1
EXHIBIT 10.2
================================================================================
CREDIT AGREEMENT
dated as of April 30, 1997,
by and among
ShoLodge, Inc.
and
Certain Subsidiaries of ShoLodge
as Borrowers,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK OF TENNESSEE,
as Administrative Agent
and
NATIONSBANK OF TENNESSEE, N.A.,
as Co-Agent
================================================================================
2
CREDIT AGREEMENT, dated as of the 30th day of April, 1997, by and among
SHOLODGE, INC., a corporation organized under the laws of Tennessee
("ShoLodge"), certain Subsidiaries of ShoLodge listed on the signature pages
hereto and such Subsidiaries as may become Borrowers pursuant to Section 8.12
hereof (the "Subsidiary Borrowers" and, together with ShoLodge, the "Borrowers",
each individually a "Borrower"), the Lenders who are or may become a party to
this Agreement, FIRST UNION NATIONAL BANK OF TENNESSEE, as Administrative Agent
for the Lenders ("First Union") and NATIONSBANK OF TENNESSEE, N.A., as co-agent
for the Lenders (the "Co-Agent").
STATEMENT OF PURPOSE
The Borrowers have requested, and the Lenders have agreed, to extend
certain credit facilities to the Borrowers on the terms and conditions of this
Agreement.
ShoLodge owns, directly or indirectly, all or substantially all of the
outstanding capital stock or other ownership interests of the Subsidiary
Borrowers. Accordingly, ShoLodge and the other Borrowers are members of the same
affiliated group and each member of the affiliated group benefits, directly or
indirectly, from the business operations of the other members of the affiliated
group. All Extensions of Credit to an individual Borrower will inure to the
benefit of the other Borrowers, directly or indirectly, through increased
borrowing capacity and availability of funding and other strategic business
advantages.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms when used in this Agreement
shall have the meanings assigned to them below:
"Administrative Agent" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto ap pointed pursuant to
Section 12.9.
"Administrative Agent's Office" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
13.1.
3
"Affiliate" means, with respect to any Person, any other Person (other
than Subsidiaries) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. The term "control" means (a) the
power to vote ten percent (10%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any other power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be modified at any time or from time
to time pursuant to Section 2.6. On the Closing Date, the Aggregate Commitment
shall be Seventy Five Million Dollars ($75,000,000).
"Agreement" means this Credit Agreement, as amended supple mented,
restated or otherwise modified from time to time.
"Applicable Law" means all provisions of constitutions, statutes, laws,
rules, treaties, regulations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators, but only to the extent
applicable to the Borrowers or the Lenders, as appropriate.
"Applicable Margin" shall have the meaning assigned thereto in Section
4.1(c).
"Application" means an application, in the form specified by the Issuing
Lender from time to time, requesting the Issuing Lender to issue a Letter of
Credit.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.10.
"Available Commitment" means, as to any Lender at any time, an amount
equal to the excess, if any, of (a) such Lender's Commitment over (b) such
Lender's Extensions of Credit.
"Base Rate" means, at any time, the higher of (a) the Prime Rate or (b)
the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take
effect simultaneously with the corre sponding change or changes in the Prime
Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon the
Base Rate as provided in Section 4.1(a).
"Borrowers" means ShoLodge and each of its Subsidiaries that becomes a
party hereto.
2
4
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina are open for the conduct of their
commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and
that is also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"Capital Asset" means, with respect to ShoLodge and its Subsidiaries, any
asset that should, in accordance with GAAP, be classified and accounted for as a
capital asset on a Consolidated balance sheet of ShoLodge and its Subsidiaries.
"Capital Lease" means, with respect to ShoLodge and its Subsidiaries, any
lease of any property that should, in accor dance with GAAP, be classified and
accounted for as a capital lease on a Consolidated balance sheet of ShoLodge and
its Subsid iaries.
"Capitalized Interest" means, with respect to ShoLodge and its
Subsidiaries for any period, the amount of capitalized interest of ShoLodge and
its Subsidiaries, determined for such period on a Consolidated basis in
accordance with GAAP.
"Change in Control" shall have the meaning assigned thereto in Section
11.1(i).
"Closing Date" means the date of this Agreement.
"Co-Agent" means NationsBank of Tennessee, N.A. in its capacity as
Co-Agent hereunder, and its successors.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Commitment" means, as to any Lender, the obligation of such Lender to
make Loans to and issue or participate in Letters of Credit issued for the
account of the Borrowers hereunder in an aggregate principal or face amount at
any time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1(a) hereto, as the same may be reduced or modified at any
time or from time to time pursuant to Sections 2.6 and 13.10.
"Commitment Percentage" means, as to any Lender at any time, the ratio of
(a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment
of all of the Lenders.
3
5
"Consolidated" means, when used with reference to financial statements or
financial statement items of ShoLodge and its Subsidiaries, such statements or
items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Contingent Obligation" means, with respect to ShoLodge and its
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other obliga tion of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to keep
well, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement condition or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Contingent
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business.
"Credit Facility" means the collective reference to the Revolving Credit
Facility and the L/C Facility.
"Debt" means, with respect to ShoLodge and its Subsidiaries at any date
and without duplication, the sum of the following calculated in accordance with
GAAP: (a) all liabilities, obliga tions and indebtedness for borrowed money
including but not limited to obligations evidenced by bonds, debentures, notes
or other similar instruments of any such Person, (b) all obligations to pay the
deferred purchase price of property or services of any such Person, except trade
payables arising in the ordinary course of business not more than ninety (90)
days past due unless being contested in good faith by such Person, (c) all
obligations of any such Person as lessee under Capital Leases, (d) all Debt of
any other Person secured by a Lien on any asset of any such Person, (e) all
Contingent Obligations of any such Person, (f) all obligations, contingent or
otherwise, of any such Person relative to the face amount of letters of credit,
whether or not drawn, including without limitation any Reimbursement Obligation,
and banker's acceptances issued for the account of any such Person, (g) all
obligations to redeem, repurchase, exchange, defease or otherwise make payments
in respect of capital stock or other securities of such Person and (h) all
termination payments which would be due and payable by any such Person pursuant
to a Hedging Agreement.
4
6
"Default" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Defeased Debt" means any Debt of ShoLodge or any of its Subsidiaries
that has been irrevocably defeased in accordance with the applicable terms
thereof and an amount in cash or United States Government obligations or any
combination thereof suffi cient to pay all obligations under such Debt when and
as due has been irrevocably deposited with a trustee or similar third party
reasonably acceptable to the Administrative Agent in connection with such
payment. For the limited purpose of this definition only and provided the
Revenue Participation Bonds Pledge Agreement is in full force and effect and no
defaults exist thereunder, the principal indebtedness of the Revenue
Participation Bonds in an amount not to exceed $11,500,000 shall be deemed to be
Defeased Debt.
"Disposition" shall have the meaning assigned thereto in Section 10.7(c).
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBIT" means, with respect to ShoLodge and its Subsidiaries for any
period, the following, calculated on a Consolidated basis without duplication
for such period in accordance with GAAP: (a) Net Income for such period, plus
(b) the sum of the following to the extent deducted in the determination of Net
Income: (i) income and franchise taxes and (ii) Interest Expense.
"EBITDA" means, with respect to the ShoLodge and its Subsid iaries for
any period, the following, calculated on a Consolidat ed basis without
duplication for such period in accordance with GAAP, the sum of (a) Net Income
for such period, plus (b) the sum of the following to the extent deducted in the
determination of Net Income: (i) income and franchise taxes, (ii) Interest Ex
pense, (iii) amortization and depreciation.
"Eligible Assignee" means, with respect to any assignment of the rights,
interest and obligations of a Lender hereunder, a Person that is at the time of
such assignment (a) a commercial bank organized under the laws of the United
States or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a finance company, insurance company or other financial
institution which in the ordinary course of business extends credit of the type
extended hereunder and that has total assets in excess of $1,000,000,000, (c)
already a Lender hereun der (whether as an original party to this Agreement or
as the assignee of another Lender), (d) the successor (whether by transfer of
assets, merger or otherwise) to all or substantially all of the commercial
lending business of the assigning Lender,
5
7
or (e) any other Person that has been approved in writing as an Eligible
Assignee by ShoLodge and the Required Lenders.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is main tained for employees of any
Borrower or any ERISA Affiliate or (b) has at any time within the preceding six
years been main tained for the employees of any Borrower or any current or
former ERISA Affiliate.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order, or other order or direction
(conditional or otherwise) by any Governmental Authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease, or death), tangible or intangible property damage, contribution,
indemnity, direct or consequential damages, damage to the envi ronment,
nuisance, pollution, contamination, or other adverse effects on the environment,
or for fines, penalties, or restrictions, in each case relating to, resulting
from, or in connection with Hazardous Materials and relating to ShoLodge or any
of its Subsidiaries, or any property leased, owned, operated or used by ShoLodge
or any of its Subsidiaries.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, re quirements pertaining to the manufacture, processing, distribu tion, use,
treatment, storage, disposal, transportation, han dling, reporting, licensing,
permitting, investigation or remedi ation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA Affiliate" means any Person who together with any Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergen cy reserves) in
respect of Eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
6
8
"Event of Default" means any of the events specified in Section 11.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Existing Judgment" means that certain judgment entered on December 27,
1995 by the Chancery Court of the State of Tennessee against Shoney's Inn of
Music Valley, Ltd. (of which ShoLodge is a 60% partner) in the amount of
$3,045,031.00, which was reversed by order of the Tennessee Court of Appeals
filed March 12, 1997, which order of dismissal is still subject to appeal, a
more particular description of said judgment is set forth on Schedule 6.1(v).
"Extensions of Credit" means, as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) such Lender's Commitment Percentage of the L/C
Obligations then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) repre senting the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a daily rate
which is determined, in the opinion of the Administrative Agent, to be the rate
at which federal funds are being offered for sale in the national federal funds
market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be
the same as the rate for the most immediate preceding Business Day.
"First Union" means First Union National Bank of Tennessee, a national
banking association, and its successors.
"Fiscal Year" means the fiscal year of ShoLodge and its Subsidiaries
ending on the last Sunday of each calendar year.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accoun tants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for ShoLodge and its Subsidiaries throughout the period indicated and
consistent with the prior financial practice of ShoLodge and its Subsidiaries.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
7
9
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or adminis trative functions of or pertaining to
government, and any corpo ration or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) wh ich are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance, a trespass
or pose a health or safety hazard to persons or neighboring properties, (f)
which are materials consisting of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest rate
swap, collar, cap, floor or a forward rate agree ment or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrowers under this Agreement, and
any confirming letter executed pursuant to such hedging agreement, all as
amended or supplemented from time to time.
"Interest Expense" means, with respect to ShoLodge and its Subsidiaries
for any period, the gross interest expense (includ ing without limitation,
interest expense attributable to Capital Leases and all net obligations pursuant
to Hedging Agreements) of ShoLodge and its Subsidiaries, determined for such
period on a Consolidated basis in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
4.1(b).
"Issuing Lender" means First Union, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"Joinder Agreement" means a Joinder Agreement substantially in the form
of Exhibit H executed by such Subsidiaries as may be
8
10
required by Section 8.12, as amended or supplemented from time to time.
"L/C Commitment" means Five Million Dollars ($5,000,000).
"L/C Facility" means the letter of credit facility estab lished pursuant
to Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum of (a)
the aggregate 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" means the collective reference to all the Lenders
other than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 13.10.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans.
"Letters of Credit" shall have the meaning assigned thereto in Section
3.1.
"LIBOR" means the rate for deposits in Dollars for a period equal to the
Interest Period selected which appears on the Telerate Page 3750 at
approximately 11:00 a.m. London time, two (2) Business Days prior to the
commencement of the applicable Interest Period (rounded upwards, if necessary,
to the next higher 1/100th of 1%). If, for any reason, such rate is not
available, then "LIBOR" shall mean the rate per annum at which, as determined by
the Administrative Agent, Dollars in the amount of $5,000,000 are being offered
to leading banks at approximately 11:00 a.m. London time, two (2) Business Days
prior to the commencement of the applicable Interest Period for settlement in
immediately available funds by leading banks in the London interbank market for
a period equal to the Interest Period selected (rounded upwards, if necessary,
to the next higher 1/100th of 1%).
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR Rate = LIBOR
-----------------------------------------
1.00-Eurodollar Reserve Percentage
9
11
"LIBOR Rate Loan" means any Loan bearing interest at a rate based upon
the LIBOR Rate as provided in Section 4.1(a).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loans" means the collective reference to the Revolving Credit Loans and
the Swingline Loans and "Loan" means any of such Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Applications, any Hedging Agreement executed by any Lender, and each other
document, instrument and agreement executed and delivered by any Borrower, or
any Subsidiary thereof in connection with this Agreement or otherwise referred
to herein or contemplated hereby, all as may be amended or supplemented from
time to time.
"Material Adverse Effect" means, with respect to ShoLodge or any of its
Subsidiaries, a material adverse effect on the properties, business, prospects,
operations or condition (financial or otherwise) of ShoLodge and its
Subsidiaries, taken as a whole, or the ability of the Borrowers, taken as a
whole, to perform the obligations under the Loan Documents.
"Material Contract" means (a) any contract or other agree ment, written
or oral, of ShoLodge or any of its Subsidiaries involving monetary liability of
or to any such Person in an amount in excess of $1,000,000 per annum, or (b) any
other con tract or agreement, written or oral, of ShoLodge or any of its
Subsidiaries the failure to comply with which could reasonably be expected to
have a Material Adverse Effect.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"Net Cash Proceeds" means, with respect to any offering of capital stock
or other ownership or equity interest, the gross cash proceeds received by
ShoLodge or any of its Subsidiaries therefrom less all legal, underwriting and
similar fees and expenses incurred in connection therewith.
"Net Disposition Proceeds" means, with respect to any Disposition, the
aggregate amount of all cash payments received by any Borrower or any of its
Subsidiaries, directly or
10
12
indirectly, in connection with such Disposition, whether at the time of such
Disposition or after such Disposition under deferred payment arrangements or
related investments entered into or received in connection with such
Disposition; provided that:
(a) Net Disposition Proceeds shall be net of (i) the amount of any
legal, title, transfer and recording tax expenses, commissions and
other fees and expenses payable by such Borrower or any of its
Subsidiaries in connection with such Disposition and (ii) any Federal,
state and local income or other taxes estimated to be payable by such
Borrower or any of its Subsidiaries as a result of such Disposition,
but only to the extent that such estimated taxes are in fact paid to
the relevant Federal, state or local Governmental Authority within
twelve (12) months of the date of such Disposition; and
(b) Net Disposition Proceeds shall be net of any repayments by such
Borrower or any of its Subsidiaries of any indebtedness to the extent
that (i) such indebtedness is secured by a Lien on the property that is
the subject of such Disposition and (ii) the transferee of (or holder
of a Lien on) such property requires that such indebtedness be repaid
as a condition to the purchase of such property and such indebtedness
is repaid.
"Net Income" means, with respect to ShoLodge and its Subsidiaries, the
Consolidated net income (or loss) of ShoLodge and its Subsidiaries for such
period determined in accordance with GAAP; provided, that there shall be
excluded from net income any extraordinary gains.
"Net Worth" means, with respect to any Person, at any date, the
stockholders' equity (including capital stock, additional paid-in capital and
retained earnings, after deducting treasury stock) or other equity interest of
such Person on such date determined in accordance with GAAP.
"Notes" means the collective reference to the Revolving Credit Notes
and the Swingline Notes and "Note" means any of such Notes.
"Notice of Account Designation" shall have the meaning assigned thereto
in Section 5.2(e)(i).
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.3(a).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 4.2.
11
13
"Notice of Prepayment" shall have the meaning assigned thereto in
Section 2.4(d).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
the L/C Obligations, (c) all payment and other obligations owing by the
Borrowers to any Lender or the Administrative Agent under any Hedging Agreement
permitted pursuant to Section 10.1 to which a Lender is a party and (d) all
other fees and commissions (including attorney's fees), charges, indebtedness,
loans, liabilities, financial accommodations, obligations, covenants and duties
owing by the Borrowers to the Lenders or the Administrative Agent under or in
respect of this Agreement, any Note, any Letter of Credit or any of the other
Loan Documents, of every kind, nature and description, direct or indirect,
absolute or contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note, and
whether or not for the payment of money.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section
4.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the
Borrowers or any ERISA Affiliates or (b) has at any time within the preceding
six years been maintained for the employees of the Borrowers or any of their
current or former ERISA Affiliates.
"Permitted Debt" shall mean all Debt permitted pursuant to Section 10.1
hereof.
"Person" means an individual, corporation, partnership, association,
trust, business trust, joint venture, joint stock company, pool, syndicate, sole
proprietorship, unincorporated organization, Governmental Authority or any other
form of entity or group thereof.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on the
day such change in the Prime Rate occurs. The parties hereto acknowledge that
the rate
12
14
announced publicly by First Union as its Prime Rate is an index or base rate and
shall not necessarily be its lowest or best rate charged to its customers or
other banks.
"Refinanced Debt" means certain existing Debt of ShoLodge and its
Subsidiaries as more particularly described on Schedule 1.1(b) attached hereto.
"Register" shall have the meaning assigned thereto in Section 13.10(d).
"Reimbursement Obligation" means the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Required Lenders" means, at any date, any combination of holders of at
least sixty-six and two-thirds percent (66-2/3%) of the aggregate unpaid
principal amount of the Notes, or if no amounts are outstanding under the Notes,
any combination of Lenders whose Commitment Percentages aggregate at least
sixty-six and two-thirds percent (66-2/3%).
"Revenue Participation Bonds" means those certain revenue, appreciation
payment and principal repayment bonds due April 15, 2001 issued pursuant to the
Revenue Participation Bonds Indenture.
"Revenue Participation Bonds Indenture" means that certain Indenture
dated as of April 15, 1986 between Shoney's Inns Group IV, Inc. and Third
National Bank in Nashville, as trustee.
"Revenue Participation Bonds Pledge Agreement" means that certain
Pledge Agreement dated as of April 15, 1986 between Shoney's Inns Group IV, Inc.
and Third National Bank in Nashville, as trustee, whereby Shoney's Inns Group
IV, Inc. pledges Government Obligations and/or Zero Coupon Certificates (as such
terms are defined in the Revenue Participation Bonds Indenture) in order to
secure the payment of the principal indebtedness evidenced by the Revenue
Participation Bonds.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Loan" means any revolving loan made to the Borrowers
pursuant to Section 2.1, and all such Loans collectively as the context
requires.
"Revolving Credit Notes" means the separate Revolving Credit Notes made
by the Borrowers payable to the order of each Lender, substantially in the form
of Exhibit A-1 hereto, evidencing the Revolving Credit Facility, and any
amendments and modifications thereto, any substitutes therefor, and any
replacements, restate-
13
15
ments, renewals or extension thereof, in whole or in part; "Revolving Credit
Note" means any of such Notes.
"Revolving Termination Date" means the earliest of the dates referred
to in Section 2.7.
"Senior Debt" means, as of any date of determination, the Consolidated
Debt of ShoLodge and its Subsidiaries as of such date minus all Subordinated
Debt as of such date.
