTS...................................... 98
6.1 Indebtedness............................................ 98
6.2 Liens and Related Matters...............................101
A. Prohibition on Liens..............................101
B. Equitable Lien in Favor of Lenders................101
C. No Further Negative Pledges.......................101
D. No Restrictions on Subsidiary Distributions
to the Borrower or Other Subsidiaries...........102
6.3 Investments and Certain Capital Expenditures............102
6.4 Contingent Obligations..................................105
6.5 Restricted Junior Payments..............................107
6.6 Financial Covenants.....................................108
A. Maximum Consolidated Total Indebtedness...........108
B. Minimum Interest Coverage.........................108
C. Maximum Total Debt Leverage Ratio.................109
6.7 Fundamental Changes.....................................110
6.8 Zoning and Contract Changes and Compliance..............111
6.9 No Joint Assessment; Separate Lots......................112
6.10 Transactions with Affiliated Persons....................112
6.11 Sales and Lease-Backs...................................112
6.12 Sale or Discount of Receivables.........................114
6.13 Ownership of Subsidiaries...............................114
6.14 Conduct of Business; Restrictions on Operations
in Canada.............................................114
A. Conduct of Business...............................114
B. Restrictions on Operations in Canada..............115
6.15 Properties..............................................115
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A. Acquisition of Properties.........................115
B. Transfer of Properties............................115
C. Certain Transfers of Properties...................115
D. Certain Casualties or Takings of Properties.......116
6.16 Renovation Expenditures.................................117
6.17 Management Agreements and Servicing Agreements..........117
6.18 Intellectual Property; Franchise Agreements.............118
A. Intellectual Property...............................118
B. Franchise Agreements................................118
6.19 Material Leases.........................................118
6.20 Changes in Certain Obligations and Documents;
Issuance of Equity Securities.........................118
A. Credit Agreement..................................118
B. CapStar Preferred Stock...........................119
C. Equity Securities.................................119
D. Organization Documents............................119
E. Pool A Ground Leases..............................120
F. Franchise Agreements..............................120
G. Servicing Agreements; Management Agreements.......120
H. Atlanta Documents; MBL Acquisition Documents......121
6.21 Fiscal Year.............................................121
SECTION 7 EVENTS OF DEFAULT; REMEDIES.............................121
7.1 Events of Default.......................................121
A. Failure to Make Payments When Due.................121
B. Default in Other Agreements.......................121
C. Breach of Certain Covenants.......................122
D. Breach of Warranty................................122
E. Invalidity of Loan Document; Repudiation
of Obligations..................................122
F. Pool A Ground Leases..............................122
G. Pool B Obligations................................123
H. Prohibited Transfers..............................123
I. Other Defaults Under Loan Documents...............123
J. Involuntary Bankruptcy; Appointment of
Receiver, etc...................................123
K. Voluntary Bankruptcy; Appointment of
Receiver, etc...................................124
L. Judgments and Attachments.........................124
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M. Dissolution.......................................124
N. Employee Benefit Plans............................124
O. Material Adverse Effect...........................125
P. Change in Control.................................125
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Q. Employment of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇....................125
R. Franchise Agreements..............................126
7.2 Certain Remedies........................................126
SECTION 8 SUBORDINATION...........................................128
8.1 Obligations Subordinated to Senior Indebtedness
of the Borrower.......................................128
8.2 Priority and Payment Over of Proceeds in Certain Events.128
A. Subordination on Dissolution, Liquidation or
Reorganization of the Borrower....................128
B. Subordination on Default of Senior Indebtedness...128
C. Rights and Obligations of the Lenders.............129
8.3 Payments May Be Paid Prior to Dissolution...............130
8.4 Rights of Holders of Senior Indebtedness of the
Borrower Not To Be Impaired...........................131
8.5 Subrogation.............................................132
8.6 Obligations of the Borrower Unconditional...............132
8.7 Lenders Authorize Agent to Effectuate Subordination.....133
8.8 Rights of Agent.........................................133
8.9 Indefeasible Payment....................................134
SECTION 9 MISCELLANEOUS...........................................134
9.1 Assignments and Participations in Loans.................134
A. General...........................................134
B. Participations....................................135
C. Assignments to Federal Reserve Banks..............135
D. Information.......................................135
9.2 Expenses................................................135
9.3 Indemnity...............................................136
A. Indemnity.........................................136
B. Procedure.........................................138
C. Contribution......................................138
D. No Limitation.....................................139
E. No Enlargement....................................139
9.4 No Joint Venture or Partnership.........................139
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9.5 Ratable Sharing.........................................140
9.6 Amendments and Waivers..................................140
9.7 Independence of Covenants...............................141
9.8 Notices.................................................141
9.9 Survival of Representations, Warranties and Agreements..141
9.10 Agent's or Lenders' Discretion; Successor Agents........142
9.11 Obligations Several; Independent Nature of the
Lenders' Rights.......................................142
9.12 Remedies of the Borrower................................142
9.13 Marshalling; Payments Set Aside.........................143
9.14 Severability............................................143
9.15 Headings................................................143
9.16 Applicable Law..........................................143
9.17 Successors and Assigns..................................144
9.18 Consent to Jurisdiction and Service of Process..........144
9.19 Waiver of Jury Trial....................................145
9.20 Counterparts; Effectiveness.............................145
9.21 Material Inducement.....................................146
9.22 Entire Agreement........................................146
9.23 Confidentiality.........................................146
9.24 Maximum Amount..........................................147
SECTION 10 AGENT...................................................148
10.1 Appointment.............................................148
10.2 Powers and Duties; General Immunity.....................148
▇. ▇▇▇▇▇▇; Duties Specified..........................148
B. No Responsibility for Certain Matters.............148
C. Exculpatory Provisions............................149
D. Agent Entitled to Act as Lender...................149
10.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness...........................150
10.4 Right to Indemnity......................................150
10.5 Successor Agent.........................................150
10.6 Guaranties..............................................151
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EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF NOTICE OF CONTINUATION
IV FORM OF COMPLIANCE CERTIFICATE
V FORM OF SENIOR SUBORDINATED CAPSTAR GUARANTY
VI FORM OF SENIOR SUBORDINATED AFFILIATE GUARANTY
VII FORMS OF OPINIONS OF LOAN PARTIES' COUNSEL
VIII FORM OF SOLVENCY CERTIFICATE
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SCHEDULES
1.1A MBL PROPERTIES
2.1A LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1A ORGANIZATION AND CAPITALIZATION
4.1B GOOD STANDING
4.2C GOVERNMENT CONSENTS
4.3B CONTINGENT OBLIGATIONS
4.4A1 POOL A PROPERTIES
4.4A2 POOL B PROPERTIES
4.4B POOL A GROUND LEASES
4.4C POOL B DOCUMENTS
4.4D MANAGEMENT AGREEMENTS AND ESTOPPELS
4.4E SERVICING AGREEMENTS
4.4F FRANCHISE AGREEMENTS
4.4G MATERIAL LEASES
4.4H LIQUOR LICENSES
4.5 LITIGATION
4.7 CERTAIN CONTRACTUAL OBLIGATIONS
4.13A ZONING
4.14B REQUIRED CAPITAL EXPENDITURES
4.15 INSURANCE
4.19A INTELLECTUAL PROPERTY
4.20 WETLANDS
4.22 EMPLOYMENT AND LABOR AGREEMENTS
5.1 FORM OF FINANCIAL STATEMENT
6.2 PERMITTED ENCUMBRANCES
6.10 AFFILIATE TRANSACTIONS
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SENIOR SUBORDINATED CREDIT AGREEMENT
This SENIOR SUBORDINATED CREDIT AGREEMENT is dated as of December 13, 1996
and entered into among CAPSTAR MANAGEMENT COMPANY, L.P., a Delaware limited
partnership (the "BORROWER"), CAPSTAR HOTEL COMPANY, a Delaware corporation
("CAPSTAR"), THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (individually
referred to herein as a "LENDER" and collectively as the "LENDERS") and BANKERS
TRUST
COMPANY ("BANKERS"), as arranger and agent for the Lenders (in such capacity,
the "AGENT").
R E C I T A L S
A. CapStar is the sole general partner of the Borrower, and CapStar LP
Corporation, a Delaware corporation and a Wholly-Owned Subsidiary of CapStar
("CAPSTAR SUB"), is the sole limited partner of the Borrower.
B. The Borrower, CapStar and their Subsidiaries desire that the Lenders
provide a senior subordinated term loan facility to the Borrower, the proceeds
of which will be used for the acquisition of upscale full service hotels in the
United States of America and, to the extent permitted herein, Canada.
C. CapStar, Capstar Sub and the Subsidiaries of the Borrower that are Loan
Parties (as hereinafter defined) desire to guaranty the obligations of the
Borrower under this Agreement on a senior subordinated basis.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, CapStar, the Borrower, the Lenders
and the Agent agree as follows:
SECTION 1
INTERPRETATION
This Agreement and the other Loan Documents shall be construed and
interpreted in accordance with this Section 1.
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement and the other Loan Documents
shall have the following meanings when used herein with initial capital letters:
"ACADIA" means Acadia Partners, L.P., a Delaware limited partnership.
"ACQUISITION" means any acquisition by the Borrower or any of its Wholly
Owned Subsidiaries of any fee or, to the extent permitted herein, leasehold
interest in any hotel property.
"ACQUISITION AGREEMENTS" means, collectively, the agreements entered into
by the Borrower and any of its Subsidiaries in connection with an Acquisition by
(i) the Borrower or a Wholly Owned Subsidiary pursuant to subsection 2.9A or
(ii) by a Wholly Owned Subsidiary of the Borrower pursuant to subsection 2.9B.
"ADDITIONAL POOL A PROPERTY" has the meaning assigned to that term in
subsection 2.9A.
"ADDITION DATE" means the following:
(i) with respect to any Pool A Property listed on Schedule 4.4A1
annexed hereto and with respect to any Pool B Property listed on Schedule
4.4A2 annexed hereto, the Closing Date; and
(ii) with respect to any Additional Pool A Property or any Pool B
Property acquired after the Closing Date in accordance with subsection
2.9, the latest to occur of (a) the date on which the Acquisition of such
Property is consummated and (b) the date on which all the conditions to
such Acquisition set forth in subsection 2.9A or 2.9B, as the case may be,
shall have been satisfied with respect to such Property.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination Date
with respect to a Eurodollar Rate Loan, the rate per annum obtained by DIVIDING
(i)(a) the Eurodollar offered rate for deposits with maturities comparable to
the Interest Period for which such Adjusted Eurodollar Rate will apply as of
approximately 10:00 A.M. (New York time) on such Interest Rate Determination
Date as set forth on Telerate Page 4756 (or such other page as may, in the
opinion of the Agent, replace such page for the purpose of displaying such rate)
or (b) if such rate does not appear on Telerate Page 4756 (or such other page,
as the case may be) on such Interest Rate Determination Date, the per annum rate
(rounded upward to the nearest 1/16 of 1%)
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at which deposits in Dollars are offered by the Agent to first-class banks
in the New York interbank market, in an amount closest to the amount of the
Agent's relevant Eurodollar Rate Loan and having a maturity closest to such
Interest Period, at approximately 10:00 A.M. (New York time) on such Interest
Rate Determination Date BY (ii) a percentage equal to 100% MINUS the stated
maximum rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in subsection 2.6C.
"AFFILIATE" means with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AFFILIATE GUARANTY" means the Senior Subordinated Affiliate Guaranty by
each Loan Party (other than CapStar and the Borrower) and any other Subsidiary
of CapStar (other than the Borrower) that becomes a party thereto, substantially
in the form of EXHIBIT VI annexed hereto, as such Senior Subordinated Affiliate
Guaranty may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof.
"AGENT" has the meaning assigned to that term in the introduction to this
Agreement and also means and includes any successor Agent hereunder.
"AGREEMENT" means this Senior Subordinated Credit Agreement dated as of
the date first written above among CapStar, the Borrower, the Lenders and the
Agent, as it may be amended, restated, supplemented or otherwise modified from
time to time.
"APPLICABLE BASE RATE MARGIN" means, as of any date of determination, a
per annum rate equal to 3.00%.
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"APPLICABLE EURODOLLAR RATE MARGIN" means, as of any date of
determination, a per annum rate equal to 4.00%.
"APPLICABLE LAWS" means, collectively, all statutes, laws, rules,
regulations, ordinances, orders, decisions, writs, judgments, decrees and
injunctions of Governmental Authorities (including Environmental Laws) affecting
the Borrower or any other Loan Party, whether now or hereafter enacted and in
force, and all Authori zations relating thereto, and all covenants, conditions
and restrictions contained in any instruments, either of record or known to the
Borrower or any other Loan Party, at any time in force affecting any Property or
any part thereof, including any such covenants, conditions and restrictions
which may (i) require improvements, repairs or alterations in or to such
Property or any part thereof or (ii) in any way limit the use and enjoyment
thereof.
"APPRAISAL" means, with respect to any Property, a written appraisal of
such Property prepared by an Appraiser and requested by, or delivered to, the
Senior Representative pursuant to the Senior Credit Agreement.
"APPRAISER" means CB Commercial Real Estate Group, Inc. or any other
independent appraiser who is a member of the Appraisal Institute with a national
practice and who has at least 10 years experience with real estate of the same
type as the Property to be appraised.
"APPRAISED VALUE" means, as of any date of determination and with respect
to any Property, the lesser of (i) the appraised value of such Property, in each
case as most recently determined by an Appraisal on or before such date of
determination and (ii) the maximum aggregate principal amount secured by the
mortgage (if any) delivered under the Senior Credit Agreement and applicable to
such Property, as such principal amount shall be modified or supplemented from
time to time in accordance with the terms of the Senior Credit Agreement.
"ATLANTA AIRPORT PROPERTY" means the real property, together with all
Improvements thereon and all fixtures attached thereto and all personal property
used in connection therewith, located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and
known, as of the date of this Agreement, as the Westin Hotel Atlanta Airport.
"ATLANTA AIRPORT SUB" means Lepercq Atlanta Renaissance Partners, L.P., a
limited partnership.
"ATLANTA GP" means EquiStar Atlanta GP Company, L.L.C., a Delaware limited
liability company.
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"ATLANTA LP" means EquiStar Atlanta LP Company, L.L.C., a Delaware limited
liability company.
"ATLANTA MORTGAGE" means that certain Amended and Restated Deed to Secure
Debt, Assignment of Leases and Rents and Security Agreement dated as of August
23, 1996 executed by the Atlanta Airport Sub in favor of the Borrower and
assigned to the agent under the Senior Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
therein.
"ATLANTA NOTE" means that certain Consolidated and Amended and Restated
Note dated as of August 23, 1996 executed by the Atlanta Airport Sub in the
original principal amount of $23,609,456, as such note may be amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
therein and herein.
"ATLANTA PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement
of Limited Partnership dated as of June 11, 1987 of LePercq Atlanta Renaissance
Parties, LP, as such agreement may be further amended, restated, supplemented or
otherwise modified from time to time.
"ATTRIBUTABLE ECONOMIC INTEREST" means, with respect to any Person as of
any date of determination, the number of shares of Capital Stock of any entity
of which such Person is the record owner PLUS the total number of shares that
such Person would be entitled to receive upon the distribution to such Person by
such entity, pro rata with respect to ownership interests of such entity (and
without regard to any liabilities of such entity), of all shares of which such
Person is deemed to be the beneficial owner but of which other Persons are the
record owners.
"ATTRIBUTABLE INDEBTEDNESS" means, when used with respect to any sale and
leaseback transaction with respect to which the lease is not accounted for as a
Capital Lease, as of any date of determination, the greater of (i) the
unamortized portion (determined on a level pay basis over the term of the lease)
of an amount equal to 85% of the gross purchase price for the property subject
to such transaction; PROVIDED that in connection with any sale to a real estate
investment trust, the amount calculated pursuant to this clause (i) shall be net
of any security deposit required to be established with the proceeds of such
purchase price; and (ii) the present value (discounted at 10% per annum,
compounded on a monthly basis) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such arrangement
(including any period for which such lease has been extended), as each such
amount shall be reasonably determined by the Borrower and certified to the Agent
in an Officers' Certificate of the Borrower, together with the information
utilized by the Borrower to make such determination; PROVIDED, HOWEVER, that if
the applicable
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lease specifies the amount of a termination fee, liquidated damages or other
maximum amount that is payable by the lessee upon a termination (for whatever
reason) of the lease by the lessor or the lessee prior to the scheduled
termination of the base term or any extension thereof, the amount calculated
pursuant to this definition shall not exceed such maximum amount.
"AUTHORIZATION" means any authorization, approval, franchise, license,
variance, land use entitlement, sewer and waste water discharge permit, storm
water discharge permit, air pollution authorization to operate, certificate of
occupancy, municipal water and sewer connection permit, and any like or similar
permit now or hereafter required for the construction or Renovation of any
Improvements located on any Property or for the use, occupancy or operation of
any Property and all amendments, modifications, supplements and addenda thereto.
"BANKERS" has the meaning assigned to that term in the introduction to
this Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the rate per annum that is the higher of
(i) of the Prime Rate and (ii) the sum of (a) the Federal Funds Effective Rate
PLUS (b) 1/2 of 1.00%.
"BASE RATE LOANS" means any portion of the Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
"BORROWER" has the meaning assigned to that term in the introduction to
this Agreement.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.
"CAPITAL EXPENDITURES" means, with respect to any Property, for any period
and as of any date of determination, the sum of (i) 4.0% of Property Gross
Revenues from such Property for such period, PROVIDED that, with respect to any
Property at which a Renovation costing more than $1,000,000 (as evidenced by
written documentation reasonably satisfactory in form and substance to the
Agent) has been completed during the 12 consecutive month period ending on the
last day of the
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month immediately preceding the applicable date of determination, such
percentage shall be 3.00% for the period from the Addition Date to the first
anniversary of such Addition Date; PLUS (ii) the aggregate amount, if any, in
excess of 4.0% of Property Gross Revenues which is required to be paid,
deposited or reserved by the Borrower or any of its Subsidiaries in respect of
such Property for Capital Items pursuant to the Pool B Obligations or any
applicable Ground Lease for such period.
"CAPITAL ITEMS" means, with respect to any Property for any period and as
of any date of determination, the cost of capital repairs and replacements of
all or any portion of the Improvements or any other portion of such Property,
including (i) costs of tenant improvements and brokerage commissions payable in
connection with lease transactions at any Property, (ii) costs of environmental
audits and monitoring, environmental remediation work or any other costs and
expenses incurred with respect to compliance with Environmental Laws, (iii)
costs of any Restoration, (iv) costs of any Renovation, (v) costs of FF&E, (vi)
costs of appraisals, valuations, title insurance and inspections and (vii) any
other costs incurred in connection with the Properties that are not included in
Operating Expenses, in each case to the extent such costs would be capitalized
on a balance sheet in accordance with GAAP.
"CAPITAL LEASE" means, with respect to any Person, the lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CAPITAL STOCK" means, with respect to any Person, any capital stock,
partner ship, limited liability company or joint venture interests of such
Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into any of the foregoing), warrants or options to purchase any of
the foregoing.
"CAPSTAR" has the meaning assigned to that term in the recitals to this
Agreement.
"CAPSTAR GUARANTY" means the Senior Subordinated CapStar Guaranty by
CapStar, substantially in the form of EXHIBIT V annexed hereto, as such Senior
Subordinated CapStar Guaranty may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"CAPSTAR SUB" has the meaning assigned to that term in the recitals to
this Agreement.
-7-
"CASH AVAILABLE FOR DEBT SERVICE" means, with respect to any Pool B
Subsidiary for any period and as of any date of determination, an amount equal
to Property EBITDA with respect to the Properties owned by such Pool B
Subsidiary, as the same shall be determined based upon the financial statements
for such Properties for such period and such other information with respect
thereto that may be provided by the Loan Parties and their respective
Subsidiaries, subject to such adjustments as may reasonably be required by the
Agent so that Property EBITDA with respect to such Properties shall be
calculated in the same manner as Property EBITDA with respect to Pool A
Properties owned by the Loan Parties and their respective Subsidiaries during
the entire period (it being understood that any adjustments required by the
agent under the Senior Credit Agreement (so long as same is in effect) shall be
given effect for purposes of this Agreement); PROVIDED, HOWEVER, that for
purposes of the calculation of Property EBITDA under this definition of Cash
Available for Debt Service with respect to any Property for any period,
Operating Expenses shall include (i) franchise and marketing fees of not less
than 7.5% of revenues from room rentals for such period in the event such
Property is subject to a Franchise Agreement, (ii) not less than 7.0% of
Property Gross Revenues for marketing expenses in the event such Property is not
subject to a Franchise Agreement, (iii) all Management Fees in respect of each
such Property payable to the Borrower but in no event less than 3.0% of Property
Gross Revenues in respect of such Property and (iv) and a reserve for Capital
Items in an amount not less than 4.0% of Property Gross Revenues in respect of
each such Property (except to the extent that higher reserves are required by a
franchisor under any applicable Franchise Agreement).
"CASH EQUIVALENTS" means, as of any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and princi pal by the United States of America or (b) issued by any agency of
the United States of America the obligations of which are backed by the full
faith and credit of the United States of America, in each case maturing within
one year after such date; (ii) market able direct obligations issued by any
state of the United States of America or any ▇▇▇▇▇▇ ▇▇▇ subdivision of any such
state or any public instrumentality thereof, in each case maturing within one
year after such date and having, at the time of the acquisition thereof, the
highest rating obtainable from either S&P or ▇▇▇▇▇'▇; (iii) commercial paper
maturing no more than one year from the date of creation thereof and having, at
the time of the acquisition thereof, a rating of at least A-1 from S&P or at
least P-1 from ▇▇▇▇▇'▇; (iv) Eurodollar deposits due within one year of any
commercial bank whose outstanding senior long-term debt securities are rated
either A- or higher by S&P or A-3 or higher by ▇▇▇▇▇'▇; (v) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) of this paragraph with any bank meeting the
qualifications specified in clause (vi) of this paragraph; (vi) certificates of
deposit or bankers' acceptances maturing within one year
-8-
after such date and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary Federal banking regulator) and (b) has
Tier 1 capital (as defined in such regulations) of not less than $100,000,000;
and (vii) shares of any money market mutual fund that (a) has at least 95% of
its assets invested continuously in the types of investments referred to in
clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000,
and (c) has the highest rating obtainable from either S&P or ▇▇▇▇▇'▇.
"CASH PROCEEDS" means, with respect to any sale or other disposition or
refinancing of any Property, cash payments received from such sale or
disposition or refinancing.
"CLOSING DATE" means the first date on which each of the conditions set
forth in subsection 3.1 are satisfied.
"COMMITMENT" means the commitment of a Lender to make its Loan to the
Borrower pursuant to subsection 2.1A, and "COMMITMENTS" means such commitments
of all Lenders in the aggregate.
"COMMON STOCK" means the common stock of CapStar, par value $.01 per
share.
"COMPLIANCE CERTIFICATE" means a certificate delivered to the Agent by the
Borrower pursuant to subsection 5.1(iv) substantially in the form attached as
EXHIBIT IV hereto.
"CONDEMNATION PROCEEDS" means all compensation, awards, damages, rights of
action and proceeds awarded to any Loan Party or any of its Subsidiaries by
reason of any Taking.
"CONSOLIDATED EBITDA" means, for any period, the remainder of the
following:
(i) the sum, without duplication, of (a) Total Property EBITDA for
such period PLUS (b) all revenue of CapStar and its Subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP, that
was not included in the calculation of Total Property EBITDA for such
period irrespec tive of whether such revenue relates to the Properties,
including, without limitation and without duplication, (1) Management Fees
with respect to Properties that shall have been included in the
calculation of Operating
-9-
Expenses for such period and (2) payments received by CapStar and its
Subsidiaries in respect of Interest Rate Agreements; PROVIDED that the
calculation of the amount referred to in this clause (i) shall exclude (v)
income expressly excluded from the definition of Property Gross Revenue,
(w) income resulting from the write-up of the value of assets, (x) income
from interest earned on notes and receiv ▇▇▇▇▇ from affiliates except to
the extent actually received, (y) the income of a Joint Venture and income
accounted for by the equity method of accounting, in each case except to
the extent distributed to CapStar or any of its Subsidiaries, and
increases or decreases in earnings attributable to minority interests and
(z) the income of any Person acquired in a pooling of interests
transaction before the date of acquisition; MINUS
(ii) all expenses, without duplication, of CapStar and its
Subsidiaries (to the extent not deducted from the calculation of Total
Property EBITDA) for such period and determined on a consolidated basis in
accordance with GAAP, whether or not such expenses relate to the
Properties; PROVIDED that the calculation of the amount referred to in
this clause (ii) shall exclude any expense related to the charge off of
amounts referred to in clause (i) above previously recognized as revenue.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of CapStar and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP, with respect to all outstanding
Indebtedness of CapStar and its Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Interest Rate
Agreements.
"CONSOLIDATED NET INCOME" means, with respect to any Person as of any date
of determination and for any period, the aggregate Net Income of such Person and
its Subsidiaries, on a consolidated basis, determined in accordance with GAAP,
from the first day of such period to the last day of the calendar quarter ending
not less than 30 days before such date of determination for which the Agent has
received the financial statements pursuant to subsection 5.1(ii); PROVIDED, that
(i) the Net Income of any Person that is not a Subsidiary or that is accounted
for by the equity method of account ing shall be excluded, whether or not
distributed to CapStar or one of its Subsidiaries, (ii) the Net Income of any
Person that is a Subsidiary and that is restricted from declar ing or paying
dividends or other distributions, directly or indirectly, by operation of the
terms of its charter, any applicable agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation or otherwise shall be included
only to the extent of the amount of dividends or distributions paid to any
Person or a Wholly Owned
-10-
Subsidiary of any Person and (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded.
"CONSOLIDATED TOTAL INDEBTEDNESS" means, as of any date of determination,
the sum of the following, without duplication: (i) all Indebtedness of CapStar
and its Subsidiaries, determined on a consolidated basis; PLUS (ii) all
Contingent Obligations of CapStar and its Subsidiaries to make any Investments
or Guaranties; PLUS (iii) all Guaranties of CapStar or any of its Subsidiaries;
PLUS (iv) the Letter of Credit Usage MINUS the sum of (a) the Letter of Credit
Usage with respect to letters of credit issued for the account of CapStar or any
of its Subsidiaries and supporting other Indebtedness of CapStar or any of its
Subsidiaries PLUS (b) the amount of cash deposited and held pursuant to the
terms of any collateral account agreement under the Senior Credit Agreement;
PLUS (v) Attributable Indebtedness.
"CONTINGENT OBLIGATION" means, with respect to any Person, as of any date
of determination and without duplication, any direct or indirect liability,
contingent or otherwise, of that Person which has not been (or to the extent
that it has not been) paid or otherwise discharged with respect to the
following: (i) any Guaranty; (ii) any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings; or (iii) performance, surety and similar bonds in respect of any
Restoration, Renovation or other design, construction, restoration, renovation,
expansion or repair of any Improvements, in each case with respect to any
Property or other hotel property; PROVIDED that Contingent Obligations shall not
include (x) other performance, surety and appeal bonds provided in the ordinary
course of business consistent with past practices, (y) indemnification or
contribution obligations in respect of agreements providing for indemnification,
adjustment of purchase price or similar obligations or for Guaranties or letters
of credit, surety bonds and performance bonds securing any obligations of the
Borrower or any of its Subsidiaries pursuant to such agreements, in any case
incurred in connection with the acquisition or Transfer of a business, asset or
Subsidiary (other than Guaranties of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition), and (z) indemnification obligations with
respect to environmental matters and "bad deeds" and other actions (other than
the payment of any Indebtedness, Contingent Obligation, Guaranty or other
monetary liability) in connection with Indebtedness, Management Agreements,
Servicing Agreements, service contracts, Leases, partnerships, agreements,
Franchise Agreements, leases, licensing agreements and Ground Leases, in each
case on customary terms consistent with industry practice and to the extent that
such Indebtedness or agreements are not prohibited by this Agreement and (iv)
obligations of the type set forth in clauses (i) - (iii) above and all
Indebtedness owed
-11-
either by any partnership of which such Person is a general partner or by any
limited liability company of which such Person is a member and with respect to
which Indebtedness such Person has liability under law or by agreement. The
amount of any Contingent Obligation, as of any date of determination, shall be
equal to the least of (x) the amount of the obligation so Guaranteed or that
otherwise may be required to be paid, (y) the amount to which such Contingent
Obligation is expressly limited and (z) except with respect to a Guaranty of
Indebtedness, the maximum exposure under such Contingent Obligation as
reasonably calculated by the Borrower and approved by the Agent in its sole
discretion.
"CONTRACTUAL OBLIGATION" means, with respect to any Person, any provision
of any Security issued by that Person or of any material indenture, mortgage,
deed of trust, deed to secure debt, contract, lease, purchase order,
undertaking, agreement or other instrument to which that Person is a party or by
which it or any of its properties is bound or to which it or any of its
properties is subject, including, with respect to CapStar or any of its
Subsidiaries, any provision of the Related Documents to which CapStar or such
Subsidiary is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect CapStar or any of its Subsidiaries
against fluctua tions in currency values.
"DESIGNATED POOL A PROPERTIES" means, as of any date of determination, the
Pool A Properties other than the Removed Pool A Properties.
"DEVELOPMENT" means the erection or other construction or installation of
Improvements on real property that is then substantially unimproved or from
which all or substantially all of the existing Improvements thereon have been
removed or in connection with such erection, construction or installation will
be removed; PROVIDED that Development does not include (x) Restorations and
Renovations and (y) the erection or other construction or installation of
Improvements on real property that is contiguous with a Property and in
connection with the expansion of Improvements at such Property.
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"EAC" means EquiStar Acquisition Corporation, a Delaware corporation.
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"ELIGIBLE ASSIGNEE" means (i) (a) a commercial bank organized under the
laws of the United States of America or any state thereof; (b) a savings and
loan association or savings bank organized under the laws of the United States
of America or any state thereof; (c) a commercial bank organized under the laws
of any other country or a political subdivision thereof; PROVIDED, HOWEVER, that
(x) such bank is acting through a branch or agency located in the United States
of America or (y) such bank is organ ized under the laws of a country that is a
member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (d) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities Act)
which extends credit or buys loans as one of its principal businesses including,
but not limited to, insurance companies, investment banks, mutual funds,
investment partnerships and lease financing companies, in each case (under
clauses (a) through (d) above) that is reasonably acceptable to the Agent; and
(ii) any Lender and any Affiliate of any Lender; PROVIDED FURTHER, HOWEVER, that
each Eligible Assignee under clauses (i)(a) through (i)(c) above shall have Tier
1 capital (as defined in the regulations of its primary Federal banking
regulator) of not less than $100,000,000.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which (i) is currently maintained or contributed to by
CapStar, any of its Subsidiaries, or any of their respective ERISA Affiliates,
or (ii) was at any time within the preceding five years maintained or
contributed to by CapStar, any of its Subsidiaries, or any of their respective
ERISA Affiliates to the extent any of them could reasonably be expected to incur
liability with respect to such employee benefit plan.
"ENVIRONMENTAL CLAIM" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any Governmental Authority or any other Person for
any damage, including personal injury (including sickness, disease or death),
tangible or intangible property damage, contribution, indemnity, indirect or
consequential damages, damage to the environment, damage to natural resources,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to CapStar, any of
its Subsidiaries (including any Person who was a Subsidiary prior to the Closing
Date) or any Property.
"ENVIRONMENTAL LAWS" means all statutes, laws, ordinances, orders, rules,
regulations, written guidelines, writs, judgments, decrees or injunctions and
the like relating to (i) environmental matters, including those relating to
fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries result
-13-
ing from the Hazardous Release or threatened Hazardous Release of Hazardous
Materials, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, or the protection of human, plant or animal health or welfare, in any
manner applicable to any Loan Party or any of its Subsidiaries or any of their
properties, including the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. ▇▇.▇▇. 9601, ET SEQ.), the Hazardous Materials
Transportation Act (49 U.S.C. ▇▇.▇▇. 1801, ET SEQ.), the Resource Conservation
and Recovery Act (42 U.S.C. ▇▇.▇▇. 6901, ET SEQ.), the Federal Water Pollution
Control Act (33 U.S.C. ▇▇.▇▇. 1251, ET SEQ.), the Clean Air Act (42 U.S.C.
▇▇.▇▇. 7401, ET SEQ.), the Toxic Substances Control Act (15 U.S.C. ▇▇.▇▇. 2601,
ET SEQ.), the Solid Waste Disposal Act (42 U.S.C. ▇▇.▇▇. 6901, ET SEQ.), as
amended by the Resource Conservation and Recovery Act (42 U.S.C. ▇▇.▇▇. 6901, ET
SEQ.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ▇▇.▇▇.
136, ET SEQ.), the OccupatioNal Safety and Health Act (29 U.S.C. ▇▇.▇▇. 651, ET
SEQ.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
▇▇.▇▇. 11001, ET SEQ.), each as amended or supplemented, and rules and
regulations, policies and guidelines promulgated pursuant thereto and any
analogous future or present local, state and federal statutes and rules and
regulations, policies and guidelines promulgated pursuant thereto, each as in
effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, with respect to any Person, (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within
the meaning of Sec tion 414(c) of the Internal Revenue Code of which that Person
is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of any
Loan Party or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of such Loan Party or such Subsidiary, within the meaning of this
definition with respect to the period during which such entity was an ERISA
Affiliate of such Loan Party or such Subsidiary and with respect to liabilities
arising after such period for which such Loan Party or such Subsidiary could be
liable under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of Sec
tion 4043 of ERISA and the regulations issued thereunder with respect to any
Pension
-14-
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation), (ii) the failure to meet the minimum funding
standard of Sec tion 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan, in the case of any such failure, by a material amount, (iii)
the provision by the administrator of any Pension Plan pursuant to Sec tion
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA, (iv) the withdrawal by any
Loan Party, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064
of ERISA, (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occur rence of any event or condition which might
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan, (vi) the imposition of liability on any
Loan Party or any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA, (vii) the withdrawal by any Loan Party
or any of its Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential material liability
therefor, or the receipt by any Loan Party or any of its Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pur suant to Section 4241 or 4245 of ERISA,
or that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA, (viii) the occurrence of an act or omission which could give rise to the
imposition on any Loan Party or any of its Subsidiaries or any of their
respective ERISA Affiliates of material fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Sec tion 409 or
Section 502(c)(2), (i) or (l), or Section 4071 of ERISA in respect of any
Employee Benefit Plan, (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against any Loan Party or any of
its Subsidiaries or any of their respective ERISA Affiliates in connection with
any such Employee Benefit Plan, (x) receipt from the Internal Revenue Service of
notice of the failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue Code) to
qualify under Section 401(a) of the Internal Revenue Code, or the failure of any
trust forming part of any Pension Plan to qualify for exemp tion from taxation
under Section 501(a) of the Internal Revenue Code or (xi) the imposition of a
Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
-15-
"EURODOLLAR RATE LOANS" means any portion of the Loans bearing interest at
rates determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in subsection 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"EXTRAORDINARY RECEIPTS" means the proceeds to CapStar or any of its
Subsidiaries from such items as (i) sales, exchanges or other dispositions of
the assets of CapStar or any of its Subsidiaries other than in the ordinary
course of business thereof, (ii) damage recoveries and casualty insurance
proceeds (including Condemnation Proceeds or Insurance Proceeds but other than
the proceeds of business interruption insurance or rental loss insurance), (iii)
income derived from Securities and other property acquired for investment except
to the extent such Securities represent Cash Equivalents, (iv) condemnation
awards or sales in lieu of and under the threat of condemnation (other than
awards or other payments for any Taking for temporary use), (v) debt or equity
financing or refinancing, and (vi) all other amounts of any nature paid to
CapStar or any of its Subsidiaries not arising out of the ordinary course of
business thereof.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"FF&E" means, with respect to any Property or the offices of CapStar and
its Subsidiaries, any furniture, fixtures and equipment, including any beds,
lamps, bedding, tables, chairs, sofas, curtains, carpeting, smoke detectors,
mini bars, paintings, decorations, televisions, telephones, radios, desks,
dressers, towels, bathroom equip ment, heating, cooling, lighting, laundry,
incinerating, loading, swimming pool, land scaping, garage and power equipment,
machinery, engines, vehicles, fire prevention, refrigerating, ventilating and
communications apparatus, carts, dollies, elevators, escala tors, kitchen
appliances, restaurant equipment, computers, reservation systems, soft ▇▇▇▇,
cash registers, switchboards, hotel cleaning equipment or any other items of
furniture, fixtures and equipment typically used in hotel properties (including
-16-
furniture, fixtures and equipment used in guest rooms, lobbies, common areas,
front desk, back office, bars, restaurants, kitchens, laundries, concierge,
▇▇▇▇▇▇▇, recreation, amuse ment, landscaping, parking and other areas of hotels)
and any replacements of all or any portion of any of the foregoing.
"FRANCHISE AGREEMENT" means each of the franchise agreements listed on
SCHEDULE 4.4F annexed hereto, together with the most recent related property
improvement plan required by the respective franchisor, as each such agreement
may be amended, restated, supplemented or otherwise modified, replaced or
entered into from time to time in accordance with subsection 6.20F.
"FUNDING DATE" means a single date occurring on or after the Closing Date
and on or before December 31, 1996 as the date on which the funding of the Loans
occurs.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, in each case as the same are
applicable to the circum stances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state,
county, municipality or other political subdivision or branch thereof, and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any agency, board, central
bank, commission, court, department or officer thereof.
"GROUND LEASES" means each of the ground leases from time to time with
respect to the Properties.
"GUARANTOR" means each Loan Party party to the Affiliate Guaranty and the
CapStar Guaranty.
"GUARANTY" means, with respect to any Person, any obligation, contingent
or otherwise, of that Person which has not been (or to the extent that it has
not been) paid or otherwise discharged with respect to any Indebtedness, Ground
Lease, other lease, dividend or other obligation of any other Person if the
primary purpose or intent thereof by the Person incurring the Guaranty is to
provide assurance to the obligee of such obli gation that such obligation of
another will be paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of such obligation will be
-17-
protected (in whole or in part) against loss in respect thereof. Guaranties
shall include, without limitation, (i) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (ii) the obli gation to make take-or-pay or
similar payments if required regardless of non-per formance by any other party
or parties to an agreement, and (iii) any liability of such Person for the
obligation of another Person through any agreement (contingent or other wise)
(a) to purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (b) to maintain the solvency or any balance sheet item, level
of income or financial con dition of another Person if, in the case of any
agreement described under subclauses (a) or (b) of this sentence, the primary
purpose or intent thereof is as described in the pre ceding sentence. The amount
of any Guaranty shall be equal to the least of (x) the amount of the obligation
so guaranteed or otherwise supported, (y) the amount to which such Guaranty is
specifically limited and (z) except with respect to a Guaranty of Indebtedness,
the maximum exposure under such Guaranty as reasonably calculated by the
Borrower and approved by the Agent in its sole discretion. Guaranties shall not
include (1) any of the foregoing obligations to the extent that the same
constitutes Indebtedness under the definition thereof or is a Guaranty with
respect thereto and (2) Guaranties of any liability or obligation of the
Borrower or any Pool A Subsidiary in respect of which the Borrower and the Pool
A Subsidiaries are permitted to become liable pursuant to this Agreement. The
term "Guarantee" used as a verb has a corre sponding meaning.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances",
"pollutant", "contaminant" or any other formulations intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Laws, (ii) any oil, petroleum, petroleum fraction or petroleum
derived substance, (iii) any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil, natural
gas or geothermal resources, (iv) any flammable substances or explosives, (v)
any radioactive materials, (vi) asbestos in any form, (vii) radon, (viii) urea
formaldehyde foam insulation, (ix) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million, (x) pesticides, and (xi) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority or which may or
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could pose a hazard to the health and safety of the owners, occupants or any
Persons in the vicinity of the Properties; PROVIDED, HOWEVER, that Hazardous
Materials shall not include any materials in a non-hazardous form such as
asphalt contained in road-sur facing materials or hazardous materials
customarily used in the operation of hotel prop erties and properly stored and
maintained.
