1
EXHIBIT 10.3
AMENDED AND RESTATED SENIOR SECURED NOTE AGREEMENT
BY AND AMONG
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
STARWOOD HOTELS & RESORTS,
THE GUARANTORS
AND
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
AS ARRANGER AND ADMINISTRATIVE AGENT,
BT ALEX. ▇▇▇▇▇ INCORPORATED AND
CHASE SECURITIES INC.,
AS SYNDICATION AGENTS,
AND THE LENDERS
DATED AUGUST 27, 1998
EFFECTIVE AUGUST 28, 1998
$3,500,000,000
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I. DEFINITIONS.......................................................1
Section 1.1. Defined Terms.................................................1
Section 1.2. Terms Generally..............................................28
Section 1.3. Accounting Terms; GAAP; Effect of Reorganization on Certain
Definitions...............................................................28
ARTICLE II. THE LOANS.......................................................29
Section 2.1. Commitments..................................................29
Section 2.2. Repayment; Senior Secured Notes..............................31
Section 2.3. Interest; Commitment Fee.....................................32
Section 2.4. Redemption...................................................34
Section 2.5. Purchase Offers..............................................35
Section 2.6. Yield Protection.............................................37
Section 2.7. Breakage Costs...............................................39
Section 2.8. Taxes........................................................39
Section 2.9. Pro Rata Payments; Sharing of Setoffs........................40
Section 2.10. Replacement of Lender.......................................41
Section 2.11. Commitment Reductions.......................................41
ARTICLE III. CONDITIONS.....................................................42
Section 3.1. Effective Date...............................................42
Section 3.2. Conditions Precedent to All Tranche Two Loans................44
ARTICLE IV. REPRESENTATIONS AND WARRANTIES..................................44
Section 4.1. Representations and Warranties in the Acquisition Agreement
and the Bank Credit Facility..............................................45
3
Section 4.2. Organization; Good Standing..................................45
Section 4.3. Due Authorization and Enforceability.........................45
Section 4.4. Affiliate Guaranty...........................................46
Section 4.5. No Conflicts.................................................46
Section 4.6. No Violation of Margin Regulation............................47
Section 4.7. Governmental Regulations.....................................47
Section 4.8. Full Disclosure..............................................47
Section 4.9. Financial Condition; Solvency................................47
Section 4.10. No Material Adverse Change..................................48
ARTICLE V. COVENANTS........................................................48
Section 5.1. Payment of Senior Secured Notes..............................48
Section 5.2. Maintenance of Office or Agency..............................48
Section 5.3. Reports......................................................48
Section 5.4. Compliance Certification.....................................49
Section 5.5. Taxes........................................................50
Section 5.6. Stay, Extension and Usury Laws...............................50
Section 5.7. Restricted Payments..........................................50
Section 5.8. Dividend and Other Payment Restrictions Affecting
Subsidiaries..............................................................54
Section 5.9. Limitations on Incurrence of Indebtedness and Issuance of
Disqualified Stock........................................................55
Section 5.10. Asset Sales.................................................58
Section 5.11. Transactions with Affiliates................................59
Section 5.12. Liens.......................................................59
Section 5.13. Corporate Existence.........................................60
Section 5.14. Offer to Repurchase Upon Change of Control..................61
- ii -
4
Section 5.15. Designation of Unrestricted Subsidiary......................61
Section 5.16. Limitation on Status as Investment Company..................61
Section 5.17. Special Covenants...........................................61
ARTICLE VI. SUCCESSORS......................................................62
Section 6.1. Merger, Consolidation, or Sale of Assets.....................62
Section 6.2. Successor Corporation Substituted............................62
ARTICLE VII. TRANSFER OF THE SENIOR SECURED NOTES...........................63
Section 7.1. Transfer of the Senior Secured Notes.........................63
Section 7.2. Registration of Transfer or Exchange.........................63
Section 7.3. Transfers by the Lenders.....................................63
ARTICLE VIII. EVENTS OF DEFAULT.............................................65
Section 8.1. Events of Default............................................65
Section 8.2. Acceleration.................................................67
Section 8.3. Rights and Remedies Cumulative...............................68
Section 8.4. Delay or Omission Not Waiver.................................68
Section 8.5. Waiver of Past Defaults......................................68
ARTICLE IX. GUARANTY AND INDEMNITY..........................................68
Section 9.1. Guaranty.....................................................68
Section 9.2. Joint and Several Indemnity..................................68
Section 9.3. Acceleration of Payment......................................69
Section 9.4. Guaranty of Payment, Independently Enforceable...............69
Section 9.5. Fraudulent Transfer Limitation...............................69
Section 9.6. Subordinated Liabilities.....................................70
Section 9.7. Prohibited Payments..........................................70
- iii -
5
Section 9.8. Prohibited Actions...........................................70
Section 9.9. Proceedings..................................................70
Section 9.10. Held in Trust...............................................71
Section 9.11. Reimbursement and Contribution Rights.......................71
Section 9.12. The Liability of each Guarantor.............................73
Section 9.13. Certain Waivers by Guarantors...............................75
Section 9.14. Waiver of Benefit of Anti-Deficiency Laws...................76
Section 9.15. Reinstatement...............................................77
Section 9.16. Authority of Guarantors or Borrower.........................77
Section 9.17. Condition of the Borrower and other Guarantors..............77
Section 9.18. Acceptance and Notice.......................................78
Section 9.19. Rights Cumulative...........................................78
Section 9.20. Notice of Events............................................78
Section 9.21. Set Off.....................................................78
Section 9.22. Notation....................................................79
ARTICLE X. SPECIAL COVENANTS................................................79
Section 10.1. Additional Loan Parties.....................................79
Section 10.2. Further Assurances..........................................79
Section 10.3. Security Documents..........................................79
Section 10.4. Permanent Financing.........................................80
ARTICLE XI. MISCELLANEOUS...................................................80
Section 11.1. Notices.....................................................80
Section 11.2. Waivers; Amendments.........................................80
Section 11.3. Expenses; Indemnity; Damage Waiver..........................81
- iv -
6
Section 11.4. Successors and Assigns......................................82
Section 11.5. Survival....................................................83
Section 11.6. Counterparts; Integration; Effectiveness....................83
Section 11.7. Severability...............................................83
Section 11.8. Right of Setoff.............................................83
Section 11.9. Governing Law; Jurisdiction; Service of Process.............84
Section 11.10. WAIVER OF JURY TRIAL.....................................84
Section 11.11. Additional Guarantors....................................85
Section 11.12. Agents...................................................85
Section 11.13. Headings..................................................86
Section 11.14. Obligations Absolute.....................................86
Section 11.15. Recourse...................................................86
ARTICLE XII. THE ADMINISTRATIVE AGENT.......................................86
Section 12.1. Appointment of Administrative Agent........................86
Section 12.2. Nature of Duties of the Administrative Agent...............87
Section 12.3. Lack of Reliance on the Administrative Agent...............87
Section 12.4. Certain Rights of the Administrative Agent.................88
Section 12.5. Reliance by the Administrative Agent.......................88
Section 12.6. Indemnification of the Administrative Agent................88
Section 12.7. Administrative Agent in its Individual Capacity............88
Section 12.8. Successor Administrative Agent.............................89
Section 12.9. Collateral; Remedies.......................................89
Section 12.10. Defaults..................................................89
Section 12.11. Miscellaneous.............................................89
- v -
7
AMENDED AND RESTATED SENIOR SECURED NOTE AGREEMENT dated as of
August 27, 1998 (the "Agreement") by and among STARWOOD HOTELS & RESORTS
WORLDWIDE, INC., a Maryland corporation (the "Borrower"), STARWOOD HOTELS &
RESORTS, a Maryland real estate investment trust ("Starwood REIT"), and the
other Persons listed on Schedule A hereto (collectively, including Starwood REIT
and together with each Person that at any time becomes a party hereto by a
Guarantor Joinder, the "Guarantors"), the Persons listed on Schedule B hereto
(collectively, and together with each Person that hereafter becomes a party
hereto by Assignment and Acceptance, the "Lenders"), ▇▇▇▇▇▇ Commercial Paper
Inc., as Administrative Agent, and BT Alex. ▇▇▇▇▇ Incorporated and Chase
Securities Inc., as Syndication Agents.
RECITALS
On February 23, 1998, certain of the Lenders made loans to the
Borrower, which loans are evidenced by the Borrower's Senior Secured Increasing
Rate Notes due 2003, in an aggregate principal amount of $2.5 billion pursuant
to a Senior Secured Increasing Rate Note Agreement dated as of February 23, 1998
(as amended, the "Original Agreement") among the Borrower, the Guarantors and
the Lenders (or their predecessors-in-interest), which Original Agreement is
being amended and restated hereby.
The Borrowers and the Guarantors have requested that certain Lenders
severally lend to the Borrower during the six-month period beginning on the
Effective Date one or more additional loans of up to the aggregate amounts set
forth on Schedule B hereto for such Lenders and specified as "Tranche Two
Loans," equal in the aggregate to $1.0 billion, on the terms and subject to the
conditions set forth in this Agreement and evidenced by the Borrower's Senior
Secured Notes due 2003, for the Borrower's general corporate purposes, including
the repurchase of certain paired Capital Stock issued by the Borrower and
Starwood REIT.
The applicable Lenders are willing to make such additional loans,
and the requisite Lenders are willing to amend and restate the Original
Agreement, in each case on the terms and subject to the conditions set forth in
this Agreement.
In the arrangement of the credit extended under the Loans, ▇▇▇▇▇▇
Commercial Paper Inc. has acted as Arranger and Administrative Agent, and BT
Alex. ▇▇▇▇▇ Incorporated and Chase Securities, Inc. have acted as Syndication
Agents.
ACCORDINGLY, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINED TERMS. As used in this Agreement:
"ACCELERATION DATE" means any date prior to the Maturity Date on
which the Loans are declared to be, or become, immediately due and payable
pursuant to Section 8.2.
"ACQUIRED DEBT" means, with respect to any specified Person, (a)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a
8
Subsidiary of such specified Person, including Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Restricted Subsidiary of such specified Person, and (b)
Indebtedness encumbering any asset acquired by such specified Person.
"ACQUISITION" means the transactions contemplated in the
Acquisition Agreement.
"ACQUISITION AGREEMENT" means the Amended and Restated Agreement and
Plan of Merger dated as of November 12, 1997, entered into by the Borrower,
Starwood REIT, Chess Acquisition Corp. and ITT, as in effect on the date of this
Agreement.
"ADDITIONAL GUARANTOR" has the meaning specified in Section 11.11.
"ADJUSTED MAXIMUM AMOUNT" has the meaning specified in Section
9.11(b).
"ADMINISTRATIVE AGENT" means LCPI, acting in its capacity as
administrative agent hereunder for the Lenders, together with its successors and
assigns in such capacity.
"AFFILIATE" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control of such Person. Neither any
Lender nor any Affiliate of a Lender shall be an Affiliate of any Loan Party for
purposes of this Agreement.
"AFFILIATE GUARANTY" means the guaranty set forth in Article IX.
"AFFILIATE TRANSACTION" has the meaning specified in Section 5.11.
"AGGREGATE UNREIMBURSED PAYMENTS" has the meaning specified in
Section 9.11(b).
"APPLICABLE MARGIN" means, for Tranche Two Loans, 2.75% per annum,
and for Tranche One Loans, for any day in any Monthly Interest Period listed
below (counted from the Original Closing Date), the percentage rate per annum
set forth below for such Monthly Interest Period:
2
9
MONTHLY INTEREST PERIODS APPLICABLE MARGIN (P.A.)
------------------------ ------------------------
1, 2 and 3 1.75%
4, 5 and 6 2.25
7, 8 and 9 2.75
10, 11 and 12 3.25
Thereafter 3.75
"ASSET SALE" means (a) the sale, conveyance, transfer or other
disposition (whether in a single transaction or a series of related
transactions) of assets or rights (including by way of a sale and leaseback) of
the Borrower or Starwood REIT or any Restricted Subsidiary (each referred to in
this definition as a "disposition") or (b) the issuance or sale of Equity
Interests in any Restricted Subsidiary (other than Starwood REIT, after the
Reorganization), whether in a single transaction or a series of related
transactions, in each case, other than (i) a disposition of inventory or goods
held in the ordinary course of business, (ii) the disposition of all or
substantially all of the assets of the Borrower and Starwood REIT in a manner
permitted pursuant to Article VI or any disposition that constitutes a Change of
Control hereunder, (iii) any disposition that is a Restricted Payment or that is
a dividend or distribution permitted under Section 5.7 or any Investment that is
not prohibited thereunder or any disposition of cash or Cash Equivalents, (iv)
any single disposition, or related series of dispositions, of assets with an
aggregate fair market value of less than $5.0 million, (v) a transfer of assets
among the Borrower, Starwood REIT or any Restricted Subsidiary, (vi) an issuance
of Equity Interests by a Restricted Subsidiary to the Borrower, Starwood REIT or
another Restricted Subsidiary, (vii) any sale, conveyance, transfer or other
disposition of property that secures Non-Recourse Financing that is to or on
behalf of the lender of such Non-Recourse Financing, (viii) any licensing of
tradenames or trademarks or other intellectual property in the ordinary course
of business by the Borrower, Starwood REIT or a Restricted Subsidiary, (ix)(A)
the exchange of one or more lodging, gaming or leisure related properties and
related assets held by the Borrower, Starwood REIT or any of their Restricted
Subsidiaries for one or more lodging, gaming or leisure related properties and
related assets of any other Person, provided, that if any other assets are
received by the Borrower, Starwood REIT or any of their Restricted Subsidiaries,
such other consideration is in cash or Cash Equivalents or in Investments that
are not prohibited by Section 5.7 and any such cash or Cash Equivalents so
received that shall be deemed to be Net Proceeds of an Asset Sale and applied in
accordance with Section 5.10, and (B) the issuance of OP Units that are not
Disqualified Stock as full or partial consideration for the acquisition of real
estate properties and related assets, provided, that in the case of either (A)
or (B), the Board of Directors has determined that the terms of any exchange or
acquisition in excess of $50.0 million are fair and reasonable and that the fair
market value of the assets received by the Borrower, Starwood REIT or a
Restricted Subsidiary are equal to or greater than the fair market value of the
assets exchanged or transferred.
"ASSIGNED STARWOOD NOTE" means a promissory note in the amount of
$2,127,996,246 assigned to Assigned Starwood Note LLC as part of the WD
Disposition, as such note is in effect on the date of this Agreement.
3
10
"ASSIGNED STARWOOD NOTE LLC" means WD Investment, LLC, a Delaware
limited liability company, (i) the non-member manager of which shall be ITT and
(ii) the 100% member of which shall be WD Parent Corp.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an assignee, and delivered to the Borrower, in the
form of Exhibit A or any other form approved by the Borrower and the Required
Lenders.
"AVAILABILITY PERIOD" has the meaning specified in Section 2.1(b).
"BANK CREDIT FACILITY" means the Credit Agreement, dated as of
February 23, 1998, among the Borrower, Starwood REIT, SLT Realty Limited
Partnership and Chess Acquisition Corp. (and ITT, as its successor by merger),
certain additional borrowers, various lenders and LCPI, as Syndication Agent,
and Bankers Trust Company and The Chase Manhattan Bank, as Administrative
Agents, together with the related documents thereto (including any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented,
replaced, refinanced or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (but only if such increase in borrowings is permitted by Section 5.9)
or adding or deleting Subsidiaries of the Borrower or Starwood REIT as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"BANKRUPTCY LAW" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any similar
federal or state law for the relief of debtors.
"BENEFICIARY" means each Person that holds, beneficially owns or is
entitled to enforce any Guaranteed Obligation.
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States or any successor.
"BOARD OF DIRECTORS" means the Board of Directors of the Borrower or
the Board of Trustees of Starwood REIT or any authorized committee thereof.
"BORROWER" means Starwood Hotels & Resorts Worldwide, Inc., a
Maryland corporation.