"Senior Leverage Ratio" means the ratio determined in accordance with
Section 9.3 hereof.
"Senior Subordinated Indenture" means that certain Indenture dated as
of November 15, 1996 between ShoLodge and Bankers Trust Company, as Trustee
respecting the Senior Subordinated Notes.
"Senior Subordinated Notes" means the $125,000,000 Senior Subordinated
Notes issued or permitted to be issued pursuant to the Senior Subordinated
Indenture as more particularly described on Schedule 6.1(u).
"Solvent" means, as to ShoLodge and its Subsidiaries on a particular
date, that ShoLodge and each of its Subsidiaries (a) have capital sufficient to
carry on the businesses and transactions in which they engage and all
businesses and transactions in which they are about to engage and are able to
pay their debts as they mature, (b) own property having a value, both at fair
valuation and at present fair saleable value, greater than the amount required
to pay their probable liabilities (including contingencies), and (c) do not
believe that they will incur debts or liabilities beyond their ability to pay
such debts or liabilities as they mature.
"Subordinated Debt" means the collective reference to Debt on Schedule
6.1(u) hereof designated thereon as Subordinated Debt and any other unsecured
Debt of any Borrower or any Subsidiary thereof subordinated in right and time of
payment (whether structurally subordinated or otherwise) to the Obligations and
containing terms and conditions (including without limitation maturity and
financial covenants) and pursuant to instruments satisfactory to the Required
Lenders.
"Subsidiary" means as to any Person, any corporation, partnership or
other entity of which more than fifty percent (50%) of the outstanding capital
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity is at the time, directly or indirectly, owned by
or the management is otherwise controlled by such Person
14
16
(irrespective of whether, at the time, capital stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency).
"Swingline Commitment" means Five Million Dollars ($5,000,000).
"Swingline Lender" means First Union in its capacity as swingline
lender hereunder.
"Swingline Loan" means any swingline loan made by the Swingline Lender
to the Borrowers pursuant to Section 2.2, and all such Loans collectively as the
context requires.
"Swingline Note" means the Swingline Note made by the Borrowers payable
to the order of the Swingline Lender, substan tially in the form of Exhibit A-2
hereto, evidencing the Swingline Loans, and any amendments and modifications
thereto, any substitutes therefor, and any replacements, restatements, renewals
or extension thereof, in whole or in part.
"Swingline Termination Date" means the earlier to occur of (a) the
resignation of First Union as Administrative Agent in accordance with Section
12.9 and (b) the Revolving Termination Date.
"Taxes" shall have the meaning assigned thereto in Section 4.11(a).
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of any Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041
of ERISA, or (d) the institution of proceedings to terminate, or the appointment
of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other
event or condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan, or (f) the partial or complete withdrawal of any Borrower or any
ERISA Affiliate from a Multiemployer Plan, or (g) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA, or (h) any event or
condition which results in the reorganization or insolvency of a Multiemployer
Plan under Sections 4241 or 4245 of ERISA, or (i) any event or condition which
results in the termination of a Multiemployer Plan under Section 4041A of ERISA
or the institution by PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
15
17
"Uniform Customs" means, the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce
Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary all of
the shares of capital stock or other ownership interests of which are, directly
or indirectly, owned or controlled by ShoLodge and/or one or more of its
Wholly-Owned Subsidiaries.
SECTION 1.2. General. Unless otherwise specified, a reference in this
Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Any reference herein to "Charlotte time" shall refer to
the applicable time of day in Charlotte, North Carolina.
SECTION 1.3. Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. 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.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Revolving
Credit Loans to the Borrowers from time to time from the Closing Date through
the Revolving Termination Date as requested by the Borrowers in accordance with
the terms of Section 2.3; provided, that (a) the aggregate principal amount of
all outstanding Revolving Credit Loans (after giving effect to any amount
requested) shall not exceed the Aggregate Commitment
16
18
less the sum of all outstanding Swingline Loans and the L/C Obligations and (b)
the principal amount of outstanding Revolving Credit Loans from any Lender to
the Borrowers shall not at any time exceed such Lender's Commitment. Each
Revolving Credit Loan by a Lender shall be in a principal amount equal to such
Lender's Commitment Percentage of the aggregate principal amount of Revolving
Credit Loans requested on such occasion. Subject to the terms and conditions
hereof, the Borrowers may borrow, repay and reborrow Revolving Credit Loans
hereunder until the Revolving Termination Date.
SECTION 2.2. Swingline Loans.
(a) Availability. Subject to the terms and conditions of this
Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrowers
from time to time from the Closing Date through the Swingline Termination Date;
provided, that the aggregate principal amount of all outstanding Swingline Loans
(after giving effect to any amount requested), shall not exceed the lesser of
(i) the Aggregate Commitment less the sum of all outstanding Revolving Credit
Loans and the L/C Obligations and (ii) the Swingline Commitment.
(b) Refunding.
(i) Swingline Loans shall be refunded by the Lenders on demand
by the Swingline Lender at the Swingline Lender's discretion. Such refundings
shall be made by the Lenders in accordance with their respective Commitment
Percentages and shall thereafter be reflected as Revolving Credit Loans of the
Lenders on the books and records of the Administrative Agent. Each Lender shall
fund its respective Commitment Percentage of Revolving Credit Loans as required
to repay Swingline Loans outstanding to the Swingline Lender upon demand by the
Swingline Lender but in no event later than 2:00 p.m. (Charlotte time) on the
date such demand is made if made on or before 12:00 noon (Charlotte time) on
such date and no later than 12:00 noon (Charlotte time) on the next succeeding
Business Day if demand therefor is made after 12:00 noon (Charlotte time).
(ii) The Borrowers shall pay to the Swingline Lender on demand
the amount of such Swingline Loans to the extent amounts received from the
Lenders are not sufficient to repay in full the outstanding Swingline Loans
requested or required to be refunded. In addition, the Borrowers hereby
authorize the Administrative Agent to charge any account maintained by any of
them with the Swingline Lender (up to the amount available therein) in order to
immediately pay the Swingline Lender the amount of such Swingline Loans to the
extent amounts received from the Lenders are not sufficient to repay in full the
outstanding Swingline Loans requested or required to be refunded. If any portion
of any such amount paid to the Swingline Lender shall be recovered by or on
17
19
behalf of the Borrowers from the Swingline Lender in bankruptcy or otherwise,
the loss of the amount so recovered shall be ratably shared among all the
Lenders in accordance with their respective Commitment Percentages.
(iii) Each Lender acknowledges and agrees that its obliga tion to
refund Swingline Loans in accordance with the terms of this Section 2.2 is
absolute and unconditional and shall not be affected by any circumstance
whatsoever; provided, that if prior to the refunding of any outstanding
Swingline Loans pursuant to this Section 2.2, one of the events described in
Section 11.1(j) or (k) shall have occurred, each Lender will, on the date the
applicable Revolving Credit Loan would have been made, purchase an undivided
participating interest in the Swingline Loan to be refunded in an amount equal
to its Commitment Percentage of the aggregate amount of such Swingline Loan.
Each Lender will immediately transfer to the Swingline Lender, in immediately
available funds, the amount of its participation and upon receipt thereof the
Swingline Lender will deliver to such Lender a certificate evidencing such
participation dated the date of receipt of such funds and for such amount.
Whenever, at any time after the Swingline Lender has received from any Lender
such Lender's participating interest in a Swingline Loan, the Swingline Lender
receives any payment on account thereof, the Swingline Lender will distribute to
such Lender its participating interest in such amount (appropriately adjusted,
in the case of interest payments, to reflect the period of time during which
such Lender's participating interest was outstanding and funded).
SECTION 2.3. Procedure for Advances of Revolving Credit and Swingline
Loans.
(a) Requests for Borrowing. ShoLodge, on behalf of the Borrowers, shall
give the Administrative Agent irrevocable prior written notice in the form
attached hereto as Exhibit B (a "Notice of Borrowing") not later than noon
(Charlotte time) (i) on the same Business Day as each Swingline Loan and each
Base Rate Loan and (ii) at least three Business Days before each LIBOR Rate
Loan, of its intention to borrow, specifying (A) the date of such borrowing,
which shall be a Business Day, (B) the amount of such borrowing, which shall be
in an aggregate principal amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof for Base Rate Loans, an aggregate principal amount of
$2,500,000 or an integral multiple of $500,000 in excess thereof for LIBOR Rate
Loans and an aggregate principal amount of $100,000 for Swingline Loans, (C)
whether such Loan is to be a Revolving Credit Loan or a Swingline Loan, (D) in
the case of a Revolving Credit Loan, whether the Loans are to be LIBOR Rate
Loans or Base Rate Loans, and (E) in the case of a LIBOR Rate Loan, the duration
of the Interest Period applicable thereto. Notices received after noon
(Charlotte time) shall be deemed received on
18
20
the next Business Day. The Administrative Agent shall promptly notify the
Lenders of each Notice of Borrowing with respect to a Revolving Credit Loan.
(b) Disbursement of Revolving Credit and Swingline Loans. Not later
than 3:00 p.m. (Charlotte time) on the proposed borrowing date, (i) each Lender
will make available to the Administrative Agent, for the account of the
Borrowers, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Lender's Commitment Percentage of
the Revolving Credit Loans to be made on such borrowing date and (ii) the
Swingline Lender will make available to the Administrative Agent, for the
account of the Borrowers, at the office of the Administrative Agent in funds
immediately available to the Administrative Agent, the Swingline Loans to be
made to the Borrowers on such borrowing date. The Borrowers hereby irrevocably
authorize the Administrative Agent to disburse the proceeds of each borrowing
requested pursuant to this Section 2.3 in immediately available funds by
crediting such proceeds to a deposit account of ShoLodge maintained with the
Administrative Agent or by wire transfer to such account as may be agreed upon
by ShoLodge and the Administrative Agent from time to time. Subject to Section
4.7 hereof, the Administrative Agent shall not be obligated to disburse the
proceeds of any Revolving Credit Loan requested pursuant to this Section 2.3 to
the extent that any Lender has not made available to the Administrative Agent
its Commitment Percentage of such Loan. Revolving Credit Loans to be made for
the purpose of refunding Swingline Loans shall be made by the Lenders as
provided in Section 2.2(b) hereof.
SECTION 2.4. Repayment of Loans.
(a) Repayment. The Borrowers shall repay the outstanding principal
amount of (i) all Revolving Credit Loans on the Revolving Termination Date, if
not sooner repaid, and (ii) all Swingline Loans in accordance with Section
2.2(b), together, in each such case, with all accrued but unpaid interest
thereon.
(b) Mandatory Repayment of Excess Loans. If at any time the outstanding
principal amount of all Loans plus the L/C Obligations exceeds the Aggregate
Commitment, the Borrowers shall repay immediately upon notice from the
Administrative Agent, by payment to the Administrative Agent for the account of
the Lenders, Extensions of Credit in an amount equal to such excess with each
such repayment applied first to the principal amount of outstanding Swingline
Loans, second to the principal amount of outstanding Revolving Credit Loans, and
third, with respect to any Letters of Credit then outstanding, a payment of cash
collateral into a cash collateral account opened by the Borrowers with the
Administrative Agent for the benefit of the Lenders. Such cash collateral shall
be applied in accordance with Section
19
21
11.2(b). Each such repayment shall be accompanied by any amount required to be
paid pursuant to Section 4.9 hereof.
(c) Mandatory Repayment - Sale of Assets. If pursuant to Section
10.7(c) an amount equal to the Net Disposition Proceeds is not reinvested into
comparable replacement assets by any Borrower or any of its Subsidiaries within
twelve (12) months of the applicable Disposition then within five (5) days after
the passage of said twelve (12) month period, the Borrowers shall immediately
repay to the Administrative Agent for the account of the Lenders, Extensions of
Credit in an amount equal to such Net Disposition Proceeds not so reinvested.
Each such repayment shall be applied first to the principal amount of
outstanding Swingline Loans, second to the principal amount of outstanding
Revolving Credit Loans, and third, with respect to any Letters of Credit then
outstanding, a payment of cash collateral into a cash collateral account opened
by the Borrowers with the Administrative Agent for the benefit of the Lenders.
Such cash collateral shall be applied in accordance with Section 11.2(b). Each
such repayment shall be accompanied by any amount required to be paid pursuant
to Section 4.9 hereof.
(d) Optional Repayments. The Borrowers may at any time and from time to
time repay the Revolving Credit Loans, in whole or in part, without premium or
penalty (except as provided in this Agreement, including without limitation
Section 2.4(e)), by providing notice to the Administrative Agent no later than
noon (Charlotte Time) upon at least three (3) Business Days prior to such
repayment with respect to LIBOR Rate Loans and on the same Business Day as such
repayment with respect to Base Rate Loans, in the form attached hereto as
Exhibit C (a "Notice of Prepayment") specifying the date and amount of
repayment and whether the repayment is of LIBOR Rate Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
repayments with respect to Base Rate Loans shall be in an aggregate amount of
$1,000,000 or a whole multiple of $100,000 in excess thereof. Partial repayments
with respect to LIBOR Rate Loans shall be in an aggregate amount of $2,500,000
or a whole multiple of $500,000 in excess thereof. Each such repayment shall be
accompanied by any amount required to be paid pursuant to Section 4.9 hereof.
(e) Limitation on Repayment of LIBOR Rate Loans. Notwithstanding the
provisions of Section 2.4(d), any LIBOR Rate Loan may not be repaid on any day
other than on the last day of the Interest Period applicable thereto unless such
repayment is accompanied by an amount required to be paid pursuant to Section
4.9 hereof.
20
22
SECTION 2.5. Notes.
(a) Revolving Credit Notes. Each Lender's Revolving Credit Loans and
the obligation of the Borrowers to repay such Revolving Credit Loans shall be
evidenced by a Revolving Credit Note executed by the Borrowers payable to the
order of such Lender representing the Borrowers' joint and several obligation to
pay such Lender's Commitment or, if less, the aggregate unpaid principal amount
of all Revolving Credit Loans made and to be made by such Lender to the
Borrowers hereunder, plus interest and all other fees, charges and other amounts
due thereon. Each Revolving Credit Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 4.1.
(b) Swingline Notes. The Swingline Loans and the obligation of the
Borrowers to repay such Swingline Loans shall be evidenced by a Swingline Note
executed by the Borrowers payable to the order of the Swingline Lender
representing the Borrowers' joint and several obligation to pay the Swingline
Lender's Swingline Commitment or, if less, the aggregate unpaid principal amount
of all Swingline Loans made by the Swingline Lender to the Borrowers hereunder,
plus interest on such principal amounts and all other fees, charges and other
amounts due thereon. The Swingline Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 4.1.
SECTION 2.6. Permanent Reduction of the Aggregate Commitment.
(a) The Borrowers shall have the right at any time and from time to
time, upon at least five (5) Business Days prior written notice to the
Administrative Agent, to permanently reduce, in whole at any time or in part
from time to time, without premium or penalty, the Aggregate Commitment in an
aggregate principal amount not less than $2,500,000 or any whole multiple of
$1,000,000 in excess thereof.
(b) Each permanent reduction permitted pursuant to this Section 2.6
shall be accompanied by a payment of principal (and with respect to L/C
Obligations, furnishing of cash collateral) sufficient to reduce the aggregate
outstanding Extensions of Credit of the Lenders after such reduction to the
Aggregate Commitment as so reduced. Any reduction of the Aggregate Commitment
to zero shall be accompanied by payment of all outstanding Obligations (and
furnishing of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations) and, if such reduction is permanent, termination of the
Commitments and Credit Facility. Such cash collateral shall be applied in
accordance with Section 11.2(b). If the reduction of the Aggregate Commitment
requires the repayment of any LIBOR Rate Loan, such reduc-
21
23
tion may be made only on the last day of the then current Interest Period
applicable thereto unless such repayment is accompanied by any amount required
to be paid pursuant to Section 4.9 hereof.
SECTION 2.7. Revolving Termination Date. The Credit Facility (subject
to Section 2.2(a) with respect to Swingline Loans) shall terminate on the
earliest of (a) April 29 2000, (b) the date of termination by the Borrowers
pursuant to Section 2.6(a), and (c) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section 11.2(a)
SECTION 2.8. Use of Proceeds. The Borrowers shall use the proceeds of
the Loans (a) to refinance certain existing indebtedness including the
Refinanced Debt and (b) for working capital and general corporate requirements
of ShoLodge and its Subsidiaries, including the payment of certain fees and
expenses incurred in connection with the transactions contemplated hereby.
SECTION 2.9. Joint and Several Liability. The Obligations of the
Borrowers under this Agreement and the Notes shall be joint and several.
SECTION 2.10. Agreements for Contribution.
(a) To the extent any Borrower is required, by reason of its
Obligations hereunder, to pay to the Administrative Agent and the Lenders an
amount greater than the amount of Extensions of Credit actually made available
to or for the direct benefit of such Borrower, such Borrower shall have an
enforceable right of contribution against the remaining Borrowers, and the
remaining Borrowers shall be jointly and severally liable, for repayment of the
full amount of such excess payment. Subject only to the subordination provided
in the following subsection (d), such Borrower further shall be subrogated to
any and all rights of the Administrative Agent and the Lenders against the
remaining Borrowers to the extent of such excess payment.
(b) To the extent that any Borrower would, but for the operation of
this Section 2.10 and by reason of its Obligations hereunder or its obligations
to other Subsidiaries under this Section 2.10, be rendered insolvent for any
purpose under Applicable Law, each of the Borrowers hereby agrees to indemnify
such Borrower and commits to make a contribution to such Borrower's capital in
an amount at least equal to the amount necessary to prevent such Borrower from
having been rendered insolvent by reason of the incurring of any such
obligations.
(c) To the extent that any Borrower would, but for the operation of
this Section 2.10, be rendered insolvent under any Applicable Law by reason of
its incurring of obligations to any
22
24
other Borrower under the foregoing subsections (a) and (b) above, such Borrower
shall, in turn, have rights of contribution and indemnity, to the full extent
provided in the foregoing subsections (a) and (b) above, against the remaining
Borrowers, such that all Obligations of all of the Borrowers hereunder and under
this Section 2.10 shall be allocated in a manner such that no Borrower shall be
rendered insolvent for any purpose under Applicable Law by reason of its
incurring of such obligations.
(d) The rights of any Borrower to contribution, subrogation and
indemnity under this Section 2.10 or under Applicable Law shall in all events
and all respects be subject and subordinate to the rights of the Administrative
Agent and the Lenders under this Agreement and subject to the prior full, final
and indefeasible payment to the Administrative Agent and the Lenders of all
Obligations and no such right may be exercised until all of such Obligations
have been fully, finally and indefeasibly paid and such payments are in no event
subject to avoidance under Title 11 of the United States Code or any other
Applicable Law.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1. L/C Commitment. 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 standby letters of credit ("Letters
of Credit") for the account of the Borrowers on any Business Day from the
Closing Date through but not including the Revolving Termination Date in such
form as may be approved from time to time by the Issuing Lender; provided, that
the Issuing Lender shall not issue any Letter of Credit if, after giving effect
to such issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b)
the Available Commitment of any Lender would be less than zero. Each Letter of
Credit shall (i) be denominated in Dollars in a minimum amount of $250,000, (ii)
be a standby letter of credit issued to support obligations of the Borrowers,
contingent or otherwise, incurred in the ordinary course of business, (iii)
expire on a date satisfactory to the Issuing Lender, which date shall be no
later than the Revolving Termination Date and (iv) be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
North Carolina. 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 Law. References herein to "issue" and derivations thereof with
respect to Letters of Credit shall also include extensions or modifications of
any existing Letters of Credit, unless the context otherwise requires, but shall
exclude all existing letters of credit relating to existing industrial revenue
bonds of ShoLodge and its Subsidiaries.
