CAPSTAR HOTEL COMPANY,
a Delaware corporation
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CREDIT AGREEMENT
dated as of June 30, 1997
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$450,000,000
Senior Secured Credit Facility
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▇▇▇▇▇▇ BROTHERS HOLDINGS INC.,
as Arranger and Syndication Agent,
BANKERS TRUST COMPANY, as Documentation Agent,
BANKBOSTON, N.A., as Administrative Agent, and
▇▇▇▇▇ FARGO BANK, N.A.
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS.................................................... 1
1.1 Defined Terms................................................... 1
1.2 Other Definitional Provisions................................... 32
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................ 32
2.1 Revolving Credit Commitments.................................... 32
2.2 Procedure for Revolving Credit Borrowing........................ 33
2.3 Term Loans...................................................... 34
2.4 Procedure for Term Loan Borrowing............................... 34
2.5 Commitment Fee.................................................. 34
2.6 Termination or Reduction of Commitments......................... 35
2.7 Swing Line Commitment........................................... 35
2.8 Repayment of Loans; Evidence of Debt............................ 36
2.9 Optional Prepayments............................................ 38
2.10 Mandatory Prepayments and Reduction of Commitment............... 38
2.11 Conversion and Continuation Options............................ 40
2.12 Minimum Amounts and Maximum Number of Tranches................. 41
2.13 Interest Rates and Payment Dates............................... 41
2.14 Computation of Interest and Fees............................... 41
2.15 Inability to Determine Interest Rate........................... 42
2.16 Pro Rata Treatment and Payments................................ 42
2.17 Illegality..................................................... 44
2.18 Requirements of Law............................................ 44
2.19 Taxes.......................................................... 45
2.20 Indemnity...................................................... 47
2.21 Certain Fees................................................... 48
2.22 Change of Lending Office....................................... 48
SECTION 3. LETTERS OF CREDIT.............................................. 48
3.1 L/C Commitment.................................................. 48
3.2 Procedure for Issuance of Letters of Credit..................... 49
3.3 Fees, Commissions and Other Charges............................. 49
3.4 L/C Participation............................................... 50
3.5 Reimbursement Obligation of the Borrower........................ 51
3.6 Obligations Absolute............................................ 51
3.7 Letter of Credit Payments....................................... 52
3.8 Application..................................................... 52
SECTION 4. REPRESENTATIONS AND WARRANTIES................................. 52
4.1 Financial Condition............................................. 52
4.2 No Change....................................................... 53
4.3 Existence; Compliance with Law.................................. 53
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4.4 Power; Authorization; Enforceable Obligations................... 53
4.5 No Legal Bar.................................................... 54
4.6 No Material Litigation.......................................... 54
4.7 No Default...................................................... 54
4.8 Properties; Agreements; Licenses................................ 54
4.9 Zoning; Authorizations................................... 56
4.10 Physical Condition; Encroachment......................... 56
4.12 Leases................................................... 57
4.13 Environmental Reports; Engineering Reports; Appraisals; Market
Studies.................................................. 57
4.14 No Condemnation or Casualty.............................. 57
4.15 Wetlands................................................. 57
4.16 Utilities and Access..................................... 58
4.17 Intellectual Property.......................................... 58
4.18 No Burdensome Restrictions..................................... 59
4.19 Taxes.......................................................... 59
4.20 Federal Regulations............................................ 59
4.21 ERISA.......................................................... 59
4.22 Investment Company Act; Other Regulations...................... 60
4.23 Subsidiaries................................................... 60
4.24 Purpose of Loans............................................... 60
4.25 Environmental Matters.......................................... 60
4.26 Regulation H................................................... 61
4.27 Accuracy of Information........................................ 61
4.28 Security Documents............................................. 62
4.29 Solvency....................................................... 62
4.30 Senior Indebtedness............................................ 62
4.31 Labor Matters.................................................. 62
4.32 Cash Management System................................... 63
4.33 Pledged Notes............................................ 63
SECTION 5. CONDITIONS PRECEDENT........................................... 63
5.1 Conditions to Initial Loans............................... 63
5.2 Conditions to Each Loan and Letter of Credit.................... 72
SECTION 6. AFFIRMATIVE COVENANTS.......................................... 73
6.1 Financial Statements............................................ 73
6.2 Certificates; Other Information................................. 74
6.3 Payment of Obligations.......................................... 75
6.4 Conduct of Business and Maintenance of Existence................ 75
6.5 Common Stock............................................. 75
6.6 Maintenance of Property; Repairs................................ 76
6.7 Inspection of Property; Books and Records; Discussions.......... 76
6.8 Notices......................................................... 76
6.9 Environmental Laws.............................................. 77
6.10 Further Assurances............................................. 77
6.11 Interest Rate Protection....................................... 78
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6.12 Additional Collateral.......................................... 78
6.13 Insurance................................................ 79
6.14 Casualty and Condemnation; Restoration................... 84
6.16 Capital Expenditures; Deferred Maintenance............... 87
6.17 O&M Requirements......................................... 87
6.18 Management of Properties................................. 88
6.19 Cash Management System; Administrative Agent Rights...... 88
SECTION 7. NEGATIVE COVENANTS ............................................. 89
7.1 Financial Condition Covenants................................... 90
7.2 Limitation on Indebtedness...................................... 91
7.3 Limitation on Liens............................................. 93
7.4 Limitation on Guarantee Obligations............................. 93
7.5 Limitation on Fundamental Changes............................... 94
7.6 Limitation on Sale of Assets.................................... 94
7.7 Limitation on Leases............................................ 96
7.8 Limitation on Dividends......................................... 96
7.9 Limitation on Acquisitions, Investments, Loans and Advances..... 96
7.10 Management Agreements.................................... 97
7.12 Limitation on Transactions with Affiliates..................... 98
7.13 Limitation on Changes in Fiscal Year........................... 98
7.14 Limitation on Negative Pledge Clauses.......................... 98
7.16 Limitation on Lines of Business................................ 98
7.17 Changes in Certain Documents; Issuance of Equity Securities.... 98
SECTION 8. EVENTS OF DEFAULT..............................................100
SECTION 9. THE AGENTS.....................................................103
9.1 Appointment.....................................................103
9.2 Delegation of Duties............................................103
9.3 Exculpatory Provisions..........................................103
9.4 Reliance by Agents..............................................104
9.5 Notice of Default...............................................104
9.6 Non-Reliance on Agents and Other Lenders........................104
9.7 Indemnification.................................................105
9.8 Agents and Their Individual Capacities..........................105
9.9 Successor Administrative Agent..................................106
SECTION 10. MISCELLANEOUS.................................................106
10.1 Amendments and Waivers.........................................106
10.2 Notices........................................................107
10.3 No Waiver; Cumulative Remedies.................................108
10.4 Survival of Representations and Warranties.....................108
10.5 Payment of Expenses and Taxes..................................108
10.6 Successors and Assigns; Participations and Assignments.........109
10.7 Adjustments; Set-off...........................................112
10.8 Counterparts...................................................113
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10.9 Severability...................................................113
10.10 Integration...................................................113
10.11 GOVERNING LAW.................................................113
10.12 Submission To Jurisdiction; Waivers...........................114
10.13 Acknowledgements..............................................114
10.14 WAIVERS OF JURY TRIAL.........................................114
10.15 Confidentiality...............................................115
10.16 Enforceability; Usury.........................................115
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EXHIBITS
A Form of Notice of Borrowing
B Form of Compliance Certificate
C Form of Guarantee and Collateral Agreement
D Form of Mortgage
E Form of Reinvestment Notice
F Form of Revolving Credit Note
G Form of Term Note
H Form of Swing Line Note
I Form of Notice of Optional Prepayment
J Form of Notice of Continuation/Conversion
K Form of Exemption Certificate
L Form of Closing Certificate
M Form of Legal Opinion of Counsel to Borrower
N Form of Cash Management Agreement
O Form of Assignment and Acceptance
SCHEDULES
I Commitments; Lending Offices and Addresses
II Pricing Grid
III Term Loan Amortization
IV Permitted Acquisitions
3.1 Existing Letter of Credit
4.4 Required Consents
4.8(a)I Mortgaged Properties
4.8(a)II Non-Recourse Properties
4.8(b) Ground Leases
4.8(c) Non-Recourse Documents
4.8(d) Management Agreements
4.8(e) Franchise Agreements
4.8(f) Material Leases
4.8(g) Liquor Licenses
4.9 Zoning
4.17 Intellectual Property
4.23 Subsidiaries and Joint Ventures
4.25 Environmental Matters
4.32 Cash Management System
7.4(a) Existing Guarantee Obligations
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CREDIT AGREEMENT, dated as of June 30, 1997, among CAPSTAR HOTEL COMPANY,
a Delaware corporation ("Borrower"), the several lenders from time to time
parties hereto (collectively, the "Lenders"; each a "Lender"), ▇▇▇▇▇▇ BROTHERS
HOLDINGS INC., as Advisor, Arranger and Syndication Agent (in such capacities,
the "Arranger"), BANKERS TRUST COMPANY, as Documentation Agent (in such
capacity, the "Documentation Agent"), BANKBOSTON, N.A., as Administrative Agent
(in such capacity, the "Administrative Agent") and ▇▇▇▇▇ FARGO BANK, N.A..
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Lenders to extend credit to it to
refinance certain existing indebtedness and for the other purposes set forth in
Section 4.24; and
WHEREAS, the Lenders are willing to extend such credit on and subject to
the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"Acquisition": any acquisition by the Borrower or any of its
Subsidiaries of any fee or leasehold interest in any Qualifying Hotel
Property or any other assets or interests permitted to be acquired
hereunder.
"Acquisition Agreements": collectively, the agreements entered into
by the Borrower and any of its Subsidiaries in connection with an
Acquisition.
"Additional Mortgaged Property": as defined in Schedule IV.
"Adjustment Date": (a) the third day following the receipt by the
Administrative Agent of the financial statements for the most recently
completed fiscal period furnished pursuant to Section 6.1(a) or (b), as
the case may be, and the compliance certificate with respect to such
financial statements furnished pursuant to Section 6.2(b). For purposes of
determining the Applicable Margin, the first "Adjustment Date" shall mean
the date on which the financial statements for the fiscal quarter ended
June 30, 1997 furnished pursuant to Section 6.1(b) and the related
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compliance certificate furnished pursuant to Section 6.2(b) are delivered
to the Administrative Agent pursuant to Section 6.1(b) and 6.2(b),
respectively.
"Administrative Agent": as defined in the Preamble to this
Agreement.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Agents": the collective reference to the Administrative Agent, the
Documentation Agent, the Syndication Agent, the Arranger and ▇▇▇▇▇ Fargo
Bank, N.A.
"Aggregate Outstanding Extensions of Credit": as to any Lender at
any time, an amount equal to the sum of (a) the Aggregate Outstanding
Revolving Extensions of Credit of such Lender and (b) Aggregate
Outstanding Term Loan Extensions of Credit of such Lender.
"Aggregate Outstanding Revolving Extensions of Credit": as to any
Revolving Credit Lender at any time, an amount equal to the sum of (a) the
aggregate principal amount of all Revolving Credit Loans made by such
Lender then outstanding and (b) such Lender's Revolving Credit Commitment
Percentage of the L/C Obligations then outstanding.
"Aggregate Outstanding Term Loan Extensions of Credit": as to any
Term Loan Lender at any time, an amount equal to the aggregate principal
amount of all Term Loans made by such Lender then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": at any time, the rates per annum set forth on
Schedule II under the relevant column heading opposite the level of the
Consolidated Total Debt Ratio and Consolidated Senior Debt Ratio most
recently determined; provided that (a) the Applicable Margin commencing on
the Closing Date shall be 2.00% in the case of Revolving Credit Loans
which are Eurodollar Loans and 2.125% in the case of Term Loans which are
Eurodollar Loans, until the first Adjustment Date, (b) the Applicable
Margin determined for any Adjustment Date (including the first Adjustment
Date) shall remain in effect until a subsequent Adjustment Date for which
the Consolidated Total Debt Ratio and/or Consolidated Senior Debt Ratio
falls within a different level and (c) if the financial statements and
related compliance certificate for any fiscal period are not delivered by
the date due pursuant to Sections 6.1 and 6.2, the
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Applicable Margin shall be 2.00% in the case of Revolving Credit Loans
which are Eurodollar Loans and 2.125% in the case of Term Loans which are
Eurodollar Loans, until the date of delivery of such financial statements
and compliance certificate.
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"Appraisal": with respect to any Property, a written appraisal of
such Property prepared by an Appraiser and delivered to the Administrative
Agent pursuant to Schedule IV or Section 5.1, in each case in form,
content and methodology satisfactory to the Administrative Agent and in
compliance with all applicable legal and regulatory requirements
(including the requirements of Title XI of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. ▇▇.▇▇. 3331, et
seq., as amended (or any successor statute thereto), and the regulations
promulgated thereunder ("FIRREA")).
"Appraiser": an independent appraiser reasonably acceptable to the
Administrative Agent who meets all regulatory requirements applicable to
the Administrative Agent, who holds an MAI designation, is state licensed
or state certified if required under the laws of the state where the
applicable Property is located, who meets the requirements of FIRREA and
who has at least 10 years experience with real estate of the same type as
the Property to be appraised.
"Approved Environmental Consultant": an independent environmental
consultant reasonably acceptable to the Administrative Agent.
"Asset Sale": any sale, sale-leaseback, or other disposition by the
Borrower or any Subsidiary thereof of any of its property or assets,
including the Capital Stock of any Subsidiary of the Borrower, but
excluding sales of inventory and FF&E in the ordinary course of business.
"Assignee": as defined in Section 10.6(c).
"Authorization": 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.
"Available Revolving Credit Commitment": as to any Lender at any
time, an amount (which may be a negative number) equal to the difference
of (a) such Lender's Revolving Credit Commitment minus (b) the sum of (i)
such Lender's Aggregate Outstanding Revolving Extensions of Credit and
(ii) such Lender's Revolving Credit Commitment Percentage of the aggregate
unpaid principal amount at such time of all
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Swing Line Loans (provided that for purposes of calculating the Available
Revolving Credit Commitments pursuant to Section 2.5, the amount referred
to in this clause (ii) shall be zero), and (iii) such Lender's Revolving
Credit Commitment Percentage of the then applicable Working Capital
Reserve (provided that for purposes of calculating the Available Revolving
Credit Commitments pursuant to Section 2.5, the amount referred to in this
clause (iii) shall be zero).
"Available Term Loan Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Term Loan Commitment over (b) the Aggregate Outstanding Term Loan
Extensions of Credit of such Lender. After the Term Loan Extended
Borrowing Date, the Available Term Loan Commitment shall be zero
regardless of the amount of Term Loans advanced.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the
Administrative Agent as its prime or base rate in effect at its principal
office in Boston, Massachusetts; "Federal Funds Effective Rate" shall
mean, for any day, 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 on the next succeeding 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 the
day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it; "Assessment
Rate" means, for any day, the annual assessment rate in effect on such day
that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327
(or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result
of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall
be such annual rate as shall be determined by the Administrative Agent to
be representative of the cost of such insurance to the Lenders; "Base CD
Rate" shall mean the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the Federal Reserve
System through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major
5
money center banks in New York City received at approximately 10:00 A.M.,
New York City time, on such day (or, if such day shall not be a Business
Day, on the next preceding Business Day) by the Administrative Agent from
three New York City negotiable certificate of deposit dealers of
recognized standing selected by it; and "Statutory Reserve Rate" means for
any day as applied to any Base Rate Loan, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement for a Depositary Institution
(as defined in Regulation D of the Board) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or more. Any change
in the Base Rate due to a change in the Prime Rate, the Base CD Rate or
the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.2, 2.4 or 2.7 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Borrowing Notice": a notice substantially in the form of Exhibit A.
"Business": as defined in Section 4.25 (b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close or a day on which the Administrative Agent is closed for
business.
"Canadian Security Documents": each of the mortgages, pledges,
debentures, collateral assignments and other similar documents which
created Liens upon the Properties owned by the Borrower and its
Subsidiaries which are located in Canada.
"Capital Expenditures": for any period, the aggregate of all
expenditures (excluding capitalized interest) by the Borrower and its
Subsidiaries for the acquisition or leasing of fixed or capital assets or
additions to equipment (including replacements and improvements during
such period) which should be capitalized under GAAP on a consolidated
balance sheet of the Borrower and its Subsidiaries, 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 and (v) costs of any
other major repair and/or replacement of FF&E.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all
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equivalent ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"CapStar I": CapStar Management Company, L.P., a Delaware limited
partnership.
"CapStar II": CapStar Management Company II, L.P., a Delaware
limited partnership.
"Cash Equivalents": to the extent owned by a Person free and clear
of Liens, (a) securities with maturities of one year or less from the date
of acquisition issued or fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date
of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than 30 days with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a
domestic issuer rated at least A-1 by Standard and Poor's Rating Group
("S&P") or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), (e)
securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's, (f) securities with
maturities of one year or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares
of money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"Cash Management System": the system of Deposit Accounts of Loan
Parties and their Subsidiaries pursuant to which all Receipts of Loan
Parties and such Subsidiaries are collected and distributed, all as
described in Schedule 4.32, as the same may be amended from time to time
pursuant to Section 6.19.
"Cash Manager": BankBoston, N.A., or any successor thereto
reasonably approved by the Administrative Agent.
"Cash Management Agreement": the letter agreement delivered pursuant
to subsection 5.1(x) with respect to the Concentration Accounts by and
among the Cash Manager, the Administrative Agent and the Borrower.
"Change of Control": the occurrence of any of the following events:
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(i) ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall cease to be (for any reason other than
his death or incapacity) an active, senior officer of the Borrower;
or
(ii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall sell, transfer or otherwise dispose
of more than twenty five percent (25%) of the Capital Stock of the
Borrower that he owns on the date hereof or acquires subsequent to
the date hereof (other than to his immediate family members or to a
trust for the benefit of such immediate family members); or
(iii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall pledge as collateral for any
Indebtedness more than fifty percent (50%) of the Capital Stock of
the Borrower that he owns on the date hereof or acquires subsequent
to the date hereof; or
(iv) the Borrower shall cease to be the sole general partner
of either Operating Company or both Operating Companies; or
(v) the Borrower shall cease to own at least fifty one percent
(51%) of the partnership interests in each Operating Company; or
(vi) any Person (other than ▇▇▇▇ ▇▇▇▇▇▇▇▇), whether singly or
in concert with one or more Persons, shall, directly or indirectly,
have acquired, or acquired the power to vote or direct the voting
of, more than 25% of the voting stock of the Borrower; or
(vii) a majority of the board of directors of the Borrower
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; or
(viii) 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.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall be satisfied.
"Co-Arrangers": the collective reference to Bankers Trust Company,
BancBoston Securities, Inc. and ▇▇▇▇▇ Fargo Bank, N.A.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
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"Collateral": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Term Loan Commitment
and the Revolving Credit Commitment of such Lender.
"Commitment Percentage": as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the
aggregate Commitments or, at any time after the Commitments shall have
expired or terminated, the percentage which the aggregate principal amount
of such Lender's Loans (including, in the case of Revolving Credit Loans,
such Lender's Revolving Credit Commitment Percentage of the aggregate
unpaid principal amount at such time of all Swing Line Loans) then
outstanding constitutes of the aggregate principal amount of the Loans
then outstanding.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of
the Code.
"Common Limited Partner Interests": the partnership units issued by
the Operating Companies which pay dividends which are tied to dividends
paid on the Common Stock and which, by their terms may be converted into
or exercised or redeemed by the holders thereof for Common Stock only.
"Common Stock": the common stock of the Borrower, including all
classes thereof.
"Compliance Certificate": a certificate substantially in the form of
Exhibit B, delivered pursuant to Section 6.2(b).
"Concentration Account": collectively, the accounts established and
maintained in the name of the Administrative Agent at the offices of the
Cash Manager pursuant to the terms of the Guarantee and Collateral
Agreement, to which funds on deposit in the Local Accounts included in the
Cash Management System are automatically deposited in accordance with the
Cash Management System.
"Condemnation Proceeds": 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" or "Consolidated": when used in respect of any
financial term or financial covenants relating to the Borrower and its
Subsidiaries, refers to the Borrower and the Subsidiaries of the Borrower
whose accounts are consolidated with the Borrower's accounts in accordance
with GAAP; provided, that for purposes of calculating Indebtedness,
EBITDA, fixed charges, lease expense, debt service, interest
9
expense, income, net income, expenses, and other similar accounts of
Subsidiaries of the Borrower which are not Wholly Owned Subsidiaries, such
Indebtedness, interest expense, income, net income, expenses, and other
similar accounts of such Subsidiary shall be included on a pro rata basis
to the extent of the percentage interest that the Borrower and its Wholly
Owned Subsidiaries have in any such Subsidiary.
"Consolidated Adjusted EBITDA": for any period of four consecutive
fiscal quarters, Consolidated EBITDA for such period, adjusted as follows:
(i) such Consolidated EBITDA shall be reduced by the amount of
Consolidated EBITDA contributed by any Property with respect to which, on
the date of such calculation, more than 50% of the rooms "available for
sale" 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 any period of 30 consecutive days within six (6) months
before or after such date of calculation, (ii) such Consolidated EBITDA
shall be reduced by 60% of the amount of Consolidated EBITDA contributed
by any Property with respect to which, on the date of such calculation,
more than 25% of the rooms "available for sale" 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 any period of 30
consecutive days within six (6) months before or after such date of
calculation, (iii) such Consolidated EBITDA shall be adjusted by including
the Consolidated EBITDA of any Person, Property, Management Agreement,
Pledged Note or Joint Venture interest acquired by the Borrower or its
Subsidiaries during such period on a pro forma basis (based upon the
trailing twelve (12) months operating results) for such period of four
full fiscal quarters (assuming the consummation of each such acquisition
and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal
quarters) if the Administrative Agent has received such financial
information with respect to the acquired Person, Property, Management
Agreement, Pledged Note or Joint Venture interest as it shall reasonably
determine is adequate to determine the Consolidated EBITDA of the acquired
Person or Property, and (iv) such Consolidated EBITDA shall be adjusted by
excluding the Consolidated EBITDA of any Person or Property disposed of by
the Borrower or its Subsidiaries during such period on a pro forma basis
for such period of four full fiscal quarters (assuming such disposition
and the repayment of any Indebtedness in connection therewith occurred on
the first day of such period of four full fiscal quarters).
"Consolidated Debt Service Ratio": for any period, the ratio of (a)
Consolidated Adjusted EBITDA for such period to (b) the sum of (without
duplication) (i) Consolidated Interest Expense for such period and (ii)
scheduled principal payments required to have been made during such period
of Indebtedness of the Borrower or any of its Subsidiaries (including
scheduled payments in respect of the Loans and payments required as a
result of scheduled reductions of the Revolving Credit Commitments).
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a
charge in the statement
10
of such Consolidated Net Income for such period, the sum of (a) total
income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary
expenses or losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such
period, losses on sales of assets outside of the ordinary course of
business), (f) any other noncash charges and (g) if applicable,
restructuring charges, write-off of goodwill and licensing agreements and
minus, to the extent included in the statement of such Consolidated Net
Income for such period, the sum of (a) interest income (other than
interest on Pledged Notes), (b) any extraordinary income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the
sales of assets outside of the ordinary course of business), (c) any other
noncash income, all as determined on a consolidated basis, (d) gains on
sales of assets and (e) net revenues from management fees under Management
Agreements, Pledged Notes and Joint Venture investments not received in
cash by a Loan Party.
"Consolidated Fixed Charge Coverage Ratio": for any period, the
ratio of (a) Consolidated Adjusted EBITDA for such period to (b) the sum
of (without duplication) (i) income tax paid by the Borrower and its
Subsidiaries during such period, (ii) Consolidated Interest Expense for
such period, (ii) Consolidated Lease Expense for such period, (iii)
scheduled payments required to have been made during such period on
account of principal of Indebtedness of the Borrower or any of its
Subsidiaries (including payments in respect of the Loans and payments
required as a result of scheduled reductions of the Revolving Credit
Commitments)) and (iv) interest, dividend or preferred return payments
made with respect to any Preferred Stock, Preferred Limited Partner
Interests or Trust Preferred Securities.
"Consolidated Interest Expense": for any period, total interest
expense, both expensed and capitalized, of the Borrower and its
Subsidiaries for such period with respect to all outstanding Indebtedness
of the Borrower 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 to the extent such net costs are allocable to
such period in accordance with GAAP), determined on a consolidated basis
in accordance with GAAP.
"Consolidated Lease Expense": for any period, the aggregate amount
of fixed and contingent rentals payable by the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP,
for such period with respect to leases of real and personal property.
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries for such period in
accordance with GAAP.
11
"Consolidated Net Worth": at a particular date, all amounts which
would, in conformity with GAAP, be included on a consolidated balance
sheet of the Borrower and its Subsidiaries under stockholders' equity as
of such date, which shall include in any event Trust Preferred Securities
owned by the Borrower and its Subsidiaries.
"Consolidated Senior Adjusted EBITDA": for any period, Consolidated
Adjusted EBITDA for such period minus, to the extent included in
Consolidated Adjusted EBITDA, the portion of Consolidated Adjusted EBITDA
contributed by by Non-Recourse Properties for such period.
"Consolidated Senior Debt": at any particular date, all Consolidated
Total Debt other than Subordinated Debt and Non-Recourse Indebtedness as
of such date.
"Consolidated Senior Debt Ratio": at any particular date, the ratio
of (a) Consolidated Senior Debt on such date to (b) Consolidated Senior
Adjusted EBITDA for the four consecutive fiscal quarters ending on such
date.
"Consolidated Total Debt": at any particular date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries
at such date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Debt Ratio": at any particular date of any
determination thereof, the ratio of (a) Consolidated Total Debt on such
date to (b) Consolidated Adjusted EBITDA for the four full fiscal quarters
ending on such date.
"Consolidated Working Capital": at any particular date, the excess
of (a) the sum of all amounts (other than cash and Cash Equivalents) that
would, in accordance with GAAP, be set forth opposite the caption "total
current assets" (or any like caption) on a consolidated balance sheet of
the Borrower and its Subsidiaries at such date over (b) all amounts that
would, in accordance with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Borrower and its Subsidiaries on such date (excluding, to the
extent it would otherwise be included under current liabilities, any
short-term Consolidated Total Debt and the current portion of any
long-term Consolidated Total Debt).
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Deferred Maintenance": to the extent not completed on the Closing
Date, the deferred maintenance and repair in respect of the Mortgaged
Properties recommended to be completed on or before the first anniversary
of the Closing Date or the first
12
anniversary of the date of the Acquisition of such Mortgaged Property, as
applicable, and the improvements recommended to be made to the Mortgaged
Properties in furtherance of causing any Mortgaged Properties to comply
with the Americans with Disabilities Act, each as set forth in the
Engineering Reports delivered by the Borrower pursuant to Schedule IV and
Section 5.1 and actions required to remedy any adverse environmental
condition described in the environmental audits relating to the Properties
and delivered by the Borrower pursuant to Schedule IV and Section 5.1.