"BUSINESS DAY" means any day that is not (a) a Saturday or a Sunday,
(b) any other day on which commercial banks in New York City are authorized or
required by law to remain closed or (c) when used in connection with the
determination or payment of interest with reference to the One-Month LIBO Rate,
a day on which banks are not open for dealings in dollar deposits in the London
interbank market.
4
11
"CAPITAL LEASE OBLIGATIONS" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"CASH EQUIVALENTS" means (a) United States dollars; (b)(i) direct
obligations of the United States of America (including obligations issued or
held in book-entry form on the books of the Department of the Treasury of the
United States of America) or obligations fully guaranteed by the United States
of America, (ii) obligations, debentures, notes or other evidence of
indebtedness issued or guaranteed by any other agency or instrumentality of the
United States, backed by the full faith and credit of the United States of
America, (iii) interest-bearing demand or time deposits (which may be
represented by certificates of deposit) issued by banks having general
obligations rated (on the date of acquisition thereof) at least "A" by Standard
& Poor's Ratings Services ("S&P") or "A2" by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's") (S&P and Moody's together with any other nationally recognized
credit rating agency if neither of such corporations is then currently rating
the pertinent obligations, a "Rating Agency") or the equivalent by another
Rating Agency, if applicable, or, if not so rated, secured at all times, in the
manner and to the extent provided by law, by collateral security in clause (i)
or (ii) of this definition, of a market value of no less than the amount of
monies so invested, (iv) commercial paper rated (on the date of acquisition
thereof) at least "A-1" or "P-1" or the equivalent by any Rating Agency issued
by any Person, (v) repurchase obligations for underlying securities of the types
described in clause (i) or (ii) above, entered into with any commercial bank or
any other financial institution having long-term unsecured debt securities rated
(on the date of acquisition thereof) at least "A" or "A2" or the equivalent by
any Rating Agency in connection with which such underlying securities are held
in trust or by a third-part custodian, (vi) guaranteed investment contracts of
any financial institution which has long-term debt rated (on the date of
acquisition thereof) at least "A" or "A2" or the equivalent by any Rating
Agency, (vii) obligations (including both taxable and nontaxable municipal
securities) issued or guaranteed by, and any other obligations the interest on
which is excluded from income for Federal income tax purposes issued by, any
state of the United States of America or the District of Columbia or the
Commonwealth of Puerto Rico or any political subdivision, agency, authority or
instrumentality thereof, which issuer or guarantor has (A) short-term debt rated
(on the date of acquisition thereof) at least "A-1" or "P-1" or the equivalent
by any Rating Agency and (B) long-term debt rated (on the date of acquisition
thereof) at least "A" or "A2" or the equivalent by any Rating Agency, (viii)
investment contracts of any financial institution either (A) fully secured by
(1) direct obligations of the United States, (2) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States or (3) securities or receipts evidencing ownership interest in
obligations or specified portions thereof described in clause (1) or (2), in
each case guaranteed as full faith and credit obligations
5
12
of the United States of America, having a market value at least equal to 102% of
the amount deposited thereunder, or (B) with long-term debt rated (on the date
of acquisition of such investment contract) at least "A" or "A2" or the
equivalent by any Rating Agency and short-term debt rated (on the date of
acquisition of such investment contract) at least "A-1" or "P-1" or the
equivalent by any Rating Agency, (ix) a contract or investment agreement with a
provider or guarantor (A) which provider or guarantor is rated (on the date of
acquisition of such contract or investment agreement) at least "A" or "A2" or
the equivalent by any Rating Agency (provided that if a guarantor is party to
the rating, the guaranty must be unconditional and must be confirmed in writing
prior to any assignment by the provider to another subsidiary of such
guarantor), (B) providing that monies invested shall be payable without
condition (other than notice) and without brokerage fee or other penalty, upon
not more than two Business Days' notice for application when and as required and
(C) stating that such contract or agreement is unconditional, expressly
disclaiming any right of setoff and providing for immediate termination in the
event of insolvency of the provider and termination upon demand of the Borrower
or any of its secured lenders or their agents after any payment or other
covenant default by the provider, or (x) any debt instruments of any Person
which instruments are rated (on the date of acquisition thereof) at least "▇,"
"▇▇," "A-1" or "P-1" or the equivalent by any Rating Agency; provided that in
each case of clauses (i) through (x), such investments are denominated in United
States dollars and maturing not more than 13 months from the date of acquisition
thereof; (c) investments in any money market fund which is rated (on the date of
acquisition thereof) at least "A" or "A2" or the equivalent by any Rating
Agency; (d) investments in mutual funds sponsored by any securities
broker-dealer of recognized national standing having an investment policy that
requires substantially all the invested assets of such fund to be invested in
investments described in any one or more of the foregoing clauses and having a
rating of at least "A" or "A2" or the equivalent by any Rating Agency; or (e)
investments in both taxable and nontaxable (i) periodic auction reset securities
which have final maturities between one and 30 years from the date of issuance
and are repriced through a dutch auction or other similar method every 35 days
or (ii) auction preferred shares which are senior securities of leveraged closed
end municipal bond funds and are repriced pursuant to a variety of rate reset
periods, in each case having a rating (on the date of acquisition thereof) of at
least "A" or "A2" or the equivalent by any Rating Agency.
"CHANGE IN LAW" means (a) the adoption of any law, rule or
regulation after the Original Closing Date, with respect to Tranche One Lenders
and Tranche One Loans, or the date of this Agreement, with respect to Tranche
Two Lenders and Tranche Two Loans, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Entity after
the Original Closing Date, with respect to Tranche One Lenders and Tranche One
Loans, or the date of this Agreement, with respect to Tranche Two Lenders and
Tranche Two Loans or (c) compliance by any Lender (or by any lending office of
such Lender or by such Lender's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Entity made or issued after the Original Closing Date, with respect
to Tranche One Lenders and Tranche One Loans, or after the date of this
Agreement, with respect to Tranche Two Lenders and Tranche Two Loans.
6
13
"CHANGE OF CONTROL" means the occurrence of any of the following:
(a) the sale, lease or transfer, in one or a series of transactions, of all or
substantially all of the assets of the Borrower and Starwood REIT and the
Restricted Subsidiaries, taken as a whole (other than to the Borrower, Starwood
REIT and/or one or more of the Restricted Subsidiaries); (b) either the Borrower
or Starwood REIT becomes aware (by way of a report or any other filing pursuant
to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise)
of the acquisition by any person or group (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision),
including any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a
single transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or purchase of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision) of 20% or more of the total voting power of the Voting Stock of the
Borrower and Starwood REIT; (c) the first day within any two-year period on
which a majority of the members of the Board of Directors of the Borrower are
not Continuing Directors; (d) the adoption of a plan relating to liquidation or
dissolution of either the Borrower or Starwood REIT (except liquidation of (i)
Starwood REIT into the Borrower and (ii) the Borrower into Starwood REIT); and
(e) from and after the Reorganization Date, Starwood REIT shall not for any
reason be a Subsidiary of the Borrower; provided, however, that a "Change of
Control" shall not include the Borrower's becoming the owner of 100% of the
Class A Shares of Starwood REIT pursuant to the Reorganization.
"CIGA" means CIGA SpA, an Italian company.
"CLASS A EXCHANGEABLE PREFERRED SHARES" means the Class A
Exchangeable Preferred Shares of the Borrower and Starwood REIT.
"CLASS B EXCHANGEABLE PREFERRED SHARES" means the Class B
Exchangeable Preferred Shares of Starwood REIT.
"CLASS A SHARES" means the common shares of beneficial interest in
Starwood REIT after the Reorganization.
"CLASS B SHARES" means the new class of shares of beneficial
interest of Starwood REIT to be paired with the common stock of the Borrower
after the Reorganization.
"CODE" means the Internal Revenue Code of 1986 and any regulation
promulgated thereunder.
"COLLATERAL" means all property upon which a Lien is at any time
granted to or held by the Collateral Agent as security for any Senior Secured
Liabilities.
"COLLATERAL AGENT" means Bankers Trust Company, acting in its
capacity as collateral agent for the holders of the Senior Secured Liabilities.
"COMBINED ADJUSTED TOTAL ASSETS" means, with respect to the Borrower
and Starwood REIT as of any date, the sum of (a) Combined Undepreciated Real
Estate Assets on such date, (b) the book value, determined under GAAP, of all
other tangible assets on such date
7
14
of the Borrower, Starwood REIT and the Restricted Subsidiaries on a combined,
consolidated basis, and (c) 50% of the book value, determined under GAAP, of all
intangible assets on such date of the Borrower, Starwood REIT and the Restricted
Subsidiaries on a combined, consolidated basis.
"COMBINED CASH FLOW" means, with respect to the Borrower and
Starwood REIT for any period, Combined Net Income for such period plus (a) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing
Combined Net Income), plus (b) provision for taxes based upon net income or net
profits of the Borrower and Starwood REIT and the Restricted Subsidiaries to the
extent such provision for taxes was deducted in computing Combined Net Income
(excluding any gaming revenue taxes), plus (c) Combined Interest Expense for
such period to the extent such expenses were deducted in computing Combined Net
Income, plus (d) Combined Depreciation and Amortization Expense for such period
to the extent such expenses were deducted in computing Combined Net Income,
minus (e) non-cash items increasing such Combined Net Income for such period, in
each case, on a combined basis for the Borrower and Starwood REIT and the
Restricted Subsidiaries and determined in accordance with GAAP. To the extent
Combined Cash Flow includes any fiscal quarter ending on or prior to March 31,
1998, Combined Cash Flow shall be the sum of (i) the actual Combined Cash Flow
for each fiscal quarter completed that began on or after April 1, 1998 and (ii)
$1.651 billion, as an assumed allowance for Combined Cash Flow for the 12 months
ended March 31, 1998, but as such amount may be adjusted on a pro forma basis
(as provided in the definition of "Fixed Charge Coverage Ratio") for
acquisitions or dispositions after the Original Closing Date, times a fraction,
the numerator of which is the number of fiscal quarters included in such
calculation that ended on or prior to March 31, 1998 and the denominator of
which is four.
"COMBINED DEBT" means, with respect to the Borrower and Starwood
REIT at any date, the aggregate principal amount of Indebtedness outstanding on
such date of the Borrower, Starwood REIT and the Restricted Subsidiaries on a
combined, consolidated basis determined in accordance with GAAP.
"COMBINED DEPRECIATION AND AMORTIZATION EXPENSE" means, with respect
to the Borrower and Starwood REIT for any period, the total amount of
depreciation and amortization expense and other noncash expenses (excluding any
noncash expense that represents an accrual, reserve or amortization of a cash
expenditure for a past, present or future period) of the Borrower and Starwood
REIT and the Restricted Subsidiaries for such period on a combined consolidated
basis as defined in accordance with GAAP.
"COMBINED FUNDS FROM OPERATIONS" means, with respect to the Borrower
and Starwood REIT for any period, Combined Net Income for such period plus (a)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing Combined Net Income), plus (b) Combined Depreciation and Amortization
Expense for such period to the extent such expenses were deducted in computing
Combined Net Income, plus (c) amortization of debt issuance costs and deferred
financing fees of the Borrower and its Restricted Subsidiaries on a combined
consolidated basis to the extent deducted in computing Combined Net Income,
minus (d)
8
15
non-cash items increasing such Combined Net Income for such period, in each
case, on a combined basis for the Borrower and Starwood REIT and the Restricted
Subsidiaries and determined in accordance with GAAP, and plus (e) the allocable
portion, based upon the ownership percentage, of funds from operations of
unconsolidated investments.
"COMBINED INTEREST EXPENSE" means, with respect to any period,
without duplication, the sum of (a) combined consolidated interest expense of
the Borrower, Starwood REIT and the Restricted Subsidiaries for such period,
whether paid or accrued, to the extent such expense was deducted in computing
Combined Net Income (including original issue discount, non-cash interest
payments (other than in Equity Interests that are not Disqualified Stock), the
interest component of Capital Lease Obligations, and net payments (if any,
whether positive or negative) pursuant to Hedging Obligations, but excluding
amortization of debt issuance costs and deferred financing fees), (b)
commissions, discounts and other fees and charges paid or accrued with respect
to letters of credit and bankers' acceptance financing and (c) to the extent not
included above, the maximum amount of interest which would have to be paid by
the Borrower or Starwood REIT or any Restricted Subsidiary under a Guaranty of
Indebtedness of any other Person if such Guaranty were called upon.
Notwithstanding the foregoing, Combined Interest Expense shall include (and, to
the extent not already reflected therein, Combined Interest Expense shall be
increased by) an amount (not less than zero) equal to the aggregate amount of
cash interest payments made during the respective period in respect of the
Assigned Starwood Note less the amounts paid during such period by WD Parent
Corp. and Assigned Starwood Note LLC in respect of taxes, normal overhead and
the VNU Preferred Stock (net of amounts received during such period by WD Parent
Corp. in respect of Preferred Stock owned by it). To the extent Combined
Interest Expense is determined for any fiscal quarter ending on or prior to
March 31, 1998, Combined Interest Expense shall be the sum of (i) the actual
Combined Interest Expense for each fiscal quarter completed that began on or
after April 1, 1998 and (ii) $650 million, as an assumed allowance for Combined
Interest Expense for the 12 months ended March 31, 1998, as such amount may be
adjusted on a pro forma basis (as provided in the definition of "Fixed Charge
Coverage Ratio") for borrowings and repayments after the Original Closing Date,
times a fraction, the numerator of which is the number of fiscal quarters
included in such calculation that ended on or prior to March 31, 1998 and the
denominator of which is four.
"COMBINED NET INCOME" means, with respect to the Borrower and
Starwood REIT for any period, the aggregate of the Net Income of the Borrower
and Starwood REIT and the Restricted Subsidiaries for such period, on a combined
consolidated basis, determined in accordance with GAAP; provided, however, that
(a) the Net Income for such period of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting, shall be included only
to the extent of the amount of dividends or distributions paid in cash (or to
the extent converted into cash) to the referent Person or a Restricted
Subsidiary thereof in respect of such period, (b) the Net Income of any Person
acquired in a pooling of interests transaction shall not be included for any
period prior to the date of such acquisition, (c) the Net Income for such period
of any Restricted Subsidiary that is not a Guarantor shall be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary of its Net Income is not at the date of determination
permitted without any prior
9
16
governmental approval (which has not been obtained) or, directly or indirectly,
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, unless such restriction with
respect to the payment of dividends or in similar distributions has been legally
waived, and (d) the cumulative effect of a change in accounting principles shall
be excluded.
"COMBINED UNDEPRECIATED REAL ESTATE ASSETS" means, as of any date,
the cost (being the original cost to the Borrower, Starwood REIT or any
Restricted Subsidiary, plus capital improvements) of real estate assets of the
Borrower, Starwood REIT and the Restricted Subsidiaries on such date, before
depreciation and amortization of such real estate assets, determined on a
combined, consolidated basis in conformity with GAAP.
"COMMITMENT" means, with respect to each Lender, the commitment of
such Lender to make a Loan under the Original Agreement on the Original Closing
Date or one or more Tranche Two Loans hereunder on or after the Effective Date
in the amount set forth on Schedule B, as the same may be reduced or terminated
from time to time in accordance with the terms of this Agreement and as the same
may be adjusted from time to time as a result of assignments to or from such
Lender in accordance with the terms of this Agreement, and otherwise subject to
the terms and conditions set forth herein.
"COMMITMENT PERCENTAGE" means, with respect to each Tranche Two
Lender, a fraction (expressed as a percentage) the numerator of which is the
amount of such Lender's Tranche Two Commitment at such time and the denominator
of which is the aggregate amount of all Lenders' Tranche Two Commitments at such
time, provided, that if the Tranche Two Commitments have been terminated as of
the date of determination, then the Commitment Percentage shall be determined as
of the time immediately prior to such termination.