23
25
SECTION 3.2. Procedure for Issuance of Letters of Credit. The Borrowers
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at the Administrative Agent's Office 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 request. Upon receipt of any Application, the Issuing Lender
shall process such Applica tion and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 3.1 and Article V hereof,
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 Borrowers. The Issuing
Lender shall furnish to the Borrowers a copy of such Letter of Credit and
furnish to each Lender a copy of such Letter of Credit and the amount of each
Lender's participation therein pursuant to Section 3.4(a), all promptly
following the issuance of such Letter of Credit.
SECTION 3.3. Commissions and Other Charges.
(a) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants, a letter of credit
commission with respect to each Letter of Credit in an amount equal to the
product of (i) a per annum fee equal to the Applicable Margin in effect with
respect to LIBOR Rate Loans as set forth in Section 4.1(c) and (ii) the face
amount of such Letter of Credit. Such commission shall be payable quarterly in
arrears on the last Business Day of each calendar quarter and on the Revolving
Termination Date during the period that any Letter of Credit is outstanding
hereunder. The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and L/C Participants all commissions
received by the Administrative Agent in accordance with their respective
Commitment Percentages.
(b) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Lender a non-refundable fronting fee with respect to each
Letter of Credit in an amount equal to the product of (i) 0.125% (on a per annum
basis) and (ii) the face amount of such Letter of Credit. Such fee shall be
payable quarterly in arrears on the last Business Day of each calendar quarter
and on the Revolving Termination Date during the period that any Letter of
Credit is outstanding hereunder.
(c) In addition to the foregoing commissions and fees, the Borrowers
shall pay or reimburse the Issuing Lender for such
24
26
normal and customary costs and expenses as are incurred or charged by the
Issuing Lender in issuing, effecting payment under, transferring, amending or
otherwise administering any Letter of Credit.
SECTION 3.4. L/C Participations.
(a) 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 Commitment Percentage 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 Borrowers 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 Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average Federal
Funds Rate as determined by the Administrative Agent during the period from and
including the date such payment is due 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. A certificate of the Issuing Lender with respect to
any amounts owing under this Section shall be conclusive in the absence of
manifest error. With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this Section 3.4(b), if the L/C Participants
receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte
time) on any Business Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due
on the following Business Day.
25
27
(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
Commitment Percentage of such payment in accordance with this Section 3.4, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrowers or otherwise, or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Partici pant its pro
rata share thereof; provided, that in the event that any such payment received
by the Issuing Lender shall be required to be returned by the Issuing Lender,
such L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
SECTION 3.5. Reimbursement Obligation of the Borrowers. The Borrowers
agree to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrowers of the date and amount of a draft paid under any Letter
of Credit for the amount of (a) such draft so paid and (b) 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 and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrowers under this Article III from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrowers fail to
timely reimburse the Issuing Lender on the date the Borrowers receive the notice
referred to in this Section 3.5, the Borrowers shall be deemed to have timely
given a Notice of Borrowing hereunder to the Administrative Agent requesting
the Lenders to make a Base Rate Loan on such date in an amount equal to the
amount of such drawing and, subject to the satisfaction or waiver of the
conditions precedent specified in Article V, the Lenders shall make Base Rate
Loans in such amount, the proceeds of which shall be applied to reimburse the
Issuing Lender for the amount of the related drawing and costs and expenses.
SECTION 3.6. Obligations Absolute. The Borrowers' obligations under
this Article III (including without limitation the Reimbursement Obligation)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which any
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit. The Borrowers also agree with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrowers' Reimbursement
Obligation under Section 3.5 shall not be affected by 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 any
dispute between or among any Borrower and any beneficiary of any Letter
26
28
of Credit or any other party to which such Letter of Credit may be transferred
or any claims whatsoever of any Borrower against any beneficiary of such Letter
of Credit or any such transferee. The Issuing Lender shall not 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. The Borrowers agree 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 Customs and, to the extent not inconsistent therewith, the UCC shall
be binding on the Borrowers and shall not result in any liability of the Issuing
Lender to the Borrowers. The responsibility of the Issuing Lender to the
Borrowers in connection with any draft presented for payment under any Letter of
Credit 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 are in conformity with such Letter of Credit.
SECTION 3.7. Effect of Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1. Interest.
(a) Interest Rate Options. Subject to the provisions of this Section
4.1, at the election of the Borrowers, the aggregate principal balance of the
Revolving Credit Notes or any portion thereof shall bear interest at the Base
Rate or the LIBOR Rate plus, in each case, the Applicable Margin as set forth
below; provided that the LIBOR Rate shall not be available until three (3)
Business Days after the Closing Date. The Borrowers shall select the rate of
interest and Interest Period, if any, applicable to any Loan at the time a
Notice of Borrowing is given pursuant to Section 2.3 or at the time a Notice of
Conversion/Continuation is given pursuant to Section 4.2. Each Loan or portion
thereof bearing interest based on the Base Rate shall be a "Base Rate Loan" and
each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a
"LIBOR Rate Loan." Any Swingline Loan shall bear interest at the Base Rate. Any
27
29
Loan or any portion thereof as to which the Borrowers have not duly specified an
interest rate as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan, the
Borrowers, by giving notice at the times described in Section 4.1(a), shall
elect an interest period (each, an "Interest Period") to be applicable to such
Loan, which Interest Period shall be a period of one (1), two (2), three (3) or
six (6) months; provided that:
(i) the Interest Period shall commence on the date of advance of
or conversion to any LIBOR Rate Loan and, in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the date on
which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, that if any Interest Period with respect to a LIBOR Rate
Loan would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate 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 the relevant calendar
month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Revolving
Termination Date; and
(v) there shall be no more than five (5) Interest Periods
outstanding at any time.
(c) Applicable Margin. The Applicable Margin provided for in Section
4.1(a) with respect to the Loans (the "Applicable Margin") shall be (i) during
the period from the Closing Date through and including the date which is five
(5) Business Days following receipt by the Administrative Agent of the financial
statements and Officer's Compliance Certificate for the third fiscal quarter of
1997 required pursuant to Sections 7.1 and 7.2, respectively, 0.25% for Base
Rate Loans and 2.00% for LIBOR Rate Loans and (ii) for each fiscal quarter
thereafter, determined by reference to the Senior Leverage Ratio as of the end
of the fiscal quarter immediately preceding the delivery of the applicable
Officer's Compliance Certificate as follows:
28
30
Applicable Margin Per Annum
Tier Senior Leverage Ratio Base Rate + LIBOR Rate +
---- --------------------- ----------- ------------
I less than 1.50 0.00% 1.75%
II greater than or equal to
1.50 and less than 2.50 0.25% 2.00%
III greater than or equal to
2.50 but less than 3.25 0.50% 2.25%
IV greater than or equal to
3.25 0.50% 2.50%
Except as otherwise provided in clause 4.1(c)(i) above, adjust ments, if any, in
the Applicable Margin shall be made by the Administrative Agent on the tenth
(10th) Business Day after receipt by the Administrative Agent of quarterly
financial statements for ShoLodge and its Subsidiaries and the accompanying
Officer's Compliance Certificate setting forth the Senior Leverage Ratio of
ShoLodge and its Subsidiaries as of the most recent fiscal quarter end. Subject
to Section 4.1(d), in the event ShoLodge fails to deliver such financial
statements and certificate within the time required by Sections 7.1 and 7.2
hereof (including the financial statements, and certificate to be delivered with
regard to the third fiscal quarter of 1997), the Applicable Margin shall be the
highest Applicable Margin set forth above until the tenth (10th) Business Day
after delivery of such financial statements and certificate.
(d) Default Rate. Upon the occurrence and during the continuance of an
Event of Default, (i) the Borrowers shall no longer have the option to request
LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at a
rate per annum two percent (2%) in excess of the rate then applicable to LIBOR
Rate Loans until the end of the applicable Interest Period and thereafter at a
rate equal to two percent (2%) in excess of the rate then applicable to Base
Rate Loans, and (iii) all outstanding Base Rate Loans shall bear interest at a
rate per annum equal to two percent (2%) in excess of the rate then applicable
to Base Rate Loans. Interest shall continue to accrue on the Notes after the
filing by or against the Borrowers of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate Loan
shall be payable in arrears on the last Business Day of each calendar quarter
commencing as of the last Business Day of the second calendar quarter of 1997;
and interest on each LIBOR Rate
29
31
Loan shall be payable on the last day of each Interest Period applicable
thereto, and if such Interest Period extends over three (3) months, at the end
of each three (3) month interval during such Interest Period. Interest rates on
each Base Rate Loan shall be computed on the basis of a 365-day year and
assessed for the actual number of days elapsed. Interest rates on each LIBOR
Rate Loan and all fees and commissions provided hereunder shall be computed on
the basis of a 360-day year and assessed for the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative
Agent's option promptly refund to the Borrowers any interest received by Lenders
in excess of the maximum lawful rate or shall apply such excess to the principal
balance of the Obligations. It is the intent hereof that the Borrowers not pay
or contract to pay, and that neither the Administrative Agent nor any Lender
receive or contract to receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be paid by the Borrowers under Applicable
Law.
SECTION 4.2. Notice and Manner of Conversion or Continuation of Loans.
Provided that no Event of Default has occurred and is then continuing, the
Borrowers shall have the option to (a) convert at any time all or any portion of
its outstanding Base Rate Loans (other than Swingline Loans) in a principal
amount equal to $2,500,000 or any whole multiple of $500,000 in excess thereof
into one or more LIBOR Rate Loans; or (b) upon the expiration of any Interest
Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a
principal amount equal to $1,000,000 or a whole multiple of $100,000 in excess
thereof into Base Rate Loans, or (ii) continue such LIBOR Rate Loans as LIBOR
Rate Loans. Whenever the Borrowers desire to convert or continue Loans as
provided above, ShoLodge, on behalf of the Borrowers, shall give the
Administrative Agent irrevocable prior written notice in the form attached as
Exhibit D (a "Notice of Conversion/ Continuation") not later than noon
(Charlotte time) three (3) Business Days before the day on which a proposed
conversion of a Base Rate Loan to a LIBOR Rate Loan or continuation of a LIBOR
Rate Loan is to be effective and on the same Business Day on which a proposed
conversion of a LIBOR Rate Loan to a Base Rate Loan is to be effective
specifying (A) the Loans to be converted or continued, and, in the case of any
LIBOR Rate Loan to be converted or continued, the last day of the Interest
Period therefor, (B) the
30
32
effective date of such conversion or continuation (which shall be a Business
Day), (C) the principal amount of such Loans to be converted or continued, and
(D) the Interest Period to be applicable to such converted or continued LIBOR
Rate Loan. The Administrative Agent shall promptly notify the Lenders of such
Notice of Conversion/Continuation.
SECTION 4.3. Fees.
(a) Commitment Fee. The Borrowers shall pay to the Administrative
Agent, for the account of the Lenders, a non-refundable commitment fee on the
average daily unused portion of the Aggregate Commitment at a rate per annum
which shall be (i) during the period from the Closing Date through and including
the date which is five (5) Business Days following receipt by the Administrative
Agent of the financial statements and Officer's Compliance Certificate for the
third fiscal quarter of 1997 required pursuant to Sections 7.1 and 7.2, 0.30%
and (ii) for each fiscal quarter thereafter, determined by reference to the
Senior Leverage Ratio as of the end of the fiscal quarter immediately preceding
the delivery of the applicable Officer's Compliance Certificate, as follows:
Tier Senior Leverage Ratio Commitment Fee
---- --------------------- --------------
I less than 1.50 .20%
II greater than or equal to
1.50 and less than 2.50 .30%
III greater than or equal to
2.50 and less than 3.25 .40%
IV greater than or equal to
3.25% .50%
Except as otherwise provided in clause 4.3(a)(i) above, adjustments, if any, in
the commitment fee shall be made by the Administrative Agent on the tenth
(10th) Business Day after receipt by the Administrative Agent of quarterly
financial statements for ShoLodge and its Subsidiaries and the accompanying
Officer's Compliance Certificate setting forth the Senior Leverage Ratio of
ShoLodge and its Subsidiaries as of the most recent fiscal quarter end. Upon the
occurrence and continuance of an Event of Default or in the event ShoLodge fails
to deliver such financial statements and certificate within the time required by
Sections 7.1 and 7.2 hereof (including the financial statements and certificate
to be delivered with regard to the third fiscal quarter of 1997), the commitment
31
33
fee shall be the highest commitment fee set forth above until the tenth (10th)
Business Day after delivery of such financial statements and certificate. The
commitment fee shall be payable in arrears on the last Business Day of each
calendar quarter during the term of this Agreement commencing as of the last
Business Day of the second calendar quarter of 1997, and on the Revolving
Termination Date. Such commitment fee shall be distributed by the Administrative
Agent to the Lenders pro rata in accordance with the Lenders' respective
Commitment Percentages.
(b) Upfront Fees. The Borrowers agree to pay to the Administrative
Agent, for the ratable benefit of the Lenders, upfront fees in an amount of
.125% of the Aggregate Commitment, said fees to be paid on or prior to the
Closing Date.
(c) Administrative Agent's and Other Fees. In order to compensate the
Administrative Agent for structuring and syndicating the Loans and for its
obligations hereunder, the Borrowers agree to pay to the Administrative Agent,
for its account, the fees set forth in the separate fee letter agreement
executed by ShoLodge, the Administrative Agent and First Union Capital Markets
Corp. dated February 24, 1997.
SECTION 4.4. Manner of Payment. Each payment by the Borrowers on
account of the principal of or interest on the Loans or of any fee, commission
or other amounts (including the Reimbursement Obligation) payable to the
Lenders under this Agreement or any Note shall be made not later than 2:00 p.m.
(Charlotte time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office for the account of the
Lenders pro rata in accordance with their respective Commitment Percentages
(other than as specifically set forth below), in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before 3:00 p.m.
(Charlotte time) on such day shall be deemed a payment on such date for the
purposes of Section 11.1, but for all other purposes shall be deemed to have
been made on the next succeeding Business Day. Any payment received after 3:00
p.m. (Charlotte time) shall be deemed to have been made on the next succeeding
Business Day for all purposes. Upon receipt by the Administrative Agent of each
such payment, the Administrative Agent shall distribute to each Lender at its
address for notices set forth herein its pro rata share of such payment in
accordance with this Section 4.4 and shall wire advice of the amount of such
credit to each Lender. Each payment to the Administrative Agent of the Issuing
Lender's fees or L/C Participants' commissions shall be made in like manner, but
for the account of the Issuing Lender or the L/C Participants, as the case may
be. Each payment to the Administrative Agent of Administrative Agent's fees or
expenses shall be made for the account of the Administrative Agent and any
amount payable to any Lender under
32
34
Sections 4.8, 4.9, 4.10, 4.11 or 13.2 shall be paid to the Administrative Agent
for the account of the applicable Lender.
SECTION 4.5. Crediting of Payments and Proceeds. In the event that the
Borrowers shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by the Borrowers hereunder, then to all indemnity obligations then
due and payable by the Borrowers hereunder, then to all Administrative Agent's
and Issuing Lender's fees then due and payable, then to all commitment and other
fees and commissions then due and payable, then to accrued and unpaid interest
on the Swingline Note to the Swingline Lender, then to the principal amount
outstanding under the Swingline Note to the Swingline Lender, then to accrued
and unpaid interest on the Revolving Credit Notes, the Reimbursement Obligation
and any termination payments due in respect of a Hedging Agreement with any
Lender permitted pursuant to Section 10.1 (pro rata in accordance with all such
amounts due), then to the principal amount of the Revolving Credit Notes and
Reimbursement Obligation and then to the cash collateral account described in
Section 11.2(b) hereof to the extent of any L/C Obligations then outstanding, in
that order.
SECTION 4.6. Adjustments. If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Extensions of Credit, or
interest thereon, or if any Lender shall at any time receive any collateral in
respect to its Extensions of Credit (whether voluntarily or involuntarily, by
set-off or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of such other
Lender's Extensions of Credit, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Extensions of Credit, 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 Lenders; provided, 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. The
Borrowers agree that each Lender so purchasing a portion of another Lender's
Extensions of Credit may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
SECTION 4.7. Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by the Administrative Agent. The obligations of the Lenders
under this Agreement to make the Loans
33
35
and issue or participate in Letters of Credit are several and are not joint or
joint and several. Unless the Administrative Agent shall have received notice
from a Lender prior to a proposed borrowing date that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of the
amount to be borrowed on such date (which notice shall not release such Lender
of its obligations hereunder), the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the
proposed borrowing date in accordance with Section 2.3(b) and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrowers on
such date a corresponding amount. If such amount is made available to the
Administrative Agent on a date after such borrowing date, such Lender shall pay
to the Administrative Agent on demand an amount, until paid, equal to the
product of (a) the amount of such Lender's Commitment Percentage of such
borrowing, times (b) the daily average Federal Funds Rate during such period as
determined by the Administrative Agent, times (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such Lender's Commitment Percentage of such borrowing shall
have become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative Agent with
respect to any amounts owing under this Section shall be conclusive, absent
manifest error. If such Lender's Commitment Percentage of such borrowing is not
made available to the Administrative Agent by such Lender within three (3)
Business Days of such borrowing date, the Administrative Agent shall be entitled
to recover such amount made available by the Administrative Agent with interest
thereon (without duplication) at the rate per annum applicable to Base Rate
Loans hereunder, on demand, from the Borrowers. The failure of any Lender to
make its Commitment Percentage of any Loan available shall not relieve it or any
other Lender of its obligation, if any, hereunder to make its Commitment
Percentage of such Loan available on such borrowing date, but no Lender shall be
responsible for the failure of any other Lender to make its Commitment
Percentage of such Loan available on the borrowing date.