"Documentation Agent": as defined in the Preamble to this
Agreement.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"Engineer": each reputable engineer approved by the Administrative
Agent licensed as such in the state, province or other jurisdiction in
which the Property in question is located and experienced with real estate
of the same type as the Properties.
"Engineering Report": with respect to any Property, a written report
prepared by an Engineer, describing and analyzing the physical condition
of the improvements of such Property, describing any necessary or
recommended repairs, estimating the cost of such repairs and otherwise in
form and substance reasonably satisfactory to the Administrative Agent.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or
the environment, as now or may at any time hereafter be in effect.
"Environmental Permits": any and all permits, licenses,
registrations, notifications, exemptions and any other authorization
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
13
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined by the Administrative Agent to be the arithmetic mean (rounded
upward to the nearest 1/16th of 1%) of the offered rates for deposits in
Dollars with a term comparable to such Interest Period that appears on the
Telerate British Bankers Assoc. Interest Settlement Rates Page (as defined
below), on the second full Business Day preceding the first day of such
Interest Period; provided, however, that if there shall at any time no
longer exist a Telerate British Bankers Assoc. Interest Settlement Rates
Page, "Eurodollar Base Rate" shall mean, with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which the Administrative Agent is offered Dollar
deposits at or about 9:00 A.M., New York City time, two Business Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations
in respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar Loan
to be outstanding during such Interest Period. "Telerate British Bankers
Assoc. Interest Settlement Rates Page" shall mean the display designated
as Page 3750 on the Telerate System Incorporated Service (or such other
page as may replace such page on such service for the purpose of
displaying the rates at which Dollar deposits are offered by leading banks
in the London interbank deposit market).
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/16th of 1%):
Eurodollar Base Rate
1.00 - Eurocurrency Reserve Requirements.
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess
of (a) the sum, without duplication, of the following: (i) Consolidated
Net Income for such fiscal year, (ii) the net decrease, if any, in
Consolidated Working Capital during such fiscal year, (iii) to the extent
deducted in computing such Consolidated Net Income, non-cash interest
expense, depreciation and amortization for such fiscal year, (iv)
extraordinary non-cash losses during such fiscal year subtracted in the
determination of Consolidated Net Income for such fiscal year, (v)
deferred income tax expense of the Borrower for such fiscal year, (vi)
non-cash losses in connection with asset dispositions whether or not
constituting extraordinary losses, and (vii) non-cash ordinary losses over
(b) the sum, without duplication, of (i) the aggregate amount of
14
permitted cash Capital Expenditures made by the Borrower and its
Subsidiaries during such fiscal year (except to the extent such Capital
Expenditures were paid for with Net Proceeds), (ii) the net increase, if
any, in Consolidated Working Capital during such fiscal year, (iii) the
aggregate amount of payments of principal in respect of any Indebtedness
not prohibited hereunder during such fiscal year (other than (A)
prepayments of Revolving Credit Loans not accompanied by reductions of the
Commitments and (B) mandatory prepayments pursuant to Section 2.10(a) and
(b) and (c) payment made with Net Proceeds), (iv) deferred income tax
credit of the Borrower for such fiscal year, (v) extraordinary non-cash
gains during such fiscal year added in the determination of Consolidated
Net Income for such fiscal year, (vi) non-cash gains in connection with
asset dispositions whether or not constituting extraordinary gains and
(vii) non-cash ordinary gains.
"Excess Cash Flow Payment Date": July 15, 1998 and July 15 of each
year thereafter.
"Existing Credit Facilities": the credit facilities made available
to the Operating Companies by Bankers Trust Company, as agent for itself
and the other lender parties to that certain Senior Secured Revolving
Credit Agreement dated as of September 24, 1996, as amended.
"Existing Letter of Credit": as defined in Section 3.1.
"Existing Subordinated Debt": the Indebtedness incurred by CapStar I
and guaranteed by the Borrower and its Subsidiaries pursuant to that
certain Senior Subordinated Credit Agreement dated as of December 13,
1996, as amended, among CapStar I, the Borrower, Bankers Trust Company, as
agent for itself and the other lender parties thereto.
"FF&E": with respect to any Property, 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
equipment, heating, cooling, lighting, laundry, incinerating, loading,
swimming pool, landscaping, garage and power equipment, machinery,
engines, vehicles, fire prevention, refrigerating, ventilating and
communications apparatus, carts, dollies, elevators, escalators, kitchen
appliances, restaurant equipment, computers, reservation systems,
software, cash registers, switchboards, hotel cleaning equipment or any
other items of furniture, fixtures and equipment typically used in hotel
properties (including furniture, fixtures and equipment used in guest
rooms, lobbies, common areas, front desk, back office, bars, restaurants,
kitchens, laundries, concierge, ▇▇▇▇▇▇▇, recreation, amusement,
landscaping, parking and other areas of hotels) and any replacements of
all or any portion of any of the foregoing.
"Financing Lease": any lease (or other similar arrangement conveying
the right to use) of property, real or personal, the obligations of the
lessee in respect of which
15
are required in accordance with GAAP to be capitalized on a balance sheet
of the lessee.
"Franchise Agreement": each of the franchise agreements or license
agreements relating to any of the Properties, 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.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Ground Leases": each of the ground and underlying leases with
respect to the Properties.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement, substantively in the form of Exhibit C, to be executed and
delivered by the Borrower and its Subsidiaries (other than Non-Recourse
Subsidiaries), as the same may be amended, supplemented or otherwise
modified.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lesser of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation.
16
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other
than trade payables and accrued expenses incurred in the ordinary course
of such Person's business not more than 60 days past due), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person, (e) all obligations of such Person under
Financing Leases, (f) all obligations, contingent or otherwise, of such
Person as an account party under acceptance, letter of credit or similar
facilities (other than obligations in respect of undrawn letters of credit
securing trade payables or performance obligations incurred in the
ordinary course of business not more than 90 days past due or being
contested in good faith), (g) all obligations of such Person to purchase,
redeem, retire or otherwise acquire for value any Capital Stock of such
Person (provided that the obligation to purchase, redeem, retire or
otherwise acquire any Preferred Stock or Preferred Limited Partner
Interests shall only be included in Indebtedness to the extent such
obligation requires payment in cash as opposed to Common Stock), (h) all
obligations of the Operating Companies to make cash payments with respect
to the redemption of Preferred Stock or Preferred Limited Partner
Interests (but only to the extent such payments may be required to be made
during the applicable period), (i) all Guarantee Obligations of such
Person in respect of Indebtedness of Persons other than Loan Parties and
(j) all obligations of the kind referred to in clauses (a) through (h)
above secured by any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, whether or not such
Person has assumed or become liable for the payment of such obligation
(but if not so assumed, the amount of such obligation shall be deemed not
to exceed the fair market value of the property subject to the Lien);
provided, that obligations with respect to Trust Preferred Securities
shall not be included in Indebtedness.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Insurance Proceeds": all insurance proceeds, damages, claims and
rights of action and the right thereto under any insurance policies
relating to any portion of any Property.
"Intellectual Property": 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 business, 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.
17
"Interest Payment Date": (a) as to any Base Rate Loan, the first day
of each calendar month, (b) as to any Eurodollar Loan, the last day of the
Interest Period with respect thereto, provided, that if such Interest
Period is longer than 90 days, then on such 90th day and on the last day
of such Interest Period.
"Interest Period":
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment
is due on the Term Loans shall end on the Revolving Credit
Termination Date or such date of final payment, as the case may be;
and
(3) any Interest Period pertaining to a Eurodollar Loan 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 end on the last
Business Day of a calendar month.
"Interest Rate Agreement": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or
other similar agreement or arrangement.
"Interest Rate Agreement Obligations": the obligations of the
Borrower or any of its Subsidiaries to make payments to
counterparties under Interest Rate Agreements.
"IP License Agreements": as defined in Section 4.17.
18
"Issuing Lender": (a) with respect to the Existing Letter of Credit,
Bankers Trust Company, and (b) with respect to any Letters of Credit
issued after the Closing Date, BankBoston, N.A., in its capacity as issuer
of any Letter of Credit (other than the Existing Letter of Credit.
"Joint Venture": 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 of the Borrower, but excluding the Operating
Companies and any other Wholly owned Subsidiaries of the Borrower.
"L/C Commitment": $10,000,000.
"L/C Fee Payment Date": the first day of each April, July, October
and January.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Lenders
other than the Issuing Lender, excluding those Lenders with only a Term
Loan Commitment and no Revolving Credit Commitment .
"Lease": 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, restatement,
supplement, consolidation or other modification thereof, and every
Guarantee Obligation relating to the performance and observance of the
covenants, conditions and agreements to be performed and observed by the
other party thereto, and any Guarantee Obligation covering leasing
commissions.
"Letters of Credit": as defined in Section 3.1.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any priority or other security agreement of any kind
or nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement and any Financing Lease having
substantially the same economic effect as any of the foregoing).
19
"Liquor Licenses": collectively, the licenses set forth on Schedule
4.8(g) and each other 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.
"LLC Loan Parties": collectively, each Person that is a limited
liability company and is, or becomes, a Loan Party.
"Loan": any loan made by any Lender pursuant to this Agreement,
including, without limitation, Swing Line Loans.
"Loan Documents": this Agreement, any Notes, the Applications, the
Security Documents and the Cash Management Agreement.
"Loan Parties": the Borrower and each Subsidiary of the Borrower
which is a party to a Loan Document, including the Operating Companies.
"Local Accounts": collectively, the deposit accounts listed on
Schedule 4.32 as "Local Accounts" and any other deposit or other bank
account established with respect to one or more Properties into which
Receipts are deposited.
"Managed Properties": 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 Subsidiaries pursuant to the Management Agreements.
"Management Agreements": collectively, all hotel management
agreements and REIT Leases under which the Borrower or any of its
Subsidiaries is named or acts as manager, as any such agreement may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this or any of the other Loan Documents or
the rights or remedies of the Agents or the Lenders hereunder or
thereunder.
"Material Lease": each Lease either (i) demising in excess of 15,000
square feet of the improvements with respect to any Mortgaged Property or
(ii) generating in excess of 5.0% of the gross revenues with respect to
any Mortgaged Property.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any
20
Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Mortgages": the collective reference to the mortgages and deeds of
trust (including leasehold mortgages or deeds of trust) to be executed and
delivered by the Borrower or the appropriate Subsidiary, substantially in
the form of Exhibit D (with such changes therein as may be required to
reflect different laws and practices in the various jurisdictions in which
the Mortgages are to be recorded), as the same may be amended,
supplemented or otherwise modified from time to time.
"Mortgaged Property": collectively, the Qualifying 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 as listed on Schedule 4.8(a)(I) as to
which the Administrative Agent for the benefit of the Lenders shall be
granted a Lien pursuant to the Mortgages, and any such property that is
owned by the Borrower or any of its Subsidiaries (other than a
Non-Recourse Subsidiary) after the date hereof in accordance with the
terms of this Agreement and as to which the Administrative Agent for the
benefit of the Lenders shall be granted a Lien in accordance with Schedule
IV.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": the aggregate cash proceeds received by the Borrower
or any of its Subsidiaries in respect of:
(a) any incurrence by the Borrower or any of its Subsidiaries
of Indebtedness after the Closing Date (other than the Loans);
(b) any Asset Sale;
(c) any Recovery Event (except any proceeds from a Recovery
Event which are paid to the Lenders in accordance with Section
6.14);
(d) any cash payments received in respect of any principal
prepayments on any Pledged Notes; and
(e) any cash payments received in respect of promissory notes
delivered to the Borrower or such Subsidiary in respect of an Asset
Sale;
in each case net of (without duplication), (A) in the case of an Asset
Sale, the amount required to repay any Indebtedness (other than the Loans)
secured by a Lien on any assets of the Borrower or a Subsidiary of the
Borrower that are sold or otherwise disposed of in connection with such
Asset Sale, (B) the reasonable expenses (including legal fees and brokers'
and underwriters' commissions, lenders fees, credit enhancement fees,
accountants' fees, investment banking fees, survey costs, title
21
insurance premiums and other customary fees, in any case, paid to third
parties incurred in connection with such issuance, sale or event (provided
that amounts deducted from aggregate proceeds pursuant to this clause and
not actually paid by the Borrower or any of its Subsidiaries in
liquidation of such contingent liabilities shall be deemed to be Net
Proceeds and shall be applied in accordance with Section 2.10(a) at such
time as the Borrower shall reasonably determine that such amounts are not
required to pay contingent liabilities with respect to such sale, issuance
or event) and (C) any taxes reasonably attributable to such sale and
reasonably estimated by the Borrower or such Subsidiary to be actually
payable (after taking into account any available tax credits or deductions
and any tax sharing arrangements with any Person other than the Borrower
and its Subsidiaries).
"Non-Excluded Taxes": as defined in Section 2.19.
"Non-Recourse Documents": collectively, each Ground Lease relating
to a Non- Recourse Property, agreement, guaranty, instrument, promissory
note or other document entered into by any Person in connection with any
Non-Recourse Indebtedness, as each such Ground Lease, agreement, guaranty,
instrument or other document may be amended, restated, supplemented or
otherwise modified from time to time).
"Non-Recourse Indebtedness": as defined in Section 7.2 hereof.
"Non-Recourse Property": collectively, the Qualifying Hotel
Properties listed on Schedule 4.8(a)(II), and any such Qualifying Hotel
Property that is owned by a Non-Recourse Subsidiary after the date hereof
in accordance with the terms of this Agreement or any property owned by a
Joint Venture which is not subject to a Mortgage.
"Non-Recourse Subsidiary": collectively, each special purpose
Subsidiary of the Borrower that is organized to own a Non-Recourse
Property or to invest in a Joint Venture which owns a Non-Recourse
Property in accordance with Section 7.2, the legal and tax structure of
which includes features intended to make such Subsidiary "bankruptcy
remote".
"Notes": the collective reference to the Swing Line Note, the
Revolving Credit Notes and the Term Notes.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans, the Notes and all other obligations and liabilities
of the Borrower to the Agents or to any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may
22
arise under this Agreement, any other Loan Document, the Letters of
Credit, any Interest Rate Agreement entered into with any Co-Arranger,
Agent or Lender or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees, charges and disbursements of
counsel to the Agents) or otherwise.
"Officers' Certificate": as applied to any corporation, a
certificate executed on behalf of such corporation by a Responsible
Officer.
"Operating Companies": collectively, CapStar I and CapStar II; each
an "Operating Company".
"Participant": as defined in Section 10.6(b).
"Partnership Loan Parties": collectively, each Person that is a
partnership and is, or becomes, a Loan Party.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Acquisitions": the Acquisition by the Borrower or any of
its Subsidiaries of any assets pursuant to and in accordance with Schedule
IV and the terms hereof.
"Permitted Encumbrances": 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):
(a) 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 this Agreement;
(b) the Leases in existence on the Closing Date and any Leases
entered into thereafter in accordance with the requirements of the
Loan Documents;
(c) covenants, easements, rights-of-way, restrictions, minor
encroachments or other similar encumbrances incurred in the ordinary
course of business of the Borrower and its Subsidiaries (or any
predecessor owner) 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 the Borrower and its Subsidiaries and which are otherwise reasonably
acceptable to the Administrative Agent;
(d) Liens securing the Obligations;
23
(e) Liens that are bonded and thereby released of record in a manner
reasonably satisfactory to the Administrative Agent;
(f) rights of guests to occupy rooms and of tenants under Leases;
(g) all exceptions contained in any Title Policy (i) delivered on or
prior to the Closing Date or (ii) with respect to an Additional Mortgaged
Property or, (iii) if such exceptions reflect one or more Liens securing a
monetary obligation, a Non-Recourse Property, in each case as are
reasonably acceptable to the Administrative Agent;
(h) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(i) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements; and
(j) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, Joint Venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledged Notes", "Pledged Securities" and "Pledged Stock": each as
defined in the Guarantee and Collateral Agreement.
"Preferred Limited Partner Interests": limited partner interests in
the Operating Companies that require the issuer thereof to pay regularly
scheduled fixed distributions thereon which are not related to dividends
on the Common Stock and which by their terms may be converted into, or
exercised or redeemed for, cash or Common Stock.
"Preferred Stock": the preferred stock of the Borrower, including
all classes thereof.
24
"Properties": the collective reference to each Mortgaged Property
(including each Additional Mortgaged Property), each Non-Recourse Property
and each Managed Property.
"Property Information and Deliveries": with respect to any
Acquisition of any Additional Mortgaged Property or any Non-Recourse
Property pursuant to Schedule IV, the following information:
(a) operating statements in respect of such Property for the most
recently completed three calendar years and for the trailing twelve (12)
month period most recently completed, in each case, to the extent such
operating statements exist and can be readily obtained by any Loan Party
or any of its Subsidiaries;
(b) 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, in each case, to the extent such
financial statements exist and can be readily obtained by any Loan Party
or any of its Subsidiaries;
(c) to the extent any Renovation is then proposed for such Property,
a preliminary project plan and a project budget for such Property;
(d) (i) a comprehensive environmental audit with respect to such
Property dated not more than six (6) months prior to the closing date
(which shall include a Phase I environmental audit and, either if
recommended or suggested by an Approved Environmental Consultant a Phase
II environmental audit), conducted and certified by an Approved
Environmental Consultant (the Borrower shall certify as of the closing
date of such Acquisition that, as to any environmental audit delivered by
the Borrower prior to such closing date, to the Borrower's knowledge, the
information contained in such audit remains true, correct and complete),
(ii) a reliance letter from such Approved Environmental Consultant with
respect to each such environmental audit addressed to the Administrative
Agent and Lenders, together with a copy of such Approved Environmental
Consultant's errors and omissions policy, which reliance letter and such
insurance policy shall be reasonably satisfactory in form and substance to
the Administrative Agent and (iii) evidence reasonably satisfactory to the
Administrative Agent that all required approvals from all Governmental
Authorities having jurisdiction with respect to the environmental
condition of such Property, if any, have been obtained;
(e) (i) a written Engineering Report with respect to such Property
dated not more than six (6) months prior to the closing date of such
Acquisition that shall be prepared by an Engineer, and (ii) a reliance
letter from such Engineer with respect to each such Engineering Report
addressed to the Administrative Agent and Lenders, which letter shall be
in form and substance reasonably satisfactory to the Administrative Agent;
25
(f) copies of the related Acquisition Agreements, Non-Recourse
Documents and all other purchase agreements or other related agreements
entered into by any Loan Party or any of its Subsidiaries in connection
with such Acquisition;
(g) an Appraisal of such Property as of a date not earlier than six
(6) months before the proposed date of closing of such Acquisition and
copies of all other appraisals and market studies with respect to such
Property conducted thereafter to the extent such appraisals and market
studies exist and can be readily obtained by any Loan Party or any of its
Subsidiaries;
(h) a copy of the Borrower's Investment Committee Memorandum with
respect to such Property or other investment;
(i) evidence acceptable to the Administrative Agent with respect to
valid policies of insurance, required by this Agreement, any applicable
Non-Recourse Documents or any other Loan Document;
(j) to the extent applicable, each of the other documents and
satisfy each of the other conditions set forth in paragraphs (g), (h),
(j), (k), (l), (m), (n), (p) and (q) of Section 5.1, mutatis mutandis,
with respect to such Property;
(k) an Assumption Agreement pursuant to the Guarantee and Collateral
Agreement, executed by the applicable Subsidiary; provided that a
Non-Recourse Subsidiary shall not be required to become a party to the
Guarantee and Collateral Agreement if and so long as doing so would
violate the provisions of any Non- Recourse Indebtedness then owed by such
Non-Recourse Subsidiary or, in the case of a Joint Venture where the
Borrower (directly and indirectly) owns 20% or less of the equity
interests in such Joint Venture and the documents governing such Joint
Venture prohibit the same;
(l) if the Acquisition includes a leasehold interest which will be a
part of the Collateral, (i) a leasehold mortgage in substantially the form
and substance of the Mortgages and evidence reasonably satisfactory to the
Administrative Agent that all other documents have been executed and all
actions that the Administrative Agent reasonably requests taken in order
to create, perfect and maintain a valid and enforceable first priority
Lien in the leasehold interest of the applicable Loan Party or Subsidiary
and (ii) original counterparts of a landlord estoppel certificate and
agreement with respect to each of the applicable Ground Leases or REIT
Leases, reasonably satisfactory in form and substance to the
Administrative Agent, and duly executed and acknowledged by each lessor
under such Ground Lease or REIT Lease, provided that a Non-Recourse
Subsidiary shall not be required to execute such a leasehold mortgage if
and so long as doing so would violate the provisions of any Non-Recourse
Indebtedness then owed by such Non-Recourse Subsidiary; and
(m) payment pursuant to Section 10.5 of the expenses incurred by the
Administrative Agent in connection with the matters subject to Schedule
IV.
26
"Qualifying Hotel Properties": the collective reference to (i) full
service, upscale, national brand name, hospitality properties, (ii)
limited service hospitality properties operating only under the brand
names of Residence Inns, Courtyard by Marriott, Hampton Inns, Homewood
Suites and Hilton Gardens, (iii) commercial office buildings which are
part of a mixed-use property incorporating the foregoing hospitality
properties (provided that the Borrower or one of its Subsidiaries shall
also be the owner or lessee of the related hospitality property and such
office building shall only be a Mortgaged Property if the related
hospitality Property is also a Mortgaged Property) and (iv) the land on
which any of the foregoing properties are located and all improvements
thereon and all fixtures attached thereto and all personal property used
solely in connection therewith, in each case located in the United States
or Canada (subject to the proviso at the end of Section 7.9(c)).
"Receipts": collectively, all cash, Cash Equivalents, checks, notes,
drafts and any items of payment or collection received, by or on behalf of
the Borrower or any of its Subsidiaries, or by any officers, employees or
agents of the Borrower or any of its Subsidiaries or other Persons acting
for or in concert with the Borrower or such Subsidiary to make collections
on the Borrower's or such Subsidiary's behalf in connection with or in any
way relating to the Borrower or such Subsidiary or the operation of the
Borrower's or such Subsidiary's business.
"Recovery Event": any settlement of or payment in respect of a
property or casualty insurance claim or any Taking relating to any asset
of the Borrower or any of its Subsidiaries (including any Condemnation
Proceeds or Insurance Proceeds).
"Refunded Swing Line Loans": as defined in Section .
"Register": as defined in Section 10.6(e).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Notice": a written notice in the form of Exhibit E
executed by a Responsible Officer of the Borrower to the Administrative
Agent within 15 days after the end of the reinvestment period set forth in
Section 2.10(a) with respect to the event which yields Net Proceeds or
within fifteen days prior to the applicable Excess Cash Flow Payment Date,
as applicable, stating (i) that no Default or Event of Default has
occurred and is continuing, (ii) the events that gave rise to such Net
Proceeds and the amounts of such Net Proceeds or the calculation of Excess
Cash Flow, as applicable, (iii) that the Borrower (directly or indirectly
through another Subsidiary) has used all or the portion of the Net
Proceeds or Excess Cash Flow specified therein to restore or replace the
assets in respect of which an Asset Sale or Recovery Event yielding such
Net Proceeds occurred, to make Permitted Acquisitions, to repay
27
Subordinated Debt (in the event that Net Proceeds result from the issuance
of new Subordinated Debt) or to invest in the business of the Borrower and
its Subsidiaries, and (iv) if less than all of such Net Proceeds or Excess
Cash Flow shall have been reinvested as provided in Section 2.10(a) or
Section 2.10(b), as applicable, the amount due to be paid by the Borrower
in accordance with Section 2.10(a) and 2.10(b), as the case may be.
"REIT Leases": the collective reference to the leases, if any,
entered into by the Borrower or any of its Subsidiaries wherein a real
estate investment trust which owns a Qualifying Hotel Property, as lessor,
leases such Property to the Borrower or such Subsidiary, as lessee, under
the terms of which it is reasonably anticipated that the Borrower or such
Subsidiary will receive net income from the Property substantially
equivalent to a reasonable management fee.
"Renovation": the expansion, rebuilding, repair, restoration,
refurbishment, fixturing and equipping of the improvements at a Property.
The term "Renovate" used as a verb has a corresponding meaning.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period
is waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss.
2615.
"Required Lenders": at any time, Lenders the Commitment Percentages
of which aggregate at least 60%.
"Required Revolving Credit Lenders": at any date, Lenders whose
Revolving Credit Commitment Percentages aggregate more than 60%.
"Required Term Loan Lenders": at any date, Lenders whose Term Loan
Commitment Percentages aggregate more than 60%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer of Borrower, the
president of the Borrower, the senior vice president for development of
Borrower or, with respect to financial matters, the chief financial
officer of the Borrower or the vice president- finance of the Borrower.
28
"Restoration": 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 corresponding meaning.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans (including Revolving
Credit Loans used to pay Refunded Swing Line Loans) to and/or issue or
participate in Letters of Credit issued on behalf of the Borrower
hereunder in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading "Revolving Credit Commitment" opposite
such Lender's name on Schedule I, as the same may be changed from time to
time pursuant to the terms hereof and as the same shall be reduced
pursuant to Sections 2.1, 2.6 and 2.10.
"Revolving Credit Commitment Percentage": as to any Revolving Credit
Lender at any time, the percentage which such Lender's Revolving Credit
Commitment then constitutes of the aggregate Revolving Credit Commitments
or, at any time after the Revolving Credit Commitments shall have expired
or terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Credit Loans (including such Lender's Revolving Credit
Commitment Percentage of the aggregate unpaid principal amount at such
time of all Swing Line Loans and L/C Obligations) then outstanding
constitutes of the aggregate principal amount of the Revolving Credit
Loans (and Swing Line Loans and L/C Obligations) then outstanding.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to but not including the Revolving Credit Termination
Date or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"Revolving Credit Lender": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.1.
"Revolving Credit Note": as defined in Section 2.8(e).
"Revolving Credit Termination Date": June 30, 2002.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages, the Canadian Security Documents, the
Cash Management Agreement and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any asset or
assets of any Person to secure the obligations and liabilities of the
Borrower hereunder and under any of the other Loan Documents or to secure
any guarantee of any such obligations and liabilities.
29
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt": (a) until the Closing Date, the Existing
Subordinated Debt and (b) thereafter, any unsecured Indebtedness of the
Borrower no part of the principal of which is required to be paid (whether
by way of mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date that is 91 days following the
Term Loan Termination Date; the payment of the principal of and interest
on which and other obligations of the Borrower in respect thereof are
subordinated to the prior payment in full of the principal of and interest
(including post-petition interest) on the Loans and all other obligations
and liabilities of the Borrower to the Administrative Agent and the
Lenders hereunder on terms and conditions reasonably approved in writing
by the Required Lenders; and the holder of such Subordinated Debt enters
into an intercreditor agreement reasonably satisfactory in form and
substance to the Required Lenders (as evidenced by their prior written
approval thereof).