"HAZARDOUS RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other receptacles containing any Hazardous Materials), or into or out of any
Property, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
"IMPOSITIONS" means all real property taxes and assessments, of any kind
or nature whatsoever, including, without limitation, vault, water and sewer
rents, rates, charges and assessments, levies, permits, inspection and license
fees and other governmental, quasi-governmental or nongovernmental levies or
assessments such as maintenance charges, owner association dues or charges or
fees resulting from covenants, conditions and restrictions affecting the
Properties, assessments resulting from inclusion of any Property in any taxing
district or municipal or other special district, any of which are assessed or
imposed upon the Property, or become due and payable, and which create or may
create a Lien upon the Property, or any part thereof. In the event that any
penalty, interest or cost for nonpayment of any Imposition becomes due and
payable, such penalty, interest or cost shall be included within the term
"Impositions".
"IMPROVEMENTS" means all buildings, structures, fixtures, tenant
improvements and other improvements of every kind and description now or
hereafter located in or on or attached to any Land, including all building
materials, water, sanitary and storm sewers, drainage, electricity, steam, gas,
telephone and other utility facilities, parking areas, roads, driveways, walks
and other site improvements; and all additions and betterments thereto and all
renewals, substitutions and replacements thereof.
"INDEBTEDNESS" means, with respect to any Person and without duplication,
to the extent required to be shown on a balance sheet prepared in conformity
with GAAP, (i) all indebtedness for money borrowed by that Person, (ii) that
portion of obligations with respect to Capital Leases that is classified as a
liability on a balance sheet in conformity with GAAP, (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) all obliga tions owed for all or any part
of the deferred purchase price of assets or services purchased by that Person
(a) due more than six months from the date of incurrence of
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the obligation in respect thereof, (b) evidenced by a note or similar written
instrument or (c) owed in respect of real property purchased by such Person or
any of its Subsidi aries, (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person, (vi) obligations under Currency
Agreements and Interest Rate Agreements, (vii) that portion of any other
obligation of that Person (other than reservation and similar deposits from
custo mers and working capital deposits from owners received and held in the
ordinary course of business) that is classified as a liability on a balance
sheet in conformity with GAAP, which obligation is (a) due more than six months
from the date of incurrence thereof or (b) evidenced by a note or similar
written instrument, (viii) trade payables of such Person and its Subsidiaries
that by their terms are more than 90 days delinquent and (ix) all Guaranties by
that Person.
"INDEMNIFIED PERSON" has the meaning assigned to that term in subsection
9.3.
"INSURANCE PROCEEDS" means all insurance proceeds, damages, claims and
rights of action and the right thereto under any insurance policies relating to
any portion of any Property.
"INSURANCE REQUIREMENTS" means all terms of any insurance policy required
hereunder covering or applicable to any Property or any part thereof, all
requirements of the issuer of any such policy, and all orders, rules,
regulations and other require ments of the National Board of Fire Underwriters
(or any other body exercising similar functions) applicable to or affecting any
Property or any part thereof or any use of any Property or any portion thereof.
"INTELLECTUAL PROPERTY" means, as of any date of determination, all
patents, trademarks, tradenames, copyrights, technology, know-how and processes
used in or necessary for the conduct of the business of the Loan Parties and
their respective Subsidiaries as conducted on such date of determination that
are material to the busi ness, operations, condition (financial or otherwise) or
prospects of the Loan Parties and their Subsidiaries, taken as a whole,
including any of the foregoing licensed to the Loan Parties or any of their
respective Subsidiaries by other Persons.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect CapStar or any of its Subsidiaries against
fluctuations in interest rates.
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"INTEREST RATE DETERMINATION DATE" means each date for calculating the
Adjusted Eurodollar Rate for purposes of determining the interest rate in
respect of an Interest Period. The Interest Rate Determination Date shall be the
second Business Day prior to the first day of the related Interest Period for
any Loan.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means, with respect to any Person or any of its Subsidiaries,
as of any date of determination and without duplication:
(i) any direct or indirect purchase or other acquisition (whether or
not for consideration) by such investing Person or Subsidiary of, or of a
beneficial interest in, any Securities of any other Person;
(ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value by such investing Person or Subsidiary from any
other Person (other than (a) a Person with respect to which such investing
Person or Subsidiary is a Wholly Owned Subsidiary or (b) any other Wholly
Owned Subsidiary of the Person referred to in the preceding clause (a);
PROVIDED that, in the case of CapStar and its Subsidiaries, such other
Wholly Owned Subsidiary is a Loan Party and has Guaranteed the
Obligations), of any equity Securities of such investing Person or
Subsidiary;
(iii) any direct or indirect loan, advance (other than (a) advances to
officers, employees, consultants, accountants, attorneys and other
advisors and members of the Board of Directors of any Person for moving,
entertainment and travel expenses, drawing accounts and similar
expenditures in each case incurred in the ordinary course of business and
(b) advances to officers of any Person for other purposes in an amount not
greater than $100,000 individually or $330,000 in the aggregate, in each
case at any time outstanding) or capital contribution to any other Person,
including all indebtedness and accounts receivable from that other Person
that are not current assets or did not arise from sales to that other
Person in the ordinary course of business;
(iv) any payment to any other Person for the purpose of or otherwise
in connection with securing, extending, renewing or modifying any
Management Agreement;
(v) any commitment or obligation to make any investment described
in clauses (i) through (iv) above; and
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(vi) any liability that is recourse to such investing Person or
Subsidiary or secured by any asset of such investing Person or Subsidiary
and that arises, by law, contract, ownership of Securities or otherwise,
directly or indirectly, as the result of or otherwise in connection with
the origination, continuation or termination of any investment described
in clauses (i) through (iv) above.
The amount of any Investment, as of any date of determination, shall be equal to
(y) with respect to an Investment referred to in clause (i) or (ii) of the
preceding sentence, the remainder of (1) the sum of original cost of such
Investment PLUS the cost of all additions thereto as of such date of
determination, MINUS (2) the aggregate amount paid to such Person or Subsidiary
as a return of such Investment; PROVIDED, that (A) the calculation of the amount
referred to in this clause (2) shall exclude all fees and other amounts (or the
portion thereof) that shall constitute interest, dividends or other amounts in
respect of the return on such Investment, as determined in accordance with GAAP,
and (B) the calculation of the amount referred to in this clause (i) shall
exclude, all adjustments for increases or decreases in value, and write-ups,
write-downs or write-offs with respect to such Investment, and (z) with respect
to an Investment referred to in clause (iv) or (v) of the preceding sentence,
the maximum aggregate liability for which such investing Person or Subsidiary
may become liable, by law, contract, ownership of Securities or otherwise, with
respect to such Investment as of such date of determination.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership, limited liability company or
other legal form, which joint venture, partnership or other similar arrangement
may be a Subsidiary of any Person, including, without limitation, a Subsidiary
(other than a Wholly Owned Subsidiary) of the Borrower.
"LAND" means, with respect to each Pool A Property and Pool B Property,
the land located in the municipalities, towns, counties and states listed on
SCHEDULE 4.4A1 annexed hereto (and more particularly described in the applicable
security documents delivered under the Senior Credit Agreement) and SCHEDULE
4.4A2 annexed hereto, respectively, together with all strips and gores within or
adjoining such property, all estate, right, title, interest, claim or demand
whatsoever of any Loan Party or any of its Subsidiaries in the streets, roads,
sidewalks, alleys, and ways adjacent thereto (whether or not vacated and whether
public or private and whether open or proposed), all vaults or chutes adjoining
such land, all of the tenements, hereditaments, easements, reciprocal easement
agreements, rights pursuant to any trackage agreement, rights to the use of
common drive entries, rights-of-way and other rights, privileges and
appurtenances thereunto belonging or in any way pertaining thereto, all
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reversions, remainders, dower and right of dower, curtesy and right of curtesy,
all of the air space and right to use said air space above such property, all
transferable development rights arising therefrom or transferred thereto, all
water and water rights (whether riparian, appropriative or otherwise, and
whether or not appurtenant) and shares of stock evidencing the same, all
mineral, mining, gravel, geothermal, oil, gas, hydrocarbon substances and other
rights to produce or share in the production of anything related to such
property, all drainage, crop, timber, agricultural, and horticultural rights
with respect to such property, and all other appurtenances appurtenant to such
property, including without limitation, any now or hereafter belonging or in any
way appertaining thereto, and all claims or demands of such Loan Party or such
Subsidiary, either at law or in equity, in possession or expectancy, now or
hereafter acquired, of, in or to the same.
"LEASE" means each of the leases (other than the Ground Leases), licenses,
concession agreements, franchise agreements (other than the Franchise
Agreements) and other occupancy agreements and other agreements demising,
leasing or granting rights of possession or use or, to the extent of the
interest therein of any Loan Party or any of its Subsidiaries, any sublease,
subsublease, underletting or sublicense, which now or hereafter may affect any
Property or any part thereof or interest therein, including any agreement
relating to a loan or other advance of funds made in connection with any such
lease, license, concession agreement, franchise or other occupancy agreement and
such sublease, subsublease, underletting or sublicense, and every amendment,
restate ment, supplement, consolidation or other modification of or other
agreement relating to or entered into in connection with such lease, license,
concession agreement, ▇▇▇▇ ▇▇▇▇▇ or other occupancy agreement and such sublease,
subsublease, underletting or sublicense, and every Guaranty of the performance
and observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto, and any Guaranties of leasing commissions.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 9.1.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all letters of credit issued for the account
of CapStar or any of its Subsidiaries under the Senior Credit Agreement and then
outstanding plus (ii) the aggregate amount of all drawings under such letters of
credit and not theretofore reimbursed by CapStar or such Subsidiary.
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"LIEN" means any lien (including any lien or security title granted
pursuant to any mortgage, deed of trust or deed to secure debt), pledge,
hypothecation, assignment, security interest, charge, levy, attachment,
restraint or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement to
give any security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
"LIQUOR LEASE" means each Lease entered into between the Borrower or any
of its Wholly Owned Subsidiaries, in each case as lessor, and the holder of a
Liquor License in respect of a Property, in each case in connection with the
sale of alcoholic beverages at such Property, in a form customarily used by the
Borrower or in such form as may be reasonably acceptable to the Agent (it being
understood and agreed that any such form as may be approved by the agent under
the Senior Credit Agreement (so long as same is in effect) shall be acceptable
for purposes of this Agreement) as any such Lease may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
"LIQUOR LICENSES" means each license issued by the Department of Alcoholic
Beverage Control or similar state or local agency to any Loan Party or any of
its Subsidiaries or in respect of any Property, in each case in connection with
the sale of alcoholic beverages at such Property.
"LIQUOR OPERATIONS SERVICING AGREEMENTS" means, collectively, the
sub-management agreements entered into between the Borrower and each Loan Party
(or Subsidiary of a Loan Party) that is a holder of a Liquor License, as any
such sub-management agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"LLC LOAN PARTIES" means, collectively, each Person that is a limited
liability company and is, or becomes, a Loan Party.
"LOAN DOCUMENTS" means, collectively, this Agreement, the CapStar
Guaranty, the Affiliate Guaranty and the Notes.
"LOAN EXPOSURE" means, with respect to any Lender, as of any date of deter
mination (i) prior to the termination of the Commitments, that Lender's
Commitment and (ii) after the termination of the Commitments, the aggregate
outstanding principal amount of the Loans of that Lender.
"LOAN PARTIES" means, collectively, CapStar, CapStar Sub, the Borrower and
any other Subsidiary of CapStar which is or becomes a party to a Loan Document.
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"LOANS" means, collectively, the Loans made by the Lenders to the Borrower
pursuant to subsection 2.1A.
"MAJOR RENOVATION/RESTORATION" means, as of any date of determination, any
Renovation or Restoration of a Property with respect to which more than 50% of
the rooms "available for sale" at the applicable Property have been, are
scheduled to be, or could reasonably be expected to be, "rooms out-of-order", as
determined in accor dance with the Uniform System, during any period of 30
consecutive days; PROVIDED that a Restoration related to a casualty or Taking
and conducted pursuant to and, as of such date of determination, satisfying the
conditions of subsection 6.11F of the Senior Credit Agreement (as in effect on
the Closing Date) is not a Major Renovation/ Restoration.
"MAJOR RENOVATION/RESTORATION REMOVAL PERIOD" means with respect to any
Property, the period commencing on the day that a Major Renovation/Restoration
shall commence with respect to such Property and terminating on the day that
such Major Renovation/Restoration shall terminate with respect to such Property,
in each case as such dates of commencement and termination shall be reasonably
determined by the Agent based on documentation received from the Borrower and on
such other informa tion as the Agent shall determine to be relevant (it being
understood and agreed that any such dates as are acceptable to the agent under
the Senior Credit Agreement (so long as the same is in effect) shall be
acceptable for purposes of this Agreement).
"MANAGED PROPERTIES" means, collectively, the real properties, together
with all Improvements thereon and all fixtures attached thereto and all personal
property used in connection therewith, that are managed by the Borrower or any
of its Wholly Owned Subsidiaries pursuant to the Management Agreements. Managed
Properties do not include Properties.
"MANAGEMENT AGREEMENT EFFECTIVENESS DATE" means the date that is 30 days
after the last day of a calendar quarter that is also the last day of 12
consecutive calendar months during which the aggregate amount of Management Fees
paid to the Borrower and its Subsidiaries pursuant to Management Agreements is
equal to or greater than 10% of the consolidated gross revenues of CapStar and
its Subsidiaries; PROVIDED that the calculation of gross revenues shall exclude
the income excluded from clause (i) of the definition of "Consolidated EBITDA".
"MANAGEMENT AGREEMENTS" means, collectively, all hotel management
agreements under which CapStar or any of its Subsidiaries is named or acts as
manager, as any such hotel management agreement may be amended, restated,
supplemented or
-25-
otherwise modified from time to time in accordance with the terms thereof and
hereof. Management Agreements do not include the Servicing Agreements or other
hotel management agreements among the Borrower and any of its Subsidiaries with
respect to the Properties.
"MANAGEMENT FEES" means, collectively, all hotel management fees (however
characterized, including base fees, trade name fees, incentive fees, special
incentive fees, termination fees and all fees in respect of liquor license
operations) and all other fees or charges payable to the manager for the
management and operation of a hotel property, the related land and the
improvements thereof.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"MARKET EQUITY CAPITALIZATION" means, with respect to any issuer and as of
any date of determination, the product of (i) the number of shares of common
stock of such issuer outstanding as of such date MULTIPLIED BY (ii) the average
of the closing bid prices of such common stock on the principal national
securities exchange on which such common stock is listed or, if such common
stock is not so listed, on NASDAQ/NMS, as the case may be, for each of the 30
consecutive trading days next preceding such date of determination (or such
shorter period during which such common stock shall have been publicly traded
until such time as it has been so traded for 30 consecutive trading days).
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, condition (financial or otherwise) or prospects of the
Loan Parties, taken as a whole, and (ii) the material impairment of the ability
of any of the Loan Parties to perform, or of the Agent or the Lenders to
enforce, any Obligation of any Loan Party.
"MATERIAL LEASE" means each Lease either (i) demising in excess of 7,500
square feet of the Improvements with respect to any Property or (ii) generating
in excess of 5.0% of the Property Gross Revenues with respect to any Property or
otherwise identified as a Material Lease on SCHEDULE 4.4G annexed hereto;
PROVIDED that no Liquor Lease shall be a Material Lease.
"MATERIAL MANAGEMENT AGREEMENT" means any Management Agreement pursuant to
which the Borrower or any of its Subsidiaries has received or reasonably expects
that it is, or will become, entitled to receive more than $250,000 per year in
gross revenues.
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"MATURITY DATE" means the earliest of (i) December 31, 1999, as such date
may be extended pursuant to subsection 2.1E to a date not later than December
31, 2001, (ii) the date as of which the Obligations shall have become
immediately due and payable pursuant to subsection 7.1 and (iii) the date which
is 91 days after the date as of which the obligations under the Senior Credit
Agreement shall have become immediately due and payable pursuant to subsection
2.4B(v) of the Senior Credit Agreement (or any replacement subsection thereof).
"MBL PROPERTIES" means each of the hotel properties listed on SCHEDULE
1.1A annexed hereto.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor to the
business thereof.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan that is a
"multiemployer plan", as defined in Section 3(37) of ERISA.
"NASDAQ/NMS" means the National Association of Securities Dealers
Automated Quotation System/National Market Securities.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, any gain (but not
loss), together with any related provision for Taxes on such gain (but not
loss), realized in connection with the sale or other disposition of any asset
(including the disposition of a Property pursuant to subsection 6.11 but
excluding any gain from the sale of inventory in the ordinary course of
business), and excluding any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but not loss).
"NET INSURANCE/CONDEMNATION PROCEEDS" means all Insurance Proceeds on
account of damage or destruction to any Property or all Condemnation Proceeds in
respect of any Property, MINUS the reasonable cost, if any, of such recovery and
of pay ing out such proceeds, including reasonable attorneys' fees and costs
allocable to inspecting the Work and the plans and specifications therefor.
"NET SALES PRICE" means, with respect to any sale or other permanent
disposi tion by a Loan Party or any of its Subsidiaries of a Property, or other
asset, the gross purchase price therefor less the sum of (i) except with respect
to the sale or other permanent disposition of a Pool A Property, the amounts
applied to the payment of Indebtedness or other obligations secured by a Lien on
such Property or other asset,
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(ii) the reasonable out-of-pocket costs and expenses incurred by such Loan Party
or Subsidiary directly in connection with such sale or other permanent
disposition, includ ing income taxes paid or estimated to be actually payable as
a result thereof, after taking into account any available tax credits or
deductions and any tax sharing arrange ments and (iii) closing adjustments
contemplated and reserved.
"NET WORTH" means, as of any date of determination, the sum of the capital
stock and additional paid-in capital PLUS retained earnings (or MINUS
ACCUMULATED DEFICITS) of CapStar and its Subsidiaries determined in conformity
with GAAP.
"NOTES" means, collectively, (i) the promissory notes of the Borrower
issued pursuant to subsection 2.1D(iv) and (ii) any promissory notes issued by
the Borrower pursuant to the last sentence of subsection 9.1A in connection with
assignments of the Commitment (if not theretofore terminated) or Loan of any
Lender, in each case sub stantially in the form of EXHIBIT I annexed hereto, as
they may be amended, restated, supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof.
"NOTICE OF BORROWING" means the notice substantially in the form of
EXHIBIT II annexed hereto delivered by the Borrower to the Agent pursuant to
subsection 2.1B with respect to the proposed borrowing of the Loans hereunder.
"NOTICE OF CONTINUATION" means a notice substantially in the form of
EXHIBIT III annexed hereto delivered by the Borrower to the Agent pursuant to
subsec tion 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the portion
of the Loans specified therein.
"OBLIGATIONS" means, collectively, all obligations of every nature of
CapStar or any of its Subsidiaries from time to time owed to the Agent or the
Lenders or any of them under or in respect of the Loans and the Loan Documents,
whether for princi pal, interest, fees, commissions, expenses, indemnification
or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate exe cuted on behalf of such corporation by a person specified in
this Agreement for such purpose or, in the absence of such specification, by its
chairman of the board (if an officer) or its president or one of its vice
presidents and by its chief financial officer or its treasurer; PROVIDED,
HOWEVER, that the Officers' Certificate with respect to the compliance with the
conditions precedent to the making of the Loans hereunder shall include (i) a
statement that each officer making or giving such Officers' Certificate has read
such condition and any definitions or other provisions contained in this
Agreement
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relating thereto, (ii) a statement that, in the opinion of each signer, he has
made or has caused to be made such examination or investigation as is reasonably
necessary to enable him to express an informed opinion as to whether or not such
condition has been complied with, and (iii) a statement as to whether, in the
opinion of each signer, such condition has been complied with.
"OPERATING EXPENSES" means, for any period and as calculated on the
accrual basis of accounting, all expenses incurred by Cap Star or any of its
Subsidiaries during such period in connection with the ownership, management,
operation, cleaning, main tenance, ordinary repair or leasing of any Property,
including, without duplication:
(i) costs and expenses in connection with the cleaning, ordinary
repair, maintenance, decoration and painting of such Property;
(ii) wages, benefits, payroll taxes, uniforms, insurance costs and
all other related expenses for employees of CapStar and its Subsidiaries
engaged in the management, operation, cleaning, maintenance, ordinary
repair and leasing of such Property and service to guests, customers,
Tenants, concessionaires and licensees of such Property;
(iii) the cost of all services and utilities with respect to such
Property, including all electricity, oil, gas, water, steam, heating,
ventilation, air conditioning, elevator, escalator, landscaping, model
furniture, answering services, telephone maintenance, credit check, snow
removal, trash removal and pest extermination costs and expenses and any
other energy, utility or similar item and overtime services with respect
to such Property;
(iv) the cost of building and cleaning supplies with respect to
such Property;
(v) insurance premiums required in order to maintain the insurance
policies required under this Agreement or any other Loan Documents or Pool
B Obligations, in each case with respect to such Property (which, in the
case of any policies covering multiple Properties, shall be allocated
among the Properties pro rata in proportion to the insured value of the
Properties covered by such policies);
(vi) legal, accounting, engineering and other fees, costs and
expenses incurred by or on behalf of CapStar or such Subsidiary in
connection with the ownership, management, operation, maintenance,
ordinary repair and leasing of such Property, including collection costs
and expenses;
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(vii) operating costs and expenses of security and security systems
provided to and/or installed and maintained with respect to such Property;
(viii) operating costs and expenses of reservation systems, internal
telephone exchanges and key card systems with respect to such Property;
(ix) costs and expenses of parking and valet services, parking lot
maintenance and ordinary parking lot repairs in respect of such Property;
(x) costs and expenses of food and beverages with respect to such
Property;
(xi) real property taxes and assessments with respect to such
Property and the costs incurred in seeking to reduce such taxes or the
assessed value of such Property;
(xii) advertising, marketing and promotional costs and expenses with
respect to such Property;
(xiii) costs and expenses incurred in connection with lock changes,
storage, moving, market surveys, permits (and the application or
registration therefor) and licenses (and the application or registration
therefor) with respect to such Property;
(xiv) maintenance and cleaning costs related to guest and customer
amenities with respect to such Property;
(xv) costs and expenses of maintaining and repairing FF&E (including
the breakage or loss of any such FF&E) with respect to such Property;
(xvi) franchise fees due and payable with respect to such Property;
(xvii) payments due and payable under the Ground Lease with respect
to such Property, if applicable;
(xviii) actual reserves required under the Ground Lease with respect
to such Property, if applicable;
(xix) Management Fees with respect to such Property for such period;
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(xx) tenant improvements and leasing commissions with respect to
such Property accrued during such period;
(xxi) contributions by CapStar or any of its Subsidiaries to any
merchants' association, whether as dues or advertising costs or otherwise
with respect to such Property;
(xxii) costs incurred pursuant to any reciprocal easement agreement
affecting such Property;
(xxiii) refunds CapStar or any of its Subsidiaries must pay to guests,
customers, Tenants, concessionaires and licensees and other occupants of
such Property;
(xxiv) reserves (other than reserves required to be deposited in any
capital reserve account under the Senior Credit Agreement) for such
purposes and in such amounts as the Borrower may reasonably determine in
good faith;
(xxv) costs and expenses of maintaining operating, repairing and
servicing vehicles, including fuel and insurance premiums;
(xxvi) costs of environmental audits and monitoring, environmental
remediation work or any other costs and expenses incurred with respect to
compliance with Environmental Laws; and
(xxvii) all other ongoing expenses which in accordance with the accrual
basis of accounting should be included in CapStar's or any of its
Subsidiaries' annual financial statements as operating expenses of such
Property.
Notwithstanding the foregoing, Operating Expenses shall not include, without
duplica tion, (a) non-cash equity participation expenses, (b) Consolidated
Interest Expense, including such items included within the definition thereof as
shall apply to any Property or Properties with respect to which such Operating
Expenses are being deter mined, (c) income taxes, (d) depreciation, (e)
amortization, (f) principal or Release Prices, if any, due under the loans or
the notes under the Senior Credit Agreement or otherwise in connection with the
obligations under the Senior Credit Agreement, (g) principal, if any, due in
respect of the Pool B Obligations, or (h) expenses referred to in the preceding
sentence that are capitalized on the financial statements of CapStar or any of
its Subsidiaries in conformity with GAAP.
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"OPERATING LEASE" means, with respect to any Person, a lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is not accounted for as a capital lease on the balance
sheet of that Person.
"PARTNERSHIP LOAN PARTIES" means, collectively, each Person that is a
partnership and is, or becomes, a Loan Party.
"PAYMENT DATE" means the 15th day of each calendar month, beginning
January 15, 1997, or, if such day is not a Business Day, the next succeeding
Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor
thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
"PERMITTED ENCUMBRANCES" means the Liens shown on SCHEDULE 6.2 annexed
hereto for such Property and, with respect to any Property (including any Pool B
Property), the following types of Liens (other than any such Lien imposed
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by
ERISA):
(i) Liens for real property Taxes, assessments, vault charges, water
and sewer rents, and other Impositions the payment of which is not, at the
time, required by subsection 5.4;
(ii) the Leases in existence on the Closing Date and any Leases
entered into thereafter in accordance with the requirements of the Loan
Documents;
(iii) covenants, easements, rights-of-way, restrictions, minor
encroachments or other similar encumbrances incurred in the ordinary
course of business of CapStar and its Subsidiaries that do not make such
Property unmarketable or interfere in any material respect, and which
could not reasonably be expected to interfere in any material respect,
with the use of the Property for hotel purposes or with the ordinary
conduct of the business of CapStar and its Subsidiaries;
(iv) Liens, if any, securing the Obligations and Liens securing the
obligations under the Senior Credit Agreement;
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(v) Liens that are bonded and thereby released of record in a
manner reasonably satisfactory to the Agent;
(vi) rights of guests to occupy rooms and of Tenants under Leases;
(vii) all exceptions contained in any title policy delivered to the
lenders under the Senior Credit Agreement; PROVIDED that in no event shall
any Servicing Agreement, Management Agreement or other hotel management
agreement be a Permitted Encumbrance; and
(viii) the Atlanta Mortgage.
"PERMITTED SENIOR CREDIT AGREEMENT AMOUNT" means, at any time,
$225,000,000 (less the amount of any mandatory permanent commitment reductions
effected under the Senior Credit Agreement after the Closing Date) (such amount,
as so reduced, the "Initial Permitted Senior Credit Agreement Amount"), provided
that the Initial Permitted Senior Credit Agreement Amount may be increased by an
additional $50,000,000 in the aggregate so long as at the time that the Borrower
desires to incur any extensions of credit under the Senior Credit Agreement in
excess of the Initial Permitted Senior Credit Agreement Amount at such time (the
"Excess Permitted Senior Credit Agreement Amount") (A) no Event of Default or
Potential Event of Default shall have occurred and be continuing or would result
therefrom, (B) no event of default or potential event of default shall have
occurred and be continuing under the Senior Credit Agreement or would result
therefrom and (C) the Borrower shall have delivered to the Agent an Officers'
Certificate certifying as to the matters set froth in clauses (A) and (B) above
and demonstrating in reasonable detail that, as of the last day of the most
recently ended full fiscal month for which full financial statements are
available, CapStar and the Borrower would have achieved the financial ratios
required to be satisfied for the financial covenants contained in subsection 6.6
as of the last day of the fiscal quarter ending immediately after such full
fiscal month and assuming that the full amount of the Excess Permitted Senior
Credit Agreement Amount had been incurred (and the proceeds therefrom had been
applied) on the first day of the twelve-month period ended on the last day of
such full fiscal month and that such amount had remained outstanding throughout
such period and that the Borrower or a Subsidiary thereof had owned any asset
purchased with such proceeds throughout such period, it being understood and
agreed, however, that prior to the Borrower actually incurring more than
$25,000,000 of additional extensions of credit under the Senior Credit Agreement
which utilizes the Excess Permitted Senior Credit Agreement Amount, the Borrower
shall first satisfy the requirements of preceding clauses (A), (B), and (C) and
shall also obtain the prior written consent of the Requisite Lenders (which
consent shall
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not be unreasonably withheld). Concurrently with the delivery of the Officers'
Certificate pursuant to clause (C) above, the Borrower also shall deliver to the
Agent the financial statements on which the respective calculations were based.
"PERSON" means, collectively, natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and Governmental Authorities.
"POOL A GROUND LEASE" means each of the ground leases with respect to the
Pool A Properties from time to time, together with all right, title and interest
of any Loan Party, as the case may be, in and to the leasehold estate created
pursuant to each such ground lease as each such ground lease may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"POOL A PROPERTIES" means, collectively, the hotel properties, the Land on
which they are located, the related Pool A Ground Leases and all Improvements
thereon and all fixtures attached thereto and all personal property used in
connection therewith, in each case with respect to those properties listed on
SCHEDULE 4.4A1 annexed hereto and with respect to the Additional Pool A
Properties (in each case so long as such properties are owned or leased by the
Borrower or any Pool A Subsidiary).
"POOL A SUBSIDIARIES" means, collectively, each Wholly Owned Subsidiary of
the Borrower in existence on the date of this Agreement which owns or leases a
Pool A Property or created pursuant to subsection 6.7 to own or lease any Pool A
Property, provided that in no event shall a Pool A Subsidiary also own a Pool B
Property.
"POOL B DOCUMENTS" means, collectively, each Pool B Ground Lease, agree
ment, Guaranty, instrument, promissory note or other document entered into by
any Loan Party or any of its Subsidiaries in connection with any Pool B
Obligation, as each such Pool B Ground Lease, agreement, Guaranty, instrument or
other document may be amended, restated, supplemented or otherwise modified from
time to time).
"POOL B GROUND LEASE" means each of the ground leases with respect to the
Pool B Properties from time to time.
"POOL B INDEBTEDNESS" has the meaning assigned to that term in subsection
6.1(v).
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"POOL B OBLIGATIONS" means, collectively, the obligations of any of the
Loan Parties, any of their respective Subsidiaries and any of the Pool B
Subsidiaries, respec tively, of any nature, from time to time owed in respect of
any Pool B Indebtedness, whether for principal, interest, fees, commissions,
expenses, indemnification or other wise.
"POOL B PROPERTIES" means, collectively, the hotel properties, the Land on
which they are located and all Improvements thereon and all fixtures attached
thereto and all personal property used solely in connection therewith, in each
case with respect to those properties listed on SCHEDULE 4.4A2 annexed hereto
and with respect to any properties acquired pursuant to subsection 2.9B (in each
case so long as such properties are owned or leased by any Pool B Subsidiary).
"POOL B SUBSIDIARIES" means, collectively, each Wholly Owned Subsidiary of
the Borrower in existence on the date of this Agreement which owns or leases a
Pool B Property or created pursuant to subsection 6.7 to own one or more Pool B
Properties, provided that in no event shall a Pool B Subsidiary also own a Pool
A Property.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within the applicable grace period.
"PREFERRED LIMITED PARTNER INTERESTS" has the meaning assigned to that
term in subsection 6.20C(ii).
"PRIME RATE" means the rate that Bankers announces from time to time as
its prime lending rate, as in effect from time to time or, if Bankers shall
cease to announce such rate, the rate that is published as the "Prime Rate" in
THE WALL STREET JOURNAL (Eastern edition) or other rate published in THE WALL
STREET JOURNAL (Eastern edition) or any other newspaper of general circulation
that shall have been approved by the Borrower and the Agent. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"PROJECTED INTEREST EXPENSE" means, with respect to any Pool B Subsidiary
as of any date of determination and for any period, total interest expense
(including that portion attributable to Capital Leases in accordance with GAAP
and capitalized interest) reasonably projected by the Borrower to be incurred on
all outstanding and proposed
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Pool B Indebtedness of such Pool B Subsidiary, including, without limitation,
all commissions, discounts and other fees and charges and net costs under
Interest Rate Agreements.
"PROPERTIES" means, collectively, from and after the respective dates of
Acquisition, each of the Pool A Properties and the Pool B Properties. Properties
do not include Managed Properties.
"PROPERTY AMOUNT" means, as of any date of determination with respect to
any Designated Pool A Property, the following:
(i) except with respect to a Designated Pool A Property described
in clause (ii) or (iii) below, the lesser of (a) the product of the
applicable factor set forth in column (I) below MULTIPLIED BY the Property
EBITDA for such Designated Pool A Property and (b) the product of the
applicable factor set forth in column (II) below MULTIPLIED BY the
Property EBITDA-CapEx for such Designated Pool A Property, in each case
for the 12 most recently completed calendar months ending not less than 30
days before such date of determination for which the Agent has received
the financial statements with respect to such Properties required to be
delivered pursuant to subsection 5.1(i):
============================== ==================== =======================
(I) (II)
PERIOD EBITDA FACTOR EBITDA-CAP EX
FACTOR
------------------------------ -------------------- -----------------------
from and including the Closing
Date to September 29, 1997 4.25 5.00
------------------------------ -------------------- -----------------------
from and including September
30, 1997 to September 29, 1998 4.00 4.75
------------------------------ -------------------- -----------------------
from and including September 3.75 4.50
30, 1998 to the Maturity Date
============================== ==================== =======================
; PROVIDED that such Property Amount shall not be greater than an amount
equal to 55% of the Appraised Value thereof; or
(ii) with respect to each of not more than three Designated Pool A
Properties (other than the Atlanta Airport Property), as designated from
time to time by the Borrower in a writing delivered to the Agent, with
respect to which a Renovation shall have commenced and before the end of
12 complete calendar months after completion
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of the Renovation, an amount equal to 60% of the most recently Appraised
Value, on an "as completed" basis, on or before the applicable date of
determination; or
(iii) with respect to the Atlanta Airport Property, the least of (a)
the applicable amount calculated pursuant to clause (i) above, (b) an
amount equal to 55% of the Appraised Value of such Property and (c) the
aggregate outstanding principal amount of the Atlanta Note as of the
applicable date of determination.
"PROPERTY EBITDA" means, with respect to any Property, for any period and
as of any date of determination and calculated on the accrual basis of
accounting, whether a positive or negative number, the amount equal to the
remainder of the following:
(i) all Property Gross Revenues for such period in respect of such
Property; PROVIDED that Property Gross Revenues for such period in respect
of any Property shall be included in the calculation of Property EBITDA
for such period only to the extent that the Agent and Lenders shall have
received the financial statements for such period required to be delivered
on or before such date of determination pursuant to subsection 2.9 or
5.1(i), as the case may be; MINUS
(ii) all Operating Expenses for such period with respect to such
Property, without duplication of items excluded from the definition of
Property Gross Revenues; PROVIDED that (x) Management Fees included in the
calculation of Property EBITDA for such period with respect to such
Property shall not be less than 3.0% of Property Gross Revenues for such
period with respect to such Property and (y) the sum of the aggregate
amount of fees payable pursuant to Franchise Agreements PLUS marketing
fees and expenses included in the calculation of Property EBITDA for such
period with respect to such Property shall not be less than 8.5% of
Property Gross Revenues with respect to such Property;
PROVIDED that:
(v) Property EBITDA with respect to any Property shall be zero for
such period if (1) the Addition Date with respect to such Property shall
not have occurred on or before such date of determination or (2) such
Property shall have been sold or otherwise permanently disposed of on or
before such date of determination;
(w) if the Addition Date with respect to such Property shall have
occurred after the Closing Date and after the commencement of such period
but before the termination of such period, Property EBITDA with respect to
such Property for such period shall be the sum of (A) Property EBITDA for
the portion of such period commencing on the first
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day of such period and ending on the day before such Addition Date, as the
same shall be determined based upon the financial statements for such
period required by subsection 2.9A or 2.9B, as the case may be, to be
delivered with respect to such Property and such other information with
respect thereto that may be provided by the Loan Parties and their
respective Subsidiaries, subject to such adjustments as may be reasonably
required by the Agent so that Property EBITDA with respect to such
Property shall be calculated in the same manner as Property EBITDA with
respect to Properties owned by the Loan Parties and their respective
Subsidiaries during the entire period, PLUS (B) Property EBITDA with
respect to such Property for the portion of such period commencing on such
Addition Date and ending on the last day of such period, based upon the
financial statements for such period required to be delivered on or before
such date of determination pursuant to subsection 5.1(i);
(x) if such date of determination shall occur during a Major
Renovation/ Restoration Removal Period with respect to such Property and
the Property EBITDA with respect to such Property for such period is a
positive number, then (1) for purposes of calculating the Property Amount
with respect to such Property (if such Property is a Pool A Property) as
of such date of determination, Property EBITDA with respect to such
Property for such period shall be zero and (2) for purposes of calculating
any amount pursuant to subsections 6.6B or 6.6C as of such date of
determination, Property EBITDA with respect to such Property for such
period shall be equal to the product of (1) the applicable factor set
forth below as of such date of determination, as determined by reference
to the percentage amount of the rooms "available for sale" at such
Property that have been, are scheduled to be, or could reasonably be
expected to be, "rooms out-of-order", as determined in accordance with the
Uniform System, during such Major Renovation/Restoration Removal Period,
multiplied by (2) the amount of Property EBITDA with respect to such
Property for such period as of such date of determination if effect were
not given to this clause (x):
PERCENTAGE FACTOR
---------- ------
50.00% - 74.99% 0.33
75.00% - 100.00% 0.00
"PROPERTY EBITDA-CAPEX" means, with respect to any Property, for any
period and as of any date of determination, the Property EBITDA with respect to
such Property MINUS Capital Expenditures with respect to such Property.