SECTION 4.8. Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with respect to
any Interest Period the Administrative Agent or any Lender (after consultation
with Administrative Agent) shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars, in the applicable amounts are not being quoted via Telerate Page
3750 or offered to the Administrative Agent or such Lender for such Interest
Period, then the Administrative Agent shall forthwith give notice thereof to the
Borrowers. Thereafter, until the Administrative Agent notifies the Borrowers
that such circumstances no longer exist, the obligation of the Lenders to make
LIBOR Rate Loans and the right of the Borrowers to convert any Revolving Credit
Loan to
34
36
or continue any Revolving Credit Loan as a LIBOR Rate Loan shall be suspended,
and the Borrowers shall repay in full (or cause to be repaid in full) the then
outstanding principal amount of each such LIBOR Rate Loan together with accrued
interest thereon, on the last day of the then current Interest Period applicable
to such LIBOR Rate Loan or convert the then outstanding principal amount of each
such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest
Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give
notice to the Borrowers and the other Lenders. Thereafter, until the
Administrative Agent notifies the Borrowers that such circumstances no longer
exist, (i) the obligations of the Lenders to make LIBOR Rate Loans and the right
of the Borrowers to convert any Revolving Credit Loan to or continue any
Revolving Credit Loan as a LIBOR Rate Loan shall be suspended and thereafter the
Borrowers may select only Base Rate Loans hereunder, and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto as a LIBOR Rate Loan, the
applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan
for the remainder of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction of, or
any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their respective
Lending Offices) to any tax, duty or other charge with respect to any Note,
Letter of Credit or Application or shall change the basis of taxation of
payments to any of the Lenders (or any of their respective Lending Offices) of
the principal of or interest on any Note, Letter of Credit or Application or any
other amounts due under this Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of any of the
35
37
Lenders or any of their respective Lending Offices imposed by the jurisdiction
in which such Lender is organized or is or should be qualified to do business or
such Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrowers in writing of such fact and demand
compensation therefor and, within fifteen (15) days after written such notice by
the Administrative Agent, the Borrowers shall pay to such Lender such additional
amount or amounts as will compensate such Lender or Lenders for such increased
cost or reduction. The Administrative Agent will promptly notify the Borrowers
of any event of which it has knowledge which will entitle such Lender to
compensation pursuant to this Section 4.8(c); provided, that the Administrative
Agent shall incur no liability whatsoever to the Lenders or the Borrowers in the
event it fails to do so. The amount of such compensation shall be determined, in
the applicable Lender's sole discretion, based upon the assumption that such
Lender funded its Commitment Percentage of the LIBOR Rate Loans in the London
interbank market, and using any reasonable attribution or averaging methods
which such Lender deems appropriate and practical. A certificate of such Lender
setting forth the basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrowers through the
Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.
SECTION 4.9. Indemnity. The Borrowers hereby indemnify each of the
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrowers to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrowers to borrow on a
date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation or (c) due to any payment, prepayment or conversion of
any LIBOR Rate Loan on a date other
36
38
than the last day of the Interest Period therefor. The amount of such loss or
expense shall be determined, in the applicable Lender's sole discretion, based
upon the assumption that such Lender funded its Commitment Percentage of the
LIBOR Rate Loans in the London interbank market, and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical. A certificate of such Lender setting forth the basis for determining
such amount or amounts necessary to compensate such Lender shall be forwarded to
the Borrowers through the Administrative Agent and shall be conclusively
presumed to be correct save for manifest error.
SECTION 4.10. Capital Requirements. If either (a) the introduction of,
or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of law),
has or would have the effect of reducing the rate of return on the capital of,
or has affected or would affect the amount of capital required to be maintained
by, any Lender or any corporation controlling such Lender as a consequence of,
or with reference to the Commitments and other commitments of this type, below
the rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrowers shall pay to such Lender
from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to the Borrowers and the Administrative Agent by such
Lender, shall, in the absence of manifest error, be presumed to be correct and
binding for all purposes.
SECTION 4.11. Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrowers
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or is
or should be qualified to do business or any political subdivision thereof and
(ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrowers shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note or Letter of Credit to any Lender or the
Administrative Agent, (A) the sum payable shall be increased as may be necessary
so that
37
39
after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.11) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the amount
such party would have received had no such deductions been made, (B) the
Borrowers shall make such deductions, (C) the Borrowers shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with Applicable Law, and (D) the Borrowers shall deliver to the
Administrative Agent evidence of such payment to the relevant taxing authority
or other authority in the manner provided in Section 4.11(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrowers shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrowers shall furnish to the
Administrative Agent, at its address referred to in Section 13.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
the Borrowers, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms) properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or deduction for or on account of any
38
40
United States federal income taxes, and (ii) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding taxes. Each such Lender further
agrees to deliver to the Borrowers, with a copy to the Administrative Agent, a
Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms or manner
of certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrowers,
certifying in the case of a Form 1001 or 4224 that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes (unless in any such case an event (including
without limitation any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
such forms inapplicable or the exemption to which such forms relate unavailable
and such Lender notifies the Borrowers and the Administrative Agent that it is
not entitled to receive payments without deduction or withholding of United
States federal income taxes) and, in the case of a Form W-8 or W-9, establishing
an exemption from United States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 4.11 shall survive the payment in full of the
Obligations and the termination of the Commitments.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1. Closing. The closing shall take place at the offices of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at 10:00 a.m. on April __, 1997, or on such other date or at such
other location as the parties hereto shall mutually agree.
SECTION 5.2. Conditions to Closing and Initial Extensions of Credit.
The obligation of the Lenders to close this Agreement and to make the initial
Loan or issue the initial Letter of Credit is subject to the satisfaction of
each of the following conditions:
(a) Executed Loan Documents. The following Loan Documents, in form and
substance satisfactory to the Administrative Agent and each Lender:
(i) this Agreement;
(ii) the Revolving Credit Notes; and
39
41
(iii) the Swingline Note;
shall have been duly authorized, executed and delivered by the parties thereto,
shall be in full force and effect and no default shall exist thereunder, and the
Borrowers shall have delivered original counterparts thereof to the
Administrative Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate of the Borrowers. The Administrative
Agent shall have received a certificate from the chief executive officer, the
chief financial officer or the treasurer of ShoLodge, on behalf of the
Borrowers, in form and substance satisfactory to the Administrative Agent, to
the effect that all representations and warranties of the Borrowers contained in
this Agreement and the other Loan Documents are true, correct and complete; that
the Borrowers are not in violation of any of the covenants contained in this
Agreement and the other Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default or Event of Default has
occurred and is continuing (including, without limitation, any cross default as
described in Sections 11.1(g) and (h)); and that the Borrowers have satisfied
each of the closing conditions.
(ii) Certificate of Secretary of the Borrowers. The Administrative
Agent shall have received a certificate of the secretary or assistant secretary
of each of the corporate Borrowers (or of the secretary or assistant secretary
of the authorized general partner or the individual authorized general partner
of each of the partnership Borrowers) certifying that attached thereto is a true
and complete copy of the articles of incorporation (or with respect to
partnership Borrowers, certificate of partnership) of such Borrower and all
amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of formation; that attached thereto
is a true and complete copy of the bylaws (or with respect to partnership
Borrowers, partnership agreement) of such Borrower as in effect on the date of
such certification; that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of such Borrower (or with
respect to partnership Borrowers, the Board of Directors of the authorized
general partner or such other authorized representative) authorizing the
borrowings contemplated hereunder and the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party; and as to
the incumbency and genuineness of the signature of each officer of such Borrower
executing Loan Documents to which it is a party.
(iii) Certificates of Good Standing. The Administrative Agent shall
have received long-form certificates as of a recent date of the good standing of
ShoLodge and each of the corporate Borrowers (or with respect to partnership
Borrowers, the authorized
40
42
general partner) under the laws of its jurisdiction of organization and each
other jurisdiction where such Borrower is qualified to do business, and, to the
extent available in the normal course in the applicable jurisdictions, a
certificate of the relevant taxing authorities of such jurisdictions certifying
that such Person has filed required tax returns and owes no material amount of
delinquent taxes.
(iv) Opinions of Counsel. The Administrative Agent shall have
received favorable opinions of counsel to the Borrowers addressed to the
Administrative Agent and the Lenders with respect to the Borrowers, the Loan
Documents and such other matters as the Lenders shall request.
(v) Tax Forms. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by Section
4.11(e) hereof.
(c) Consents; Defaults.
(i) Governmental and Third Party Approvals. All necessary
approvals, authorizations and consents, if any be required, of any Person and of
all Governmental Authorities and courts having jurisdiction with respect to the
transactions contemplated by this Agreement and the other Loan Documents shall
have been obtained.
(ii) Permits and Licenses. All permits and licenses, including
permits and licenses required under Applicable Laws, necessary to the conduct of
business by each Borrower and its Subsidiaries, shall have been obtained.
(iii) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the Administrative Agent's
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.
(iv) No Material Adverse Change. There shall not have occurred any
material adverse change in the properties, business, operations, prospects or
condition (financial or otherwise) of any Borrower and its Subsidiaries, or any
event or condition that could reasonably be expected to have a Material Adverse
Effect.
41
43
(v) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Administrative Agent shall have
received recent annual and interim financial statements of ShoLodge and its
Subsidiaries and such other financial information with respect to ShoLodge and
its Subsidiaries as may be reasonably requested by the Administrative Agent, all
in form and substance satisfactory to the Administrative Agent.
(ii) Financial Condition Certificate. ShoLodge, on behalf of the
Borrowers, shall have delivered to the Administrative Agent a certificate, in
form and substance satisfactory to the Administrative Agent, and certified as
accurate by the chief executive officer, the chief financial officer or the
treasurer of ShoLodge, that (A) the Borrowers and each of their respective
Subsidiaries are Solvent taking into consideration the provisions of Section
2.10 hereof, (B) the Borrowers' payables are current and not past due (unless
being contested by the Borrowers diligently and in good faith), (C) attached
thereto is a pro forma balance sheet of ShoLodge and its Subsidiaries setting
forth on a pro forma basis the financial condition of ShoLodge and its
Subsidiaries on a Consolidated basis as of the Closing Date, reflecting on a pro
forma basis the effect of the transactions contemplated herein, including all
fees and expenses in connection therewith, and evidencing compliance on a pro
forma basis with the covenants contained in Articles IX and X hereof and (D)
attached thereto are the financial projections previously delivered to the
Administrative Agent representing the good faith opinions of ShoLodge and
senior management thereof as to the projected results contained therein.
(iii) Payment at Closing; Fee Letters. There shall have been paid
by the Borrowers to the Administrative Agent and the Lenders the fees set forth
or referenced in Section 4.3 and any other accrued and unpaid fees or
commissions due hereunder (including, without limitation, legal fees and
expenses), and to any other Person such amount as may be due thereto in
connection with the transactions contemplated hereby, including all taxes,
fees and other charges in connection with the execution, delivery, recording,
filing and registration of any of the Loan Documents. The Administrative Agent
shall have received duly authorized and executed copies of the fee letter
agreement referred to in Section 4.3(b).
(e) Miscellaneous.
(i) Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing from ShoLodge, on behalf of the Borrowers, in
accordance with Section 2.3(a), and a written notice
42
44
in the form attached hereto as Exhibit G (a "Notice of Account Designation")
specifying the account or accounts to which the proceeds of any Loans made after
the Closing Date are to be disbursed.
(ii) Proceedings and Documents. All opinions, certificates and
other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Lenders. The Lenders shall have received copies of all other instruments and
other evidence as the Lenders may reasonably request, in form and substance
satisfactory to the Lenders, with respect to the transactions contemplated by
this Agreement and the taking of all actions in connection therewith.
(iii) Due Diligence and Other Documents. The Borrowers shall have
delivered or made available to the Administrative Agent such other documents,
certificates and opinions as the Administrative Agent reasonably requests,
including without limitation copies of each document evidencing or governing the
Subordinated Debt and any other Debt permitted by Section 10.1, certified by a
secretary or assistant secretary of ShoLodge as a true and correct copy thereof.
(iv) Termination of Refinanced Debt. On or prior to the Closing
Date, the Refinanced Debt shall have been fully and finally paid and terminated
and all Liens, if any exist, related to such Refinanced Debt shall have been
released.
SECTION 5.3. Conditions to All Loans and Letters of Credit. The
obligations of the Lenders to make any Loan or issue any Letter of Credit is
subject to the satisfaction of the following conditions precedent on the
relevant borrowing or issue date, as applicable:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article VI shall be true and correct
on and as of such borrowing or issuance date with the same effect as if made on
and as of such date.
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder (i) on the borrowing date with respect
to such Loan or after giving effect to the Loans to be made on such date or (ii)
the issue date with respect to such Letter of Credit or after giving affect to
such Letters of Credit on such date.
(c) Officer's Compliance Certificate; Additional Documents.
The Administrative Agent shall have received the financial statements and
Officer's Compliance Certificate required pursuant to Sections 7.1 and 7.2
respectively and each additional
43
45
document, instrument, legal opinion or other item of information reasonably
requested by it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
SECTION 6.1. Representations and Warranties. To induce the
Administrative Agent to enter into this Agreement and the Lenders to make the
Loans or issue or participate in the Letters of Credit, the Borrowers hereby
represent and warrant to the Administrative Agent and Lenders that:
(a) Organization; Power; Qualification. Each Borrower and each of its
respective Subsidiaries (other than non-Borrower Subsidiaries to the extent the
failure of such non-Borrower Subsidiaries to comply with the following
requirements would not cause a Material Adverse Effect) is duly organized,
validly existing and in good standing (if applicable to the type of entity in
question) under the laws of the jurisdiction of its incorporation or formation,
has the power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization and the failure to be so qualified and authorized would materially
and adversely affect such Borrower. The jurisdictions in which, as of the
Closing Date, ShoLodge, and each other Borrower and each of its Subsidiaries are
organized and qualified to do business are described on Schedule 6.1(a).
(b) Ownership. Each Subsidiary of ShoLodge as of the Closing Date is
listed on Schedule 6.1(b). As of the Closing Date, the capitalization of
ShoLodge and its Subsidiaries consists of (i) with respect to ShoLodge and its
corporate Subsidiaries, the number of shares, authorized, issued and
outstanding, of such classes and series, with or without par value, described on
Schedule 6.1(b) and (ii) with respect to partnership Subsidiaries, the
partnership interests, described on Schedule 6.1(b). All outstanding shares of
ShoLodge and each corporate Subsidiary of ShoLodge have been duly authorized and
validly issued and are fully paid and nonassessable. As of the Closing Date, the
shareholders of the corporate Subsidiaries of ShoLodge that are Borrowers and
the number of shares owned by each are described on Schedule 6.1(b). As of the
Closing Date, the owners of the partnership Subsidiaries of ShoLodge that are
Borrowers and the percentage of the ownership interests of each owner are
described on Schedule 6.1(b). As of the Closing Date, there are no outstanding
stock purchase warrants, subscriptions, options, securities, instruments, rights
of first refusal or other rights of any type or nature whatsoever issued by
ShoLodge or its Subsidiaries, which are convertible into,
44
46
exchangeable for or otherwise provide for or permit the issuance of capital
stock or other ownership interests by ShoLodge or its Subsidiaries, except as
described on Schedule 6.1(b).
(c) Authorization of Agreement, Loan Documents and Borrowing. Each
Borrower has the right, power and authority and has taken all necessary
corporate and other action to authorize the execution, delivery and performance
of this Agreement and each of the other Loan Documents to which it is a party in
accordance with their respective terms. This Agreement and each of the other
Loan Documents have been duly executed and delivered by the duly authorized
officers of each of the Borrowers party thereto, and each such document
constitutes the legal, valid and binding obligation of each of the Borrowers
party thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar state or federal debtor relief laws from time to time in effect which
affect the enforcement of creditors' rights in general and the availability of
equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance by each Borrower of the Loan
Documents to which such Borrower is a party, in accordance with their respective
terms, the borrowings hereunder and the transactions contemplated hereby do not
and will not, by the passage of time, the giving of notice or otherwise, (i)
require any Governmental Approval or violate any Applicable Law relating to such
Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of
or constitute a default under the articles of incorporation, bylaws, certificate
of partnership, partnership agreement or other organizational documents of such
Borrower or any of its Subsidiaries or any indenture, agreement or other
instrument to which such Borrower or any of its Subsidiaries is a party or by
which any of its properties may be bound or any Governmental Approval relating
to such Borrower or any of its Subsidiaries, or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by such Borrower or any of its Subsidiaries.
(e) Compliance with Law; Governmental Approvals. Each Borrower and each
of its respective Subsidiaries (i) has all Governmental Approvals required by
any Applicable Law for it to conduct its business, each of which is in full
force and effect, is final and not subject to review on appeal and is not the
subject of any pending or, to the best of its knowledge, threatened attack by
direct or collateral proceeding, and (ii) is in compliance with each
Governmental Approval applicable to it and in compliance with all other
Applicable Laws relating to it or any of its respective properties, except where
the failure to have such Governmental Approvals or to so comply with such
Governmental Approvals or Applicable Laws would not result in a Material Adverse
Effect.
45
47
(f) Tax Returns and Payments. Each Borrower and each of its respective
Subsidiaries has duly filed or caused to be filed all federal, state, local and
other tax returns required by Applicable Law to be filed, and has paid, or made
adequate provision for the payment of, or is duly contesting in good faith and
by proper proceedings and for which adequate reserves have been established in
accordance with GAAP, all federal, state, local and other taxes, assessments and
governmental charges or levies upon it and its property, income, profits and
assets which are due and payable, except with respect to each Borrower and its
Subsidiaries (other than ShoLodge) where the failure to so file or pay would not
cause a Material Adverse Effect. No Governmental Authority has asserted any Lien
or other claim against any Borrower or any of its Subsidiaries with respect to
unpaid taxes which has not been discharged or resolved, other than those that
are being contested in good faith and by proper proceedings and for which
adequate reserves have been established in accordance with GAAP. The charges,
accruals and reserves on the books of ShoLodge and its Subsidiaries in respect
of federal, state, local and other taxes for all Fiscal Years and portions
thereof since the organization of ShoLodge and its Subsidiaries are in the
judgment of ShoLodge adequate in all material respects, and ShoLodge does not
anticipate any additional material taxes or assessments for any of such years.
(g) Intellectual Property Matters. Except as set forth on Schedule
6.1(g), each Borrower and each of its Subsidiaries owns or possesses rights to
use all franchises, licenses, copyrights, copyright applications, patents,
patent rights or licenses, patent applications, trademarks, trademark rights,
trade names, trade name rights, copyrights and rights with respect to the
foregoing which are required to conduct its business, except, with respect to
non-Borrower Subsidiaries, those that the failure of which to own or possess
such rights to use would not cause a Material Adverse Effect. No event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such rights, and, except as set forth on
Schedule 6.1 (g), neither any Borrower nor any Subsidiary thereof is liable to
any Person for infringement under Applicable Law with respect to any such rights
as a result of its business operations, except to the extent such termination or
infringement would not cause a Material Adverse Effect.
(h) Environmental Matters.
(i) The operations of each Borrower and each of its Subsidiaries have been and
are conducted in a manner such that said operations have not created any level
of regulatory concern with Environmental Laws or harm or potential harm to third
parties from violation of any Environmental Laws. Each Borrower and each of its
Subsidiaries have obtained all governmental authorizations under Environmental
Laws necessary to their respective operations, and all such
46
48
governmental authorizations are in good standing, and each Borrower and each of
its Subsidiaries are in compliance with all material terms and conditions of
such governmental authorizations.