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person or which is
consolidated with such Person in accordance with GAAP. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Survey": with respect to any Property, a survey map prepared by a
surveyor licensed in the state in which such Property is located,
reasonably acceptable to the Administrative Agent, which shall (i) contain
the legal description of such Property, (ii) conform, and be certified by
such surveyor to the Administrative Agent and the Lenders and the Title
Company as conforming, to the Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys for urban survey class as adopted by ALTA and
American Congress on Surveying & Mapping (1992 version), and (iii) show,
to the extent practicable, all matters described in "Table A/Optional
Survey Responsibilities and Specifications" in such Minimum Standard
Detail Requirements; provided, however, that the survey need not satisfy
the requirements of the preceding clauses (ii) and (iii) if the Title
Company has eliminated the survey exception from the Title Policies and
all other exceptions to the Title Policies based upon such survey are
acceptable to the Administrative Agent in its sole discretion. Any such
survey shall contain a certification by such surveyor to the
Administrative Agent and the Lenders stating whether the Property is
located in an area having special flood hazards as identified by the
Federal Emergency Management Agency and, without limiting the generality
of the foregoing, there shall be surveyed and shown on such maps, plats or
surveys the following: (a) the locations on such sites of all the
buildings, structures
30
and other improvements and the established building setback lines; (b) the
lines of streets abutting the sites and width thereof; (c) all access and
other easements appurtenant to the sites or necessary or desirable to use
the sites; (d) all roadways, paths, driveways, easements, encroachments
and overhanging projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (e) any encroachments on any adjoining
property by the building structures and improvements on the sites; and (f)
if the site is described as being on a filed map, a legend relating the
survey to said map.
"Swing Line Commitment": the Swing Line Lender's obligation to make
Swing Line Loans pursuant to Section in an aggregate principal amount not
exceeding $10,000,000 at any time outstanding.
"Swing Line Lender": the Administrative Agent, in its capacity as
lender of the Swing Line Loans.
"Swing Line Loans": as defined in Section 2.7(a).
"Swing Line Note": as defined in Section 2.8(e).
"Syndication Agent": as defined in the Preamble hereto.
"Taking": 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.
"Term Loan": as defined in Section 2.3.
"Term Loan Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading
"Term Loan Commitment" opposite such Lender's name on Schedule I.
"Term Loan Commitment Percentage": as to any Term Loan Lender at any
time, the percentage which such Lender's Term Loan Commitment then
constitutes of the aggregate Term Loan Commitments or, at any time after
the Term Loan Commitment Period, the percentage which the aggregate
principal amount of such Lender's Term Loans then outstanding constitutes
of the aggregate principal amount of the Term Loans then outstanding.
31
"Term Loan Commitment Period": the period from and including the
Closing Date to but not including the Term Loan Extended Borrowing Date or
such earlier date on which the Term Loan Commitments shall terminate as
provided herein.
"Term Loan Extended Borrowing Date": December 31, 1997.
"Term Loan Lender": each Lender which has a Term Loan Commitment or
which has made a Term Loan.
"Term Loan Termination Date": June 30, 2004.
"Term Note": as defined in Section 2.8(e).
"Title Company": such title company as may be selected by the
Borrower and approved by the Administrative Agent in its reasonable
discretion.
"Title Policies": with respect to the Mortgaged Properties, the paid
mortgagee policies of title insurance in the form of a 1970 ALTA loan
policy (Amended 10/17/70) (or other form of loan policy available in the
applicable state and acceptable to the Administrative Agent), or marked up
unconditional binder for such insurance.
"Tranche": the collective reference to Revolving Credit Loans or
Term Loans, as the case may be, which are Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Transferee": as defined in Section 10.6(g).
"Trust Preferred Securities": preferred, undivided beneficial
interests in the assets of a statutory business trust, subject to the
following: (i) such trust is formed by the Borrower under the laws of the
State of Delaware, (ii) the Borrower owns all of the common undivided
beneficial interests in such trust, (iii) such trust exists for the
exclusive purpose of issuing such preferred and common interests, (iv) the
Borrower has the right pursuant to the terms of such preferred interests
to postpone the dividends payable thereunder for a period ending not
earlier than the Term Loan Termination Date and (v) such Trust Preferred
Securities are treated as mandatorily redeemable preferred stock under
GAAP.
"Type": as to any Loan, its nature as an Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
32
"Uniform System": 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.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which is owned by such Person directly and/or through
other Wholly Owned Subsidiaries, provided, however, that the Operating
Companies and the wholly owned Subsidiaries of the Operating Companies
shall be deemed to be Wholly Owned Subsidiaries of the Borrower
notwithstanding that certain limited partnership interests in the
Operating Companies are not owned, directly or indirectly, by the
Borrower.
"Working Capital Reserve": at any time, the positive difference, if
any, of (i) the undisbursed portion of budgets for major Renovations of
Properties which the Borrower is required to deliver pursuant to Section
6.15(a), for Deferred Maintenance and for work required pursuant to
franchisor property improvement programs pursuant to any Franchise
Agreement (excluding normal recurring expenses of repairing and replacing
FF&E), in each case that have not been completed as of the applicable
Borrowing Date, over (ii) the cash on hand of the Borrower and its
Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding not exceeding such Revolving Credit Lender's
Revolving Credit Commitment; provided, that after giving effect to each
Revolving Credit Loan each Revolving Credit Lender's Available Revolving Credit
Commitment will be not less than zero. During the Revolving Credit
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Commitment Period the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.11, provided that no Revolving Credit Loan
shall be made as a Eurodollar Loan after the day that is one month prior to the
Revolving Credit Termination Date.
(c) The Revolving Credit Commitments shall be reduced (and each
Revolving Credit Lender's Revolving Credit Commitment shall be ratably reduced)
on the first day of October, 2000, January, 2001, April, 2001 and July, 2001 in
equal installments of $12,500,000 such that the Revolving Credit Commitments
shall be no greater than $300,000,000 on July 1, 2001.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Administrative Agent an irrevocable Borrowing Notice (which notice must be
received by the Administrative Agent prior to 10:00 A.M., New York City time,
(a) three Business Days prior to the requested Borrowing Date, if all or any
part of the requested Revolving Credit Loans are to be initially Eurodollar
Loans or (b) one Business Day prior to the requested Borrowing Date, otherwise),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, Base Rate Loans or a
combination thereof, (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the amounts of such Revolving Credit Loan and the respective
lengths of the initial Interest Periods therefor and (v) the purpose of such
borrowing. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $3,000,000 or a whole
multiple of $100,000 thereof (or, if the then Available Revolving Credit
Commitments are less than $100,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $3,000,000 or a whole multiple of $100,000 in excess thereof,
subject to the provisions of Section 2.12, except that any borrowing of Base
Rate Loans under the Revolving Credit Commitments to be used solely to pay a
like amount of Swing Line Loans may be in the aggregate principal amount of such
Swing Line Loans. Upon receipt of any such Borrowing Notice from the Borrower,
the Administrative Agent shall promptly notify each Lender thereof. Each
Revolving Credit Lender will make the amount of its Revolving Credit Commitment
Percentage of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent specified in
Section 10.2 prior to 11:00 A.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Revolving Credit Lenders and in like funds as received by the
Administrative Agent.
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2.3 Term Loans. (a) Subject to the terms and conditions hereof, each
Term Loan Lender severally agrees to make term loans ("Term Loans") to the
Borrower from time to time during the Term Loan Commitment Period in an
aggregate principal amount not to exceed the amount of such Lender's Term Loan
Commitment. During the Term Loan Commitment Period the Borrower may use the Term
Loan Commitments by borrowing in accordance with the terms and conditions
hereof.
(b) The Term Loans may from time to time be (i) Eurodollar Loans,
(ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.4 and 2.11.
2.4 Procedure for Term Loan Borrowing. The Borrower may borrow under
the Term Loan Commitments during the Term Loan Commitment Period on any Business
Day, provided, that the Borrower shall give the Administrative Agent an
irrevocable Borrowing Notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Term Loans are to be initially Eurodollar Loans or (b) one Business Day prior to
the requested Borrowing Date, otherwise), specifying (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to
be of Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the amount of such
Eurodollar Loans and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Term Loan Commitments shall be in an amount
equal to $10,000,000 or a whole multiple of $100,000 in excess thereof (or, if
the then Available Term Loan Commitments are less than $10,000,000, such lesser
amount), subject to the provisions of Section 2.12; provided, that the Borrower
shall draw a minimum of $50,000,000 of Term Loans on the Closing Date and the
Borrower may not make more than five (5) drawings thereafter under the Term Loan
Commitment. Upon receipt of any such Borrowing Notice from the Borrower, the
Administrative Agent shall promptly notify each Term Loan Lender thereof. Each
Term Loan Lender will make the amount of its Term Loan Commitment Percentage of
each borrowing available to the Administrative Agent for the account of the
Borrower at the office of the Administrative Agent specified in Section 10.2
prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the Term
Loan Lenders and in like funds as received by the Administrative Agent. Any Term
Loan Commitments outstanding on the Term Loan Extended Borrowing Date shall be
cancelled on such date.
2.5 Commitment Fee. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee for the period from and
including the first day of the Revolving Credit Commitment Period to the
Revolving Credit Termination Date, computed at the rate of 1/4th of 1% per annum
on the average daily amount of the Available Revolving Credit Commitment and
Available Term Loan Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears within one
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day after the Borrower receives an invoice therefor from the Administrative
Agent and on the Revolving Credit Termination Date or such earlier date on which
all of the Commitments shall terminate as provided herein.
2.6 Termination or Reduction of Commitments. The Borrower shall have
the right, upon not less than five Business Days' notice to the Administrative
Agent, to terminate any of the Commitments or, from time to time, to reduce the
amount of any of the Commitments, provided, that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans and the Swing Line Loans made on the
effective date thereof, the aggregate principal amount of the Revolving Credit
Loans and the Swing Line Loans then outstanding, when added to the then
outstanding L/C Obligations, would exceed the Revolving Credit Commitments then
in effect. Any such reduction shall be in an amount equal to $5,000,000 or a
whole multiple thereof and shall reduce permanently the applicable Commitments
then in effect, and, provided, further, that the aggregate Revolving Credit
Commitments may not be reduced below $100,000,000 unless they are being
terminated and the aggregate Term Loan Commitments may not be reduced below
$75,000,000 unless they are being terminated. Each such reduction shall reduce
the Commitments of each Lender pro rata in accordance with its Revolving Credit
Commitment Percentage or its Term Loan Commitment Percentage, as applicable.
2.7 Swing Line Commitment. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make swing line loans ("Swing Line
Loans") to the Borrower from time to time during the Revolving Credit Commitment
Period in an aggregate principal amount at any one time outstanding not to
exceed the amount of the Swing Line Commitment, provided, that in no event shall
any Swing Line Loans be made if the aggregate amount of the Swing Line Loans to
be made would, after giving effect to the use of proceeds thereof, exceed the
aggregate Available Revolving Credit Commitments. Amounts borrowed by the
Borrower under this Section may be repaid and, through but excluding the
Revolving Credit Termination Date, reborrowed. All Swing Line Loans shall be
made as Base Rate Loans and shall not be entitled to be converted into
Eurodollar Loans. The Borrower shall give the Swing Line Lender an irrevocable
Borrowing Notice (which notice must be received by the Swing Line Lender prior
to 3:00 p.m., New York City time) on the requested Borrowing Date specifying the
amount of each requested Swing Line Loan, which shall be in an aggregate minimum
amount of $500,000 or a whole multiple of $100,000 in excess thereof. The
proceeds of each Swing Line Loan will be made available by the Swing Line Lender
to the Borrower by crediting the account of the Borrower at the office of the
Swing Line Lender with such proceeds. The proceeds of Swing Line Loans may be
used solely for the purposes referred to in Section 4.24.
(b) The Swing Line Lender at any time in its sole and absolute
discretion may, and on the last Business Day of each month shall, on behalf of
the Borrower (which hereby irrevocably directs the Swing Line Lender to act on
its behalf) request each Revolving Credit Lender, including the Swing Line
Lender, to make a Revolving Credit Loan in an amount equal to such Lender's
Revolving Credit Commitment Percentage of the amount of the Swing Line Loans
(the "Refunded Swing Line Loans") outstanding on the date such notice is given.
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Unless any of the events described in clause (f) of Section 8 shall have
occurred (in which event the procedures of Section shall apply) each Lender
shall make the proceeds of its Revolving Credit Loan available to the Swing Line
Lender for the account of the Swing Line Lender at the office of the Swing Line
Lender prior to 12:00 noon (New York City time) in funds immediately available
on the Business Day next succeeding the date such notice is given. The proceeds
of such Revolving Credit Loans shall be immediately applied to repay the
Refunded Swing Line Loans.
(c) If prior to the making of a Revolving Credit Loan pursuant to
Section one of the events described in clause (f) of Section 8 shall have
occurred, each Lender
will, on the date such Loan was to have been made, purchase an undivided
participating interest in the Refunded Swing Line Loans in an amount equal to
its Revolving Credit Commitment Percentage of such Refunded Swing Line Loans.
Each Revolving Credit Lender will immediately transfer to the Swing Line Lender
in immediately available funds, the amount of its participation.
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Revolving Credit Lender's participating
interest in a Refunded Swing Line Loan, the Swing Line Lender receives any
payment on account thereof, the Swing Line Lender will distribute to such
Revolving Credit Lender its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Revolving Credit Lender's participating interest was outstanding and
funded) in like funds as received; provided, however, that in the event that
such payment received by the Swing Line Lender is required to be returned, such
Revolving Credit Lender will return to the Swing Line Lender any portion thereof
previously distributed by the Swing Line Lender to it in like funds as such
payment is required to be returned by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make Revolving
Credit Loans to repay Refunded Swing Line Loans pursuant to Section 2.7(b)
and/or to purchase participating interests pursuant to Section shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of an Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of the Borrower; (iv) any breach of this Agreement by the Borrower or
any other Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
(f) The priority of the Liens created by the Security Documents with
respect to the Revolving Credit Loans, the Term Loans, the L/C Obligations and
the Swing Line Loans shall be parri passu.
2.8 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the applicable Lenders (i) the then unpaid principal amount of each Revolving
Credit Loan of such
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Revolving Credit Lender on the last day of the Revolving Credit Commitment
Period (or such earlier date on which the Revolving Credit Loans become due and
payable pursuant to Section 8), (ii) the principal amount of the Term Loans, in
26 consecutive quarterly installments, each of which installments shall be an
aggregate principal amount for all Lenders equal to the amount for such
installment payment date set forth on the amortization schedule set forth on
Schedule III, commencing on March 31, 1998 and on the last day of each June,
September, December and March thereafter (or on such earlier date on which the
then unpaid principal amount of the Term Loans become due and payable pursuant
to Section 8) and (iii) in the case of the Swing Line Lender, the then unpaid
principal amount of each Swing Line Loan on the Revolving Credit Termination
Date. The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
Section 2.13.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
Section 10.6(e), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Revolving Credit Loan, Term Loan and Swing Line
Loan made hereunder and any Note evidencing such Loan, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder, (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof and (iv) the stated
amount of, and beneficiary under, any Letters of Credit which are issued and
outstanding.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender (i) a
promissory note of the Borrower evidencing the Revolving Credit Loans of such
Lender, substantially in the form of Exhibit F with appropriate insertions as to
date and principal amount (a "Revolving Credit Note"), (ii) in the case of the
Swing Line Lender, a promissory note of the Borrower evidencing the Swing Line
Loans of the Swing Line Lender, substantially in the form of Exhibit G with
appropriate insertions as to date and principal amount (as amended, supplemented
or otherwise modified from time to time, the "Swing Line Note ") and/or (iii) a
promissory note of the Borrower evidencing the Term Loan of such Lender,
substantially in
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the form of Exhibit H with appropriate insertions as to date and principal
amount (a "Term Note").
2.9 Optional Prepayments. The Borrower may on the last day of any
Interest Period with respect thereto, in the case of Eurodollar Loans (or,
subject to Section 2.20, any other Business Day), or at any time and from time
to time, in the case of Base Rate Loans, prepay the Loans, in whole or in part,
without premium or penalty, upon at least three Business Days' irrevocable
notice to the Administrative Agent, or, in the case solely of Swing Line Loans,
upon notice by 12:00 noon, New York City time on the same Business Day to the
Swing Line Lender, specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans (and which Tranches thereof), Base Rate Loans
or a combination thereof, and whether of Revolving Credit Loans (and Swing Line
Loans, if any), Term Loans, or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice the
Administrative Agent shall promptly notify each affected Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to Section 2.20 and, in the case of prepayments of the Term Loans only,
accrued interest to such date on the amount prepaid. Partial prepayments of the
Term Loans shall be applied to the remaining installments, pro rata according to
the respective outstanding principal amounts thereof. Notwithstanding the
foregoing, each Term Loan Lender shall have the right to refuse up to 50% of the
amount of any prepayment pursuant to this Section 2.9 allocable to such Lender's
Term Loans, and the amount so refused shall be retained by the Borrower. Amounts
prepaid on account of the Term Loans may not be reborrowed. Prepayments of
Revolving Credit Loans and Swing Line Loans shall be applied first to all
outstanding Swing Line Loans and second to Revolving Credit Loans. Partial
prepayments of Revolving Credit Loans or Term Loans under this Section 2.9 shall
be in an aggregate principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof; partial prepayments of Swing Line Loans shall be
in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof. Any notice of prepayments as provided above shall be
substantially in the form of Exhibit I.
2.10 Mandatory Prepayments and Reduction of Commitment.
(a) If the Borrower or any of its Subsidiaries shall receive any Net
Proceeds after the Closing Date, 100% of such Net Proceeds shall be applied on
the date such Net Proceeds are received toward the prepayment of the Term Loans
and the permanent reduction of the Revolving Credit Commitments as set forth in
paragraph (c) of this Section 2.10. Notwithstanding the foregoing sentence, (i)
no prepayment and reduction of the Term Loans or the Revolving Credit
Commitments shall be required in respect of the first $2,000,000 in Net Proceeds
received in any fiscal year (excluding any Net Proceeds described in clause (ii)
of this sentence) and (ii) if no Default or Event of Default shall have occurred
and be continuing, to the extent that the Net Proceeds are used by the Borrower
and/or its Subsidiaries to make Permitted Acquisitions, to pay existing
Subordinated Debt (in the case of Net Proceeds resulting from the issuance of
new Subordinated Debt) or other investments in the business of the Borrower and
its Subsidiaries permitted hereunder within (i) six months from the date of any
Asset Sale or Recovery Event or (ii) one year from the date of any
39
incurrence of Indebtedness, as certified by a Responsible Officer of
the Borrower pursuant to a Reinvestment Notice delivered to with respect to such
Net Proceeds in accordance with the definition of "Reinvestment Notice", such
Net Proceeds shall not be applied toward the prepayment of Term Loans and the
reduction of the Revolving Credit Commitments as provided in Section 2.10(c).
(b) If there is Excess Cash Flow for any fiscal year of the Borrower
(including 1997), 50% of such Excess Cash Flow shall be applied toward the
prepayment of the Term Loans and the permanent reduction of the Revolving Credit
Commitments (as provided in paragraph (c) of this Section 2.10) on the Excess
Cash Flow Payment Date for such fiscal year; provided, that if no Default or
Event of Default shall have occurred and be continuing, to the extent that such
Excess Cash Flow has been used by the Borrower and/or its Subsidiaries to make
Permitted Acquisitions or other investments in the business of the Borrower and
its Subsidiaries permitted hereunder during or, without duplication, within six
months after the end of such fiscal year, as certified by a Responsible Officer
of the Borrower pursuant to a Reinvestment Notice delivered to with respect to
such Excess Cash Flow in accordance with the definition of "Reinvestment
Notice", such Excess Cash Flow shall not be applied toward the prepayment of
Term Loans and the reduction of the Revolving Credit Commitments as provided in
Section 2.10(c).
(c) Prepayments made pursuant to Sections 2.10 (a) or (b) shall be
applied by the Borrower, subject to the next sentence, first, to the prepayment
of the Term Loans (pro rata according to the outstanding principal amounts
thereof held by the respective Term Loan Lenders) and, second, to reduce
permanently the Revolving Credit Commitments (pro rata according to the amounts
of the Revolving Credit Commitments of the respective Revolving Credit Lenders).
Notwithstanding the foregoing, each Term Loan Lender shall have the right to
refuse up to 50% of the amount of any prepayment pursuant to this Section 2.10
allocable to such Lender's Term Loans, and the amount so refused shall be
retained by the Borrower.
(d) If after giving effect to any reduction of the Revolving Credit
Commitments under Sections 2.1, 2.6 or 2.10 or an increase in the Working
Capital Reserve the Available Revolving Credit Commitments shall be less than
zero, the Borrower shall immediately make a prepayment of first, Swing Line
Loans and second, Revolving Credit Loans in an amount equal to such negative
amount, provided, that if the aggregate principal amount of Revolving Credit
Loans and Swing Line Loans then outstanding is less than such negative amount
(because L/C Obligations constitute a portion thereof), the Borrower shall, to
the extent of the balance of such negative amount, replace outstanding Letters
of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Administrative Agent. Amounts on
deposit in the cash collateral account shall be invested as directed by the
Borrower subject to the approval of the Administrative Agent, which approval
shall not be unreasonably withheld. Amounts prepaid in respect of the Term Loans
shall be applied to installments thereof pro rata according to the outstanding
principal amounts thereof. Amounts prepaid on account of the Term Loans may not
be reborrowed.
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(e) The Borrower shall make the mandatory principal payments
required pursuant to Section 2.10 (a) and Section 2.10(b) within one Business
Day after the Borrower delivers a Reinvestment Notice which specifies that a
principal payment is required pursuant to either of such Sections. Each
prepayment of the Loans under this Section 2.10 shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid. Any payment or
prepayment of Term Loans or Revolving Credit Loans pursuant to Section 2.8(a) or
this Section 2.10 shall be applied, first, to any such Base Rate Loans then
outstanding and the balance of such prepayment, if any, to any such Eurodollar
Loans then outstanding; provided, that prepayments of Eurodollar Loans, if not
on the last day of the Interest Period with respect thereto, shall, at the
Borrower's option, be prepaid subject to the provisions of Section 2.20, or the
amount of such prepayment (after application to any Base Rate Loans) shall be
deposited with the Administrative Agent as cash collateral for the Loans on
terms reasonably satisfactory to the Administrative Agent and thereafter shall
be applied in the order of the Interest Periods next ending most closely to the
date such prepayment is required to be made and on the last day of each such
Interest Period. After such application, unless an Event of Default shall have
occurred and be continuing, any remaining interest earned on such cash
collateral shall be paid to the Borrower.
2.11 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided, that any such conversion of Eurodollar Loans may only
be made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans (other than Swing Line
Loans) to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election. Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof. All or any part
of outstanding Eurodollar Loans or Base Rate Loans (other than Swing Line Loans)
may be converted as provided herein, provided, that (i) no Loan may be converted
into a Eurodollar Loan when any Event of Default has occurred and is continuing
and the Required Term Loan Lenders or the Required Revolving Credit Lenders, as
applicable, have determined that such a conversion is not appropriate and (ii)
no Loan may be converted into a Eurodollar Loan after the date that is one month
prior to the Revolving Credit Termination Date (in the case of conversions of
Revolving Credit Loans) or the date of the final installment of principal of the
Term Loans (in the case of conversions of Term Loans).
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided,
that no Eurodollar Loan may be continued as such (i) when any Event of Default
has occurred and is continuing and the Required Term Loan Lenders or the
Required Revolving Credit Lenders, as applicable, have determined that such a
continuation is not appropriate or (ii) after the date that is one month or 30
days prior to, respectively, the Revolving Credit Termination Date (in the case
of continuations of Revolving Credit Loans)
41
or the date of the final installment of principal of the Term Loans (in the case
of continuations of Term Loans) and provided, further, that if the Borrower
shall fail to give such notice or if such continuation is not permitted such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period.
(c) All notices of conversions and continuations as set forth above
shall be in substantially in the form of Exhibit J.
2.12 Minimum Amounts and Maximum Number of Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto there shall be no more than seven
(7) Eurodollar Tranches outstanding at any time.
2.13 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) If, during the thirty (30) day period following the Closing
Date, any Loans are outstanding as Eurodollar Loans, and at such time one or
more of the Lenders are selling a portion of such Eurodollar Loans to an
Assignee or Participant, the Borrower shall pay to the assigning Lender at the
time of such sale the amounts required to be paid pursuant to Section 2.20
assuming, for purposes of such Section 2.20, that the principal amount of
Eurodollar Loans being sold was a prepayment by the Borrower of such Eurodollar
Loan in such amount.
(d) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 3%
or (y) in the case of any such overdue interest, commitment fee or other amount,
the rate described in paragraph (b) of this Section plus 3%, in each case from
the date of such non-payment until such overdue principal, interest, commitment
fee or other amount is paid in full (as well after as before judgment).
(e) Interest shall be payable in arrears on each Interest Payment
Date, provided, that interest accruing pursuant to paragraph (d) of this Section
shall be payable from time to time on demand.
2.14 Computation of Interest and Fees. (a) Commitment fees and,
whenever it is calculated on the basis of the Prime Rate, interest shall be
calculated on the basis of a 365-
42
(or 366-, as the case may be) day year for the actual days elapsed; and,
otherwise, interest shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Administrative Agent shall promptly notify the Borrower
and the Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. Any change in the
interest rate on a Loan resulting from a change in the Applicable Margin shall
become effective as of the opening of business on the applicable Adjustment
Date. The Administrative Agent shall promptly notify the Borrower and the
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.13(a).
2.15 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost
to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar Loans
shall be converted to or continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans that were to have been continued as such on such first day
shall be converted on such day to Base Rate Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made
or continued as such, nor shall the Borrower have the right to convert Loans to
Eurodollar Loans.
2.16 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder (other than Swing Line Loans), each payment
by the Borrower on account of any commitment fee hereunder and any reduction of
the Commitments of the Lenders shall be made pro rata according to the
respective Revolving Credit Commitment Percentages or Term Loan Commitment
Percentages, as the case may be, of the Lenders.
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Except as provided in Sections 2.9 and 2.10, each payment (including each
prepayment) by the Borrower on account of principal of and interest on the Loans
(other than Swing Line Loans) shall be made pro rata according to the respective
outstanding principal amounts of, and interest on, the respective Revolving
Credit Loans or Term Loans, as the case may be, of the Lenders then due and
owing to such Lenders. All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without set off or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Administrative Agent's office
specified in Section 10.2, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its Revolving Credit Commitment Percentage or Term
Loan Commitment Percentage, as the case may be, of such borrowing available to
the Administrative Agent, the Administrative Agent may assume that such Lender
is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted to
any Lender with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error. If such Lender's Revolving Credit
Commitment Percentage or Term Loan Commitment Percentage, as the case may be, of
such borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Revolving Credit Loans or Term Loans
hereunder, as applicable, on demand, from the Borrower. If any Lender fails to
fund any Loan or make any extension of credit required to be funded or made by
such Lender pursuant to the express terms of this Agreement (a "Defaulting
Lender") and remains a Defaulting Lender for 5 or more consecutive Business
Days, the Borrower shall have the right (in addition to all other rights that
the Borrower may have with respect to such Defaulting Lender) for a period of 45
days following the date of such Lender becomes a Defaulting Lender to request
that such Defaulting Lender assign its Commitment and outstanding Obligations to
a proposed Assignee designated by the Borrower and reasonably satisfactory to
Administrative Agent and the Arranger and, within 10 Business Days of such
request, such Defaulting Lender shall, upon payment in cash to such Defaulting
Lender of all Obligations owing to such Lender and at the Borrower's expense,
promptly take all actions reasonably necessary to consummate such assignment
(including the execution of an Assignment and Acceptance); provided that at any
time prior to the consummation of any such assignment, the Administrative Agent,
with the consent of the Arranger, may (but shall
44
have no obligation to) designate a proposed Assignee in substitution for the
proposed Assignee designated by the Borrower, in which event, the applicable
Defaulting Lender shall, upon payment in cash to such Defaulting Lender of all
Obligations owing to such Lender's and at the Borrower's expense, promptly take
all actions reasonably necessary to consummate the proposed assignment
(including the execution of an Assignment and Acceptance). The Borrower shall
offer the Commitment of such Defaulting Lender to other Lenders (other than
Defaulting Lenders) before offering such Commitment for assignment to any Person
that is not a Lender.