"PROPERTY GROSS REVENUE" means, for any period, all Receipts resulting
from the operation of such Property, including, without limitation, Rents or
other payments from guests and customers, Tenants, licensees and concessionaires
and business interruption and rental loss insurance payments; PROVIDED that
Property Gross Revenue shall be determined net of allowances in accordance with
the Uniform System and shall exclude (i) excise, sales, use, occupancy and
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similar taxes and charges collected from guests or customers and remitted to
Governmental Authorities, (ii) gratuities collected for employees of such
Property, (iii) security deposits and other advance deposits, until and unless
same are forfeited to any Loan Party or Subsidiary thereof or applied for
the purpose for which collected, (iv) federal, state or municipal excise, sales,
use or similar taxes collected directly from patrons or guests or included as
part of the sales price of any goods or services, (v) interest income on amounts
deposited in such Property's bank accounts in excess of amounts so deposited in
the ordinary course of business and in accor dance with past practices, (vi)
rebates, refunds or discounts (including, without limitation, free or discounted
accommodations) and (vii) Extraordinary Receipts.
"PROPERTY INFORMATION" means, with respect to any Acquisition of any
Additional Pool A Property pursuant to subsection 2.9A or any Pool B Property
pursuant to subsection 2.9B, the following information:
(i) financial statements in respect of such Property for the most
recently completed three calendar years and for the completed calendar
months after the most recently completed calendar year, in each case, to
the extent such financial statements exist and can be readily obtained by
any Loan Party or any of its Subsidiaries;
(ii) copies of all other consolidated balance sheets and related
statements of operations and statements of cash flows of such Property
that are to be delivered to any Loan Party or any of its Subsidiaries in
connection with such Acquisition;
(iii) to the extent any Renovation is then proposed for such Property,
a preliminary project plan and a project budget for such Property ; and
(iv) such other information and/or reports (including Appraisals and
environmental reports) as may be delivered to the lenders under the Senior
Credit Agreement with respect to such Acquisition and as may be reasonably
requested by the Agent.
"PROPERTY SERVICING AGREEMENTS" means, collectively, the hotel management
agreements entered into between the Borrower, on the one part, and a Subsidiary
of the Borrower that owns a fee or leasehold interest in a Property, on the
other part, substantially in a form customarily used by the Borrower or in such
other form as may be reasonably acceptable to the Agent, as any such Servicing
Agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof.
"PRO RATA SHARE" means, with respect to each Lender, the percentage
obtained by dividing (i) the Loan Exposure of that Lender by (ii) the sum of the
aggregate Loan Exposure
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of all Lenders, as such percentage may be adjusted by assignments permitted
pursuant to subsection 9.1. The initial Pro Rata Share of each Lender is set
forth opposite the name of that Lender in SCHEDULE 2.1A annexed hereto.
"QUALIFIED CAPITAL STOCK" means, with respect to any Person, any series or
class of Capital Stock of that Person which may not be required to be redeemed
or repurchased, in whole or in part, by that Person or any of its Subsidiaries,
in whole or in part, at the option of the holder thereof, on or prior to the
Maturity Date, or not be convertible or exchangeable into or exercisable for
Capital Stock of CapStar that is not Qualified Capital Stock on or prior to the
date that is one year and one day after the Maturity Date; PROVIDED that Capital
Stock will be deemed to be Qualified Capital Stock if it may only be so redeemed
or put solely in consideration of Qualified Capital Stock.
"RECEIPTS" means, collectively, all cash, Cash Equivalents, checks, notes,
drafts and any items of payment or collection received, by or on behalf of
CapStar or any of its Subsidi aries, or by any officers, employees or agents of
CapStar or any of its Subsidiaries or other Persons acting for or in concert
with CapStar or such Subsidiary to make collections on CapStar's or such
Subsidiary's behalf in connection with or in any way relating to CapStar or such
Subsidiary or the operation of CapStar's or such Subsidiary's business,
including, without limitation, any proceeds received from or pursuant to (i) any
sales of, or loans against, accounts of CapStar or any of its Subsidiaries
(other than the Loans pursuant to this Agreement and loans under the Senior
Credit Agreement), (ii) any disposition of assets (including, without
limitation, any disposition of assets permitted hereunder or consented to by the
Agent, but excluding amounts applied to the repayment of indebtedness or other
obligations secured by a Lien on the assets subject to such disposition) or
issuance or sale of equity Securities by CapStar or any of its Subsidiaries,
(iii) the incurrence of Indebtedness by CapStar or any of its Subsidiaries and
the issuance and sale by CapStar or any of its Subsidiaries of equity or debt
Securities, in each case other than the Obligations and other Indebtedness
permitted by this Agreement, (iv) insurance policies (other than liability
insurance payable directly or indirectly to a third party) maintained by CapStar
or any of its Subsidiaries, (v) the successful prosecution (including any
settlement) of any claims, actions or other litigation or proceeding by or on
behalf of or against CapStar or any of its Subsidiaries, (vi) Investments in, or
equity and debt Securities issued by, Joint Ventures or other Persons and (vii)
the Management Agreements (other than amounts received by CapStar or any of its
Subsidiaries in respect of the Managed Properties on behalf of, or as agent for,
the parties to the Management Agreements other than CapStar and its
Subsidiaries); it being understood and agreed that nothing contained in this
definition shall in any respect be deemed to permit any transactions by CapStar
or any of its Subsidiaries otherwise restricted or prohibited by this Agreement.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
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"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"RELEASE DATE" means the date of a sale or other disposition of any
Property pursuant to subsection 2.10.
"RELEASE PRICE" means, as calculated as of any Release Date (or the date
of any casualty or Taking) with respect to any Pool A Property, the amount that
is the greatest of the following:
(a) the amount equal to 125% of the Property Amount with
respect to such Pool A Property; provided that, with respect to
the Specified Release Properties, such amount shall be 100% of
the Property Amount with respect to such Specified Release
Property;
(b) in the event of a sale or other permanent disposition of
such Pool A Property, the amount equal to 75% of the Net Sales
Price for such Pool A Property; provided that, with respect to
the Specified Release Properties, such amount shall be zero;
(c) the amount necessary to ensure that the requirements of
clause (i)(c) of the definition of "Release Price" as defined in
the Senior Credit Agreement (as in effect on the Closing Date)
are satisfied; and
(d) in the event of a casualty or Taking with respect to such
Pool A Property, the Insurance Proceeds or Condemnation Proceeds,
as the case may be, resulting therefrom.
"REMOVED POOL A PROPERTIES" means, as of any date of determination, all
Pool A Properties that have been removed (and which remain removed) pursuant to
subsection 2.9D of the Senior Credit Agreement (as in effect on the Closing
Date).
"RENOVATION" means the expansion, rebuilding, repair, restoration,
refurbishment, fixturing and equipping of the Improvements at a Property or a
Managed Property. The term "Renovate" used as a verb has a corresponding
meaning.
"RENTS" means, collectively, all rents, issues, profits, royalties,
receipts, revenues, accounts receivable, security deposits and other deposits
(subject to the prior right of Tenants making such deposits) and income,
including room receipts, rack charges, vending machine receipts, food and
beverage receipts, concession fees and charges, public assembly room receipts,
fixed, additional and percentage rents, occupancy charges, operating expense
▇▇▇▇-
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bursements, reimbursements for increases in taxes, sums paid by Tenants to any
Loan Party or any of its Subsidiaries to reimburse such Loan Party or such
Subsidiary for amounts originally paid or to be paid by such Loan Party or such
Subsidiary or such Loan Party's or such Subsidiary's agents or Affiliates for
which such Tenants were liable, as, for example, tenant improvements costs in
excess of any work letter, lease takeover costs, moving expenses and tax and
operating expense pass-throughs for which a Tenant is solely liable, parking,
valet, main tenance, common area, tax, insurance, utility and service charges
and contributions, proceeds of sale of electricity, gas, heating,
air-conditioning and other utilities and services, deficiency rents and
liquidated damages, and other benefits.
"REQUISITE LENDERS" means (i) except for the purpose described in clause
(ii) of this definition, Lenders having or holding at least 66-2/3% of the sum
of the aggregate Loan Exposure of all Lenders or (ii) for purposes of declaring
the Obligations due and payable pursuant to subsection 7, Lenders having or
holding at least 33-1/3% of the sum of the aggregate Loan Exposure of all
Lenders. For purposes of determining the Requisite Lenders at any time of
determination thereof, any Loans made or held by any Affiliate of any Loan Party
shall be considered as though such Loans are not outstanding. Each Lender, upon
the request of the Agent, shall inform the Agent as to whether or not such
Lender is an Affiliate of any Loan Party.
"RESTORATION" means the repair, restoration (including demolition),
replacement and rebuilding of all or any portion of a Property (or the
Improvements thereof) following the destruction, damage, loss or Taking thereof.
The term "Restore" used as a verb has a corre sponding meaning.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock or other
equity Security of any Loan Party or any Subsidiary of a Loan Party now or
hereafter outstanding, except a dividend or dis tribution payable to the
Borrower or any of its Wholly Owned Subsidiaries that are Loan Parties or
payable solely in shares of that class of stock to the holders of that class,
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any equity
Securities, now or hereafter outstanding, of CapStar or any of its Subsidiaries
that are not Wholly Owned Subsidiaries, (iii) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any now or hereafter outstanding, of CapStar or any of its
Subsidiaries that are not Wholly Owned Subsidiaries and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in substance or legal defeasance),
sinking fund or similar payment with respect to, any Indebtedness of CapStar or
any of its Subsidiaries (other than Senior Indebtedness and the Obligations).
-42-
"SECURITIES" means any stock, shares, partnership interests, interests in
limited liability companies, voting trust certificates, certificates of interest
or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or partici pations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"SENIOR CREDIT AGREEMENT" means (collectively) the Senior Secured
Revolving Credit Agreement dated as of September 24, 1996, among CapStar, the
Borrower, the lenders from time to time party thereto in their capacities as
lenders thereunder and Bankers Trust Company, as agent, together with the
related documents thereto (including, without limitation, any guarantee
agreements, security documents and the other loan documents related thereto), in
each case as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including all agreements extending the maturity of, refinancing or replacing all
of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"SENIOR INDEBTEDNESS" means the principal of, premium, if any, interest
(including any post default interest and any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all
obligations of every nature of the Borrower under the Senior Credit Agreement,
including, without limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, and (y) all obligations of the Borrower under Interest Rate
Agreements entered into with a lender under the Senior Credit Agreement (or an
Affiliate thereof) relating to Indebtedness outstanding under the Senior Credit
Agreement, in each case whether outstanding on the Closing Date or thereafter
incurred. Notwithstanding the foregoing, Senior Indebtedness shall not include
that portion of any such Indebtedness incurred in violation of the provisions
set forth in this Agreement.
"SENIOR REPRESENTATIVE" means the indenture trustee or other trustee,
agent or represen tative in respect of the Senior Credit Agreement; PROVIDED
that if, and for so long as, the Senior Credit Agreement lacks such a
representative, then the Senior Representative for the Senior Credit Agreement
shall at all times constitute the holders of a majority in outstanding principal
amount of loans outstanding under the Senior Credit Agreement.
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"SERVICING AGREEMENTS" means, collectively, the Property Servicing
Agreements, the Liquor Operations Servicing Agreements and the Liquor Leases, as
any such agreement may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof and hereof.
"SIGNIFICANT SUBSIDIARY" means the Borrower, CapStar Sub and any other
Subsidiary of CapStar that would be a "Significant Subsidiary" of CapStar within
the meaning of Rule 1-02 under Regulation S-X promulgated by the Securities and
Exchange Commission.
"SPECIFIED RELEASE PROPERTIES" means three Properties designated by the
Borrower at the time such Properties are Released; PROVIDED that each Property
so designated shall either (i) have been a Property on the date of this
Agreement or (ii) be an MBL Property.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which either (i) the Person is a general partner or member of
a limited liability company or other entity having the right to direct or manage
the business and affairs of such entity or (ii) more than 50% of the total
voting power of shares of stock or other ownership interests entitled (without
regard to the occurrence of any contingency) to vote in the election of the
Person or Persons (whether directors, managers, trustees or other Persons
performing similar functions) having the power to direct or cause the direction
of the management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof.
"S&P" means Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc., or any successor to the business thereof.
"TAKING" means the taking or appropriation (including by deed in lieu of
condemnation or by voluntary sale or transfer under threat of condemnation or
while legal proceedings for condemnation are pending) of any Property, or any
part thereof or interest therein, for public or quasi-public use under the power
of eminent domain, by reason of any public improvement or condemnation
proceeding, or in any other manner or any damage or injury or diminution in
value through condemnation, inverse condemnation or other exercise of the power
of eminent domain. The term "Taken" used as a verb has a correlative meaning.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, on
whomsoever and wherever imposed, levied, collected, withheld or assessed by a
Governmental Authority; PROVIDED, HOWEVER, that "TAX ON THE OVERALL NET INCOME"
of a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or, in the case
of any Lender, its lending office) is located or in which that Person is deemed
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to be doing business on all or part of the net income, profits or gains of that
Person (whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or otherwise).
"TENANT" means any Person liable by contract or otherwise to pay rent or a
percentage of income, revenue or profits pursuant to a Lease, and includes a
tenant, subtenant, lessee and sublessee.
"TOTAL PROPERTY EBITDA" means, for any period and as of any date of
determination, the aggregate Property EBITDA for such period with respect to all
Properties.
"TRANSFER" means any conveyance, assignment, sale, mortgaging,
encumbrance, pledging, hypothecation, granting of a security interest in,
granting of options with respect to or other disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) all or any portion of any legal
or beneficial interest (i) in all or any portion of any Property or (ii) in any
other assets of any Loan Party or any of its Subsidiaries.
"UNIFORM SYSTEM" means the Uniform System of Accounts for Hotels, 8th
Revised Edition, 1986, as published by the Hotel Association of New York City,
as the same may be further revised from time to time.
"UNITED STATES OF AMERICA" means the 50 states of the United States of
America and Washington, D.C., but excluding any territories or possessions
thereof other than the Commonwealth of Puerto Rico.
"VIRGINIA PARKING SUB" means Ballston Parking Associates, a Virginia
general partnership.
"VIRGINIA SUB" means EquiStar Virginia Company, L.L.C., a Delaware limited
liability company.
"WHOLLY OWNED" means, with respect to any Subsidiary of any Person, a
Subsidiary all of the outstanding equity Securities of which are owned directly
or indirectly by such Person.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT; PRO FORMA.
Except as otherwise expressly provided in this Agreement, all accounting
terms not other wise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
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delivered by the Borrower to the Agent for distribution to the Lenders pursuant
to subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation. Except as otherwise expressly provided herein,
calculations in connection with the definitions, covenants and other provisions
of this Agreement shall utilize accounting principles and policies in conformity
with those used to pre pare the financial statements referred to in subsection
4.3A. For purposes of calculating any amount pursuant to subsection 6.6, as of
any date of determination and for any period, pro forma effect shall be given to
the consummation of the Formation (as defined in the Senior Credit Agreement as
in effect on the Closing Date) and the Equity Offering (as defined in the Senior
Credit Agreement as in effect on the Closing Date) and the application of all
proceeds therefrom, as if such transactions shall have been consummated on the
first day of such period.
1.3 REFERENCES TO ARTICLES, SECTIONS, EXHIBITS, SCHEDULES AND ATTACHMENTS.
All references appearing in a Loan Document to Articles, Sections,
subsections, clauses, Recitals, Exhibits, Schedules or Attachments are
references to the Articles, Sections, subsec tions, clauses and Recitals thereof
and to the Exhibits, Schedules or Attachments annexed to such Loan Document
unless expressly otherwise designated in such Loan Document. All references
appearing in a Loan Document to Exhibits, Schedules and Attachments are
references to such documents as initially annexed to such Loan Document or as
supplemented or revised in accordance with the terms of this Agreement or such
other Loan Document.
1.4 CAPTIONS.
All captions to any Article, Section, subsection, clause, Recital,
Exhibit, Schedule or Attachment in a Loan Document are used for convenience and
reference only and in no way define, limit or describe the scope or intent of,
or in any way affect, such Loan Document.
1.5 DRAFTER.
No inference against or in favor of any party to any Loan Document shall
be drawn from the fact that such party or its counsel has drafted any portion of
any Loan Document.
1.6 REFERENCES TO PERSONS INCLUDE PERMITTED SUCCESSORS AND ASSIGNS.
Except as otherwise specified in a Loan Document, all references in such
Loan Document to any Person, other than the Borrower or any of its Affiliates,
shall be deemed to include the successors and assigns of such Person.
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1.7 REFERENCES TO APPLICABLE LAW AND CONTRACTS.
Except as otherwise specified in a Loan Document, all references in such
Loan Document to any Applicable Law or contracts specifically defined or
referred to therein, shall be deemed references to such Applicable Law or
contracts as may be amended, restated, supplemented, con solidated or otherwise
modified from time to time, or, in the case of any such contract, as the terms
thereof may be waived or modified, but only in the case of each such amendment,
waiver or modification of a contract, to the extent permitted by, and effected
in accordance with, the terms thereof and hereof and only to the extent such
amendment, waiver or modification of a contract is not prohibited by any of the
Loan Documents.
1.8 HEREIN.
The words "herein", "hereinabove", "hereinbelow", "hereof", "hereunder"
and words of similar import, when used in a Loan Document, shall refer to such
Loan Document as a whole.
1.9 INCLUDING WITHOUT LIMITATION.
The words "includes", "including" and similar terms used in any Loan
Document shall be construed as if followed by the words "without limitation".
1.10 GENDER.
Whenever the context so requires, the neuter gender includes the masculine
or feminine and the singular number includes the plural, and vice versa.
1.11 SINGULAR AND PLURAL.
Any of the terms defined in a Loan Document may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
1.12 KNOWLEDGE.
As used in this Agreement or in any other Loan Document, the phrases "TO
THE BORROWER'S ACTUAL KNOWLEDGE", "TO THE KNOWLEDGE OF THE BORROWER" and any
variations thereof shall mean, as of any date of determination and after inquiry
that would be made by a prudent owner and manager of upscale full service hotels
owning or managing such hotels for its own account, the actual knowledge or
awareness, as of such date, of the persons who occupy the offices of Chairman of
the Board, Chief Executive Officer, President, Chief Operating
Officer, Chief Financial Officer, Senior Executive Vice President-Finance,
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Executive Vice President-Finance and Development, Senior Vice
President-Operations and such other officers as shall from time to time perform
the functions that are performed by the foregoing officers as of the date of
this Agreement. The Borrower represents and warrants that the foregoing Persons
have executive and administrative responsibility for the Borrower and its assets
and, in the performance of their duties in the ordinary course of business, and
that one or more of such Persons would customarily have knowledge of the matters
referred to herein.
SECTION 2
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; LOANS; NOTES; THE REGISTER.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of CapStar and the Borrower
herein set forth, each Lender hereby severally agrees to lend to the Borrower,
on the Funding Date, an amount equal to such Lender's Pro Rata Share of the
aggregate amount of the Commitments, to be used for the purposes identified in
subsection 2.5A. The amount of each Lender's Commitment and such Lender's Pro
Rata Share is set forth opposite its name on SCHEDULE 2.1A annexed hereto and
the aggregate amount of the Commitments is $50,000,000; PROVIDED, HOWEVER, that
prior to the Funding Date the Commitments of the Lenders shall be adjusted to
give effect to any assignments of the Commitments pursuant to subsection 9.1.
Each Lender's Commitment shall expire immediately and without further
action on the earlier of (i) the Funding Date (after giving effect to the making
of the Loans on such date) and (ii) 5:00 P.M. (New York time) on December 31,
1996. The Borrower may make only one borrowing under the Commitments; PROVIDED,
HOWEVER, that the Commitments may be terminated by the Borrower pursuant to
subsection 2.4B(ii). Any amounts borrowed under this subsection 2.1A and
subsequently repaid or prepaid may not be reborrowed.
B. NOTICE OF BORROWING. When the Borrower desires to borrow the Loans
under subsection 2.1A, the Borrower shall deliver to the Agent the Notice of
Borrowing no later than 10:00 A.M. (New York time), at least three Business Days
in advance of the Funding Date. The Notice of Borrowing shall contain the
information specified in the form attached hereto as EXHIBIT II. The Borrower
shall notify the Agent prior to the funding of the Loans in the event that any
of the matters to which the Borrower is required to certify in the Notice of
Borrowing is no longer true and correct as of the Funding Date, and the
acceptance by the Borrower of the proceeds of the Loans shall constitute a
re-certification by the Borrower, as of the Funding Date, as to the matters to
which the Borrower is required to certify in the Notice of Borrowing.
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Except as otherwise provided in subsections 2.6B and 2.6C, the Notice of
Borrowing for a Eurodollar Rate Loan shall be irrevocable on and after the
related Interest Rate Determination Date, and the Borrower shall be bound to
make the proposed borrowing in accordance therewith.
C. DISBURSEMENT OF FUNDS. The Loans under this Agreement shall be made by
the Lenders simultaneously and proportionately to their respective Pro Rata
Shares, it being understood that no Lender shall be responsible for any default
by any other Lender in that other Lender's obligation to make its Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in that other Lender's obligation to
make its Loan requested hereunder. After receipt by the Agent of the Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
the Agent shall promptly notify (and, if the Notice of Borrowing is received by
the Agent by 10:00 A.M. (New York time) on any day, in any event by the end of
such day) each Lender of the proposed borrowing. Each Lender shall make the
amount of its Loan available to the Agent, in same day funds, at the office of
the Agent located at One Bankers Trust Plaza, New York, New York, not later than
12:00 Noon (New York time) on the Funding Date in same day funds in Dollars.
Upon satisfaction or waiver of the conditions precedent specified in subsections
3.1 and 3.2, the Agent shall make the proceeds of such Loans available to the
Borrower on the Funding Date by causing an amount of same day funds equal to the
proceeds of all such Loans received by the Agent from the Lenders to be
transferred to an account designated in writing by the Borrower to the Agent.
Unless the Agent shall have been notified by any Lender prior to the
Funding Date that such Lender does not intend to make available to the Agent the
amount of such Lender's Loan requested on the Funding Date, the Agent may assume
that such Lender has made such amount available to the Agent on the Funding Date
and the Agent may, in its sole discretion, but shall not be obligated to, make
available to the Borrower a corresponding amount on the Funding Date. If such
corresponding amount is not in fact made available to the Agent by such Lender,
the Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from the Funding Date
until the date such amount is paid to the Agent, at the Federal Funds Effective
Rate for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Agent together with interest
thereon, for each day from the Funding Date until the date such amount is paid
to the Agent, at the rate payable under this Agreement for Base Rate Loans.
Nothing in this subsection 2.1C shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights that
the Borrower may have against any Lender as a result of any default by such
Lender hereunder.
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D. THE REGISTER.
(i) The Agent shall maintain, at its address referred to in
subsection 9.8, a register for the recordation of the names and addresses
of the Lenders and the Commitment or outstanding Loan, as the case may be,
of each Lender from time to time (the "REGISTER"). The Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender
at any reasonable time and from time to time upon reasonable prior notice.
(ii) The Agent shall record in the Register the Commitment or the
outstanding Loan, as the case may be, of each Lender, and each repayment
or prepayment in respect of the principal amount of the Loan of each
Lender. Any such recordation shall be conclusive and binding on the
Borrower and each Lender, absent manifest error; PROVIDED, HOWEVER, that
failure to make any such recordation, or any error in such recordation,
shall not affect the Borrower's Obligations in respect of the applicable
Loans.
(iii) Each Lender shall record on its internal records (including
any promissory note described in subsection 2.1D(iv)) the amount of the
Loan made by it and each payment in respect thereof. Any such recordation
shall be conclusive and binding on the Borrower, absent manifest error;
PROVIDED, HOWEVER, that failure to make any such recordation, or any error
in such recordation, shall not affect the Borrower's Obligations in
respect of the applicable Loans; PROVIDED FURTHER, HOWEVER, that in the
event of any inconsistency between the Register and any Lender's records,
the recordations in the Register shall govern.
(iv) Any Lender may, by notice to the Agent and the Borrower,
request that all or part of the principal amount of the Borrower's Loan
from such Lender here under be evidenced by a Note. Within three Business
Days of the Borrower's receipt of such notice, the Borrower shall execute
and deliver to the Agent for delivery to the appropriate Lender a Note in
the principal amount(s) of such Loan, in the form of EXHIBIT I attached
hereto, payable to the notifying Lender or, if so specified in such
notice, any Person who is an assignee of such Lender pursuant to
subsection 9.1.
E. EXTENSION OF MATURITY DATE.
(i) At any time prior to the date that is 180 days before
December 31, 1999, the Borrower may deliver a written notice to the Agent
requesting that the
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Maturity Date be extended from December 31, 1999 to December 31, 2000 and,
if such notice is delivered, the Maturity Date shall be so extended
provided that the following conditions are satisfied:
(a) as of December 31, 1999, no Event of Default or
Potential Event of Default shall have occurred and be continuing
and no event of default or potential event of default under the
Senior Credit Agreement shall have occurred and be continuing and
the Borrower shall have delivered to the Agent an Officers'
Certificate certifying thereto;
(b) on or prior to December 31, 1999, the Borrower shall
have paid to the Agent in immediately available funds, for
distribution to the Lenders in accordance with their Pro Rata
Shares, a fee equal to .25% of the aggregate principal of the
Loans outstanding on December 31, 1999; and
(c) after giving effect to the proposed extension, no
Indebtedness permitted pursuant to subsection 6.1(iv) or (v)
shall mature prior to the date that is 91 days after the Maturity
Date, as so extended, except to the extent expressly permitted by
the second proviso contained in subsection 6.1(iv).
(ii) If the Maturity Date has been extended pursuant to clause
(i) above, at any time prior to the date that is 180 days before December
31, 2000, the Borrower may deliver a written notice to the Agent
requesting that the Maturity Date be extended from December 31, 2000 to
December 31, 2001 and, if such notice is delivered, the Maturity Date
shall be so extended provided that the following conditions are satisfied:
(a) as of December 31, 2000, no Event of Default or
Potential Event of Default shall have occurred and be continuing
and no event of default or potential event of default under the
Senior Credit Agreement shall have occurred and be continuing and
the Borrower shall have delivered to the Agent an Officers'
Certificate certifying thereto;
(b) on or prior to December 31, 2000, the Borrower shall
have paid to the Agent in immediately available funds, for
distribution to the Lenders in accordance with their Pro Rata
Shares, a fee equal to .25% of the aggregate principal of the
Loans outstanding on December 31, 2000; and
(c) after giving effect to the proposed extension, no
Indebtedness permitted pursuant to subsection 6.1(iv) or (v)
shall mature prior
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to the date that is 91 days after the Maturity Date, as so
extended, except to the extent expressly permitted by the second
proviso contained in subsection 6.1(iv).
(iii) If the maturity date of the Senior Credit Agreement is
extended from September 30, 1999 to September 30, 2000 for any reason
while any Loan remains outstanding, then the Maturity Date shall, subject
to the provisions of the immediately following sentence, be automatically
extended from December 31, 1999 to December 31, 2000 and if the maturity
date of the Senior Credit Agreement is extended from September 30, 2000 to
September 30, 2001 for any reason while any Loan is outstanding, then the
Maturity Date shall, subject to the provisions of the immediately
following sentence, be automatically extended from December 31, 2000 to
December 31, 2001. Notwithstanding anything to the contrary contained in
this subsection 2.1E(iii), the Maturity Date shall only be extended
pursuant to the provisions of the immediately preceding sentence if at the
time of any such extension, (i) the Borrower shall have paid the
applicable extension fee referred to in subsection 2.1E(i)(b) or
2.1E(ii)(b), as the case may be, and (ii) no Event of Default or Potential
Event of Default shall have occurred and be continuing and no event of
default or potential event of default under the Senior Credit Agreement
shall have occurred and be continuing.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.2E, 2.6
and 2.7, the Loans shall bear interest on the unpaid principal amount thereof
from the date made through the Maturity Date at a rate determined by reference
to the Adjusted Eurodollar Rate; PROVIDED HOWEVER, that at all times during
which this Agreement otherwise provides that a Loan shall be a Base Rate Loan,
such Loan shall bear interest at a rate determined by reference to the Base
Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Loans shall
bear interest through the Maturity Date as follows:
(i) if a Base Rate Loan, then at a rate equal to the sum of the
Base Rate PLUS the Applicable Base Rate Margin; and
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate PLUS the Applicable Eurodollar Rate Margin.
From time to time upon the request of the Borrower with respect to any
Loan, the Agent shall advise the Borrower of the interest rate applicable to
such Loan. The Agent shall advise the Borrower of the amount of each interest
payment in advance of each Payment Date in
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accordance with the customary procedures of the Agent with respect thereto, but
the failure of the Agent to provide such advice accurately or timely shall not
vary the obligation of the Borrower to pay the same in accordance with the terms
of this Agreement.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, the
Borrower shall, pursuant to the Notice of Borrowing or the applicable Notice of
Continuation, as the case may be, select an interest period (each an "INTEREST
PERIOD") to be applicable to such Loan, which Interest Period shall be at the
Borrower's option either a one, two, three or, if available, six month period;
PROVIDED, HOWEVER, that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date;
(ii) each successive Interest Period shall commence on the day on
which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, HOWEVER, that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on the
last Business Day of a calendar month;
(v) no Interest Period with respect to any Eurodollar Rate Loan
shall extend beyond the Maturity Date;
(vi) there shall be no more than one Interest Period outstanding at
any time; and
(vii) in the event the Borrower either shall fail to specify an
Interest Period for a Eurodollar Rate Loan in the Notice of Borrowing or
in the applicable Notice of Continuation or shall fail to timely deliver a
Notice of Continuation, the Borrower shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on the Loans shall be payable monthly in arrears on and to each Payment
Date, upon any prepayment of the Loans (to the extent accrued on the amount
being prepaid) and at the Maturity Date.
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D. CONVERSION/CONTINUATION. Subject to the provisions of subsections 2.2E
and 2.6, if any Eurodollar Rate Loan is to be made or continued on any date on
which any Base Rate Loans are outstanding, each outstanding Base Rate Loan shall
be automatically converted into a Eurodollar Rate Loan on such date and shall
have the same Interest Period as the Eurodollar Rate Loan to be made or
continued on such date.
Upon the expiration of any Interest Period applicable to a Eurodollar Rate
Loan, the Borrower shall continue such Loan as a Eurodollar Rate Loan. The
Borrower shall deliver a Notice of Continuation to the Agent no later than 10:00
A.M. (New York time) at least three Business Days in advance of the proposed
continuation date for the applicable Eurodollar Rate Loan. A Notice of
Continuation shall specify (i) the proposed continuation date (which shall be a
Business Day), (ii) the amount of the Eurodollar Rate Loan to be continued,
(iii) the requested Interest Period, and (iv) that no Potential Event of Default
or Event of Default has occurred and is continuing. In lieu of delivering the
above-described Notice of Continuation, the Borrower may give the Agent
telephonic notice by the required time of any proposed continuation under this
subsection 2.2D; PROVIDED, HOWEVER, that such notice shall be promptly confirmed
in writing by delivery of a Notice of Continuation to the Agent on or before the
proposed continuation date. Upon receipt of written or telephonic notice of any
proposed continuation under this subsection 2.2D, the Agent shall promptly
transmit such notice by telefacsimile or telephone to each Lender.
Neither the Agent nor any Lender shall incur any liability to the
Borrower or any of its Affiliates in acting upon any telephonic notice referred
to above that Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of the Borrower
or for otherwise acting in good faith under this subsection 2.2D, and upon
continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice the Borrower shall have effected a continuation, as the case
may be, hereunder.
Except as otherwise provided in subsections 2.2E, 2.6B and 2.6C,
a Notice of Continuation for continuation of a Eurodollar Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and after the related
Interest Rate Determination Date, and Borrower shall be bound to effect a
continuation in accordance therewith.
E. DEFAULT RATE INTEREST. During the continuation of any Event of
Default, the outstanding principal amount of all Loans and, to the extent
permitted by applicable law, any interest payments thereon not paid when due
(other than any excess interest payable solely pursuant to this subsection 2.2E)
and any fees and other amounts then due and payable hereunder, shall thereafter
bear interest (including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy or insolvency laws) payable upon
demand at a rate that is 3.0% per annum in excess of the interest rate otherwise
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payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 3.0% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); PROVIDED, HOWEVER, that, in the case of Eurodollar Rate Loans, if such
Event of Default is continuing, upon the expiration of the Interest Period in
effect at the time any such increase in interest rate is effective, such
Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 3.0% per annum
in excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans. Payment or acceptance of the increased rates of interest provided
for in this subsection 2.2E is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or otherwise prejudice or
limit any rights or remedies of the Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed (i) in
the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as the
case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a
360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan shall be included, and the date of payment of such Loan or the expiration
date of an Interest Period applicable to such Loan shall be excluded; PROVIDED,
HOWEVER, that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
2.3 FEES.
The Borrower agrees to pay to the Agent and the Lenders such fees in the
amounts and at the times separately agreed upon in writing between the Borrower
and the Agent and/or such Lenders.
2.4 REPAYMENTS AND PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF THE LOANS. On the Maturity Date, the Loans
and all other Obligations shall be paid in full by the Borrower.
B. PREPAYMENTS AND TERMINATION OF COMMITMENTS.
(i) VOLUNTARY PREPAYMENTS. The Borrower may, without prepayment
charge or penalty (except as provided in subsection 2.6D), upon not less
than one Business Day's prior written or telephonic notice, in the case of
Base Rate Loans, and upon not less than three Business Days' prior written
or telephonic notice in the case of Eurodollar Rate Loans, in each case
confirmed in writing to the Agent (which notice the Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time prepay
the
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Loans on any Business Day in whole (but not in part); PROVIDED, HOWEVER,
that in the event a Eurodollar Rate Loan is prepaid on a day other than
the last day of the Interest Period applicable thereto, such prepayment
shall be accompanied by the payment of any amounts payable under
subsection 2.6D. Notice of prepayment having been given as aforesaid, all
of the Loans shall become due and payable on the prepayment date specified
therein.
(ii) VOLUNTARY TERMINATION OF COMMITMENTS. At any time prior to the
Funding Date, the Borrower may, upon not less than three Business Days'
prior written or telephonic notice confirmed in writing to the Agent
(which notice the Agent will promptly transmit by telegram, telex or
telephone to each Lender), at any time terminate the Commitments in whole
(but not in part), without premium or penalty. The Borrower's notice to
the Agent shall designate the date (which shall be a Business Day) of such
termination and such termination of the Commitments shall be effective on
the date specified in the Borrower's notice and shall terminate the
Commitment of each Lender.
(iii) MANDATORY REPAYMENTS OF LOANS FROM SALES OR OTHER DISPOSITIONS
OF PROPERTIES AND FROM ANY CASUALTY OR TAKING OF PROPERTIES. In the event
that subsection 6.15C or 6.15D is applicable, the Borrower shall be
required to repay outstanding Loans as and to the extent required by such
subsection 6.15C or 6.15D in connection with the sale or other permanent
disposition of a Property or in connection with any casualty or Taking of
a Property, as the case may be.
C. APPLICATION OF PAYMENTS TO PRINCIPAL AND INTEREST. All payments in
respect of the principal amount of the Loans shall include payment of accrued
interest on the principal amount being repaid or prepaid, and all such payments
shall be applied to the payment of unpaid interest before application to
principal.
D. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) MANNER AND TIME OF PAYMENT. All payments by the Borrower of
principal, interest, fees and other Obligations hereunder and under the
Notes and the other Loan Documents owed to Agent or any Lender shall be
made in same day funds and without defense, setoff or counterclaim, free
of any restriction or condition, and delivered to the Agent not later than
2:00 P.M. (New York time) on the date due at its office located at One
Bankers Trust Plaza, New York, New York, for the account of the Lenders;
funds received by the Agent after that time on such due date shall be
deemed to have been paid by the Borrower on the next succeeding Business
Day.
(ii) APPORTIONMENT OF PAYMENTS. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such
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payments relate, in each case proportionately to the Lenders' respective
Pro Rata Shares. The Agent shall promptly distribute to each Lender, at
its primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request, its Pro
Rata Share of all such payments received by the Agent and the commit ment
fee of such Lender when received by the Agent pursuant to subsection 2.3.
Not withstanding the foregoing provisions of this subsection 2.4D(ii), if,
pursuant to the provisions of subsection 2.6C, any Affected Lender makes
Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate
Loans, the Agent shall give effect thereto in apportioning payments
received thereafter.
(iii) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made here
under shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder.
(iv) NOTATION OF PAYMENT. Each Lender agrees that before disposing of
the Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; PROVIDED,
HOWEVER, that the failure to make (or any error in the making of) a nota
tion of any Loan made under such Note shall not limit or otherwise affect
the obligations of the Borrower hereunder or under such Note with respect
to any Loan or any payments of principal or interest on such Note.
(v) DISTRIBUTION TO LENDERS. Any payment received by the Agent for
distribu tion to the Lenders that is received by 2:00 P.M. (New York time)
on any day shall be paid to the Lenders by the end of such day and, if
such amounts are not paid to the Lenders on such date, shall bear
interest, payable on demand, until paid to the Lenders at the Federal
Funds Effective Rate for three Business Days and thereafter at the Base
Rate.
2.5 USE OF PROCEEDS.
A. LOANS. Subject to the other provisions of this Agreement, the
proceeds of the Loans shall be applied by the Borrower for the acquisition of
upscale full service hotels in the United States of America and, to the extent
permitted by subsection 6.14B, Canada.
B. MARGIN REGULATIONS. No portion of the proceeds of the Loans shall
be used by any Loan Party or any of its Subsidiaries in any manner that might
cause such borrowing to violate Regulation G, Regulation U, Regulation T or
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Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation of such Board or to violate the Exchange Act, in each case as
in effect on the Funding Date.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to the Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable after
10:00 A.M. (New York time) on each Interest Rate Determination Date, the Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to the Borrower and each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE; EXISTENCE OF DEFAULT.