"CONTINUING DIRECTOR" means, as of any date of determination, any
member of the Board of Directors who (a) was a member of such Board of Directors
on the date of this Agreement or (b) was nominated for election or elected to
such Board of Directors with, or whose election to the Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election.
"CREDIT FACILITY DOCUMENTS" means the Bank Credit Facility and each
note, each banker's acceptance, the ITT acknowledgment, the guaranty of the Bank
Credit Facility, the Pledge Agreement, each subordination agreement and any
other guaranties, pledge agreements or additional security documents, in each
case, as executed and delivered in accordance with the Bank Credit Facility as
in effect on the Original Closing Date.
"CREDIT FACILITY LIABILITIES" means all Obligations and other
amounts owing to the agents, the Collateral Agent or any lender from time to
time party to the Bank Credit Facility pursuant to the terms of the Bank Credit
Facility or any other Credit Facility Document.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
10
17
"DEFAULT" means any event that is, or after the passage of time or
the giving of notice (or both) would be, an Event of Default.
"DISCHARGE OF THE NOTE LIABILITIES" means that all obligations of
the Lenders to extend credit under the Original Agreement and this Agreement
have expired or been terminated and have been absolutely, unconditionally and
irrevocably discharged and the Senior Secured Notes and all other Note
Liabilities at any time created, incurred or outstanding (except Obligations for
indemnification which are then contingent and in respect of which no claim or
demand has then been made) have been fully, finally and indefeasibly paid in
cash.
"DISCLOSURE SCHEDULE" means the schedules attached to the Bank
Credit Facility as of the Original Closing Date.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part on, or prior to, September 1, 2003; provided, however, that any
Capital Stock which would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require the Borrower and/or Starwood
REIT to repurchase or redeem such Capital Stock upon the occurrence of a Change
of Control or an Asset Sale occurring prior to the final maturity of the Senior
Secured Notes shall not constitute Disqualified Stock if the change of control
provisions, event of loss provisions, or asset sale provisions, as the case may
be, applicable to such Capital Stock specifically provide that the Borrower and
Starwood REIT will not repurchase or redeem any such stock pursuant to such
provisions prior to the Borrower's and Starwood REIT's compliance with the
provisions of Section 5.10 and Section 5.14.
"DOLLARS" or "$" means such lawful currency of the United States of
America as may at the time be legal tender for the payment of debts therein.
"EFFECTIVE DATE" means the date on which the conditions referred to
in Section 3.1 are satisfied (or waived in accordance with Section 11.2).
"ELIGIBLE HEDGING LIABILITIES" means Hedging Obligations that,
pursuant to the Bank Credit Facility, are secured by the Lien of the Pledge
Agreement on a pari passu basis with all other Credit Facility Liabilities.
"EMPLOYEE STOCK BUYBACKS" has the meaning specified in Section
5.9.
"ENGAGEMENT LETTERS" means the engagement agreements dated as of
February 23, 1998 and August 17, 1998, each by and among the Borrower, Starwood
REIT, ▇▇▇▇▇▇ Brothers and LCPI.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
11
18
"EVENT OF DEFAULT" means any event specified in Section 8.1.
"EXCESS PROCEEDS" has the meaning specified in Section 5.10.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXCHANGE ACT DOCUMENTS" means any and all reports and filings made
by any Loan Party with the SEC pursuant to the Exchange Act after January 1,
1996 and prior to the date of this Agreement.
"EXCLUDED DEFAULT" means the acceleration of not more than
$225,000,000 in Existing Debt based or predicated upon the consummation of the
Acquisition, if such Indebtedness is paid in full and discharged within five
Business Days from the date of such acceleration.
"EXCLUDED TAXES" means, with respect to any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender, any withholding tax that is
imposed under the laws of the United States of America at the time such Foreign
Lender becomes a party to this Agreement or becomes a Foreign Lender on amounts
payable to such Foreign Lender under this Agreement.
"EXISTING DEBT" means (a) the Class A Exchangeable Preferred Shares,
the Class B Exchangeable Preferred Shares, the Preferred Partnership Units in
both SLC Operating Limited Partnership and SLT Realty Limited Partnership issued
and outstanding on the Original Closing Date or created in connection with the
acquisition of Westin Hotels & Resorts Worldwide, Inc.; (b) 34.4 million savings
shares of CIGA issued and outstanding on the Original Closing Date; and (c)
approximately $3.3 billion of other Indebtedness of the Borrower and Starwood
REIT and the Restricted Subsidiaries outstanding on the Original Closing Date,
after giving effect to the acquisition of ITT (but excluding the Bank Credit
Facility and the Senior Secured Notes and guaranties thereof).
"FAIR SHARE" has the meaning specified in Section 9.11(b).
"FEE LETTERS" means the letter agreements dated as of February 23,
1998 and August 17, 1998, each by and among the Borrower, Starwood REIT, ▇▇▇▇▇▇
Brothers and LCPI.
"FINANCIAL STATEMENTS" means the unaudited combined consolidated
balance sheets and statements of profits and losses of the Borrower, Starwood
REIT and their Subsidiaries as they appear in the Exchange Act Documents.
12
19
"FIXED CHARGE COVERAGE RATIO" means, with respect to the Borrower
and Starwood REIT for any period, the ratio of Combined Cash Flow for such
period to the Fixed Charges for such period. In the event that the Borrower,
Starwood REIT or any Restricted Subsidiary incurs, assumes, guarantees,
defeases, discharges or redeems any Indebtedness (other than revolving credit
borrowings) or issues Disqualified Stock or Subsidiary Preferred Stock (other
than to the Borrower, Starwood REIT or any Restricted Subsidiary) subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, defeasance, discharge or redemption of Indebtedness and
the use of proceeds therefrom, or such issuance or redemption of Disqualified
Stock or Subsidiary Preferred Stock, as if the same had occurred at the
beginning of the applicable four-quarter period. For purposes of making the
computation referred to above, acquisitions, dispositions and discontinued
operations (as determined in accordance with GAAP) that have been made by the
Borrower, Starwood REIT or any Restricted Subsidiary, including all mergers,
consolidations and dispositions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be calculated on a pro forma basis assuming that all such acquisitions,
dispositions, discontinued operations, mergers, consolidations (and the
reduction of any associated fixed charge obligations resulting therefrom) had
occurred on the first day of the four-quarter reference period.
"FIXED CHARGES" means, with respect to the Borrower and Starwood
REIT for any period, the sum, without duplication, of (a) Combined Interest
Expense for such period, (b) all capitalized interest of the Borrower and
Starwood REIT and the Restricted Subsidiaries and (c) all dividend payments,
whether or not in cash, on any series of Preferred Stock (other than OP Units
and Preferred Stock issued by the Borrower or Starwood REIT) of such Person or
any of its Restricted Subsidiaries, other than dividend payments on Equity
Interests payable solely in Equity Interests or dividends paid as an increase in
liquidation preference on Preferred Stock, in each case, on a combined
consolidated basis and in accordance with GAAP.
"FOREIGN LENDER" means any Lender that is organized under the laws
of a jurisdiction other than the United States of America, any State thereof or
the District of Columbia.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, the statements and
pronouncements of the Financial Accounting Standards Board and such other
statements by such other entities as have been approved by a significant segment
of the accounting profession, which are applicable at the date of determination.
For the purposes of this Agreement, the term "combined consolidated" with
respect to the Borrower and Starwood REIT or their Subsidiaries shall mean the
Borrower and Starwood REIT consolidated with their respective Restricted
Subsidiaries and combined together and shall not include any Unrestricted
Subsidiary.
13
20
"GAMING AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, province or any city or
other political subdivision, whether now or hereafter existing, or any officer
or official thereof, including the Nevada Gaming Commission, the New Jersey
Casino Control Commission, the Division of Gaming Enforcement of the New Jersey
Attorney General's office, the Nevada State Gaming Control Board, the ▇▇▇▇▇
County Liquor and Gaming Licensing Board and any other agency with authority to
regulate any gaming operation (or proposed gaming operation) owned, managed or
operated by the Borrower, Starwood REIT or any of their Subsidiaries.
"GAMING LICENSE" means every license, franchise or other
authorization required to own, lease, operate or otherwise conduct gaming
activities of the Borrower, Starwood REIT or any Restricted Subsidiary,
including all such licenses granted under applicable Nevada or New Jersey law,
and the regulations promulgated pursuant thereto, and other applicable federal,
state, foreign or local laws.
"GOVERNMENTAL ENTITY" means any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality thereof, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section 9.1.
"GUARANTOR JOINDER" means the act or agreement by which any
Restricted Subsidiary becomes bound by this Agreement as a Guarantor hereunder.
"GUARANTORS" means Starwood REIT and each of the Persons listed on
Schedule A and each other Subsidiary of the Borrower or Starwood REIT that
becomes a party to this Agreement by a Guarantor Joinder.
"GUARANTY" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including letters of credit and reimbursement
agreements in respect thereof), of all or any part of any Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
Obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (b) other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"INCUR" has the meaning specified in Section 5.9.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
14
21
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guaranty by such Person of any indebtedness of any other Person
and liability, whether or not contingent, whether or not it appears on a balance
sheet of such Person. The amount of any Indebtedness outstanding as of any date
shall be (a) the accreted value thereof, in the case of any Indebtedness that
does not require current payments of interest, and (b) the principal amount
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
"INDEMNITEES" has the meaning specified in Section 11.3(b).
"INDEMNIFIED TAXES" means all Taxes other than Excluded Taxes.
"INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the Board of Directors, (a) qualified to perform the task for which
it has been engaged and (b) disinterested and independent with respect to the
Borrower, Starwood REIT and their Subsidiaries and each Affiliate of the
Borrower or Starwood REIT.
"INTERCOMPANY MORTGAGE NOTE" means the subordinated Intercompany
Mortgage Note in aggregate principal amount not to exceed $3,450,000,000 issued
by the Borrower to Starwood REIT and contributed by Starwood REIT to SLT Realty
Limited Partnership.
"INTEREST PAYMENT DATE" means the last day of each Monthly
Interest Period, the Maturity Date and the Acceleration Date.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of direct or
indirect loans (including Guaranties of Indebtedness or other Obligations),
advances or capital contributions (excluding commission, travel, entertainment,
moving and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.
"ITT" means ITT Corporation, a Nevada corporation.
"ITT NOTES" means each of (a) ITT's 6-1/4% Notes due November 15,
2000, (b) ITT's 6-1/4% Notes due November 15, 2000, (c) ITT's 6-3/4% Notes due
November 15, 2005, (d) ITT's 6-3/4% Notes due November 15, 2003, (e) ITT's
7-3/8% Debentures due November 15, 2005 and (f) ITT's 7-3/4% Debentures due
November 15, 2025.
"JOINT PROXY STATEMENT" means the Joint Proxy Statement/Prospectus
dated January 14, 1998, delivered to shareholders of the Borrower, Starwood REIT
and ITT.
15
22
"LCPI" means ▇▇▇▇▇▇ Brothers Commercial Paper Inc., a Delaware
corporation.
"▇▇▇▇▇▇ BROTHERS" means ▇▇▇▇▇▇ Brothers Inc., a Delaware
corporation.
"LENDERS" means the Persons listed on Schedule B and each other
Person that becomes a party hereto pursuant to an Assignment and Acceptance but
does not include any such Person that ceases to be a party hereto by
transferring all Loans outstanding to it to another Lender pursuant to an
Assignment and Acceptance.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in any asset and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LOAN PARTIES" means the Borrower and the Guarantors.
"LOANS" means the loans made by the Lenders to the Borrower pursuant
to this Agreement or the Original Agreement, including the Tranche One Loans and
the Tranche Two Loans.
"MARGIN REGULATIONS" means Regulation T, U or X of the Board of
Governors of the Federal Reserve System and all official rulings and
interpretations thereunder or thereof.
"MARGIN STOCK" has the meaning assigned to such term in the
Margin Regulations.
"MATERIAL ADVERSE EFFECT" means any circumstance or event that might
have a material adverse effect on (a) any Loan Party's ability to perform its
obligations under any Note Document to which it is a party, (b) the validity or
enforceability of any Note Document, (c) any Collateral, or the creation,
perfection, priority, legality or enforceability of the Collateral Agent's Liens
thereon or the benefits of the security afforded thereby, or (d) the combined
consolidated financial condition, stockholders' equity, business or results of
operations of the Borrower, Starwood REIT and their Subsidiaries, taken as a
whole.
"MATURITY DATE" means February 23, 2003.
"MONTHLY INTEREST PERIOD" means the monthly period that began on the
Original Closing Date, in the case of Tranche One Loans, or that begins on the
date on which the applicable Tranche Two Loan is made hereunder, in the case of
Tranche Two Loans, and ended or ends on the numerically corresponding date in
the month next following thereafter and each subsequent monthly period that
began or begins at the expiration of any such monthly period and ended or ends
on the numerically corresponding date in the month next following thereafter,
except that (a) if any such monthly period would end on a day other than a
Business Day, such monthly period shall be extended to the next succeeding
Business Day unless such
16
23
next succeeding Business Day falls in the next calendar month, in which case
such monthly period shall end on the next preceding Business Day and (b) any
such monthly period that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day to the last
Business Day of such monthly period) shall end on the last Business Day of such
monthly period.
"NET INCOME" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however, (a) any
gain (or loss), together with any related provision for taxes on such gain (or
loss), realized in connection with (i) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (ii)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries, and (b) any extraordinary
gain (or loss), together with any related provision for taxes on such
extraordinary gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the
Borrower, Starwood REIT or any Restricted Subsidiary in respect of any Asset
Sale, net of the direct costs relating to such Asset Sale (including legal,
accounting and investment banking fees and expenses, employee severance and
termination costs, any trade payables or similar liabilities related to the
assets sold and required to be paid by the seller as a result thereof and sales,
finder's or broker's commissions), and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements) or amounts required to be distributed by Starwood REIT in order to
maintain its status as a REIT under the Code that result from the gain from such
Asset Sale, amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that are the subject of such Asset
Sale, all distributions and other payments required to be made to minority
interest holders in a subsidiary or joint venture as a result of the Asset Sale
and any reserve for adjustment in respect of the sale price of such asset or
assets or any liabilities associated with the asset disposed of in such Asset
Sale.
"NEWCO" means a newly created, wholly-owned subsidiary of the
Borrower to be merged with and into Starwood REIT pursuant to the
Reorganization.
"NEW DEBT" means the new Indebtedness and refinancings of existing
Indebtedness, in an aggregate principal amount of up to $500,000,000, defined as
"New Debt" in the Fourth Amendment to Credit Agreement dated as of July 15, 1998
relating to the Bank Credit Facility, as in effect on the date hereof.
"NEW LENDING OFFICE" has the meaning specified in Section 2.8(e).
"NON-RECOURSE FINANCING" means Indebtedness incurred in
connection with the purchase or lease of personal or real property useful in the
business of the Borrower, Starwood REIT or any Restricted Subsidiary and (a) as
to which the lender upon default may seek recourse or payment against the
Borrower, Starwood REIT or any Restricted Subsidiary only through the return or
sale of the property or the equipment so purchased or leased, or in the case of
any Indebtedness issued by a special purpose entity with no material assets
other than the
17
24
assets so financed, only through foreclosure upon the assets or Capital Stock of
such special purpose entity and (b) may not otherwise assert a valid claim for
payment on such Indebtedness against the Borrower, Starwood REIT or any
Restricted Subsidiary (other than as specified above) or any other property of
the Borrower, Starwood REIT or any Restricted Subsidiary.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness or Disqualified
Stock, as the case may be, or that portion of Indebtedness or Disqualified
Stock, as the case may be, as to which none of the Borrower, Starwood REIT or
any Restricted Subsidiary (a) provides credit support pursuant to any
undertaking, agreement or instrument that would constitute Indebtedness or
Disqualified Stock, as the case may be, or (b) is directly or indirectly liable.
"NOTE DOCUMENTS" means this Agreement, the Original Agreement (as
amended hereby), the Senior Secured Notes, the Pledge Agreement, the Engagement
Letters, the Fee Letters, and all documents delivered on the Original Closing
Date pursuant to the Original Agreement or on the Effective Date pursuant to
this Agreement.