(c) Following the occurrence of an Event of Default, the proceeds of
any Collateral or other monies from the enforcement of any of the Loan Documents
that are received by the Administrative Agent shall, after payment of the costs
and expenses of collection and enforcement, be paid to the Term Loan Lenders and
the Revolving Credit Lenders, pro rata, according to the respective Aggregate
Outstanding Revolving Extensions of Credit of the Revolving Credit Lenders and
the Aggregate Outstanding Term Loan Extensions of Credit of the Term Loan
Lenders and, thereafter to the payment of the other Obligations. Such payments
made to the Term Loan Lenders shall be paid to the Term Loan Lenders pro rata
according to the respective Aggregate Outstanding Term Loan Extensions of Credit
of each Term Loan Lender and such payments made to the Revolving Credit Lenders
shall be paid to the Revolving Credit Lenders pro rata according to the
respective Aggregate Outstanding Revolving Credit Extensions of Credit of each
Revolving Credit Lender.
2.17 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.20.
2.18 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever,
or change the basis of taxation of payments to such Lender with respect to
this Agreement, any Note or any Eurodollar Loan made by it or any Letter
of Credit issued or participated in by it (except for Non-Excluded Taxes
covered by Section 2.19 and changes in the rate of tax on the overall net
income of such Lender);
45
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition (except with
respect to Non-Excluded Taxes covered by Section 2.19 and changes in the
rate of tax on the overall net income of such Lender);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender
such additional amount or amounts as will compensate such Lender for such
increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a copy to
the Administrative Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
Section submitted by such Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this Section shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
2.19 Taxes. (a) All payments made by the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any
46
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement, any Note or any other Loan Documents). If
any such non-excluded taxes, levies, imposts, duties, charges, fees deductions
or withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder or under any
Note, the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Non-U.S. Lender (as defined below) with
respect to any Non-Excluded Taxes (i) that are attributable to such non-U.S.
Lender's failure to comply with the requirements of paragraph (b) of this
subsection or (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time the Lender becomes a party to this Agreement,
except to the extent that such Lender's assignor (if any) was entitled, at the
time of assignment, to receive additional amounts from the Borrower with respect
to such Non-Excluded Taxes pursuant to section 2.19(a). Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this Section shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a corporation or
partnership created or organized in or under the laws of the United States, any
estate that is subject to federal income taxation regardless of the source of
its income or any trust which is subject to the supervision of a court within
the United States and the control of a United States fiduciary as described in
section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) on or
before the date on which it becomes a party to this Agreement (or, in the case
of a Participant, on or before the date on which such Participant purchases the
related participation) either:
(A) (x) two duly completed and signed copies of either Internal
Revenue Service Form 1001 (relating to such Non-U.S. Lender and entitling
it to a complete exemption from withholding of U.S. Taxes on all amounts
to be received by such Non-U.S. Lender pursuant to this Agreement and the
other Loan Documents) or Form 4224 (relating to all amounts to be received
by such Non-U.S. Lender pursuant to this Agreement and the other Loan
Documents), or successor and related applicable forms, as the case may be,
and (y) two duly completed and signed copies of Internal Revenue Service
Form W-8, or successor and related applicable forms, as the case may be;
or
47
(B) in the case of a Non-U.S. Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that does not comply with
the requirements of clause (A) hereof, (x) a statement in the form of
Exhibit K (or such other form of statement as shall be reasonably
requested by the Borrower or the Administrative Agent from time to time)
to the effect that such Non-U.S. Lender is eligible for a complete
exemption from withholding of U.S. Taxes under Code Section 871(h) or
881(c), and (y) two duly completed and signed copies of Internal Revenue
Service Form W-8 or successor and related applicable form.
Further, each Non-U.S. Lender agrees to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender (or, in the case
of a Participant, to the Lender from which the related participation shall have
been purchased) two further duly completed and signed copies of such Form 1001,
4224 or W-8, as the case may be, or successor and related applicable forms, on
or before the date that any such form expires or becomes obsolete and promptly
after the occurrence of any event requiring a change from the most recent
form(s) previously delivered by it to the Borrower or the Administrative Agent
(or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) in accordance with the applicable
United States laws and regulations; unless, in any such case, any change in law
or regulation has occurred subsequent to the date such lender became a party to
this Agreement (or in the case of a Participant, the date on which such
Participant purchased the related participation) which renders all such forms
inapplicable or which would prevent such Lender (or Participant) from properly
completing and executing any such form with respect to it and such Lender
promptly notifies the Borrower and the Administrative Agent (or, in the case of
a Participant, the Lender from which the related participation shall have been
purchased) if it is no longer able to deliver, or if it is required to withdraw
or cancel, any form of statement previously delivered by it pursuant to this
Section 2.19(b).
2.20 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
48
2.21 Certain Fees. (a) The Borrower agrees to pay to the
Administrative Agent, for its own account, a non-refundable administration fee
in an amount previously agreed to with the Administrative Agent, payable in
advance on the Closing Date and annually in advance on each anniversary thereof
until payment in full of all amounts owing under this Agreement.
(b) The Borrower agrees to pay to the Arranger, each Co-Arranger and the
Agents the fees in the amounts and on the dates set forth in the Fee Letter,
dated June 27, 1997, among the Borrower, the Arranger, the Agents and the
Co-Arrangers.
2.22 Change of Lending Office. Each Lender agrees that if it makes
any demand for payment under Section 2.18 or 2.19(a), or if any adoption or
change of the type described in Section 2.17 shall occur with respect to it, it
will use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, as determined in its sole discretion) to designate a different lending
office if the making of such a designation would reduce or obviate the need for
the Borrower to make payments under Section 2.18 or 2.19(a), or would eliminate
or reduce the effect of any adoption or change described in Section 2.17.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Prior to the date hereof, Bankers Trust
Company has issued the Letters of Credit listed on Schedule 3.1 (the "Existing
Letter of Credit"), and subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Lenders set forth in Section
3.4(a), agrees to issue letters of credit (together with the Existing Letter of
Credit, "Letters of Credit") for the account of the Borrower on any Business Day
during the Revolving Credit Commitment Period in such form as may be approved
from time to time by the Issuing Lender; provided, that the Issuing Lender shall
have no obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the
Available Revolving Credit Commitments of all Lenders would be less than zero.
(b) Each Letter of Credit shall (i) be denominated in Dollars, (ii)
be (x) a standby letter of credit issued to support obligations of the Borrower
or any of its Subsidiaries, contingent or otherwise, or to finance the working
capital needs of the Borrower or any of its Subsidiaries in the ordinary course
of business or (y) a commercial letter of credit issued in respect of the
purchase of goods or services by the Borrower and its Subsidiaries in the
ordinary course of business and (iii) expire no later than the earlier of (x)
the date that is 12 months after the date of its issuance and (y) the fifth
Business Day prior to the Revolving Credit Termination Date; provided, that any
Letter of Credit with an expiration date occurring up to twelve months after
such Letter of Credit's date of issuance may be automatically renewable for
subsequent 12-month periods (but in no event later than the fifth Business Day
prior to the Revolving Credit Termination Date).
49
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State where the
Issuing Lender has its head office.
(d) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit at
any time one month prior to the Revolving Credit Termination Date by delivering
to the Issuing Lender at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender and such other
certificates, documents and other papers and information as the Issuing Lender
may reasonably request. Upon receipt of any Application, the Issuing Lender will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor) and all such other certificates, documents and other
papers and information relating thereto by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower, the Administrative Agent and the L/C
Participants promptly following the issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay
to the Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit fee with respect to each Letter of Credit,
computed for the period from and including the date of issuance of such Letter
of Credit to the expiration date of such Letter of Credit at a rate per annum
equal to the Applicable Margin then in effect for Eurodollar Revolving Credit
Loans, of the aggregate face amount of Letters of Credit outstanding, payable in
arrears on each L/C Fee Payment Date and on the Revolving Credit Termination
Date. Such fee shall be payable to the Administrative Agent to be shared ratably
among the Lenders in accordance with their respective Revolving Credit
Commitment Percentages. In addition, the Borrower shall pay to the
Administrative Agent, for the account of the Issuing Lender, a fronting fee
equal to 1/8% per annum of the aggregate face amount of outstanding Letters of
Credit, payable in advance upon the issuance of each Letter of Credit and on
each anniversary thereof if renewed.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this Section.
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3.4 L/C Participation. (a) Effective on the Closing Date in respect
of the Existing Letter of Credit, and effective on the date of issuance thereof
in respect of each Letter of Credit issued hereunder after the Closing Date, the
Issuing Lender irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Lender to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage from time to time in effect in the Issuing Lender's
obligations and rights under each Letter of Credit issued hereunder and the
amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's then Revolving Credit Commitment Percentage of the amount
of such draft, or any part thereof, which is not so reimbursed; provided, that,
if such demand is made prior to 12:00 Noon, New York time, on a Business Day,
such L/C Participant shall make such payment to the Issuing Lender prior to the
end of such Business Day and otherwise such L/C Participant shall make such
payment on the next succeeding Business Day.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to paragraph 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate, as quoted by the Issuing Lender, during the period
from and including the date such payment is required to the date on which such
payment is immediately available to the Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during such period and
the denominator of which is 360. If any such amount required to be paid by any
L/C Participant pursuant to Section 3.4(a) is not in fact made available to the
Issuing Lender by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Lender shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Base Rate Revolving Credit
Loans hereunder. A certificate of the Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will, if such payment is received prior to 12:00 Noon, New York time, on
a Business Day, distribute to such L/C Participant its pro rata share thereof
prior to the end of such Business Day and otherwise the Issuing Lender will
distribute such payment
51
on the next succeeding Business Day; provided, however, that in the event that
any such payment received by the Issuing Lender and distributed to the L/C
Participants shall be required to be returned by the Issuing Lender, each such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower
agrees to reimburse the Issuing Lender on the same Business Day on which the
Issuing Lender notifies the Borrower of the date and amount of a draft presented
under any Letter of Credit and paid by the Issuing Lender. The Issuing Lender
shall provide notice to the Borrower on each Business Day on which a draft is
presented and paid by the Issuing Lender indicating the amount of (i) such draft
so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining
unpaid by the Borrower under this Section from the date a draft presented under
any Letter of Credit is paid by the Issuing Lender until payment in full (i) at
the rate which would be payable on any Revolving Credit Loans that are Base Rate
Loans at such time until such payment is required to be made pursuant to Section
3.5(a), and (ii) thereafter, at the rate which would be payable on any Revolving
Credit Loans that are Base Rate Loans at such time which were then overdue.
3.6 Obligations Absolute. (a) The Borrower's obligations under
Section 3.5(a) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender, any
L/C Participant or any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 3.5(a) shall not be affected by, among other things,
(i) the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or (ii) any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit may be
transferred or (iii) any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee.
(c) Neither the Issuing Lender nor any L/C Participant shall be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall
52
be binding on the Borrower and shall not result in any liability of the Issuing
Lender or any L/C Participant to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower and the Administrative Agent of the date and amount thereof. If any
draft shall be presented for payment under any Letter of Credit, the
responsibility of the Issuing Lender to the Borrower in connection with such
draft shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment appear on their face to be in conformity with such Letter of Credit.
3.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Arranger, the Co-Arrangers, the Agents and the Lenders
to enter into this Agreement and to make the Loans and issue or participate in
the Letters of Credit, the Borrower hereby represents and warrants to the
Arranger, the Co-Arrangers, the Agents and each Lender that:
4.1 Financial Condition. The consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at December 31, 1996 and the
related consolidated statements of income, of operations, of stockholders'
equity and partners' capital and of cash flows for the fiscal year ended on such
date, reported on by KPMG Peat Marwick LLP, copies of which have heretofore been
furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at March 31, 1997 and the related unaudited consolidated statements of income,
of operations, of stockholders' equity and partners' capital and of cash flows
for the three-month period ended on such date, certified by a Responsible
Officer, copies of which have heretofore been furnished to each Lender, are
complete and correct and present fairly the consolidated financial condition of
the Borrower and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Neither the
Borrower nor any of its consolidated Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or
53
unusual forward or long-term commitment, including, without limitation, any
Interest Rate Agreement or foreign currency swap or exchange transaction, which
is not reflected in the foregoing statements or in the notes thereto. Except as
disclosed in the Schedules to this Agreement, during the period from December
31, 1996 to and including the date hereof there has been no sale, transfer or
other disposition by the Borrower or any of its consolidated Subsidiaries of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the Borrower and
its consolidated Subsidiaries at December 31, 1996.
4.2 No Change. Since December 31, 1996 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect, and during the period from December 31, 1996 to and including
the date hereof no dividends or other distributions have been declared, paid or
made upon the Capital Stock of the Borrower nor has any of the Capital Stock of
the Borrower been redeemed, retired, purchased or otherwise acquired for value
by the Borrower or any of its Subsidiaries (except for the regularly scheduled
payments made on June 30, 1997 to the holders of Preferred Limited Partner
Interests).
4.3 Existence; Compliance with Law. Each Loan Party (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation, partnership or limited liability company and
in good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4 Power; Authorization; Enforceable Obligations. Each Loan Party
has the power and authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and, in the case of the Borrower, to
borrow hereunder and has taken all necessary corporate, partnership or other
action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party, and in the case of the Borrower, to authorize
the borrowings on the terms and conditions of this Agreement and any Notes.
Except as set forth on Schedule 4.4, no consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the borrowings hereunder or with
the execution, delivery, performance, validity or enforceability of the Loan
Documents. This Agreement has been, and each other Loan Document will be, duly
executed and delivered on behalf of each Loan Party which is a party thereto.
This Agreement constitutes, and each other Loan Document when executed and
delivered will constitute, a legal, valid and binding obligation of each Loan
Party which is a party hereto or thereto, enforceable against each such Loan
Party in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
54
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
4.5 No Legal Bar. The execution, delivery and performance of the
Loan Documents, the issuance of the Letters of Credit, the borrowings hereunder
and the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of any Loan Party and will not result in, or require, the
creation or imposition of any Lien on any of its or their respective properties
or revenues pursuant to any such Requirement of Law or Contractual Obligation.
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.8 Properties; Agreements; Licenses.
(a) Title to Properties; Liens. Each of Schedule 4.8(a)(I) and Schedule
4.8(a)(II) correctly sets forth the interest of each Loan Party and each of its
Subsidiaries in each of the Mortgaged Properties and Non-Recourse Properties,
respectively. The Borrower and its Subsidiaries do not own any interest in any
real property other than as set forth on Schedules 4.8(a)(I) and 4.8(a)(II).
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 any Loan Party. Such Loan Party has good and marketable fee
simple title to, or a valid leasehold interest in, the Properties and good title
to the remainder of the Collateral purported to be owned by it, free and clear
of all Liens, in each case except Liens permitted pursuant to Section 7.3. 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 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 Liens permitted pursuant to
Section 7.3. Except as heretofore disclosed in writing by the Borrower to the
Administrative 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) Ground Leases. Each of the Ground Leases and all amendments thereto
are listed on Schedule 4.8(b). The Ground Leases, as so amended, are in full
force and effect and no term or condition thereof will have been further amended
or modified, or waived after
55
the execution thereof except in accordance with this Agreement; and no Person
will have failed in any material respect to perform any material obligation or
covenant or satisfy any condition required by the Ground Leases to be performed
or complied with.
(c) Non-Recourse Documents. Each of the Non-Recourse Documents and all
amendments thereto are listed on Schedule 4.8(c). Such documents, as so amended,
are in full force and effect and no term or condition thereof have been amended
or modified, or waived after the execution thereof except in accordance with
this Agreement, 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 4.8(d). The Management Agreements, as so
amended, are in full force and effect and no term or condition thereof has been
further amended or modified, or waived after the execution thereof in any
material adverse respect; 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) Franchise Agreements. Each of the Franchise Agreements relating to
Mortgaged Properties and Non-Recourse Properties and all amendments thereto are
listed on Schedule 4.8(e). The Franchise Agreements, as so amended, are in full
force and effect and no term or condition thereof have been further amended or
modified, or waived after the execution thereof except in accordance with this
Agreement; 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.
(f) Liquor Licenses. Each Liquor License issued in connection with each
Mortgaged Property is set forth on Schedule 4.8(g), each such Liquor License is
validly issued and in full force and effect. The holder of each 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. All cash and other revenues and receipts from the
operation of any owner of a Liquor License of an alcoholic beverage service at
any Property are collected either by the licensee thereof or the Borrower or the
applicable Loan Party owning the Property and are then deposited directly into
deposit accounts subject to the Cash Management System.
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4.9 Zoning; Authorizations.
(a) Zoning. Except as set forth on Schedule 4.9, the use and operation by
each Loan Party of each Mortgaged 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 Requirements of Law 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 shown on the pro forma Title Policies or the Surveys delivered
pursuant to Section 5.1, 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 Mortgaged
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 Materials of Environmental Concern). The Borrower has 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 Materials of Environmental
Concern) 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 individually or in the aggregate, a Material Adverse Effect. No
Loan Party nor any of its Subsidiaries nor, to the knowledge of 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.
4.10 Physical Condition; Encroachment. Except as disclosed on the
Engineering Reports delivered pursuant to Schedule IV or 5.1 and the property
improvement plans delivered pursuant to 5.1, each Property is free of material
structural defects and is in good repair (normal wear and tear excepted) and all
building systems contained therein and all other material items of Collateral
are in good working order in all material respects subject to ordinary wear and
tear, 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 the Borrower, other than as described in
the Title Policy and in any Survey, no improvement at any Property encroaches
upon any building line, setback line, side yard line or any recorded or visible
easement.
57
4.11 Insurance. Each Loan Party has delivered to the Administrative
Agent on or before the Closing Date evidence acceptable to the Administrative
Agent for the valid policies of insurance required by this Agreement or any
other Loan Document to be carried evidencing (i) the issuance of such policies,
(ii) the payment of all premiums payable on or before the Closing Date and (iii)
coverage which meets all of the requirements set forth in this Agreement. 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 payable to date have been paid with
respect to each insurance policy required to be maintained by the Borrower and
its Subsidiaries pursuant to this Agreement or any other Loan Document.
4.12 Leases. Each Material Lease with respect to each Mortgaged
Property and Non-Recourse Property and all amendments thereto that have been or
shall be entered into on or before the Closing Date are listed on Schedule
4.8(f). 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
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.
4.13 Environmental Reports; Engineering Reports; Appraisals; Market
Studies. The Borrower has delivered to the Administrative Agent and the Lenders
correct and complete copies of all environmental audits, engineering reports,
appraisals and market studies with respect to each Mortgaged Property and
Non-Recourse Property that any Loan Party or any of its Subsidiaries has in its
possession that is dated not earlier than the date that is one year prior to the
Closing Date. To the knowledge of the Borrower, the information contained in
each such environmental audit and engineering report remains materially true,
correct and complete.
4.14 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 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.
4.15 Wetlands. None of the improvements on any Property are
constructed on land designated by any Governmental Authority having land use
jurisdiction as wetlands.
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4.16 Utilities and Access. To the extent necessary for the full
utilization of each Mortgaged Property and each Non-Recourse 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 such 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 such Property are available to the boundaries of the land
relating to such Property. All necessary rights-of-way for all roads, which are
sufficient to permit each such Property to be utilized fully for its current
use, have been completed and are serviceable, and, to the knowledge of the
Borrower, all public rights-of-way through or adjacent to such Properties have
been acquired and dedicated and accepted for maintenance and public use by the
applicable Governmental Authorities.
4.17 Intellectual Property.
(a) Ownership; IP License Agreements. 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 4.17,
all such Intellectual Property (other than rights under Franchise Agreements or
rights under standard software licenses) 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 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 4.17. Each of the license
agreements (together with any such agreements entered into after the Closing
Date, the "IP License Agreements"), other than the Franchise Agreements and
standard software licenses, 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 4.17. Each Loan Party and each of its Subsidiaries is in compliance
with the material terms of each IP License Agreement to which it is a party and
each such IP 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 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 the Borrower, by any other Person
challenging or questioning the validity or effectiveness of any such
Intellectual Property, and the Borrower does not know 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
59
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.
4.18 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.19 Taxes. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge other than any item being so
contested and any item which is a Permitted Encumbrance.
4.20 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. If requested by any Lender or the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of FR Form G-3 or FR
Form U-1 referred to in said Regulation G or Regulation U, as the case may be.
4.21 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the
60
valuation date most closely preceding the date on which this representation is
made or deemed made. No such Multiemployer Plan is in Reorganization or
Insolvent.
4.22 Investment Company Act; Other Regulations. The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
4.23 Subsidiaries. As of the date hereof, the Subsidiaries listed on
Schedule 4.23 constitute all the direct or indirect Subsidiaries (including
Joint Ventures) of the Borrower, and Schedule 4.23 shows, as to each such
Subsidiary, its jurisdiction of its incorporation, its authorized
capitalization, the ownership of Capital Stock of such Subsidiary and the
principal assets owned by such Subsidiary.
4.24 Purpose of Loans. The proceeds of the Loans shall be used by
the Borrower for (i) refinancing the Indebtedness under the Existing Credit
Facility, (ii) to finance the acquisition of Qualifying Hotel Properties or
Persons owning Qualifying Hotel Properties, (iii) to finance the acquisition of
hotel Management Agreements or Persons owning Management Agreements, (iv) to
finance the acquisition of equity and debt investments in joint ventures and
other entities formed to acquire, own, renovate, manage and operate Qualifying
Hotel Properties, (v) to finance the acquisition of first mortgage loans secured
by first mortgage liens on Qualifying Hotel Properties, (vi) to pay for the
costs and expenses incurred by the Borrower and its Subsidiaries in acquiring
such assets, (vii) to finance Property Renovation costs, (viii) to refinance
Indebtedness (other than Subordinated Debt) of the Borrower and its
Subsidiaries, (ix) to finance the acquisition of land to the extent permitted by
clause (c) of Schedule IV and (x) for working capital and other general
corporate purposes not prohibited by the terms hereof.
4.25 Environmental Matters. Except as set forth on Schedule 4.25:
(a) The Properties do not contain any Materials of Environmental
Concern in amounts or concentrations which (i) constitute or constituted a
violation of, or (ii) could reasonably be expected to give rise to
liability under, any Environmental Law.
(b) The Properties and all operations at the Properties are in
compliance in all material respects with all applicable Environmental
Laws, and there is no contamination at, under or about the Properties or
violation of any Environmental Law with respect to the Properties or the
business operated by the Borrower or any of its Subsidiaries (the
"Business") which could materially interfere with the continued operation
of the Properties or materially impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of
61
the Properties or the Business, nor does the Borrower or any other Loan
Party have knowledge or reason to believe that any such notice will be
received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location which could reasonably be expected to give rise to liability
under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any
of the Properties in violation of, or in a manner that could reasonably be
expected to give rise to liability under,any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or
related to the operations of the Borrower or any Subsidiary in connection
with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could reasonably give rise
to liability under Environmental Laws.
Notwithstanding the foregoing, the representations and warranties
made in this Section 4.25 with respect to Managed Properties are made to the
best knowledge of the Borrower and its Subsidiaries.
4.26 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards (Zone A or V) and
in which flood insurance has been or would be made available under the National
Flood Insurance Act of 1968.
4.27 Accuracy of Information. No statement or information contained
in this Agreement, any other Loan Document or any other document, certificate or
statement furnished to the Arrangers, the Co-Arrangers, the Administrative Agent
or the Lenders, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished any untrue statement of a material fact or, with all such
statements and information being taken as a whole, omitted to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to the executive management of the Borrower
that could reasonably be expected to have a Material Adverse Effect that has not
been expressly
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disclosed herein, in the other Loan Documents, or in such other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
4.28 Security Documents. (a) Upon execution and delivery thereof by
the parties thereto, the Guarantee and Collateral Agreement will be effective to
create in favor of the Administrative Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in the Pledged Stock
and Pledged Notes and, when stock certificates representing or constituting the
Pledged Stock are delivered to the Administrative Agent and the originals of the
Pledged Notes are delivered to the Administrative Agent, such security interest
shall constitute a perfected first lien on, and security interest in, all right,
title and interest of the pledgor party thereto in the Pledged Stock and the
Pledged Notes.
(b) Except as provided in the legal opinions delivered to the
Administrative Agent pursuant to Section 5 .1, upon execution and delivery
thereof by the parties thereto, the Guarantee and Collateral Agreement will be
effective to create in favor of the Administrative Agent, for the ratable
benefit of the Lenders, a legal, valid and enforceable security interest in the
collateral described therein (other than Pledged Stock and Pledged Notes
described in paragraph (a) above). Uniform Commercial Code financing statements
have been filed in each of the jurisdictions listed on Schedule 3 to the
Guarantee and Collateral Agreement or arrangements have been made for such
filing in such jurisdictions, and upon such filing, and upon the taking of
possession by the Administrative Agent of any such collateral the security
interests in which may be perfected only by possession, such security interests
will constitute perfected first priority liens on, and security interests in,
all right, title and interest of the debtor party thereto in the collateral
described therein, except to the extent that a security interest cannot be
perfected therein by the filing of a financing statement or the taking of
possession under the Uniform Commercial Code of the relevant jurisdiction.
(c) Each Mortgage, when executed and delivered by the relevant Loan
Party, and properly filed and recorded (with all required filing and recording
fees being paid) in the appropriate recording offices, shall constitute a Lien
on, and security interest in, all right, title and interest of the Loan Parties
in the Mortgaged Property properly described therein, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and
superior in right to any other Person, other than with respect to Liens
expressly permitted by Section 7.3.
4.29 Solvency. Each Loan Party is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred hereunder will be,
and will continue to be, Solvent.
4.30 Senior Indebtedness. The Obligations shall constitute "Senior
Indebtedness" within the meaning of the instruments under which any Subordinated
Debt is outstanding.
4.31 Labor Matters. There are no strikes pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries which, individually or in
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the aggregate, could reasonably be expected to have a Material Adverse Effect.
The hours worked and payments made to employees of the Borrower and each of its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law, except to the extent such violations could
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. All material payments due from the Borrower or any of its
Subsidiaries on account of wages and employee health and welfare insurance and
other benefits have been paid or accrued as a liability on the books of the
Borrower or such Subsidiary.
4.32 Cash Management System. The summary of the Cash Management
System attached hereto as Schedule 4.32 is accurate and complete in all material
respects and does not omit to state any material fact necessary to make the
statements set forth therein not misleading. No Loan Party nor any of its
Subsidiaries owns any deposit or other bank account which is not described in
Schedule 4.32.