(ii) No Borrower nor any of its Subsidiaries has received: (A) any
notice or claim to the effect that it is or may be liable to any person for an
amount that would be of regulatory concern as a result of or in connection with
any Hazardous Materials; or (B) any letter or request for information under
Section 104 of the Comprehensive Environmental Response, Compensa tion and
Liability Act (42 U.S.C. Section 9604) or comparable state laws, and, to the
best of each Borrower's knowledge, none of the operations of such Borrower or
any of its Subsidiaries have been subject to any federal or state investigation
relating to or in connection with any Hazardous Materials at any location.
(iii) None of the operations of any Borrower or any of its
Subsidiaries is subject to any judicial or administrative proceeding alleging
the violation of or liability under any Environmental Law which if adversely
determined could impair the ability of any Borrower to perform each and every
one of the Obligations, or the ability of any of its Subsidiaries to perform
each and every one of its obligations to the Administrative Agent and the
Lenders; or materially and adversely effect any Borrower's or any of its
Subsidiaries' business or any Borrower's or any of its Subsidiaries' ability to
carry on their business substantially in the manner as now conducted. No
Borrower nor any of its Subsidiaries or any of their respective facilities or
operations are subject to any outstanding written order or agreement with any
governmental authority or private property relating to any Environmental Laws.
(iv) No Borrower nor any of its Subsidiaries has any
contingent liability in connection with any release of any Hazardous Materials
in a reportable quantity, by any such Borrower or any of its Subsidiaries.
(v) No Borrower nor any of its Subsidiaries nor, to the best
knowledge of any Borrower, any predecessor of any Borrower or any of its
Subsidiaries has filed any notice under any Environmental Laws indicating past
or present treatment or release of Hazardous Materials in a reportable quantity
at any property owned, leased, operated, or used by any Borrower or any of its
Subsidiaries, and none of any Borrower's or any of its Subsidiaries' operations
involves the generation, transportation, treatment, storage, or disposal of
Hazardous Materials that rise to a level of regulatory concern.
(vi) To the best of each Borrower's knowledge, and after
reasonable inquiry of past uses, no Hazardous Materials exist on, under, or
about any property owned, leased, operated, or used by any Borrower or any of
its Subsidiaries in a manner that has a
47
49
reasonable possibility of giving rise to any Environmental Claim that could
impair the ability of any Borrower to perform each and every one of the
Obligations, or the ability of any of its Subsidiaries to perform each and every
one of its obligations to the Administrative Agent and the Lenders; or
materially and adversely effect any Borrower's or any of its Subsidiaries'
business or any Borrower's or any of its Subsidiaries' ability to carry on their
business substantially in the manner as now conducted, and no Borrower nor any
of its Subsidiaries, has filed any notice or report of the release of any
Hazardous Materials that has a reasonable possibility of giving rise to any
Environmental Claim that could impair the ability of any Borrower to perform
each and every one of the Obligations, or the ability of any of its Subsidiaries
to perform each and every one of its obligations to the Administrative Agent and
the Lenders; or materially and adversely effect any Borrower's or any of its
Subsidiaries' business or any Borrower's or any of its Subsidiaries' ability to
carry on their business substantially in the manner as now conducted. No
Borrower nor any of its Subsidiaries nor, to the best knowledge of any Borrower,
any of their respective predecessors has disposed of any Hazardous Materials in
a manner that has a reasonable possibility of giving rise to an Environmental
Claim that could impair the ability of any Borrower to perform each and every
one of its Obligations, or the ability of any of its Subsidiaries to perform
each and every one of its obligations to the Administrative Agent and the
Lenders; or materially and adversely effect any Borrower's or any of its
Subsidiaries' business or any Borrower's or any of its Subsidiaries' ability to
carry on their business substantially in the manner now conducted.
(vii) To the best of each Borrower's knowledge, and after
reasonable inquiry of past uses, no underground storage tanks or subsurface
impoundments are on or at any property owned, leased, operated, or used by any
Borrower or any of its Subsidiaries. To the best of each Borrower's knowledge,
and after reasonable inquiry, no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been attached to
any property owned, leased, operated, or used by any Borrower or any of its
Subsidiaries.
(i) ERISA.
(i) As of the Closing Date, neither any Borrower nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those identified on Schedule 6.1(i);
(ii) each Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except for
any required amendments for which the remedial amendment period as defined in
Section
48
50
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been determined by
the Internal Revenue Service to be so qualified, and each trust related to such
plan has been determined to be exempt under Section 501(a) of the Code. No
liability has been incurred by any Borrower or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan
or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor has
any funding waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has any Borrower or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension
Plan prior to the due dates of such contributions under Section 412 of the Code
or Section 302 of ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension
Plan;
(iv) Neither any Borrower nor any ERISA Affiliate has: (A) engaged
in a nonexempt prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Code, (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid, (C) failed to make a required contribution or payment
to a Multiemployer Plan, or (D) failed to make a required installment or other
required payment under Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably expected
to occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is existing
or, to the best knowledge of any Borrower after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by any Borrower or
any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(j) Margin Stock. Neither any Borrower nor any Subsidiary thereof is
engaged principally or as one of its activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in Regulations G and U of the Board of Governors of
the Federal Reserve System). No part of the proceeds of any of the Loans or
Letters of Credit will be used for purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the provisions
of Regulation G, T, U or X of such Board of Governors.
49
51
(k) Government Regulation. Neither any Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither any Borrower nor any Subsidiary thereof is, or
after giving effect to any Extension of Credit will be, subject to regulation
under the Public Utility Holding Company Act of 1935 or the Interstate Commerce
Act, each as amended, or any other Applicable Law which limits its ability to
incur or consummate the transactions contemplated hereby.
(l) Securities Law. No proceeds of the Loans will be used to acquire
any security in any transaction which is subject to Section 13 and 14 of the
Securities Exchange Act of 1934, including particularly, but without limitation,
Sections 13(d) and 14(d) thereof.
(m) Material Contracts. Schedule 6.1(m) sets forth a complete and
accurate list of all Material Contracts of each Borrower and its Subsidiaries in
effect as of the Closing Date not listed on any other Schedule hereto; other
than as set forth in Schedule 6.1(m), each such Material Contract is, and after
giving effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect in all material respects in
accordance with the terms thereof. Upon written request of the Administrative
Agent, ShoLodge shall deliver to the Administrative Agent a true and complete
copy of each Material Contract required to be listed on Schedule 6.1(m).
(n) Employee Relations. Each Borrower and each of its Subsidiaries has
a stable work force in place and is not, as of the Closing Date, party to any
collective bargaining agreement nor has any labor union been recognized as the
representative of its employees. No Borrower knows of any pending, threatened or
contemplated strikes, work stoppage or other collective labor disputes involving
its employees or those of its Subsidiaries which could reasonably be expected to
result in a Material Adverse Effect.
(o) Burdensome Provisions. Neither any Borrower nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable future
could be reasonably expected to have a Material Adverse Effect. Neither any
Borrower nor any Subsidiary thereof presently anticipates that future
expenditures needed to meet the provisions of any statutes, orders, rules or
regulations of a Governmental Authority will be so burdensome as to have a
Material Adverse Effect.
50
52
(p) Financial Statements. The Consolidated and consolidating audited
balance sheets of ShoLodge and its Subsidiaries as of December 29, 1996 and the
related statements of income and retained earnings and cash flows for the Fiscal
Year then ended, copies of which have been furnished to the Administrative Agent
and each Lender, fairly present the assets, liabilities and financial position
of ShoLodge and its Subsidiaries as at such dates, and the results of the
operations and changes of financial position for the periods then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP. ShoLodge and its Subsidiaries have
no Debt, obligation or other unusual forward or long-term commitment which is
not fairly reflected in the foregoing financial statements or in the notes
thereto.
(q) No Material Adverse Change. Since December 29, 1996, there has been
no material adverse change in the properties, business, operations, prospects,
or condition (financial or otherwise) of ShoLodge and its Subsidiaries and no
event has occurred or condition arisen that could reasonably be expected to have
a Material Adverse Effect.
(r) Solvency. As of the Closing Date and after giving effect to each
Extension of Credit made hereunder and the provisions of Section 2.10 hereof,
ShoLodge and its Subsidiaries will be Solvent.
(s) Titles to Properties. Each Borrower and each of its Subsidiaries
has such title to the real property owned by it as is necessary to the conduct
of its business and has valid and legal title to or a leasehold interest in all
of its tangible personal property and assets, including, but not limited to,
those reflected on the balance sheets of ShoLodge and its Subsidiaries delivered
pursuant to Section 6.1(p), except those which have been disposed of by such
Borrower or its Subsidiaries subsequent to such date which dispositions have
been in the ordinary course of business or as otherwise expressly permitted
hereunder.
(t) Liens. Except as set forth on Schedule 6.1(t), as of the Closing
Date, none of the properties and assets of any Borrower or any Subsidiary
thereof is subject to any Lien having a related Debt in excess of $500,000 per
Lien. No financing statement under the Uniform Commercial Code of any state
which names any Borrower or any Subsidiary thereof or any of their respective
trade names or divisions as debtor and which has not been terminated, has been
filed in any state or other jurisdiction and neither any Borrower nor any
Subsidiary thereof has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens permitted by Section 10.3 hereof.
(u) Debt and Contingent Obligations. Schedule 6.1(u) is a complete and
correct listing, as of the Closing Date, of all Debt
51
53
and Contingent Obligations of each Borrower and each of its Subsidiaries in
excess of $250,000. Each Borrower and each of its respective Subsidiaries have
performed and are in compliance in all material respects with all of the terms
of such Debt and Contingent Obligations and all instruments and agreements
relating thereto, and no event of default, or event or condition which with
notice or lapse of time or both would constitute such an event of default on the
part of such Borrower or its Subsidiaries exists with respect to any such Debt
or Contingent Obligation.
(v) Litigation. Except as set forth on Schedule 6.1(v), including the
Existing Judgment described thereon, as of the Closing Date, there are no
actions, suits or proceedings pending nor, to the knowledge of any Borrower,
threatened against or in any other way relating adversely to or affecting any
Borrower or any Subsidiary thereof or any of their respective properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority the liabilities of which could be reasonably expected to exceed
$500,000 per action, suit or proceeding.
(x) Absence of Defaults. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes an event of
default (after the passage of any applicable grace or cure periods) by any
Borrower or any Subsidiary thereof under any Material Contract or judgment,
decree or order to which any Borrower or its Subsidiaries is a party or by which
any Borrower or its Subsidiaries or any of their respective properties may be
bound or which would require any Borrower or its Subsidiaries to make any
payment thereunder prior to the scheduled maturity date therefor.
(y) Revenue Participation Bonds. The principal indebtedness
with respect to the Revenue Participation Bonds has been
irrevocably defeased.
(z) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of any Borrower or
any Subsidiary thereof and furnished to the Lenders were, at the time the same
were so furnished, complete and correct in all material respects to the extent
necessary to give the recipient a true and accurate knowledge in all material
respects of the subject matter. No document furnished or written statement made
to the Administrative Agent or the Lenders by any Borrower or any Subsidiary
thereof in connection with the negotiation, preparation or execution of this
Agreement or any of the Loan Documents contains or will contain any untrue
statement of a fact material to the creditworthiness of such Borrower or its
Subsidiaries or omits or will omit to state a fact necessary in order to make
the statements contained therein not misleading in any material respect. No
Borrower is aware of any facts which it has not disclosed in writing to the
Administrative Agent having a Material Adverse Effect, or insofar as such
Borrower can now
52
54
foresee, could reasonably be expected to have a Material Adverse Effect.
SECTION 6.2. Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VI and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty
made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Closing Date, shall survive the Closing Date and shall not be
waived by the execution and delivery of this Agreement, any investigation made
by or on behalf of the Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrowers will
furnish or cause to be furnished to the Administrative Agent at the
Administrative Agent's Office at the address set forth in Section 13.1 hereof
and to each Lender at its respective address as set forth on Schedule 1.1(a), or
such other office as may be designated by the Administrative Agent or such
Lender from time to time:
SECTION 7.1. Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in any
event within fifty (50) days after the end of each fiscal quarter, an unaudited
Consolidated and consolidating balance sheet of ShoLodge and its Subsidiaries as
of the close of such fiscal quarter and unaudited Consolidated and consolidating
statements of income, retained earnings and cash flows for the fiscal quarter
then ended and that portion of the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by ShoLodge in
accordance with GAAP and, if applicable, containing disclosure of the effect on
the financial position or results of operations of any change in the application
of accounting principles and practices during the period, and certified by the
chief executive officer, the chief financial officer or the treasurer of
ShoLodge to present fairly in all material respects the financial condition of
ShoLodge and its Subsidiaries as of their respective dates and the results of
operations of ShoLodge and its Subsidiaries for the respective periods then
ended, subject to normal year end adjustments.
53
55
(b) Annual Financial Statements. As soon as practicable and in any
event within ninety-five (95) days after the end of each Fiscal Year, an audited
Consolidated and consolidating balance sheet of ShoLodge and its Subsidiaries as
of the close of such Fiscal Year and audited Consolidated and consolidating
statements of income, retained earnings and cash flows for the Fiscal Year then
ended, including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year and
prepared by an independent certified public accounting firm acceptable to the
Administrative Agent in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
year, and accompanied by a report thereon by such certified public accountants
that is not qualified with respect to scope limitations imposed by ShoLodge or
any of its Subsidiaries or with respect to accounting principles followed by
ShoLodge or any of its Subsidiaries not in accordance with GAAP.
(c) Annual Business Plan. As soon as practicable and in any event
within thirty (30) days subsequent to the beginning of each Fiscal Year (and at
such other times that the Administrative Agent may reasonably request), a
business plan of ShoLodge and its Subsidiaries for the ensuing four (4) fiscal
quarters, such plan to be prepared in accordance with GAAP and to include, on a
quarterly basis, the following: a quarterly operating and capital budget, a
projected income statement, statement of cash flows and balance sheet and a
report containing management's assumptions used in such projections, accompanied
by a certificate from the chief executive officer, the chief financial officer
or the treasurer of ShoLodge to the effect that, to the best of such officer's
knowledge, such projections are good faith estimates of the financial condition
and operations of ShoLodge and its Subsidiaries for such four (4) quarter
period.
SECTION 7.2. Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 7.1 (a) or (b) and at such other
times as the Administrative Agent shall reasonably request, a certificate of the
chief executive officer, the chief financial officer or the treasurer of
ShoLodge in the form of Exhibit E attached hereto (an "Officer's Compliance
Certificate"):
(a) stating that such officer has reviewed such financial statements
and such statements fairly present the financial condition of ShoLodge and its
Subsidiaries as of the dates indicated and the results of their operations and
cash flows for the periods indicated;
(b) stating that to the knowledge of such officer, based on a
reasonable examination sufficient to enable him to make an informed statement,
no Default or Event of Default exists (includ-
54
56
ing, without limitation, any cross default as described in Sections 11.1(g) and
(h) hereof), or if such is not the case, specifying such Default or Event of
Default and its nature, when it occurred, whether it is continuing and the steps
being taken by the Borrowers with respect to such Default or Event of Default;
(c) setting forth as of the end of such fiscal quarter for the year to
date or Fiscal Year, as the case may be, the Applicable Margin, the calculations
required to determine the Applicable Margin and to establish whether or not each
Borrower and its Subsidiaries are in compliance with the covenants and
restrictions contained in Articles VIII, IX and X hereof; and
(d) setting forth as of the end of such fiscal quarter for the year to
date or Fiscal Year (and such other dates reasonably requested by the
Administrative Agent), as the case my be, the aggregate amounts of all Debt
incurred during such fiscal quarter or Fiscal Year permitted pursuant to Section
10.1 hereof to be set forth on a schedule attached thereto containing a
designation of the type of Debt incurred consistent with Section 10.1, the
applicable lender/creditor, the origination date of the Debt, the original
principal balance of the Debt, the maturity date of the Debt and applicable
repayment terms.
SECTION 7.3. Accountants' Certificate. At each time the financial
statements are delivered pursuant to Section 7.1(b), a certificate of the
independent public accountants certifying such financial statements addressed to
the Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of any
Event of Default or, if such is not the case, specifying such Event of Default
and its nature and period of existence; and
(b) including the calculations prepared by such accountants required to
establish whether or not ShoLodge and its Subsidiaries are in compliance with
the financial covenants set forth in Article IX hereof as at the end of each
Fiscal Year.
SECTION 7.4. Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to any Borrower or its Board of Directors by its independent public
accountants in connection with their auditing function, including, without
limitation, any management report and any management responses thereto;
(b) Promptly, but in any event within ten (10) Business Days after the
filing thereof, a copy of (i) each report or other filing made by ShoLodge or
any of its Subsidiaries with the Securities and
55
57
Exchange Commission ("SEC") and required by the SEC to be delivered to the
shareholders of ShoLodge or any of its Subsidiaries, and (ii) each report made
by ShoLodge or any of its Subsidiaries to the SEC on Form 8-K and each final
registration of ShoLodge or any of its Subsidiaries filed with the SEC.
(c) Such other information regarding the operations, business affairs
and financial condition of ShoLodge or any of its Subsid iaries as the
Administrative Agent or any Lender may reasonably request.
SECTION 7.5. Notice of Litigation and Other Matters. Prompt (but in no
event later than ten (10) days after an officer of any Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or before
any Governmental Authority and all actions and proceedings in any court or
before any arbitrator against or involving any Borrower or any Subsidiary
thereof or any of their respective properties, assets or businesses the
liabilities of which could be reasonably expected to exceed $500,000 per action,
suit or proceeding;
(b) any notice of any violation received by any Borrower or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws, which in any such
case could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result
in, a strike or other work action against any Borrower or any Subsidiary
thereof, which in any such case could reasonably be expected to have a Material
Adverse Effect;
(d) any attachment, judgment, lien, levy or order exceeding $500,000
that may be assessed against any Borrower or any Subsidiary thereof;
(e) any Default or Event of Default, together with a detailed statement
by a responsible officer of such Borrower of the steps being taken to cure the
effect of such Default or Event of Default;
(f) any event which constitutes an event of default (after the passage
of any applicable grace or cure period) under any Material Contract to which any
Borrower or any of its Subsidiaries is a party or by which any Borrower or any
Subsidiary thereof or any of their respective properties may be bound;
(g) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy
56
58
thereof), (ii) all notices received by any Borrower or any ERISA Affiliate of
the PBGC's intent to terminate any Pension Plan or to have a trustee appointed
to administer any Pension Plan, (iii) all notices received by any Borrower or
any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) any
Borrower obtaining knowledge or reason to know that any Borrower or any ERISA
Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section 4041(c)
of ERISA;
(h) any event which makes any of the representations set forth in
Section 6.1 inaccurate in any material respect; and
(i) any proposed amendment, change, modification to, or waiver of any
provision of, or any termination of, any Material Contract which could
reasonably be expected to have a Material Adverse Effect.