"NOTE LIABILITIES" means all direct or indirect debts, liabilities
and other obligations of the Borrower or any Guarantor of any and every type and
description at any time arising under or in connection with this Agreement, the
Original Agreement (as amended hereby), or any other Note Document to LCPI, to
▇▇▇▇▇▇ Brothers, to any Lender or to any Indemnitee or their respective
successors, transferees or assigns, whether or not the right of such Person to
payment in respect of such obligations and liabilities is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured and whether or not such claim
is discharged, stayed or otherwise affected by any bankruptcy case or insolvency
or liquidation proceeding, and shall include all liabilities for principal of
and interest on the Loans and under the Senior Secured Notes and all other
liabilities of the Borrower or any Guarantor under the Note Documents for any
fees, costs, taxes, expenses, indemnification and other amounts payable
thereunder.
"NOTE REGISTER" has the meaning specified in Section 7.3(b).
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing, or owing with respect to, any Indebtedness.
"OFFER PERIOD" has the meaning specified in Section 2.5(a).
"OFFER AMOUNT" has the meaning specified in Section 2.5(a).
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President of such
Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of a
Loan Party by two Officers (or if a limited liability company or partnership,
two Officers of the managing member or general partner of such limited liability
company or partnership) of such Loan Party,
18
25
one of whom must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of such Loan Party;
but in the case of an Officers' Certificate of the Borrower and Starwood REIT,
by one Officer of each of the Borrower and Starwood REIT, one of whom must be
the principal executive officer, the principal financial officer, the treasurer
or the principal accounting officer of the Borrower or Starwood REIT.
"ONE-MONTH LIBO RATE" means, for any Monthly Interest Period for any
Loan, the rate per annum appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Required
Lenders of the applicable Tranche from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Monthly Interest Period, as the rate for
dollar deposits with a one-month maturity period.
"OP UNITS" means limited partnership units in any limited
partnership that is a Restricted Subsidiary and which limited partnership units
by their terms may be exchanged into, or exercised or redeemed for, cash or the
common stock of the Borrower and Starwood REIT.
"ORIGINAL AGREEMENT" has the meaning specified in the Recitals
hereto.
"ORIGINAL CLOSING DATE" means February 23, 1998.
"OTHER TAXES" means any and all current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Note Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Note
Document.
"PAIRED COMMON SHARES" means the common stock of the Borrower and
(a) prior to the Reorganization, the common shares of beneficial interest of
Starwood REIT, and (b) upon and following consummation of the Reorganization,
the Class B Shares of Starwood REIT.
"PARTICIPANT" has the meaning specified in Section 7.3(c).
"PAYMENT DEFAULT" has the meaning specified in Section 8.1(f).
"PERCENTAGE SHARE" means, with respect to any Lender (and, where so
specified, any Tranche), that Lender's interest in the applicable facility,
calculated as follows:
(a) for Tranche One, divide the principal amount of that Lender's
outstanding Tranche One Loans by the total principal amount of all Tranche One
Loans outstanding at the time;
19
26
(b) for Tranche Two, divide the aggregate amount of that Lender's
Tranche Two Commitment and Tranche Two Loans by the total amount of all Tranche
Two Commitments and Tranche Two Loans outstanding at the time;
(c) in all other cases, divide the aggregate amount of that Lender's
Tranche One Loans, Tranche Two Loans and Tranche Two Commitment by the aggregate
amount of all Tranche One Loans, Tranche Two Loans and Tranche Two Commitments
then outstanding.
"PERFECTED" means, as to the Collateral Agent's Lien in any of the
Collateral in respect of any and all outstanding Senior Secured Liabilities,
that (a) a creditor on a simple contract could not acquire a judicial lien upon
such Collateral that is superior to the Lien of the Collateral Agent thereon,
and (b) the Collateral Agent's Lien in such Collateral would be perfected and
not avoidable if a Proceeding were commenced under Bankruptcy Law in which the
owner of such Collateral is the debtor.
"PERMITTED INVESTMENTS" means (a) Investments in the Borrower,
Starwood REIT or any Restricted Subsidiary; (b) Investments in Cash Equivalents;
(c) Investments by the Borrower, Starwood REIT or any Restricted Subsidiary in a
Person, if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary or (ii) such Person is merged, combined or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, the Borrower, Starwood REIT or a Restricted Subsidiary; (d) any
acquisition of assets solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Borrower and Starwood REIT or for OP
Units (that are not Disqualified Stock); (e) receivables owing to the Borrower,
Starwood REIT or any Restricted Subsidiary if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, that such trade terms may include such
concessionary trade terms as the Borrower, Starwood REIT or any Restricted
Subsidiary deems reasonable under the circumstances; (f) payroll, relocation,
housing, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (g) loans or
advances to employees of the Borrower, Starwood REIT or their Restricted
Subsidiaries (1) to fund the exercise price of options granted under employment
agreements and the Borrower's and Starwood REIT's stock option plans or
agreements or (2) for any other purpose including in connection with relocation
not to exceed $50.0 million in the aggregate at any one time outstanding under
this clause (g); (h) stock, obligations or securities received in settlement of
debts created in the ordinary course of business or in satisfaction of
judgments; (i) other Investments in any Person (other than in an Affiliate of
the Borrower or Starwood REIT) or in any Unrestricted Subsidiary having a fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (i) that are at the time
outstanding, not to exceed 5% of the combined consolidated total assets of the
Borrower and Starwood REIT and the Restricted Subsidiaries; and (j) Investments
in any person which Investment is made with Equity Interests (other than
Disqualified Stock) of the Borrower and Starwood REIT or in OP Units (that are
not Disqualified Stock).
20
27
"PERMITTED LIENS" means (a) Liens in favor of the Borrower, Starwood
REIT or a Restricted Subsidiary; (b) Liens securing the Senior Secured Notes and
other Note Liabilities; (c) Liens securing Credit Facility Liabilities incurred
pursuant to clause (a) of Section 5.9 and any additional Indebtedness permitted
to be incurred thereunder pursuant to clause (i) of Section 5.9 and Liens
securing Hedging Obligations that are Eligible Hedging Liabilities and are
permitted to be incurred under clause (f) of Section 5.9, but only if the Note
Liabilities (and, if required, the ITT Notes) are secured equally and ratably
with such Credit Facility Liabilities and Eligible Hedging Liabilities;
provided, that in the circumstances, and to the extent, provided in the Bank
Credit Facility, cash (and Cash Equivalents) collateral may be delivered from
time to time in accordance with the requirements of the Bank Credit Facility
without equally and ratably securing the Note Liabilities; (d) Liens in
existence on the Original Closing Date, attaching to property owned by the
Borrower, Starwood REIT or a Restricted Subsidiary on the Original Closing Date
and securing only Indebtedness that was outstanding on the Original Closing Date
and Liens on the Collateral under the Pledge Agreement securing obligations on,
or with respect to, Hedging Obligations permitted under Section 5.9 and the ITT
Notes equally and ratably with the Senior Secured Liabilities; (e) Liens on
property of a Person existing at the time such Person became a Restricted
Subsidiary, is merged into or combined with or into, or wound up into, one of
the Borrower and Starwood REIT or any Restricted Subsidiary of the Borrower and
Starwood REIT if such Liens were in existence prior to the contemplation of such
acquisition, merger or consolidation or winding up and do not extend to any
other assets other than those of the Person acquired by, merged into or combined
with one of the Borrower and Starwood REIT or such Restricted Subsidiary; (f)
Liens on property existing at the time of acquisition thereof by the Borrower
and Starwood REIT or any Restricted Subsidiary if such Liens were in existence
prior to the contemplation of such acquisition; (g) Liens upon property of any
Person securing Refinancing Indebtedness, if (i) when it was incurred, such
Refinancing Indebtedness was permitted to be incurred under clause (d) in
Section 5.9 and (ii) when incurred, such Refinancing Indebtedness was secured by
Liens not materially more extensive than the Liens securing the Indebtedness so
refinanced; (h) Liens securing Indebtedness that, when incurred, was permitted
to be incurred under clause (g) in Section 5.9; (i) Liens securing Indebtedness
that, when incurred, was permitted to be incurred under the first paragraph of
Section 5.9; (j) Liens on real property and related assets securing the
Intercompany Mortgage Note; (k) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business and which obligations
are not expressly prohibited by this Agreement; (l) Liens constituting or
reflecting the interests of landlords or lessors; (m) (1) Liens for taxes,
assessments or governmental charges or claims or (2) statutory Liens of
landlords, and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business,
in the case of each of (1) and (2), with respect to amounts that either (A) are
not yet delinquent or (B) are being contested in good faith by appropriate
proceedings as to which appropriate reserves or other provisions have been made
in accordance with GAAP; (n) easements, rights-of-way, navigational servitudes,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances which do not interfere in any material respect with the ordinary
conduct of business of the Borrower and Starwood REIT and the Restricted
Subsidiaries; (o) a leasehold mortgage in favor of a party financing a
third-party lessee of the Borrower, Starwood REIT or a Restricted
21
28
Subsidiary, but only if neither the Borrower nor Starwood REIT nor any
Restricted Subsidiary is liable for the payment of any principal of, or interest
or premium on, such financing; (p) licenses of patents, trademarks and other
intellectual property rights granted by the Borrower, Starwood REIT or a
Restricted Subsidiary in the ordinary course of business and not interfering in
any material respect with the ordinary conduct of the business of the Borrower,
Starwood REIT and the Restricted Subsidiaries; (q) any attachment or judgment
Lien not constituting an Event of Default; (r) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (s) Liens on assets of the
Borrower, Starwood REIT and the Restricted Subsidiaries (other than on assets
constituting Collateral) securing collateralized mortgage backed securities
transactions otherwise permitted hereunder in an aggregate principal amount not
to exceed $1,000,000,000 at any time outstanding; and (t) Liens on cash or Cash
Equivalents not exceeding $135,000,000 securing obligations incurred in
connection with the sale of the UBS Shares.
"PERMITTED PAYMENT" means any payment on account of Subordinated
Liabilities made in cash in conformity with the Borrower's and Starwood REIT's
ordinary cash management practices for the businesses conducted by the Borrower,
Starwood REIT and their respective Subsidiaries, if no Event of Default has
occurred and is continuing at the time such payment is made or would result
therefrom.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or government or any agency or political subdivision thereof or any
other entity.
"PLEDGE AGREEMENT" means that certain Pledge and Security Agreement,
dated as of February 23, 1998, by and among the Borrower, Starwood REIT, the
Guarantors and Bankers Trust Company, as collateral agent.
"POST-PETITION INTEREST AND EXPENSE CLAIMS" means any and all claims
of any holder of Guaranteed Obligations (a) for interest on any Note Liabilities
determined for any period of time occurring after the commencement of any
Proceeding at the contract rate (including any applicable post-default increase
therein) set forth in this Agreement and the Senior Secured Notes or (b) for
cost and expense reimbursements or indemnification on the terms set forth in
this Agreement or any other Note Document for costs and expenses incurred and
indemnification rights accrued at any time after the commencement of any such
Proceeding, in each case to the extent such claim accrues or becomes payable in
accordance with the provisions of this Agreement or any other Note Document (or
would have accrued or become payable if enforceable or allowable in such
Proceeding), whether or not such claim is enforceable, allowable or allowed in
such Proceeding and even if such claim is disallowed therein.
"PREFERRED PARTNERSHIP UNITS" means the Class A Units of SLT Realty
Limited Partnership, a Delaware limited liability partnership, and the Class A
Units and Class B Units of SLC Operating Limited Partnership, a Delaware limited
liability partnership.
22
29
"PREFERRED STOCK" means any Equity Interest with preferential right
of payment of dividends or upon liquidation, dissolution or winding up.
"PREPAYMENT DATE" has the meaning specified in Section 2.4(c).
"PROCEEDING" means any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of a Person
(including any such proceeding under the Bankruptcy Law).
"PURCHASE OFFER" has the meaning specified in Section 2.5.
"PURCHASE DATE" has the meaning specified in Section 2.5(a).
"RECORD DATE" means the 10th day of each calendar month.
"REFERENCE RATE" means, for any day in any Monthly Interest Period,
the One-Month LIBO Rate determined two Business Days prior to the commencement
of such Monthly Interest Period, except that if as of the first day of such
Monthly Interest Period the Borrower and the applicable Lenders have received a
Reference Rate Changeover Notice that has not been withdrawn by written notice
of such withdrawal delivered to the Borrower and the applicable Lenders by the
Required Lenders of the applicable Tranche, then the Reference Rate for such
Monthly Interest Period shall be the Three-Month Treasury ▇▇▇▇ Alternative Rate
determined as of the first Business Day prior to the commencement of such
Monthly Interest Period.
"REFERENCE RATE CHANGEOVER NOTICE" means a certificate delivered to
the Borrower and the applicable Lenders prior to the first day of any Monthly
Interest Period by Lenders holding at least 25% in outstanding Senior Secured
Notes of the applicable Tranche stating that such Lenders have determined (which
determinations, if made in good faith, shall be conclusive and binding upon the
Loan Parties and the Lenders) and have notified the Borrower that as of the date
such notice is given, (a) by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the One-Month LIBO Rate for such Monthly Interest Period, (b) funding in the
London interbank market is not available to first-class banks organized under
the laws of the United States or the State of New York, (c) the One-Month LIBO
Rate determined or to be determined for such Monthly Interest Period does not
adequately and fairly reflect the cost that would be incurred by first-class
banks organized under the laws of the United States or by first-class banks
organized under the laws of the State of New York, if such banks were to seek
funding of one-month time deposits in the London interbank market as of the
second Business Day prior to the commencement of such Monthly Interest Period,
or (d) maintenance or continuation of any such funding in the London interbank
market by first-class banks organized under the laws of the United States or by
first-class banks organized under the laws of the State of New York has become
unlawful or impermissible for such banks by compliance, in good faith, with any
law, governmental rule, regulation or order of any central bank or other
Governmental Entity or
23
30
quasi-governmental authority (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful or would result in costs or
penalties).
"REFERENCE RATE INTEREST" has the meaning specified in Section
2.6(e).
"REFINANCING INDEBTEDNESS" has the meaning specified in Section
5.9(d).
"REINVESTMENT PERIOD" has the meaning specified in Section 5.10.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees,
attorneys, agents and advisors of such Person and such Person's Affiliates.
"REORGANIZATION" means a transaction whereby (i) Newco is merged
with and into Starwood REIT, with Starwood REIT being the surviving entity so
that after the merger Starwood REIT is a direct subsidiary of the Borrower; (ii)
the common stock of Newco becomes the Class A Shares; (iii) the common shares of
beneficial interest of Starwood REIT are converted into the Class B Shares; (iv)
the Class B Shares are paired with the common stock of the Borrower; (v) the
existing Class A Exchangeable Preferred Shares and Class B Exchangeable
Preferred Shares of Starwood REIT remain outstanding as shares of Starwood REIT;
and (vi) the organizational documents of Starwood REIT and the Corporation are
amended (including by way of an amendment and restatement) to effectuate the
foregoing, provided, that (A) after giving effect to the Reorganization, the
Borrower shall own all of the issued and outstanding Class A Shares, which
shares shall represent 100% of the equity interests in Starwood REIT other than
the equity interests represented by the Class B Shares, which shall be paired
with the shares of common stock of the Borrower, and the Class A Exchangeable
Preferred Shares and the Class B Exchangeable Preferred Shares, (B) the terms of
the Class B Shares shall provide that the same shall be, at the option of the
Borrower at any time when one or more material Events of Default and other
events of default under the Bank Credit Facility have continued in existence
beyond a cure period to be determined, exchanged for shares of common stock of
the Borrower, (C) the Class A Shares shall not constitute Margin Stock, and (D)
consummation of the Reorganization shall not have a Material Adverse Effect or
constitute a default under the Bank Credit Facility.