In the event that the Agent shall have determined in good faith (which
determination shall absent mani fest error be final and conclusive and binding
upon all parties hereto), on any Interest Rate Determination Date with respect
to any Eurodollar Rate Loans, that by reason of circumstances affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the interest rate applicable to such Loans on the basis provided
for in the definition of Adjusted Eurodollar Rate, the Agent shall on such date
give notice (by telefacsimile or by telephone confirmed in writing) to the
Borrower and each Lender of such determination, whereupon (i) no Loans may be
made as, or converted to Eurodollar Rate Loans until such time as the Agent noti
fies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist and (ii) the Notice of Borrowing or any Notice of
Continuation given by the Borrower with respect to the Loans in respect of which
such determination was made shall be deemed to contain a request that such Loans
be made as or converted to Base Rate Loans. Notwithstanding any thing to the
contrary contained in this Agreement, no Loan may be made as, or converted into,
a Eurodollar Rate Loan if an Event of Default or a Potential Event of Default
has occurred and is continuing.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event
that on any date any Lender shall have determined in good faith (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with the Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
govern mental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender
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material hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank Eurodollar market,
or the position of such Lender in that market, then, and in any such event, such
Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to the Borrower and the
Agent of such determination (which notice the Agent shall promptly transmit to
each other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until
such notice shall be with drawn by the Affected Lender (which withdrawal shall
be promptly accomplished by such Affected Lender by notice to the Agent and the
Borrower as soon as the circumstances causing such Affected Lender to be so
classified no longer exist), (b) to the extent such determination by the
Affected Lender relates to a Eurodollar Rate Loan then being requested by the
Borrower to be made or continued hereunder, the Affected Lender shall make such
Loan as, or convert such Loan to, as applicable, a Base Rate Loan, (c) the
Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans
(the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Except as provided
in the immediately preceding sentence, nothing in this subsection 2.6C shall
affect the obligation of any Lender other than an Affected Lender to make or
maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance
with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS. The
Borrower shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may sus
tain: (i) if for any reason (other than a default by that Lender or events
described in subsection 2.6C above with respect to such Lender) a borrowing or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in the Notice of Borrowing or a Notice of Continuance, as applicable,
or a telephonic request for borrowing, or a conversion to or contin uation of
any Eurodollar Rate Loan does not occur on the date specified therefor, (ii) if
any prepayment or conversion of any of its Eurodollar Rate Loans occurs on a
date that is not the last day of an Interest Period applicable to that Loan,
(iii) if any prepayment (including any prepayment pursuant to subsection 2.4B(i)
or subsection 2.4B(iii)) or other principal payment of any of its Eurodollar
Rate Loans is not made by the Borrower on any date specified in a notice of
prepayment given by the Borrower or (iv) as a consequence of any other default
by the Borrower in the repayment of its Eurodollar Rate Loans when required by
the terms of this Agreement.
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E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender located in the United States of
America; PROVIDED, HOWEVER, that each Lender may fund each of its Eurodollar
Rate Loans in any manner it sees fit and the fore going assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.7A.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions
of sub section 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall in good faith determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto but shall be made only after consultation with
the Agent) that any law, treaty or governmental rule, regulation or order, or
any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any deter mination of a Governmental Authority, in each
case that becomes effective after the date hereof, or compliance by such Lender
with any guideline, request or directive issued or made after the date hereof by
any central bank or other Governmental Authority or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender), with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by,
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or any other acquisition of funds by, any office of such Lender (other
than any such reserve or other requirements with respect to Eurodollar
Rate Loans that are reflected in the definition of Adjusted Eurodollar
Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, the Borrower shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the Borrower (with a copy to the Agent)
a written statement setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. WITHHOLDING OF TAXES.
(i) PAYMENTS TO BE FREE AND CLEAR. All sums payable by the Borrower
under this Agreement and the other Loan Documents shall be paid free and
clear of and (except to the extent required by law) without any deduction
or withholding on account of any Tax (excluding in the case of each Lender
and the Agent, Taxes imposed on its income by a jurisdiction under the
laws of which it is organized or in which its principal executive office
is located or in which its applicable lending office for funding or
booking its Loans hereunder is located) imposed, levied, collected,
withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of the
Borrower or by any federation or organization of which the United States
of America or any such jurisdiction is a member at the time of payment.
(ii) GROSSING-UP OF PAYMENTS. If the Borrower or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by the Borrower to the Agent or any
Lender under any of the Loan Documents:
(a) the Borrower shall notify the Agent of any such
requirement or any change in any such requirement as soon as the
Borrower becomes aware of it;
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(b) the Borrower shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on the Borrower) for its own account or
(if that liability is imposed on the Agent or such Lender, as the
case may be) on behalf of and in the name of the Agent or such
Lender;
(c) the sum payable by the Borrower in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, the Agent or such Lender,
as the case may be, receives on the due date a net sum equal to what
it would have received had no such deduction, withholding or payment
been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required
by clause (b) above to pay, the Borrower shall deliver to the Agent
evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to
the relevant taxing or other authority;
PROVIDED, HOWEVER, that no such additional amount shall be required to be
paid to any Lender under clause (c) above except to the extent that any
change after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date such Lender became a Lender
pursuant to subsection 9.1 (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned
therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Agreement
(in the case of each Lender listed on the signature pages hereof) or at
the date such Lender became a Lender pursuant to subsection 9.1 (in the
case of each other Lender) as the case may be, in respect of payments to
such Lender.
(iii) U.S. TAX CERTIFICATES. Each Lender that is organized under
the laws of any jurisdiction other than the United States of America or
any state or other political subdivision thereof shall deliver to the
Agent for transmission to the Borrower, on or prior to the Closing Date
(in the case of each Lender listed on the signature pages hereof) or on
the date it becomes a Lender pursuant to subsection 9.1 (in the case of
each other Lender), and at such other times as may be necessary in the
determination of the Borrower or the Agent (each in the reasonable
exercise of its discretion), such certifi ▇▇▇▇▇, documents or other
evidence, properly completed and duly executed by such Lender (including
Internal Revenue Service Form 1001 or Form 4224 or any other certi
ficate or statement of exemption required by Treasury Regulations Section
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1.1441-4(a) or Section 1.1441-6(c) or any successor thereto) to establish
that such Lender is not subject to deduction or withholding of United
States federal income tax under Sec tion 1441 or 1442 of the Internal
Revenue Code or otherwise (or under any comparable provisions of any
successor statute) with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any of the Loan
Documents. The Borrower shall not be required to pay any additional amount
to any Lender under clause (c) or perform with respect thereto under
clause (d) of subsection 2.7B(ii) at any time during which such Lender
shall have failed to satisfy the requirements of the immediately preceding
sentence; PROVIDED, HOWEVER, that if such Lender shall have satisfied such
requirements on the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date it becomes a Lender (in the case of
each other Lender), nothing in this subsection 2.7B(iii) shall relieve the
Borrower of its obligation to pay any additional amounts pursuant to
clause (c) or perform with respect thereto under clause (d) of subsection
2.7B(ii) in the event that, as a result of any change in any applicable
law, treaty or governmental rule, regulation or order, or any change in
the interpretation, administration or application thereof, such Lender is
no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender is
not subject to withholding as described in the immediately preceding
sentence.
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have reasonably
determined that the adoption, effectiveness, phase-in or applicability (after
the date of this Agreement) of any law, rule or regulation (or any provision
thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any Governmental Authority,
including any central bank or comparable agency charged with the interpretation
or administra tion thereof, or compliance by any Lender (or its applicable
lending office) with any guideline, request or directive regarding capital
adequacy (whether or not having the force of law (after the date of this
Agreement)) of any such Governmental Authority, has or would have the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such Lender's
Loans or Commitment or other obligations hereunder with respect to the Loans to
a level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, appli cability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by the Borrower from such Lender
of the statement referred to in the next sentence, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such controlling corporation on an after-tax basis for such reduction. Such
Lender shall deliver to the Borrower (with a copy to the Agent) a written state
ment, setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
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2.8 OBLIGATION OF THE LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loans becomes aware of the
occurrence of an event or the existence of a condition that would cause such
Lender to become an Affected Lender or that would entitle such Lender to receive
payments under subsection 2.7, it will, to the extent not inconsistent with the
internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, fund or maintain the
Commitment of such Lender or the affected Loans of such Lender through another
lending office of such Lender, or (ii) take such other measures as such Lender
may deem reasonable, if as a result thereof the circum stances which would cause
such Lender to be an Affected Lender would cease to exist or the additional
amounts which would otherwise be required to be paid to such Lender pursuant to
subsection 2.7 would be materially reduced and if, as determined by such Lender
in its reason able judgment, the making, funding or maintaining of such
Commitment or Loans through such other lending office or in accordance with such
other measures, as the case may be, would not otherwise materially adversely
affect such Commitment or Loans or the interests of such Lender; PROVIDED,
HOWEVER, that such Lender will not be obligated to utilize such other lending
office pursuant to this subsection 2.8 unless the Borrower agrees to pay all
incremental expenses incurred by such Lender as a result of utilizing such other
lending office as described in clause (i) above. A certificate as to the amount
of any such expenses payable by the Borrower pursuant to this subsection 2.8
(setting forth in reasonable detail the basis for requesting such amount)
submitted by such Lender to the Borrower (with a copy to the Agent) shall be
conclusive absent manifest error.
2.9 ACQUISITION OF PROPERTIES.
A. ACQUISITION AND ADDITION OF POOL A PROPERTIES. The Borrower and its
Wholly Owned Subsidiaries may make Acquisitions of one or more hotel properties
(each, an "ADDITIONAL POOL A PROPERTY") as Pool A Properties; PROVIDED that, in
any event:
(i) such Additional Pool A Property shall be owned either by the
Borrower or a Pool A Subsidiary; PROVIDED that such Subsidiary shall have
executed a counterpart of the Affiliate Guaranty;
(ii) each Additional Pool A Property shall include the entire fee
interest or leasehold interest pursuant to a Ground Lease in an upscale
full service hotel located in the United States of America and, to the
extent provided in subsection 6.14B, Canada, and otherwise be of a type,
quality and character consistent with the Borrower's business plan and
strategy or, if not consistent, as approved by the Requisite Lenders,
which approval may be granted, withheld, conditioned or delayed in the
Requisite Lenders' sole
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discretion (provided that, so long as the Senior Credit Agreement is in
effect, no such approval shall be required to the extent that such
approval is granted under the Senior Credit Agreement and such Additional
Pool A Property is otherwise an upscale full service hotel located in the
United States of America and, to the extent provided in subsection 6.14B,
in Canada);
(iii) prior to the proposed Addition Date, the Borrower, at its
expense, shall deliver to the Lenders the Property Information with
respect to such Additional Pool A Property; and
(iv) on or before the proposed Addition Date with respect to such
Additional Pool A Property, the Borrower at its expense, shall deliver to
the Lenders a statement of Property Gross Revenues and Operating Expenses
and any other expenses with respect to such Additional Pool A Property for
the 12 most recently completed calendar months ending not less than 30
days before such Addition Date, in reasonable detail satisfactory to the
Agent and certified by the Authorized Officer of the Borrower to the
effect provided in subsection 5.1(i), MUTATIS MUTANDIS, PROVIDED that such
certificate may be based upon his or her knowledge, after reasonable
inquiry.
B. ACQUISITION OF POOL B PROPERTIES. So long as no Event of Default or
Potential Event of Default has occurred and is continuing or would be caused
thereby, any of the Pool B Subsidiaries may make Acquisitions of Pool B
Properties; PROVIDED that:
(i) each Pool B Property subject to such Acquisition shall include
the entire fee or leasehold interest pursuant to a Ground Lease in an
upscale full service hotel located in the United States of America and, to
the extent permitted in subsection 6.14B, Canada and otherwise be of a
type, quality and character consistent with the Borrower's business plan
and strategy or, if not consistent, as approved by the Requisite Lenders,
which approval may be granted, withheld, conditioned or delayed in the
Requisite Lenders' sole discretion (provided that, so long as the Senior
Credit Agreement is in effect, no such approval shall be required to the
extent that such approval is granted under the Senior Credit Agreement and
such Pool B Property is otherwise an upscale full service hotel located in
the United States of America and, to the extent provided in subsection
6.14B, in Canada);
(ii) at least 15 days before the proposed closing date of each such
Acquisition, the Borrower, at its expense, shall deliver to the Lenders
(1) the Property Information with respect to such Pool B Property that has
not previously been delivered and (2) a statement of Property Gross
Revenues and Operating Expenses and any other expenses with respect to
such Pool B Property for the 12 most recently completed calendar months
ending not less than 30 days before such closing date, in reasonable
detail and certified
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by the Chief Executive Officer or the Chief Financial Officer of the
Borrower to the effect provided in subsection 5.1(i), MUTATIS MUTANDIS,
PROVIDED that such certificate may be based upon his or her knowledge,
after reasonable inquiry;
(iii) on or before such closing date, the Borrower or any of its
Wholly Owned Subsidiaries (other than Pool B Subsidiaries) shall have
entered into a Property Servicing Agreement with such Pool B Subsidiary
and, in the event a Liquor License exists with respect to such Pool B
Property or is acquired thereafter, and the Borrower shall reasonably
determine that the same is necessary or advisable or same is required
under the Senior Credit Agreement, the appropriate parties shall have
entered into a Liquor Operation Servicing Agreement or a Liquor Lease;
(iv) on or before such closing date, the Borrower, at its expense,
shall deliver to the Agent, unless previously delivered to the Agent
pursuant to subsection 6.7(ii), original counterparts to the Affiliate
Guaranty executed by such Pool B Subsidiary; PROVIDED that such Pool B
Subsidiary shall not be required to execute an Affiliate Guaranty if and
so long as doing so would violate the provisions of any Pool B
Indebtedness then owed by such Pool B Subsidiary; and
(v) at no time shall a Pool B Subsidiary acquire and own more than
one Pool B Property unless such Pool B Properties are acquired in a single
transaction or series of related transactions.
C. ATLANTA PROPERTY. Notwithstanding anything herein to the contrary, the
Atlanta Property shall cease to be a Pool A Property and shall become a Pool B
Property, in each case for all purposes under this Agreement at the time the
Atlanta Property becomes a Pool B Property under the Senior Credit Agreement.
2.10 SALES OF POOL A PROPERTIES.
At any time and from time to time after the Closing Date and prior to the
date on which subsection 6.15C is applicable, the Borrower may effect the sale
or other permanent disposition of a Pool A Property (or the Capital Stock of any
Subsidiary owning a Pool A Property) only if the following terms and conditions
are satisfied on the applicable Release Date:
(i) the Borrower shall have delivered written notice to the Agent
prior to the actual Release Date specifying such actual Release Date and
such Pool A Property;
(ii) no Event of Default shall have occurred and be continuing as of
the date of the delivery of the notice pursuant to clause (i) above (other
than an Event of Default or Potential Event of Default that pertains
solely to the Pool A Property or portion
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thereof which is the subject of such Release or which is cured by such
Release) and no Event of Default shall be continuing as of the Release
Date after giving effect to such Release;
(iii) concurrently with such Release, the borrowing base under the
Senior Credit Agreement shall be reduced by an amount equal to the then
applicable Property Amount with respect to such Pool A Property in effect
immediately prior to giving effect to such Release;
(iv) the Borrower shall concurrently prepay any outstanding loans
under the Senior Credit Agreement in an amount equal to the Release Price
in respect of such Pool A Property; and
(v) the Borrower shall have delivered to the Agent for distribution
to the Lenders an Officers' Certificate dated the Release Date, certifying
as to the matters referred to in clauses (ii) through (iv) above or, to
the extent applicable, to the matters set forth in the immediately
following sentence.
SECTION 3
CONDITIONS PRECEDENT
3.1 CONDITIONS TO CLOSING DATE AND EFFECTIVENESS OF COMMITMENTS.
The occurrence of the Closing Date and the effectiveness of the
Commitments of the Lenders is conditioned upon the prior or concurrent
satisfaction, at the expense of the Borrower, of the conditions specified in
this subsection 3.1, in each case as determined by the Agent:
A. CORPORATE DOCUMENTS. Each Loan Party (other than any Partnership Loan
Party or LLC Loan Party) and each corporate general partner of a Partnership
Loan Party shall deliver or cause to be delivered to the Agent (with sufficient
originally executed copies for each Lender and the Agent's counsel) the
following, each unless otherwise noted dated the Closing Date:
(i) to the extent such Loan Party is a party thereto, executed
originals of this Agreement, the Affiliate Guaranty, the CapStar Guaranty
and each other Loan Document to which it is a party;
(ii) a certificate of the secretary or any assistant secretary of
such Loan Party certifying that there have been no changes to its
Certificate of Incorporation or ByLaws since September 30, 1996;
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(iii) resolutions of its Board of Directors approving and
authorizing (a) the execution, delivery and performance of each Loan
Document to which it is a party and (b) the consummation of the
transactions contemplated hereby and thereby, in each case certified as of
the Closing Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
(iv) signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is a
party; and
(v) a good standing certificate for CapStar and the Borrower from
the Secretary of State of the State of Delaware dated not more than 7 days
prior to the Closing Date.
B. PARTNERSHIP AND LLC DOCUMENTS. Each Partnership Loan Party and each LLC
Loan Party, as applicable, shall deliver to the Agent (with sufficient
originally executed copies for each Lender and the Agent's counsel) the
following, each unless otherwise noted dated the Closing Date:
(i) to the extent such Loan Party is a party thereto, executed
originals of this Agreement, the Affiliate Guaranty, a Note in favor of
each Lender and each other Loan Document to which it is a party;
(ii) with respect to each Partnership Loan Party, a certificate of
each general partner of such partnership certifying that there have been
no amendments or modifications to its partnership agreement or certificate
of limited partnership since September 30, 1996 and that such partnership
agreement and certificate of limited partnership are in full force and
effect;
(iii) with respect to each LLC Loan Party, a certificate of the
manager of such LLC Loan Party certifying that there have been no
amendments or modifications to its limited liability company agreement and
its other organizational documents (including its Articles of Organization
or Certificate of Formation) since September 30, 1996 and that such
agreement and other organizational documents are in full force and effect;
(iv) all documents of such Partnership Loan Party and its partners
(to the extent required by the applicable organizational documents) or
such LLC Loan Party and its members, as applicable, approving or
authorizing (a) the execution, delivery and performance of the Affiliate
Guaranty and any other Loan Documents to which it is a
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party, and (b) the consummation of the transactions contemplated hereby
and thereby, each certified as of the Closing Date by the general partner
of such Partnership Loan Party or other Loan Party; and
(v) unless otherwise required to be delivered pursuant to
subsection 3.1A(iv), signature and incumbency certificates of the
Person(s) executing, on behalf of such partnership or limited liability
company, as applicable, any Loan Documents to which such Partnership Loan
Party or LLC Loan Party is a party.
C. FINANCIAL STATEMENTS; CERTIFICATES. The Borrower shall have
delivered to the Agent an Officers' Certificate of the Chief Executive Officer
or the Chief Financial Officer of the Borrower certifying as to the following:
(i) the delivery to the Agent of the financial statements
referred to in subsection 4.3 on or before the Closing Date;
(ii) as of the Closing Date, CapStar has a Market Equity
Capitalization of not less than $200,000,000; and
(iii) since September 30, 1996, no Material Adverse Effect has
occurred.
D. NO MATERIAL ADVERSE EFFECT. Since September 30, 1996, in the sole
opinion of the Agent, no condition or event has occurred that has had or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
E. OPINIONS OF THE BORROWER'S COUNSEL. On the Closing Date, the Borrower
shall have delivered to the Agent, its counsel and the Lenders (i) executed
copies of each of the favorable written opinions of ▇▇▇▇▇▇▇, Diamond & Ash and
▇▇▇▇, Weiss, Rifkin, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, respectively, each counsel for the
Borrower, which shall be substantially in the forms of EXHIBIT VII annexed
hereto, with such changes as the Agent may approve and dated the Closing Date
and (ii) evidence satisfactory to the Agent that the Borrower has requested such
counsel to deliver such opinions to the Agent and its counsel and the Lenders.
F. SOLVENCY CERTIFICATE. On the Closing Date, the Borrower shall have
delivered to the Agent a solvency certificate in the form of EXHIBIT VIII
annexed hereto and dated the Closing Date, which solvency certificate shall be
executed by the Chief Financial Officer of CapStar.
G. AMENDMENT TO THE SENIOR CREDIT AGREEMENT. On or prior to the Closing
Date, the Borrower and the lenders under the Senior Credit Agreement shall have
entered into an amendment to the Senior Credit Agreement with respect to, INTER
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ALIA, the entering into by CapStar, the Borrower and the other Loan Parties of
this Agreement and the other Loan Documents, and such amendment shall be in form
and substance satisfactory to the Agent and the Lenders and shall be in full
force and effect.
H. NO ADVERSE LITIGATION. There shall not be pending or, to the knowledge
of the Borrower, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting CapStar or any of its
Subsidiaries or any property of CapStar or any of its Subsidiaries that has not
been disclosed by the Borrower in writing pursuant to subsection 4.5 prior to
the execution of this Agreement and that is reasonably likely to have a Material
Adverse Effect, and there shall have occurred no development not so disclosed in
any such action, suit, proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of the Agent, is reasonably
likely to have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect to any
action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the
transactions contemplated by this Agreement or the making of the Loans
hereunder.
I. CONTINGENT OBLIGATIONS. The Agent and the Lenders shall have received
and approved a list of all Contingent Obligations substantially in the form of
SCHEDULE 4.3B annexed hereto.
J. PAYMENT OF FEES AND EXPENSES. The Borrower shall have paid to the
Agent, for distribution (as appropriate) to the Lenders and the Agent, the fees
payable pursuant to subsection 2.3 and the expenses payable pursuant to
subsection 9.2.
K. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by the Agent and
its counsel shall be reasonably satisfactory in form and substance to the Agent
and such counsel, and the Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as the Agent may
reasonably request.
L. OTHER DOCUMENTS. Each Loan Party shall have delivered to the Agent
such other information and documents as the Agent may reasonably request.
3.2 CONDITIONS TO THE LOANS ON THE FUNDING DATE.
The obligations of the Lenders to make the Loans on the Funding Date are
subject to the following further conditions precedent:
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A. NOTICE OF BORROWING. The Agent shall have received before the Funding
Date, in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, in each case signed by the Chief Executive
Officer, the Chief Financial Officer or the Treasurer of the Borrower or by any
executive officer of the Borrower designated by any of the above-described
officers on behalf of the Borrower in a writing delivered to the Agent.
B. OTHER CONDITIONS PRECEDENT. As of the Funding Date:
(i) the representations and warranties of the Loan Parties as
contained herein and in the other Loan Documents shall be true and correct
in all material respects on and as of the Funding Date to the same extent
as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date;
(ii) no event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by the Notice of
Borrowing that would constitute an Event of Default or a Potential Event
of Default;
(iii) no event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by the Notice of
Borrowing that would constitute an event of default or a potential event
of default under the Senior Credit Agreement;
(iv) each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement and the
other Loan Documents provide shall be performed or satisfied by it on or
before the Funding Date;
(v) no order, judgment or decree of any arbitrator or Governmental
Authority shall purport to enjoin or restrain any Lender from making the
Loans to be made by it on the Funding Date and the making of the Loans
requested on the Funding Date shall not violate any law including, without
limitation, Regulation G, Regulation T, Regulation U or Regulation X of
the Board of Governors of the Federal Reserve System;
(vi) there shall not be pending or, to the knowledge of the Borrower,
threat ened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Borrower of its Subsidiaries that has
not been disclosed by the Borrower in writing pursuant to subsection 4.5
or 5.1(xi) prior to the making of the Loans and that would be reasonably
likely to have a Material Adverse Effect, and there shall have occurred no
development not so disclosed in any such action, suit, proceeding, govern
mental investigation or arbitration so disclosed, that, in either event,
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in the opinion of the Agent, would be reasonably likely to have a Material
Adverse Effect; and no injunc tion or other restraining order shall have
been issued and no hearing to cause an injunc tion or other restraining
order to be issued shall be pending or noticed with respect to any action,
suit or proceeding seeking to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the
transactions contem plated by this Agreement or the making of the Loans
hereunder;
(vii) since September 30, 1996, no condition or event shall have
occurred that has had or could reasonably be expected, either individually
or in the aggregate, to have a Material Adverse Effect; and
(viii) on, or within three Business Days prior to, the Funding Date,
the Borrower shall have delivered to the Agent an Officers' Certificate
certifying (and showing the respective calculations in reasonable detail
to establish) that the ratio of Consolidated Total Indebtedness on the
Funding Date (and after giving effect to the incurrence of the Loans on
such date and the acquisition of the respective Pool A Properties on such
date) to Consolidated EBITDA for the immediately preceding 12 consecutive
full fiscal months is not greater than 5.50 to 1.00.
SECTION 4
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to make the Loans, each of CapStar and the Borrower represents and warrants
to the Agent and the Lenders that, as of the Closing Date and the Funding Date
the following statements in this Section 4 are true, correct and complete on the
Closing Date and on the Funding Date, as the case may be.
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party and each of its Subsidiaries
(other than any Partnership Loan Party or any LLC Loan Party) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (which jurisdiction is set forth on SCHEDULE 4.1A
annexed hereto). Each such Loan Party and each such Subsidiary has the requisite
corporate power and authority to own and operate its properties (including the
Properties identified as being owned or leased by such Loan Party or such
Subsidiary on SCHEDULE 4.4A1 and SCHEDULE 4.4A2 annexed hereto), to carry on its
business as now conducted and as proposed to be conducted, to enter into the
Loan Documents and each Acquisition Agreement to which it is a party, and to
carry out the transactions contemplated
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hereby and thereby. Each Partnership Loan Party is a limited partnership duly
formed and validly existing under the laws of its jurisdiction of organization
(which jurisdiction is set forth on SCHEDULE 4.1A) and each Partnership Loan
Party has all requisite partnership power and authority to own and operate its
properties (including the Properties identified on SCHEDULE 4.4A1 and SCHEDULE
4.4A2 as being owned or leased by such Partnership Loan Party), to carry on its
business as now conducted and proposed to be conducted, to enter into each Loan
Document and each Acquisition Agreement to which it is a party and to carry out
the transactions contemplated hereby and thereby and, in the case of the
Borrower, to issue and pay the Notes. Each LLC Loan Party is a limited liability
company duly formed and validly existing under the laws of its jurisdiction of
organization (which jurisdiction is set forth on SCHEDULE 4.1A) and each LLC
Loan Party has all requisite power and authority to own and operate its
properties (including the Properties identified on SCHEDULE 4.4A1 and SCHEDULE
4.4A2 as being owned or leased by such LLC Loan Party), to carry on its business
as now conducted and proposed to be conducted, to enter into each Loan Document
and each Acquisition Agreement to which it is a party and to carry out the
transactions contemplated thereby. The books and records of each Loan Party and
each of its Subsidiaries reflect the properties and assets purported to be owned
by such Loan Party or Subsidiary, as applicable.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party and each of its
Subsidiaries is qualified to do business and in good standing in every
jurisdiction necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. The jurisdictions in which each Loan Party
and each of its Subsidiaries owns property or otherwise conducts business as of
the Closing Date are set forth on SCHEDULE 4.1B annexed hereto.
C. CONDUCT OF BUSINESS. CapStar, the Borrower and each of their
respective Subsidiaries are engaged only in the businesses permitted to be
engaged in by them pursuant to subsection 6.14.
D. SUBSIDIARIES. The Capital Stock of each of the Subsidiaries is duly and
validly authorized and issued and (with the exception of partnership interests
of general partners and except to the extent that the limited liability company
agreements governing the respective limited liability companies provide
otherwise) fully paid and nonassessable. All of the Subsidiaries of each Loan
Party as of the Closing Date are identified on SCHEDULE 4.1A annexed hereto. The
capital stock of each Person identified on SCHEDULE 4.1A is not Margin Stock.
SCHEDULE 4.1A correctly sets forth the ownership interests in each Loan Party
(other than the Borrower) and each of its Subsidiaries as of the Closing Date.
Except as set forth on SCHEDULE 4.1A, each Subsidiary of the Borrower is a
Wholly Owned Subsidiary.
E. ACQUISITIONS. Each Loan Party shall have the corporate, partnership or
other applicable power to consummate each Acquisition to be consummated by it
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upon the consummation thereof, on the terms set forth in any applicable
Acquisition Agreement or other operative agreement related to such Acquisition.
Upon the consummation of any Acquisition, such Acquisition shall have been duly
authorized by all necessary action of such Loan Party or Subsidiary, as the case
may be.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of
this Agreement and the other Loan Documents and each Acquisition Agreement to
which each Loan Party is a party and the issuance, delivery and payment of the
Notes have been duly authorized by all necessary corporate, partnership or other
action on the part of each Loan Party, as the case may be.
B. NO CONFLICT. The execution, delivery and performance by each Loan Party
of each Loan Document and each Acquisition Agreement to which it is a party and
the consummation of the transactions contemplated hereby and thereby, do not and
will not (i) violate any provision of law applicable to any Loan Party or any of
its Subsidiaries, the Certificate of Incorporation or Bylaws, partnership
agreement or other organizational document of any Loan Party or any of its
Subsidiaries or any order, judgment or decree of any court or other agency of
government binding on any Loan Party or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of any Loan Party, which
default, individually or in the aggregate, could have a Material Adverse Effect,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of any Loan Party or any of its Subsidiaries (other
than Liens securing the obligations under the Senior Credit Agreement), or (iv)
require any approval of stockholders or any approval or consent of any Person
under any Contractual Obligation of any Loan Party the absence of which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, other than approvals or consents which will be or have been
obtained on or before the Closing Date (or, in the case of an Acquisition, on or
before the date such Acquisition is consummated) and disclosed in writing to the
Agent and the Lenders.
C. GOVERNMENTAL CONSENTS. Except as set forth on SCHEDULE 4.2C annexed
hereto, the execution, delivery and performance by each Loan Party of each Loan
Document and each Acquisition Agreement to which it is a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any Governmental Authority, except for (i) such of
the foregoing which will have been made or obtained on or before the Closing
Date (or, in the case of any Acquisition Agreement relating to an Acquisition,
on or before the date of the closing of such Acquisition) and (ii) the
recordings and filings required to perfect the Liens granted pursuant to the
Senior Credit Agreement. As of the Closing Date, all consents or approvals from
or notices to or filings with any federal, state, or other (domestic or foreign)
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regulatory authorities required to be obtained on or before such date in
connection with the documents or transactions described or referred to in the
preceding sentence will have been accomplished in all material respects in
compliance in all material respects with all Applicable Laws. None of the
transactions constituting the consummation of the transactions contemplated by
this Agreement, the other Loan Documents and the Acquisition Agreements violates
any Applicable Law or regulation in any respect, which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
D. BINDING OBLIGATION. This Agreement is, and the other Loan Documents
when executed and delivered hereunder will be, the legally valid and binding
obligations of the applicable Loan Parties, enforceable against the applicable
Loan Parties in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or law) and subject to other qualifications, exceptions and assumptions
such as are set forth in the various legal opinions delivered to the Agent in
connection with such documents or other documents.
E. VALID ISSUANCE OF COMMON STOCK. All the issued and outstanding
Common Stock is duly and validly issued, fully paid and nonassessable.
F. NEW YORK STOCK EXCHANGE LISTING. All outstanding shares of each class
of Capital Stock of CapStar shall at all times be duly listed on the New York
Stock Exchange, Inc. CapStar shall timely file all reports required to be filed
by it with the New York Stock Exchange, Inc. and the Securities and Exchange
Commission.
4.3 FINANCIAL CONDITION; CONTINGENT OBLIGATIONS.
A. FINANCIAL CONDITION. The Borrower has heretofore delivered to the
Agent, at the Agent's request, the unaudited consolidated balance sheet of
CapStar and its Subsidiaries as at September 30, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows of
CapStar and its Subsidiaries for the 12 months then ended. The statements
referred to in the preceding sentence were prepared in conformity with GAAP and
fairly present, in all material respects, the consolidated financial position of
CapStar and its Subsidiaries as at the date thereof and the consolidated results
of operations of CapStar and its Subsidiaries for the period then ended, subject
to changes resulting from audit and normal year end adjustments and there are no
material differences between such consolidated financial position and
consolidated results of operations of CapStar and its Subsidiaries as presented
in such consolidated financial statements and the consolidated financial
position and consolidated results of operations of the Borrower and its
Subsidiaries as at the date of such consolidated financial statements and for
the
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period then ended. CapStar and its Subsidiaries do not (and will not following
the extension of credit hereunder) have any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing financial
statements, the notes thereto or SCHEDULE 4.3B annexed hereto and which in any
such case is material in relation to the business, operations, properties,
assets, condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries.
B. CONTINGENT OBLIGATIONS. On the Closing Date, the Loan Parties and their
respective Subsidiaries will not be directly or indirectly liable with respect
to any Contingent Obligations other than as set forth on SCHEDULE 4.3B annexed
hereto. SCHEDULE 4.3B sets forth all Investments made by the Loan Parties and
their respective Subsidiaries and all Guaranties with respect to which the Loan
Parties and their respective Subsidiaries are liable as of the Closing Date,
including all such Investments and Guaranties that would be subject to
subsections 6.3 and 6.4 if the same were made or incurred on or after the
Closing Date.
4.4 PROPERTIES; AGREEMENTS; LICENSES.
A. TITLE TO PROPERTIES; LIENS. Each of SCHEDULE 4.4A1 and SCHEDULE 4.4A2
correctly sets forth the interest of each Loan Party and each of its
Subsidiaries in each of the Pool A Properties and Pool B Properties,
respectively, as of the Closing Date. As of the Closing Date, there are no
outstanding options, rights of first refusal, rights of first offer or similar
rights to purchase or otherwise acquire such fee interest or leasehold interest,
as the case may be, in any such Property, other than options and rights owned by
Loan Party or Subsidiary thereof, as applicable. Such Loan Party or Subsidiary
thereof, as applicable, has good and marketable fee simple title to, or a valid
leasehold interest in, the Properties and good title to the remainder of its
property purported to be owned by it, free and clear of all Liens, in each case
except Permitted Encumbrances and Liens permitted pursuant to subsection 6.2A.
All material fixtures, furnishings, attachments and equipment necessary for the
operation, use and occupancy of each such Property have been installed or
incorporated into such Property and each Loan Party or Subsidiary thereof, as
applicable, is the sole owner of all of the same, free and clear of all chattel
mortgages, conditional vendor's liens and other liens, and security interests
other than Permitted Encumbrances and Liens permitted pursuant to subsection
6.2A. Except as heretofore disclosed in writing by the Borrower to the Agent, no
tax liens have been filed against the Borrower or any of its Subsidiaries and/or
any of their respective properties, including any Property, other than Liens for
non-delinquent real property taxes.
B. POOL A GROUND LEASES. Each of the Pool A Ground Leases and all
amendments thereto that have been or will be entered into on or before the
Closing Date are listed on SCHEDULE 4.4B annexed hereto. Such Pool A Ground
Leases, as so amended, are in full force and effect; and no Person will have
failed in any material respect to perform any material obligation or covenant or
satisfy any condition required by such Pool A Ground Leases to be performed or
complied with.
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C. POOL B DOCUMENTS. Each of the Pool B Documents and all amendments
thereto that have been or will be entered into on or before the Closing Date are
listed on SCHEDULE 4.4C annexed hereto. Such documents, as so amended, are in
full force and effect; and no Person will have failed in any respect to perform
any obligation or covenant or satisfy any condition required thereunder to be
performed or complied with, except where failure to so comply will not then have
had and could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
D. MANAGEMENT AGREEMENTS. Each of the Management Agreements and all
amendments thereto that have been or will be entered into on or before the
Closing Date are listed on SCHEDULE 4.4D annexed hereto. Each Material
Management Agreement that has been or will be entered into on or before the
Closing Date is in full force and effect; and no Person will have failed in any
respect to perform any obligation or covenant or satisfy any condition required
by the Management Agreements to be performed or complied with, except where
failure to so comply will not then have had and could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
E. SERVICING AGREEMENTS. The Property Servicing Agreement with respect to
each Property and, if a Liquor License exists with respect to such Property, the
Liquor Operation Service Agreement with respect to such Property, in each case
with all amendments thereto that have been or will be entered into on or before
the Closing Date, are listed on SCHEDULE 4.4E annexed hereto. Such Servicing
Agreements, as so amended, are in full force and effect; and no Person will have
failed in any respect to perform any obligation or covenant or satisfy any
condition required by such Servicing Agreements to be performed or complied
with, except where failure to so comply will not then have had and could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
F. FRANCHISE AGREEMENTS. Each of the Franchise Agreements and all
amendments thereto that have been or will be entered into on or before the
Closing Date are listed on SCHEDULE 4.4F annexed hereto. Such Franchise
Agreements, as so amended, are in full force and effect; and no Person will have
failed in any respect to perform any obligation or covenant or satisfy any
condition required by the Franchise Agreements to be performed or complied with,
except where failure to so comply will not then have had and could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
G. MATERIAL LEASES. Each Material Lease with respect to each Property and
all amendments thereto that have been or shall be entered into on or before the
Closing Date are listed on SCHEDULE 4.4G annexed hereto. Such Material Leases,
as so amended, shall be in full force and effect; and no Person will have failed
in any respect to perform any obligation or covenant or satisfy any condition
required by such Material Leases to be performed or complied with, except where
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failure to so comply will not then have had and could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
H. LIQUOR LICENSES. Each Liquor License issued in connection with each
Property on or prior to the Closing Date is set forth on SCHEDULE 4.4H annexed
hereto, each such Liquor License is validly issued and in full force and effect.
The holder of each such Liquor License has the legal right to utilize each such
Liquor License in connection with the operation of any restaurant, bar or other
alcoholic beverage service located at the applicable Property.
4.5 LITIGATION; ADVERSE FACTS.
Except as set forth in SCHEDULE 4.5 annexed hereto, as amended or
supplemented from time to time, there is no action, suit, proceeding,
arbitration or governmental investigation (whether or not purportedly on behalf
of CapStar or any of its Subsidiaries) at law or in equity or before or by any
Governmental Authority, or to the knowledge of CapStar and the Borrower, changes
to Applicable Law, pending or, to the knowledge of CapStar and the Borrower,
threatened against or affecting any Loan Party or any of its Subsidiaries, any
Property or any other property of CapStar or any of its Subsidiaries that has
had, or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. No Loan Party nor any of its Subsidiaries
is (i) in violation in any material respect of any Applicable Law or (ii)
subject to or in default with respect to any Applicable Law in either case that
has had, or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. To the knowledge of CapStar and the
Borrower, there are no pending or threatened actions, suits or proceedings to
revoke, attack, invalidate, rescind or modify the zoning affecting any Property
or any Authorizations heretofore issued with respect to any Property or
asserting that such Authorizations or the zoning affecting any Property or any
other property of any Loan Party or any of its Subsidiaries do not permit the
continued use of such Property or property as contemplated by the Loan
Documents. Except as set forth on SCHEDULE 4.5 annexed hereto, to the knowledge
of CapStar and the Borrower, no Person has asserted any claimed violation of
Applicable Laws arising from the operation, use or occupancy of the Properties
which has not been cured which has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
4.6 TAXES.
A. PAYMENT OF TAXES. Except to the extent permitted by subsection 5.4 and
as set forth on the financial statements delivered pursuant to subsections 3.1C
and 4.3, all federal, state and material local Tax returns and reports relating
to any Loan Party or any of its Subsidiaries or the Properties required to be
filed have been timely filed, and all material Taxes, Impositions, assessments,
fees and other governmental charges upon any Loan Party or any of its
Subsidiaries
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or upon the Properties which are due and payable have been paid prior to
delinquency. Neither CapStar nor the Borrower knows of any proposed Tax
assessment against any Loan Party or any of its Subsidiaries or the Properties
that could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Neither any Loan Party nor any of its
Subsidiaries (i) has executed or filed with the Internal Revenue Service or any
other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Taxes, assessments, fees or other governmental charges or (ii) has any
obligation under any written Tax sharing agreement or agreement regarding
payments in lieu of Taxes (other than obligations pursuant to partnership
agreements to make distributions of cash for the payment of taxes).