SECTION 7.6. Accuracy of Information. Without limiting the effect of
other specific provisions set forth in the Loan Documents, all written
information, reports, statements and other papers and data furnished by or on
behalf of any Borrower to the Administrative Agent or any Lender (other than
financial forecasts) whether pursuant to this Article VII or any other provision
of this Agreement, shall be, at the time the same is so furnished, complete and
correct in all material respects to the extent necessary to give the
Administrative Agent or any Lender complete, true and accurate, in all material
respects, knowledge of the subject matter based on the Borrowers' knowledge
thereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 13.11, each Borrower will, and
will cause each of its Subsidiaries to:
SECTION 8.1. Preservation of Corporate Existence and Other Related
Matters. Except as permitted by Sections 10.6 and 10.7, maintain its separate
corporate (or other applicable) existence and all rights, franchises, licenses
and privileges necessary to the conduct of its business, and qualify and remain
qualified as a foreign corporation (or other entity, as applicable) and
authorized to do business in each jurisdiction in which the failure to so
qualify could reasonably be expected to have a Material Adverse Effect;
57
59
SECTION 8.2. Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including franchises,
copyrights, patents, trade names and trademarks; maintain, in all material
respects, in good working order and condition, buildings, equipment and other
tangible real and personal property; and from time to time make or cause to be
made all renewals, replacements and additions to such property necessary for the
conduct of its business, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
SECTION 8.3. Insurance. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law, and on the Closing Date and from time to time thereafter deliver
to the Administrative Agent upon its reasonable request a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
SECTION 8.4. Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete in all material respects) as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP and in compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 8.5. Payment and Performance of Obligations. Pay and perform
all Obligations under this Agreement and the other Loan Documents (with respect
to each Borrower), and pay or perform (a) all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any of its
property, and (b) all other indebtedness, obligations and liabilities in
accordance with its customary trade practices; provided, that such Borrower or
Subsidiary may contest any item described in clauses (a) and (b) of this Section
8.5 in good faith so long as adequate reserves are maintained with respect
thereto in accordance with GAAP.
SECTION 8.6. Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business
except where the failure to do so would not cause a Material Adverse Effect.
SECTION 8.7. Environmental Inspection and Disclosure; Remedial Action
Regarding Hazardous Materials. In addition to and without limiting the
generality of Section 8.6, (a) exercise due diligence in order to comply with,
and ensure such compliance by all tenants and subtenants under any leases or
occupancy agreements affecting any property owned, leased, operated or used by
any
58
60
Borrower or any or its Subsidiaries, if any, with, all applicable Environmental
Laws and obtain and comply with and maintain, and ensure that all tenants and
subtenants obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, (b) permit the Administrative Agent and the Lenders, from time to time and
in their sole and absolute discretion, to retain, at the Borrowers' expense, an
independent professional consultant to review any report relating to Hazardous
Materials prepared by or for the Borrowers and to conduct their own
investigation of any property owned, leased, operated, or used by any Borrower
or any of its Subsidiaries, (c) grant the Administrative Agent and the Lenders
and their agents, employees, consultants, and contractors the right to enter
into or on to any property owned, leased, operated, or used by any Borrower or
any of its Subsidiaries to perform such tests on such property as are reasonably
necessary to conduct such a review and/or investigation, (d) advise the
Administrative Agent and the Lenders in writing and in reasonable detail of: (i)
any release of any Hazardous Materials required to be reported to any federal,
state, or local governmental or regulatory agency under any applicable
Environmental Laws; (ii) any and all written communications with respect to any
Environmental Claims or with respect to any release of Hazardous Materials
required to be reported to any federal, state or local governmental or
regulatory agency; (iii) any remedial action taken by any Borrower or any other
Person in response to (x) any Hazardous Materials on, under, or about any
property owned, leased, operated, or used by any Borrower or any of its
Subsidiaries, or (y) any Environmental Claim; (iv) any Borrower's discovery of
any occurrence or condition on any real property adjoining or in the vicinity
of any property owned, leased, operated, or used by any Borrower or any of its
Subsidiaries that could cause such property or any part thereof to be subject to
any restrictions on the ownership, occupancy, transferability, or use thereof
under any Environmental Laws; and (v) any request for information from any
governmental agency that suggests such agency is investigating whether any
Borrower or any of its Subsidiaries may be potentially responsible for a release
of Hazardous Materials, (e) at their own expense, provide copies of such
documents or information as the Administrative Agent and the Lenders may
reasonably request in relation to any matters disclosed pursuant to this Section
8.7, and (f) promptly take any and all necessary remedial action in connection
with the presence, storage, use, disposal, transportation, or release of any
Hazardous Materials on, under or about any property owned, leased, operated, or
used by any Borrower or any of its Subsidiaries in order to comply with all
applicable Environmental Laws.
In the event any Borrower or any of its Subsidiaries under takes any
remedial action with respect to any Hazardous Materials on, under, or about any
property owned, leased, operated, or used by any Borrower or any of its
Subsidiaries, such Borrower or such
59
61
Subsidiary will conduct and complete such remedial action in compliance with the
policies, orders, and directives of all federal, state, and local governmental
authorities except when, and only to the extent that, such Borrower's or such
Subsidiary's liability for such presence, storage, use, disposal,
transportation, or discharge of any Hazardous Materials is being contested in
good faith by such Borrower or such Subsidiary.
SECTION 8.8. Compliance with ERISA. In addition to and without
limiting the generality of Section 8.6, (a) comply with all applicable
provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans, (b) not take any action
or fail to take action the result of which could be a liability to the PBGC or
to a Multiemployer Plan, (c) not participate in any prohibited transaction that
could result in any civil penalty under ERISA or tax under the Code, (d)
operate each Employee Benefit Plan in such a manner that will not incur any
tax liability under Section 4980B of the Code or any liability to any qualified
beneficiary as defined in Section 4980B of the Code and (e) furnish to the
Administrative Agent upon the Administrative Agent's request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Administrative Agent.
SECTION 8.9. Compliance With Agreements. Comply in all material
respects with each term, condition and provision of all leases, agreements and
other instruments entered into in the conduct of its business including, without
limitation, any Material Contract; provided, that such Borrower or Subsidiary
may contest any such lease, agreement or other instrument in good faith through
applicable proceedings so long as adequate reserves are maintained in accordance
with GAAP.
SECTION 8.10. Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date
and in lines of business reasonably related thereto.
SECTION 8.11. Visits and Inspections. Permit representatives of the
Administrative Agent or any Lender, from time to time upon notice to ShoLodge
(except in cases of emergency), to visit and inspect its properties; inspect,
audit and make extracts from its books, records and files, including, but not
limited to, management letters prepared by independent accountants; and discuss
with its principal officers, and its independent accountants, its business,
assets, liabilities, financial condition, results of operations and business
prospects.
SECTION 8.12. Additional Borrowers. Upon (a) the creation, acquisition
or increased activity or business operations of any Subsidiary of ShoLodge
permitted by this Agreement having assets in excess of $1,000 , except for (i)
those Subsidiaries of ShoLodge set forth on Schedule 8.12 hereof and (ii) any
non-Wholly Owned
60
62
Subsidiary of ShoLodge formed or acquired after the Closing Date that is
prohibited by fiduciary requirements of Applicable Law from becoming a Borrower
under this Agreement, or (b) the release or termination of any agreement or
instrument, or the repeal or elimination of any fiduciary requirements under
Applicable Law, that prohibit any then existing Subsidiary from becoming a
Borrower under this Agreement, cause to be executed and delivered to the
Administrative Agent within ten (10) Business Days after the occurrence of the
events described in clauses (a) and (b): (i) the Joinder Agreement attached as
Exhibit H hereto executed by such Subsidiary, (ii) the closing documents and
certificates required of each of the Borrowers pursuant to Section 5.2(b) hereof
with respect to such Subsidiary and (iii) such other documents reasonably
requested by the Administrative Agent in order that such Subsidiary shall become
bound by all of the terms, covenants and agreements contained in the Loan
Documents. Upon satisfaction of the conditions set forth in this Section 8.12,
such Subsidiary shall become a Borrower hereunder and under the other Loan
Documents, as of such date, as if an original signatory hereto and to the other
Loan Documents.
SECTION 8.13. Further Assurances. Make, execute and deliver all such
additional and further acts, deeds and instruments as the Administrative Agent
or any Lender may reasonably require to document and consummate the transactions
contemplated hereby and to vest completely in the Administrative Agent and the
Lenders their respective rights under this Agreement, the Notes, the Letters of
Credit and the other Loan Documents.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, ShoLodge and each
other Borrower will not and will not permit any of their Subsidiaries to:
SECTION 9.1 Minimum Net Worth. Permit the Consolidated Net Worth of
ShoLodge and its Subsidiaries at any time to be less than (a) $83,000,000 plus
(b) seventy-five percent (75%) of Consolidated Net Income of ShoLodge and its
Subsidiaries (if positive) as of each fiscal quarter end occurring after
December 29, 1996 plus (c) one hundred percent (100%) of the aggregate Net Cash
Proceeds of any offering of capital stock or other ownership or equity interest
(including, without limitation, conversion of Debt into equity) of ShoLodge or
any of its Subsidiaries received after the Closing Date.
61
63
SECTION 9.2. Debt to Capitalization Ratio. As of the end of any fiscal
quarter, permit the ratio of (a) the Consolidated Debt of ShoLodge and its
Subsidiaries (excluding Defeased Debt) as of such fiscal quarter end to (b) the
sum of (i) the Consolidated Net Worth of ShoLodge and its Subsidiaries plus (ii)
the Consolidated Debt of ShoLodge and its Subsidiaries (excluding Defeased
Debt), each as of such fiscal quarter end, to exceed 0.69 to 1.00.
SECTION 9.3 Senior Leverage Ratio. As of any fiscal quarter ending
during the applicable period set forth below, permit the ratio of (a) Senior
Debt (excluding Defeased Debt) as of such date to (b) EBITDA (excluding
accretion income associated with any Defeased Debt), for the period of four (4)
consecutive fiscal quarters ending on such fiscal quarter end to exceed the
corresponding ratio set forth below:
Maximum
Senior Debt/
Period EBITDA
------ ------
Closing Date to and including
December 27, 1997 3.75 to 1.00
Beginning as of December 28, 1997
to and including December 26, 1998 3.25 to 1.00
Beginning as of December 27, 1997
1998 and thereafter 2.50 to 1.00
SECTION 9.4. Interest Coverage Ratio. As of the end of any fiscal
quarter, permit the ratio of (a) Consolidated EBIT for the period of four (4)
consecutive fiscal quarters ending on such fiscal quarter to (b) Interest
Expense plus Capitalized Interest for such period of four (4) consecutive fiscal
quarters, to be less than 1.50 to 1.00.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, each Borrower will not
and will not permit any of its Subsidiaries to:
SECTION 10.1. Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except:
(a) the Obligations;
62
64
(b) Debt incurred in connection with a Hedging Agreement with a
counterparty and upon terms and conditions reasonably satisfactory to the
Administrative Agent;
(c) Debt (including, without limitation the Senior Subordinated Notes
issued now or in the future pursuant to the Senior Subordinated Indenture, and
other Subordinated Debt) existing on the Closing Date (except for such Senior
Subordinated Notes issued in the future pursuant to the terms of the Senior
Subordinated Indenture, which together with those Senior Subordinated Notes
existing as of the Closing Date shall not exceed the principal amount of
$125,000,000) and not otherwise permitted under this Section 10.1, as set forth
on Schedule 6.1(u), and the renewal and refinancing (but not the increase)
thereof;
(d) Subordinated Debt not otherwise permitted under Section 10.1(c)
above, as may be approved in writing by the Required Lenders;
(e) Debt of ShoLodge or any of its Subsidiaries that is (i) incurred
for the sole purpose of financing furniture, fixtures, equipment and other
personal property located in any hotel owned by ShoLodge or any of its
Subsidiaries or located in the principal headquarter office of ShoLodge, (ii)
secured by a Lien on such property granted within six (6) months of the
acquisition of such property and (iii) in an amount not to exceed (A) $1,500,000
per hotel owned by ShoLodge or any of its Subsidiaries or (B) $2,000,000 for the
principal headquarter office of ShoLodge;
(f) purchase money Debt of ShoLodge or any of its Subsidiaries not
otherwise permitted under Section 10.1(e) above in an aggregate amount not to
exceed $5,000,000 on any date of determination;
(g) Debt consisting of Contingent Obligations permitted by Section
10.2; and
(h) Debt not otherwise permitted by this Section 10.1 in an aggregate
amount not to exceed $1,000,000 on any date of determination.
provided, that none of the Debt permitted to be incurred by this Section shall
restrict, limit or otherwise encumber (by covenant or otherwise) the ability of
any Subsidiary of any Borrower to make any payment to such Borrower or any of
its Subsidiaries (in the form of dividends, intercompany advances or otherwise)
for the purpose of enabling such Borrower to pay the Obligations.
SECTION 10.2. Limitations on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligations except,
(a) Contingent Obligations in favor of the Administrative Agent for the
benefit of the Administrative Agent and the Lenders;
63
65
(b) (i) Contingent Obligations in favor of Affiliates that are included
in Borrowers' Consolidated financial statements in an aggregate amount, together
with the Contingent Obligations set forth in (ii) below, not to exceed
$4,000,000 on any date of determination, and (ii) upon prior written notice to
the Administrative Agent, Contingent Obligations in favor of Persons who are not
Affiliates, provided that such Contingent Obligations are (A) in the ordinary
course of the Borrowers' business, (B) reasonably necessary to promote some
portion of the Borrowers' business or the business of their Affiliates and (C)
in an aggregate amount, together with the Contingent Obligations set forth in
(i) above, not to exceed $4,000,000 on any date of determination; and
(c) Contingent Obligations with respect to Debt permitted pursuant to
Sections 10.1(c) (other than Subordinated Debt), (e), (f) and (h).
SECTION 10.3. Limitations on Liens. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed sixty (60) days except where the Applicable Law of a State permits a
longer period of grace with respect to the payment of ad valorem real estate
taxes only), if any, related thereto has not expired or which are being
contested in good faith and by appropriate proceedings if adequate reserves are
maintained to the extent required by GAAP;
(b) Liens respecting the claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials, supplies or rentals
incurred in the ordinary course of business, (i) which are not overdue for a
period of more than thirty (30) days or (ii) which are being contested in good
faith and by appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract in any material
64
66
respect from the value of such property or materially impair the use thereof in
the ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(f) Liens not otherwise permitted by this Section 10.3 and in existence
on the Closing Date and either (i) described on Schedule 6.1(t) or (ii) securing
Debt of less than $500,000 per Lien; and
(g) Liens securing Debt permitted under Sections 10.1(e) and (f);
provided, that (i) such Liens do not at any time encumber any property other
than the property financed by such Debt and (ii) the amount of Debt secured
thereby is not increased.
SECTION 10.4. Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture
(including without limitation the creation or capitalization of any Subsidiary),
evidence of Debt or other obligation or security, substantially all or a portion
of the business or assets of any other Person or any other investment or
interest whatsoever in any other Person, or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person, or enter into, directly or
indirectly, any commitment or option in respect of the foregoing except:
(a) (i) investments in or loans or advances to Subsidiaries of ShoLodge
that are Borrowers existing on the Closing Date and (ii) other loans, advances
and investments existing on the Closing Date and described on Schedule 10.4.
(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within 120 days from the date of acquisition thereof, (ii) commercial
paper maturing no more than 120 days from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Rating's Group, a Division of ▇▇▇▇▇▇-▇▇▇▇ Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc., (iii) certificates of deposit maturing no more than 120 days from
the date of creation thereof issued by commercial banks incorporated under the
laws of the United States of America, each having combined capital, surplus and
undivided profits of not less than $500,000,000 and having a rating of "A" or
better by a nationally recognized rating agency; provided, that the aggregate
amount invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank, (iv) time deposits maturing no more than 30 days from the date of
creation thereof with commercial banks or savings banks or savings and loan
associations each having membership either in the FDIC or the deposits of which
are insured
65
67
by the FDIC and in amounts not exceeding the maximum amounts of insurance
thereunder or (v) such cash equivalent investments similar to those set forth in
(i) through (iv) above but not meeting the standards set forth in (i) through
(iv) above approved by the applicable Board of Directors or other governing body
of ShoLodge or any Subsidiary of ShoLodge, as applicable;
(c) investments, loans, or advances after the Closing Date from (i) any
Subsidiary of ShoLodge to any Borrower, (ii) any Borrower to another Borrower,
(iii) any Borrower to any Subsidiary of ShoLodge that is not a Borrower in an
aggregate amount, with regard to all such non-Borrower Subsidiaries, not to
exceed $10,000,000 and (iv) any Subsidiary of ShoLodge that is not a Borrower to
another Subsidiary of ShoLodge that is not a Borrower;
(d) investments, loans or advances not otherwise permitted by this
Section 10.4, after the Closing Date in or to other Persons in an aggregate
amount not to exceed $10,000,000, provided that such Person shall be a
franchisee of ShoLodge, a Subsidiary of ShoLodge or any Affiliate thereof, or
engaged in the hotel/motel business; and
(e) investments, loans or advances not otherwise permitted by this
Section 10.4, after the Closing Date in or to Persons in an aggregate amount not
to exceed $1,000,000, provided that no Default or Event of Default shall have
occurred and be continuing both before and after giving effect to such
investment.
SECTION 10.5. Fictitious Names; Name Change. Neither ShoLodge nor any
of its Subsidiaries, as of the Closing Date, is doing business or intends to do
business other than under its full corporate name, including, without
limitation, under any trade name or other doing business name other than
Shoney's Inn, Shoney's Inn & Suites, Shoney's Suites, ▇▇▇▇▇▇ Inn & Suites or
Sumner Suites. Neither any Borrower nor any of its Subsidiaries will change its
name without notifying the Administrative Agent within ten (10) days after the
effective date of such name change.
SECTION 10.6. Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution)
except that any Subsidiary of ShoLodge may merge with any other Subsidiary of
ShoLodge or any other Borrower; provided, that, in the case of a merger with
ShoLodge or any other Borrower, ShoLodge or a Borrower is the surviving
corporation; provided, further, that any Subsidiary of ShoLodge may be
liquidated or dissolved in connection with a transfer of all of the assets of
such Subsidiary to (i) ShoLodge, (ii) another Borrower or (iii) a Subsidiary
that is not a Borrower in connection with a liquidation or dissolution of a
Subsidiary that is not a Borrower.