"REORGANIZATION DATE" means the date upon which the merger of Newco
into Starwood REIT is consummated.
"REQUIRED LENDERS" means, at any time, Lenders whose combined
Percentage Shares are greater than 50%.
"RESTRICTED INVESTMENT" means (a) an Investment other than a
Permitted Investment or (b) any sale, conveyance, lease, transfer or other
disposition of assets at less than fair market value to an Unrestricted
Subsidiary, provided that the amount of such Restricted Investment under this
clause (b) shall be such difference in value.
"RESTRICTED PAYMENTS" has the meaning specified in Section 5.7.
24
31
"RESTRICTED SUBSIDIARY" means, at any time, any direct or indirect
Subsidiary of the Borrower or Starwood REIT that is not then an Unrestricted
Subsidiary. If any Unrestricted Subsidiary ceases to be an Unrestricted
Subsidiary, such Subsidiary shall automatically become a Restricted Subsidiary.
The term " Restricted Subsidiary" without a reference to a parent Person shall
mean a Restricted Subsidiary of either the Borrower or Starwood REIT.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITIES PROCEEDS" means any cash proceeds of the sale of any
security of the Borrower, Starwood REIT or any Subsidiary of either of them
(including any sale of collateralized mortgage backed securities, but excluding
the Indebtedness hereunder, Indebtedness under the Bank Credit Facility and New
Debt), net of the direct costs relating to such sale (including legal,
accounting and investment banking fees and expenses), and any taxes paid or
payable as a result thereof (after taking into account any available tax credits
or deductions and any tax sharing arrangements).
"SENIOR SECURED LIABILITIES" means Credit Facility Liabilities,
Note Liabilities and Eligible Hedging Liabilities.
"SENIOR SECURED NOTES" means the Borrower's Tranche One Notes and
Tranche Two Notes.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary of either the Borrower
or Starwood REIT that would be a "significant subsidiary" of the Borrower and
Starwood REIT, taken as a whole, as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
was in effect on the Original Closing Date, except that the level of
significance shall be 10% rather than 20% as stated in such definition.
"STARWOOD REIT" means Starwood Hotels & Resorts, a Maryland real
estate investment trust.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Company or
Starwood REIT or any Restricted Subsidiary which by its terms is expressly
subordinated in right of payment to the Senior Secured Notes or any guaranty
thereof.
"SUBORDINATED LIABILITIES" has the meaning specified in Section 9.6.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof and (ii) any partnership of
which more than 50% of the partnership's capital accounts, distribution rights
or general or limited partnership interests are owned or controlled, directly or
indirectly, by such Person or one or
25
32
more of the other Subsidiaries of such Person or a combination thereof. The term
"Subsidiary" without a reference to a parent Person shall mean a Subsidiary of
either the Borrower or Starwood REIT.
"SUBSIDIARY PREFERRED STOCK" means any Preferred Stock issued by a
Restricted Subsidiary (excluding (1) any OP Units that are not Disqualified
Stock and (2) the Preferred Stock of Starwood REIT after consummation of the
Reorganization).
"TAXES" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental Entity.
"T-▇▇▇▇ DIFFERENTIAL" means, as to any Monthly Interest Period that
commences when any event has occurred pursuant to which the Reference Rate for
any Loan outstanding during such Monthly Interest Period is the Three-Month
Treasury ▇▇▇▇ Alternative Rate, the excess, if any, (as determined in good faith
by Required Lenders of the applicable Tranche or, if no determination is made by
such Required Lenders, then by the Lenders giving a Reference Rate Changeover
Notice or otherwise giving notice of or affected by such event) of (i) the
One-Month LIBO Rate over (ii) the Three-Month Treasury ▇▇▇▇ Alternative Rate,
determined on average for the last ten Business Days prior to the occurrence of
such event for which the One-Month LIBO Rate and the Three-Month Treasury ▇▇▇▇
Alternative Rate can be reliably ascertained.
"THREE-MONTH TREASURY ▇▇▇▇ ALTERNATIVE RATE" means, at any time for
any Monthly Interest Period, the sum of (a) the T-▇▇▇▇ Differential determined
for such Monthly Interest Period plus (b) the rate per annum equal to the
secondary market yield to maturity rate for three-month United States Treasury
bills as of the Monday immediately preceding the first day of such Monthly
Interest Period, as such secondary market yield to maturity rate is published
from time to time by the Board in Federal Reserve Statistical Release H.15 (519)
(or any successor to or substitute for such publication providing rate
quotations comparable to those currently provided therein as to secondary market
yield to maturity rates for United States Treasury bills, as determined by the
Required Lenders of the applicable Tranche from time to time).
"TRANCHE" means the facility and commitments used in making a
particular type of Loan hereunder. There are two Tranches: Tranche One Loans
and Tranche Two Loans.
"TRANCHE ONE LENDER" means each Lender to which one or more Tranche
One Loans are owed.
"TRANCHE ONE LOANS" means the Loans made by the Tranche One Lenders
(or their predecessors-in-interest) under the Original Agreement, in the
aggregate original principal amount of $2,500,000,000. All of such Tranche One
Loans remain (to the extent not repaid) outstanding hereunder.
"TRANCHE ONE NOTES" means the Borrower's Senior Secured Increasing
Rate Notes due 2003 in substantially the form of Exhibit B-1.
26
33
"TRANCHE TWO COMMITMENT" means the commitment of each applicable
Lender to make Tranche Two Loans in accordance with and subject to the terms and
conditions of this Agreement. As of the Effective Date, the aggregate principal
amount of all of the Tranche Two Commitments is $1,000,000,000 and the
individual Tranche Two Commitment of each Tranche Two Lender is set forth on
Schedule B.
"TRANCHE TWO LENDER" means each Lender which has a Tranche Two
Commitment or to which one or more Tranche Two Loans are owed.
"TRANCHE TWO LOANS" means the Loans made by the Tranche Two Lenders
pursuant to Section 2.1(b).
"TRANCHE TWO NOTES" means the Borrower's Senior Secured Notes due
2003 in substantially the form of Exhibit B-2.
"TRANSACTIONS" means the Acquisition and the financing thereof and
other transactions occurring on the Effective Date or the Original Closing Date
contemplated by the Acquisition Agreement, this Agreement and the Bank Credit
Facility.
"TRANSACTION DOCUMENTS" means the Acquisition Agreement, the Note
Documents, and the Credit Facility Documents.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939.
"UBS SHARES" means the 2,185,000 Paired Common Shares of Starwood
REIT and the Borrower sold on October 14, 1997 to an affiliate of Union Bank of
Switzerland in a private placement.
"UNRESTRICTED SUBSIDIARY" means any entity that would have been a
Restricted Subsidiary of the Borrower or Starwood REIT but for its designation
as an "Unrestricted Subsidiary" in accordance with the provisions of this
Agreement and any Subsidiary of such entity, so long as it remains an
Unrestricted Subsidiary in accordance with the terms of this Agreement.
"VNU" means VNU International B.V.
"VNU PREFERRED STOCK" means preferred stock issued by WD Parent
Corp. to VNU prior to the date of this Agreement.
"VOTING STOCK" means, with respect to any Person that is a
corporation, any class or series of capital stock of such Person that is
ordinarily entitled to vote in the election of directors thereof at a meeting of
stockholders called for such purpose, without the occurrence of any additional
event or contingency, and with respect to any other Person that is a limited
liability company, membership to manage the operations or business of the
limited liability company.
"WD PARENT CORP." means WD Parent, Inc., a Delaware corporation.
27
34
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the number
of years obtained by dividing (a) the sum of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (b) the then outstanding principal amount of such Indebtedness
or Disqualified Stock, as the case may be.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person, all of the Capital Stock or other ownership interests of which (other
than directors' qualifying shares) shall at the time be owned by such Person or
by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.2. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The word "will"
shall be construed to have the same meaning and effect as the word "shall."
Unless the context requires otherwise (a) any definition of or reference to any
law, agreement, instrument or other document herein shall be construed as
referring to such law, agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified (subject to any exceptions and
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors, transferees and assigns, (c) the words "herein," "hereof"
and "hereunder," and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
unless otherwise specified, all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, whether real,
personal or mixed and of every type and description.
SECTION 1.3. ACCOUNTING TERMS; GAAP; EFFECT OF REORGANIZATION ON
CERTAIN DEFINITIONS.
(a) GAAP. Except as otherwise expressly provided herein, all terms
of an accounting or financial nature shall be construed in accordance with GAAP,
as in effect from time to time. If the Borrower notifies the Lenders that the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision or if the Required Lenders notify the
Borrower that they request an amendment to any provision hereof for such purpose
(in each case regardless of whether any such notice is given before or after
such change in GAAP or in the application thereof), then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change became effective until such notice is withdrawn or such provision is
amended in accordance herewith.
28
35
(b) EFFECT OF REORGANIZATION ON CERTAIN DEFINITIONS. Effective upon
consummation of the Reorganization, each reference herein to "combined" or
"combined consolidated" amounts or financial statements with respect to Starwood
REIT and the Borrower shall be deemed modified to refer to "consolidated"
amounts or financial statements, as applicable, with respect to the Borrower and
its subsidiary, Starwood REIT, and the other Restricted Subsidiaries of the
Borrower (but shall not include any Unrestricted Subsidiary).
ARTICLE II.
THE LOANS
SECTION 2.1. COMMITMENTS.
(a) TRANCHE ONE LOANS. The Borrower acknowledges that each Tranche
One Lender (or its predecessor-in-interest) made a Tranche One Loan to the
Borrower on the Original Closing Date, which is evidenced by one or more Senior
Secured Notes issued pursuant to the Original Agreement. Such Tranche One Loans,
in an aggregate original principal amount of $2,500,000,000, shall (to the
extent not repaid) remain outstanding pursuant to the terms and conditions of
this Agreement.
(b) TRANCHE TWO LOANS. Subject to the terms and conditions set forth
herein, each Lender with a Tranche Two Commitment severally (and not jointly)
agrees to make one or more Loans to the Borrower, from the Effective Date
through the date which is six months after the Effective Date (the "Availability
Period"), in an aggregate amount not to exceed such Lender's Tranche Two
Commitment.
(c) MULTIPLE FUNDINGS; NO REBORROWING. The Tranche Two Loans are
available for one or more fundings during the Availability Period. Each Lender's
obligation to make Tranche Two Loans hereunder shall expire and be discharged
upon funding of such Lender's Tranche Two Commitment, and no Lender shall be
obligated to make any Tranche Two Loans hereunder after the last day of the
Availability Period. When repaid, the Loans may not be reborrowed.
(d) FUNDING BRANCH OR OFFICE. Each Lender at its option may maintain
funding of its Loan by causing any domestic or foreign branch or Affiliate of
such Lender to maintain funding of such Loan. The exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement.
(e) PROCEDURE FOR BORROWINGS.
(i) REQUESTS FOR LOANS. To request a borrowing of Tranche Two
Loans (each, a "Borrowing"), the Borrower shall deliver to the
Administrative Agent a written notice, substantially in the form of
Exhibit F (a "Notice of Borrowing"). Each Notice of Borrowing shall
specify the aggregate principal amount of the Tranche Two Loans requested
to be made by all Tranche Two Lenders at such time, the Business Day on
which the Borrower requests that such Loans be made and the Borrower's
instructions regarding
29
36
disbursement of such Loans. Notices of Borrowing for Tranche Two Loans
shall be received by the Administrative Agent not later than 11:00 a.m.
New York time on the third Business Day prior to the date of the proposed
Borrowing. Each Notice of Borrowing shall be in an aggregate amount for
all Lenders of not less than $50,000,000 ($100,000,000 in the case of the
initial borrowing of Tranche Two Loans hereunder) or an integral multiple
of $50,000,000 in excess thereof. The Borrower shall specify in each
Notice of Borrowing whether the conditions for the requested Borrowing are
satisfied. Once given, a Notice of Borrowing is irrevocable by and binding
on the Borrower. The Borrower shall provide to the Administrative Agent a
list, with specimen signatures, of officers authorized to request Loans.
The Administrative Agent is entitled to rely upon such list until it is
replaced by the Borrower. The Administrative Agent shall give each Tranche
Two Lender prompt notice by telephone or facsimile transmission of a
Notice of Borrowing.
(ii) MANDATORY REQUEST FOR LOANS. If the Borrower has not
borrowed $250,000,000 or more in aggregate principal amount of Tranche Two
Loans by September 30, 1998 and there is no Default or Event of Default on
such date, the Borrower shall be deemed to have delivered to the
Administrative Agent a Notice of Borrowing requesting a Borrowing of
Tranche Two Loans in an aggregate amount (the "Deemed Borrowing Amount")
equal to the difference between $250,000,000 and the aggregate amount of
Tranche Two Loans otherwise borrowed hereunder on or prior to such date
(after giving effect to any Borrowings requested to be made on such date
under paragraph (i) above), with each Tranche Two Lender's Tranche Two
Loan thereunder to be in an amount equal to such Tranche Two Lender's
Commitment Percentage of the Deemed Borrowing Amount and September 30,
1998 (or the next succeeding Business Day, if such day is not a Business
Day) as the date on which such Tranche Two Loans are to be made.
(iii) DISBURSEMENT OF LOANS. If the conditions set forth in
Section 3.1 are satisfied (or waived in accordance with Section 11.2),
each Tranche Two Lender will fund its Tranche Two Loan by remitting to or
for the account of the Borrower, no later than 2:00 p.m. New York time on
the date of the proposed Borrowing as set forth in the Notice of
Borrowing, an amount in Dollars equal to its Commitment Percentage of the
aggregate principal amount of requested Tranche Two Loans as set forth in
the Notice of Borrowing in compliance with paragraph (i) or (ii) above,
provided, however, that in no event shall such amount exceed the
unutilized amount of such Lender's Tranche Two Commitment. The proceeds of
Loans shall be transmitted by each Lender by wire transfer of immediately
available funds and otherwise as reasonably requested by the Borrower in
its Notice of Borrowing, provided, that if the Borrower does not specify
instructions in writing regarding disbursement of Loans deemed requested
pursuant to a Notice of Borrowing under paragraph (ii) above, the Borrower
hereby agrees that the proceeds of such Loans shall be
30
37
disbursed in accordance with the disbursement instructions attached hereto
as Schedule C.
(f) SEVERAL OBLIGATIONS. The Tranche Two Commitments are several and
no Lender shall be responsible for any other Lender's failure to make Loans.
(g) USE OF PROCEEDS. The Borrower represents and warrants that it
used the proceeds of the Tranche One Loans solely to fund the Acquisition,
refinance Indebtedness and pay fees and expenses related thereto. The Borrower
shall use the proceeds of the Tranche Two Loans solely for its general corporate
purposes, including repurchases of the Paired Common Shares of the Borrower and
Starwood REIT to the extent permitted hereunder.
SECTION 2.2. REPAYMENT; SENIOR SECURED NOTES.
(a) PROMISE TO PAY. The Borrower hereby unconditionally promises to
pay to each Lender on the earlier of the Maturity Date or the Acceleration Date,
in Dollars and at any place of payment in the Borough of Manhattan in the City
of New York identified in or designated pursuant to Section 2.2(b), the then
unpaid principal amount of each Loan outstanding to such Lender, together with
all interest then accrued and unpaid thereon.
(b) PLACE, TIME AND MANNER OF PAYMENT. The Borrower shall make each
payment required to be made by it hereunder or under any other Note Document
prior to 1:00 p.m., New York City time, on the date when due, in immediately
available funds, without setoff or counterclaim. Any amounts received after such
time on any date shall be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments due
to any Lender shall be made to such place of payment within the Borough of
Manhattan in the City of New York as may be set forth by such Lender in Schedule
B or in the Assignment and Acceptance by which it became a Lender or by a
written notice delivered to the Borrower by such Lender from time to time. It
shall not be necessary for any Lender to present, exhibit, or permit notation of
payment on, such Lender's Senior Secured Note as a condition of any payment
thereunder. If any payment under any Note Document is due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments under
each Note Document shall be made in Dollars.