B. CLASSIFICATION AS A PARTNERSHIP. Each of the Loan Parties that is a
Partnership Loan Party or LLC Loan Party is properly classified as a partnership
for federal income tax purposes.
4.7 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
No Loan Party nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any Contractual Obligation, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
Except as disclosed on SCHEDULE 4.7 annexed hereto and as provided in the Senior
Credit Agreement, no Loan Party nor any of its Subsidiaries is a party to or
otherwise subject to any agreement or instrument (other than the Loan
Documents), any charge or other internal restriction or any Contractual
Obligation which by its terms or effect (i) prohibits or restricts such Loan
Party or Subsidiary from acquiring, loaning or disposing of any Property or
other asset, or any interest therein, or acquiring or entering into, or
providing any services under any Management Agreement or other management
agreement or (ii) otherwise restricts the conduct by such Loan Party or any of
its Subsidiaries of any business, except in each case where the consequences,
direct or indirect, of any violation thereof could not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect. Except
as disclosed on SCHEDULE 4.7 annexed hereto, no Loan Party nor any of its
Subsidiaries is a party to or is otherwise subject to any agreement or
instrument, any charter or other internal restriction or any Contractual
Obligation which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
4.8 GOVERNMENTAL REGULATION; SECURITIES ACTIVITIES.
No Loan Party nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
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Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which could limit its ability to incur
Indebtedness or which could otherwise render all or any portion of the
Obligations unenforceable. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
4.9 EMPLOYEE BENEFIT PLANS.
A. ERISA. Each Loan Party, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance in all material respects with all
applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit Plan,
and have performed in all material respects their respective obligations under
each Employee Benefit Plan. The sponsor of each Employee Benefit Plan (other
than a Multiemployer Plan) which is intended to qualify under Section 401(a) of
the Internal Revenue Code has received a determination letter from the Internal
Revenue Service concluding that such Employee Benefit Plan is so qualified, or
has timely filed (or will timely file) an application for a determination letter
with the IRS for such employee benefit plan and has not received an unfavorable
determination, and to the knowledge of each Loan Party, each of its Subsidiaries
and each of their respective ERISA Affiliates, no event has occurred, amendment
been adopted or action been taken that would cause such Employee Benefit Plan to
lose its qualified status.
B. ERISA EVENT. With respect to each Employee Benefit Plan, other than a
Multiemployer Plan, no ERISA Event has occurred or is reasonably expected to
occur. With respect to each Multiemployer Plan, to the knowledge of each Loan
Party, no ERISA Event has occurred or is reasonably expected to occur.
C. UNFUNDED BENEFIT LIABILITIES. As of the most recent valuation date for
any Pension Plan, the accumulated benefit obligation (calculated using
reasonable actuarial assumptions employed by the Borrower's actuary for funding
purposes) individually for any Pension Plan, or in the aggregate for all Pension
Plans, does not exceed the assets of all such Pension Plans by more than
$5,000,000 (excluding for purposes of such computation any Pension Plans with
respect to which assets exceed benefit obligations).
D. POTENTIAL WITHDRAWAL LIABILITY. As of the most recent valuation date
for each Multiemployer Plan for which the actuarial report is available, the
potential current liability of the Loan Parties, their Subsidiaries and their
respective ERISA Affiliates for a complete withdrawal from such Multiemployer
Plan (within the meaning of Section 4203 of ERISA), when aggregated with such
potential current liability for a complete withdrawal from all Multiemployer
Plans, based on information available pursuant to Section 4221(e) of ERISA, does
not exceed $5,000,000.
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4.10 CERTAIN FEES.
No broker's or finder's fee or commission will be payable by any Loan
Party or any of its Subsidiaries with respect to this Agreement or any of the
transactions contemplated hereby (other than the fees payable pursuant to this
Agreement), and the Borrower hereby indemnifies the Agent and the Lenders
against, and agrees that it will hold the Agent and the Lenders harmless from,
any claim, demand or liability for any such broker's or finder's fees or
commissions payable by the Borrower alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.
4.11 SOLVENCY.
As of the Closing Date and as of the Funding Date, and after giving effect
to the consummation of the other transactions contemplated by this Agreement and
the other Loan Documents, as of the Closing Date and as of the Funding Date,
with respect to each Loan Party and each of its Subsidiaries, (i) (a) the then
fair saleable value of the property of such Person (including, without
limitation, any rights to contribution from the other Loan Parties under the
Loan Documents) is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and matured considering all financing alternatives
and potential asset sales reasonably available to such person; (b) such Person's
capital is (or will be, as the case may be), not unreasonably small in relation
to its business or any contemplated or undertaken transaction; and (c) such
Person does not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts beyond its ability to pay such debts as they become
due; and (ii) such Person is (or will be, as the case may be), "solvent" within
the meaning given that term and similar terms under Applicable Laws relating to
fraudulent transfers and conveyances. For purposes of clause (i) of the
preceding sentence, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
4.12 DISCLOSURE.
No representation or warranty of any Loan Party contained in this
Agreement and the other Loan Documents to which it is a party or in any other
document, certificate or written statement furnished to the Agent or the Lenders
by or on behalf of any Loan Party for use in connection with the transactions
contemplated by the Loan Documents contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact (known to such
Loan Party, in the case of any document not furnished by it) necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances in which the same were made or will be made, as the case may
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be. The projections and pro forma financial information contained in such
materials are based or will be based upon good faith estimates and assumptions
believed to be reasonable at the time made, it being recognized by the Agent and
the Lenders that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ materially from the projected results. There is no fact
known to CapStar or the Borrower (other than matters of a general economic
nature) that has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect and that has not
been disclosed in any of the Loan Documents and any of the Acquisition
Agreements to which any Loan Party is a party as of the date hereof or in such
other documents, certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated hereby.
4.13 ZONING; AUTHORIZATIONS.
A. ZONING. Except as set forth on SCHEDULE 4.13A annexed hereto, the use
and operation by each Loan Party or any of its Subsidiaries, as applicable, of
each Property as a commercial hotel with related uses, separate and apart from
any other properties, constitutes a legal use under applicable zoning
regulations (as the same may be modified by special use permits or the granting
of variances) and complies in all material respects with all Applicable Laws and
all applicable Insurance Requirements, and does not violate any Authorizations
or other material approvals, material restrictions of record or any material
agreement affecting any Property (or any portion thereof) to which such Loan
Party or such Subsidiary is a party or by which such Loan Party, such Subsidiary
or such Property (or portion thereof) is bound, except for violations and
failures to comply which could not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect. Except as set
forth on SCHEDULE 4.13A annexed hereto, neither the zoning nor any right of
access to or use of any Property is to any extent dependent upon or related to
any real property other than such Property.
B. AUTHORIZATIONS. There have been issued in respect of each Property all
Authorizations necessary to own, operate, use and occupy such Property in the
manner operated by the Loan Parties and their respective Subsidiaries, and their
respective predecessors in interest, as of the Closing Date and contemplated by
the Loan Parties and their respective Subsidiaries to be operated on and after
the Closing Date (including any required permits relating to Hazardous
Materials). CapStar and the Borrower have no knowledge that any Authorization
necessary or required to own, operate, use and occupy any Property in the manner
currently operated by the Tenants under any Material Lease and contemplated to
be operated by the Tenants on and after the Closing Date (including any required
permits relating to Hazardous Materials) has not been issued and is not in full
force and effect, other than any such Authorizations which, if not obtained,
could not reasonably be expected to have, either
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individually or in the aggregate, a Material Adverse Effect. No Loan Party nor
any of its Subsidiaries nor, to the knowledge of CapStar and the Borrower, any
prior owner thereof, has received any notice of violation or revocation thereof
except for those which could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
4.14 PHYSICAL CONDITION; ENCROACHMENT; CAPITAL EXPENDITURES.
A. PHYSICAL CONDITION; ENCROACHMENT. Except as disclosed in any
engineering reports or property improvement plans heretofore delivered pursuant
to the Senior Credit Agreement, each Property is free of material structural
defects and is in good repair (normal wear and tear excepted) and all building
systems contained therein are in good working order in all material respects
subject to ordinary wear and tear, except as disclosed in such engineering
reports, and is free and clear of any damage that would affect materially and
adversely the value of such Property or the use of such Property for its
intended purposes. To the knowledge of CapStar and the Borrower, other than as
described in any title policy and in any survey heretofore delivered pursuant to
the Senior Credit Agreement, no Improvement at any Property encroaches upon any
building line, setback line, side yard line or any recorded or visible easement.
B. CAPITAL EXPENDITURES. SCHEDULE 4.14B annexed hereto sets forth, as of
the Closing Date, a complete and accurate list of the capital expenditure or
similar reserves required in respect of any Property pursuant to a Ground Lease,
any agreement pursuant to which any of the Loan Parties and their respective
Subsidiaries shall have incurred or may incur any Indebtedness or any other
agreement, instrument or other document, other than the Loan Documents and the
Senior Credit Agreement.
4.15 INSURANCE.
All insurance required to be maintained by the Loan Parties and their
respective Subsidiaries pursuant to this Agreement or any other Loan Document is
in full force and effect in accordance with the terms thereof. As to each
Property located in an area identified by the Federal Emergency Management
Agency as having special flood hazards, if flood insurance is available, a flood
insurance policy is in effect. All premiums have been paid with respect to each
insurance policy required to be maintained by CapStar and its Subsidiaries
pursuant to this Agreement or any other Loan Document. SCHEDULE 4.15 annexed
hereto contains a complete and accurate description of all policies of insurance
that will be in effect as of the Closing Date.
4.16 LEASES.
There is no default or event which with notice or lapse of time or both
would constitute a default under any of the provisions of any Material Lease
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affecting any Property that has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. No
litigation is currently pending or has been threatened by any Tenant in
connection with any Material Lease affecting any Property that has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. All Material Leases and other Leases material to the
operation of the Properties as hotels are in full force and effect, except to
the extent such failure could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
4.17 NO CONDEMNATION OR CASUALTY.
No condemnation or other like proceedings (including relocation of any
roadways abutting any Property or change in grade of such roadways or denial of
access to any Property) that has had, or could reasonably be expected to result
in, a Material Adverse Effect, are pending and served nor, to the knowledge of
CapStar and the Borrower, threatened against any Property in any manner
whatsoever. No casualty has occurred to any Property that has had or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
4.18 UTILITIES AND ACCESS.
To the extent necessary for the full utilization of each Pool A Property
in accordance with its current use, telephone services, gas, steam, electric
power, storm sewers, sanitary sewers and water facilities and all other utility
services are available to each Pool A Property, are adequate to serve each such
Property, exist at the boundaries of the Land and are not subject to any
conditions, other than normal charges to the utility supplier, which would limit
the use of such utilities. All streets and easements necessary for the occupancy
and operation of each Pool A Property are available to the boundaries of the
Land. All necessary rights-of-way for all roads, which are sufficient to permit
each Pool A Property to be utilized fully for its current use, have been
completed and are serviceable, and, to the knowledge of CapStar and the
Borrower, all public rights-of-way through or adjacent to the Pool A Properties
have been acquired and dedicated and accepted for maintenance and public use by
the applicable Governmental Authorities.
4.19 INTELLECTUAL PROPERTY.
A. OWNERSHIP. The Loan Parties and their respective Subsidiaries own, or
are licensed to use or otherwise have the lawful right to use, the Intellectual
Property. Except as set forth on SCHEDULE 4.19A annexed hereto, all such
Intellectual Property (other than rights under Franchise Agreements) is fully
protected and duly and properly registered, filed or issued in the appropriate
office and jurisdictions for such registrations, filing or issuances, except
where
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the lack of the lawful right to use such Intellectual Property could not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect, and all registered Intellectual Property and all
pending applications and the jurisdictions in which such Intellectual Property
is registered or will be registered on or before the Closing Date, and in each
case the Loan Party holding rights therein, are identified in SCHEDULE 4.19A
annexed hereto. Each of the license agreements, other than the Franchise
Agreements, pursuant to which any Loan Party or any of its Subsidiaries has
rights or will have rights on or before the Closing Date to use any material
Intellectual Property as of the Closing Date is identified in SCHEDULE 4.19A
annexed hereto. Each Loan Party and each of its Subsidiaries is in compliance
with the material terms of each such license agreement to which it is a party
and each such license agreement is in full force and effect, except where the
failure to be in compliance or the failure to be in full force and effect (i)
has not had and could not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect or (ii) result in an Event of
Default or Potential Event of Default hereunder.
B. NO ADVERSE CLAIMS. (i) No claim has been asserted with respect to the
use of any such Intellectual Property by the Loan Parties and their respective
Subsidiaries or, to the knowledge of CapStar or the Borrower, by any other
Person challenging or questioning the validity or effectiveness of any such
Intellectual Property, and neither CapStar nor the Borrower knows of any valid
basis for any such claim which, in either case, has had or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect; and (ii) the use of such Intellectual Property by each Loan Party and
each of its Subsidiaries does not infringe on the rights of any Person, subject
to such claims and infringements as do not, in the aggregate, give rise to any
liability on the part of any Loan Party or any of its Subsidiaries that has had
or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. The consummation of the transactions
contemplated by this Agreement will not in any manner or to any extent impair
the ownership of (or the license to use, as the case may be) any of such
Intellectual Property by any Loan Party or any of its Subsidiaries.
4.20 WETLANDS.
Except as disclosed on SCHEDULE 4.20 annexed hereto, as of the Closing
Date, none of the Improvements on any Property are constructed on land
designated by any Governmental Authority having land use jurisdiction as
wetlands.
4.21 LABOR MATTERS.
There are no strikes or other labor disputes against any Loan Party or any
of its Subsidiaries, pending or, to the knowledge of CapStar and the Borrower,
threatened that have had or could reasonably be expected to have, either
individually or in the aggregate, a Material
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Adverse Effect. Hours worked by and payments made by any Loan Party or any of
its Subsidiaries to their respective employees are not in violation in any
material respect of the Fair Labor Standards Act or any other applicable law
dealing with such matters.
4.22 EMPLOYMENT AND LABOR AGREEMENTS.
Except as disclosed on SCHEDULE 4.22 annexed hereto, as of the Closing
Date, there are no employment agreements covering management employees of any
Loan Party or any of its Subsidiaries and there are no collective labor
agreements covering any employees of any Loan Party or any of its Subsidiaries.
Each Loan Party and each of its Subsidiaries is in compliance in all material
respects with the terms and conditions of all such collective bargaining
agreements.
SECTION 5
AFFIRMATIVE COVENANTS
Each of CapStar and the Borrower covenants and agrees that, from and after
the Closing Date and so long thereafter as the Commitments hereunder shall
remain in effect and until payment in full of the Loans and the other
Obligations (other than indemnification obligations with respect to claims that
have not been asserted at the time that the Loans and all other Obligations have
been paid in full), each of CapStar and the Borrower shall perform and shall
cause each of their respective Subsidiaries to perform all covenants in this
Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
CapStar shall maintain and cause each of its Subsidiaries to maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of consolidated and consolidating
financial statements in conformity with GAAP. The Borrower shall deliver to the
Agent (for distribution to each Lender):
(i) MONTHLY PROPERTY OPERATING STATEMENTS: as soon as available
and in any event within 30 days after the end of each calendar month,
commencing with respect to the calendar month ending December 31, 1996, a
statement of Property Gross Revenues and Operating Expenses and any other
expenses with respect to each Property separately, in each case for the 12
month period ending on the last day of such calendar month, in reasonable
detail satisfactory to the Agent and certified by the Chief Executive
Officer or the Chief Financial Officer of CapStar and the Borrower stating
that, subject to normal adjustments following the preparation of the
financial statements referred to below in clauses (ii) and (iii),
respectively, (x) such statements of Property Gross Revenues and Operating
Expenses and other expenses fairly present, in all material
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respects, the results of operations of the Properties indicated for the
periods indicated and (y) all Operating Expenses and any other expenses
with respect to each Property which have become due and payable as of the
last day of the calendar month next preceding the delivery of such income
statement have been fully paid or recognized by CapStar or any of its
Subsidiaries;
(ii) QUARTERLY FINANCIAL STATEMENTS OF CAPSTAR AND ITS
SUBSIDIARIES: as soon as available and in any event within 50 days after
the end of each calendar quarter of each calendar year, commencing with
respect to the calendar quarter ending December 31, 1996, (a) the
consolidated balance sheet of CapStar and its Subsidiaries as at the end
of such calendar quarter and the related consolidated statements of
income, stockholders' equity and cash flows of CapStar and its
Subsidiaries for such calendar quarter and for the period from the
beginning of the then current calendar year to the end of such calendar
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous year and the
corresponding figures from the plan and financial forecast for the current
year delivered pursuant to this subsection, and (b) the consolidating
financial statements of CapStar and its Subsidiaries (including balance
sheets and income statements segmenting any Subsidiaries of CapStar or
groups of Subsidiaries of CapStar, as requested by the Agent in its
reasonable discretion) together with any adjustments and/or eliminations
needed to reconcile such Subsidiary financial statements to the
consolidated financial statements of CapStar, all in reasonable detail (it
being understood and agreed that, to the extent CapStar's quarterly report
filed on Form 10-Q with the Securities and Exchange Commission for such
period contains the foregoing information, such quarterly report shall be
deemed to comply with the foregoing requirements) and certified by the
Chief Executive Officer or the Chief Financial Officer of CapStar and the
Borrower stating that (x) such consolidated and consolidating financial
statements fairly present, in all material respects, the financial
condition of CapStar and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments and (y) except as noted, there are no material differences
between such consolidated financial statements of CapStar and its
Subsidiaries and the consolidated financial statements of the Borrower and
its Subsidiaries with respect to such quarter;
(iii) YEAR-END FINANCIAL STATEMENTS: as soon as available and in
any event within 100 days after the end of each calendar year, commencing
with respect to the calendar year ending December 31, 1996, (a) the
consolidated balance sheet of CapStar and its Subsidiaries as at the end
of such calendar year and the related consolidated statements of income,
stockholders' equity and cash flows of CapStar and its Subsidiaries for
such calendar year, setting forth in each case in comparative form the
corresponding figures for the previous calendar year and the corresponding
figures from
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the plan and financial forecast delivered pursuant to this subsection for
the calendar year covered by such consolidated financial statements, (b)
the balance sheets and related income statements of each Property, (c) the
consolidating financial statements of CapStar and its Subsidiaries
(including balance sheets and income statements segmenting any
Subsidiaries of CapStar or groups of Subsidiaries of CapStar, as requested
by the Agent in its reasonable discretion) together with any adjustments
and/or eliminations needed to reconcile such Subsidiary financial
statements to the consolidated financial statements of CapStar, all of the
foregoing in reasonable detail and certified by the Chief Executive
Officer or the Chief Financial Officer of CapStar and the Borrower stating
that they present fairly, in all material respects, the financial
condition of CapStar and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods
indicated, and (d) in the case of the consolidated financial statements
referred to in clause (a), a report thereon of KPMG Peat Marwick LLP or
other independent accountants of recognized national standing selected by
CapStar and reasonably satisfactory to the Agent (it being understood and
agreed that any such other independent accountants of recognized national
standing satisfactory to the agent under the Senior Credit Agreement (so
long as same is in effect) shall be acceptable for purposes of this
Agreement), which report shall be unqualified, shall express no doubts
about the ability of CapStar and its Subsidiaries to continue as a going
concern and shall state that such consolidated financial statements fairly
present, in all material respects, the financial position of CapStar and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as
otherwise disclosed in such financial statements) and that the examination
by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards;
(iv) OFFICERS' AND COMPLIANCE CERTIFICATES: together with each
delivery of financial statements of CapStar and its Subsidiaries pursuant
to subdivisions (i), (ii) and (iii) above, (a) an Officers' Certificate of
CapStar and the Borrower stating that (1) the signer has reviewed the
terms of this Agreement and has made, or caused to be made under his or
her supervision, a review in reasonable detail of the transactions and
condition of CapStar and its Subsidiaries during the accounting period
covered by such financial statements, (2) such review has not disclosed
the existence of any Event of Default or Potential Event of Default during
or at the end of such accounting period, (3) the signer does not have
knowledge of the existence as at the date of such Officers' Certificate,
of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action CapStar and the Borrower have taken, are taking and propose to take
with respect thereto and (4) except for the minority interest reflected on
the balance sheet of the Borrower, such financial statements do not
differ in any material respect from the corresponding consolidated
financial statements of the Borrower and its Subsidiaries; and (b) a
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Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
covenants set forth in subsection 6.6;
(v) ACCOUNTANTS' CERTIFICATION: together with each delivery of
financial statements of CapStar pursuant to subdivision (iii) above, a
written statement by KPMG Peat Marwick LLP or other independent
accountants of recognized national standing selected by CapStar and
reasonably satisfactory to the Agent giving the report thereon (a) stating
in substance that their audit examination has included a review of the
terms of this Agreement and the other Loan Documents as they relate to
accounting matters, and (b) stating whether, in connection with their
audit examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and, if
such a condition or event has come to their attention, specifying the
nature and period of existence thereof; PROVIDED, HOWEVER, that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default that
would not be disclosed in the course of their audit examination;
(vi) ACCOUNTANTS' REPORTS: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to CapStar or any of its Subsidiaries by KPMG Peat Marwick LLP
or any other independent accountants in connection with each annual,
interim or special audit of the consolidated financial statements of
CapStar and its Subsidiaries made by such accountants, including any
comment letter submitted by such accountants to management in connection
with their annual audit;
(vii) RECONCILIATION STATEMENTS: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the financial statements referred to in subsection 4.3, the consolidated
financial statements of the CapStar and its Subsidiaries delivered
pursuant to subdivisions (i), (ii) or (iii) of this subsection 5.1 differ
in any material respect from the consolidated financial statements that
would have been delivered pursuant to such subdivisions had no such change
in accounting principles and policies been made, then (a) together with
the first delivery of financial statements pursuant to subdivision (i),
(ii) or (iii) of this subsection 5.1 following such change, consolidated
financial statements of CapStar and its Subsidiaries for (1) the current
calendar year to the effective date of such change and (2) the two full
calendar years immediately preceding the calendar year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (i), (ii) or
(iii) of this subsection 5.1 following such change, a written
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statement of the Chief Financial Officer or the Chief Executive Officer of
CapStar and the Borrower setting forth the differences which would have
resulted in the calculation of the covenants set forth in Section 6 if
such financial statements had been prepared without giving effect to such
change;
(viii) EVIDENCE OF INSURANCE: together with the delivery of the
statements pursuant to subsection 5.1(i), evidence reasonably satisfactory
to the Agent that the monthly premiums with respect to the insurance
required to be maintained pursuant to subsection 5.9 have been paid for
the current month; PROVIDED that evidence previously delivered pursuant to
this clause (viii) with respect to the prior payment of premiums for the
current month need not be redelivered;
(ix) SEC FILINGS AND PRESS RELEASES: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by CapStar to its
security holders, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by CapStar or the Borrower with the New York
Stock Exchange, Inc., any other securities exchange or with the Securities
and Exchange Commission or any Governmental Authority or private
regulatory authority, and (c) all press releases and other statements made
available generally by CapStar or any of its Subsidiaries to the public or
to the securityholders of CapStar;
(x) EVENTS OF DEFAULT, ETC.: promptly upon CapStar or the
Borrower obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that the Agent or any Lender has given any notice or taken any other
action with respect to a claimed Event of Default or Potential Event of
Default, (b) that any Person has given any notice to CapStar or any of its
Subsidiaries or taken any other action with respect to a claimed default
or event or condition of the type referred to in subsection 7.1B, 7.1C,
7.1D, 7.1E, 7.1F, 7.1H or 7.1I, (c) of any condition or event that
constitutes or may (upon the giving or receiving of notice or the lapse of
time, later, or otherwise) constitute a default, a potential event of
default or an event of default (in each case, as defined in the agreement
or instrument creating, evidencing or governing any such Indebtedness)
under or with respect to any Indebtedness (other than the Indebtedness
hereunder) or any Pool B Obligation, or becoming aware that any agent,
trustee, lender or security holder with respect thereto has given any
notice or taken any other action with respect to such condition or event,
(d) of any condition or event that would be required to be disclosed in a
current report filed by CapStar with the Securities and Exchange
Commission on Form 8-K (Items 1, 2, 4, and 6 of such Form as in effect on
the date hereof) if CapStar were required to file such reports under the
Exchange Act or (e) of the occurrence of any event or change that has had,
or could reasonably be expected to have, either individually or in the
aggregate, a
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Material Adverse Effect, an Officers' Certificate specifying the nature
and period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of such
claimed Event of Default, Potential Event of Default, default, event or
condition, and what action CapStar and the Borrower have taken, are taking
and propose to take with respect thereto;
(xi) LITIGATION OR OTHER PROCEEDINGS: (a) promptly upon CapStar or
the Borrower obtaining knowledge of (x) the institution of any action,
suit, proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration against or affecting CapStar or
any of its Subsidiaries, or any property of CapStar or such Subsidiary
(collectively, "PROCEEDINGS") not previously disclosed in writing by
CapStar or the Borrower to the Lenders or (y) any material development in
any Proceeding that, in any case:
(1) if adversely determined, could reasonably be
expected to have, either individually or in the aggregate, a
Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to CapStar or the Borrower to enable the Agent and
its counsel to evaluate such matters; and (b) within 20 days after the end
of each calendar quarter of CapStar, a schedule of all Proceedings
involving an alleged liability of, or claims against or affecting, CapStar
and its Subsidiaries which, if adversely determined, could reasonably be
expected to result in a money judgment in excess of $1,000,000
individually or $10,000,000 in the aggregate (in either case not
adequately covered by insurance as to which a solvent and unaffiliated
insurance company has accepted coverage), and promptly after request by
the Agent, such other information as may be reasonably requested by the
Agent to enable the Agent and its counsel to evaluate any of such
Proceedings;
(xii) ERISA EVENTS AND NOTICES: (a) promptly upon becoming aware of
the occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action CapStar or any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto; (b) with reasonable promptness,
copies of all notices received by CapStar or any of its ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (c) with
reasonable promptness following the Agent's reasonable request, (x) copies
of any SCHEDULE B
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(Actuarial Information) filed by CapStar or any of its ERISA Affiliates
with the Internal Revenue Service with respect to any Pension Plan and (y)
copies of such other documents or governmental reports or filings relating
to any Employee Benefit Plan as the Agent shall reasonably request;
(xiii) FINANCIAL PLANS: as soon as practicable and in any event no
later than November 30 of each year, projected financial statements for
each Property for the three next succeeding calendar years setting forth
in detail each line item appearing in the form of financial statement set
forth in SCHEDULE 5.1 annexed hereto, together with an explanation of the
assumptions on which such forecasts are based, and such other information
and projections as the Agent may reasonably request for any Property, all
the Properties or CapStar or any of its Subsidiaries;
(xiv) INSURANCE: as soon as practicable and in any event by the
last day of each calendar year, a report in form and substance reasonably
satisfactory to the Agent outlining all material insurance coverage
maintained as of the date of such report by CapStar and its Subsidiaries
or, in lieu thereof, copies of such policies, and a report as to all
material insurance coverage planned to be maintained by CapStar and its
Subsidiaries in the next succeeding calendar year to the extent varying
from the description of that delivered or described;
(xv) ENVIRONMENTAL AUDITS AND REPORTS: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of CapStar or any of its Subsidiaries or by
independent consultants, with respect to material environmental matters at
any Property or which relate to an Environmental Claim which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;
(xvi) BOARD OF DIRECTORS: with reasonable promptness, written
notice of any change in the Board of Directors of CapStar;
(xvii) REDUCTION OF PROPERTY AMOUNT OR PROPERTY EBITDA: promptly
after the Borrower's acquiring actual knowledge of the same, an Officers'
Certificate with respect to the occurrence or effectiveness of any event
or condition (other than an event or condition that is affecting the
hospitality business generally) that could reasonably be expected to cause
the Property Amount or Property EBITDA with respect to any Property, as of
any date of determination thereafter, to be reduced by more than the
greater of (a) 10% as of such later date of determination or for any
period and (b) $100,000; and
(xviii) OTHER INFORMATION: with reasonable promptness, (a)
information and other data revised to correct any erroneous information
and other data
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previously delivered by CapStar or the Borrower to the Agent pursuant to
this subsection 5.1 or included in any statement, report or certificate
previously delivered by CapStar or the Borrower to the Agent pursuant to
this subsection 5.1, together with such statement, report or certificate
that shall have been revised to reflect such revised information and data,
and (b) such other information and data with respect to the Loan Parties
and their respective Subsidiaries, the Properties (separately and for all
Properties), the Managed Properties, the Ground Leases and Leases, the
Management Agreements and the assets and liabilities of the Loan Parties
and their respective Subsidiaries, all in form reasonably satisfactory to
the Agent, as from time to time may be reasonably requested by the Agent.
5.2 COMMON STOCK.
CapStar shall (i) cause the Common Stock, and each class of preferred
stock of the Borrower permitted by subsection 6.20B, to be and to remain at all
times duly listed on the New York Stock Exchange, Inc. and (ii) file timely all
reports required to be filed by CapStar with the New York Stock Exchange, Inc.
and the Securities and Exchange Commission.
5.3 CORPORATE EXISTENCE; CORPORATE SEPARATENESS ETC.
A. CORPORATE EXISTENCE. Except as permitted pursuant to subsection 6.7,
each Loan Party shall, and shall cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its corporate, partnership or limited
liability company existence and all Authorizations, rights and franchises
material to its business.
B. FINANCIAL MATTERS. The Borrower shall, and shall cause each of the Pool
A Subsidiaries to, (i) maintain financial statements, payroll records,
accounting records and other corporate records and other documents separate from
each other and any other Person (other than the Borrower and the Pool A
Subsidiaries, but including CapStar and the Pool B Subsidiaries); (ii) maintain
its own bank accounts in its own name, separate from each other and any other
Person (other than the Borrower and the Pool A Subsidiaries, but including
CapStar and the Pool B Subsidiaries); (iii) pay its own expenses and other
liabilities from its own assets and incur (or endeavor to incur) obligations to
other Persons (other than the Borrower and the Pool A Subsidiaries, but
including CapStar and the Pool B Subsidiaries) based solely upon its own assets
and creditworthiness and not upon the creditworthiness of each other or any
other Person (other than the Borrower and the Pool A Subsidiaries, but including
CapStar and the Pool B Subsidiaries); and (iv) file its own tax returns or, if
part of a consolidated group, join in the consolidated tax return of such group
as a separate member thereof.
C. INDEPENDENT BUSINESS. The Borrower shall manage the business of the
Borrower and each Pool A Subsidiary independently from the business of CapStar
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and any other Person (other than the Borrower and the Pool A Subsidiaries) and
in accordance with the best interest of the Borrower or such Pool A Subsidiary.
The Borrower shall conduct the administrative activities of the Borrower and the
Pool A Subsidiaries separately from the administrative activities of any other
Person (other than the Borrower and the Pool A Subsidiaries, but including
CapStar and the Pool B Subsidiaries). Any moneys earned by the Borrower or the
Pool A Subsidiaries on their assets or proceeds of the sale of any of their
assets shall be deposited in bank accounts separate from any of the assets of
any other Person (other than the Borrower and the Pool A Subsidiaries, but
including CapStar and the Pool B Subsidiaries), and no assets of the Borrower
and the Pool A Subsidiaries shall become commingled with assets of such other
Persons.
D. BUSINESS DEALINGS. Each of CapStar and the Borrower shall hold itself
out, and shall continue to hold itself out, to the public and to its creditors
as a legal entity, separate and distinct from all other entities (other than,
with respect to the Borrower, the Pool A Subsidiaries), and shall continue to
take all steps reasonably necessary to avoid (i) misleading any other Person as
to the identity of the entity with which such Person is transacting business or
(ii) implying that the Borrower is, directly or indirectly, absolutely or
contingently, responsible (if such is not the case) for the Indebtedness or
other obligations of any other Person. CapStar and the Borrower shall not permit
any Pool B Subsidiary to imply that any other Loan Party or any of its
Subsidiaries (other than such Pool B Subsidiary) is directly or indirectly,
absolutely or contingently, responsible for the Indebtedness or other
obligations of such Pool B Subsidiary.
5.4 TAXES AND CLAIMS; TAX CONSOLIDATION.
A. TAXES AND CLAIMS. Each Loan Party shall, and shall cause each of its
Subsidiaries to, pay or discharge or cause to be paid or discharged all Taxes
and Impositions imposed upon any Loan Party or any of its Subsidiaries, or
payable by any Loan Party or any of its Subsidiaries with respect to any
Property or other assets or in respect of any of the franchises, business,
income or other property of any Loan Party or any of its Subsidiaries before the
same shall become delinquent and before any penalty accrues thereon, and will
pay, discharge or otherwise satisfy or cause to be paid, discharged or otherwise
satisfied at or before maturity or before they become delinquent, all
Indebtedness, obligations and other claims (including claims for labor,
supplies, materials and services that, if unpaid, might become a Lien on the
property of any Loan Party or any of its Subsidiaries) of any Loan Party and its
Subsidiaries; PROVIDED, HOWEVER, that no such charge or claim needs to be paid
if (i) such charge or claim is being diligently contested in good faith by
appropriate proceedings, (ii) reserves consistent with GAAP or otherwise
consented to by the Agent shall have been made therefor by such Loan Party or
such Subsidiary, (iii) none of any Loan Party, or any of its Subsidiaries, the
Agent or any Lender could become subject to any civil fine or penalty not
adequately reserved
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against (in the case of any Loan Party or Subsidiary thereof) or criminal fine
or penalty, in each case as a result of non-payment of such charge or claim and
(iv) such contest has not had and could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. Each Loan
Party shall, and shall cause each of its Subsidiaries to, deliver to the Agent
all receipts evidencing the payment of all such Taxes and Impositions with
respect to any Property and, upon written request by the Agent, all other Taxes,
Impositions, assessments, levies, permits, fees, rents and other public charges
imposed upon or in respect of or assessed against any Loan Party, any of its
Subsidiaries or any of their respective properties or assets except for those
being paid or contested as described in the provisos above.
B. TAX CONSOLIDATION. Each Loan Party will not, and will not permit any of
its Subsidiaries to, file or consent to the filing of any consolidated income
tax return with any Person other than CapStar and its Subsidiaries.
5.5 MAINTENANCE OF PROPERTIES; REPAIR.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain or cause to be maintained each Property and all other material property
in a manner consistent for upscale full service hotel properties and related
property, and such other property, in each case of the same quality and
character, and shall keep or cause to be kept every part thereof in good
condition and repair, reasonable wear and tear excepted, and make all reasonably
necessary repairs, renewals or replacements thereto as may be reasonably
necessary to conduct the business of such Loan Party and its Subsidiaries.
5.6 INSPECTION.
As often as may be reasonably requested, each Loan Party shall, and shall
cause each of its Subsidiaries to, permit (i) any authorized representatives
designated by the Agent or any Lender to visit and inspect any Property, and
(ii) any authorized representatives designated by the Agent to inspect the
financial and accounting records, tenant leasing files and other manage ment
books and records of such Loan Party or Subsidiary, and to make copies and take
extracts therefrom, and to discuss its and their affairs, operations, finances
and accounts with its and their officers, property managers and independent
accountants; PROVIDED that each such visit, inspection and discussion shall be
made upon reasonable notice and at such reasonable times dur ing normal business
hours, with as little disruption of such party's business and operations as is
reasonably practical.
5.7 COMPLIANCE WITH LAWS, AUTHORIZATIONS, ETC.
Each Loan Party shall, and shall cause each of its Subsidiaries and all
other Persons occupying any Properties to, comply in all material respects with
the requirements of all
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Applicable Laws. Each Loan Party shall, and shall cause each of its Subsidiaries
to, keep all Authorizations which are from time to time required for the use and
operation of each Pool A Property in full force and effect.
5.8 PERFORMANCE OF LOAN DOCUMENTS AND ACQUISITION AGREEMENTS.
A. LOAN DOCUMENTS. Each Loan Party shall, and shall cause each of its
Subsidiaries to, observe and perform, or cause to be observed and performed, all
its covenants, agreements, conditions and requirements contained in each of the
Loan Documents to which it is or will be a party in accordance with the terms
thereof and will maintain the validity and effectiveness of such Loan Documents.
B. ACQUISITION AGREEMENTS. Each Loan Party shall, and shall cause each of
its Subsidiaries to, observe and perform, or cause to be observed and performed,
all its material covenants, agreements, conditions and requirements contained in
each of the Acquisition Agreements to which it is a party in accordance with the
terms thereof and will maintain the validity and effectiveness of such
Acquisition Agreements, the violation or invalidity of which could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
5.9 INSURANCE.
Each Loan Party shall provide or cause to be provided, for itself and each
of its Subsidi aries, insurance (including appropriate self-insurance) against
loss or damage of the kinds that, in the good faith judgment of the senior
management of such Loan Party, are adequate and appropriate for the conduct of
the business of the Loan Parties and such Subsidiaries in a prudent manner, with
reputable and solvent insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the good faith
judgment of the senior management of such Loan Party, for companies similarly
situated in the industry. Each Loan Party shall pay, and shall cause each of its
Subsidiaries to pay, in a timely manner all premiums due in connec tion
therewith. All insurance policies shall be issued by insurers doing business as
admitted licensed carriers in the state where such Property is located, and
shall be authorized and licensed to issue insurance in such state unless
otherwise approved by the Agent in its sole discretion.
5.10 CASUALTY AND CONDEMNATION; RESTORATION.
A. NOTICE OF CASUALTY. Upon the occurrence of any damage to or loss or
destruction of all or any portion of any Pool A Property, whether or not covered
by insurance, which will cost (or may reasonably be expected to cost) more than
$500,000 to Restore, as reasonably determined by the Borrower and so certified
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in an Officers' Certificate delivered to the Agent, the Borrower shall promptly
deliver to the Agent written notice of the same which shall, among other things,
describe such casualty.
B. NOTICE OF CONDEMNATION. The Loan Parties shall, and shall cause their
respective Subsidiaries to, promptly deliver written notice to the Agent upon
obtaining knowledge of the institution, or the proposed institution, of any bona
fide action or proceeding for the Taking of all or any portion of any Pool A
Property.
C. REDUCTION OF BORROWING BASE; PAYMENT OF RELEASE PRICE. Except to the
extent that subsection 6.15C is applicable, in the event of any casualty or
Taking with respect to a Pool A Property, which will cost (or may reasonably be
expected to cost) more than $500,000 to Restore, as reasonably determined by the
Borrower and so certified in an Officers' Certificate delivered to the Agent,
the Borrower shall elect by written notice delivered to the Agent as soon as
practicable thereafter, but in any event before the earlier of (x) 10 days after
the occurrence of such casualty or Taking and (y) the commencement of the
Restoration of such Pool A Property, either:
(i) to remove the Pool A Property from the calculation of the
borrowing base under the Senior Credit Agreement as required pursuant to
the terms thereof, prepay any outstanding loans under the Senior Credit
Agreement in an amount equal to the Release Price with respect to such
Pool A Property and not Restore such Pool A Property;
(ii) to Restore such Pool A Property in a reasonably prudent
and timely manner to the extent permitted (or not otherwise restricted) by
the Senior Credit Agreement; or
(iii) to prepay any outstanding loans under the Senior Credit
Agreement in an amount equal to the Release Price with respect to such
Pool A Property and Restore such Pool A Property in a reasonably prudent
and timely manner.