4.33 Pledged Notes. Schedule 2 to the Guarantee and Collateral
Agreement sets forth all of the promissory notes or other debt securities (other
than Cash Equivalents) held by the Borrower and its Subsidiaries.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Loans. The agreement of each Lender to
make the initial Loan requested to be made by it, and of the Issuing Lender to
issue the Letter of Credit, is subject to the satisfaction, immediately prior to
or concurrently with the making of the initial Loans on the Closing Date, of the
following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender, (ii) the Guarantee and
Collateral Agreement, executed and delivered by a duly authorized officer
of each party thereto, with a counterpart or a conformed copy for each
Lender, (iii) each of the Mortgages, each executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a conformed
copy for each Lender and (iv) each of the Canadian Security Documents,
each executed and delivered by a duly authorized officer of the party
thereto, with a counterpart or a conformed copy for each Lender.
(b) Related Agreements. The Administrative Agent shall have
received, with a copy for each Lender, true and correct copies, certified
as to authenticity by the Borrower, of such other documents or instruments
as may be reasonably requested by the Administrative Agent, including,
without limitation, a copy of any debt instrument, security agreement or
other material contract to which the Loan Parties may be a party.
(c) Termination of Existing Credit Facilities and Existing
Subordinated Debt. The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent and the Arranger that the
Existing Credit Facilities and the
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Existing Subordinated Debt shall be simultaneously terminated, all amounts
thereunder shall be simultaneously paid in full and arrangements
satisfactory to the Arranger and the Administrative Agent shall have been
made for the termination of Liens and security interests granted in
connection with the Existing Credit Facilities.
(d) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, dated the Closing Date, substantially in the form of Exhibit L,
with appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by a Responsible Officer.
(e) Fees. The Lenders, Arranger, the Co-Arranger and the
Administrative Agent shall have received all fees required to be paid, and
all expenses for which invoices have been presented, on or before the
Closing Date.
(f) Approvals. All governmental and third party approvals necessary
or, in the reasonable discretion of the Arranger, advisable in connection
with the financings contemplated hereby and the continuing operations of
the Borrower and its Subsidiaries shall have been obtained and be in full
force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on
the continuing operations of the Borrower.
(g) 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
Administrative Agent the following, each unless otherwise noted dated the
Closing Date:
(i) certified copies of its Certificate of Incorporation,
together with a good standing certificate (including verification,
where generally available, of tax good standing) from the Secretary
of State (or similar official) of its jurisdiction of incorporation
and each other state in which a Property owned or leased by such
Loan Party is located), each dated not more than 15 days prior to
the Closing Date;
(ii) copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(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; and
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(iv) signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is
a party.
(h) Partnership and LLC Documents. Each Partnership Loan Party and
each LLC Loan Party, as applicable, shall deliver to the Administrative
Agent the following, each unless otherwise noted dated the Closing Date:
(i) with respect to each Partnership Loan Party, a conformed
copy of the partnership agreement, certified by each general partner
of such partnership as of the Closing Date as being in full force
and effect without modification or amendment;
(ii) with respect to each LLC Loan Party, a conformed copy of
the limited liability company agreement and each other
organizational document, certified by the manager of such LLC Loan
Party as of the Closing Date as being in full force and effect
without modification or amendment;
(iii) (a) with respect to each Partnership Loan Party, its
Certificate of Limited Partnership, certified by the Secretary of
State (or similar official) of its jurisdiction of formation and a
certificate of existence or good standing, as the case may be, from
the Secretary of State (or similar official) of such jurisdiction,
each dated not more than 15 days prior to the Closing Date, (b) with
respect to each LLC Loan Party, its Articles of Organization or
Certificate of Formation, certified by the Secretary of State (or
similar official) of its jurisdiction of its jurisdiction of
organization, each dated not more than 15 days prior to the Closing
Date, and (c) a good standing certificate or certificate of
existence, as the case may be, from the Secretary of State (or
similar official) of each state or other jurisdiction in which a
Property owned or leased by such entity is located;
(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 Guarantee and Collateral Agreement and any other Loan
Documents to which it is a 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) signature and incumbency certificate 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.
(i) Consents, Licenses and Approvals. The Administrative Agent shall
have received, with a counterpart for each Lender, an Officer's
Certificate (i) attaching
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copies of all consents, authorizations and filings referred to in Section
4.4, and (ii) stating that such consents, licenses and filings are in full
force and effect, and each such consent, authorization and filing shall be
in form and substance satisfactory to the Administrative Agent.
(j) Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of ▇▇▇▇▇▇▇ Diamond & Ash,
counsel to the Borrower and the other Loan Parties, substantially in
the form of Exhibit M; and
(ii) the local counsel opinions referred to in Section
5.1(k)(iv).
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require;
(k) Security Interests. The Borrower shall have taken or caused
to be taken all such actions as may be necessary or reasonably requested
by the Administrative Agent to give the Administrative Agent a valid,
enforceable and perfected first priority Lien on or first priority
security interest in the Collateral as of the Closing Date. Such
actions shall include the following:
(i) the delivery to the Administrative Agent of fully executed
and acknowledged counterparts of the Mortgages, the Guarantee and
Collateral Agreement and all other Security Documents with respect
to the Mortgaged Properties and the other Collateral as of the
Closing Date, and the delivery of evidence satisfactory to the
Administrative Agent that counterparts of the Mortgages and all
other of such documents the Administrative Agent desires to have
recorded have been or will be recorded in all places necessary or
desirable to create and maintain valid and enforceable first
priority Liens on the fee simple or leasehold interests of the
Borrower and its Subsidiaries, as applicable, in the Mortgaged
Properties in favor of the Administrative Agent, as mortgagee (or as
beneficiary in those jurisdictions where the Lien is granted to a
trustee for the benefit of the Administrative Agent) and in all
other items of Collateral as of the Closing Date in favor of the
Administrative Agent;
(ii) (a) the delivery to the Administrative Agent for filing
pursuant to the Security Documents of properly executed financing
statements under the Uniform Commercial Code (or any equivalent or
similar legislation), or any other documents required to be filed by
other Requirements of Law, satisfactory in form and substance to the
Administrative Agent in each jurisdiction as may be necessary (in
the Administrative Agent's reasonable judgment) effectively to
perfect and maintain the security interests in the Collateral
created by such Security Documents and (b) the delivery of evidence
that such financing statements or other documents will have been or
will be
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recorded in all places necessary or desirable, in the reasonable
judgment of the Administrative Agent, to create and maintain valid
and enforceable first priority Liens on the Collateral in favor of
the Administrative Agent;
(iii) delivery to the Administrative Agent of a mortgagee's
Title Policy (or policies) dated the Closing Date, insuring fee
simple or leasehold title to each of the Mortgaged Properties vested
in the Borrower or the applicable Subsidiary of the Borrower and
insuring the first priority of the Liens created under the
Mortgages, in each case subject only to Permitted Encumbrances, and
such other title exceptions (which shall not include long term
management contracts) as are satisfactory to the Administrative
Agent. Each such policy shall (i) be in an amount satisfactory to
the Administrative Agent; (ii) be issued at ordinary rates; (iii)
insure that the Mortgage insured thereby creates a valid first Lien
on such parcel free and clear of all defects and encumbrances,
except such as may be approved by the Administrative Agent; (iv)
name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; (v) contain such endorsements and affirmative
coverage as the Administrative Agent may request and to the extent
the same are available in the applicable jurisdiction and (vi) be
issued by the Title Company (and any title companies acting as
co-insurers or reinsurers, at the option of the Administrative
Agent). The Administrative Agent shall have received evidence
satisfactory to it that the Borrower shall have paid to the Title
Company or to the appropriate Governmental Authority all expenses
and premiums of the Title Company in connection with the issuance of
such Title Policies or in connection with any Loan hereunder and an
amount equal to the recording and stamp taxes (including mortgage
recording, intangible and similar taxes) payable in connection with
recording each Mortgage in the appropriate county or parish land
offices or in connection with any Loans hereunder;
(iv) the delivery to the Administrative Agent of an opinion of
counsel in each state or other jurisdiction in which each Mortgaged
Property is located, dated the Closing Date, addressed to the
Administrative Agent and the Lenders and in form and substance
reasonably satisfactory to the Administrative Agent;
(v) the delivery to the Title Company of such certificates and
affidavits as the Title Company may reasonably require in connection
with the issuance of the Title Policies;
(vi) the delivery to the Administrative Agent and the Title
Company of a Survey with respect to each of the Mortgaged
Properties, dated or re-dated to a date as is reasonably acceptable
to the Administrative Agent (provided the Title Company insures such
Survey on a current basis), which Surveys shall be reasonably
satisfactory in form and substance to the Administrative Agent and
the Title Company;
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(vii) unless a title insurance zoning endorsement is issued to
the Administrative Agent by the Title Company, the delivery to the
Administrative Agent of either a letter, to the extent generally
available, from the applicable Governmental Authority or a zoning
opinion is issued by local counsel, with respect to each of the
Mortgaged Properties and reasonably satisfactory to the
Administrative Agent stating that all improvements on each such
Property have been constructed and are being used and operated in
material compliance with (a) all applicable zoning, subdivision,
local environmental, building and land use laws, ordinances, rules
and regulations of all Governmental Authorities or
quasi-governmental authorities having jurisdiction with respect to
each such Property and all applicable fire and building maintenance
codes, and (b) all building permits issued in respect of each such
Property for work then being conducted and the certificate of
occupancy (if available) for each such Property;
(viii) the delivery to the Administrative Agent pursuant to
the Guarantee and Collateral Agreement of the stock certificates
(which certificates shall be accompanied by irrevocable undated
stock powers duly endorsed in blank and irrevocable proxies, all
satisfactory in form and substance to the Administrative Agent),
certificated partnership interests, certificated limited liability
company membership interests, promissory notes and other
instruments, (in each case duly endorsed in blank by a duly
authorized officer of the pledgor thereof), representing the capital
stock, partnership interests, limited liability company membership
interests, promissory notes and other instruments to be pledged on
the Closing Date pursuant to the Guarantee and Collateral Agreement;
(ix) the delivery to the Administrative Agent of evidence
reasonably satisfactory to the Administrative Agent that all other
filings, recordings and other actions the Administrative Agent deems
necessary or advisable to establish, perfect and preserve the Liens
granted to the Administrative Agent in the Collateral (including any
uncertificated partnership interests or uncertificated limited
liability company membership interests) as of the Closing Date shall
have been made.
(l) Flood Insurance. If requested by the Administrative Agent, the
Administrative Agent shall have received (i) a policy of flood insurance
which (A) covers any parcel of improved real property which is encumbered
by any Mortgage, (B) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (C)
has a term ending not earlier than the maturity of the indebtedness
secured by such Mortgage and (ii) confirmation that the Borrower has
received the notice required pursuant to Section 208(e)(3) of Regulation H
of the Board of Governors of the Federal Reserve System.
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(m) Copies of Documents. The Administrative Agent shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in
Section 5.1(k)(iii) and a copy, certified by such parties as the
Administrative Agent may deem appropriate, of all other documents
affecting the property covered by each Mortgage.
(n) Ground Leases; Landlord Estoppel Certificates. The Borrower
shall have delivered to the Administrative Agent executed or conformed,
certified copies of each of the Ground Leases and all amendments thereto
entered into on or prior to the Closing Date, as listed on Schedule
4.8(b); all of the terms and conditions of the Ground Leases relating to
the Mortgaged Properties shall have been approved by the Agents; the
Ground Leases shall be in full force and effect and no term or condition
thereof shall have been further amended or modified in any material
respect; and no Person shall have failed in any material respect to
perform any material obligation or covenant or satisfy any material
condition required by the Ground Leases to be performed or complied with
on or before the Closing Date; the owner of the fee interest in the land
covered by such Ground Lease shall subordinate its interest in such land
to the Mortgage on the leasehold estate under such Ground Lease or such
Ground Lease shall contain leasehold mortgagee protections reasonably
satisfactory to the Agents (including, without limitation, notices of
default, opportunity to cure, rights to a new lease and reasonably
satisfactory provisions regarding insurance and condemnation proceeds);
such Ground Lease shall have a minimum remaining term of at least twenty
five years with no extraordinary termination rights in favor of the ground
lessor. On or before the Closing Date, the Borrower shall have delivered
to the Administrative Agent original counterparts of an estoppel
certificate and agreement with respect to each Ground Lease, reasonably
acceptable in form and substance to the Administrative Agent, and duly
executed by each lessor under such Ground Lease.
(o) Management Agreements. The Borrower shall have delivered to the
Administrative Agent (i) executed or conformed, certified copies of each
of the Management Agreements and all amendments thereto entered into on or
before the Closing Date, as listed on Schedule 4.8(d); the Management
Agreements shall be in full force and effect and no term or condition
thereof shall have been further amended or modified in any material
adverse respect; any Management Agreements or other contracts or
agreements for the management of any of the Mortgaged Properties shall
have been fully subordinated to the Mortgage on the applicable Mortgaged
Property; and (ii) an Officers' Certificate of the Borrower (a) listing
each operating deficit guaranty and each contract with any owner of a
Property regarding the provision of FF&E at a fixed cost to which any Loan
Party is a party on the Closing Date and (b) attaching copies (certified
as true, correct and complete) of each such guaranty and contract.
(p) Franchise Agreements; Franchisor Estoppel Certificates. The
Borrower shall have delivered to the Administrative Agent executed or
conformed, certified copies of each of the Franchise Agreements and all
amendments thereto entered into on or before the Closing Date, as listed
on Schedule 4.8(e); the Franchise Agreements
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shall be in full force and effect and no term or condition thereof shall
have been further amended or modified; and no Person shall have failed in
any material respect to perform any material obligation or covenant or
satisfy any material condition required by the Franchise Agreements to be
performed or complied with on or before the Closing Date, including,
without limitation (but only if the same constitute a material obligation,
covenant or condition), obligations under property improvement plans and
quality control plans required by the respective franchisors to be
performed within specified periods. To the extent not delivered by the
Borrower prior to the Closing Date, on the Closing Date, the Borrower
shall have delivered to the Administrative Agent original counterparts of
a franchisor's estoppel certificate and consent agreement with respect to
each Franchise Agreement in respect of the Mortgaged Properties,
reasonably acceptable in form and substance to the Administrative Agent,
and duly executed by each franchisor under such Franchise Agreement.
(q) Material Leases; Tenant Estoppel Certificates. The Borrower
shall have delivered to the Administrative Agent (i) executed or
conformed, certified copies of each Material Lease with respect to each
Property and all amendments thereto entered into on or before the Closing
Date, as listed on Schedule 4.8(f); the Material Leases shall be in full
force and effect and no term or condition thereof shall have been further
amended or modified; and no Person shall have failed in any material
respect to perform any material obligation or covenant or satisfy any
material condition required by the Material Leases to be performed or
complied with on or before the Closing Date; and (ii) original
counterparts of estoppel certificates with respect to each of the Material
Leases specified on Schedule 4.8(f), reasonably satisfactory in form and
substance to the Administrative Agent, duly executed and delivered by each
tenant party to such Material Lease.
(r) Environmental Audits. The Borrower shall have delivered to the
Administrative Agent evidence satisfactory to the Administrative Agent, in
its sole discretion, that (i) there are no material pending or threatened
claims, suits, actions or proceedings arising out of or relating to the
existence of any Materials of Environmental Concern at, in, on, from,
around or under any of the Properties; (ii) each such Property is in
compliance in all material respects with all applicable Environmental Laws
with respect to such Property; and (iii) no Materials of Environmental
Concern exist at, in, on, from, around or under any such Property, except
in compliance in all material respects with applicable Environmental Laws
and all other Materials of Environmental Concern have been removed from
each Property to the extent required by Requirements of Law. With respect
to the Mortgaged Properties, such evidence shall include (a) a
comprehensive environmental audit (which shall include a Phase I
environmental audit and, if recommended or suggested by an Approved
Environmental Consultant, a Phase II environmental audit), reasonably
satisfactory in form and substance to the Administrative Agent, conducted
and certified by an Approved Environmental Consultant (the Borrower shall
certify as of the Closing Date that, as to any environmental audit
delivered by the Borrower prior to the Closing Date, to the Borrower's
knowledge, the information contained in
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such audit remains true, correct and complete), (b) a reliance letter from
such Approved Environmental Consultant with respect to each such
environmental audit addressed to the Administrative Agent and Lenders,
which reliance letter shall be satisfactory in form and substance to the
Administrative Agent, (c) certification that all required approvals from
all Governmental Authorities having jurisdiction with respect to the
environmental condition of the Properties, if any, have been obtained, and
(d) such other environmental reports, inspections and investigations as
the Administrative Agent shall in its sole discretion require after
considering factors reasonably related to such determination, prepared, in
each instance, by an Approved Environmental Consultant, which approvals,
reports, inspections and investigations shall be satisfactory in form and
substance to the Administrative Agent, in its sole discretion. On or
before the Closing Date, the Borrower shall have delivered to the
Administrative Agent evidence satisfactory to the Administrative Agent, in
its sole discretion, that the Borrower has complied (or has made
arrangements to comply) with the recommendations and suggestions of all
environmental consultant(s) referred to above.
(s) Engineering Reports. The Borrower shall have delivered to the
Administrative Agent (i) a written Engineering Report with respect to each
Mortgaged Property dated not more than twelve months prior to the Closing
Date and prepared by an Engineer acceptable to the Administrative Agent,
which Engineering Report shall contain current repair recommendations for
the first five years, and shall in all other respects be reasonably
satisfactory in form and substance to the Administrative Agent; and (ii) a
reliance letter from such Engineer with respect to each such Engineering
Report addressed to the Administrative Agent and Lenders, which letter
shall be in form and substance reasonably satisfactory to the
Administrative Agent.
(t) Appraisals. The Administrative Agent shall have received (i) an
Appraisal of each Mortgaged Property dated not more than twelve (12)
months prior to the Closing Date and prepared by an Appraiser, which
Appraisal shall be satisfactory in form and substance to the
Administrative Agent and shall satisfy all applicable regulatory
requirements; and (ii) copies of all appraisals, market studies, and
similar information with respect to each of the Mortgaged Properties in
the possession or under the control of the Borrower or any of its
Subsidiaries dated after the date of such Appraisals.
(u) Lien Searches. The Administrative Agent shall have received the
results of a recent search in such states and other jurisdictions as the
Administrative Agent shall determine by a Person satisfactory to the
Administrative Agent of the Uniform Commercial Code (or similar
legislation), judgement and tax lien filings which may have been filed
with respect to personal property of the Borrower and the other Loan
Parties, and the results of such search shall be satisfactory to the
Administrative Agent.
(v) Insurance. The Administrative Agent shall have received (i)
duplicate originals or true and complete copies of each policy or other
evidence of insurance
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required by this Agreement evidencing (a) the issuance of such policies,
(b) that the Borrower is not then in default in the payment of any premium
and (c) coverage which meets all of the requirements set forth in this
Agreement; and (ii) an Officers' Certificate dated the Closing Date to the
effect that the insurance coverage required by this Agreement is in full
force and effect and that all monthly premiums therefor have been paid to
date.
(w) Business Plan. The Lenders shall have received a satisfactory
business plan for fiscal years 1997-2004 and a satisfactory written
analysis of the business and prospects of the Borrower and its
Subsidiaries for the period from the Closing Date through the final
maturity date of the Term Loans.
(x) Cash Management Agreement. The Lenders shall have received a
letter in the form attached as Exhibit N duly executed by the Borrower,
the other Loan Parties, the Cash Manager and the Administrative Agent.
(y) Pledged Note Documents. The Administrative Agent shall have
received each of the documents described in paragraph (d) of Schedule IV
with respect to the Pledged Notes listed on Schedule 2 of the Guarantee
and Collateral Agreement.
5.2 Conditions to Each Loan and Letter of Credit. The agreement of
each Lender to make any Loan requested to be made by it, and of the Issuing
Lender to issue any Letters of Credit, on any date (including, without
limitation, the initial Loans) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Except to the extent that they
are made as of a specific date, each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true
and correct in all material respects on and as of such date as if made on
and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Additional Matters. All proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
(d) Borrowing Notice. The Borrower shall have delivered to the
Administrative Agent the applicable Borrowing Notice in accordance with
the relevant Section of Section 2.
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Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain
in effect, any Loan, Note or Letter of Credit remains outstanding and unpaid or
any other amount is owing to any Lender or the Administrative Agent hereunder,
the Borrower shall and, if applicable, shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related consolidated statements of income and
retained earnings and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by KPMG Peat Marwick
LLP or other independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as
being fairly stated in all material respects (subject to normal year-end
audit adjustments); and
(c) as soon as available and in any event within 45 days after the
end of each calendar quarter, commencing with respect to the calendar
quarter ending June 30, 1997, quarterly operating statements (including
trailing 12 months operating results) with respect to each Mortgaged
Property and Non-Recourse Property (including rent rolls for office
property), in reasonable detail satisfactory to the Administrative Agent
and certified by the Chief Executive Officer or Chief Financial Officer of
the Borrower stating that, subject to normal adjustments following the
preparation of the financial statements referred to above in clauses (i)
and (ii), respectively, such statements fairly present, in all material
respects, the results of operations of the Properties indicated for the
periods indicated;
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all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to each Lender:
(a) upon request of the Administrative Agent at any time after the
occurrence of a Default or an Event of Default, an agreed upon procedures
report prepared by the independent certified public accountants reporting
on the financial statements referred to in Section 6.1(a) which verifies
the calculations contained in the most recently delivered Compliance
Certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 6.1, a Compliance Certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, during
such period (A) no Subsidiary has been formed or acquired (or, if any such
Subsidiary has been formed or acquired, the Borrower has complied with the
requirements of Section 6.12 with respect thereto), (B) neither the
Borrower nor any of its Subsidiaries has changed its name, its principal
place of business, its chief executive office or the location of any
material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect
thereto and (C) the Borrower has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to be observed, performed
or satisfied by it, and that such Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and
(ii) setting forth calculations demonstrating compliance with Sections
7.1., 7.2, 7.6, 7.8, 7.9 and 7.17;
(c) not later than the end of each fiscal year of the Borrower, a
copy of the projections by the Borrower of the operating budget and cash
flow budget of the Borrower and its Subsidiaries for the succeeding fiscal
year, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the
basis of sound financial planning practice and that such Officer has no
reason to believe they are incorrect or misleading in any material respect
with respect to any Property owned or managed on the date of the
projections;
(d) as soon as practicable and in any event no later than December
15 of each year, projected financial statements for each Property for the
next succeeding calendar year, together with an explanation of the
assumptions on which such forecasts are based, and such other information
and projections as the Administrative Agent may reasonably request for any
Property;
(e) promptly upon their becoming available, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Borrower to its security holders, (b) all
regular and periodic reports and all
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registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by 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 the Borrower or any of its Subsidiaries to the public or to
the security holders of the Borrower;
(f) as soon as practicable and in any event by the last day of each
yearly policy period, a report in form and substance reasonably
satisfactory to the Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by the Borrower 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 the
Borrower and its Subsidiaries in the next succeeding yearly policy period
to the extent varying from the description of that delivered or described;
(g) as soon as practicable following receipt thereof, copies of all
environmental audits and reports, whether prepared by personnel of the
Borrower or any of its Subsidiaries or by independent consultants, with
respect to material environmental matters at any Property or which relate
to a claim, action or proceeding under any Environmental Laws which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;
(h) with reasonable promptness, written notice of any change in the
Board of Directors of the Borrower; and
(i) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to Section 6.5; comply with all Contractual Obligations (including,
without limitation, all Management Agreements and Franchise Agreement) and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
6.5 Common Stock. Cause the Common Stock to be and to remain at all
times duly listed on the New York Stock Exchange, Inc., and timely file all
reports required
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to be filed by the Borrower with the New York Stock Exchange, Inc. and the
Securities and Exchange Commission.
6.6 Maintenance of Property; Repairs. (i) Maintain or cause to be
maintained each Mortgaged Property and all other items of Collateral in a manner
consistent for upscale full service hotel properties, limited service properties
or office properties, as applicable, and related property, and other property
and assets constituting the Collateral, 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; (ii)
not remove, demolish or structurally alter, or permit or suffer the removal,
demolition or structural alteration of, any of the improvements in respect of a
Mortgaged Property except as expressly permitted hereunder or in connection with
a Renovation or Restoration; (iii) comply in all material respects with all
Requirements of Law, applicable insurance requirements and all covenants,
conditions and restrictions now or hereafter affecting any Property or other
item of Collateral or any part thereof or requiring any alterations or
improvements; and (iv) not commit or permit any waste of the Collateral.
6.7 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
6.8 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of
its Subsidiaries in which the amount involved, individually or in the
aggregate, is $1,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought;
77
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i)
the occurrence or expected occurrence of any Reportable Event with respect
to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of
any other action by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or
the terminating, Reorganization or Insolvency of, any Plan;
(e) the occurrence of any event that results in Net Proceeds;
(f) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower
and its Subsidiaries taken as a whole or any development or event which
could reasonably be expected to have a Material Adverse Effect; and
(g) any default beyond applicable cure periods in the payments due
on any Pledged Note.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
6.9 Environmental Laws. (a) Comply with, and ensure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply in all material respects with and maintain, and ensure that
all tenants and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect.
6.10 Further Assurances. Upon the request of the Administrative
Agent, promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without limitation,
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law which
are necessary or advisable to maintain in favor of the Administrative Agent, for
the benefit of the Lenders, Liens on the Collateral that are duly perfected in
accordance with all applicable Requirements of Law.
78
6.11 Interest Rate Protection. If the aggregate principal amount
outstanding of Loans and/or any other Indebtedness of the Borrower and its
Subsidiaries bearing interest at floating rates exceeds $200,000,000 as of any
date of determination, then within 60 days thereafter the Borrower shall enter
into Interest Rate Agreements, on terms and with counterparties, in each case
reasonably acceptable to the Arranger and the Administrative Agent, and in an
outstanding notional amount equal to 30% of the aggregate principal amount of
the aggregate floating rate Indebtedness of the Borrower and its Subsidiaries.
The Borrower's obligation to enter into Interest Rate Agreements as provided
above shall automatically become effective again each time the amount of
Indebtedness of the Borrower and its Subsidiaries bearing interest at floating
rates rises in $25,000,000 increments above $200,000,000 (in which case such
Interest Rate Agreements shall be entered into within 30 days after any such
increase).
6.12 Additional Collateral. (a) With respect to any assets acquired
after the Closing Date by the Borrower or any of its Subsidiaries that are
permitted hereunder or are otherwise intended to be subject to the Lien created
by any of the Security Documents but which are not so subject (other than (x)
any assets described in paragraph (b) of this Section and (z) immaterial assets
a Lien on which cannot be perfected by filing UCC-1 financing statements),
within 30 days after the acquisition thereof: (i) execute and deliver to the
Administrative Agent such amendments to the relevant Security Documents or such
other documents as the Administrative Agent shall deem necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a Lien on
such assets, (ii) take all actions necessary or advisable to cause such Lien to
be duly perfected in accordance with all applicable Requirements of Law,
including, without limitation, the filing of financing statements in such
jurisdictions as may be requested by the Administrative Agent, (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent and (iv) any other documents
or information set forth in the definition of "Property Information and
Deliveries" that is required to be delivered hereunder in connection with such
acquisition.