66
68
SECTION 10.7. Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale of obsolete assets no longer used or usable in the
business of such Borrower or any of its Subsidiaries;
(b) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the compromise or
collection thereof;
(c) the sale or disposition (a "Disposition") of fixed assets
consisting of real property (including land, improvements and fixtures),
equipment and other personalty used or held in connection with hotels owned by
ShoLodge or a Subsidiary of ShoLodge or the capital stock or other ownership
interest of a corporation or other entity that owns such assets (the "Hotel
Fixed Assets") in a manner consistent with usual and customary business
activities of ShoLodge or any of its Subsidiaries and in an aggregate amount not
to exceed 20% of the net book value of all Hotel Fixed Assets of ShoLodge and
its Subsidiaries (the "Maximum Dispositions Amount") for Dispositions occurring
from the Closing Date until the earlier of payment in full of the Obligations or
the Revolving Credit Termination Date. The Maximum Dispositions Amount shall be
determined in accordance with GAAP and calculated using the net book value of
all Hotel Fixed Assets of ShoLodge and its Subsidiaries shown on the balance
sheet delivered to the Administrative Agent pursuant to Section 7.1(b) for
Fiscal Year end 1996; provided, that the Net Disposition Proceeds from each such
Disposition shall be reinvested into comparable replacement assets within twelve
(12) months of such Disposition; and provided further, that the failure of
ShoLodge or any of its Subsidiaries to reinvest such Net Disposition Proceeds
within such twelve (12) month period shall result in a mandatory repayment of
the Extensions of Credit in the manner set forth in Section 2.4(c);
(d) the sale or disposition of fixed assets consisting of real property
(including land, improvements and fixtures), equipment and other personalty of
ShoLodge or any of its Subsidiaries not used or held in connection with hotels
owned by ShoLodge or any of its Subsidiaries (the "Non-Hotel Fixed Assets") in a
manner consistent with usual and customary business activities of ShoLodge and
its Subsidiaries in an aggregate amount in any Fiscal Year not to exceed
$10,000,000;
(e) the sale or disposition by any Borrower of its business or assets
to another Borrower; and
67
69
(f) any sale or disposition of assets, not otherwise permitted under
this Section 10.7, in any Fiscal Year having a net book value not to exceed an
aggregate amount equal to $500,000.
SECTION 10.8. Limitations on Dividends and Distributions. Declare or
pay any dividends upon any of its capital stock or distribution of any other
ownership interest; purchase, redeem, retire or otherwise acquire, directly or
indirectly, any shares of its capital stock or any other evidence of ownership
interest, or make any distribution of cash, property or assets among the holders
of shares of its capital stock or other ownership interests, or make any change
in its capital structure that could reasonably be expected to have a Material
Adverse Effect; provided that:
(a) such Borrower or any Subsidiary thereof may pay dividends in shares
of its own capital stock; and
(b) any Subsidiary may pay cash dividends or cash distributions to a
Borrower.
SECTION 10.9. Transactions with Affiliates. Directly or indirectly: (a)
except as permitted by Section 10.4(d) hereof, make any loan or advance to, or
purchase or assume any note or other obligation to or from, any of its officers,
directors, shareholders, partners or Affiliates, or to or from any member of the
immediate family of any of its officers, directors, shareholders, partners or
Affiliates, or subcontract any operations to any of its Affiliates in an
aggregate amount in excess of $1,000,000 in any Fiscal Year, or (b) enter into,
or be a party to, any transaction with any of its Affiliates, except pursuant to
the reasonable requirements of its business and upon fair and reasonable terms
that are no less favorable to it than it would obtain in a comparable arm's
length transaction with a Person not its Affiliate, and with respect to such
transactions in excess of $100,000 such terms are fully disclosed in writing to
the Administrative Agent.
SECTION 10.10. Certain Accounting Changes. Change its Fiscal Year end,
or make any change in its accounting treatment and reporting practices except as
required by GAAP.
SECTION 10.11. Amendments; Payments and Prepayments of Subordinated
Debt. Amend or modify (or permit the modification or amendment of) any of the
terms or provisions of any Subordinated Debt, or cancel or forgive, make any
voluntary or optional payment or prepayment on, or voluntarily redeem or acquire
for value (including without limitation by way of depositing with any trustee
with respect thereto money or securities before due for the purpose of paying
when due) any Subordinated Debt.
68
70
SECTION 10.12. Restrictive Agreements. Enter into any Debt (i) which
contains any negative pledge on assets unless such Debt is Permitted Debt and a
Lien on such assets would be permitted under Section 10.3, (ii) which contains
any financial covenants or negative covenants more restrictive than the
restrictions of Articles IX and X hereof, respectively, or (iii) which
restricts, limits or otherwise encumbers its ability to incur Liens on or with
respect to any of its assets or properties other than the assets or properties
securing such Debt.
SECTION 10.13. Release or Substitution of Collateral; Amendments of
Revenue Participation Bonds. Release or substituting the Mortgaged and Pledged
Property (as such term is defined in the Revenue Participation Bonds Indenture),
including without limitation the property pledged pursuant to the Revenue
Participation Bonds Pledge Agreement; or amend or modify (or permit the
modification or amendment of) in any material respect any of the terms or
provisions of the Revenue Participation Bonds, the Revenue Participation Bonds
Indenture or the Revenue Participation Bonds Pledge Agreement.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1. Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement
Obligations. The Borrowers shall default in any payment of principal of any
Loan, Note or Reimbursement Obligation when and as due (whether at maturity, by
reason of acceleration or otherwise).
(b) Other Payment Default. The Borrowers shall default in the payment
when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue unremedied for three (3)
Business Days.
(c) Misrepresentation. Any representation or warranty made or deemed to
be made by any Borrower under this Agreement, any Loan Document or any amendment
hereto or thereto, shall at any time prove to have been incorrect or misleading
in any material respect when made or deemed made.
69
71
(d) Default in Performance of Certain Covenants. Any Borrower shall
default in the performance or observance of any covenant or agreement contained
in Section 2.8, Section 7.5(e) or Articles IX or X of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. Any
Borrower shall default in the performance or observance of any term, covenant,
condition or agreement contained in this Agreement (other than as specifically
provided for otherwise in this Section 11.1) or any other Loan Document and such
default shall continue for a period of thirty (30) days after written notice
thereof has been given to the Borrowers by the Administrative Agent; provided
however, the Borrowers shall have an additional period of fifteen (15) days
beyond said thirty (30) day period within which to cure any such default
contained in this Section 11.1(e) (other than defaults relating to the
performance or observance of any term, covenant, condition or agreement
contained in Article VII hereof), if such default by its nature cannot be cured
within said thirty (30) day period, the Borrowers deliver written notice to the
Administrative Agent prior to the end of said thirty (30) day period of the
nature of such default and the Borrowers diligently pursue such cure and do in
fact completely cure such failure in full within said additional fifteen (15)
day period.
(f) Hedging Agreement. Any termination payment shall be due by the
Borrowers under any Hedging Agreement and such amount is not paid within five
(5) Business Days of the due date thereof.
(g) Debt Cross-Default. Any Borrower or any of its Subsidiaries shall
(i) default in the payment of any Debt (other than the Notes or any
Reimbursement Obligation) the aggregate outstanding amount of which is in excess
of $500,000 beyond the period of grace if any, provided in the instrument or
agreement under which such Debt was created, or (ii) default in the observance
or performance of any other agreement or condition relating to any Debt (other
than the Notes or any Reimbursement Obligation) the aggregate outstanding amount
of which is in excess of $500,000 or contained in any instrument or 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 holders of such Debt (or a trustee or agent on
behalf of such holder or holders) to cause, with the giving of notice if
required, any such Debt to become due prior to its stated maturity (any
applicable grace period having expired).
(h) Other Cross-Defaults. Any Borrower or any of its Subsidiaries shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract unless, but only as long as,
the existence of any such default is being contested by such Borrower or
Subsidiary in good faith by appropriate proceedings and adequate reserves in
70
72
respect thereof have been established on the books of such Borrower or
Subsidiary to the extent required by GAAP.
(i) Change in Control. (a) Any person or group of persons (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended)
shall obtain ownership or control in one or more series of transactions of more
than thirty-three percent (33%) of the voting power of ShoLodge entitled to vote
in the election of members of the board of directors of ShoLodge (provided that
the foregoing shall not apply to the acquisition of additional shares of capital
stock of ShoLodge by ▇▇▇▇ ▇▇▇▇▇); (b) there shall have occurred under any
indenture or other instrument evidencing any Debt in excess of $1,000,000 any
"change in control" (as defined in such indenture or other evidence of Debt)
obligating ShoLodge to repurchase, redeem or repay all or any part of the Debt
or capital stock provided for therein; or (c) ShoLodge shall fail to own or
control, directly or indirectly, more than fifty percent (50%) of the voting
power of any Subsidiary entitled to vote in the election of members of the board
of directors of such Subsidiary or such other governing body of such Subsidiary,
other than as a result of a merger, consolidation or other similar combination
or a liquidation or dissolution permitted under Section 10.6 or as a result of a
sale of assets permitted under Section 10.7, (any such event, a "Change in
Control").
(j) Voluntary Bankruptcy Proceeding. Any Borrower or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any of the
foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against any Borrower or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for any Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue
71
73
undismissed or unstayed for a period of sixty (60) consecutive days, or an order
granting the relief requested in such case or proceeding (including, but not
limited to, an order for relief under such federal bankruptcy laws) shall be
entered.
(l) Failure of Agreements. Any material provision of this Agreement or
of any other Loan Document shall for any reason cease to be valid and binding on
any Borrower or Subsidiary party thereto or any such Person shall so state in
writing.
(m) Termination Event. The occurrence of any of the following events:
(i) any Borrower or any ERISA Affiliate fails to make full payment when due of
all amounts which, under the provisions of any Pension Plan or Section 412 of
the Code, any Borrower or any ERISA Affiliate is required to pay as
contributions thereto, (ii) an accumulated funding deficiency in excess of
$250,000 occurs or exists, whether or not waived, with respect to any Pension
Plan, (iii) a Termination Event or (iv) any Borrower or any ERISA Affiliate as
employers under one or more Multiemployer Plan makes a complete or partial
withdrawal from any such Multiemployer Plan and the plan sponsor of such
Multiemployer Plans notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an amount exceeding
$250,000.
(n) Judgment. Except with respect to the Existing Judgment, a judgment
or order for the payment of money which causes the aggregate amount of such
judgments to exceed $2,500,000 in any Fiscal Year shall be entered against any
Borrower or any of its Subsidiaries by any court and such judgment or order
shall continue undischarged or unstayed for a period of sixty (60) days.
SECTION 11.2. Remedies. Upon the occurrence of an Event of Default,
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 Borrowers:
(a) Acceleration; Termination of Facilities. Declare the principal of
and interest on the Loans, the Notes and the Reimbursement Obligations at the
time outstanding, and all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement or any of the other Loan Documents
(including, without limitation, all L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) and all other Obligations, to be forthwith due
and payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other Loan Documents to the
contrary notwithstanding, and terminate the Credit Facility and any right of the
Borrowers to request borrowings or Letters of Credit thereunder; provided, that
upon the occurrence of
72
74
an Event of Default specified in Section 11.1(j) or (k), the Credit Facility
shall be automatically terminated and all Obligations shall automatically become
due and payable.
(b) Letters of Credit. 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 the preceding paragraph, require the Borrowers at such
time to 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 the
other Obligations. After all such Letters of Credit shall have expired or been
fully drawn upon, the Reimbursement Obligation shall have been satisfied and all
other Obligations shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrowers.
(c) Rights of Collection. Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrowers' Obligations.
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between the Borrowers, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
73
75
ARTICLE XII
THE ADMINISTRATIVE AGENT AND THE CO-AGENT
SECTION 12.1. Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender under
this Agreement and the other Loan Documents and each such Lender irrevocably
authorizes First Union as Administrative Agent for such Lender, 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 the Administrative Agent by the terms of this Agreement and such
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or the other Loan Documents or otherwise exist
against the Administrative Agent.
SECTION 12.2. Delegation of Duties. The Administrative Agent and the
Co-Agent may execute any of their respective 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.
Neither the Administrative Agent nor the Co-Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by such
Administrative Agent or Co-Agent with reasonable care.
SECTION 12.3. Exculpatory Provisions. Neither the Administrative Agent
nor the Co-Agent nor any of their respective officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for
actions occasioned solely by its or such Person's own gross negligence or
willful misconduct), or (b) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any Borrower or
any of its Subsidiaries or any officer thereof contained in this Agreement or
the other Loan Documents or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent
or the Co-Agent under or in connection with, this Agreement or the other Loan
Documents or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or the other Loan Documents or for any failure
of any Borrower or any of its Subsidiaries to perform its obligations hereunder
or thereunder. Neither the Administrative Agent nor the Co-Agent shall be under
any obligation to any Lender to ascertain
74
76
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement, or to inspect the properties,
books or records of any Borrower or any of its Subsidiaries.
SECTION 12.4. Reliance by the Administrative Agent and the Co-Agent.
The Administrative Agent and the Co-Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, 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 Borrowers), independent accountants and other
experts selected by the Administrative Agent or the Co-Agent. The Administrative
Agent and the Co-Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless such Note shall have been transferred in
accordance with Section 13.10 hereof. The Administrative Agent and the Co-Agent
shall be fully justified in failing or refusing to take any action under this
Agreement and the other Loan Documents unless it shall first receive such advice
or concurrence of the Required Lenders (or, when expressly required hereby or by
the relevant other Loan Document, all the 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 except for its own gross negligence or
willful misconduct. The Administrative Agent and the Co-Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders (or, when
expressly required hereby, all the 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.
SECTION 12.5. Notice of Default. Neither the Administrative Agent nor
the Co-Agent shall be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder unless it has received notice from a
Lender or the Borrowers 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 Co-Agent receives such a notice, it shall promptly give notice
thereof to the Administrative Agent, who shall promptly 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; 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.
75
77
SECTION 12.6. Non-Reliance on the Administrative Agent, Co-Agent and
Other Lenders. Each Lender expressly acknowledges that neither the
Administrative Agent nor the Co-Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent or Co-Agent hereinafter taken, including any review of the
affairs of any Borrower or any of its Subsidiaries, shall be deemed to
constitute any representation or warranty by such Administrative Agent or
Co-Agent to any Lender. Each Lender represents to the Administrative Agent and
the Co-Agent that it has, independently and without reliance upon the
Administrative Agent, Co-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 ShoLodge and its Subsidiaries and made its own
decision to make its Loans and issue or participate in Letters of Credit
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent, Co-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 ShoLodge and its Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder or by the other Loan Documents,
the Administrative Agent and the Co-Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of ShoLodge or any of its Subsidiaries which may come into the
possession of the Administrative Agent, Co-Agent or any of their respective
officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates.
SECTION 12.7. Indemnification. The Lenders agree to indemnify the
Administrative Agent and Co-Agent in its capacity as such and (to the extent not
reimbursed by the Borrowers and without limiting the obligation of the Borrowers
to do so), ratably according to the respective amounts of their Commitment
Percentages, 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 or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Administrative Agent or
Co-Agent in any way relating to or arising out of this Agreement or the other
Loan Documents, or any documents contemplated by or referred to herein or
therein or the transactions contemplated
76
78
hereby or thereby or any action taken or omitted by the Administrative Agent or
the Co-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 resulting solely from the Administrative Agent's or
Co-Agent's bad faith, gross negligence or willful misconduct. The agreements in
this Section 12.7 shall survive the payment of the Notes, any Reimbursement
Obligation and all other amounts payable hereunder and the termination of this
Agreement.
SECTION 12.8. The Agents Each in Its Individual Capacity. The
Administrative Agent, Co-Agent and their respective Subsidiaries and Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrowers as though such Administrative Agent and Co-Agent
were not Administrative Agent or Co-Agent hereunder. With respect to any Loans
made or renewed by it and any Note issued to it and with respect to any Letter
of Credit issued by it or participated in by it, the Administrative Agent and
the Co-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 Administrative Agent or Co-Agent, and the terms "Lender" and "Lenders"
shall include the Administrative Agent and Co-Agent each in its individual
capacity.
SECTION 12.9. Resignation of the Agents; Successor Administrative
Agent. The Co-Agent may resign as Co-Agent at any time by giving notice thereof
to the Lenders and the Borrowers. Subject to the appointment and acceptance of a
successor as provided below, the Administrative Agent may resign at any time by
giving notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. If no successor Administrative Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the Administrative Agent's giving of notice of
resignation, then the Administrative Agent may, on behalf of the Lenders,
appoint a successor Administrative Agent, which successor shall have minimum
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Section 12.9 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.
77
79
SECTION 12.10. The Co-Agent. The Co-Agent, in its capacity as co-agent,
shall have no duties or responsibilities and no liabilities under this Agreement
or any other Loan Document.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the controlling and proper notice in the event of a failure to receive a
confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to the Borrowers: ShoLodge, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Boult, Cummings, ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
PLC
P.O. Box 198062
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
78
80
If to First Union as First Union National Bank of
Administrative Agent: North Carolina
One First ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: Syndication Agency
Services
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
First Union National Bank of
Tennessee
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, LLP
NationsBank Corporate Center, Ste.
4200
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: To the Address set forth on
Schedule 1.1(a) hereto
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrowers and Lenders, as the Administrative Agent's Office referred to herein,
to which payments due are to be made and at which Loans will be disbursed and
Letters of Credit issued.
SECTION 13.2. Expenses; Indemnity. The Borrowers will (a) pay all
reasonable out-of-pocket expenses of the Administrative Agent and Co-Agent in
connection with: (i) the preparation, execution and delivery of this Agreement
and each other Loan Document, whenever the same shall be executed and delivered,
including without limitation all reasonable out-of-pocket syndication and due
diligence expenses and reasonable fees and disbursements of counsel for the
Administrative Agent and Co-Agent and (ii) the preparation, execution and
delivery of any waiver,
79
81
amendment or consent by the Administrative Agent, the Co-Agent or the Lenders
relating to this Agreement or any other Loan Document, including without
limitation reasonable fees and disbursements of counsel for the Administrative
Agent and Co-Agent, (b) pay all reasonable out-of-pocket expenses of the
Administrative Agent, the Co-Agent and each Lender in connection with the
administration and enforcement of any rights and remedies of the Administrative
Agent, Co-Agent and Lenders under the Credit Facility, including consulting with
appraisers, accountants, engineers, attorneys and other Persons concerning the
nature, scope or value of any right or remedy of the Administrative Agent,
Co-Agent or any Lender hereunder or under any other Loan Document or any factual
matters in connection therewith, which expenses shall include without limitation
the reasonable fees and disbursements of such Persons, and (c) defend, indemnify
and hold harmless the Administrative Agent, Co-Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any losses, penalties, fines, liabilities,
settlements, damages, costs and expenses, suffered by any such Person in
connection with any claim, investigation, litigation or other proceeding
(whether or not the Administrative Agent, Co-Agent or any Lender is a party
thereto) and the prosecution and defense thereof, arising out of or in any way
connected with the Agreement, any other Loan Document or the Loans, including
without limitation reasonable attorney's and consultant's fees, except to the
extent that any of the foregoing directly result from the gross negligence or
willful misconduct of the party seeking indemnification therefor.
SECTION 13.3. Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with Section 13.10 are hereby authorized by the Borrowers at any time or from
time to time, without notice to the Borrowers or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of any Borrower against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 11.2 and although such Obligations shall be contingent or unmatured.
80
82
SECTION 13.4. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
SECTION 13.5. CONSENT TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY
CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
MECKLENBURG COUNTY, NORTH CAROLINA, IN ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH BORROWER HEREBY IRREVOCABLY
CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY
ACTION, CLAIM OR PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT OR ANY LENDER IN
CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN
SECTION 13.1. NOTHING IN THIS SECTION 13.5 SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR
ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS
PROPERTIES IN THE COURTS OF ANY OTHER APPROPRIATE JURISDICTIONS.