5.11 MANAGEMENT OF PROPERTIES.
The Borrower shall, or shall cause any of its Subsidiaries to, manage and
operate the Atlanta Property and the Pool B Properties pursuant to Servicing
Agreements in a commercially reasonable and prudent manner. No Person other than
the Borrower or any Wholly Owned Subsidiary shall have substantial authority
over the management and operation of any Property.
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SECTION 6
NEGATIVE COVENANTS
Each of CapStar and the Borrower covenants and agrees that, so long as the
Commitments hereunder shall remain in effect and until payment in full of the
Loans and the other Obligations (other than indemnification obligations with
respect to claims that have not been asserted at the time that the Loans and all
other Obligations have been paid in full), CapStar and the Borrower shall
perform and shall cause each of their respective Subsidiaries to perform all
covenants in this Section 6.
6.1 INDEBTEDNESS.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, create, incur, assume, Guarantee,
refinance, exchange, refund or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except:
(i) the Loan Parties and their respective Subsidiaries may
become and remain liable with respect to the Obligations;
(ii) the Loan Parties and their respective Subsidiaries may become
and remain liable with respect to Interest Rate Agreements required
pursuant to the terms of the Senior Credit Agreement (as in effect on the
Closing Date);
(iii) the Loan Parties and their respective Subsidiaries may become
and remain liable with respect to intercompany Indebtedness owed to the
Borrower or any of its Wholly Owned Subsidiaries that are Loan Parties;
(iv) so long as at the time of incurrence, refinancing, exchange,
amendment or refunding thereof (a) no Event of Default or Potential Event
of Default has occurred and is continuing or would be caused thereby and
(b) such incurrence, refinancing, exchange, amendment or refunding is
permitted under the terms and provisions of all other Indebtedness and
each agreement pursuant to which such other Indebtedness was incurred, the
Borrower and its Subsidiaries may incur, refinance, exchange, amend or
refund Indebtedness or become liable with respect to Guaranties in an
aggregate principal amount not to exceed $10,000,000 at any time; PROVIDED
that (x) no such Indebtedness (and, if applicable, any security into which
such Indebtedness is convertible or for which it is exchangeable), whether
upon the happening of any event (excluding the occurrence of an event of
default, if such event of default has not then occurred) or otherwise,
shall mature, become payable or require the payment of any principal
amount thereof (or any other amount in lieu thereof) or be mandatorily
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redeemable, pursuant to a sinking fund or otherwise or redeemable at the
option of the holder thereof, or be redeemed, purchased, retired or
defeased (including in substance or legal defeasance) or paid voluntarily
by or on behalf of any obligor thereunder, in any case in whole or in
part, before the date that is 91 days after the Maturity Date and (y) no
obligation that is guaranteed by any such Guaranty, whether upon the
happening of any event (excluding the occurrence of an event of default,
if such event of default has not then occurred) or otherwise, shall
mature, become payable or require the payment of any amount thereof (or
any other amount in lieu thereof) or be mandatorily redeemable, pursuant
to a sinking fund or otherwise or redeemable at the option of the holder
thereof, in any case in whole or in part, before the date that is 91 days
after the Maturity Date; PROVIDED, HOWEVER, that the preceding proviso
shall not be given effect with respect to any equipment lease (or series
of related equipment leases) covering equipment having a value of less
than $500,000 in the aggregate at the commencement of such lease (or
series of leases);
(v) so long as at the time of incurrence, refinancing, exchange
or refunding thereof (a) no Event of Default or Potential Event of Default
has occurred and is continuing or would be caused thereby and (b) such
incurrence, refinancing, exchange, amendment or refunding is permitted
under the terms and provisions of all other Indebtedness and each
agreement pursuant to which such other Indebtedness was incurred, the Pool
B Subsidiaries (other than a Pool B Subsidiary that has acquired or shall
acquire any leasehold interests in Pool B Properties pursuant to the sale
and leaseback transactions permitted by subsection 6.11), may incur,
refinance, exchange, amend or refund Indebtedness in connection with the
Acquisition or ownership of one or more Pool B Properties acquired in a
single transaction or series of related transactions (as so incurred,
refinanced, exchanged, amended or refunded, "POOL B INDEBTEDNESS"), in an
aggregate principal amount not to exceed the lesser of (i) $50,000,000 for
all Pool B Subsidiaries at any time and (ii) that amount which, when added
to the sum of (1) the aggregate amount of all loans and letters of credit
(including amounts drawn (and not reimbursed) under any letters of credit)
outstanding under the Senior Credit Agreement at such time and (2) the
aggregate maximum potential liability of the Borrower pursuant to
guaranties of lease obligations permitted by subsection 6.4(vii) at such
time, equals the Permitted Senior Credit Agreement Amount at such time;
PROVIDED, HOWEVER, that (s) the aggregate outstanding principal amount of
any such Pool B Indebtedness shall not at any time exceed 55% of the sum
of the aggregate cash purchase price of such Pool B Properties PLUS the
aggregate amount of expenditures actually made by such Pool B Subsidiary
in connection with the Renovation of such Pool B Properties, (t) the ratio
of Cash Available for Debt Service (determined with reference to the 12
most recently completed calendar months ending not less than 30 days
before the date of such incurrence, refinancing, exchange, amendment or
refunding) to Projected Interest Expense (determined with reference to the
12 complete calendar months commencing on
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the first day of the month following the date of such incurrence,
refinancing, exchange or refunding) shall not be less than 1.60 to 1.00,
(u) such Pool B Indebtedness of any Pool B Subsidiary (and, if applicable,
any security into which such Indebtedness is convertible or for which it
is exchangeable) shall not mature or require the scheduled payment of
principal (or any other amount in lieu thereof) or be mandatorily
redeemable, pursuant to a sinking fund or otherwise, or redeemable at the
option of the holder thereof, or be redeemed, purchased, retired or
defeased (including in substance or legal defeasance) or paid voluntarily
by or on behalf of any obligor thereunder, in any case in whole or in
part, before the date that is 91 days after the Maturity Date, except that
such Indebtedness may require principal amortization calculated on a level
pay basis over a term of not less than 15 years, (v) such Pool B
Indebtedness shall be non-recourse to any Loan Party, any of its
Subsidiaries and any Joint Venture in which it has an Investment (other
than for any Guaranties provided with respect to customary carve-outs for
environmental and "bad deed" indemnities), (w) such Pool B Indebtedness
shall not be secured by (1) the assets of any Loan Party or any of its
Subsidiaries (other than the Properties owned by such Pool B Subsidiary)
or (2) the Transfer of or Lien on any Intellectual Property, (x) so long
as (1) such Pool B Indebtedness has not been accelerated, (2) a receiver
has not been appointed with respect to a related Pool B Property or (3) no
other remedy is being exercised with respect to any collateral securing,
or other property subject to, such Pool B Indebtedness, such financing
does not preclude or limit the distribution of cash flow (after reserves
for Capital Items, Taxes, insurance and other customary reserves) to the
Borrower and its other Subsidiaries for the purposes set forth herein, (y)
after giving affect to such transaction, the Borrower is in compliance
with all of the provisions set forth herein and the other Loan Documents
and (z) the Borrower shall have delivered to the Agent any Officers'
Certificate demonstrating compliance with the provisions of this
subsection 6.1(v) by the applicable Pool B Subsidiary in connection with
such transaction; and
(vi) the Loan Parties may become and remain liable with respect to
their obligations under the Senior Credit Agreement, provided that the
aggregate principal amount of loans and letters of credit (including
amounts drawn (and not reimbursed) under any letter of credit) permitted
to be outstanding at any time under the Senior Credit Agreement, when
added to the sum of (1) the aggregate outstanding principal amount of all
Pool B Indebtedness at such time and (2) the aggregate maximum potential
liability of the Borrower pursuant to guaranties of lease obligations
permitted by subsection 6.4(vii) at such time, shall not exceed the
Permitted Senior Credit Agreement Amount at such time;
PROVIDED that the prohibition in clauses (iv) and (v) above against actually
defeasing or voluntarily prepaying Indebtedness, in whole or in part, is not
intended to prohibit, and shall not
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prohibit, the Borrower or any of its Subsidiaries from incurring, refinancing,
exchanging, amending or refunding Indebtedness that by its terms entitles any
Person to defease or voluntarily prepay such Indebtedness, in whole or in part.
6.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. The Loan Parties shall not, and shall not permit
any of their respective Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of any kind (including any document or instrument in respect of goods,
furniture, fixtures, equipment or accounts receivable) of CapStar or any of its
Subsidiaries, whether now owned or hereafter acquired, or any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens on a Pool B Property and related assets granted or
assumed by a Pool B Subsidiary to secure the Pool B Obligations owed by
the Pool B Subsidiary; PROVIDED, that such Liens encumber only the assets
purchased, financed or refinanced with, or leased or otherwise used
pursuant to the terms of, such Pool B Obligations; and
(iii) Liens on FF&E granted to secure Indebtedness incurred
pursuant to subsection 6.1(iv); PROVIDED that such Liens encumber only
FF&E purchased, financed or refinanced with such Indebtedness.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If any Loan Party or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 6.2A, the Borrower shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien equally
and ratably with any and all other Indebtedness secured thereby as long as any
such Indebtedness shall be so secured; PROVIDED, HOWEVER, that, notwithstanding
the foregoing, this covenant shall not be construed as a consent by the Agent or
any Lender to the creation or assumption of any such Lien not permitted by the
provisions of subsection 6.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to (i) specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to a sale or other disposition of
assets permitted hereunder, (ii) specific property subject to a Ground Lease,
(iii) Management Agreements (to the extent that the terms thereof prohibit the
assignment of rights thereunder, but not any other rights or interests and
otherwise consistent with industry practices) as security for the obligations of
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the Loan Parties under the Senior Credit Agreement or otherwise, (iv) any other
agreement entered into in the ordinary course of business which by its terms
restricts the assignment of rights thereunder (but not any other rights or
interests and otherwise consistent with industry practices) as security for the
obligations of the Loan Parties under the Senior Credit Agreement or otherwise
and (v) the Senior Credit Agreement, the Loan Parties shall not and shall not
permit any of their respective Subsidiaries to, directly or indirectly, enter
into any agreement prohibiting the creation or assumption of any Lien upon any
of its properties or assets (including, without limitation, any interest in, or
right to receive payments under, any of the Management Agreements), whether now
owned or hereafter acquired except to the extent that Liens to secure the
Obligations are excluded therefrom.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO THE BORROWER OR OTHER
SUBSIDIARIES. Except as provided in this Agreement, in the Senior Credit
Agreement and the Pool B Documents (with respect to the related Pool B
Subsidiaries and Pool B Properties), the Loan Parties shall not, and shall not
permit any of their respective Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary's
capital stock or other equity interest owned by the Borrower or any other
Subsidiary of the Borrower, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to the Borrower or any other Subsidiary of the Borrower, (iii) make
loans or advances to the Borrower or any other Subsidiary of the Borrower, or
(iv) transfer any of its property or assets to the Borrower or any other
Subsidiary of the Borrower, except for specific property encumbered to secure
the payment of particular Indebtedness permitted hereunder.
6.3 INVESTMENTS AND CERTAIN CAPITAL EXPENDITURES.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, make any Investment in any Person,
including any Affiliate or Joint Venture, any expenditure to acquire any hotel
or other real property or any expenditure to acquire, secure, extend, renew or
modify any Management Agreement, except:
(i) CapStar and its Subsidiaries may make Investments in cash or
Cash Equivalents;
(ii) the Borrower, Atlanta GP and Atlanta LP may (a) permit to exist
the Investment in the Atlanta Airport Sub, (b) subject to subsection 6.5,
purchase outstanding limited partner interests from other partners in the
Atlanta Airport Sub and (c) subject to clause (viii) below, purchase
outstanding limited partner interests from other limited partners in the
Atlanta Airport Sub and make other Investments in the Atlanta Airport Sub;
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(iii) the Borrower, EAC and the Virginia Sub may (a) permit to exist
the Investment in the Virginia Parking Sub, (b) subject to subsection 6.5,
purchase outstanding general partner interests from other partners in the
Virginia Parking Sub and (c) subject to clause (viii) below, purchase
outstanding general partner interests from other general partners in the
Virginia Parking Sub and make other Investments in the Virginia Parking
Sub;
(iv) CapStar may make equity Investments in the Borrower, and the
Borrower and its Wholly Owned Subsidiaries may make equity and debt
Investments in their respective Wholly Owned Subsidiaries for the
acquisition, ownership, renovation, restoration, management, operation and
disposition of Properties;
(v) the Borrower and its Subsidiaries may make Acquisitions
permitted pursuant to subsection 2.9;
(vi) so long as no Event of Default has occurred and is continuing
and no Event of Default or Potential Event of Default would be caused
thereby, the Borrower and its Subsidiaries may acquire real property that
is contiguous with any Property for use in the expansion of such Property,
PROVIDED that the aggregate purchase price for such real properties,
measured on a cumulative basis from the Closing Date, shall not exceed
$10,000,000;
(vii) so long as no Event of Default or Potential Event of Default
has occurred and is continuing or would be caused thereby, the Borrower
and its Subsidiaries may acquire and own not more than two debt Securities
(other than the Atlanta Note) at any time, which debt Securities shall be
secured exclusively by first priority mortgages encumbering 100% of the
fee interest on hotel properties; PROVIDED that the aggregate purchase
price for such debt Securities shall not exceed $30,000,000; and
(viii)so long as no Event of Default or Potential Event of Default
has occurred and is continuing or would be caused thereby, the Borrower
and the Pool A Subsidiaries may make and own equity or debt Investments
in, or acquire and own equity or debt Securities issued by, the Atlanta
Airport Sub, the Virginia Parking Sub and not more than ten other Joint
Ventures or other Persons (other than a Wholly Owned Subsidiary of the
Borrower); PROVIDED that (a) either (1) the sole purpose of such Joint
Venture or other Person (other than the Virginia Parking Sub) is to
acquire, own, Renovate, restore, manage, operate and dispose of upscale,
full-service hotels in the United States of America and, to the extent
permitted by subsection 6.14B, Canada or (2) such equity or debt
Securities are registered under the Exchange Act; (b) the aggregate amount
of such Investments in, or the aggregate purchase price of such Securities
issued by, each such
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Joint Venture or other Person (other than the Atlanta Airport Sub and the
Virginia Parking Sub) shall not exceed $2,000,000 at any time and the
aggregate amount of such Investments in, or the aggregate purchase price
of such Securities issued by, all such Joint Ventures or other Persons
(other than the Atlanta Airport Sub and the Virginia Parking Sub) shall
not exceed $20,000,000 at any time; (c) the sum of (1) the aggregate
principal amount of the Indebtedness of such Joint Venture or other Person
and, in either case, the Subsidiaries thereof PLUS (2) the purchase price
of any equity Investment made in, or Securities issued by, such Joint
Venture or other Person (other than the aggregate amount of such
Investments, or the aggregate purchase price of such Securities issued by
the Atlanta Airport Sub or the Virginia Parking Sub as of the date of this
Agreement) and, in either case, its Subsidiaries that are preferred in
right or priority of payment (including any mandatory redemption or
redemption at the option of the holder) to any such investment or
Securities (other than a priority right to receive a return on Investment
of up to 25% per annum) shall at no time exceed 60% of the greater of (x)
the undepreciated book value of all properties owned or leased by such
Joint Venture or other Person and, in either case, the Subsidiaries
thereof and (y) the fair market value of all such properties and asset, as
reasonably determined by the Borrower as of the respective dates of
acquisition thereof; (d) the Joint Venture or other Person in which such
Investment is made or by which such Securities are issued shall not be an
Affiliate of more than four other Joint Ventures or other Persons in which
Investments are made or owned or whose Securities are acquired or owned
pursuant to this subsection 6.3(viii), and the Investment made in or
Securities issued by each such Joint Venture or other Person shall neither
be secured by the assets of more than four other Joint Ventures or other
Persons in which Investments are made or owned or whose Securities are
acquired or owned pursuant to this subsection 6.3(viii) nor
cross-defaulted to Investments in or Securities issued by more than four
other Joint Ventures or other Persons in which Investments are made or
whose Securities are acquired pursuant to this subsection 6.3(viii);
PROVIDED, HOWEVER, that (I) without the approval of the Agent, but subject
to all the other limitations set forth in this subsection 6.3(viii) (other
than the requirement in clause (a) above that the hotels be upscale,
full-service hotels), the Borrower and its Wholly Owned Subsidiaries
(other than the Pool B Subsidiaries) may make and own Investments in, or
acquire and own equity or debt Securities issued by, Joint Ventures and
other Persons if the aggregate amount of such Investments in, or the
aggregate purchase price of such Securities issued by, each such Joint
Venture or other Person shall not at any time exceed $500,000 and the
aggregate amount of such Investments in, or the aggregate purchase price
of such securities issued by, all such Joint Ventures or other Persons
shall not at any time exceed $2,500,000, (II) without the approval of the
Agent, the Borrower and its Wholly Owned Subsidiaries (other than the Pool
B Subsidiaries) may make Investments described in clause (iv) of the
definition of "Investments" and the provisions of clauses (a) and (c)
above shall not be given effect with respect to such Investments, PROVIDED
that, with the approval of the Agent, in its sole discretion (provided
that, so long as the Senior Credit Agreement is in effect, no such
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approval shall be required to the extent that such approval is granted
under the Senior Credit Agreement), the Borrower and its Wholly Owned
Subsidiaries (other than Pool B Subsidiaries) may make such Investments
and the provisions of clauses (a), (c) and (d) above shall not be given
effect, and (III) with respect to Investments in, or the acquisition of
Securities issued by, a Joint Venture or other Person that shall be
identified in writing to and approved in writing by the Lenders before the
Closing Date, the provisions of clause (b) above shall not be given effect
and the percentage amount in clause (c) above shall be increased from 60%
to 75%;
PROVIDED that (A) the aggregate amount of the consideration or Investment, as
the case may be, paid by the Borrower and the Pool A Subsidiaries to acquire the
real property, acquire the Securities and make the Investments and expenditures
referred to in clauses (vi), (vii) and (viii) above shall not exceed $60,000,000
at any time, (B) except as provided to the contrary in sub clauses (I) and (II)
to the proviso to clause (vii) above, each such expenditure and acquisition or
Investment referred to in clauses (vi), (vii) and (viii) above shall be approved
by the Agent, in its sole discretion; and (C) each such Acquisition referred to
in clause (iii) above from a person that is an Affiliate or 5% stockholder of
any of the Loan Parties (other than other Loan Parties) or any entity in which
such Person has an equity or debt Investment shall be approved by a majority of
the independent directors of the board of directors of CapStar and by the Agent,
which approval shall not be unreasonably withheld, conditioned or delayed
(provided that, so long as the Senior Credit Agreement is in effect, no such
approval by the Agent shall be required to the extent that such approval is
granted under the Senior Credit Agreement).
For the purpose of this subsection 6.3 and without limiting any other
method of making an Investment, the Borrower and its Subsidiaries shall be
deemed to make an Investment in each Investment owned by a Person at the time
such Person becomes a Subsidiary of the Borrower or any of its Subsidiaries.
6.4 CONTINGENT OBLIGATIONS.
The Loan Parties shall not and shall not permit any of their respective
Subsidiaries to, directly or indirectly, create or become liable with respect to
any Contingent Obligation, except that:
(i) the Borrower and its Subsidiaries may become liable with
respect to Contingent Obligations in respect of the Obligations and the
Indebtedness, Investments and Contingent Obligations in respect of which
the Borrower and the Pool A Subsidiaries are permitted by subsections 6.1,
6.3 and 6.4 (other than pursuant to this clause (i)) to become liable;
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(ii) CapStar and its Subsidiaries may become liable with respect
to Contingent Obligations in respect of Senior Indebtedness subject to the
limitations set forth in subsections 6.1(ii) and (vi);
(iii) the Borrower and its Subsidiaries may become liable with
respect to indemnification agreements and Guaranties (whether now existing
or hereafter entered into) with respect to performance, surety and similar
bonds or guaranties of completion provided in the ordinary course of
business consistent with past practices in respect of the Restoration or
Renovation of any Property, but excluding any such bonds with respect to
any hotel property that is not then a Property, in an aggregate maximum
amount not at any time exceeding $25,000,000 MINUS the sum, without
duplication, of (1) the Letter of Credit Usages that shall have been used,
issued or made for or in connection with the Restoration of the Properties
or the Renovation of Properties subject to subsection 7.16, in each case
that shall have been commenced but not completed, PLUS (2) the aggregate
amount of expenditures for the Restoration of Properties or the Renovation
of Properties subject to subsection 6.16, in each case that shall have
been commenced but not completed;
(iv) the Borrower and the Pool A Subsidiaries may become liable to
make Investments permitted by, and in accordance with the terms of,
subsection 6.3;
(v) such of the Borrower and its Subsidiaries as are specified on
SCHEDULE 4.3B annexed hereto may be liable (a) with respect to the
Contingent Obligations set forth on such Schedule, in each case in the
aggregate amount not greater than the maximum estimated amount specified
thereon with respect to such Continent Obligation and (b) with respect to
modifications to any such Contingent Obligation either (1) that do not
increase either the maximum possible amount, or the maximum estimated
amount thereof, or both, in each case as specified on each list, add any
obligors with respect thereto or increase, decrease or otherwise vary the
liabilities of the existing obligors with respect thereto or (2) that
increase either the maximum possible amount or the maximum estimated
amount thereof, or both, in each case as specified on such list, add any
obligors with respect thereto or increaser, decrease or otherwise vary the
liabilities of the existing obligors;
(vi) the Borrower and its Subsidiaries may become liable with
respect to other Contingent Obligations in an aggregate amount (not less
than zero) at any time not greater than the amount by which $10,000,000 is
greater than the amount referred to in clause (iii) of this subsection 6.4
at such time; and
(vii) the Borrower may guaranty obligations of its Pool B
Subsidiaries under leases related to sale and lease-back transactions
permitted
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pursuant to subsection 6.11; PROVIDED that (a) the maximum aggregate
potential liability of the Borrower pursuant to such guaranties (whether
for regularly scheduled lease payments, any amount due in connection with
the termination or expiration of any lease or any other amount payable in
connection with such leases) shall not exceed the lesser of (i) $5,000,000
at any time and (ii) that amount which, when added to the sum of (1) the
aggregate amount of all loans and letters of credit (including amounts
drawn (and not reimbursed) under any letter of credit) outstanding under
the Senior Credit Agreement at such time, equals the Permitted Senior
Credit Agreement Amount at such time; and PROVIDED FURTHER, that the
Borrower shall have obtained the Agent's prior written approval of (x) the
terms of the applicable lease (and each supplement thereto and amendment
or modification thereof), (y) the identity of lessor and (z) the property
subject to such sale and lease-back transaction (provided that, so long as
the Senior Credit Agreement is in effect, no such approval shall be
required to the extent that such approval is granted under the Senior
Credit Agreement).
6.5 RESTRICTED JUNIOR PAYMENTS.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, declare, order, pay, make, give or
publish notice or fix a date in respect of or set apart any sum for any
Restricted Junior Payment, enter into an agreement or make any commitment to
effect any of the foregoing or take any other similar action in furtherance of
or otherwise in connection with the foregoing; PROVIDED, HOWEVER, that, so long
as no Event of Default or Potential Event of Default has occurred or is
continuing, the Loan Parties may make any of the following payments:
(i) commencing on January 1, 2000, the Loan Parties may make
Restricted Junior Payments in respect of equity Securities, including
payments in respect of limited partner interests in the Borrower that
shall not be beneficially owned by CapStar or CapStar Sub); PROVIDED that
(a) the aggregate amount of Restricted Junior Payments pursuant to this
clause (i) during any calendar year shall not exceed an amount equal to
25% of Consolidated Net Income for the immediately preceding calendar year
and (b) no payments of principal, or any redemption, purchase or
defeasance, of any Indebtedness of CapStar and its Subsidiaries shall be
permitted pursuant to this clause (i);
(ii) the Atlanta Airport Sub may make distributions to its
partners in accordance with the Atlanta Partnership Agreement; PROVIDED
that such distributions are made (x) pursuant to Section 5.1, 5.2 or 13.2
of the Atlanta Partnership Agreement in accordance with the provisions
thereof in effect on the date of this Agreement and (y) with respect to
Cash Flow from Operations and Capital Proceeds (in each case as defined in
the Atlanta Partnership Agreement on the date of this Agreement); and
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(iii) the Loan Parties may make Restricted Junior Payments in an
aggregate amount (measured on a cumulative basis from the Closing Date)
not to exceed $25,000,000 pursuant to the conversion, exercise or
redemption of the Preferred Limited Partner Interests.
6.6 FINANCIAL COVENANTS.
A. MAXIMUM CONSOLIDATED TOTAL INDEBTEDNESS. CapStar and the Borrower shall
not permit at any time Consolidated Total Indebtedness to exceed the lesser of
(i) 60% (or, if CapStar has an offering of its equity Securities after the
Closing Date, 55%) of the sum of (a) Consolidated Total Indebtedness at such
time PLUS (b) the Market Equity Capitalization of CapStar at such time and (ii)
65% (or, if CapStar has an offering of its equity Securities after the Closing
Date, 60%) of the sum of (y) Consolidated Total Indebtedness at such time PLUS
(z) Net Worth of CapStar at such time.
B. MINIMUM INTEREST COVERAGE. As of the last day of any calendar quarter
ending during any of the periods set forth below, CapStar and the Borrower shall
not permit the ratio of Consolidated EBITDA to Consolidated Interest Expense to
be less than the correlative ratio indicated for the periods set forth below
(such amounts to be determined with reference to the preceding 12-month period
ending on such last day and to be adjusted to the extent required by the
respective provisos to the definition of Property EBITDA):
=========================== ===========================
MINIMUM
INTEREST
PERIOD COVERAGE RATIO
--------------------------- ---------------------------
Closing Date through 2.00 to 1.00
December 31, 1997
--------------------------- ---------------------------
January 1, 1998 through 2.40 to 1.00
December 31, 1998
--------------------------- ---------------------------
January 1, 1999 through 2.70 to 1.00
December 31, 1999
--------------------------- ---------------------------
January 1, 2000 through 2.90 to 1.00
December 31, 2000
--------------------------- ---------------------------
January 1, 2001 through the 3.15 to 1.00
Maturity Date
=========================== ===========================
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C. MAXIMUM TOTAL DEBT LEVERAGE RATIO. As of the last day of any calendar
quarter ending during any of the periods set forth below, CapStar and the
Borrower shall not permit the ratio of Consolidated Total Indebtedness to
Consolidated EBITDA to exceed the correlative ratio indicated for the periods
set forth below (Consolidated Total Indebtedness to be determined as of such
last day, and Consolidated EBITDA to be determined with reference to the
preceding 12-month period ending on such day):
=========================== ===========================
MAXIMUM
LEVERAGE
PERIOD RATIO
--------------------------- ---------------------------
Closing Date through 5.50 to 1.00
June 30, 1997
--------------------------- ---------------------------
July 1, 1997 through 5.25 to 1.00
September 30, 1997
--------------------------- ---------------------------
October 1, 1997 through 5.00 to 1.00
March 31, 1998
--------------------------- ---------------------------
April 1, 1998 through 4.75 to 1.00
June 30, 1998
--------------------------- ---------------------------
July 1, 1998 through 4.50 to 1.00
September 30, 1998
--------------------------- ---------------------------
October 1, 1998 through 4.25 to 1.00
December 31, 1999
--------------------------- ---------------------------
January 1, 2000 through 4.00 to 1.00
December 31, 2000
--------------------------- ---------------------------
January 1, 2001 through the 3.75 to 1.00
Maturity Date
=========================== ===========================
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6.7 FUNDAMENTAL CHANGES.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, alter the legal structure of any Loan Party or any of its
Subsidiaries, to incorporate or otherwise organize any Subsidiaries, or enter
into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or make or permit
any Transfer or acquire by purchase or otherwise, directly or indirectly, all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person, make any Acquisition, acquire
or enter into any management agreement with respect to any hotel property or
Transfer any Property, except that, from time to time after the Closing Date:
(i) the Loan Parties and their Subsidiaries may lease space in
Improvements and in accordance with subsection 6.5(vi) of the Senior
Credit Agreement (as in effect on the Closing Date) remove, sell or
otherwise dispose of items of collateral under the Senior Credit Agreement
and other property;
(ii) the Borrower and any Wholly Owned Subsidiary (other than a Pool
A Subsidiary or a Pool B Subsidiary) may incorporate or otherwise organize
one or more Subsidiaries; PROVIDED that (a) before the Subsidiary shall
conduct any business or acquire any asset, the Borrower shall deliver to
the Agent (1) information reflecting the incorporation or other
organization of such Subsidiary, and (2) an originally executed
counterpart to the Affiliate Guaranty (except as may be provided to the
contrary in subsection 2.9B), (b) the legal and tax structure of each such
Subsidiary shall be approved by the Agent, which approval shall not be
unreasonably withheld, conditioned or delayed (provided that, so long as
the Senior Credit Agreement is in effect, no such approval shall be
required to the extent that such approval is granted under the Senior
Credit Agreement); PROVIDED FURTHER that, with respect to the restrictions
on the tax and legal structure of a Pool B Subsidiary, such structure may
include features intended by the Borrower to make such Pool B Subsidiary
"bankruptcy-remote" and (c) no Pool B Subsidiary shall at any time (1)
incur, assume or otherwise become liable for any Indebtedness or
Contingent Obligation except as permitted by subsections 6.1 and 6.4, or
(2) incur, assume or otherwise become liable for any other liability or
indebtedness except in the ordinary course of business (PROVIDED that, in
any event, each such liability or obligation shall be non-recourse to each
Loan Party, its Subsidiaries and the Joint Ventures in which it has an
Investment, in each case other than such Pool B Subsidiary) or as shall
have been approved by the Requisite Lenders in their sole discretion;
(iii) the Loan Parties and their respective Subsidiaries may make
Acquisitions to the extent permitted by, and in accordance with,
subsections 2.9A and 2.9B;
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(iv) the Loan Parties and their respective Subsidiaries may Transfer
Properties to the extent permitted by, and in accordance with, subsection
6.15B or 6.15C, as applicable;
(v) the Loan Parties and their respective Subsidiaries may acquire
or enter into Management Agreements and Servicing Agreements with respect
to hotel properties to the extent permitted by, and in accordance with,
subsection 5.11 or 6.17;
(vi) the Loan Parties may make Investments and acquisitions of real
property to the extent permitted by, and in accordance with, subsection
6.3;
(vii) the Loan Parties and their respective Subsidiaries may
dissolve one or more Inactive Subsidiaries and one or more other
Subsidiaries upon the Transfer of all or substantially all their
respective assets in a single transaction or series of transactions not
prohibited by subsection 6.15B or 6.15C, as applicable.
Notwithstanding anything to the contrary contained in this Agreement, if
any Subsidiary of CapStar after the date hereof guaranties the obligations of
the Borrower under the Senior Credit Agreement then such Subsidiary shall
contemporaneously execute a counterpart to the Affiliate Guaranty.
6.8 ZONING AND CONTRACT CHANGES AND COMPLIANCE.
Without the prior written approval of the Agent, which approval shall not
be unreasonably withheld, conditioned or delayed (provided that, so long as the
Senior Credit Agreement is in effect, no such approval shall be required to the
extent that such approval is granted under the Senior Credit Agreement), the
Loan Parties shall not and shall not permit any of their respective Subsidiaries
to initiate or consent to any zoning reclassification of any property or seek
any material variance under any existing zoning ordinance or use or permit the
use of any Property in any manner that could result in such use becoming a
non-conforming use (other than a non-conforming use permissible under automatic
grandfathering provisions) under any zoning ordinance or any other applicable
land use law, rule or regulation. The Loan Parties shall not and shall not
permit any of their respective Subsidiaries to initiate or consent to any change
in any laws, requirements of Governmental Authorities or obligations created by
private contracts and Material Leases which now or hereafter could reasonably be
likely to materially and adversely affect the ownership, occupancy, use or
operation of any Property without the prior written consent of the Agent
(provided that, so long as the Senior Credit Agreement is in effect, no such
approval shall be required to the extent that such approval is granted under the
Senior Credit Agreement).
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6.9 NO JOINT ASSESSMENT; SEPARATE LOTS.
Without the prior written approval of the Agent, which approval may be
granted, withheld, conditioned or delayed in its sole discretion (provided that,
so long as the Senior Credit Agreement is in effect, no such approval shall be
required to the extent that such approval is granted under the Senior Credit
Agreement), the Loan Parties shall not suffer, permit or initiate, and shall not
permit any of their respective Subsidiaries to suffer, permit or initiate, the
joint assessment of any Property (i) with any other real property constituting a
separate tax lot (other than another Property) and (ii) with any portion of any
Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any Taxes which may be levied against any such
personal property shall be assessed or levied or charged to any Property as a
single lien. Each Property is comprised of one or more parcels, each of which,
to the knowledge of the Borrower, constitutes a separate tax lot (except with
respect to any lot constituting another Property) and none of which constitutes
a portion of any other tax lot.
6.10 TRANSACTIONS WITH AFFILIATED PERSONS.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property, the rendering of any service or the making of any
Investment or Guaranty, or the amendment, restatement, supplement or other
change of, or waiver or failure to enforce any obligations under, any agreement)
with any holder of 5% or more of any class of equity Securities of the Borrower
or CapStar or any Affiliate of the Borrower or CapStar unless the terms thereof
are not less favorable to such Loan Party or Subsidiary, as the case may be,
than those that might be obtained in a comparable transaction at the time on an
arms-length basis from Persons who are not such a holder or Affiliate; PROVIDED,
HOWEVER, that this subsection 6.10 shall not apply to (x) any transaction
between the Borrower and any of its Wholly Owned Subsidiaries that are Loan
Parties or between any of its Wholly Owned Subsidiaries that are Loan Parties,
(y) any transaction listed on SCHEDULE 6.10 annexed hereto (but not any
amendment, restatement, supplement or other change of, or waiver or failure to
enforce any obligations under, any agreement related thereto) and (z) the terms
and conditions of the compensation paid to any such holder or Affiliate in his
or her capacity as a director or employee of such Loan Party or Subsidiary that
shall be approved by a majority of the independent directors of CapStar or by a
majority of independent directors on a committee of the Board of Directors of
CapStar having at the time two or more independent directors.
6.11 SALES AND LEASE-BACKS.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, enter into any arrangement with any
Person providing for the leasing by
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any Loan Party or any of its Subsidiaries of any real or tangible personal
property, which property has been or is to be sold or transferred by any Loan
Party or any of its Subsidiaries to such Person in contemplation of such
leasing, unless, with respect to a Pool B Property (including any Pool A
Property Released in connection with a sale and lease-back transaction permitted
pursuant to this subsection 6.11):
(i) the Loan Parties and their respective Subsidiaries shall comply
with the conditions set forth in subsection 2.9B with respect thereto;
(ii) after giving effect to the proposed transaction, the aggregate
number of Properties subject to such sale and lease-back transactions
shall not exceed three;
(iii) the leasehold interests in each subject Property shall be held
by a separate Pool B Subsidiary of the Borrower unless such leasehold
interests were acquired in the same transaction or series of related
transactions;
(iv) the obligations of each such Pool B Subsidiary (including
obligations under the related leases) may be secured by the assets of such
Pool B Subsidiary but shall not be secured by the assets of, or otherwise
recourse to, the Borrower or any of the Borrower's other Subsidiaries;
provided, that the Borrower may guaranty such obligations to the extent
permitted by subsection 6.4(vii);
(v) no such Pool B Subsidiary may incur any Pool B Indebtedness or
become liable with respect to any Guaranty or other Contingent Obligation
with respect to the same;
(vi) the Borrower would not be in default, as of the date of such
leasing, of subsection 6.6C if Consolidated Total Indebtedness were to
increase by an amount equal to the Attributable Indebtedness with respect
to such sale and lease-back arrangement; and
(vii) the aggregate amount of Attributable Indebtedness with respect
to all sale and lease-back transactions permitted by this subsection 6.11
does not exceed $60,000,000 at any time.
A sale and lease-back transaction with respect to a Property permitted by
this subsection 6.11 shall be deemed to be a sale or other permanent disposition
of such Property for all purposes of this Agreement.
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6.12 SALE OR DISCOUNT OF RECEIVABLES.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, sell with recourse or, except in the
ordinary course of business and consistent with past practices, discount or
otherwise sell for less than the face value thereof, any of its notes or
accounts receivable.
6.13 OWNERSHIP OF SUBSIDIARIES.
Except as expressly permitted pursuant to subsections 6.7(ii) and 6.15B or
6.15C, as applicable, (i) the Loan Parties shall not permit any of their
respective Wholly Owned Subsidiaries to cease to be Wholly Owned Subsidiaries,
except to qualify directors if required by Applicable Laws or permit Investments
by foreign nationals mandated by Applicable Law; PROVIDED that, notwithstanding
anything to the contrary contained in this Agreement, Atlanta GP shall not cease
to be the sole general partner of the Atlanta Airport Sub and Atlanta LP shall
not own a lesser percentage of outstanding limited partner interests in the
Atlanta Airport Sub than it owns as of the date hereof and (ii) the Borrower
shall not cease to be a Subsidiary of CapStar and the financial statements of
the Borrower shall not cease to be consolidated with the financial statements of
CapStar in accordance with GAAP.
6.14 CONDUCT OF BUSINESS; RESTRICTIONS ON OPERATIONS IN CANADA.
A. CONDUCT OF BUSINESS. The Loan Parties shall not, and shall not permit
any of their respective Subsidiaries to, directly or indirectly, do the
following:
(i) engage in any business other than (a) the acquisition,
ownership, Renovation, Restoration, management, operation and disposition
of Properties that are upscale full service hotels located in the United
States of America and, to the extent permitted by subsection 6.14(B),
Canada, excluding, without limitation, the Development of real property,
(b) the management of Managed Properties that are hotels located in the
United States of America and Canada and (c) any business that is
ancillary, in purpose and extent, to any business referred to in the
preceding clauses (a) and (b) (including, for the purpose of this clause
(c), the ownership of a parking facility by the Virginia Parking Sub);
PROVIDED that (x) CapStar shall not engage in any business other than
being the sole general partner of the Borrower and the sole stockholder of
CapStar Sub and (y) CapStar Sub shall not engage in any business other
than being a limited partner of the Borrower; or
(ii) enter into any Material Lease or other agreement, or take any
other action, if such Material Lease or such other action would materially
change the business
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conducted at any Property, including any such Material Lease, agreement or
other action, that would convert or reposition any Property into any hotel
other than an upscale full service hotel.