(b) Subject to clause (k) in the definition of "Property Information
and Deliveries", with respect to any Person that, subsequent to the Closing
Date, becomes a Subsidiary (including any Joint Venture), within 30 days after
the date thereof: (i) cause such new Subsidiary (A) to become a party to the
Guarantee and Collateral Agreement pursuant to documentation which is in form
and substance satisfactory to the Administrative Agent, and (B) to take all
actions necessary or advisable to cause the Lien on the assets of such
Subsidiary created by the Guarantee and Collateral Agreement to be duly
perfected in accordance with all applicable Requirements of Law, including,
without limitation, the filing of financing statements in such jurisdictions as
may be requested by the Administrative Agent, (ii) deliver to the Administrative
Agent the certificates representing the Capital Stock of such Subsidiary,
together with undated stock powers executed and delivered in blank by a duly
authorized officer of the pledgor thereof and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in
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clauses (i) and (ii) immediately preceding, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
6.13 Insurance. (a) Risks to be Insured. With respect to each
Mortgaged Property, procure or cause to be procured, and maintain or cause to be
maintained continuously in effect, insurance coverage issued by an insurer (i)
authorized to issue such insurance in all applicable jurisdictions, (ii) rated
"A" (or its equivalent) or better by ▇▇▇▇▇▇ ▇. Best Company, Inc., (iii) with a
financial size rating of VIII (or its equivalent) or better, by ▇▇▇▇▇▇ ▇. Best
Company, Inc., and (iv) otherwise satisfactory to the Administrative Agent;
provided, however, that the requirements set forth in clauses (ii) and (iii)
above with respect to any Mortgaged Property shall be subject to any
requirements of any related Ground Lease; provided, further, however, that as of
the Closing Date, the insurers of the Borrower's or any of its Subsidiaries'
earthquake, flood and wind insurance policies (and any renewals thereof by such
insurers, respectively) may be rated "A-" (or its equivalent) by ▇▇▇▇▇▇ ▇. Best
Company, Inc. and have a financial size rating of "VIII" (or its equivalent) by
▇▇▇▇▇▇ ▇. Best Company, Inc.; it being understood and agreed that, in the event
the Borrower or any of its Subsidiaries procures any earthquake, flood or wind
insurance from a carrier other than the carrier providing such insurance on the
Closing Date, such carrier shall comply with the requirements set forth in
clauses (ii) and (iii) above unless otherwise approved by the Administrative
Agent. Each Loan Party shall pay, and shall cause each of its Subsidiaries to
pay, in a timely manner all premiums due in connection 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
Administrative Agent in its sole discretion. The insurance to be procured and
maintained by the Borrower and its Subsidiaries is the following:
(i) Casualty. Keep each Mortgaged Property insured for the benefit
of the Administrative Agent, in each case, as follows:
(1) All Risk of Physical Loss. Insurance with respect to
the improvements now or hereafter located on the Mortgaged
Properties and any alterations or additions thereto and the
furniture, fixtures and equipment against any peril included within
the classification "All Risks of Physical Loss" with extended
coverage (including fire, lightning, windstorm, sprinkler, hail,
explosion, riot, riot attending a strike, civil commotion,
vandalism, malicious mischief, terrorist acts, aircraft, vehicle,
sinkholes and smoke) in an amount equal to the full insurable value
of such improvements and such furniture, fixtures and equipment. The
term "full insurable value" shall mean 100% of the actual
replacement cost of such improvements and such furniture, fixtures
and equipment (without taking into account any depreciation, and
exclusive of excavations, footings and foundations, landscaping and
paving) determined by an insurer upon the request of the
Administrative Agent, a recognized independent insurance broker or
an appraiser selected (and approved by the Administrative Agent) and
paid by the applicable Loan Party or its Subsidiary; provided,
however, that such amount shall be sufficient to prevent such Loan
80
Party or such Subsidiary from becoming a co-insurer, and the policy
shall contain a stated value endorsement to that effect.
(2) Builder's Risk. During any period of construction of
improvements and any repair, Restoration, Renovation or replacement
thereof, a standard builder's all risk policy (completed value
non-reporting form) or equivalent coverage under the policy
described in subclause (i)(a) above for an amount at least equal to
the full insurable value of the work to be performed and equipment,
supplies and materials to be furnished, as shall be reasonably
approved by the Administrative Agent for such purpose, the coverage
of which shall include the hazards described in Section
6.13(a)(i)(1) and building collapse; provided, however, that such
policy may be obtained by a contractor if it names the
Administrative Agent and the Borrower and its applicable
Subsidiaries as additional named insureds and if it otherwise
complies with this Agreement. Such policy shall contain a stated
value endorsement so that no co-insurance provision shall be
applicable to any loss thereunder. Such policy shall contain the
provision that "permission is hereby granted to complete and/or
occupy" upon the earlier to occur of substantial completion of any
discrete increment of the work or a tenant taking occupancy of any
Mortgaged Property (or portion thereof) as to which work was being
performed.
(3) Flood. Insurance against damage or loss by flood as
to any Mortgaged Property that is located in an area now or
subsequently designated as an area having special flood hazards and
in which flood insurance has been made available under the National
Flood Insurance Act of 1968 or the Flood Disaster Protection Act of
1973, or the National Flood Insurance Reform Act of 1994, as such
Acts may be amended, modified, supplemented or replaced from time to
time, on such basis and not less than such amounts as shall be
reasonably approved by the Administrative Agent, but not less than
the amount required by law.
(4) Boilers. Broad form boiler and machinery insurance
(without exclusion for explosion) covering all boilers, boiler
tanks, heating and air conditioning equipment, pressure vessels,
auxiliary piping and similar apparatus, machinery and equipment
located in, on or about each Mortgaged Property insuring against
damage or loss from boilers, boiler tanks, heating and air
conditioning equipment, pressure vessels, auxiliary piping and
similar apparatus, machinery and equipment and insurance against
loss of occupancy or use arising from any such breakdown in such
amounts as are generally available at reasonable premiums and are
generally required by institutional lenders for properties
comparable to the Mortgaged Properties.
(5) Business Interruption or Rental Income Insurance.
Business interruption and/or loss of rental value or use and
occupancy insurance insuring against business interruption at and
against loss of rental income from each Mortgaged Property due to
any of the hazards listed in
81
Section 6.13(a)(i)(1) above in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds for a period not less
than one year of loss equal to the higher of budgeted gross revenues
or the current years' revenues (determined in each case without
giving effect to any interruption in business).
(6) Earthquake Insurance. With respect to any Mortgaged
Property located in California, British Columbia or other area
designated as seismic zones 3 or 4 in the Uniform Building Code,
earthquake insurance on such basis and in such amounts as shall be
reasonably required by the Administrative Agent; provided, that each
of the Mortgaged Properties that are located in California and
British Columbia on the Closing Date shall have earthquake insurance
as evidenced by the policies delivered pursuant to Section 5.1.
(ii) Workers' Compensation. Maintain for itself and for each
Mortgaged Property at which such Loan Party or such Subsidiary maintains
employees, statutory workers' compensation insurance (to the extent the
risks to be covered thereby are not already covered by other policies of
insurance maintained by such Loan Party or such Subsidiary), in statutory
amounts as required by law (including employer's liability insurance),
except in those states where such Loan Party elects to not subscribe to
the workers' compensation statute. If the applicable Loan Party elects to
not subscribe to the workers' compensation statute, such Loan Party shall
have a benefit program and employees' legal liability coverage to respond
to claims that would otherwise be covered by a standard policy of workers'
compensation.
(iii) Liability. Procure and maintain:
(1) Comprehensive General Liability Insurance.
Comprehensive general liability insurance, on an occurrence basis in
the amount of $2,000,000 per occurrence per Property and $5,000,000
in the aggregate per Property covering each Loan Party, each of its
Subsidiaries and the Agents against claims for bodily injury, death
and property damage (including claims and legal liability to the
extent insurable imposed upon the Agents and all court costs and
attorneys' fees and expenses), arising out of or connected with the
possession, use, leasing, operation, maintenance or condition of
each Property or occurring in, upon or about or resulting from each
Property, or any drive, sidewalk, curb or passageway adjacent
thereto (to the extent insurable), which insurance shall include
blanket contractual liability coverage which insures contractual
liability (to the extent insurable) under the indemnification set
forth in Section 10.5 of this Agreement (but such coverage or the
amount thereof shall in no way limit such indemnification), garage
liability (if applicable), products liability (if applicable) and
elevator liability (if applicable) coverage and during any period of
construction of any improvements, owner's and contractor's
protective liability coverage, including completed operations
liability coverage. If any of the coverages referred to in
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this Section 6.13(a)(iii)(1) are obtained under a so called
"blanket" policy with more than one Property covered, the policy
shall contain an "individual aggregate per location/project"
endorsement.
(2) General Liability and Property Damage. Commercial
general liability and property damage insurance on an occurrence
basis in connection with any Renovation being performed at any
Mortgaged Property, to be carried by any contractor or construction
manager or by any Person, including any Loan Party or any of its
Subsidiaries, performing a similar function, including "Builders
Risk" coverage in the amount of $2,000,000 per occurrence and
$5,000,000 in the aggregate.
(3) Liquor Liability and Dram Shop Insurance. Liquor
liability and dram shop insurance on such basis and in such amounts
as shall be reasonably required by the Administrative Agent in a
minimum amount of $2,000,000 per occurrence and $5,000,000 in the
aggregate for Mortgaged Properties.
(4) Umbrella or Excess Liability Insurance. Umbrella or
excess liability insurance, on an incurrence basis in the amount of
at least $100,000,000 per occurrence and in the aggregate per year
covering each Loan Party, each of its Subsidiaries and the
Administrative Agent against claims for damages in excess of all
primary liability policies.
(iv) Additional Insurance. Procure and maintain such other insurance
with respect to the Mortgaged Properties against loss or damage of the
kinds from time to time customarily insured against and in such amounts as
are generally available at reasonable premiums and are generally required
by institutional lenders for properties comparable to the Mortgaged
Properties.
(b) Policy Provisions. Each policy of insurance maintained in respect of
any Loan Party, any of its Subsidiaries and/or any Mortgaged Property pursuant
to this Section 6.13 shall (i) in the case of each category of public liability
insurance, name such Loan Party or such Subsidiary, as the case may be, as
insured and name the Administrative Agent (for the benefit of the Lenders) as an
additional insured, and in the case of all other insurance required under this
Agreement (other than any such policy maintained solely in respect of one or
more Non-Recourse Properties), name the Administrative Agent (for the benefit of
the Lenders) as an additional insured or as a mortgagee or loss payee, as
Administrative Agent shall require; (ii) except in the case of public liability
insurance and workers' compensation insurance, provide that all proceeds
thereunder shall be payable to the Administrative Agent pursuant to a standard
first mortgagee endorsement, without contribution, that all losses with respect
to each Property shall be paid directly to the Administrative Agent, without
contribution by any similar insurance carried by the Administrative Agent and
that adjustment and settlement of any material loss shall be subject to the
reasonable approval of the Administrative Agent; (iii) include effective waivers
by the insurer of all rights of subrogation against any loss payee, additional
insured or named insured; (iv) permit the Administrative
83
Agent to pay the premiums and continue any insurance upon failure of such Loan
Party or such Subsidiary, as the case may be, to pay premiums when due, upon the
insolvency of such Loan Party or such Subsidiary, as the case may be, or through
foreclosure; (v) to the extent such provisions are reasonably obtainable,
provide that such insurance shall not be impaired or invalidated by virtue of
(1) any act, failure to act, negligence of, or violation of declarations,
warranties or conditions contained in such policy by such Loan Party or such
Subsidiary, as applicable, the Borrower, the Administrative Agent, the Lenders
or any other named insured, additional insured or loss payee, except for the
willful misconduct of the Administrative Agent or the Lenders knowingly in
violation of the conditions of such policy, (2) the occupation or use of such
Mortgaged Property for purposes more hazardous than permitted by the terms of
the policy, (3) any foreclosure or other proceeding or notice of sale relating
to such Property or (4) any change in the possession of such Mortgaged Property
without a change in the identity of the holder of actual title to such Property
(provided, that with respect to items (3) and (4) any notice requirements of the
applicable policies are satisfied); (vi) be subject to a deductible, if any, not
greater than $100,000 (or, with respect to coverage for wind damage or
earthquake damage, such greater amount as shall not exceed 5.0% of the affected
Mortgaged Property's agreed value); (vii) contain an endorsement providing that
none of the Administrative Agent, the Lenders or such Loan Party or such
Subsidiary, as applicable, shall be, or shall be deemed to be, a co-insurer with
respect to any risk insured by such policy; and (viii) provide that if all or
any part of such policy shall be canceled or terminated, or shall expire, the
insurer will forthwith give notice thereof to the Administrative Agent and each
additional insured and loss payee and that no cancellation, termination,
expiration, reduction in amount of, or material change (other than an increase)
in, coverage thereof shall be effective until at least 30 days (or 10 days in
the case of non-payment for premiums) after receipt by the Administrative Agent
and each additional insured and loss payee of written notice thereof; provided,
however, that the requirements set forth in this Section 6.13(b) with respect to
any Mortgaged Property shall be subject to any requirements of any Ground Lease
affecting such Mortgaged Property. Nothing contained herein shall be construed
to prevent the Borrower or any of its Subsidiaries from satisfying the
provisions of this Section 6.13 through the use of so-called blanket,
manuscripted or loss limit policies.
(c) Increases in Coverage. The policy limits of any policy of insurance
required hereunder shall be increased from time to time to reflect what a
reasonable prudent owner of land and improvements similar in type and locality
to each Mortgaged Property would carry.
(d) Payment of Proceeds. If any such insurance proceeds required to be
paid to the Administrative Agent are instead made payable to the Borrower or any
Subsidiary thereof, the Borrower hereby appoints the Administrative Agent as its
attorney-in-fact, irrevocably and coupled with an interest, to endorse and/or
transfer any such payment to the Administrative Agent.
(e) Delivery of Counterpart Policies; Evidence. At each time after the
Closing Date that any Loan Party or any of its Subsidiaries is required by this
Agreement or by any Security Document or any other Loan Document to deliver
evidence of insurance, such Loan Party shall deliver, or shall cause such
Subsidiary to deliver, such evidence of valid policies
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of insurance acceptable to the Administrative Agent evidencing (i) the issuance
of the policies of insurance required by this Agreement or other Loan Document
to be carried, (ii) the payment of all premiums then due to the applicable
insurer, (iii) coverage which meets all of the requirements set forth in this
Agreement or other Loan Document, and (iv) that the required policies are in
full force and effect.
(f) Replacement or Renewal Policies. Not less than 20 days prior to the
expiration, termination or cancellation of any insurance policy which any Loan
Party or any of its Subsidiaries is required to maintain hereunder, such Loan
Party shall obtain, or shall cause such Subsidiary to obtain, a replacement or
renewal policy or policies (or a binding commitment for such replacement or
renewal policy or policies), which shall be effective no later than the date of
the expiration, termination or cancellation of the previous policy, and shall
deliver to the Administrative Agent a valid binder in respect of such policy or
policies in the same form and containing the same information as the expiring
policy or policies required to be delivered by each Loan Party and its
Subsidiaries pursuant to Section 6.13(e) or a copy of the binding commitment for
such policy complying with all the requirements of this Section, followed by a
certified true copy of the policy or policies when issued. If any Loan Party or
any of its Subsidiaries fails to obtain insurance as required hereunder, the
Administrative Agent may purchase such insurance, and the Borrower shall pay all
premiums and other costs and expenses incurred by the Administrative Agent.
(g) Material Change in Policy. Each Loan Party shall deliver, and shall
cause each of its Subsidiaries to deliver, to the Administrative Agent
concurrently with each material change in any insurance policy covering any part
of the Mortgaged Properties required to be maintained by each Loan Party and its
Subsidiaries hereunder, a valid binder or policy endorsement with respect to
such changed insurance policy certified by the insurance company issuing such
policy, in the same form and containing the same information as the original
evidence of insurance required to be delivered by each Loan Party and its
Subsidiaries pursuant to Section 6.13.
(h) Separate Insurance. No Loan Party will take out, nor will it permit
any of its Subsidiaries to take out, separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained pursuant
to this Section unless such insurance complies with all of the requirements of
this Section.
6.14 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 Mortgaged 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 in an Officers' Certificate delivered to the Administrative Agent, the
Borrower shall promptly deliver to the Administrative Agent written notice of
the same which shall, among other things, describe such casualty.
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(b) Insurance Proceeds. All Insurance Proceeds in respect of a Mortgaged
Property (other than Insurance Proceeds attributable to insurance required
pursuant to Section 6.13(a)(ii) and (iii)) and the right thereto are hereby
irrevocably assigned and pledged by each Loan Party to the Administrative Agent
for the benefit of the Lenders, and the Administrative Agent on behalf of the
Lenders is authorized, at its option, to collect and receive all of the same and
to give proper receipts and acquittances therefor; provided, however, that (x)
such assignment and pledge with respect to any such Mortgaged Property is
subject to any requirements of any Ground Lease affecting such Mortgaged
Property, (y) if no Event of Default shall have occurred and be continuing and
the Borrower certifies to the Administrative Agent that the Restoration of the
affected Property will be commenced within sixty days of the occurrence of the
receipt of Insurance Proceeds and will be completed within one year thereafter
and not later than June 30, 2004, such Loan Party shall have the right to direct
the Administrative Agent (1) to pay to such Loan Party all Insurance Proceeds
with respect to such casualty affecting a Mortgaged Property and (2) to pay to
such Loan Party all proceeds of any related business interruption insurance.
Each Loan Party agrees to execute and to cause each of its Subsidiaries to
execute such further assignments and pledges of any Insurance Proceeds in
respect of the Mortgaged Properties as the Administrative Agent may reasonably
require and shall otherwise cooperate with the Administrative Agent in obtaining
for the Administrative Agent and the Lenders the benefit of any Insurance
Proceeds lawfully or equitably payable in respect of any such Mortgaged
Property, subject to the provisos above. During the continuance of an Event of
Default, the Administrative Agent is hereby authorized and empowered by the
Borrower to settle, adjust or compromise any claims for damage, destruction or
loss thereunder, with or without the consent of any Loan Party or any of its
Subsidiaries (and the Borrower hereby irrevocably appoints and constitutes the
Administrative Agent as the Borrower's lawful attorney-in-fact, coupled with an
interest and with full power of substitution, for such purpose). In no event
shall any Loan Party or any of its Subsidiaries settle, adjust or compromise any
claim for Insurance Proceeds in respect of any Mortgaged Property in excess of
$500,000 without the prior written consent of the Administrative Agent, which
shall not be unreasonably withheld, conditioned or delayed; provided, however,
that this provision shall not restrict the right of the lessor under any
applicable Ground Lease (1) to settle, adjust or compromise any claim for
Insurance Proceeds to the extent such lessor is granted the power to do so under
such Ground Lease or (2) to approve any settlement, adjustment or compromise of
any claim for Insurance Proceeds to the extent the approval of such lessor is
required under such Ground Lease. Subject to the requirements of any Ground
Lease affecting any Mortgaged Property, each insurance company concerned is
hereby authorized and directed to make payment of all Insurance Proceeds in
respect of each of the Mortgaged Properties payable by it directly to the
Administrative Agent. If any Loan Party or any of its Subsidiaries receives any
Insurance Proceeds resulting from such casualty in respect of any Mortgaged
Property, such Loan Party or Subsidiary shall (subject to the requirements of
any Ground Lease affecting such Property) promptly endorse and transfer, or
cause such Subsidiary to endorse and transfer, such excess Insurance Proceeds to
the Administrative Agent and each Loan Party covenants that until so paid over
to the Administrative Agent, such Loan Party or such Subsidiary, as applicable,
shall hold such Insurance Proceeds in trust for the benefit of the
Administrative Agent and shall not commingle such Insurance Proceeds with any
other funds or assets of such Loan Party or Subsidiary or any other Person.
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(c) Notice of Condemnation; Negotiation and Settlement of Claims. The Loan
Parties shall, and shall cause their respective Subsidiaries to, promptly
deliver written notice to the Administrative 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 Mortgaged Property.
During the continuance of an Event of Default, the Administrative Agent shall
have the right to participate in any negotiation, action or proceeding relating
to any such action or proceeding affecting any Mortgaged Property, and no
settlement or compromise of any claim in connection with any such action or
proceeding shall be made without the consent of the Administrative Agent;
provided, however, that this provision shall not restrict the right of the
lessor under any applicable Ground Lease (1) to settle or compromise any such
claim to the extent such lessor is granted the power to do so under such Ground
Lease or (2) to approve any settlement or compromise of any such claim to the
extent the approval of such lessor is required under such Ground Lease.
(d) Condemnation Proceeds. All Condemnation Proceeds in respect of each of
the Mortgaged Properties and the right thereto are hereby irrevocably assigned
and pledged by each Loan Party to the Administrative Agent for the benefit of
the Lenders, and the Administrative Agent on behalf of the Lenders is
authorized, at its option, to collect and receive all such Condemnation Proceeds
and to give proper receipts and acquittances therefor; provided, however, (x)
that such assignment and pledge with respect to any such Mortgaged Property is
subject to any requirements of any Ground Lease affecting such Mortgaged
Property, (y) if no Event of Default shall have occurred and be continuing and
the Borrower certifies to the Administrative Agent that the Restoration of the
affected Property will be commenced within sixty days of the occurrence of the
receipt of Condemnation Proceeds, will be completed within one year thereafter
and not later than June 30, 2004 and access to the affected Property will not be
cut off, such Loan Party shall have the right to direct the Administrative Agent
to pay such Loan Party all Condemnation Proceeds with respect to a Taking
affecting a Mortgaged Property. Each Loan Party agrees to execute, and to cause
each of its Subsidiaries to execute, such further assignments of any
Condemnation Proceeds in respect of any Mortgaged Property as the Administrative
Agent may reasonably require and shall otherwise cooperate with the
Administrative Agent in obtaining for the Administrative Agent and the Lenders
the benefit of any Condemnation Proceeds lawfully or equitably payable in
respect of such Mortgaged Property, subject to the provisos above. Upon the
occurrence and during the continuance of an Event of Default (but not
otherwise), the Administrative Agent is hereby authorized and empowered by each
Loan Party to settle, adjust or compromise any claims for Condemnation Proceeds
with or without the consent of such Loan Party or any of its Subsidiaries (and
the Borrower hereby irrevocably appoints and constitutes the Administrative
Agent as its lawful attorney-in-fact, coupled with an interest and with full
power of substitution, for such purpose). In no event shall any Loan Party or
any of its Subsidiaries settle, adjust or compromise any claim for Condemnation
Proceeds in respect of any Mortgaged Property without the prior written consent
of the Administrative Agent; provided, however, that this provision shall not
restrict the right of the lessor under any applicable Ground Lease (1) to settle
or compromise any claim for Condemnation Proceeds to the extent such lessor is
granted the power to do so under such Ground Lease or (2) to approve any
settlement or compromise of any claim for Condemnation Proceeds to the extent
the approval of such lessor is required under such Ground Lease.
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6.15 Renovations. If the Borrower or any of its Subsidiaries intends
to Renovate any Mortgaged Property (including any expansion of improvements to
increase the number of available rooms) in a project or series of related
projects (other than the replacement of FF&E in the ordinary course of
business), the cost of which will exceed (or may reasonably be expected to
exceed) $250,000, as reasonably determined by the Borrower and as so certified
in the Officers' Certificate referred to below, the Borrower shall, not less
than 20 days prior to the commencement of any such Renovation, deliver to the
Administrative Agent (i) an Officer's Certificate describing such Renovation,
the estimated budget thereof, the estimated percentage of rooms to be out of
service during such Renovation and an estimated time schedule for such
Renovation (unless all of the foregoing information is contained in an
Investment Committee Memorandum previously delivered to the Administrative
Agent) and (ii) evidence of Builder's Risk insurance required by Section
6.13(a)(i)(2) with respect to such Renovation.
6.16 Capital Expenditures; Deferred Maintenance.
(a) Capital Expenditures. In each calendar year, the Borrower and
its Subsidiaries shall expend on normal, recurring repairs and
replacements of FF&E (and excluding Renovations described in Section 6.15,
Deferred Maintenance and Acquisitions) for the Mortgaged Properties and
Non-Recourse Properties not less than 4% of the aggregate gross revenues
of such Mortgaged Properties and Non-Recourse Properties for the four
immediately preceding calendar quarters, to the extent the Borrower or any
of its Subsidiaries owned such Properties during such period. On or before
the thirtieth day after the end of each calendar year, the Borrower shall
deliver to the Administrative Agent an Officers' Certificate summarizing
amounts expended with respect to each Property as set forth above during
the preceding year and the application of such proceeds.
(b) Completion of Deferred Maintenance. The Borrower shall complete
with respect to each Property the Deferred Maintenance recommended
therefor in the Engineering Reports or environmental audits delivered by
the Borrower pursuant to Section 5.1 on or before the first anniversary of
the Closing Date. On or before the thirtieth day following the first
anniversary of the Closing Date (or the first anniversary of the date of
acquisition of any Property acquired by the Borrower or any of its
Subsidiaries after the Closing Date), the Borrower shall deliver to the
Administrative Agent an Officers' Certificate certifying that all such
Deferred Maintenance has been completed and summarizing amounts expended
with respect to each Property with respect thereto and the application of
such amounts.
6.17 O&M Requirements. Within 90 days after the Closing Date, the
Borrower shall design an operations and maintenance plan ("O&M Plan") which
shall be reasonably satisfactory to the Administrative Agent, for
asbestos-bearing materials ("ABM") that is consistent with the recommendations
in the Environmental Protection Agency's "Managing Asbestos in Place, A Building
Owner's Guide to Operations and Maintenance Programs for Asbestos-Containing
Materials" and for other Materials of Environmental
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Concern, if any, used or otherwise present any Mortgaged Property or
Non-Recourse Property and which shall include, without limitation, the following
program elements: (i) notification (a program to tell workers, tenants and
building occupants where ABM is located, and how and why to avoid disturbing the
ABMs); (ii) surveillance (regular ABM surveillance to note, assess, and document
changes in the ABM's condition); (iii) controls (work control/permit system to
control activities which might disturb ABMs); (iv) work practices (O&M work
practices to avoid or minimize fiber release during activities affecting ABM);
(v) recordkeeping (to document O&M activities); (vi) worker protection (medical
and respiratory protection programs, as applicable); (vii) training (asbestos
program manager and custodial and maintenance staff training); and (viii) a plan
for complying with all Applicable Laws with respect to ABM and other Materials
of Environmental Concern. Each of the Loan Parties and their respective
Subsidiaries owning or leasing Properties that at any time are known to contain,
or for which there is a reasonable basis to believe that such Properties may
contain, ABM shall promptly implement such O&M Plan.