(c) NO MITIGATION OR EXCUSE. The Loans shall be absolutely and
unconditionally payable in Dollars in the Borough of Manhattan in the City of
New York on the earlier of the Maturity Date or the Acceleration Date, without
regard to any other event or circumstances whatsoever, whether or not foreseen
or foreseeable and whether imposed by Act of God, by force majeure or by law,
order, decree or as a consequence of any risk, casualty, loss, act, omission or
wrongful conduct or any other cause, whether or not lawful, as to all of which
the Borrower and the Guarantors hereby assume all risk.
(d) SENIOR SECURED NOTES. On the Effective Date, the Borrower shall
duly authorize, execute and deliver to each Tranche Two Lender, to evidence the
Borrower's
31
38
obligation to repay the Tranche Two Loans made by such Lender, a Senior Secured
Note payable to the order of such Lender in the amount of such Lender's Tranche
Two Commitment hereunder. Thereafter from time to time, with respect to Tranche
One Notes and Tranche Two Notes:
(i) at the request of any Lender upon any transfer of Loans or
Tranche Two Commitments by Assignment and Acceptance, the Borrower will
issue one or more new Senior Secured Notes as necessary to give effect to
such transfer and any interest in the Loans and Tranche Two Commitments,
as applicable, retained by the transferor, in an aggregate amount equal to
the principal amount of Loans and (without duplication) the Tranche Two
Commitment held by the transferor immediately prior to giving effect to
the transfer and against appropriate evidence of cancellation or surrender
of the Senior Secured Note or notes then outstanding to the transferor,
and
(ii) upon request by any Lender, the Borrower will (without
any lost instrument bond or indemnity, unless such bond or indemnity is
reasonably requested by the Borrower) issue a Senior Secured Note to such
Lender in replacement of any outstanding Senior Secured Note payable to
such Lender, if such Lender certifies that such outstanding Senior Secured
Note was defaced, despoiled, misplaced, lost or stolen and has not been
endorsed and delivered to any Person.
SECTION 2.3. INTEREST; COMMITMENT FEE.
(a) EURODOLLAR BORROWINGS. Except as otherwise provided in Section
2.3(h) or Section 2.3(b), all outstanding Loans shall bear interest for each day
in each Monthly Interest Period for the applicable Loan at the Reference Rate
determined for such Monthly Interest Period plus the Applicable Margin for the
applicable Loan determined for such Monthly Interest Period.
(b) INTEREST AFTER EVENT OF DEFAULT. Notwithstanding the provisions
of Section 2.3(a), for each day in any Monthly Interest Period on which any
amount due for principal of or interest on any Loan remains unpaid and, in
addition, for each day in any Monthly Interest Period on which any Event of
Default has occurred and is continuing, any and all outstanding Loans (whether
or not then due and payable) shall bear interest, after as well as before
judgment, at a rate per annum equal to 2% per annum plus the Reference Rate
determined for such Monthly Interest Period plus the Applicable Margin for the
applicable Loan determined for such Monthly Interest Period.
(c) OTHER OBLIGATIONS. All other Note Liabilities at any time
outstanding and due and payable shall bear interest for each day at the highest
rate of interest that is (or, if Loans were outstanding, would be) applicable to
all or any portion of the Loans for such day pursuant to Section 2.3(a) or, when
applicable, Section 2.3(b).
32
39
(d) PAYMENT OF INTEREST. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan, except that, in
any event, (A) interest accrued as set forth in Section 2.3(b) shall be payable
on demand, and (B) in the event of any voluntary or mandatory redemption or
required repurchase of any Loan, accrued interest on the principal amount repaid
or repurchased shall be payable on the date of such repayment or repurchase,
together with any compensation due in respect of such repayment or repurchase
pursuant to Section 2.7.
(e) COMPUTATION OF INTEREST. All interest hereunder shall be
computed on the basis of actual days elapsed and a year of 360 days. Interest
shall be calculated to accrue from and including the most recent date to which
interest has been paid or provided for (or from and including the date on which
such Loan was made if no interest has been paid) to, but not including, the date
of payment.
(f) RECORD DATE. All interest accrued in any Monthly Interest Period
shall become due and payable on the Interest Payment Date for such Monthly
Interest Period to the applicable Lenders determined of record at the close of
business on the Record Date immediately preceding such Interest Payment Date.
(g) DETERMINATION OF REFERENCE RATE. The Required Lenders of the
applicable Tranche may at any time or from time to time make all determinations
necessary to fix the Reference Rate for each applicable Monthly Interest Period
and, absent manifest error, each such determination by such Required Lenders
shall be final, conclusive and binding. Once set for any Monthly Interest
Period, the Reference Rate shall be applicable for each day during such Monthly
Interest Period.
(h) ILLEGALITY. If at any time any Lender determines (which
determination shall, if made in good faith, be final, conclusive and binding
upon all parties) that the funding or continuation of its Loan as a borrowing
priced by reference to the One-Month LIBO Rate has become unlawful or
impermissible by compliance by such Lender in good faith with any law,
governmental rule, regulation or order of any central bank or other Governmental
Entity or quasi-governmental authority (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful or would result
in costs or penalties), then, and in any such event, such Lender may give notice
of such determination, in writing, to the Borrower and each Lender. When such
notice is given by a Lender, such Lender's Loan shall immediately, or if
permitted by applicable law, no later than the date permitted thereby, upon at
least one Business Day's written notice to the Borrower and the Lenders, be
converted so as to bear interest at all times in each Monthly Interest Period
thereafter at the Three-Month Treasury ▇▇▇▇ Alternative Rate determined for such
Monthly Interest Period plus the Applicable Margin determined for such Monthly
Interest Period. If, at any time after a Lender gives notice under this Section
2.3(h), such Lender determines that it may lawfully fund and maintain its Loans
by reference to the One-Month LIBO Rate, such Lender shall promptly give notice
of such determination in writing to the Borrower and each other Lender and,
effective at the commencement of the Monthly Interest Period next following
thereafter, such Lender's Loan shall bear interest at the Reference Rate
determined for such Monthly Interest Period plus the Applicable Margin
determined for such Monthly Interest Period.
33
40
(i) COMMITMENT FEE. The Borrower shall pay in arrears to each
Tranche Two Lender, on the last Business Day of each month during which any
Tranche Two Commitments are outstanding hereunder, a fee (the "Commitment Fee")
calculated at a rate per annum of one-half of one percent (0.5%) on the average
unused portion of such Tranche Two Lender's Tranche Two Commitment at the end of
each day during the Availability Period.
SECTION 2.4. REDEMPTION.
(a) RIGHT TO REDEEM. Upon three Business Days' prior written notice
to each of the Lenders, the Borrower may redeem the Senior Secured Notes at any
time in whole or from time to time in part in any amount that is an integral
multiple of $10 million, without premium or penalty, by paying to each Lender an
amount equal to 100% of such Lender's pro rata share of the aggregate principal
amount of Senior Secured Notes to be redeemed, plus accrued and unpaid interest
thereon to the Prepayment Date.
(b) INDEMNITY. The Loan Parties jointly and severally agree to
indemnify each Lender and to hold each Lender harmless from any loss or expense
which such Lender may sustain or incur as a consequence of default by the
Borrower in making any prepayment or redemption after the Borrower has given a
notice thereof in accordance with the provisions of Section 2.4(c). Such
indemnification may include an amount equal to such Lender's actual loss and
expenses incurred (excluding lost profits) in connection with, or by reason of,
any of the foregoing events. A certificate as to any amounts payable pursuant to
this Section 2.4(b) submitted to the Borrower by any Lender shall be conclusive,
final and binding in the absence of manifest error. This Section 2.4(b) shall
survive the termination of this Agreement and the payment of the Senior Secured
Notes and all other Note Liabilities.
(c) EFFECT OF NOTICE OF PREPAYMENT. The Borrower shall notify the
Lenders in writing at their addresses shown in the Note Register of any date set
for redemption (each such day, a "Prepayment Date") of Senior Secured Notes.
Once such notice is sent or mailed, the Senior Secured Notes called for
redemption, prepayment or repurchase shall become due and payable on the
Prepayment Date set forth in such notice. Such notice may not be conditional.
(d) PARTIAL REDEMPTION. In the event that less than all of the
Senior Secured Notes are to be redeemed, the Borrower shall redeem a pro rata
portion of the Senior Secured Notes of all Tranches held by each Lender.
(e) REDEMPTION REQUIRED BY GAMING AUTHORITY. If any Gaming Authority
requires that a Lender or beneficial owner of the Senior Secured Notes must be
licensed, qualified or found suitable under any applicable gaming laws in order
to maintain any gaming license or franchise of the Borrower, Starwood REIT or
any Restricted Subsidiary under any applicable gaming laws, and the Lender or
beneficial owner fails to apply for a license, qualification or finding of
suitability within 30 days after being requested to do so by such Gaming
Authority (or such lesser period that may be required by such Gaming Authority)
or if such Lender or beneficial owner is not so licensed, qualified or found
suitable, the Borrower shall have the right, at its option, (i) to require such
Lender or beneficial owner to dispose of
34
41
such Lender's or beneficial owner's Senior Secured Notes within 30 days of
receipt of such finding by the applicable Gaming Authority (or such earlier date
as may be required by the applicable Gaming Authority) or (ii) to call for
redemption of the Senior Secured Notes of such Lender or beneficial owner at a
redemption price equal to the lesser of the principal amount thereof or the
price at which such Lender or beneficial owner acquired the Senior Secured
Notes, together with, in either case, accrued and unpaid interest, if any, to
the earlier of the date of redemption or, the date of the finding of
unsuitability by such Gaming Authority. The Borrower shall not be required to
pay or reimburse any Lender or beneficial owner of Senior Secured Notes who is
required to apply for any such license, qualification or finding of suitability
for the costs of the licensure or investigation for such qualification or
finding of suitability. Such expenses shall be the obligation of such Lender or
beneficial owner.
(f) MANDATORY REDEMPTION. On each date after the Effective Date on
which the Borrower, Starwood REIT or any Subsidiary of either of them receives
any Securities Proceeds, the Borrower shall redeem or repay, in an amount equal
to the amount of such Securities Proceeds, first the Tranche One Notes, second,
to the extent then required under the Bank Credit Facility, the Tranche I Term
Loans (as defined in the Bank Credit Facility as in effect on the date hereof),
and third, the Tranche Two Notes, in the manner provided in the Bank Credit
Facility (in the case of the Tranche I Term Loans) or in this Section 2.4 (in
the cases of the Tranche One Notes and the Tranche Two Notes); provided,
however, that, if and to the extent required under the Fifth Amendment to Credit
Agreement dated as of the date hereof relating to the Bank Credit Facility, the
Tranche I Term Loans shall be redeemed or repaid prior to the Tranche One Notes.
SECTION 2.5. PURCHASE OFFERS. In the event that, pursuant to Section
5.10 or 5.14 hereof, the Borrower shall be required to commence an offer to all
Lenders to purchase Senior Secured Notes (a "Purchase Offer"), it shall follow
the procedures specified below:
(a) OFFER PERIOD AND PURCHASE DATE. The Purchase Offer shall remain
open for a period of 20 Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable law (the
"Offer Period"). No later than five Business Days after the termination of the
Offer Period (the "Purchase Date"), the Borrower shall purchase at the purchase
price (as determined in accordance with Section 5.10 or Section 5.14, as the
case may be) the principal amount of Senior Secured Notes required to be
purchased pursuant to Section 5.10 or 5.14, as the case may be (the "Offer
Amount"), or, if less than the Offer Amount has been tendered, the principal
amount of all Senior Secured Notes tendered in response to the Purchase Offer.
Payment for any Senior Secured Notes so purchased shall be made in the same
manner as interest payments are made.
(b) INTEREST PAYMENTS. If the Purchase Date is on or after a Record
Date and on or before the related Interest Payment Date, any accrued and unpaid
interest to the Purchase Date shall be paid on the Purchase Date to the Lender
in whose name a Senior Secured Note is registered on the Note Register at the
close of business on such Record Date, and no additional interest shall be
payable to Lenders who tender Senior Secured Notes pursuant to the Purchase
Offer.
35
42
(c) OFFER NOTICE. Upon the commencement of a Purchase Offer, the
Borrower shall send, by first class mail, a notice to each of the Lenders. The
notice shall contain all instructions and materials necessary to enable the
Lenders to tender Senior Secured Notes pursuant to the Purchase Offer. The
Purchase Offer shall be made to all Lenders. The notice, which shall govern the
terms of the Purchase Offer, shall state:
(i) that the Purchase Offer is being made pursuant to this
Section 2.5 and Section 5.10 or Section 5.14, as the case may be, and the
length of time the Purchase Offer shall remain open,
(ii) the Offer Amount, the purchase price and the Purchase
Date,
(iii) that any Senior Secured Note not tendered or accepted
for payment shall continue to accrue interest,
(iv) that, unless the Borrower defaults in making such
payment, any Senior Secured Note accepted for payment pursuant to the
Purchase Offer shall cease to accrue interest after the Purchase Date,
(v) that Lenders electing to have a Senior Secured Note
purchased pursuant to any Purchase Offer shall be required to tender the
Senior Secured Note to a depositary appointed by the Borrower at an
address in the Borough of Manhattan in the City of New York specified in
the notice at least three Business Days before the Purchase Date,
(vi) that Lenders shall be entitled to withdraw their election
if the Borrower or the depositary, as the case may be, receives, not later
than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Lender, the principal
amount of the Senior Secured Note the Lender tendered for purchase and a
statement that such Lender is withdrawing his election to have such Senior
Secured Note purchased, and
(vii) that, if the aggregate principal amount of Senior
Secured Notes tendered by Lenders exceeds the Offer Amount, the Senior
Secured Notes shall be selected for purchase ratably (in proportion to the
relative amounts tendered for purchase), and that Lenders whose Senior
Secured Notes were purchased only in part shall be issued new Senior
Secured Notes equal in principal amount to the unpurchased portion of the
Senior Secured Notes that were tendered.
(d) ACCEPTANCE AND PAYMENT. On or before the Purchase Date, the
Borrower shall accept for payment the Offer Amount of Senior Secured Notes or
portions thereof tendered pursuant to the Purchase Offer, ratably (in proportion
to the relative amounts tendered for purchase) if more than the Offer Amount has
been tendered or, if less than the Offer Amount has been tendered, all Senior
Secured Notes tendered, and shall deliver to the
36
43
Lenders an Officers' Certificate stating that such Senior Secured Notes or
portions thereof were accepted for payment by the Borrower in accordance with
the terms of this Section 2.5. The Borrower or the Depository, as the case may
be, shall promptly (but in any case not later than five days after the Purchase
Date) mail or deliver to each tendering Lender an amount equal to the purchase
price of the Senior Secured Notes tendered by such Lender and accepted by the
Borrower for purchase, and the Borrower shall promptly issue a new Senior
Secured Note and mail or deliver such new Senior Secured Note to such Lender, in
a principal amount equal to any unpurchased portion of the Senior Secured Note
that was tendered. Any Senior Secured Note not so accepted shall be promptly
mailed or delivered by the Borrower to the Lender that is the holder thereof.
The Borrower shall notify each Lender of the results of the Purchase Offer on
the Purchase Date.
(e) COMPLIANCE. If applicable, the Borrower shall comply with the
requirements of Rule 14e-1 under the Exchange Act, and any other securities laws
and regulations thereunder to the extent such laws or regulations are applicable
in connection with the repurchase of the Senior Secured Notes pursuant to a
Purchase Offer.
(f) APPLICATION OF OTHER PROVISIONS. Other than as specifically
provided in this Section 2.5, any purchase pursuant to this Section 2.5 shall be
made pursuant to the provisions of Sections 2.4 to the extent applicable.
(g) RETIREMENT OF REPURCHASED NOTES. Senior Secured Notes purchased
by the Borrower pursuant to a Purchase Offer shall be retired and may not be
reissued.