B. RESTRICTIONS ON OPERATIONS IN CANADA. Neither CapStar nor any of its
Subsidiaries shall make an Acquisition of any Property located in Canada or make
an Investment pursuant to subsection 6.3(viii) of a Security issued by a Person
that owns, manages or operates a hotel in Canada if, after giving effect to such
proposed Acquisition or Investment, the aggregate amount expended by CapStar and
its Subsidiaries (as of any applicable date of determination) with respect to
Properties located in Canada or such Investments is greater than an amount equal
to 15% of the aggregate amount of the commitments under the Senior Credit
Agreement at any time (or if such commitments have been terminated or the Senior
Credit Agreement has been terminated, the aggregate amount of such commitments
as in effect immediately prior to any such termination.
6.15 PROPERTIES.
A. ACQUISITION OF PROPERTIES. The Loan Parties shall not, and shall not
permit any of their respective Subsidiaries to, make an Acquisition of a fee or
leasehold interest in any hotel property after the Closing Date except in
accordance with the provisions of subsection 2.9.
B. TRANSFER OF PROPERTIES. The Loan Parties shall not, and shall not
permit any of their respective Subsidiaries to, Transfer any Property; PROVIDED
that (i) the Loan Parties and their respective Subsidiaries may create, incur,
assume or permit to exist Liens in accordance with subsection 6.2, and (ii) each
Loan Party and each of its Subsidiaries may sell or otherwise permanently
dispose of any Property (whether directly or by the sale or other permanent
disposition of all, but not less than all, the capital stock or other equity
Securities of the Subsidiary that owns such Property) prior to the termination
of the Senior Credit Agreement if (a) each such sale or other permanent
disposition of such Property is made on an arms-length basis, (b) the
consideration received by such Loan Party or Subsidiary in any such transaction
(net of any Pool B Obligations forgiven or paid in connection therewith), in an
amount not less than the Release Price required to be paid pursuant to
subsection 2.10 in connection with the Release of such Property, shall be cash
and shall be received on the date of such sale or other permanent disposition,
and (c) with respect to any Pool A Property, the Borrower complies with the
provisions set forth in subsection 2.10 with respect to such Property, including
the payment of any Release Price required thereby.
C. CERTAIN TRANSFERS OF PROPERTIES. After the termination of the Senior
Credit Agreement and the repayment of all amounts owing thereunder, the Loan
Parties shall not, and shall not permit any of their respective Subsidiaries to,
sell or otherwise permanently dispose of any Property (whether directly or by
the sale or other permanent disposition of all, but not less than all, the
capital stock or other equity Securities of the Subsidiary that owns such
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Property) unless (i) such Loan Party or the applicable Subsidiary, as the case
may be, receives consideration at the time of such sale or other permanent
disposition at least equal to the fair market value of the Property sold or
otherwise permanently disposed of (as determined in good faith by the Board of
Directors of such Loan Party or Subsidiary, as the case may be), (ii) 100% of
the consideration received by such Loan Party or Subsidiary, as the case may be,
from such sale or other permanent disposition shall either be cash or a new
Property or Properties that would otherwise satisfy the requirements of
subsection 2.9 (or a combination of cash and such Property or Properties) and
(in either case) is received at the time of such sale or other permanent
disposition; and (iii) upon the consummation of such sale or other permanent
disposition, such Loan Party shall apply, or cause such Subsidiary to apply, any
cash proceeds representing the Net Sales Price from such sale or other permanent
disposition within 180 days of receipt thereof either (A) to prepay the Loans
pursuant to subsection 2.4B(iii), (B) to reinvest in upscale full service hotels
pursuant to subsection 2.9 or (C) to effect a combination of prepayment and
investment permitted by the foregoing clauses (A) and (B). On the 181st day
after any sale or other permanent disposition of a Property or such earlier
date, if any, as the Board of Directors or the senior management of such Loan
Party or Subsidiary, as the case may be, determines not to apply such cash
proceeds relating to such sale or other disposition as set forth in clause (B)
of the immediately preceding sentence, such aggregate amount of such cash
proceeds which have not been applied on or before such date as permitted in
clauses (A) and (B) of the immediately preceding sentence shall be applied by
such Loan Party or Subsidiary, as the case may be, to prepay the Loans pursuant
to subsection 2.4B(iii).
D. CERTAIN CASUALTIES OR TAKINGS OF PROPERTIES. If there shall occur a
casualty or Taking with respect to any Property (or any portion thereof) after
the termination of the Senior Credit Agreement and the repayment of all amounts
owing thereunder, then the Loan Parties shall, or shall cause their respective
Subsidiaries to, apply the Net Insurance/Condemnation Proceeds received
therefrom within 180 days of receipt thereof either (A) to prepay the Loans
pursuant to subsection 2.4B(iii) or (B) to Restore the Property (or portion
thereof) subject to such casualty or Taking in a reasonably prudent manner or,
in the case of a total Taking of any Property, then the Borrower or the
applicable Subsidiary, as the case may be, shall have the right to reinvest such
Net Insurance/Condemnation Proceeds in additional Properties pursuant to
subsection 2.9 within 180 days of receipt thereof. On the 181st day after the
receipt of the Net Insurance/Condemnation Proceeds from the respective casualty
or Taking, or such earlier date, if any, as the Board of Directors or the senior
management of such Loan Party or Subsidiary, as the case may be, determines not
to apply the Net Insurance/Condemnation Proceeds to Restore the applicable
Property (or portion thereof), or, in the case of a total Taking, to reinvest
such proceeds as provided above, the aggregate amount of Net
Insurance/Condemnation Proceeds which have not been applied on or before such
date as permitted in clause (B) of the immediately preceding sentence shall be
applied by such Loan Party or Subsidiary, as the case may be, to prepay the
Loans pursuant to subsection 2.4B(iii).
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Notwithstanding anything to the contrary contained in the immediately preceding
sentence, in the event that the Borrower or the applicable Subsidiary has
determined to Restore the Property (or portion thereof) subject to such casualty
or Taking and the Borrower or such Subsidiary has not completed such Restoration
within 180 days after the receipt of such Net Insurance/Condemnation Proceeds,
the Borrower or such Subsidiary shall not be required to repay the Loans
pursuant to subsection 2.4B(iii) on such 181st day so long as binding
commitments have theretofore been entered into for such Restoration and such
Restoration proceeds in a timely and reasonably prudent manner.
6.16 RENOVATION EXPENDITURES.
So long as no Event of Default has occurred and is continuing and no Event
of Default or Potential Event of Default would be caused thereby, the Borrower
and its Subsidiaries may make expenditures for the Renovation of Properties
(including expanding Improvements to increase the number of available rooms);
PROVIDED that neither the Borrower nor any of its Subsidiaries shall make any
such expenditure if, after giving effect to such expenditure, the aggregate
amount of expenditures as of any date of determination for such Renovations that
shall have been commenced but not completed as of such date of determination
shall at any time exceed the amount by which $25,000,000 is greater than the
outstanding amount of Contingent Obligations then permitted pursuant to
subsection 6.4(iii).
6.17 MANAGEMENT AGREEMENTS AND SERVICING AGREEMENTS.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, enter into or otherwise become obligated with respect to, any
management agreement with respect to any hotel property (other than a Property)
after the Closing Date, except that, from time to time:
(i) so long as no Event of Default has occurred and is continuing
and no Event of Default or Potential Event of Default would be caused
thereby, without the approval of the Agent (except as provided to the
contrary in this subsection 6.17(i)) (provided that, so long as the Senior
Credit Agreement is in effect, no such approval shall be required to the
extent that such approval is granted under the Senior Credit Agreement),
the Borrower or any of its Wholly Owned Subsidiaries may enter into
Management Agreements with respect to the management and operation of
hotel properties, the related land and the improvements thereof and,
subject to subsection 6.20H, amend, restate, supplement or otherwise
change such Management Agreements; PROVIDED, however, that (a) each
Managed Property subject to such Management Agreement shall be a hotel
located in the United States of America or Canada; and (b) such Management
Agreement shall not constitute, have the form of or contain provisions
creating a leasehold interest in any hotel Property or other real or
personal property; and
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(ii) the Borrower and any of its Wholly Owned Subsidiaries shall
enter into Servicing Agreements with respect to the management and
operation of Pool B Properties as contemplated by subsection 2.9B.
6.18 INTELLECTUAL PROPERTY; FRANCHISE AGREEMENTS.
A. INTELLECTUAL PROPERTY. The Loan Parties shall not, and shall not permit
any of their respective Subsidiaries, to Transfer any Intellectual Property
unless the Borrower shall have reasonably determined that the Intellectual
Property so Transferred is no longer material to the business, operations,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries.
B. FRANCHISE AGREEMENTS. The Loan Parties shall not, and shall not permit
any of their respective Subsidiaries to, enter into or otherwise become
obligated with respect to, any franchise agreement (as franchisor), license
agreement (as licensor) or similar agreement (in a similar capacity) with
respect to any Intellectual Property of CapStar or any of its Subsidiaries.
6.19 MATERIAL LEASES.
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, (i) enter into any Lease other than Leases incidental to the
operation of the Properties as hotels or (ii) enter into any Material Lease or
any advanced booking of more than 51% of the rooms at any Property for a period
in excess of 30 days without the prior written approval of the Agent, which
approval shall not be unreasonably withheld, conditioned or delayed (provided
that, so long as the Senior Credit Agreement is in effect, no such approval
shall be required to the extent that such approval is granted under the Senior
Credit Agreement). In the event any Lease necessary to the operation of any
Property as a hotel is terminated, the applicable Loan Party or Subsidiary
thereof shall either replace such Lease with a suitable comparable Lease within
a reasonable period of time following such termination or shall itself provide
the services intended to be obtained under such Lease.
6.20 CHANGES IN CERTAIN OBLIGATIONS AND DOCUMENTS; ISSUANCE OF EQUITY
SECURITIES.
A. CREDIT AGREEMENT. Without the prior written approval of the Agent,
which approval may be granted, withheld, conditioned or delayed in its sole
discretion, the Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, enter into any agreement (other than this Agreement
and the Senior Credit Agreement) prohibiting or restricting the ability of any
of the Loan Parties and any of their respective Subsidiaries to amend or
otherwise modify this Agreement or any other Loan Document.
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B. CAPSTAR PREFERRED STOCK. Without the prior written approval of the
Agent, which approval may be granted, withheld, conditioned or delayed in its
sole discretion, CapStar shall not amend, restate, supplement or otherwise
change its articles of incorporation if the effect of such amendment,
restatement, supplement or change is to provide for the issuance of any
preferred stock of CapStar or the filing of any certificate of designation with
respect thereto, except that CapStar may amend, restate, supplement or change
its certificate of incorporation to provide for the issuance of non-cumulative
preferred stock; PROVIDED, HOWEVER, that (i) the certificate of incorporation of
CapStar, as so amended, restated, supplemented or changed, and any prospectus,
certificate of designation or other document delivered in connection with such
issuance shall be in form and substance satisfactory to the Agent, (ii) such
preferred stock shall be Qualified Capital Stock and (iii) such preferred stock
shall be subordinate in right and time of payment to the Obligations.
C. EQUITY SECURITIES. The Loan Parties shall not, and shall not permit any
of their respective Subsidiaries to, issue any Capital Stock or other Security
which, by its terms (or by the terms of any Security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund or
otherwise, or redeemable in cash at the option of the holder thereof, in whole
or in part, before the date that is 91 days after the Maturity Date; PROVIDED
that, so long as no Event of Default or Potential Event of Default has occurred
and is continuing:
(i) the Borrower may issue limited partner interests that may be
converted into shares of Common Stock of CapStar; and
(ii) the Borrower may issue limited partner interests ("PREFERRED
LIMITED PARTNER INTERESTS") that by their terms may be converted into or
exercised or redeemed for cash if (a) the aggregate amount of cash payable
upon such conversion, exercise or redemption shall not exceed $25,000,000
measured on a cumulative basis from the Closing Date and (b) the terms of
such Preferred Limited Partner Interests shall have been approved by the
Agent, which approval shall not be unreasonably withheld, conditioned or
delayed.
D. ORGANIZATION DOCUMENTS. Without the prior written approval of the
Agent, which approval may be granted, withheld, conditioned or delayed in its
sole discretion, except as expressly permitted hereunder, the Loan Parties shall
not, and shall not permit any of their respective Subsidiaries to, amend or
otherwise modify their respective charters or partnership agreements in any
material respect except in connection with an activity permitted by subsection
6.7(vii); PROVIDED that, without the prior written approval of the Agent (but
only after giving written notice with respect thereto to the Agent at least 5
Business Days before the effective date of such modification or amendment), the
Loan Parties and their respective Subsidiaries may
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modify or amend the partnership agreement of the Virginia Parking Sub in effect
on the date of this Agreement if such modification or amendment is required by
the terms thereof and does not adversely affect the interests or rights of the
Lenders in or to, or the value of, the partnership interest in the Virginia
Parking Sub owned by the Virginia Parking Sub.
E. POOL A GROUND LEASES. Without the prior written approval of the
Requisite Lenders (provided that, so long as the Senior Credit Agreement is in
effect, no such approval shall be required to the extent that such approval is
granted under the Senior Credit Agreement), which approval may be granted,
withheld, conditioned or delayed in their sole discretion, the Loan Parties
shall not, and shall not permit any of their respective Subsidiaries to, take
any action or fail to take any action, in either case as may be required or
permitted by the terms of any Pool A Ground Lease, with respect to the
termination (by such Loan Party or such Subsidiary, by the lessor or by any
other Person, and for any reason), renewal or extension thereof or to amend,
restate, supplement or otherwise change, or waive or fail to enforce any
provision of, any Pool A Ground Lease in any material respect.
F. FRANCHISE AGREEMENTS. Without the prior written approval of the
Requisite Lenders, which approval shall not be unreasonably withheld,
conditioned or delayed (provided that, so long as the Senior Credit Agreement is
in effect, no such approval shall be required to the extent that such approval
is granted under the Senior Credit Agreement), the Loan Parties shall not, and
shall not permit any of their respective Subsidiaries to, (i) take any action or
fail to take any action, in either case as may be required or permitted by the
terms of any Franchise Agreement with respect to a Pool A Property, with respect
to the termination (by such Loan Party or such Subsidiary, the franchisor or any
other Person, and for any reason), renewal or extension thereof, PROVIDED that,
without the approval of the Requisite Lenders, each such Franchise Agreement may
be renewed or extended on substantially the same terms as then in effect, (ii)
amend, restate, supplement or otherwise change, or waive or fail to enforce any
provision of, any Franchise Agreement with respect to a Pool A Property in any
material respect, or (iii) enter into any new or replacement Franchise Agreement
with respect to a Pool A Property (with the same franchisor or a different
franchisor); PROVIDED that with respect to a replacement Franchise Agreement
referred to in the preceding clause (iii), the Requisite Lenders' approval may
be granted, withheld, conditioned or delayed in the sole discretion of the
Requisite Lenders if, in their opinion, the franchisor under such replacement
Franchise Agreement shall have a national standing and reputation less favorable
than the general standing and reputation of the franchisors under Franchise
Agreements then covering the Pool A Properties (provided that, so long as the
Senior Credit Agreement is in effect, no such approval shall be required to the
extent that such approval is granted under the Senior Credit Agreement).
G. SERVICING AGREEMENTS; MANAGEMENT AGREEMENTS. Without the prior written
approval of the Requisite Lenders, which approval shall not be unreasonably
withheld, conditioned or delayed (provided that, so long as the Senior Credit
Agreement is in effect, no such approval shall be required to the extent that
such approval is granted under the Senior Credit Agreement), the Loan Parties
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shall not, and shall not permit any of their respective Subsidiaries to,
terminate, renew, extend, amend, restate, supplement or otherwise change, or
waive or fail to enforce any provision of, any Servicing Agreement in any
material respect or, after the Management Agreement Effectiveness Date, any
Material Management Agreement in any material respect.
H. ATLANTA DOCUMENTS; MBL ACQUISITION DOCUMENTS. Without the prior written
approval of the Requisite Lenders, which approval may be granted, withheld,
conditioned or delayed in its sole discretion (provided that, so long as the
Senior Credit Agreement is in effect, no such approval shall be required to the
extent that such approval is granted under the Senior Credit Agreement), the
Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, amend, restate, supplement or otherwise modify any provision of
the Atlanta Documents or the MBL Acquisition Documents.
6.21 FISCAL YEAR.
Without the prior written approval of the Requisite Lenders, which
approval may be granted, withheld, conditioned or delayed in their sole
discretion, neither CapStar nor any of its Subsidiaries shall change its fiscal
year-end from December 31.
SECTION 7
EVENTS OF DEFAULT; REMEDIES
7.1 EVENTS OF DEFAULT.
If any of the following conditions or events ("EVENTS OF DEFAULT") shall
occur:
A. FAILURE TO MAKE PAYMENTS WHEN DUE. Failure to pay any installment of
principal of any Loan when due, whether at stated maturity, by acceleration in
accordance with the provisions of the applicable Loan Document, by notice of
voluntary prepayment, by mandatory prepayment (including pursuant to subsection
2.4B(iii), 6.15C or 6.15D) or otherwise; or failure to pay interest or any other
amount due under this Agreement within 30 days after the date due; or
B. DEFAULT IN OTHER AGREEMENTS. Failure of any Loan Party or any of its
Subsidiaries to pay at final stated maturity (giving effect to any extension
thereof) the principal amount of Indebtedness (other than Indebtedness referred
to in subsection 7.1A, but including, without limitation, any Indebtedness
included in the Pool B Obligations), or the acceleration of the maturity of any
Indebtedness of any Loan Party or any or its Subsidiaries, if the aggregate
principal amount of such Indebtedness, together with the principal amount of any
other such Indebtedness in default for failure to pay principal at final stated
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maturity or which has been accelerated, aggregates $10,000,000 or more at any
time; or
C. BREACH OF CERTAIN COVENANTS. Failure of CapStar or the Borrower to
perform or comply with any term or condition contained in any of subsections
2.5, 5.3, 6.1, 6.2 (with respect to Liens voluntarily created, incurred, assumed
or permitted to exist), 6.3, 6.4, 6.5, 6.6, 6.7, 6.11, 6.12, 6.13, 6.14, 6.15
(other than clauses C or D thereof) and 6.20 and such default shall not have
been remedied or waived within 30 days after the receipt by such Loan Party or
such Subsidiary of notice from the Agent of such default; or
D. BREACH OF WARRANTY. Any representation, warranty, certification or
other statement of any Loan Party or any of its Subsidiaries made in this
Agreement or in any other Loan Document or in any statement or certificate at
any time given in writing pursuant hereto or thereto or in connection herewith
or therewith shall be false in any material respect on the date as of which made
and such default shall not have been remedied or waived within 30 days after the
receipt by such Loan Party or such Subsidiary of notice from the Agent of such
default; PROVIDED, HOWEVER, that if such default cannot be cured solely by the
payment of money and the cure of such default requires a period in excess of 30
days, and if such Loan Party or such Subsidiary, as applicable, is diligently
and continuously prosecuting such cure, then such default shall not be an Event
of Default unless such Loan Party or such Subsidiary fails to cure such default
within 90 days, after such Loan Party or such Subsidiary obtain knowledge or
notice thereof, as the case may be; or
E. INVALIDITY OF LOAN DOCUMENT; REPUDIATION OF OBLIGATIONS. At any time
after the execution and delivery thereof, (i) any Loan Document or any material
provision thereof shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared null and void; or (ii) any Loan
Party shall contest in writing the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability under
any Loan Document to which it is a party; or
F. POOL A GROUND LEASES. (i) Failure by any Loan Party or any of its
Subsidiaries to pay when due any monetary obligation contained in any Pool A
Ground Lease, in each case beyond the end of any grace period provided therefor
(without extension); (ii) occurrence of any other event or condition which, with
the giving of notice or lapse of time or both, would cause, or would permit the
landlord under any Pool A Ground Lease to cause, a cancellation or termination,
as against any Loan Party or any of its Subsidiaries party thereto, of such Pool
A Ground Lease, in each case beyond the end of any cure period therefor (without
any extension); or (iii) election by any Loan Party or any of its Subsidiaries
party to a Pool A Ground Lease to terminate such Pool A Ground Lease in
accordance with the terms thereof or to reject such Pool A Ground Lease in any
bankruptcy proceeding; or
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G. POOL B OBLIGATIONS. (i) Failure by any Loan Party or any of its
Subsidiaries to pay when due any monetary obligation contained in any Pool B
Document (other than the principal of or interest on any Indebtedness included
in the Pool B Obligations, as the case may be), in each case beyond the end of
any grace period provided therefor, in each case beyond the end of any cure
period therefor (without any extension); or (ii) the occurrence of any event or
condition which, with the giving of notice or lapse of time or both, would
cause, or would permit the holder or holders of the related Pool B Obligation,
as the case may be (including, without limitation, a landlord under any related
Pool B Ground Lease), to cause, such Pool B Obligation to become or be declared
due and payable (upon the giving or receiving of notice, lapse of time, both, or
otherwise) prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be; or
H. PROHIBITED TRANSFERS. Any Loan Party attempts to assign its rights
under this Agreement or any other Loan Document or any interest herein or
therein; or
I. OTHER DEFAULTS UNDER LOAN DOCUMENTS. Any Loan Party or any of its
Subsidiaries shall default in the performance of or compliance with any term
contained in this Agreement or any other Loan Document other than any such term
in this Agreement or other Loan Document that is referred to in any other clause
of this subsection 7.1 and such default shall not have been remedied or waived
within 30 days after the earlier of (i) such Loan Party's or such Subsidiary's
obtaining knowledge of such default or (ii) receipt by such Loan Party or such
Subsidiary of notice from the Agent of such default; PROVIDED, HOWEVER, that if
such default cannot be cured solely by the payment of money and the cure of such
default requires a period in excess of 30 days, and such default may reasonably
be expected to be cured on or before the 90th day after such Loan Party or such
Subsidiary obtains knowledge or notice thereof, and if and so long as such Loan
Party or such Subsidiary is diligently and continuously prosecuting such cure,
then such default shall not be an Event of Default unless such Loan Party or
such Subsidiary fails to cure such default before the 90th day after any Loan
Party or any of its Subsidiaries obtains knowledge or notice thereof, as the
case may be; or
J. INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of CapStar or any of its Significant Subsidiaries in an involuntary case
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is not stayed;
or any other similar relief shall be granted under any applicable federal or
state law; or (ii) an involuntary case shall be commenced against CapStar or any
of its Significant Subsidiaries under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or
a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over CapStar or any of its Significant
Subsidiaries, or over all or a substantial part of its property, shall have been
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entered; or there shall have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of CapStar or any of its Significant
Subsidiaries for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of CapStar or any of its Significant
Subsidiaries, and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged; or
K. VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) CapStar or any
of its Significant Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; or CapStar or any of its Significant Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) CapStar or any of its
Significant Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Board of Directors of CapStar or any of its Significant Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
L. JUDGMENTS AND ATTACHMENTS. Any money judgment, writ or warrant of
attachment or similar process involving individually or in the aggregate at any
time an amount of $10,000,000 or more (in either case not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against CapStar or any of its
Significant Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder);
or
M. DISSOLUTION. Any order, judgment or decree shall be entered against
CapStar or any of its Significant Subsidiaries decreeing the dissolution or
split up of CapStar or that Subsidiary and such order shall remain undischarged
or unstayed for a period in excess of 30 days; or
N. EMPLOYEE BENEFIT PLANS. There shall occur one or more ERISA Events
which individually or in the aggregate results in or could reasonably be
expected to result in liability of the Borrower, any of its Subsidiaries or any
of their respective ERISA Affiliates in excess of $10,000,000 during the term of
this Agreement; or (x) the accumulated benefit obligation (calculated using
reasonable actuarial assumptions employed by the Borrower's actuary for funding
purposes) individually for any Pension Plan, or in the aggregate for all Pension
Plans,
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exceeds the assets of such Pension Plan or Pension Plans by more than
$10,000,000 (excluding for purposes of such computation any Pension Plans with
respect to which assets exceed benefit obligations) (collectively, a "MATERIAL
PLAN") and (y) any event occurs which could reasonably be expected to result in
the termination of a Material Plan (other than a voluntary standard termination
under Section 4041(b) of ERISA); or
O. MATERIAL ADVERSE EFFECT. Any event or change (including, without
limitation, any event or condition expressly described in another paragraph or
provision of this subsection 7.1) shall occur that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect; or
P. CHANGE IN CONTROL. (i) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, any immediate family member of
▇▇. ▇▇▇▇▇▇▇▇ and any trusts established by ▇▇. ▇▇▇▇▇▇▇▇ for the benefit of ▇▇.
▇▇▇▇▇▇▇▇'▇ immediate family members (PROVIDED that ▇▇. ▇▇▇▇▇▇▇▇ or an immediate
family member is the trustee of such trust and able to exercise voting rights in
respect of the property of the trust) shall cease for any reason, other than his
death, to maintain beneficial ownership (as defined under Section 13(d) of the
Exchange Act) of, and an Attributable Economic Interest in, 200,000 shares of
Common Stock in the aggregate at any time, of which not less than 100,000 shares
shall be free of any Lien created or granted by Persons that are the record
owners of such shares, PROVIDED that, without the prior approval of the
Requisite Lenders, which approval may be granted, withheld, conditioned or
delayed in their sole discretion, ▇▇. ▇▇▇▇▇▇▇▇ shall not grant any Lien on any
option to acquire common stock granted by any of the Loan Parties or shares of
Common Stock of CapStar that may be issued upon the exercise thereof; (ii) any
Person other than any of Acadia, its successors, its partners (individually or
jointly) and other Affiliates, ▇▇. ▇▇▇▇▇▇▇▇, his immediate family members and
the trusts referred to in the preceding clause (i), or any group (as defined
under Section 13(d)(3) of the Exchange Act) consisting of members other than
Acadia, its successors, its partners (individually or jointly) and other
Affiliates, ▇▇. ▇▇▇▇▇▇▇▇, his immediate family members and the trusts referred
to in the preceding clause (i), becomes the beneficial owner of more than 30% of
the total voting power in the aggregate of all classes of Capital stock of
CapStar normally entitled to vote in the election of directors; (iii) a majority
of the board of directors of CapStar shall not consist of Persons who were
members of such board of directors on the Closing Date or who were nominated for
election or elected to such board of directors with the affirmative vote of at
least a majority of the members of such board of directors who were members on
the Closing Date or who were so nominated or elected; and (iv) the sale, lease
or transfer, in one transaction or a series of related transactions, of all or
substantially all of the Borrower's and its Subsidiaries' assets to any person
or group (as defined under Section 13(d)(3) of the Exchange Act) other than to
the Borrower or a Wholly Owned Subsidiary of the Borrower that is a Loan Party;
or
Q. EMPLOYMENT OF ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. The Borrower shall cease to employ ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ in a senior position except in the event of death or disability of
▇▇. ▇▇▇▇▇▇▇▇ or the termination of his employment for cause; or
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R. FRANCHISE AGREEMENTS. (i) Any Franchise Agreement with respect to a
Pool A Property or any consent delivered by any franchisor under any such
Franchise Agreement shall cease to be in full force and effect other than with
the express consent of the Agent or (ii) any party thereto shall deny or
disaffirm its obligations thereunder or shall deny or disaffirm its obligations
thereunder or shall default in the due performance or observance of any material
term, covenant or agreement on its party to be performed or observed pursuant
thereto and any applicable cure period shall have expired, and in any such event
the Borrower shall have failed to replace such Franchise Agreement within 60
days of such default (after the expiration of any such cure period) or
disaffirmation with a franchise acceptable to the Agent, in its sole discretion;
THEN (i) upon the occurrence of any Event of Default described in subsection
7.1J or 7.1K, each of (a) the unpaid principal amount of and accrued interest on
the Loans and (b) all other Obligations shall automatically become immediately
due and payable, without notice, presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Borrower and the obligations of each Lender to make any Loan hereunder prior to
the Funding Date shall thereupon terminate, and (ii) during the continuance of
any other Event of Default, the Agent, upon the written request of the Requisite
Lenders, shall, by written notice to the Borrower, terminate the Commitments (to
the extent not theretofore terminated) and declare all or any portion of the
amounts described in clauses (a) and (b) above to be, and the same shall
forthwith become, immediately due and payable.
The occurrence of any condition or event may constitute an Event of
Default (or a Potential Event of Default) under more than one provision of this
subsection 7.1.
7.2 CERTAIN REMEDIES.
A. During the continuance of an Event of Default, all or any one or more
of the rights, powers, privileges and other remedies available to the Agent or
the Lenders against the Borrower and the other Loan Parties under this
Agreement, the Notes or any of the other Loan Documents, or at law or in equity,
may be exercised by the Agent, acting in its own sole discretion at any time and
from time to time, whether or not all or any portion of the Obligations shall be
declared due and payable, and whether or not the Agent shall have commenced any
action for the enforcement of its rights and remedies under any of the Loan
Documents. Any such actions taken by the Agent shall be cumulative and
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as the Agent in its sole discretion
may determine, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of the Agent or the Lenders
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents.
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B. In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default the Agent is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by the Agent to or for the credit or the account of the Borrower against
and on account of the obligations and liabilities of the Borrower to the Agent
under this Agreement and the Notes, including all claims of any nature or
description arising out of or connected with this Agreement or any other Loan
Document, irrespective of whether or not (i) the Agent shall have made any
demand hereunder or (ii) the principal of or the interest on the Loan or any
other amounts due hereunder shall have become due and payable pursuant to
subsection 7.1 and although said obligations and liabilities, or any of them,
may be contingent or unmatured.
C. During the occurrence of an Event of Default and upon the occurrence
and during the continuance of a default in the payment of any principal or
interest of any Indebtedness owed or alleged to be owed by CapStar, the Borrower
or any of their respective Subsidiaries, and following the initiation of any
proceeding or the taking of any other action to collect the payment thereof by
the Person entitled to such payment, the Agent may, in its sole discretion,
advance either to such Person or to the Borrower, for payment to such Person,
all or any portion of the amount of such payment, whether or not the existence
of such obligation or amount thereof shall be disputed by the Borrower or such
Subsidiary. Each such advance, to the extent not paid out of from funds of
CapStar, the Borrower or any of their respective Subsidiaries, shall be deemed a
Loan hereunder and shall be subject to the provisions of this Agreement.
D. The rights, powers and remedies of the Agent and the Lenders under this
Agreement shall be cumulative and not exclusive of any other right, power or
remedy which the Agent or the Lenders may have against any Loan Party pursuant
to this Agreement or the other Loan Documents executed by or with respect to
such Loan Party, or existing at law or in equity or otherwise. The rights,
powers and remedies of the Agent and the Lenders may be pursued singly,
concurrently or otherwise, at such time and in such order as the Agent, acting
in its own sole discretion, may determine. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of any Event of Default or Potential Event of Default
with respect to any Loan Party shall not be construed to be a waiver of any
subsequent Event of Default or Potential Event of Default by such Loan Party or
to impair any remedy, right or power consequent thereon.
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SECTION 8
SUBORDINATION
8.1 OBLIGATIONS SUBORDINATED TO SENIOR INDEBTEDNESS OF THE BORROWER.
The Borrower and the Lenders covenant and agree that the payment of the
Obligations by the Borrower shall be subordinated in accordance with the
provisions of this Section 8 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Senior Indebtedness of the
Borrower, whether now outstanding or hereafter created (including any interest
accruing subsequent to an event specified in subsection 7.1J or 7.1K whether or
not such interest is an allowed claim against the Borrower), that the
subordination is for the benefit of the holders of Senior Indebtedness of the
Borrower, and that each holder of Senior Indebtedness of the Borrower whether
now outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Indebtedness of the Borrower (and shall have
entered into the First Amendment dated as of December 13, 1996 to the Senior
Credit Agreement) in reliance upon the covenants and provisions contained in
this Agreement.
8.2 PRIORITY AND PAYMENT OVER OF PROCEEDS IN CERTAIN EVENTS.
A. SUBORDINATION ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF THE
BORROWER. Upon any payment or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities, upon
any dissolution or winding up or any total or partial liquidation or
reorganization of the Borrower, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all Senior
Indebtedness of the Borrower (including any interest accruing subsequent to an
event specified in subsection 7.1J or 7.1K whether or not such interest is an
allowed claim enforceable against the Borrower) shall first be paid in full in
cash or Cash Equivalents, before the Agent or the Lenders shall be entitled to
receive any payment by the Borrower of any Obligations and upon any such
dissolution or winding up or liquidation or reorganization, any payment or
distribution of assets or securities of the Borrower of any kind or character,
whether in cash, property or securities, to which the Lenders would be entitled
except for the provisions of this Section 8 shall be made by the Borrower or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, directly to the holders of the Senior
Indebtedness of the Borrower or their representatives to the extent necessary to
pay all of the Senior Indebtedness of the Borrower to the holders of such Senior
Indebtedness of the Borrower.
B. SUBORDINATION ON DEFAULT OF SENIOR INDEBTEDNESS. Upon the maturity of
any Senior Indebtedness by lapse of time, acceleration or otherwise, all Senior
Indebtedness of the Borrower then due and payable shall first be paid in full in
cash or Cash Equivalents, before any payment (by conversion, exchange, set-off
or otherwise) is made by the Borrower or any Person acting on behalf of the
Borrower with respect to the Obligations or to otherwise retire, redeem,
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repurchase or defease the Obligations. No direct or indirect payment (by
conversion, exchange, set-off or otherwise) by the Borrower or any Person acting
on behalf of the Borrower with respect to Obligations or to otherwise retire,
redeem, repurchase or defease the Obligations whether pursuant to the terms of
this Agreement or upon acceleration of the Loans or otherwise shall be made, if
at the time of such payment, there exists a default in the payment of any
principal, amounts drawn under letters of credit, interest or regularly accruing
fees on any Senior Indebtedness and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders of
such Senior Indebtedness. In addition, during the continuation of any other
event of default with respect to the Senior Credit Agreement pursuant to which
the maturity of any Senior Indebtedness may be accelerated, upon the (i) receipt
by the Agent of written notice from the Senior Representative under the Senior
Credit Agreement or (ii) if such event of default results from the acceleration
of the Loans, the date of the acceleration of the Loans, no such payment (by
conversion, exchange, set-off or otherwise) may be made by the Borrower upon or
in respect of the Obligations, for a period (a "Payment Blockage Period")
commencing on the date of receipt of such notice or the date of such
acceleration and ending on the earlier to occur of 180 days after receipt of
such notice (unless such Payment Blockage Period shall be terminated by written
notice to the Agent from such Senior Representative) or the date of such
acceleration. Notwithstanding anything herein to the contrary, (x) in no event
will a Payment Blockage Period or successive Payment Blockage Periods with
respect to the same payment on the Loans extend beyond 180 days from the date
the payment on the Loans was due and (y) there must be 180 consecutive days in
any 365-day period during which no Payment Blockage Period is in effect. For all
purposes of this subsection 8.2(b), no event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Senior Credit Agreement initiating such Payment Blockage Period
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period by the Senior Representative of the Senior Credit Agreement
whether or not within a period of 365 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
C. RIGHTS AND OBLIGATIONS OF THE LENDERS. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agent or any Lender shall have received any payment on account
of any Obligation (other than as permitted by subsections 8.2(a) and (b)),
whether in cash, property or securities at a time when such payment is
prohibited by this subsection 8.2, then and in such event such payment or
distribution shall be received and held in trust for the holders of the Senior
Indebtedness of the Borrower and shall be paid over or delivered to the holders
of the Senior Indebtedness of the Borrower remaining unpaid to the extent
necessary to pay in full in cash or Cash Equivalents all Senior Indebtedness of
the Borrower in accordance with their terms after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness of
the Borrower.
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Nothing contained in this Section 8 will limit the right of the Agent or
the Lenders to take any action to accelerate the maturity of the Loans pursuant
to subsection 7.1 or to pursue any rights or remedies hereunder or otherwise;
provided that all Senior Indebtedness of the Borrower thereafter due or declared
to be due shall first be paid in full in cash or Cash Equivalents before the
Agent or any Lender is entitled to receive any payment of any kind or character
with respect to the Obligations. If payment of the Obligations is accelerated
because of an Event of Default, the Borrower shall promptly notify the Senior
Representatives for Senior Indebtedness of the Borrower of the acceleration.
Upon any payment or distribution of assets or securities referred to in
this Section 8, the Agent and the Lenders (notwithstanding any other provision
of this Agreement) shall be entitled to rely upon any order or decree of a court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Agent or the Lenders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness of the Borrower, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Section 8.
The Borrower shall give written notice to the Agent of any default or
event of default under any Senior Indebtedness of the Borrower or under any
agreement pursuant to which Senior Indebtedness of the Borrower may have been
issued, and, in the event of any such event of default, shall provide to the
Agent the names and address of the Senior Representative of the holders of such
Senior Indebtedness of the Borrower.
With respect to the holders and owners of Senior Indebtedness of the
Borrower, the Agent and each Lender undertakes to perform only such obligations
on the part of the Agent and such Lender as are specifically set forth in this
Section 8, and no implied covenants or obligations with respect to the holders
or owners of Senior Indebtedness of the Borrower shall be read into this
Agreement against the Agent or the Lenders. Neither the Agent nor the Lenders
shall be deemed to owe any fiduciary duty to the holders or owners of Senior
Indebtedness of the Borrower or to the agent under the Senior Credit Agreement
or any other representative of the holders of the Senior Indebtedness of the
Borrower.
8.3 PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
Nothing contained in this Section 8 or elsewhere in this Agreement shall
prevent or delay (i) the Borrower, except under the conditions described in
subsection 8.2, from making payments at any time for the purpose of paying
Obligations, or from depositing with the Agent any moneys for such payments, or
(ii) subject to subsection 8.2, the application by the Agent of any moneys
deposited with it for the purpose of paying the Obligations.
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8.4 RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS OF THE BORROWER NOT TO BE IMPAIRED.
No right of any present or future holder of any Senior Indebtedness of the
Borrower or their respective representatives to enforce subordination as
provided in this Section 8 shall at any time in any way be prejudiced or
impaired by any act or failure to act by any such holder, or by any
noncompliance by the Borrower, the Agent or any Lender with the terms and
provisions and covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with. Without in any way limiting the
generality of the foregoing sentence, such holders of Senior Indebtedness of the
Borrower or their respective representatives may, at any time and from time to
time without impairing or releasing the subordination provided in this Section 8
or the obligations of the Borrower, the Agent and the Lenders hereunder to the
holders of Senior Indebtedness of the Borrower, do any one or more of the
following: (i) change the manner, place, terms or time of payment of, or renew
or alter, Senior Indebtedness of the Borrower or otherwise amend or supplement
in any manner Senior Indebted ness of the Borrower or any instrument evidencing
the same or any agreement under which any Senior Indebtedness of the Borrower is
outstanding; (ii) sell, exchange, release, or otherwise deal with any property
pledged, mortgaged, or otherwise securing Senior Indebtedness of the Borrower or
fail to perfect or delay in the perfection of the security interest in such
property; (iii) release any Person liable in any manner for the collection of
Senior Indebtedness of the Borrower; (iv) exercise or refrain from exercising
any rights against the Borrower and any other Person; and (v) take any other
action, or refrain from taking any other action, that, in the absence of
authority granted under preceding clauses (i) through (iv), could have the
effect of impairing, invalidating or rendering unenforceable, in whole or in
part, or otherwise affecting, any of the provisions of this Section 8. Each
Lender by entering into this Agreement waives any and all notice of the
creation, modification, renewal, extension or accrual of any Senior Indebtedness
of the Borrower and notice of or proof of reliance by any holder or owner of
Senior Indebtedness of the Borrower upon this Section 8 and the Senior
Indebtedness of the Bor rower shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Section 8, and all dealings between
the Borrower and the holders and owners of the Senior Indebtedness of the
Borrower shall be deemed to have been consummated in reliance upon this Section
8.