6.18 Management of Properties. Manage and operate the Mortgaged
Properties and the Non-Recourse Properties in a commercially reasonable and
prudent manner and not permit any Person other than the Borrower or any Wholly
Owned Subsidiary to have substantial authority over the management and operation
of any Property, provided, that the Borrower and its Subsidiaries may engage a
third party manager on commercially reasonable terms to manage the office
portions of any Qualifying Hotel Properties.
6.19 Cash Management System; Administrative Agent Rights.
(a) Cash Management System. Maintain the Cash Management System as
described in Schedule 4.32 annexed hereto; provided, however, that each Loan
Party may open and close Local Accounts and make other changes to the Cash
Management System in the ordinary course of business upon prompt written notice
to the Administrative Agent as long as (i) no Event of Default has occurred and
is continuing or would result therefrom, (ii) such changes, either individually
or in the aggregate are not adverse to either the Administrative Agent or any
Lender (in its capacity as a Lender) or impair any rights, priority or
perfection of the Administrative Agent under the Security Documents, (iii) in
the case of any closing of any Local Account, a replacement Local Account
satisfactory to the Administrative Agent is opened by such Loan Party or such
Subsidiary, as the case may be (except if the closing of such account was done
as a result of the sale of the applicable Property) and (iv) all Receipts of
each Loan Party and each of its Wholly Owned Subsidiaries continue to be
collected and distributed pursuant to procedures described on Schedule 4.32;
provided further, that the Borrower may close a Concentration Account and open a
substitute Concentration Account with any Lender as long as (i) no Event of
Default has occurred and is continuing or would result therefrom and (ii) prior
to opening any substitute Concentration Account, the Borrower shall have
delivered evidence satisfactory to the Administrative Agent that the
Administrative Agent shall have, for the benefit of the Lenders, a perfected
security interest in such Concentration Account. For the purposes of this
Section 6.19, Receipts shall include, without limitation, Receipts derived from
investments in Subsidiaries, Joint Ventures and Pledged Notes.
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(b) Administrative Agent Rights. Comply with the following:
(i) Notwithstanding any other provision of this Agreement or any
other Loan Document, except as described on Schedule 4.32 annexed hereto,
all Receipts of each Loan Party and each of its Wholly Owned Subsidiaries
shall be deposited daily in the Local Accounts or into the Concentration
Account, in each case on or before the first Business Day following
receipt thereof, by the accounting office of the Loan Party or such
Subsidiary, as applicable, and as soon as practical in the case of
Receipts received in any other manner. All funds on deposit in the Local
Accounts of each Loan Party and each of its Wholly Owned Subsidiaries
shall be transferred to the Concentration Account in the manner described
on Schedule 4.32. Receipts shall be received and held by such Loan Party
and such Subsidiary and any of their respective officers, employees,
agents, managers or other Persons acting for or in concert with such Loan
Party or such Subsidiary to make collections for or on behalf of such Loan
Party or such Subsidiary, in trust for the Administrative Agent as
Collateral.
(ii) So long as no Event of Default shall have occurred and is
continuing, the Borrower may request that the Administrative Agent
instruct the Cash Manager to either apply Receipts on deposit in the
Concentration Account to pay Obligations or transfer such Receipts to
accounts designated by the Borrower in such amounts as the Borrower may
require, in each case by delivering such a request to the Administrative
Agent. As long as no Event of Default shall have occurred and be
continuing, upon receipt by the Administrative Agent of such a request,
the Administrative Agent shall instruct the Cash Manager to apply the
Receipts on deposit in accordance with such request; provided that, unless
the Administrative Agent notifies the Cash Manager that an Event of
Default has occurred and is continuing, the Administrative Agent may
instruct the Cash Manager to automatically apply Receipts on deposit in
the Concentration Account in accordance with the Borrower's instructions,
subject to the availability of funds on deposit in the Concentration
Account.
(iii) So long as no Event of Default shall have occurred and is
continuing, the Borrower may instruct the Cash Manager to invest in Cash
Equivalents in accordance with the Borrower's instructions all or any part
of amounts from time to time on deposit in the Concentration Account,
other than amounts necessary to effectuate a request by the Borrower as
provided for in subsection 6.19(b)(ii) with respect to the use of such
Receipts, and the Administrative Agent shall authorize the Cash Manager to
follow the Borrower's instructions as long as no Event of Default shall
exist.
(iv) The maximum balance in the Local Accounts with respect to each
Property shall not exceed $15,000 in the aggregate.
SECTION 7. NEGATIVE COVENANTS
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The Borrower hereby agrees that, so long as the Commitments remain
in effect, any Loan, Note or Letter of Credit remains outstanding and unpaid or
any other amount is owing to any Lender, the Arrangers, the Co-Arrangers or the
Administrative hereunder, the Borrower shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Maintenance of Consolidated Net Worth. Permit Consolidated Net
Worth on the last day of any fiscal period to be less than the sum of (i)
$250,000,000 plus (ii) 50% of the sum of (A) cumulative Consolidated Net
Income for each fiscal quarter ended after the Closing Date and on or
before the date of such calculation for which Consolidated Net Income was
a positive number and (B) the net cash proceeds received by the Borrower
from the sale of its equity securities between the Closing Date and the
date of such calculation.
(b) Consolidated Debt Service Ratio. Permit the Consolidated Debt
Service Ratio for any period of four consecutive fiscal quarters ending
during any "Test Period" set forth below (and tested quarterly) to be less
than the ratio set forth below opposite such period:
Test Period Ratio
Closing Date - June 30, 1998 2.25 to 1.00
July 1, 1998 - June 30, 1999 2.50 to 1.00
July 1, 1999 - June 30, 2000 2.75 to 1.00
thereafter 3.00 to 1.00.
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four
consecutive fiscal quarters ending during any "Test Period" set forth
below (and tested quarterly) to be less than the ratio set forth opposite
such period below:
Test Period Ratio
Closing Date - June 30, 1998 1.75 to 1.00
July 1, 1998 - June 30, 1999 1.95 to 1.00
July 1, 1999 - June 30, 2000 2.20 to 1.00
thereafter 2.45 to 1.00.
(d) Consolidated Total Debt Ratio. Permit Consolidated Total Debt
Ratio as of the end of any fiscal quarter ending during any "Test Period"
set forth below (and tested quarterly) to exceed the ratio set forth
opposite such period below:
Test Period Ratio
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Closing Date - June 30, 1998 5.50 to 1.00
July 1, 1998 - June 30, 1999 5.25 to 1.00
July 1, 1999 - June 30, 2000 5.00 to 1.00
July 1, 2000 - June 30, 2001 4.75 to 1.00
thereafter 4.50 to 1.00.
(e) Consolidated Senior Debt Ratio. Permit the Consolidated Senior
Debt Ratio as of the end of any fiscal quarter ending during any "Test
Period" set forth below (and tested quarterly) to exceed the ratio set
forth opposite such period below:
Test Period Ratio
Closing Date - June 30, 1998 4.75 to 1.00
July 1, 1998 - June 30, 1999 4.50 to 1.00
July 1, 1999 - June 30, 2000 4.25 to 1.00
July 1, 2000 - June 30, 2001 4.00 to 1.00
thereafter 3.75 to 1.00.
(f) Maximum Contribution from Certain Investments. (i) Permit the
aggregate amount of Consolidated EBITDA contributed by all Properties
owned by Joint Ventures and by debt and equity securities of such Joint
Ventures to be (1) more than 15% of Consolidated Adjusted EBITDA during
the period following the Closing Date to June 30, 1998, (2) more than
17.5% of Consolidated Adjusted EBITDA for July 1, 1998 to June 30, 1999,
or (3) more than 20% of Consolidated Adjusted EBITDA during any period
thereafter; or (ii) Permit the aggregate amount of Consolidated EBITDA
contributed by all Management Agreements and all Properties subject to
sale and lease-back transactions to be more than 10% of Consolidated
EBITDA any period. For purposes of this clause (f), a "Joint Venture"
shall not include a Person with respect to which at least 85% of the
Capital Stock of which is owned, directly or indirectly, by the Borrower
or any of its Wholly Owned Subsidiaries, provided, that the Borrower or
such Wholly owned Subsidiary (y) is the sole general partner or sole
managing member of such Person and (z) has the unilateral authority to
grant Liens on, and sell or otherwise transfer, the assets of such Person.
For purposes of determining whether the foregoing limitations on EBITDA
contribution are reached, the EBITDA contribution of any such assets shall
be determined as of the date of the Acquisition of such asset, provided,
that to the extent that the revenues of any such asset increases after
such date resulting in EBITDA contributions in excess of such limits, this
will not constitute a Default, however, the EBITDA from such assets in
excess of such limits shall not be included for purposes of determining
whether or not the covenants set forth in Section 7 have been satisfied.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness of the Loan Parties under the Loan Documents;
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(b) Indebtedness of the Borrower to any Subsidiary that is a Loan
Party and of any Subsidiary that is a Loan Party to the Borrower or any
other Subsidiary that is a Loan Party; provided, that all such
Indebtedness shall be evidenced by one or more promissory notes that are
pledged pursuant to the Security Documents to secure the Obligations;
(c) Indebtedness of the Loan Parties and their respective
Subsidiaries under any Interest Rate Agreements required pursuant to
Section 6.11;
(d) Indebtedness of the Borrower and any of its Subsidiaries
incurred to finance the acquisition, repair or replacement of FF&E
(whether pursuant to a loan, a Financing Lease or otherwise) in an
aggregate principal amount not exceeding as to the Borrower and its
Subsidiaries $2,500,000 at any time outstanding;
(e) so long as at the time of incurrence, refinancing, exchange or
refunding thereof (i) no Event of Default or Default has occurred and is
continuing or would be caused thereby and (ii) 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 Non- Recourse
Subsidiaries, may incur, refinance, exchange, amend or refund Indebtedness
in connection with the Acquisition or ownership of one or more
Non-Recourse Properties acquired in a single transaction or series of
related transactions (as so incurred, refinanced, exchanged, amended or
refunded, "Non-Recourse Indebtedness"), in an aggregate principal amount
not to exceed $100,000,000 for all Non-Recourse Subsidiaries at any time
(provided, that for purposes of determining whether such $100,000,000
limit has been reached, Non-Recourse Indebtedness of Subsidiaries of the
Borrower which are not Wholly Owned Subsidiaries shall be included on a
pro rata basis to the extent of the percentage interest that the Borrower
and its Wholly Owned Subsidiaries have in any such Subsidiary); provided,
however, that (A) the aggregate outstanding principal amount of any such
Non-Recourse Indebtedness shall not at any time exceed 65% of the sum of
the aggregate cash purchase price of such Non-Recourse Properties plus the
aggregate amount of expenditures actually made by such Non-Recourse
Subsidiary in connection with the Renovation of such Non- Recourse
Properties, (B) such Non-Recourse Indebtedness shall be non-recourse to
the Borrower and its Subsidiaries and any Joint Venture in which it has an
ownership interest (other than for any Guaranties provided with respect to
customary carve-outs for environmental and "bad deed" indemnities), (C)
such Non-Recourse Indebtedness shall not be secured by the assets of any
Loan Party or any of its Subsidiaries (other than the Properties owned by
such Non-Recourse Subsidiary and the Capital Stock of the Non-Recourse
Subsidiary), (D) after giving affect to such transaction, the Borrower is
in compliance with all of the provisions set forth herein and the other
Loan Documents, (E) the Borrower or a Wholly Owned Subsidiary of the
Borrower shall enter a Management Agreement with such Non-Recourse
Subsidiary which shall be on arms length, market terms, and (F) the
Borrower shall have delivered to the Administrative Agent any Officers'
Certificate demonstrating compliance with the
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provisions of this Section 7.2(e) by the applicable Non-Recourse
Subsidiary in connection with such transaction;
(f) so long as at the time of incurrence, refinancing, exchange or
refunding thereof (i) no Event of Default or Default has occurred and is
continuing or would be caused thereby and (ii) 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 (but not any of
its Subsidiaries) may incur, refinance, exchange, amend or refund
Subordinated Debt;
(g) Guarantee Obligations permitted by Section 7.4; and
(h) Indebtedness secured by Permitted Encumbrances.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except:
(a) Permitted Encumbrances;
(b) Liens on a Non-Recourse Property (or Capital Stock of a
Non-Recourse Subsidiary) and related assets granted or assumed by a
Non-Recourse Subsidiary to secure the Non-Recourse Indebtedness owed by
the Non-Recourse 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 Non-Recourse Indebtedness; and
(c) Liens on FF&E granted to secure Indebtedness incurred pursuant
to Section 7.2(d); provided, that such Liens encumber only FF&E purchased,
financed or refinanced with such Indebtedness.
7.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 7.4(a);
(b) the L/C Obligations;
(c) Guarantee Obligations of the Borrower or any Subsidiary in
respect of obligations of a Loan Party (other than a Non-Recourse
Subsidiary) permitted to be incurred by such Loan Party by this Agreement;
(d) indemnities in favor of the companies issuing title insurance
policies insuring the Mortgages or any mortgage or deed of trust securing
any Non-Recourse Debt to induce such issuance;
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(e) Guarantee Obligations in respect of Subordinated Debt, provided,
that (i) such Guarantee Obligations are subordinated to the obligations of
such guarantor under the Guarantee and Collateral Agreement on the same
terms as the subordination of the Subordinated Debt and (ii) the
intercreditor agreement covering the Subordinated Debt governs such
Guarantee Obligations on the same terms and conditions that it governs the
Subordinated Debt; and
(f) Guarantee Obligations under this Agreement and the Security
Documents.
7.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) as may be permitted under Section 7.6 and paragraph (e) of
Schedule IV;
(b) any Subsidiary (other than a Non-Recourse Subsidiary) of the
Borrower may be merged or consolidated with or into the Borrower
(provided, that the Borrower shall be the continuing or surviving
corporation) or with or into any one or more Wholly Owned Subsidiaries of
the Borrower (provided, that the Wholly Owned Subsidiary or Subsidiaries
shall be the continuing or surviving corporation); and
(c) any Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any other Subsidiary of the Borrower.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Subsidiary, except so long as no Event of Default
has occurred and is continuing or would be caused thereby, the Borrower and its
Subsidiaries may undertake:
(a) Asset Sales (including pursuant to sale lease-back transactions
wherein any Subsidiary of the Borrower sells or otherwise transfers a
Qualifying Hotel Property as part of a transaction wherein such Subsidiary
leases such Property back from the purchaser thereof, subject to clause
(e) below); provided, that the Net Proceeds of each such transaction are
applied to the prepayment of the Loans as provided in Section 2.10(a);
and, further, provided, that in any calendar year the Borrower and its
Subsidiaries shall not consummate Asset Sales with respect to assets
having a gross book value in excess of the 10% of gross book value of all
assets of the Borrower and its Subsidiaries as of the beginning of such
calendar year and during the period from
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the Closing Date until the Term Loan Termination Date, the Borrower and
its Subsidiaries shall not sell assets having a gross book value in excess
of the 25% of gross book value of all assets of the Borrower and its
Subsidiaries as of June 30, 1997;
(b) the sale of inventory and surplus and used FF&E in the ordinary
course of business;
(c) the sale or FF&E which has been replaced;
(d) the sale, transfer or other disposition of Common Limited
Partner Interests and Preferred Limited Partner Interests made as payment
for all or a portion of the purchase price of a Qualifying Hotel Property
by the Borrower or any of its Subsidiaries pursuant to a Permitted
Acquisition, so long as such transfer does not result in a Change of
Control; and
(e) sale lease-backs of Qualifying Hotel Properties as provided in
clause (a) above, provided, (i) the Borrower shall deliver or cause to be
delivered to the Administrative Agent (1) a leasehold mortgage reasonably
satisfactory in form and substance to the Administrative Agent and
evidence reasonably satisfactory to the Administrative Agent that all
other documents have been executed and all actions taken that the
Administrative Agent reasonably requests to create, perfect and maintain a
valid and enforceable first priority Lien in the leasehold interest of the
applicable Loan Party or Subsidiary and (2) an estoppel certificate,
reasonably satisfactory in form and substance to the Administrative Agent,
duly executed by the applicable lessor and (3) the items described in the
clauses (f), (h), (j) and (k) of the definition of "Property Information
and Deliveries" with respect to such Qualifying Hotel Property and such
sale lease-back transaction and (ii) the conditions contained in clause
(a)(iii) of Schedule IV shall have been satisfied. A sale and lease-back
transaction with respect to a Property permitted by this Section 7.6(e)
shall be deemed to be a sale or other permanent disposition of such
Property for all purposes of this Agreement, including Section 7.6(a).
If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Loan Party in a transaction permitted by this Agreement, then
the Administrative Agent, at the request and sole expense of the Borrower, shall
execute and deliver to such Loan Party all releases or other documents
reasonably necessary or desirable for the release of the Liens created by the
Security Documents on such Collateral; provided that the Borrower shall have
delivered to the Administrative Agent, at least ten Business Days prior to the
date of the proposed release, a written request for release identifying the
relevant Loan Party and the terms of the sale or other disposition in reasonable
detail, including the price thereof and any expenses in connection therewith,
together with a certification by the Borrower stating that such transaction is
in compliance with this Agreement and the other Loan Documents and that the
exclusion of the income and expenses from the transferred asset from
Consolidated EBITDA will not result in a violation of Section 7.1.
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7.7 Limitation on Leases. Enter into any Lease other than Leases
incidental to the operation of the Properties as hotels or leases for office
space of the Borrower and its Subsidiaries; it being understood and agreed that
if after the Closing Date any Loan Party or any of its Subsidiaries, as lessor,
enters into a Material Lease, the Administrative Agent may require that the
tenant thereunder enter into a subordination, non-disturbance and attornment
agreement reasonably satisfactory in form and substance to the Administrative
Agent. 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.
7.8 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in Common Stock) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock of the Borrower or any warrants or options to purchase
any such Stock, or make any payments in respect of the limited partnership
interests in the Operating Companies, whether now or hereafter outstanding, or
make any other distribution in respect thereof (including by way of conversion,
redemption or otherwise), either directly or indirectly, whether in cash or
property or in obligations of the Borrower or any Subsidiary, except that the
Borrower may make any such dividends or other payments in any calendar year not
in excess of 25% of Consolidated Net Income for such year.
7.9 Limitation on Acquisitions, Investments, Loans and Advances.
Make any advance, loan, extension of credit or capital contribution to, or
purchase any stock, bonds, notes, debentures or other securities of or any
assets constituting a business unit of, or make any other investment in, any
Person (which shall include any payment to any other Person for the purpose of,
or otherwise in connection with, securing, extending, renewing or modifying any
Management Agreement), including any Affiliate or Joint Venture, or make any
expenditure to acquire any hotel or other real property, or any expenditure to
construct any new hotel or any expenditure to acquire, secure, extend, renew or
modify any Management Agreement except (subject to the provisos at the end of
Section 7.9(c)):
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Permitted Acquisitions, provided, that (i) the prior written
approval of the Required Lenders shall be required for the Acquisition of
any single Property wherein the purchase price (including assumed
Indebtedness and the fair value of any limited partnership interests
issued in exchange therefor) is $50,000,000 or more or the Acquisition of
more than one Property in a related transaction or a series of related
transactions wherein the aggregate purchase price (including assumed
Indebtedness and the fair value of any limited partnership interests
issued in exchange therefor) for all such Properties is $100,000,000 or
more, (ii) the aggregate purchase price (including assumed Indebtedness)
for acquisitions of real property that is contiguous
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with any Property for use in the expansion of such Property as provided in
Schedule IV, measured on a cumulative basis from the Closing Date, shall
not exceed $10,000,000, (iii) the aggregate amount expended by the
Borrower and its Subsidiaries on (1) acquisitions after the Closing Date
of Properties located in Canada and (2) making, after the Closing Date, of
the other investments referred to above which relate to (A) any hotel
property located in Canada or (B) any Person who owns, manages or operates
any hotel property in Canada, shall not exceed $50,000,000 in the
aggregate, (iv) the aggregate amount expended after the Closing Date by
the Borrower and its Subsidiaries with respect to the investments
described in clauses (c) and (d) of Schedule IV and the Joint Venture
investments described in clause (e) of Schedule IV and REIT Leases shall
not exceed $45,000,000 (provided, that such amount shall be increased to
$60,000,000 on the first anniversary of the Closing Date and to
$75,000,000 on the second anniversary of the Closing Date), and, provided,
further, that for purposes of the proviso in this Section 7.9(c), the
Joint Ventures referred to in clause (e) of Schedule IV shall not include
a Person with respect to which at least 85% of the Capital Stock is owned,
directly or indirectly, by the Borrower or any of its Wholly Owned
Subsidiaries, provided, that the Borrower or such Wholly owned Subsidiary
(y) is the sole general partner or sole managing member of such Person and
(z) has the unilateral authority to grant Liens on, and sell or otherwise
transfer, the assets of such Person;
(d) investments by the Borrower in its Subsidiaries and investments
by such Subsidiaries in the Borrower and in other Subsidiaries;
(e) loans by the Borrower to its employees in connection with
management compensation plans or otherwise in an aggregate amount not to
exceed $500,000; and
(f) Renovations in accordance with the terms of this Agreement.
7.10 Management Agreements. Enter into or otherwise become obligated
with respect to, any management agreement with respect to any hotel property
(other than a Mortgaged Property or a Non-Recourse Property) after the Closing
Date, except as provided on Schedule IV.
7.11 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) Make any optional payment or prepayment on or redemption or
purchase of any Subordinated Debt, other than a prepayment of Subordinated Debt
with the proceeds of new Subordinated Debt, (b) amend, modify or change, or
consent or agree to any amendment, modification or change to any of the terms of
any such Indebtedness (other than any such amendment, modification or change
which would extend the maturity or reduce the amount of any payment of principal
thereof or which would reduce the rate or extend the date for payment of
interest thereon or in order to delete any covenant or agreement of any Loan
Party or to make any such covenant or agreement less restrictive on the Loan
Parties), or (c) amend the subordination provisions of any Subordinated Debt.
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7.12 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
7.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Borrower and its consolidated Subsidiaries to end on a day other than
December 31.
7.14 Limitation on Negative Pledge Clauses. 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 (other than a
Mortgaged 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 or otherwise and (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 or otherwise, 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.
7.15 No Joint Assessment; Separate Lots. 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.
7.16 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
which are directly related thereto.
7.17 Changes in Certain Documents; Issuance of Equity Securities.
(a) Equity Securities. Permit the issuance of any Capital Stock of the
Borrower or any of its Subsidiaries 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
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Term Loan Termination Date; provided, that, so long as no Event of Default or
Default has occurred and is continuing or would be caused thereby:
(i) subject to Section 7.6(d), the Operating Companies may issue
Common Limited Partner Interests and Preferred Limited Partner Interests
that may be converted solely into shares of Common Stock;
(ii) subject to Section 7.6(d), the Operating Companies may issue
Preferred Limited Partner Interests that by their terms may be converted
into or exercised or redeemed for cash or Common Stock, at the option of
the holder of such Preferred Limited Partner Interest if (a) the aggregate
amount of cash payable upon such conversion, exercise or redemption of
Preferred Limited Partner Interests issued after the Closing Date shall
not exceed $10,000,000 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 Administrative Agent, which approval shall not
be unreasonably withheld, conditioned or delayed; and
(iii) subject to Section 7.6(d), the Operating Companies may issue
Common Limited Partner Interests.
(b) Ground Leases. Take any action or fail to take any action, in either
case as may be required or permitted by the terms of any 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 Ground Lease in any material respect.
(c) Franchise Agreements. (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 Mortgaged 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 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 in any material
adverse respect, or (iii) enter into any new or replacement Franchise Agreement
with respect to such Property (with the same franchisor or a different
franchisor), provided, that the consent of the Administrative Agent or the
Lenders shall not be required if the franchisor under such new or replacement
Franchise Agreement shall have a national standing and reputation not less
favorable than the general standing and reputation of the franchisors under
Franchise Agreements then covering the such Properties and such Franchise
Agreement shall be on such franchisor's standard form of franchise agreement
with terms that are market or better for the Borrower and its Subsidiaries;
provided, that with respect to each matter referred to in the preceding clauses
(i), (ii) or (iii) for which the Administrative Agent may reasonably require a
franchisor's estoppel and consent agreement, the Administrative Agent shall
receive a franchisor's estoppel and consent agreement in substantially the form
of the
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estoppel and consent agreement delivered to the Administrative Agent pursuant to
Section 5.1 or otherwise in form and substance satisfactory to the
Administrative Agent.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder, within
five days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 7; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; 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
Borrower or such Loan Party obtains knowledge or notice thereof, and if
and so long as Borrower or such Loan Party is diligently and continuously
prosecuting such cure, then such default shall not be an Event of Default
unless the Borrower or such Loan Party fails to cure such default before
the 90th day after the Borrower or any Loan Party obtains knowledge or
notice thereof, as the case may be or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans and Non-Recourse Debt) or Interest Rate Agreement Obligation, or in
the payment of any Guarantee Obligation, beyond the period of grace, if
any, provided in the instrument or agreement under which such
Indebtedness, Guarantee Obligation or Interest Rate Agreement Obligation
was created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness, Guarantee
Obligation or Interest Rate Agreement Obligation or contained in any
instrument or
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agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation or Interest Rate
Agreement Obligation) to become payable; provided, that a default, event
or condition described in clause (i) or (ii) of this paragraph (e) shall
not at any time constitute an Event of Default under this Agreement
unless, at such time, one or more defaults, events or conditions of the
type described in clauses (i) and (ii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness and/or Guarantee
Obligations and/or Interest Rate Agreement Obligations of the Borrower and
its Subsidiaries the outstanding principal amount of which exceeds in the
aggregate $1,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries
shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against the Borrower or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 90 days; or (iii) there shall be commenced
against the Borrower or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 90 days from the entry thereof; or (iv) the Borrower or any
of its Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or
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appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled
Entity shall, or in the reasonable opinion of the Required Lenders is
likely to, incur any liability in connection with a withdrawal from, or
the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan; and
in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $3,000,000 or more, and all
such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason,
to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert or (ii)
any material Lien created by any of the Security Documents shall cease to
be enforceable and of the same effect and priority purported to be created
thereby; or
(j) Any Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) to be due and payable forthwith, whereupon
the same shall immediately become due and payable; and (iii) the Security
Documents may be enforced and the proceeds of the Collateral applied to the
Obligations.
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With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts
held in such cash collateral account shall be applied by the Administrative
Agent to the payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay other obligations of
the Borrower hereunder and under the other Loan Documents. After all such
Letters of Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
hereunder and under the other Loan Documents shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower (or such other Person as may be lawfully entitled thereto). Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2 Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither the Agents nor any of their
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred
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to or provided for in, or received by any Agent under or in connection with,
this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Notes or any other Loan Document or for any failure of any Loan Party a
party thereto to perform its obligations hereunder or thereunder. No Agent shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
9.4 Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by such Agent. The Agents may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. Each Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Agents or all Lenders) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Lenders (or,
if so specified by this Agreement, all Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.
9.5 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received written notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all Lenders); provided, that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither any Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agents hereafter taken, including any
review of the affairs of a Loan Party or any
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Affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to each Agent that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
Affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their Affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agents
hereunder, no Agent shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
any Loan Party or any Affiliate of a Loan Party which may come into the
possession of such Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against any Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any Agent under
or in connection with any of the foregoing; provided, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
which are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Agent's gross negligence or willful
misconduct. The agreements in this Section 9.7 shall survive the payment of the
Notes and all other amounts payable hereunder. Any liabilities or obligations of
the Agents hereunder shall be several but not joint.