SECTION 2.6. YIELD PROTECTION. (a) INCREASED COSTS. If any Change in
Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any holding company of
any Lender (except any such reserve requirement reflected in the One-Month
LIBO Rate), or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or any Loans outstanding to such
Lender,
and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Loan or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender
for such additional costs incurred or reduction suffered.
(b) CAPITAL COSTS. If any Lender determines that any Change in Law
regarding capital requirements increases or could reasonably be expected to have
the effect of increasing the amount or cost of capital required or expected to
be maintained by such Lender
37
44
or any corporation controlling such Lender, or reduces or could reasonably be
expected to have the effect of reducing the rate of return on such capital, and
such Lender reasonably determines that the amount or cost of such capital is
increased, or the rate of return thereon is reduced, by or based upon the
existence or funding of such Lender's commitment to make or maintain loans under
this Agreement and other commitments of this type, to a level below that which
such Lender or such Lender's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's policies and the policies
of such Lender's holding company with respect to capital adequacy), then the
Borrower shall pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender in the light of
such circumstances, to the extent that such Lender in good faith determines such
increase in capital, or reduction in the rate of return, to be allocable to the
existence or funding of its commitment.
(c) PROOF OF COSTS. A certificate of a Lender setting forth the
amount or amounts necessary to compensate such Lender or its holding company, as
the case may be, as specified in Section 2.6(a) or Section 2.6(b), shall be
delivered to the Borrower and shall be final, conclusive and binding, absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
(d) LOOK-BACK LIMIT. The Borrower shall not be required to
compensate a Lender pursuant to this Section 2.6 for any increased costs or
reductions incurred more than 90 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor,
except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 90-day period referred to above shall be
extended to include the period of retroactive effect thereof. Subject to the
foregoing, no failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.6 shall constitute a waiver of such Lender's right to
demand such compensation.
(e) EURODOLLAR RESERVE COMPENSATION. If in any Monthly Interest
Period applicable to such Lender, Lender is required to maintain any reserves
(including any marginal, special, emergency or supplemental reserves) for any
eurocurrency funding or otherwise in respect of the Senior Secured Notes, then
upon demand by such Lender the Borrower will pay such Lender on the Interest
Payment Date for such Monthly Interest Period additional interest in an amount
equal, for each day on which such reserves are required to be maintained by such
Lender, to the difference between (i) interest for such day at the One-Month
LIBO Rate determined for such Monthly Interest Period (the "Reference Rate
Interest") multiplied by a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the
aggregate amount (expressed as a decimal) certified by such Lender in a notice
delivered to the Borrower, to be the reserve percentage (including any marginal,
special, emergency or supplemental reserves) established by the Board and in
effect as to such Lender for such day for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board),
including all reserve percentages imposed pursuant to such Regulation D, and
(ii) the Reference Rate Interest for such day.
38
45
SECTION 2.7. BREAKAGE COSTS. In the event of the payment of any
principal of any Loan other than on the last day of a Monthly Interest Period
applicable thereto (including as a result of any required or voluntary
prepayment or any required purchase offer or any Event of Default), the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. Such loss, cost or expense to any Lender shall be the amount determined
by such Lender to be the excess, if any and only if a positive number, of (a)
the amount of interest that would have accrued on the principal amount of such
Loan had such event not occurred, at the One-Month LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Monthly Interest Period therefor, over (b) the
amount of interest that would accrue on such principal amount for such period at
the One-Month LIBO Rate determined as of the second Business Day preceding the
date of such event. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section 2.7
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
SECTION 2.8. TAXES. (a) PAYMENTS FREE FROM TAXES. Any and all
payments by or on account of any obligation of the Borrower hereunder or under
any other Note Document shall be made free and clear of and without deduction
for any Indemnified Taxes. If, nevertheless, the Borrower shall be required to
deduct any Indemnified Taxes from such payments, then (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.8) each Lender receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Entity in accordance with applicable law.
(b) PAYMENT OF OTHER TAXES. In addition, the Borrower shall pay any
Other Taxes to the relevant Governmental Entity in accordance with applicable
law.
(c) TAX INDEMNITY. The Borrower shall indemnify ▇▇▇▇▇▇ Brothers and
its Affiliates and each Lender, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes paid by any of them on or with
respect to any payment by or on account of any obligation of the Borrower
hereunder or under any other Note Document (including Indemnified Taxes imposed
or asserted on or attributable to amounts payable under this Section 2.8) and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Entity. A
certificate as to the amount of such payment or liability delivered to the
Borrower by the applicable Indemnified Person shall be conclusive absent
manifest error.
(d) DELIVERY OF RECEIPT. As soon as practicable after any payment of
Indemnified Taxes by the Borrower to a Governmental Entity, the Borrower shall
deliver to the affected Person the original or a certified copy of a receipt
issued by such Governmental Entity evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to such Person.
39
46
(e) FOREIGN LENDER CERTIFICATION. Any Foreign Lender shall deliver
to the Borrower two copies of either United States Internal Revenue Service Form
1001 or Form 4224, or, in the case of a Foreign Lender's claiming exemption from
U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest," a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Foreign Lender delivers a
Form W-8, a certificate representing that such Foreign Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Foreign Lender claiming complete exemption from, U.S. Federal withholding tax on
payments by the Borrower under this Agreement and the other Note Documents. Such
forms shall be delivered by each Foreign Lender on or before the date it becomes
a party to this Agreement (or, in the case of a transferee that is a
participation holder on or before the date such participation holder becomes a
Transferee hereunder) and on or before the date, if any, such Foreign Lender
changes its applicable lending office by designating a different lending office
(a "New Lending Office"). In addition, each Foreign Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Foreign Lender. Notwithstanding any other provision of this
Section 2.8(e), a Foreign Lender shall not be required to deliver any form
pursuant to the preceding sentence of this Section 2.8(e) that such Foreign
Lender is not legally able to deliver.
(f) EFFECT OF FAILURE TO COMPLY. The Borrower shall not be required
to indemnify any Foreign Lender or to pay any additional amounts to any Foreign
Lender in respect of U.S. Federal withholding tax pursuant to Section 2.8(a) or
Section 2.8(c) to the extent that the obligation to pay such additional amounts
would not have arisen but for a failure by such Foreign Lender to comply with
the provisions of Section 2.8(e). Should a Lender become subject to Taxes
because of its failure to deliver a form required hereunder, Borrower shall, at
Lender's expense, take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
SECTION 2.9. PRO RATA PAYMENTS; SHARING OF SETOFFS.
(a) RATABLE PAYMENTS. The Borrower shall make all payments then due
(including by virtue of a voluntary prepayment) on the Senior Secured Notes
concurrently, without preference of one Lender over another.
(b) DISPROPORTIONATE PAYMENTS. If any Lender shall receive from the
Borrower or any Guarantor or shall otherwise obtain, by exercising any right of
setoff or counterclaim or otherwise, any payment in respect of any principal of
or interest on its Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and accrued interest thereon
than the proportion received by any other Lender in respect of its Loans and
accrued interest thereon then owed and due, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest then owed and due on their
respective Loans without giving effect to any such
40
47
disproportionate payment. If any such participations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest. The provisions of this Section 2.9(b) shall not be
construed to apply to any payment made by the Borrower at any time when no Event
of Default has occurred and is continuing on account of any Note Liabilities
other than the principal of or interest on Senior Secured Notes. The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
SECTION 2.10. REPLACEMENT OF LENDER. If any Lender gives notice of
illegality pursuant to Section 2.3(h) or requests compensation under Section
2.6, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
2.8, then the Borrower may, at its sole expense and effort, upon notice to such
Lender and each other Lender, require such Lender to assign and transfer all
(but not less than all) Senior Secured Notes held by it, without recourse and
pursuant to an Assignment and Acceptance (in accordance with and subject to the
restrictions contained in Section 7.3), to an assignee that shall assume all of
such Lender's obligations under this Agreement (which assignee may be another
Lender willing to accept such assignment), but (in each case) only if (a) such
Lender has received payment of an amount equal to 100% of the principal balance
and all accrued and unpaid interest outstanding on such Senior Secured Notes and
all other Note Liabilities outstanding to such Lender, from the assignee (to the
extent of such outstanding principal and accrued interest) or the Borrower (in
the case of all other Note Liabilities) and (b) in the case of any such
assignment resulting from a claim for compensation under Section 2.6 or payments
required to be made pursuant to Section 2.8, such assignment will result in a
reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and transfer if, prior thereto, as a result of a waiver
by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and transfer cease to apply.
SECTION 2.11. COMMITMENT REDUCTIONS.
(a) The commitment to make Tranche One Loans of each Tranche One
Lender automatically reduced to zero on the Original Closing Date after the
Tranche One Loans were made, and such commitments may not be reinstated.
(b) On the earliest to occur of (1) September 30, 1998, if the
Borrower has not borrowed at least $250,000,000 in Tranche Two Loans on or prior
to such date, (2) the last day of the Availability Period, after giving effect
to any Tranche Two Loans made on such date, (3) the occurrence of a Change of
Control, (4) the Maturity Date and (5) the Acceleration Date, the Tranche Two
Commitment, if any, of each Lender shall automatically reduce to zero and may
not be reinstated.
(c) The Borrower may reduce or terminate the Tranche Two Commitments
at any time and from time to time in whole or in part; provided, that such
reduction shall be of
41
48
an identical percentage of each Tranche Two Lender's Tranche Two Commitment.
Each such reduction of Tranche Two Commitments must be in an aggregate amount
for all Tranche Two Lenders of not less than $50,000,000 (and in increments of
$50,000,000 in excess thereof). If the Borrower reduces the Tranche Two
Commitments pursuant to this Section 2.11(c) to an aggregate amount less than
$50,000,000, then all of the Tranche Two Commitments shall be reduced to zero
and may not be reinstated. Once reduced, no portion of the Tranche Two
Commitments may be reinstated.
(d) On each date after the Effective Date on which the Borrower,
Starwood REIT or any Subsidiary of either of them receives any Securities
Proceeds in excess of the amount of Securities Proceeds required to be applied
on such date as set forth in Section 2.4(f) ("Securities Excess Proceeds"), each
Tranche Two Lender's Tranche Two Commitment shall be reduced in an amount equal
to such Lender's Commitment Percentage of the amount of such Securities Excess
Proceeds and may not be reinstated.
ARTICLE III.
CONDITIONS
SECTION 3.1. EFFECTIVE DATE. The effectiveness of this amendment and
restatement of the Original Agreement and the obligation of each Tranche Two
Lender to make Tranche Two Loans are subject to the satisfaction or waiver by
the Required Lenders on or prior to August 31, 1998 of the following conditions
precedent:
(a) NOTE AGREEMENT. The Borrower shall have delivered to the Lenders
counterparts of this Agreement duly executed by each Person identified therein
as a signatory party thereto.
(b) SENIOR SECURED NOTES. The Borrower shall have delivered to each
Tranche Two Lender, or the designee of each such Lender, a Tranche Two Note duly
executed by the Borrower made payable to the order of such Lender in the amount
of such Lender's Tranche Two Commitment, with the Confirmation of Guaranty
thereon duly executed by Starwood REIT.
(c) ENGAGEMENT LETTER AND FEE LETTER. The Borrower shall have
delivered to LCPI the Engagement Letters and the Fee Letters, duly executed by
each party thereto.
(d) CREDIT FACILITY DOCUMENTS. The Borrower shall have delivered to
each Lender copies (certified by an officer of the Borrower to be true, correct
and complete) of all other Transaction Documents and all certificates, opinions
and reports delivered thereunder.
(e) CLOSING CERTIFICATE. The Borrower shall have delivered to the
Lenders a certificate in substantially the form of Exhibit C, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower and attaching the documents described therein.
(f) OPINIONS OF COUNSEL. The Borrower shall have delivered to the
Lenders opinions of counsel in form satisfactory to the Administrative Agent.
42
49
(g) PLEDGE AGREEMENT SHARING ENTITLEMENT NOTICE. The Borrower shall
have delivered to the Lenders a Notice of Pledge Agreement Entitlement in
substantially the form of Exhibit E duly executed by the Borrower and Starwood
REIT, with the Confirmation of Receipt and Approval appended thereto duly
executed by the Persons named thereon.
(h) CONSENTS. Required Lenders (taking into account only outstanding
Tranche One Loans) shall have consented to this amendment and restatement of the
Original Agreement and the requisite lenders under the Bank Credit Facility
shall have consented to the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the making of
the Tranche Two Loans and the use of the proceeds thereof for each of the
purposes specified in Section 2.1(g).
(i) LEGAL MATTERS. LCPI shall have received such other documents as
it or its special counsel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, may reasonably request.
(j) FEES AND COSTS. LCPI shall have received payment of all fees,
expense reimbursements and other amounts due and payable under the Note
Documents.
(k) OTHER MATTERS. The Borrower shall not have been notified in
writing by Required Lenders that:
(i) Any law, litigation or legal, judicial or administrative
proceeding is in effect, pending or threatened that substantially
restricts or seeks injunctive or compensatory relief in respect of the
Transactions or that could reasonably be expected to adversely affect the
ability of the parties to consummate, the Transactions or to have a
Material Adverse Effect,
(ii) Any consents or approvals required to be obtained from
any Governmental Entity or, except as disclosed in the Disclosure
Schedule, any other Person in connection with the Transactions or for the
Borrower or any Guarantor to conduct business, pay its liabilities and
perform its contractual obligations following the Effective Date has not
been obtained or is not in full force and effect, or any applicable
waiting period or appeal period has not expired, or any burdensome
conditions have been imposed with respect thereto, or any action by any
Governmental Entity is pending or threatened that could reasonably be
expected to restrain, prevent or impose burdensome conditions on the
Transactions or such conduct of business, payment of liabilities and
performance of contractual obligations,
(iii) An event has occurred at any time after January 14,
1998, or any information has been disclosed to the Lenders after the date
of this Agreement relating to any event that occurred or condition that
existed at any time, that has or could reasonably be expected to result in
a Material Adverse Effect,
(iv) Any representation, warranty or factual statement made by
43
50
any Loan Party in any of the Transaction Documents is in any material
respect not true and correct, or
(v) A Default has occurred and is continuing.
(l) OTHER CONDITIONS. Each of the additional conditions precedent
set forth on Schedule D hereto shall have been satisfied or waived.
The obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 11.2) at or prior to 3:00 p.m., New York City time, on
August 31, 1998. If such conditions are not so satisfied or waived by such time,
each Lender's obligation to make Loans hereunder shall terminate and this
amendment and restatement shall not become effective.
The execution and delivery of this Agreement by the Borrower on the
Effective Date shall constitute a representation and warranty by the Borrower
and each Guarantor to the effect that the applicable conditions precedent set
forth in this Article III are satisfied on the Effective Date.
SECTION 3.2. CONDITIONS PRECEDENT TO ALL TRANCHE TWO LOANS. The
obligation of each Tranche Two Lender to fund any requested Tranche Two Loan is
subject to the following additional conditions precedent, and each Notice of
Borrowing and each acceptance of the proceeds of a Tranche Two Loan shall
constitute a representation and warranty by the Borrower that such conditions
are satisfied:
(a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement and the other Note Documents shall be
true and correct in all material respects on and as of the date of such Notice
of Borrowing and on and as of the date such Loan is made, as if then made, other
than representations and warranties that expressly relate solely to an earlier
date;
(b) NO DEFAULTS. No Default or Event of Default shall have occurred
and be continuing, or would result from the making of the requested Loan; and
(c) NO ADVERSE CHANGE. No event or condition shall have occurred
since January 14, 1998 which has had or would reasonably be expected to have a
Material Adverse Effect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Each Loan Party hereby agrees with, and represents and warrants to,
LCPI and the Lenders that, as of the Original Closing Date, the Effective Date
and the date of the making of each Tranche Two Loan hereunder (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date), in each case except as
otherwise set forth in the Disclosure Schedule:
44
51
SECTION 4.1. REPRESENTATIONS AND WARRANTIES IN THE ACQUISITION
AGREEMENT AND THE BANK CREDIT FACILITY. Each of the representations and
warranties made by any Loan Party contained in the Bank Credit Facility or in
the Acquisition Agreement or any other Transaction Document, as set forth
therein on the Original Closing Date without regard to any subsequent waiver
thereof or amendment thereto, was true and correct in all material respects on
the Original Closing Date and is hereby incorporated herein by reference as if
set forth at length herein. Each of the representations and warranties made by
any Loan Party contained in the Bank Credit Facility, as set forth therein on
the Effective Date without regard to any waiver thereof or amendment thereto
after the Effective Date, is and shall be true and correct in all material
respects on the Effective Date and on the date of the making of each Tranche Two
Loan hereunder and is hereby incorporated herein by reference as if set forth at
length herein. A true copy of the Disclosure Schedule is attached hereto as
Schedule 4.1.