The provisions of this Section 8 are intended to be for the benefit of,
and shall be enforceable directly by, the holders and owners of the Senior
Indebtedness of the Borrower and their respective representatives (and such
holders and owners are third party beneficiaries of the provisions of this
Section 8). No amendment, modification, termination or waiver of any provision
of this Section 8 (or of the definition of any term used herein) shall be
effective against any holder of any Senior Indebtedness of the Borrower without
the consent of such holder.
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8.5 SUBROGATION.
Upon the payment in full in cash or Cash Equivalents in accordance with
the terms of subsection 8.2 of all amounts payable under or in respect of the
Senior Indebtedness of the Borrower, the Agent and the Lenders shall be
subrogated to the rights of the holders of such Senior Indebtedness of the
Borrower to receive payments or distributions of assets of the Borrower made on
such Senior Indebtedness of the Borrower until the Obligations shall be paid in
full in cash or Cash Equivalents; and for purposes of such subrogation no
payments or distributions to holders of such Senior Indebtedness of the Borrower
of any cash, property or securities to which the Agent or the Lenders would be
entitled except for the provisions of this Section 8, and no payment pursuant to
the provisions of this Section 8 to holders of such Senior Indebtedness of the
Borrower by the Agent or the Lenders, shall, as between the Borrower, its
creditors other than holders of such Senior Indebtedness of the Borrower and the
Agent and the Lenders, be deemed to be a payment by the Borrower to or on
account of such Senior Indebtedness of the Borrower, it being understood that
the provisions of this Section 8 are solely for the purpose of defining the
relative rights of the holders of such Senior Indebtedness of the Borrower, on
the one hand, and the Agent and the Lenders, on the other hand. A release of any
claim by any holder of Senior Indebtedness of the Borrower shall not limit the
Agent's or the Lenders' rights of subrogation under this subsection 8.5.
If any payment or distribution to which the Agent and the Lenders would
otherwise have been entitled but for the provisions of this Section 8 shall have
been applied, pursuant to the provisions of this Section 8, to the payment of
all amounts payable under the Senior Indebt edness of the Borrower, then and in
such case, the Agent and the Lenders shall be entitled to receive from the
holders of such Senior Indebtedness of the Borrower at the time outstanding the
full amount of any payments or distributions received by such holders of Senior
Indebtedness of the Borrower in excess of the amount sufficient to pay all
Senior Indebtedness of the Borrower payable under or in respect of the Senior
Indebtedness of the Borrower in full in cash or Cash Equivalents in accordance
with the terms of subsection 8.2.
8.6 OBLIGATIONS OF THE BORROWER UNCONDITIONAL.
Nothing contained in this Section 8 or elsewhere in this Agreement is
intended to or shall impair as between the Borrower and the Agent and the
Lenders the obligations of the Borrower, which are absolute and unconditional,
to pay to the Agent and the Lenders the Obligations as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Agent and the Lenders and creditors of
the Borrower other than the holders of the Senior Indebtedness of the Borrower,
nor shall anything herein or therein prevent the Agent and the Lenders from
exercising all remedies otherwise permitted by
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applicable law upon default under this Agreement, subject to the rights, if any,
under this Section 8 of the holders of such Senior Indebtedness of the Borrower
in respect of cash, property or securities of the Borrower received upon the
exercise of any such remedy.
The failure to make a payment on account of Obligations by reason of any
provision of this Section 8 shall not prevent the occurrence of an Event of
Default under subsection 7.1.
8.7 LENDERS AUTHORIZE AGENT TO EFFECTUATE SUBORDINATION.
Each Lender hereby authorizes and expressly directs the Agent on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 8 and appoints the Agent its attorney in
fact for such purpose, including, without limitation, in the event of any
dissolution, winding up, liquidation or reorganization of the Borrower (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or any other similar remedy
or otherwise) tending towards liquidation of the business and assets of the
Borrower, the immediate filing of a claim for the unpaid balance of the
Obligations in the form required in said proceedings and causing said claim to
be approved. If the Agent does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
or their respective representatives are hereby authorized to have the right to
file and are hereby authorized to file an appropriate claim for and on behalf of
the Lenders. In the event of any such proceeding, until the Senior Indebtedness
of the Borrower is paid in full in cash or Cash Equivalents without the consent
of the holders of a majority in principal amount outstanding of such Senior
Indebtedness, no Lender shall waive, settle or compromise any such claim or
claims relating to the Obligations that such Lender now or hereafter may have
against the Borrower.
8.8 RIGHTS OF AGENT.
Notwithstanding subsection 8.2(b) but subject to the provisions of
subsection 8.2(c), the Agent may continue to make payments on the Obligations
with funds received by or on behalf of the Borrower and shall not be charged
with knowledge of the existence of facts that would prohibit the making of any
such payments unless, not less than two Business Days prior to the date of such
payment, the Agent receives notice that payments may not be made under this
Section 8.
The Agent and each Lender shall be entitled to all of the rights set forth
in this Section 8 in respect of any Senior Indebtedness of the Borrower at any
time held by it to the same extent that any other holder or owner of any Senior
Indebtedness of the Borrower, and nothing in this Agreement shall be construed
to deprive the Agent or any Lender of any of its rights as such a holder.
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8.9 INDEFEASIBLE PAYMENT.
To the extent any payment of the Senior Indebtedness of the Borrower
(whether by or on behalf of the Borrower, as proceeds of security or enforcement
of any right of setoff or otherwise) is declared to be fraudulent or
preferential and is for this or any other reason set aside or required to be
paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, solely for the purpose of this Section 8, if
such payment is recovered by, or paid over to, such receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person, the Senior
Indebtedness of the Borrower or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.
SECTION 9
MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Each Lender shall have the right at any time to (i) sell,
assign, transfer or negotiate to any Eligible Assignee (PROVIDED that such
Eligible Assignee complies with the requirements of subsection 2.7B(iii) as of
the date it becomes a Lender hereunder, to the extent applicable), or (ii) sell
participations to any Person in, all or any part of its Commitment (to the
extent not theretofore terminated) or the Loans made by it or any other interest
herein or in any other Obligations owed to it; PROVIDED, HOWEVER, that (x) no
such sale, assignment, transfer or participation shall, without the consent of
the Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state and (y) no such
sale, assignment or transfer of an interest in any Lender's Loans shall be made
in an amount less than $5,000,000 (or, if less, the aggregate amount of the
Loans of such Lender). In the case of any assignment authorized under this
subsection 9.1, (i) the Agent shall notify the Borrower of the effective date of
such assignment, (ii) as of such effective date, the assignee shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it or assumed by it, as the case may be, shall have the rights and
obligations of a Lender hereunder, (iii) the assigning Lender shall, to the
extent that its rights and obligations hereunder have been assigned by it,
relinquish its rights and be released from its obligations under this Agreement
after the date of such assignment and (iv) if any such assignment occurs after
the issuance of a Note with respect to the Loans so assigned, the assigning
Lender shall surrender its applicable Note and, upon such surrender, new Notes
shall be issued to the assignee and, if applicable, the assigning Lender
substantially in the form of EXHIBIT I annexed hereto, with appropriate
insertions. In the event of an assignment hereunder prior to the Funding Date,
the Obligations
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shall be modified to reflect the Commitments of such assignee. Notwithstanding
anything to the contrary contained in this Agreement, without the prior written
consent of all Lenders, no single Lender, together with such Lender's
Affiliates, may hold (either directly or by participation) more than 50% of the
aggregate Commitments (if not theretofore terminated) or outstanding Loans
unless prior to such time such Lender and its Affiliates have made an offer to
each other Lender to purchase such other Lender's outstanding Commitment or
Loans, as the case may be, and such Lender and its Affiliates have consummated
each such purchase from those Lenders that have agreed to such offer. Except
with respect to the portion of the Loans and Commitments assigned pursuant to
this subsection 9.1, no Lender shall, as between the Borrower and such Lender,
be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or any granting of participations in,
all or any part of its Commitment or the Loans or other Obligations owed to such
Lender.
B. PARTICIPATIONS. The Borrower and each Lender hereby acknowledge and
agree that, solely for purposes of subsections 2.6, 2.7, and 9.5, (i) any
participation will give rise to a direct obligation of the Borrower to the
participant and (ii) the participant shall be considered to be a "Lender".
Notwithstanding the foregoing, no Lender shall grant any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Loan Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating, or reduce the rate or extend the time
of payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect or (ii) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement.
C. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loans and the
other Obligations owed to such Lender to any Federal Reserve Bank as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any operating circular issued by such Federal Reserve Bank.
No Lender shall, as between the Borrower and such Lender, be relieved of any of
its obligations hereunder as a result of any such assignment and pledge.
D. INFORMATION. Each Lender may furnish any information concerning the
Borrower and its Subsidiaries in the possession of that Lender from time to time
to prospective assignees and participants who agree to be bound by the
provisions of subsection 9.23.
9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be consummated,
the Borrower agrees to pay promptly (i) all the costs of furnishing all opinions
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of counsel for the Borrower and the other Loan Parties (including any opinions
reasonably requested by the Agent) as to any legal matters arising hereunder and
of each Loan Party's performance of and compliance with all agreements and
conditions on its part to be performed or complied with under this Agreement and
the other Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (ii) all reasonable
out-of-pocket fees, expenses and disbursements of counsel for the Agent and its
Affiliates (including allocated costs of internal counsel) in connection with
the negotiation, preparation, execution and syndication of the Loan Documents
and any consents, amendments, waivers or other modifications thereto and any
other documents or matters requested by any Loan Party; (iii) all reasonable
out-of-pocket costs and expenses incurred by the Agent in connection with (a)
the negotiation, preparation and execution of the Loan Documents, the
syndication of the Commitments and Loans and due diligence, (b) any consents,
amendments or waivers of or other modifications to any of the Loan Documents and
(c) the preparation, delivery or review of other documents or matters requested
by any Loan Party, and each and every other document, certificate, agreement and
instrument required to be furnished pursuant to the terms of the Loan Documents;
and (iv) after the occurrence of an Event of Default, all costs and expenses,
including reasonable attorneys' fees (including allocated costs of internal
counsel) and costs of settlement, incurred by the Agent and the Lenders in
enforcing any Obligations of or in collecting any payments due from the Borrower
hereunder or under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings. Except as expressly
provided to the contrary in this Agreement or any other Loan Document, costs or
expenses that are payable by the Borrower after the Closing Date shall be
payable by the Borrower within five Business Days after the Borrower's receipt
of written demand from the Agent to pay same, accompanied by documentation in
reasonable detail sufficient to verify the nature and amount.
9.3 INDEMNITY.
A. INDEMNITY. In addition to the payment of expenses as required by
subsection 9.2, whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to defend, indemnify and hold harmless the
Agent, the Lenders and Bankers and their respective Affiliates and Persons
deemed to be "controlling persons" thereof within the meaning of the Securities
Act or the Exchange Act and the respective directors, officers, employees,
agents, attorneys and representatives of the foregoing (collectively,
"INDEMNIFIED PERSONS" and individually, an "INDEMNIFIED PERSON"), to the full
extent lawful, from and against any and all losses, claims, damages,
liabilities, costs and expenses or other obligations of any kind or nature
whatsoever incurred by each such Indemnified Person (including fees, charges and
disbursements of counsel and the allocated costs and expenses of internal
counsel for such Indemnified Person) which are related to, arise out of or
result from (a) any untrue statements or alleged untrue statements or omissions
or alleged omissions to state therein a material fact necessary to make the
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statements therein, in light of the circumstances in which they were made, not
misleading, in each case made or, to the extent contemplated by the Loan
Documents, to be made, by or on behalf of any Loan Party or any of its
Affiliates, (x) in the representations and warranties of the Loan Parties
contained in the Loan Documents, (y) in or pursuant to any Acquisition Agreement
or (z) otherwise in connection with the Loan Documents or any Acquisition
Agreement, (b) information provided by or on behalf of any Loan Party or any of
their Affiliates for use in connection with any syndication, assignment or
participation of any portion of the Commitments, the Loans, the Notes, the other
Loan Documents or the Obligations, or in connection with any Loan Document or
any Acquisition Agreement or any transactions contemplated hereby or thereby,
(c) the transactions contemplated by the Loan Documents (including the Lenders'
agreements to make the Loans or the use or intended use of the proceeds thereof)
or any enforcement of any of the Loan Documents (including the enforcement of
the Affiliate Guaranty), (d) any actions taken or omitted to be taken by an
Indemnified Person with the consent of the Borrower or in conformity with the
instructions of the Borrower, or (e) any other transactions contemplated by the
Loan Documents or any Acquisition Agreement, and the Borrower will reimburse
each Indemnified Person for all reasonable costs and expenses, including fees
and disbursements of both outside and internal counsel for such Indemnified
Person, as they are incurred, in connection with investigating, preparing for,
or defending any formal or informal claim, action, suit, investigation, inquiry
or other proceeding, whether or not in connection with pending or threatening
litigation, caused by or arising out of or in connection with the foregoing,
whether or not such Indemnified Person is named as a party thereto and whether
or not any liability results therefrom. The Borrower shall not, however, be
responsible for any losses, claims, damages, liabilities, costs or expenses
pursuant to clauses (c), (d) or (e) of the preceding sentence which have
resulted from the bad faith or recklessness of such Indemnified Person as
determined by a final judgment of a court of competent jurisdiction. Neither the
Agent nor any other Indemnified Person shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to any of the Loan Parties and
their respective Affiliates or any director, officer, employee, agent or
representative of any of the foregoing, or any other person, for or in
connection with the foregoing, or otherwise arising out of or in any way
relating to the matters contemplated by the Loan Documents, any Acquisition
Agreement or any commitment to lend except for such liability for losses,
claims, damages, liabilities, costs or expenses of any Indemnified Person
pursuant to clauses (c), (d) or (e) of the preceding sentence to the extent they
are determined to have resulted from the bad faith or recklessness of such
Indemnified Person as determined by a final judgment of a court of competent
jurisdiction and in no event shall the Agent or any other Indemnified Person be
responsible for or liable to any of the Loan Parties or any of their respective
Affiliates or any other Person for consequential, punitive or exemplary damages.
The Borrower further agrees that the Loan Parties shall not, nor shall they
permit their respective Subsidiaries to, without the prior written consent of
the Agent and Bankers, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit, investigation,
inquiry or other proceeding in respect of which indemnification is actually
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sought hereunder unless such settlement, compromise or consent includes an
unconditional release of the Agent and each other Indemnified Person hereunder
from all liability arising out of such claim, action, suit, investigation,
inquiry or other proceeding.
B. PROCEDURE. If any action, suit, investigation, inquiry or other
proceeding is commenced, as to which an Indemnified Person proposes to demand
indemnification hereunder, such Indemnified Person shall notify the Borrower
with reasonable promptness; PROVIDED, HOWEVER, that any failure by such
Indemnified Person to notify the Borrower shall not relieve the Borrower or any
of its Affiliates from its obligations hereunder (except to the extent that the
Borrower or such Affiliate is prejudiced by such failure to so promptly notify).
The Borrower shall be entitled to assume the defense of any such action, suit,
investigation, inquiry or other proceeding, including the employment of counsel
reasonably satisfactory to the Indemnified Person and the payment of all
reasonable fees and expenses incurred in connection therewith. The Indemnified
Person shall have the right to employ separate counsel in any such action, suit,
investigation, inquiry or other proceeding, or to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Person unless (i) the Borrower has agreed to pay such fees and
expenses, (ii) the Borrower shall have failed promptly upon written demand
therefor to assume the defense of such action, suit, investigation, inquiry or
other proceeding, and employ counsel reasonably satisfactory to the Indemnified
Person in connection therewith or (iii) such Indemnified Person shall have been
advised by counsel that there exists actual or potential conflicting interests
between the Borrower and such Indemnified Person, including situations in which
one or more legal defenses may be available to such Indemnified Person that are
different from or additional to those available to the Borrower, in which case,
if such Indemnified Person notifies the Borrower in writing that it elects to
employ separate counsel at the expense of the Borrower, the Borrower shall not
have the right to assume the defense of such action or proceeding on behalf of
such Indemnified Person; PROVIDED, however, that the Borrower shall not, in
connection with any one such action, suit, investigation, inquiry or other
proceeding or separate but substantially similar or related actions, suits,
investigations, inquiries or other proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys at any time for all such
Indemnified Persons (in addition to local counsel), which firm shall be
designated in writing by the Agent.
C. CONTRIBUTION. In order to provide for just and equitable contribution
with respect to matters subject to subsection 9.3A, if a claim for
indemnification is made pursuant to these provisions but is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification is not available for any reason (except, with respect
to indemnification sought solely pursuant to subsection 9.3A, for the reasons
specified in the second sentence of subsection 9.3A), even though the express
provisions hereof provide for indemnification in such case, or is insufficient
to hold an Indemnified Party harmless, then the Borrower, on the one hand, and
the Agent, the Lenders or Bankers, on the other hand, shall contribute to such
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loss, claim, damage, liability, cost or expense for which such indemnification
or reimbursement is held unavailable or is insufficient in such proportion as is
appropriate to reflect the relative benefits to the Loan Parties and their
respective Affiliates, on the one hand, and the Agent, Lenders or Bankers, on
the other hand, in connection with the transactions described in the Loan
Documents, as well as any other equitable considerations. The parties agree that
for the purpose of this subsection 9.3C, the relative benefits to the Loan
Parties and their respective Affiliates, on the one hand, and the Agent, Lenders
and Bankers, on the other hand, shall be deemed to be in the same proportion as
the proceeds received or to be received by the Loan Parties from the Loan
Documents bears to the fees paid or to be paid to the Agent, Lenders and Bankers
under the Loan Documents. Notwithstanding the foregoing, the Agent, Lenders and
Bankers shall not be required to contribute under this subsection 9.3C any
amount in excess of the amount of fees actually received by the Agent, Lenders
and Bankers, respectively, in respect of the Loan Documents. The Borrower,
Agent, Bankers and the Lenders agree that it would not be just and equitable if
contribution pursuant to this subsection 9.3C were determined by pro rata
allocation or by any other method which does not take into account the equitable
considerations referred to in this subsection 9.3C.
D. NO LIMITATION. The foregoing rights to indemnity and contribution shall
be in addition to any rights that any Indemnified Person and Loan Parties may
have at common law or otherwise and shall remain in full force and effect
following the completion or any termination of the transactions contemplated by
the Loan Documents. In no event shall the Agent, the Lenders, or Bankers be
responsible or liable to any person for consequential damages which may be
alleged as a result of the Loan Documents and the Acquisition Agreements or any
transaction contemplated thereby.
E. NO ENLARGEMENT. The provisions of this subsection 9.3 shall not enlarge
or vary the obligations of the Borrower under subsections 2.6D and 2.7.
9.4 NO JOINT VENTURE OR PARTNERSHIP.
The Lenders, CapStar and the Borrower acknowledge and agree that the
relationship created hereunder or under the other Loan Documents is that of
creditor/debtor. Each of CapStar and the Borrower acknowledges and agrees that
(a) the Borrower, through its partners and employees, is a knowledgeable and
sophisticated business practitioner with particular expertise and broad
experience in the area of hotel acquisition, finance and management; (b) the
Agent and the Lenders individually and collectively, do not owe, and have
expressly disclaimed, any fiduciary or special obligation to the Borrower and/or
any of the Borrower's partners, agents, or representatives; and (c) nothing
contained in this Agreement or any other Loan Document shall affect the
relationship between the Lenders and the Borrower as that of creditor/
debtor hereunder and under the other Loan Documents. Nothing herein or therein
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is intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between the Borrower, any other Loan Party or Subsidiary
thereof and the Agent and Lenders.
9.5 RATABLE SHARING.
The Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with this Agreement), by realization upon security,
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, fees and other amounts then due and
owing to that Lender hereunder or under the other Loan Documents (collectively,
the "AGGREGATE AMOUNTS DUE" to such Lender) which is greater than the proportion
received by any other Lender in respect of the Aggregate Amounts Due to such
other Lender, then the Lender receiving such proportionately greater payment
shall (i) notify the Agent and each other Lender of the receipt of such payment
and (ii) apply a portion of such payment to purchase participations (which it
shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; PROVIDED, HOWEVER, that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of the Borrower
or otherwise, those purchases shall be rescinded and the purchase prices paid
for such participations shall be returned to such purchasing Lender ratably to
the extent of such recovery, but without interest. The Borrower expressly
consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies owing by the Borrower
to that holder with respect thereto as fully as if that holder were owed the
amount of the participation held by that holder.
9.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of this
Agreement or of the other Loan Documents, and no consent to any departure by
CapStar, the Borrower or the other Loan Parties therefrom, shall in any event be
effective without the written concurrence of the respective Loan Parties party
thereto and the Requisite Lenders; PROVIDED that any such amendment,
modification, termination, waiver or consent which: increases the amount of any
of the Commitments or reduces the principal amount of any of the Loans; changes
in any manner the definition of "Requisite Lenders"; changes in any manner any
provision of this
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Agreement which, by its terms, expressly requires the approval or concurrence of
all Lenders; postpones the Maturity Date; postpones the date on which any
interest or any fees are payable; decreases the interest rate borne by any of
the Loans (other than any waiver of any increase in the interest rate applicable
to any of the Loans pursuant to subsection 2.2E) or the amount of any fees
payable hereunder, in each case other than in accordance with the terms of the
Loan Documents; or changes in any manner the provisions contained in this
subsection 9.6 shall be effective only if evidenced by a writing signed by or on
behalf of each Lender affected thereby. In addition, (i) no amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the Lender which is the holder of
that Note and (ii) no amendment, modification, termination or waiver of any
provision of Section 10 or of any other provision of this Agreement which, by
its terms, expressly requires the approval or concurrence of the Agent shall be
effective without the written concurrence of the Agent. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. No notice to or demand on Borrower in any case shall
entitle such Loan Party to any other or further notice or demand in similar or
other circumstances.
9.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served or sent by telefacsimile or courier service and shall
be deemed to have been given when delivered in person or by courier service or
upon receipt of the telefacsimile, as the case may be. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature pages hereof or (i) as to the Borrower and the Agent, such
other address as shall be designated by such Person in a written notice
delivered to the other parties hereto and (ii) as to each other party, such
other address as shall be designated by such party in a written notice delivered
to the Agent.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. Except as provided in subsection 9.9B below, all representations,
warranties and agreements made herein shall survive the execution and delivery
of this Agreement and the making of the Loans and shall terminate upon
indefeasible payment in full of the Obligations and the expiration or
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termination of all Commitments, notwithstanding anything in this Agreement or
implied by law to the contrary.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of the Borrower set forth in subsections 2.6, 2.7, 9.2,
9.3 and 9.5 shall survive the payment in full of the Obligations, and the
termination of this Agreement.
9.10 AGENT'S OR LENDERS' DISCRETION; SUCCESSOR AGENTS.
Whenever pursuant to this Agreement or any other Loan Document the Agent,
the Requisite Lenders or all of the Lenders exercises any right given to it or
them to approve or disapprove, or any arrangement or term is to be satisfactory
to the Agent, the Requisite Lenders or all of the Lenders, the decision of the
Agent, the Requisite Lenders or all of the Lenders, to approve or disapprove or
to decide whether arrangements or terms are satisfactory or not satisfactory
shall (except as is otherwise specifically herein provided) be in the sole
discretion of the Agent, the Requisite Lenders or all of the Lenders, as the
case may be.
9.11 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF THE LENDERS' RIGHTS.
The obligations of the Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitment of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
the Lenders pursuant hereto or thereto, shall be deemed to constitute the
Lenders as a partnership, an association, a Joint Venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
9.12 REMEDIES OF THE BORROWER.
In the event that a claim or adjudication is made that the Agent or any
Lender or their respective agents has acted unreasonably or unreasonably delayed
acting in any case where by law or under this Agreement, the Notes or the other
Loan Documents, the Agent, such Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, the Borrower agrees that none of the
Agent, such Lender or such agents, shall be liable for any monetary damages, and
the Borrower's sole remedies shall be limited to commencing an action seeking
injunctive relief or declaratory judgement. The parties hereto agree that any
action or proceeding to determine whether the Agent or any Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
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9.13 MARSHALLING; PAYMENTS SET ASIDE.
Neither the Agent nor any Lenders shall be under any obligation to marshal
any assets in favor of the Borrower, any other Loan Party or any other party or
against or in payment of any or all of the Obligations. To the extent that the
Borrower or any other Loan Party makes a payment or payments to the Lenders or
the Agent (or to the Agent for the benefit of the Lenders), or the Agent or the
Lenders enforce any security interests or the Agent or any Lender exercises its
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, any other state
or federal law, common law or any equitable cause of action, then, to the extent
of such recovery, the obligation or part thereof originally intended to be
satisfied, and all rights and remedies therefor or related thereto, shall be
revived and continued in full force and effect as if such payment or payments
had not been made or such enforcement or setoff had not occurred.
9.14 SEVERABILITY.
In case any provision in or obligation under this Agreement or any Note or
any other Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction or under any set of circumstances, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction or under any other set of circumstances,
shall not in any way be affected or impaired thereby.
9.15 HEADINGS.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
9.16 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
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9.17 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Agent and the Lenders (it being
understood that the Lenders' rights of assignment are subject to subsection
9.1). Neither CapStar's and the Borrower's rights or obligations hereunder nor
any interest therein may be assigned or delegated by CapStar or the Borrower, as
the case may be.
9.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE BORROWER OR CAPSTAR
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING
AND DELIVERING THIS AGREEMENT, EACH OF THE BORROWER AND CAPSTAR, FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO BORROWER AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 9.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE
BORROWER AND CAPSTAR IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE AGENT RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST THE BORROWER OR CAPSTAR IN THE
COURTS OF ANY OTHER JURISDICTION; AND
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(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 9.19 RELATING
TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
9.19 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/
BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED HEREBY AND
THEREBY. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including contract claims, tort claims, breach of
duty claims and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on this waiver in entering into this
Agreement and the other Loan Documents, and that each will continue to rely on
this waiver in their related future dealings. Each party hereto further warrants
and represents that it has reviewed this waiver with its legal counsel and that
it knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SUBSECTION 9.19 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
9.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by the Borrower and
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the Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
9.21 MATERIAL INDUCEMENT.
Each of the Borrower and CapStar acknowledges that its representations,
warranties, covenants and agreements contained in this Agreement and the other
Loan Documents, are material inducements to the Lenders to enter into this
Agreement and to make the Loans, that the Lenders have already relied on such
representations, warranties, covenants and agreements in entering into this
Agreement and agreeing to make the Loans (notwithstanding any investigation
heretofore or hereafter made by or on behalf of the Lenders), and that the
Lenders will continue to rely on such representations, warranties, covenants and
agreements in their future dealings with the Borrower. The Borrower agrees that
its representations, warranties, covenants and agreements contained in this
Agreement and the other Loan Documents, are reasonable in purpose and scope. The
Borrower represents and warrants that it has reviewed this Agreement and the
other Loan Documents with its legal counsel and that it knowingly and
voluntarily is entering into this Agreement and the other Loan Documents
following consultation with legal counsel.
9.22 ENTIRE AGREEMENT.
This Agreement is evidence of the indebtedness incurred pursuant hereto
and, taken together with all of the other Loan Documents and all certificates
and other documents delivered to the Agent and the Lenders hereunder and
thereunder, embodies the entire agreement and supersedes all prior agreements,
written and oral, relating to the subject matter hereof. This Agreement and the
other Loan Documents constitute the final expression of the agreement between
the parties hereto and this Agreement and such other Loan Document may not be
contradicted by evidence of any alleged oral agreement.
9.23 CONFIDENTIALITY.
Each Lender and the Agent, severally and not jointly, agrees to exercise
commercially reasonable efforts (i) to keep any non-public information delivered
or made available to such Lender or the Agent pursuant to the Loan Documents,
which any Loan Party or its authorized representative has identified as
confidential information, confidential from any Person other than Persons
employed by or retained by such Lender or the Agent or their respective
Affiliates who are or are expected to become engaged in evaluating, approving,
structuring or administering the Loans, or other Obligations hereunder and (ii)
to advise its employees who receive such information that engaging in securities
transactions involving the Common Stock while in the possession of such
non-public information may violate applicable securities laws; PROVIDED that
nothing herein shall prevent any Lender or the Agent from disclosing such
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information to any bona fide Eligible Assignee, transferee or Eligible
Participant that has agreed to be bound by the provisions of this subsection
9.23 in connection with the contemplated assignment or transfer of any
Commitments, Loans or other Obligations hereunder or participation therein or as
required or requested by any Governmental Authority or representative thereof or
pursuant to legal process or in connection with the exercise of any remedy under
the Loan Documents.
9.24 MAXIMUM AMOUNT.
A. It is the intention of the Borrower and the Lenders to conform strictly
to the usury and similar laws relating to interest from time to time in force,
and all agreements between the Loan Parties and their respective Subsidiaries
and the Lenders, whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or otherwise, shall the
amount paid or agreed to be paid in the aggregate to the Lenders as interest
(whether or not designated as interest, and including any amount otherwise
designated but deemed to constitute interest by a court of competent
jurisdiction) hereunder or under the other Loan Documents or in any other
agreement given to secure the indebtedness of the Borrower to the Lenders, or in
any other document evidencing, securing or pertaining to the indebtedness
evidenced hereby, exceed the maximum amount permissible under applicable usury
or such other laws (the "MAXIMUM AMOUNT"). If under any circumstances whatsoever
fulfillment of any provision hereof, or any of the other Loan Documents, at the
time performance of such provision shall be due, shall involve exceeding the
Maximum Amount, then, ipso facto, the obligation to be fulfilled shall be
reduced to the Maximum Amount. For the purposes of calculating the actual amount
of interest paid and/or payable hereunder in respect of laws pertaining to usury
or such other laws, all sums paid or agreed to be paid to the holder hereof for
the use, forbearance or detention of the indebtedness of the Borrower evidenced
hereby, outstanding from time to time shall, to the extent permitted by
Applicable Law, be amortized, pro-rated, allocated and spread from the date of
disbursement of the proceeds of the Loans until payment in full of all of such
indebtedness, so that the actual rate of interest on account of such
indebtedness is uniform through the therm hereof. The terms and provisions of
this subsection shall control and supersede every other provision of all
agreements between the Borrower or any endorser of the Notes and the Lenders.
B. If under circumstances any Lender shall ever receive an amount which
would exceed the Maximum Amount , such amount shall be deemed a payment in
reduction of the principal amount of the Loans and, notwithstanding anything to
the contrary contained in subsection 2.4B(i), shall be treated as a voluntary
prepayment under such subsection 2.4B(i) and shall be so applied in accordance
with subsection 2.4 or if such excessive interest exceeds the unpaid balance of
the Loans and any other indebtedness of the Borrower in favor of such Lender,
the excess shall be deemed to have been a payment made by mistake and shall be
refunded to the Borrower.
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SECTION 10
AGENT
10.1 APPOINTMENT.
Bankers is hereby appointed Agent and Arranger hereunder, and each Lender
hereby authorizes the Agent to act as its agent in accordance with the terms of
this Agreement and the other Loan Documents. The Agent hereby agrees to act upon
the express conditions contained in this Agreement and in the other Loan
Documents, as applicable. The provisions of this Section 10 are solely for the
benefit of the Agent and Lenders and no Loan Party shall have any rights as a
third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, the Agent shall act solely as an
agent of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for any Loan Party
or any of its Subsidiaries.
10.2 POWERS AND DUTIES; GENERAL IMMUNITY.
▇. ▇▇▇▇▇▇; DUTIES SPECIFIED. Each Lender irrevocably authorizes the Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to the Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto. The Agent
shall have only those duties and responsibilities that are expressly specified
in this Agreement and in the other Loan Documents. The Agent may exercise such
powers, rights and remedies and perform such duties by or through its agents or
employees. The Agent shall not have, by reason of this Agreement or in any of
the other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. The Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by any of the Agent to the Lenders or by
or on behalf of any Loan Party or any of its Subsidiaries to the Agent or any
Lender in connection with the Loan Documents and the transactions contemplated
thereby or for the financial condition or business affairs of any Loan Party or
any of its Subsidiaries or any other Person liable for the payment of any
Obligations, nor shall the Agent be required to ascertain or inquire as to the
performance
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or observance of any of the terms, conditions, provisions, covenants or
agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or as to the exis tence or possible existence of any Event
of Default or Potential Event of Default.
C. EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
partners, directors, employees or agents shall be liable to the Lenders for any
action taken or omitted by the Agent under or in connection with any of the Loan
Documents except to the extent caused by the Agent's gross negligence or willful
misconduct. The Agent shall be entitled to refrain from any act or the taking of
any action (including the failure to take an action) in connection with this
Agreement or any of the other Loan Documents or from the exercise of any power,
discretion or authority vested in it hereunder or thereunder unless and until
the Agent shall have received instructions in respect thereof from the Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 9.6) and, upon receipt of such instructions from the Requisite
Lenders (or such other Lenders, as the case may be), the Agent shall be entitled
to act or (where so instructed) refrain from acting, or to exercise such power,
discretion or authority, in accordance with such instructions. Without prejudice
to the generality of the foregoing, (i) the Agent shall be entitled to rely, and
shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Capstar and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of the Requisite Lenders (or such
other Lenders as may be required to give such instructions under subsection
9.6).
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans, the Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Capstar or any of its Subsidiaries or Affiliates as if it were not
performing the duties specified herein (including by acting as agent or lender
under the Senior Credit Agreement), and may accept fees and other consideration
from Capstar and its Subsidiaries for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
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10.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Capstar and its
Subsidiaries in connection with the making of the Loans hereunder and that it
has made and shall continue to make its own appraisal of the creditworthiness of
Capstar and its Subsidiaries. The Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of the Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and the Agent shall not have any responsibility with respect to the
accuracy of or the completeness of any information provided to the Lenders.
10.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify the Agent, to the extent that the Agent shall not have been reimbursed
by the Borrower, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
exercising its powers, rights and remedies or performing its duties hereunder or
under the other Loan Documents or otherwise in its capacity as the Agent in any
way relating to or arising out of this Agreement or the other Loan Documents;
PROVIDED that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent that same resulted from the Agent's
gross negligence or willful misconduct.
10.5 SUCCESSOR AGENT.
A. The Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Loan Documents at any time by giving 15
Business Days' prior written notice to the Borrower and the Lenders. Such
resignation shall take effect upon the appointment of a successor Agent pursuant
to clauses (b) and (c) below or as otherwise provided below.
B. Upon any such notice of resignation the Requisite Lenders shall appoint
a successor Agent hereunder who shall be a commercial bank or trust company
reasonably acceptable to the Borrower.
C. If a successor Agent shall not have been so appointed within such 15
Business Day period, the Agent, with the consent of the Borrower (which shall
not be unreasonably withheld
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or delayed), shall then appoint a commercial bank or trust company with capital
and surplus of not less than $500,000,000 as successor Agent, who shall serve as
Agent hereunder until such time, if any, as the Requisite Lenders appoint a
successor Agent as provided above.
D. If no successor Agent has been appointed pursuant to clause (b) or (c)
above by the 25th Business Day after the date such notice of resignation was
given by the Agent, the Agent's resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of the Agent hereunder
and/or under any other Loan Documents until such time, if any, as the Requisite
Lenders appoint a successor Agent as provided above.
E. Upon resignation of the Agent pursuant to this subsection 10.5, the
Agent shall remain indemnified to the extent provided in this Agreement and the
other Loan Documents and the provisions of this subsection 10.5 shall continue
in effect for the benefit of the Agent for all of its actions and inactions
while serving as the Agent.
10.6 GUARANTIES.
Each Lender hereby further authorizes the Agent, on behalf of and for the
benefit of the Lenders, to be the agent for and representative of the Lenders
under the CapStar Guaranty and the Affiliate Guaranty, and each Lender agrees to
be bound by the terms of each such Loan Document (including, but not limited to,
the subordination provisions contained therein). Anything contained in any of
the Loan Documents to the contrary notwithstanding, the Agent and each Lender
hereby agree that the no Lender shall have any right individually to enforce the
Capstar Guaranty or the Affiliate Guaranty, it being understood and agreed that
all powers, rights and remedies under such Loan Documents may be exercised
solely by Agent for the benefit of Lenders in accordance with the instructions
of the Requisite Lenders and the terms thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
CAPSTAR MANAGEMENT COMPANY, L.P.
By: CAPSTAR HOTEL COMPANY,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Executive Vice President and
Chief Financial Officer
Notice Address:
CapStar Management Company, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
GUARANTOR:
CAPSTAR HOTEL COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Executive Vice President and
Chief Financial Officer
Notice Address:
CapStar Hotel Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
S-1
AGENT:
BANKERS TRUST COMPANY,
as Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LENDERS:
BANKERS TRUST COMPANY,
as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
S-2
OAK HILL SECURITIES FUND, L.P.,
as a Lender
By: OAK HILL SECURITIES GENPAR, L.P.,
as General Partner
By: OAK HILL SECURITIES MGP, INC.,
as Managing General Partner of
the General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
Notice Address:
Oak Hill Securities Fund, L.P.
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
S-3
▇▇▇▇▇ FARGO BANK, N.A.,
as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
Notice Address:
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
S-4
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Notice Address:
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Real Estate Department
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
▇-▇
FIRST BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
Notice Address:
First Bank National Association
First Bank Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇: MPFP ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
S-6
SCHEDULE 2.1A
LENDERS' COMMITMENTS AND PRO RATA SHARES
===================================== ======================== =================
LENDER COMMITMENT PRO RATA SHARE
------------------------------------- ------------------------ -----------------
Bankers Trust Company $ 6,535,000 13.07%
------------------------------------- ------------------------ -----------------
Oak Hills Securities Fund, L.P. $25,000,000 50%
------------------------------------- ------------------------ -----------------
▇▇▇▇▇ Fargo Bank, N.A. $ 6,525,000 13.05%
------------------------------------- ------------------------ -----------------
The First National Bank of Boston $ 6,525,000 13.05%
------------------------------------- ------------------------ -----------------
First Bank National Association $ 5,415,000 10.83%
===================================== ======================== =================