9.8 Agents and Their Individual Capacities. Each Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent
hereunder and under the other Loan Documents. With respect to its Loans made or
renewed by it and any Note issued to it and with respect to any Letter of Credit
issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Agent and the terms "Lender" and
"Lenders" shall include each Agent in their individual capacities.
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9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. The Required
Lenders may remove the Administrative Agent for cause. If the Administrative
Agent shall resign or be removed as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the other Agents (or if none is willing to become Administrative Agent, then
among the Lenders) a successor agent in such capacity, which successor agent, so
long as no Default or Event of Default shall have occurred and be continuing,
shall have been approved by the Borrower (which approval shall not be
unreasonably withheld or delayed), whereupon such successor agent shall succeed
to the rights, powers and duties of the Administrative Agent hereunder. If the
Required Lenders fail to so appoint a successor Administrative Agent within
forty five (45) days, then the acting Administrative Agent may appoint its
successor. Effective upon such appointment and approval, the terms
"Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as such shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes and the successor Swing Line Lender shall purchase all outstanding
Swing Line Loans as of the effective date of such succession. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section. The Required
Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent and the Arranger may, from time to time, (a) enter into
with the Borrower written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent and the
Arranger, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or of any installment thereof,
or reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Commitments, in each case without the consent of
each Lender affected thereby, (ii) amend, modify or waive any provision of this
Section, or consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents, in
each case without the written consent of all the Lenders, (iii) amend, modify or
waive any provision of Section 9 without the written consent of each Agent, (iv)
consent to the release of the Guarantee Obligations of any Loan Party or the
release of Collateral having a value in excess $5,000,000 without the written
consent of the Lenders (unless such release is expressly required to be given by
the terms of the Loan
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Documents) and (v) reduce the percentage specified in the definition of Required
Term Loan Lenders or Required Revolving Credit Lenders without the written
consent of all Term Loan Lenders, or all Revolving Credit Lenders, as the case
may be, (vi) amend, modify or waive any provision of Section 2.10 without the
written consent of the Required Term Loan Lenders and the Required Revolving
Credit Lenders or (vii) amend, modify or waive any provision relating to the
rights of the Swing Line Lender or the Issuing Lender without the written
consent of the applicable Lenders. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Agents and all future holders of
the Loans. In the case of any waiver, the Borrower, the Lenders and the Agents
shall be restored to their former positions and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by certified mail, return receipt
requested, three days after being deposited in the mails, postage prepaid, (c)
in the case of delivery by facsimile transmission, when sent and receipt has
been confirmed or (d) in the case of delivery by recognized overnight courier
service, one (1) Business Day after deposit with such courier service, addressed
as follows in the case of the Borrower, the Arranger and the Administrative
Agent, and as set forth in Schedule I in the case of the other parties hereto,
or to such other address as may be hereafter notified by the respective parties
hereto:
The Borrower: CapStar Hotel Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Arranger: ▇▇▇▇▇▇ Brothers Holdings Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
World Financial Center
New York, New York 10285-0900
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
The Administrative
Agent: BANKBOSTON, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Real Estate Department
with a copy to:
BANKBOSTON, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
provided, that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.2, 2.4, 2.6, 2.7, 2.9, 2.10, 2.11, 2.16 or
3.2 shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agents or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Agents for all their reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel (including any local counsel) to the Agents,
(b) to pay or reimburse each Lender and each of the Agents for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and counsel to the Agents, (c) to pay, indemnify, and hold each Lender and each
Agent harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the
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execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and each Agent and their respective officers, directors, trustees,
employees, affiliates, agents and controlling persons (each, an "indemnitee")
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including, without limitation, any of
the foregoing relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
Borrower, any of its Subsidiaries or any of the Properties (all the foregoing in
this clause (d), collectively, the "indemnified liabilities"), provided, that
the Borrower shall have no obligation hereunder to any indemnitee with respect
to indemnified liabilities to the extent such indemnified liabilities are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such
indemnitee. Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert, and hereby waives, and to
cause each of its Subsidiaries not to assert and to so waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. The agreements
in this Section 10.5 shall survive repayment of the Notes and all other amounts
payable hereunder and the termination of the Commitments and, in the case of any
Lender that may assign any interest in its Commitments, Loans or Letter of
Credit interest hereunder, shall survive the making of such assignment,
notwithstanding that such assigning Lender may cease to be a "Lender" hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Agents and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. No Lender shall be entitled to create in
favor of any Participant, in the
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participation agreement pursuant to which such Participant's participating
interest shall be created or otherwise, any right to vote on, consent to or
approve any matter relating to this Agreement or any other Loan Document except
for those specified in clauses (i), (ii) and (iv) of the proviso to the first
sentence of Section 10.1. The Borrower agrees that if amounts outstanding under
this Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided, that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.18, 2.19 and 2.20 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided, that, in the case of Section 2.19, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of the
Borrower, the Arranger, and the Administrative Agent, and the Swing Line Lender
and the Issuing Lender (in the case of assignment of Revolving Credit
Commitments only) (which in each case shall not be unreasonably withheld), to an
additional bank or financial institution which is in the business of making
loans comparable to the Loans and which has an office in the United States (an
"Assignee") all or any part of its rights and obligations under this Agreement,
the Letters of Credit, the Notes and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit O, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof or a Person under common management
with such Lender, by the Borrower, the Administrative Agent, the Arranger and,
in the case of an assignment of Revolving Credit Commitments, the Swing Line
Lender and the Issuing Lender) and delivered to the Administrative Agent for its
acceptance and recording in the Register with a copy to the Arranger; provided,
that (except with the consent of the Borrower, the Administrative Agent and the
Arranger) (i) no such assignment to an Assignee (other than any Lender or any
affiliate thereof or any Person under common management with such Lender) shall
be in an aggregate principal amount of less than $5,000,000 (other than in the
case of an assignment of all of a Lender's interests under this Agreement and
the Notes) and (ii) subsequent to any such assignment the assigning Lender shall
not retain an aggregate principal amount of less than $5,000,000 of the
Commitments and Loans. Such assignment need not be ratable as among any Term
Loan Commitments and/or Term Loans and Revolving Credit Commitments and/or
Revolving Credit Loans of the assigning Lender. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in
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such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto). Notwithstanding any provision of this
paragraph (c) and paragraph (e) of this Section 10.6, the consent of the
Borrower shall not be required for any assignment which occurs at any time when
any Event of Default shall have occurred and be continuing.
(d) A Note and the obligation(s) evidenced thereby may be assigned
or otherwise transferred in whole or in part only by registration of such
assignment or transfer of such Note and the Obligation(s) evidenced thereby on
the Register (and each Note shall expressly so provide). Any assignment or
transfer of all or part of such Obligation(s) and the Note(s) evidencing the
same shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Note(s) evidencing such obligation(s), accompanied
by an Assignment and Acceptance duly executed by the holder of such Note(s), and
thereupon one or more new Note(s) in the same aggregate principal amount shall
be issued to the designated Assignee(s) and the old Notes(s) shall be returned
by the Administrative Agent to the Borrower marked "cancelled." No assignment of
a Note and the obligation(s) evidenced thereby shall be effective unless it has
been recorded in the Register as provided in this Section 10.6(d).
(e) The Administrative Agent shall maintain at its address referred
to in Section 10.2 a copy of each Assignment and Acceptance delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time and the registered owners of the obligation(s)
evidenced by the Note(s). The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Agents and the Lenders
shall treat each Person whose name is recorded in the Register as the owner of
the Loan or the obligation evidenced by a Note recorded therein 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.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and any other parties required by Section
10.6(c))) together with payment to the Administrative Agent of a registration
and processing fee of $2,000 (except that no such registration and processing
fee shall be payable in the case of an Assignee which is already a Lender or is
an affiliate of a Lender or a Person under common management with a Lender), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower. On or prior to such effective
date, the Borrower, at its own expense, upon request, shall execute and deliver
to the Administrative Agent (in exchange for the Revolving Credit Note and/or
Term Note, as the case may be, of the assigning Lender) a new Revolving Credit
Note and/or Term Note, as the case may be, to
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the order of such Assignee in an amount equal to the Revolving Credit Commitment
and/or Term Loan, as the case may be, assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Revolving Credit
Commitment and/or Term Loan, as the case may be, upon request, a new Revolving
Credit Note and/or Term Note, as the case may be, to the order of the assigning
Lender in an amount equal to the Revolving Credit Commitment and/or Term Loan,
as the case may be, retained by it hereunder. Such new Notes shall be dated the
Closing Date and shall otherwise be in the form of the Note replaced thereby.
(g) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to such Transferee agreeing to the provisions of Section 10.15, any and
all financial information in such Lender's possession concerning the Borrower
and its Affiliates which has been delivered to such Lender by or on behalf of
the Borrower pursuant to this Agreement or which has been delivered to such
Lender by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.
(i) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any such pledge or assignment to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
shall at any time receive any payment of all or part of its Revolving Credit
Loans owing to it then due and owing, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Revolving Credit Lender, if any, in respect of such other
Lender's Revolving Credit Loans, or interest thereon, such benefitted Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Revolving Credit Loan due and owing to each
such Lender, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Revolving Credit Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) If any benefitted Lender shall at any time receive any payment
of all or part of its Term Loans owing to it then due and owing, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in
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respect of such other Lender's Term Loans, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Term Loan due and owing to each such
Lender, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Term Loan Lenders; provided, however, that if
all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(c) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement, the other Loan Documents and that
certain Syndication Letter Agreement dated of even date herewith among the
Agents and the Borrower represent the agreement of the Borrower, the Agents and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Agents or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
114
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 9.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right of the
Administrative Agent or any Lender to effect service of process in any
other manner permitted by law or shall limit the right to ▇▇▇ in any other
jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither any Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
the Agents and Lenders, on one hand, and the Borrower, on the other hand,
in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
115
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
10.15 Confidentiality. Each of the Agents and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided, that nothing herein shall prevent the Agents or any
Lender from disclosing any such information (a) to the Agents any other Lender
or any affiliate or investment advisor of any Lender, (b) to any Transferee or
prospective Transferee which agrees to comply with the provisions of this
Section 10.15, (c) to the employees, directors, agents, attorneys, accountants
and other professional advisors of such Lender or its affiliates, (d) upon the
request or demand of any Governmental Authority having jurisdiction over such
Administrative Agent or such Lender, (e) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) which has been publicly disclosed other
than in breach of this Section 10.15 or (h) in connection with the exercise of
any remedy hereunder or under any other Loan Document.
10.16 Enforceability; Usury. In no event shall any provision of this
Agreement, the Notes, or any other instrument evidencing or securing the
indebtedness of the Borrower hereunder ever obligate the Borrower to pay or
allow any Lender to collect interest on the Notes or any other indebtedness of
the Borrower hereunder at a rate greater than the maximum non-usurious rate
permitted by applicable law (herein referred to as the "Highest Lawful Rate"),
or obligate the Borrower to pay any taxes, assessments, charges, insurance
premiums or other amounts to the extent that such payments, when added to the
interest payable on the Notes, would be held to constitute the payment by the
Borrower of interest at a rate greater than the Highest Lawful Rate; and this
provision shall control over any provision to the contrary.
116
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
CAPSTAR HOTEL COMPANY
By: _________________________
Name:
Title:
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
By: _________________________
Name:
Title:
BANKERS TRUST COMPANY
By: ________________________
Name:
Title:
BANKBOSTON, N.A.
By: ________________________
Name:
Title:
▇▇▇▇▇ FARGO BANK, N.A.
By: ________________________
Name:
Title:
Schedule I
to Credit Agreement
Lenders, Commitments and Addresses
Lender/Address for Notices Revolving Credit Commitment Term Loan Commitment
-------------------------- --------------------------- --------------------
▇▇▇▇▇▇ BROTHERS HOLDINGS INC. $140,000,000 $47,500,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ 40% 47.50%
World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
BANKBOSTON, N.A. $70,000,000 $17,500,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 20% 17.50%
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Real Estate Department
with a copy to:
BANKBOSTON, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ FARGO BANK, N.A. $70,000,000 $17,500,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 20% 17.50%
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Senior Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
BANKERS TRUST COMPANY $70,000,000 $17,500,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 20% 17.50%
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Schedule II
to Credit Agreement
Pricing Grid
=====================================================================
Consolidated Consolidated Applicable Applicable Margin
Total Debt Senior Debt Margin for for Term
Ratio Ratio Revolving Eurodollar Loans
Credit
Eurodollar
Loans
---------------------------------------------------------------------
5.00 to 1.00 4.25 to 1.00 2.00% 2.125%
or greater or greater
---------------------------------------------------------------------
less than 5.00 less than 4.25 1.75% 2.00%
to 1.00 but to 1.00 but
greater than greater than
4.50 to 1.00 3.75 to 1.00
---------------------------------------------------------------------
less than 4.50 less than 3.75 1.50% 1.75%
to 1.00 to 1.00
=====================================================================
The Applicable Margin for Base Rate Loans will be in each case 1.00% lower than
for Eurodollar Loans. In the event that the Consolidated Total Debt Ratio and
the Consolidated Senior Debt Ratio fall within different pricing levels set
forth above, the higher applicable pricing level shall apply.
Schedule III to
Credit Agreement
Term Loan Amortization
Date
Principal Amount
March 31, 1998
$ 250,000
June 30, 1998
$ 250,000
September 30, 1998
$ 250,000
December 31, 1998
$ 250,000
March 31, 1999
$ 250,000
June 30, 1999
$ 250,000
September 30, 1999
$ 250,000
December 31, 1999
$ 250,000
March 31, 2000
$ 250,000
June 30, 2000
$ 250,000
September 30, 2000
$3,000,000
December 31, 2000
$3,000,000
March 31, 2001
$3,000,000
June 30, 2001
$3,000,000
September 30, 2001
$ 3,750,000
December 31, 2001
$ 3,750,000
March 31, 2002
$ 3,750,000
June 30, 2002
$ 3,750,000
September 30, 2002
$ 5,000,000
December 31, 2002
$ 5,000,000
March 31, 2003
$ 5,000,000
June 30, 2003
$ 5,000,000
September 30, 2003
$ 12,500,000
December 31, 2003
$ 12,500,000
March 31, 2004
$ 12,750,000
June 30, 2004
$ 12,750,000
1
Schedule IV
to Credit Agreement
Permitted Acquisitions
(a) Acquisition and Addition of Mortgaged Properties. So long as no Event
of Default or Default has occurred and is continuing or would be caused thereby,
the Borrower, its Wholly Owned Subsidiaries and Joint Ventures which are
Subsidiaries of the Borrower or of any of its Wholly Owned Subsidiaries (subject
to the limitations set forth in Section 7.9) may, without the prior approval of
the Agents and Lenders (except as set forth below), make Acquisitions of one or
more properties (each, an "Additional Mortgaged Property") as Mortgaged
Properties; provided, that, in any event:
(i) such Additional Mortgaged Property shall be owned either by the
Borrower, a Wholly Owned Subsidiary (other than a Non-Recourse Subsidiary)
of the Borrower or a Joint Venture which is a Subsidiary of the Borrower
(subject to the limitations set forth in Section 7.9); provided, that such
Subsidiary shall be a party to the Guarantee and Collateral Agreement;
(ii) each Additional Mortgaged Property shall include the entire fee
interest or leasehold interest pursuant to a Ground Lease in a Qualifying
Hotel Property;
(iii) if such Additional Mortgaged Property (including a Property
which is subject to a sale lease-back transaction) is subject to a Ground
Lease, (i) either the owner of the fee interest in the land covered by
such Ground Lease shall subordinate its interest in such land to the
Mortgage covering the leasehold estate under such Ground Lease or such
Ground Lease shall contain leasehold mortgagee protections reasonably
satisfactory to the Administrative Agent (including, without limitation,
notices of default, opportunity to cure, rights to a new lease and
reasonably satisfactory provisions regarding insurance and condemnation
proceeds) and (ii) such Ground Lease shall have a minimum remaining term
of at least twenty five years with no extraordinary termination rights in
favor of the ground lessor;
(iv) within 30 days following the date of the Acquisition of such
Property, the Borrower, at its expense, shall deliver to the
Administrative Agent (with sufficient copies for distribution to the
Lenders) the documents and information described in the definition of
"Property Information and Deliveries" with respect to such Additional
Mortgaged Property; and
(v) notwithstanding anything to the contrary contained herein, the
Acquisition of any Additional Mortgaged Property shall not be deemed to be
a "Permitted Acquisition" (and such Property shall not contribute to
EBITDA) if, within ten (10) days after the date of receipt of all of the
documents and information
2
described in the definition of "Property Information and Deliveries" with
respect to such Property (other than the Appraisal and the items referred
to in clause (j) of such definition), the Required Lenders object to the
Acquisition of such Property, which objection may solely be on the grounds
that (a) such Required Lenders have reasonably determined that the
Engineering Report and/or the environmental audit with respect to such
Property shows materially adverse conditions with respect to such Property
or (b) the Acquisition of such Property would cause a Default or an Event
of Default, or, after giving effect to such Acquisition, a Default or an
Event of Default would exist. Conditions shown in the environmental audit
or Engineering Reports shall not be deemed materially adverse if the
Borrower has demonstrated to the Lenders that it has in place an
appropriate and adequate plan for remedying such adverse condition from
readily available funds within one (1) year of the date of the Acquisition
of such Property.
(b) Acquisition of Non-Recourse Properties. So long as no Event of Default
or Default has occurred and is continuing or would be caused thereby, without
the approval of the Administrative Agent (except as otherwise expressly provided
herein), any of the Non- Recourse Subsidiaries may make Acquisitions of
Non-Recourse Properties; provided, that:
(i) each Non-Recourse Property subject to such Acquisition shall
include the entire fee or leasehold interest pursuant to a Ground Lease in
a Qualifying Hotel Property;
(ii) within 30 days following the closing date of each such
Acquisition, the Borrower, at its expense, shall deliver to the
Administrative Agent (with sufficient copies for distribution to the
Lenders) all of the documents and information described in items (d), (h),
(l) (if applicable) and (m) of the definition of "Property Information and
Deliveries" with respect to such Non-Recourse Property, and within five
(5) days of request thereafter requested by any Lender, items (b), (e) and
(f) of the definition of "Property Information and Deliveries" with
respect to such Non- Recourse Property, as requested by any such Lender;
and
(iii) a Wholly Owned Subsidiary of the Borrower shall enter into a
Management Agreement covering such Non-Recourse Property.
(c) Acquisitions of Vacant Land. So long as no Event of Default or Default
has occurred and is continuing or would be caused thereby, the Borrower, its
Wholly Owned Subsidiaries and Joint Ventures which are Subsidiaries of the
Borrower or of any of its Wholly Owned Subsidiaries (subject to the limitations
set forth in Section 7.9) may, without the prior approval of the Agents and
Lenders (except as set forth below), make acquisitions of real property that is
contiguous with any Property for use in the expansion of such Property,
provided, that within 30 days following the acquisition of any such land which
is contiguous to a Mortgaged Property, the Borrower shall deliver to the
Administrative Agent (with sufficient copies for distribution to the Lenders)
(1) the documents entered into by, and delivered by or to, the Borrower and its
Subsidiaries in connection therewith and (2) the items
3
described in the definition of "Property Information and Deliveries" with
respect to such real property.
(d) Acquisitions of Loans And Debt Securities. So long as no Event of
Default or Default has occurred and is continuing or would be caused thereby,
the Borrower, its Wholly Owned Subsidiaries and Joint Ventures which are
Subsidiaries of the Borrower or of any of its Wholly Owned Subsidiaries (subject
to the limitations set forth in Section 7.9) may, without the prior approval of
the Agents and Lenders (except as set forth below), undertake acquisitions of
loans and debt securities at any time, which loans and debt securities shall be
secured exclusively by first priority mortgages encumbering 100% of the fee
interest on Qualifying Hotel Properties, provided, that within 30 days following
the effective date of the acquisition of such loans or debt securities, the
Borrower shall deliver to the Administrative Agent (with sufficient copies for
distribution to the Lenders) (1) the documents entered into by, and delivered by
or to, the Borrower and its Subsidiaries in connection therewith, (2) the loan
documents, debentures, notes and other documents governing the terms of such
loans or debt securities, (3) an estoppel certificate from the applicable
borrower in form and substance reasonably satisfactory to the Administrative
Agent (provided, that, if after using best efforts to do so, the Borrower and
its Subsidiaries are unable to obtain such estoppel certificate, then such
estoppel certificate shall not be required) and (4) the items described in
clauses (a), (b), (d), (e), (h), (j), (k) and (m) of the definition of "Property
Information and Deliveries" with respect to the Property securing repayment of
such loans or debt securities and the Subsidiaries making such investments.
(e) Acquisitions of Joint Venture Interests and Interests in Persons. So
long as no Event of Default or Default has occurred and is continuing or would
be caused thereby, Wholly Owned Subsidiaries of the Borrower and Joint Ventures
which are Subsidiaries of the Borrower or of any of its Wholly Owned
Subsidiaries (subject to the limitations set forth in Section 7.9) may, without
the prior approval of the Agents and Lenders (except as set forth below),
undertake equity or debt investments in, or equity or debt securities issued by
Joint Ventures or other Persons (other than a Wholly Owned Subsidiary of the
Borrower); provided, that (1) either (A) the sole purpose of such Joint Venture
or other Person (other than the Joint Venture that owns the parking garage
located on the property adjacent to the Arlington, Virginia Property) is to
acquire, own, Renovate, restore, manage, operate and dispose of a Qualifying
Hotel Property or (B) such equity or debt Securities are registered under the
Exchange Act, (2) within 30 days following the effective date of the making of
such investment or acquisition, the Borrower shall deliver to the Administrative
Agent (with sufficient copies for distribution to the Lenders) (x) the documents
entered into by, and delivered by or to, the Borrower and its Subsidiaries in
connection therewith and (y) (A) in the case where such Subsidiary is acquiring
an interest in a Joint Venture and such Joint Venture's Property will not become
a Mortgaged Property the items described in clauses (a), (b), (d), (e), (h),
(j), (k) and (m) of the definition of "Property Information and Deliveries" with
respect to the Property owned by such Joint Venture and (B) in the case where
such Subsidiary is acquiring the interests in a Person which will become a
Wholly Owned Subsidiary after such Acquisition or is acquiring an interest in a
Joint Venture, and such Joint
4
Venture's Property will become a Mortgaged Property, the items described in the
definition of "Property Information and Deliveries" with respect to the Property
owned by Person, (3) a Wholly Owned Subsidiary of the Borrower shall enter into
a Management Agreement covering the Property owned or leased by any such Joint
Venture or other Person, (4) such the other terms and conditions contained in
this Agreement (including this Schedule IV) shall have been satisfied with
respect to the asset owned by such Joint Venture or other Person and (5) in the
case where such Wholly Owned Subsidiary is merging with, or acquiring all or a
portion of the outstanding stock or other equity interests of, a Person (i) in
the case of a merger, such Wholly Owned Subsidiary is the surviving entity, (ii)
the Required Lenders shall have approved the terms of the merger or acquisition
and the documents relating thereto, as applicable, including, without
limitation, the provisions relating to disclosure of liabilities, the
indemnities relating to undisclosed liabilities and the creditworthiness of any
entities giving indemnities for undisclosed liabilities and (iii) all of the
terms and conditions set forth herein for the acquisitions of assets shall be
met with respect to the assets of the company being merged with or acquired.
(f) Acquisitions of Management Agreements. So long as no Event of Default
or Default has occurred and is continuing or would be caused thereby, the
Borrower, its Wholly Owned Subsidiaries and Joint Ventures which are
Subsidiaries of the Borrower or of any of its Wholly Owned Subsidiaries (subject
to the limitations set forth in Section 7.9) may, without the prior approval of
the Agents and Lenders (except as set forth below), undertake acquisitions of,
or investments for or in order to complete, acquisitions of Management
Agreements and enter into Management Agreements with respect to the management
and operation of Qualifying Hotel Properties and 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; (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; (c) within
thirty days following the effective date of such Management Agreement, the
Borrower, at its expense, shall deliver to the Administrative Agent (with
sufficient copies for distribution to the Lenders) (1) an executed or conformed,
certified copy of such Management Agreement and the other documents entered into
by, and delivered by or to, the Borrower and its Subsidiaries in connection
therewith and (2) the items described in clauses (a), (b), (k) and (m) of the
definition of "Property Information and Deliveries" with respect to the Property
covered by such Management Agreement and the Subsidiaries making such
investments.
(g) Lender Approval. Notwithstanding anything to the contrary contained
herein, the Acquisition of any asset or interest described in clauses (a), (b),
(c), (d), and (e) above shall not be deemed to be a "Permitted Acquisition" (and
such Property, Person or other asset or interest shall not contribute to EBITDA)
if, within ten (10) days after the date of receipt of all of the documents and
information described in the definition of "Property Information and Deliveries"
with respect to the Property being acquired or which is subject to such other
acquisition or investment (other than the Appraisal and the items referred to in
clause (j) of such definition), the Required Lenders object to such Acquisition,
which objection may solely
5
be on the grounds that (a) such Required Lenders have reasonably determined that
the Engineering Report and/or the environmental audit with respect to such
Property shows materially adverse conditions with respect to such Property or
(b) the Acquisition would, or, after giving effect to such Acquisition, would
violate any term, condition or covenant contained in any Loan Documents or would
otherwise cause a Default or an Event of Default, or, after giving effect to
such Acquisition, a Default or an Event of Default would exist. Conditions shown
in the environmental audit or Engineering Reports shall not be deemed materially
adverse if the Borrower has demonstrated to the Lenders that it has in place an
appropriate and adequate plan for remedying such adverse condition from readily
available funds within one (1) year of the date of the Acquisition of such
Property. Notwithstanding the foregoing to the contrary, the approval by the
Required Lenders under clause (5)(ii) of paragraph (e) of this Schedule shall
not be deemed to have been given pursuant to the preceeding clauses of this
clause.
(h) EBITDA Contributions. Until the Acquisition of an asset as provided
above is approved or deemed approved as provided above, the revenues and
expenses of such asset shall not be included in determining whether or not any
of the covenants set forth in Section 7 have been satisfied and until the
Mortgage or other applicable security document has been received and all items
referenced in clauses (g) and (j) of the definition of "Property Information and
Deliveries" have been delivered to the extent applicable (and approved to the
extent required) the revenues and expenses of such asset shall not be included
in determining whether or not any of the covenants set forth in Section 7.1(d)
has been satisfied. Additionally, if at the time of determination of whether any
covenant contained in Section 7 had been satisfied (i) the Borrower or any of
its Subsidiaries is in default beyond any applicable cure periods under any
Management Agreement, the portion of Adjusted Consolidated EBITDA contributed by
any such Management Agreement shall be excluded and (ii) the borrower or obligor
under any Pledged Note is in default beyond any applicable cure periods in its
payment obligations under such Pledged Note, the portion of Adjusted
Consolidated EBITDA contributed by any such Pledged Note shall be excluded.
6