SECTION 13.6. Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any other
Loan Documents ("Disputes"), between or among parties to the Notes or any other
Loan Document shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions, claims arising from
Loan Documents executed in the future, or claims concerning any aspect of the
past, present or future relationships arising out or connected with the Loan
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. The expedited procedures
81
83
set forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to
claims of less than $1,000,000. All applicable statutes of limitation shall
apply to any Dispute. A judgment upon the award may be entered in any court
having jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.
(b) JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER HEREBY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or to the extent applicable by self help to exercise or
prosecute the following remedies: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted in
the Loan Documents or under applicable law or by judicial foreclosure and sale,
(ii) all rights of self help including peaceful occupation of property,
collection of rents and set off, (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and in filing an involuntary bankruptcy proceeding, and
(iv) when applicable, a judgment by confession of judgment. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
SECTION 13.7. Reversal of Payments. To the extent any Borrower makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral, if applicable, which payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied
82
84
shall be revived and continued in full force and effect as if such payment or
proceeds had not been received by the Administrative Agent.
SECTION 13.8. Injunctive Relief.
(a) The Borrowers recognize that, in the event the Borrowers fail to
perform, observe or discharge any of their respective obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to the
Lenders. Therefore, the Borrowers agree that the Lenders, at the Lenders'
option, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
(b) The Administrative Agent, Lender and each Borrower (on behalf of
itself and its Subsidiaries) hereby agrees that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
SECTION 13.9. Accounting Matters. All financial and accounting
calculations, measurements and computations made for any material purpose
relating to or under this Agreement, including, without limitation, all
computations utilized by ShoLodge or any Subsidiary thereof to determine
compliance with any covenant contained herein, shall, except as otherwise
expressly contemplated hereby or unless there is an express written direction by
the Administrative Agent to the contrary agreed to by the Borrowers, be
performed in accordance with GAAP as in effect on the Closing Date. In the event
that changes in GAAP shall be mandated by the Financial Accounting Standards
Board, or any similar accounting body of comparable standing, or shall be
recommended by the Borrowers' certified public accountants, to the extent that
such changes would modify such accounting terms or the interpretation or
computation thereof, such changes shall be followed in defining such accounting
terms only from and after the date the Borrowers and the Lenders shall have
amended this Agreement to the extent necessary to reflect any such changes in
the financial covenants and other terms and conditions of this Agreement.
SECTION 13.10. Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Administrative Agent and the Lenders,
all future holders of the Notes, and their respective successors and assigns,
except that no Borrower shall assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
83
85
(b) Assignment by Lenders. Each Lender may, with the consent of the
Administrative Agent, and as long as no Default or Event of Default exists, the
Borrowers, which consent shall not be unreasonably withheld, assign to one or
more Eligible Assignees all or a portion of its interests, rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Extensions of Credit at the time owing to it and the Notes held
by it); provided that:
(i) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Lender's rights and
obligations under this Agreement;
(ii) if less than all of the assigning Lender's Commitment
is to be assigned, the Commitment so assigned shall not be less
than $5,000,000;
(iii) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance in the form of Exhibit F
attached hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the
Borrowers, require any Borrower to file a registration statement with
the Securities and Exchange Commission or apply to or qualify the Loans
or the Notes under the blue sky laws of any state; and
(v) the assigning Lender shall pay to the Administrative Agent an
assignment fee of $3,000 upon the execution by such Lender of the
Assignment and Acceptance; provided that no such fee shall be payable
upon any assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Accep tance, which effective
date shall be at least five (5) Business Days after the execution thereof, (A)
the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereby and (B) the Lender thereunder shall, to the extent provided in such
assignment, be released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.
84
86
(d) Register. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Extensions of
Credit with respect to each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or Lenders at any reason able time and from time to time upon
reasonable prior notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of Exhibit F:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Lenders and the
Borrowers; and
(iv) promptly deliver a copy of such Assignment and
Acceptance to the Borrowers.
Within five (5) Business Days after receipt of notice, the Borrowers shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee in
amounts equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes delivered to the assigning Lender. Each surrendered Note
or Notes shall be canceled and returned to the Borrowers.
(f) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); provided that:
(i) each such participation shall be in an amount not less than
$5,000,000;
85
87
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by it
for all purposes of this Agreement;
(v) the Borrowers, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement;
(vi) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate
on any Loan or Reimbursement Obligation, extend the term or increase
the amount of the Commitment, reduce the amount of any fees to which
such participant is entitled, extend any scheduled payment date for
principal of any Loan or, except as expressly contemplated hereby or
thereby, release substantially all of the collateral, as applicable;
and
(vii) any such disposition shall not, without the consent of the
Borrowers, require any Borrower to file a registration statement with
the Securities and Exchange Commission or to apply to or to qualify the
Loans or the Notes under the blue sky law of any state.
(g) Disclosure of Information; Confidentiality. The Administrative
Agent and the Lenders shall hold all non-public information with respect to the
Borrowers obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information. Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.10, disclose to the assignee,
participant, proposed assignee or proposed participant, any information relating
to the Borrowers furnished to such Lender by or on behalf of the Borrowers;
provided, that prior to any such disclosure, each such assignee, proposed
assignee, participant or proposed participant shall agree with the Borrowers or
such Lender to preserve the confidentiality of any confidential information
relating to the Borrowers received from such Lender.
86
88
(h) Certain Pledges or Assignments. Nothing herein shall
prohibit any Lender from pledging or assigning any Note to any Federal Reserve
Bank in accordance with Applicable Law.
SECTION 13.11. Amendments, Waivers and Consents. Except as set forth
below, any term, covenant, agreement or condition of this Agreement or any of
the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders (or by the Administrative Agent
with the consent of the Required Lenders) and delivered to the Administrative
Agent and, in the case of an amendment, signed by the Borrowers; provided, that
no amendment, waiver or consent shall (a) increase the amount or extend the time
of the obligation of the Lenders to make Loans or issue or participate in
Letters of Credit (including without limitation pursuant to Section 2.7), (b)
extend the originally scheduled time or times of payment of the principal of any
Loan or Reimbursement Obligation or the time or times of payment of interest on
any Loan or Reimbursement Obligation, (c) reduce the rate of interest or fees
payable on any Loan or Reimbursement Obligation, (d) permit any subordination of
the principal or interest on any Loan or Reimbursement Obligation, (e) amend the
provisions of this Section 13.11 or the definition of Required Lenders, without
the prior written consent of each Lender. In addition, no amendment, waiver or
consent to the provisions of (a) Article XII shall be made without the written
consent of the Administrative Agent and (b) Article III without the written
consent of the Issuing Lender.
SECTION 13.12. Performance of Duties. The Borrowers' obligations under
this Agreement and each of the Loan Documents shall be performed by the
Borrowers at their sole cost and expense.
SECTION 13.13. All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or any Lender pursuant to
any provisions of this Agreement or any of the other Loan Documents shall be
deemed coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not been
terminated.
SECTION 13.14. Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before.
SECTION 13.15. Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for
87
89
convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 13.16. Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unen forceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 13.17. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 13.18. ShoLodge as Agent for Borrowers. Each Borrower hereby
irrevocably appoints and authorizes ShoLodge (a) to provide the Administrative
Agent with all notices with respect to Exten sions of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (b) to take such action on behalf of the Borrowers as ShoLodge
deems appropriate on its behalf to obtain Extensions of Credit and to exercise
such other powers as are reasonably incidental thereto to carry out the purposes
of this Agreement.
SECTION 13.19. Term of Agreement. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have been indefeasibly and irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
SECTION 13.20. Limitation on Partner Liability. Except as set forth in
the following proviso, no partner of a partnership Borrower shall be liable for
any of the Obligations in its capacity as a partner, and with respect to such
partner liability only, the Lenders shall look solely to the assets of such
partnership Borrower to satisfy such partnership Borrower's liability for the
Obligations; provided, however, nothing contained herein shall limit in any
manner the liability of any partner that is a Borrower.
[Signature Page to Follow]
88
90
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or duly authorized general partner,
as applicable, all as of the day and year first written above.
[CORPORATE SEAL] SHOLODGE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
ALABAMA LODGING CORPORATION
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
CAROLINA INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
DELAWARE INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
DESERT INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
91
FAR WEST INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
FRONT RANGE SUITES, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
KANSUITES, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
LAFLA INN, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
MIDWEST INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
MOBAT, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
92
▇▇▇▇▇ AND ASSOCIATES, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
NASHVILLE AIR ASSOCIATES, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
SHONEY'S INN, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
SHONEY'S INN NORTH, L.P.
[CORPORATE SEAL] By: SHOLODGE, INC., its General
Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
SHONEY'S INN OF BATON ROUGE
By: TWO SEVENTEEN, INC., one of its
General Partners
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
93
By: INN PARTNERS, INC., one of its
General Partners
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
SHONEY'S INN OF LEBANON, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
SOUTHEAST TEXAS INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
SUNSHINE INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
VIRGINIA INNS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, as Administrative Agent,
Lender and Swingline Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
95
NATIONSBANK OF TENNESSEE, N.A., as
Co-Agent and Lender
By: /s/ B.E. ▇▇▇▇▇▇▇
----------------------------------------
Name: B.E. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
96
SUNTRUST BANK, NASHVILLE, N.A., as
Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
----------------------------------
Title: Commercial Officer
---------------------------------
97
FIRST AMERICAN NATIONAL BANK, as
Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Senior Vice President
---------------------------------
98
FIRST TENNESSEE BANK, NATIONAL
ASSOCIATION, as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Title: Senior Vice President
---------------------------------
99
SCHEDULE 1.1(a): LENDERS AND COMMITMENTS
COMMITMENT
AND COMMITMENT
LENDER PERCENTAGE ADDRESS
------ ---------- -------
First Union $25,000,000 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
National Bank 33.3333333333% ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
of Tennessee Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇)▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
NationsBank of $20,000,000 One NationsBank Plaza
Tennessee, N.A. 26.▇▇▇▇▇▇▇▇▇▇% TN1-100-02-19
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇)▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
SunTrust Bank, $5,000,000 ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. 6.▇▇▇▇▇▇▇▇▇▇% ▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇)▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
First American $15,000,000 First American Center
National Bank 20.0000000000% ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇)▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
First Tennessee ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Bank, National $10,000,000 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Association 13.3333333333% Telephone No.: (▇▇▇)▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
100
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................................................. 1
SECTION 1.1. Definitions................................................................. 1
SECTION 1.2. General..................................................................... 16
SECTION 1.3. Other Definitions and Provisions............................................ 16
ARTICLE II REVOLVING CREDIT FACILITY................................................................ 16
SECTION 2.1. Revolving Credit Loans. ................................................... 16
SECTION 2.2. Swingline Loans............................................................. 17
SECTION 2.3. Procedure for Advances of Revolving Credit and Swingline Loans.............. 18
SECTION 2.4. Repayment of Loans.......................................................... 19
SECTION 2.5. Notes....................................................................... 21
SECTION 2.6. Permanent Reduction of the Aggregate Commitment............................. 21
SECTION 2.7. Revolving Termination Date.................................................. 22
SECTION 2.8. Use of Proceeds............................................................. 22
SECTION 2.9. Joint and Several Liability................................................. 22
SECTION 2.10. Agreements for Contribution................................................. 22
ARTICLE III LETTER OF CREDIT FACILITY................................................................ 23
SECTION 3.1. L/C Commitment.............................................................. 23
SECTION 3.2. Procedure for Issuance of Letters of Credit................................. 24
SECTION 3.3. Commissions and Other Charges............................................... 24
SECTION 3.4. L/C Participations.......................................................... 25
SECTION 3.5. Reimbursement Obligation of the Borrowers................................... 26
SECTION 3.6. Obligations Absolute........................................................ 26
SECTION 3.7. Effect of Application....................................................... 27
ARTICLE IV GENERAL LOAN PROVISIONS.................................................................. 27
SECTION 4.1. Interest.................................................................... 27
SECTION 4.2. Notice and Manner of Conversion or Continuation of Loans.................... 30
SECTION 4.3. Fees........................................................................ 31
SECTION 4.4. Manner of Payment........................................................... 32
SECTION 4.5. Crediting of Payments and Proceeds.......................................... 33
SECTION 4.6. Adjustments................................................................. 33
SECTION 4.7. Nature of Obligations of Lenders Regarding Extensions of Credit;
Assumption by the Administrative Agent...................................... 33
SECTION 4.8. Changed Circumstances....................................................... 34
SECTION 4.9. Indemnity................................................................... 36
SECTION 4.10. Capital Requirements........................................................ 37
SECTION 4.11. Taxes....................................................................... 37
ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING............................................. 39
SECTION 5.1. Closing..................................................................... 39
SECTION 5.2. Conditions to Closing and Initial Extensions of Credit...................... 39
SECTION 5.3. Conditions to All Loans and Letters of Credit............................... 43
i
101
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.......................................... 44
SECTION 6.1. Representations and Warranties.............................................. 44
SECTION 6.2. Survival of Representations and Warranties, Etc............................. 53
ARTICLE VII FINANCIAL INFORMATION AND NOTICES........................................................ 53
SECTION 7.1. Financial Statements and Projections........................................ 53
SECTION 7.2. Officer's Compliance Certificate............................................ 54
SECTION 7.3. Accountants' Certificate.................................................... 55
SECTION 7.4. Other Reports............................................................... 55
SECTION 7.5. Notice of Litigation and Other Matters...................................... 56
SECTION 7.6. Accuracy of Information..................................................... 57
ARTICLE VIII AFFIRMATIVE COVENANTS.................................................................... 57
SECTION 8.1. Preservation of Corporate Existence and Other Related Matters............... 57
SECTION 8.2. Maintenance of Property..................................................... 58
SECTION 8.3. Insurance................................................................... 58
SECTION 8.4. Accounting Methods and Financial Records.................................... 58
SECTION 8.5. Payment and Performance of Obligations...................................... 58
SECTION 8.6. Compliance With Laws and Approvals.......................................... 58
SECTION 8.7. Environmental Inspection and Disclosure; Remedial Action Regarding
Hazardous Materials. ....................................................... 58
SECTION 8.8. Compliance with ERISA....................................................... 60
SECTION 8.9. Compliance With Agreements.................................................. 60
SECTION 8.10. Conduct of Business......................................................... 60
SECTION 8.11. Visits and Inspections...................................................... 60
SECTION 8.12. Additional Borrowers........................................................ 60
SECTION 8.13. Further Assurances.......................................................... 61
ARTICLE IX FINANCIAL COVENANTS...................................................................... 61
SECTION 9.1 Minimum Net Worth........................................................... 61
SECTION 9.2. Debt to Capitalization Ratio................................................ 62
SECTION 9.3 Senior Leverage Ratio....................................................... 62
SECTION 9.4. Interest Coverage Ratio..................................................... 62
ARTICLE X NEGATIVE COVENANTS....................................................................... 62
SECTION 10.1. Limitations on Debt......................................................... 62
SECTION 10.2. Limitations on Contingent Obligations....................................... 63
SECTION 10.3. Limitations on Liens........................................................ 64
SECTION 10.4. Limitations on Loans, Advances, Investments and Acquisitions................ 65
SECTION 10.5. Fictitious Names; Name Change............................................... 66
SECTION 10.6. Limitations on Mergers and Liquidation...................................... 66
SECTION 10.7. Limitations on Sale of Assets............................................... 67
SECTION 10.8. Limitations on Dividends and Distributions.................................. 68
SECTION 10.9. Transactions with Affiliates................................................ 68
SECTION 10.10. Certain Accounting Changes.................................................. 68
SECTION 10.11. Amendments; Payments and Prepayments of Subordinated Debt................... 68
SECTION 10.12. Restrictive Agreements...................................................... 69
SECTION 10.13. Release or Substitution of Collateral; Amendments of Revenue
Participation Bonds......................................................... 69
ii
102
ARTICLE XI DEFAULT AND REMEDIES..................................................................... 69
SECTION 11.1. Events of Default........................................................... 69
SECTION 11.2. Remedies.................................................................... 72
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; etc............................. 73
ARTICLE XII THE ADMINISTRATIVE AGENT AND THE CO-AGENT................................................ 74
SECTION 12.1. Appointment................................................................. 74
SECTION 12.2. Delegation of Duties........................................................ 74
SECTION 12.3. Exculpatory Provisions...................................................... 74
SECTION 12.4. Reliance by the Administrative Agent and the Co-Agent....................... 75
SECTION 12.5. Notice of Default........................................................... 75
SECTION 12.6. Non-Reliance on the Administrative Agent, Co-Agent and Other Lenders........ 76
SECTION 12.7. Indemnification............................................................. 76
SECTION 12.8. The Agents Each in Its Individual Capacity.................................. 77
SECTION 12.9. Resignation of the Agents; Successor Administrative Agent................... 77
SECTION 12.10. The Co-Agent................................................................ 78
ARTICLE XIII MISCELLANEOUS............................................................................ 78
SECTION 13.1. Notices..................................................................... 78
SECTION 13.2. Expenses; Indemnity......................................................... 79
SECTION 13.3. Set-off..................................................................... 80
SECTION 13.4. GOVERNING LAW............................................................... 81
SECTION 13.5. CONSENT TO JURISDICTION..................................................... 81
SECTION 13.6. Binding Arbitration; Waiver of Jury Trial................................... 81
SECTION 13.7. Reversal of Payments........................................................ 82
SECTION 13.8. Injunctive Relief........................................................... 83
SECTION 13.9. Accounting Matters.......................................................... 83
SECTION 13.10. Successors and Assigns; Participations...................................... 83
SECTION 13.11. Amendments, Waivers and Consents............................................ 86
SECTION 13.12. Performance of Duties....................................................... 87
SECTION 13.13. All Powers Coupled with Interest............................................ 87
SECTION 13.14. Survival of Indemnities..................................................... 87
SECTION 13.15. Titles and Captions......................................................... 87
SECTION 13.16. Severability of Provisions.................................................. 87
SECTION 13.17. Counterparts................................................................ 88
SECTION 13.18. ShoLodge as Agent for Borrowers............................................. 88
SECTION 13.19. Term of Agreement........................................................... 88
SECTION 13.20. Limitation on Partner Liability............................................. 88
iii
103
EXHIBITS
--------
Exhibit A-1 - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Swingline Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Prepayment
Exhibit D - Form of Notice of Conversion/ Continuation
Exhibit E - Form of Officer's Certificate
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Notice of Account Designation
Exhibit H - Form of Joinder Agreement
SCHEDULES
---------
Schedule 1.1(a) - Lenders and Commitments
Schedule 1.1(b) - Refinanced Debt
Schedule 6.1(a) - Jurisdictions of Organization and Quali
fication
Schedule 6.1(b) - Subsidiaries and Capitalization
Schedule 6.1(g) - Intellectual Property Matters
Schedule 6.1(i) - ERISA Plans
Schedule 6.1(m) - Material Contracts
Schedule 6.1(t) - Existing Liens
Schedule 6.1(u) - Debt and Contingent Obligations
Schedule 6.1(v) - Litigation
Schedule 8.12 - Certain Excluded Subsidiaries
Schedule 10.4 - Existing Loans, Advances and Investments
iv