SECTION 4.2. ORGANIZATION; GOOD STANDING. Each Loan Party has been
duly incorporated, duly organized or duly constituted and is a validly existing
corporation, limited partnership, real estate investment trust or limited
liability company in good standing under the laws of its jurisdiction of
organization, with corporate, trust, partnership or other necessary power and
authority to own, lease and operate its properties and conduct its business as
it is being conducted and is duly qualified to do business and is in good
standing as a foreign corporation, trust, limited partnership, or limited
liability company in all jurisdictions in which it owns, leases or operates
substantial properties or in which the conduct of its business requires such
qualification except where the failure to so qualify will not cause a Material
Adverse Effect.
SECTION 4.3. DUE AUTHORIZATION AND ENFORCEABILITY.
(a) TRANSACTION DOCUMENTS. Each of the Transaction Documents (i) has
been duly authorized, executed and delivered by each Loan Party that is a party
thereto and (ii) constitutes a valid and binding obligation of such Loan Party
enforceable against it in accordance with its terms, except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights generally
and by general principles of equity (whether arising under a proceeding at law
or in equity).
(b) SENIOR SECURED NOTES. The Senior Secured Notes have been duly
authorized by the Borrower and, when executed and delivered to any Lender
pursuant to the terms of this Agreement against funding of the applicable Loan
made by such Lenders, are valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their terms, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforceability
of creditors' rights generally and by general principles of equity (whether
arising under a proceeding at law or in equity).
(c) LOAN PARTIES. Except for Subsidiaries that are Loan Parties, no
Subsidiary of the Borrower or Starwood REIT has guaranteed any Credit Facility
Obligation or
45
52
has granted or agreed to grant or become subject to any Lien securing any Credit
Facility Obligation.
(d) PLEDGE AGREEMENT BENEFITS. The Senior Secured Notes constitute
Obligations that are Senior Secured Note Obligations pursuant to subclause (v)
of Section 1(a) of the Pledge Agreement. The principal of and interest on the
Senior Secured Notes and the loans and indebtedness evidenced thereby and all
other Note Liabilities are and shall be secured by all security interests and
liens upon all collateral security granted to Bankers Trust Company as
Collateral Agent pursuant to the Pledge Agreement, on the terms and conditions
therein set forth.
(e) COLLATERAL. Neither the Borrower nor Starwood REIT nor any of
their Subsidiaries has agreed to secure, or has granted or become subject to any
Lien securing, any Credit Facility Obligations, except pursuant to the Pledge
Agreement. The Senior Secured Liabilities are, and any Indebtedness incurred to
refinance the Senior Secured Notes is permitted under the Bank Credit Facility
to be and shall be, equally and ratably secured by all Collateral under the
Pledge Agreement. All actions required under the Pledge Agreement to extend the
benefit of the collateral security thereunder to the Note Liabilities have been
duly and effectually taken and completed.
(f) SUBORDINATION. No Indebtedness or other liabilities owed by one
of the Borrower, Starwood REIT or their Subsidiaries to one or more of the
others of them has been contractually subordinated to the payment of any Credit
Facility Liabilities, except Indebtedness and other liabilities that are
subordinated, to at least the same extent, to the payment of the Note
Liabilities.
SECTION 4.4. AFFILIATE GUARANTY. The Affiliate Guaranty has been
duly authorized by each Guarantor and is a valid and binding obligation of each
Guarantor, enforceable against each of them in accordance with its terms, except
as enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforceability
of creditors' rights generally and by general principles of equity (whether
arising under a proceeding at law or in equity).
SECTION 4.5. NO CONFLICTS.
(a) NO VIOLATION. Neither the execution and delivery of any
Transaction Document nor the consummation of any of the Transactions nor
compliance with the terms and provisions hereof or thereof (i) violates or will
violate any law or regulation or any order or decree of any court or
Governmental Entity applicable to any Loan Party or any Restricted Subsidiary or
by which any of their respective properties or assets may be bound, (ii)
constitutes or will constitute a breach or a violation of, any of the terms or
provisions of, or a default under, the organizational documents (including any
certificate of incorporation or bylaws) or any other corporate or organizational
restriction, as applicable, of any Loan Party or any Restricted Subsidiary or
(iii) conflicts with or will result in the breach of, or constitutes a default
under, any contract to which a Loan Party or any Restricted Subsidiary is a
party or by which any of
46
53
them or any of their respective assets may be bound, except in the case of
clause (iii) where such breach, violation or conflict will not cause a Material
Adverse Effect.
(b) NO UNOBTAINED APPROVALS. No consent, approval, authorization or
order of, or any registration or filing with, any Governmental Entity that has
not been obtained or made is or will be required in connection with the
execution and delivery of the Transaction Documents by any Loan Party or the
consummation of the Transactions.
SECTION 4.6. NO VIOLATION OF MARGIN REGULATION. None of the
transactions contemplated by this Agreement (including the use of the proceeds
from the issuance of the Senior Secured Notes and the pledge of the Class A
Shares following the Reorganization) will violate or result in a violation of
Section 7 of the Exchange Act, or any rule or regulation issued pursuant
thereto, including the Margin Regulations.
SECTION 4.7. GOVERNMENTAL REGULATIONS. No Loan Party or Subsidiary
of a Loan Party is or will be subject to regulation under the Investment Company
Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, the Federal Power Act, the Interstate Commerce Act or to any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness for borrowed money.
SECTION 4.8. FULL DISCLOSURE. None of the Exchange Act Documents,
none of the representations, warranties and factual statements made by any Loan
Party in any of the Transaction Documents and no other information, report,
Financial Statement or certificate delivered or to be delivered to LCPI, ▇▇▇▇▇▇
Brothers or the Lenders in connection with the Note Documents or in connection
with or in anticipation of the Transactions contains or will contain, as of the
date thereof, any untrue statement of material fact or omitted or omits or will
omit to state a material fact necessary to make such statements not misleading
in light of the circumstances in which such statements were made. It is
understood, however, that to the extent the Exchange Act Documents or any such
information, report, Financial Statement or certificate includes projections,
such projections are based upon good faith estimates and assumptions believed to
be reasonable at the time made and are not to be viewed as facts. Actual results
during the period or periods covered by such projections may differ from the
projected results.
SECTION 4.9. FINANCIAL CONDITION; SOLVENCY. Giving due effect to
rights of reimbursement and contribution reserved under the Affiliate Guaranty,
(a) the fair value of the assets of each Loan Party exceeds its debts and
liabilities, direct, subordinated, contingent or otherwise, (b) the present fair
salable value of the property of each Loan Party is greater than the amount that
will be required to satisfy its probable liability on its debts and other
liabilities, direct, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party is able to
pay its debts and liabilities, direct, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (d) no Loan Party
will have unreasonably small capital with which to conduct the business in which
it is engaged as such business is now conducted and is proposed to be conducted
following the Effective Date. No Loan Party intends to incur debts beyond its
ability to pay such debts as they mature, taking into account the timing and
amounts of cash to be
47
54
received by it and the timing and amounts of cash to be payable on or in respect
of its Indebtedness.
SECTION 4.10. NO MATERIAL ADVERSE CHANGE. No event has
occurred since January 14, 1998 that has had, or could reasonably be expected
to have, a Material Adverse Effect.
ARTICLE V.
COVENANTS
So long as any of the principal of or interest on the Senior Secured
Notes shall be unpaid or any Tranche Two Commitment remains outstanding, the
Borrower and each of the Guarantors covenants and agrees with the Lenders as
follows:
SECTION 5.1. PAYMENT OF SENIOR SECURED NOTES. The Borrower shall pay
or cause to be paid the principal of and interest on the Senior Secured Notes at
the rates and on the dates and in the manner provided in this Agreement and the
Senior Secured Notes.
SECTION 5.2. MAINTENANCE OF OFFICE OR AGENCY.
(a) MAINTENANCE OF OFFICE OR AGENCY. The Loan Parties shall maintain
an office or agency where Senior Secured Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Borrower or the Guarantors in respect of the Senior Secured Notes and
this Agreement may be served. The Loan Parties shall give prompt written notice
to the Lenders of the location, and any change in the location, of such office
or agency.
(b) OTHER OFFICES OR AGENCIES. The Borrower may also from time to
time designate one or more other offices or agencies where the Senior Secured
Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations. The Borrower shall give prompt written
notice to the Lenders of any such designation or rescission and of any change in
the location of any such other office or agency.
SECTION 5.3. REPORTS. The Borrower and Starwood REIT shall provide
to the Lenders, within 15 days after they file them with the SEC, copies of
their annual report and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rule or
regulation prescribe) which the Borrower or Starwood REIT is required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Borrower or Starwood REIT may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
or otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations promulgated by
the SEC, the Borrower and Starwood REIT shall continue to provide each Lender
with, without cost to any Lender, (a) within 90 days after the end of each
fiscal year, annual reports on Form 10-K (or any successor form) containing the
information required to be contained therein (or required in such successor
form); (b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, reports on Form
48
55
10-Q (or any successor form); and (c) promptly from time to time after the
occurrence of an event required to be therein reported, such other reports on
Form 8-K (or any successor form) containing the information required to be
contained therein (or required in any successor form). The Borrower and Starwood
REIT shall in all cases, without cost to each recipient, provide copies of such
information to the Lenders and shall make available such information to
prospective purchasers and to securities analysts and broker-dealers upon their
request. In addition, the Borrower and Starwood REIT shall, for so long as any
Senior Secured Notes remain outstanding, furnish to the Lenders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. Notwithstanding anything to the contrary herein, no Lender and
no other Person shall have any duty to review such document for purposes of
determining compliance with any provisions of this Agreement.
SECTION 5.4. COMPLIANCE CERTIFICATION.
(a) OFFICERS' CERTIFICATE. The Borrower and Starwood REIT shall
deliver to each Lender, within 90 days after the end of each fiscal year, an
Officers' Certificate stating that a review of the activities of the Borrower
and Starwood REIT and their Subsidiaries during the preceding fiscal year has
been made under the supervision of the signing Officers of the Borrower and
Starwood REIT with a view to determining whether each Loan Party is in
compliance with this Agreement and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge each Loan
Party is in compliance with each and every covenant contained in this Agreement
and is not in default in the performance or observance of any of the terms,
provisions and conditions of this Agreement (or, if a Default or Event of
Default shall exist, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action the Loan Parties are taking or
propose to take with respect thereto) and that to the best of his or her
knowledge no event has occurred that remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Senior
Secured Notes is prohibited or if such event exists, a description of the event
and what action the Loan Parties are taking or propose to take with respect
thereto.
(b) AUDITORS' STATEMENT. So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 5.3 shall be
accompanied by a written statement of the Borrower's and Starwood REIT's
independent public accountants (who shall be a firm of established national
reputation) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that any Loan Party is in violation of any provisions of Article V or
Article VI or, if any such violation exists, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) NOTICE OF DEFAULT. The Borrower and Starwood REIT shall, so long
as any of the Senior Secured Notes are outstanding, deliver to each Lender,
within ten Business Days after any Officer becomes aware of any Default or Event
of Default or any event of default under any document, instrument or agreement
representing Indebtedness of the
49
56
Borrower or Starwood REIT, an Officers' Certificate specifying such Default,
Event of Default or event of default and what action the Borrower and Starwood
REIT are taking or propose to take with respect thereto.
SECTION 5.5. TAXES. The Borrower and Starwood REIT shall pay, and
shall cause each Restricted Subsidiary to pay, prior to delinquency, all
material taxes, assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where the failure to
effect such payment would not have any Material Adverse Effect.
SECTION 5.6. STAY, EXTENSION AND USURY LAWS. Each of the Borrower
and the Guarantors covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Agreement; and each of the Borrower and the Guarantors
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
any Lender, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 5.7. RESTRICTED PAYMENTS. The Borrower and Starwood REIT
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly: (i) declare or pay any dividend or make any distribution on account
of any of the Borrower's or Starwood REIT's or any Restricted Subsidiary's
Equity Interests (including any payment in connection with any merger or
consolidation involving either of the Borrower or Starwood REIT) or to the
direct or indirect holders of either of the Borrower's or Starwood REIT's Equity
Interests in their capacity as such (other than (A) dividends or distributions
by the Borrower or Starwood REIT payable in Equity Interests (other than
Disqualified Stock) of the Borrower and/or Starwood REIT (or accretions
thereon); or (B) dividends or distributions paid to the Borrower or Starwood
REIT or a Restricted Subsidiary); (ii) purchase, redeem or otherwise acquire or
retire for value (including, without limitation, in connection with any merger
or consolidation involving either of the Borrower or Starwood REIT) any Equity
Interests of the Borrower, Starwood REIT or any Restricted Subsidiary (other
than any such Equity Interests owned by the Borrower, Starwood REIT or any
Restricted Subsidiary); (iii) make any payment on or with respect to or
purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness of the Borrower, Starwood REIT or any Restricted
Subsidiary (other than, in each case, scheduled interest and principal payments
with respect to any such Subordinated Indebtedness); (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Borrower would, after giving pro forma effect to such
Restricted Payment as if such Restricted Payment had been made at the beginning
of the applicable
50
57
four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 5.9 (applying only
clauses (1) and (2) and not clause (3) thereof); and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Borrower, Starwood REIT and the
Restricted Subsidiaries after the Original Closing Date (excluding Restricted
Payments permitted by clauses (ii), (iii), (vi), (ix), (x), (xii), (xiii), (xiv)
and (xv) of the next succeeding paragraph and including the other Restricted
Payments permitted by the next paragraph), is less than the sum of (X) an amount
equal to (1) for as long as, and for the period during which, Starwood REIT
qualifies as a REIT under the Code, 90% (or, for the portion of any such period
from and after the Reorganization Date, 50%) of the Combined Funds From
Operations of the Borrower and Starwood REIT for the period (taken as one
accounting period) from December 31, 1997 to the end of the Borrower's and
Starwood REIT's most recently ended fiscal quarter for which internal financial
statements are available (or, in the case such Combined Funds From Operations
for such period is a deficit, minus 100% of such deficit), plus (2) for as long
as and for the period during which Starwood REIT does not qualify as a REIT
under the Code, 50% of the Combined Net Income of the Borrower and Starwood REIT
for the period (taken as one accounting period) commencing at the end of the
fiscal quarter during which it failed to qualify as a REIT under the Code to the
end of the Borrower's and Starwood REIT's most recently ended fiscal quarter for
which internal financial statements are available (or, in the case such Combined
Net Income for such period is a deficit, minus 100% of such deficit), plus (Y)
without duplication, 100% of the aggregate net cash proceeds received by the
Borrower or Starwood REIT since the Original Closing Date from capital
contributions (other than from the Borrower, Starwood REIT or any Restricted
Subsidiary) or the issue or sale of Equity Interests (other than Disqualified
Stock) or debt securities of the Borrower or Starwood REIT that have been
converted into or exchanged for such Equity Interests of the Borrower or
Starwood REIT (other than Equity Interests or such debt securities of the
Borrower or Starwood REIT sold to the Borrower, Starwood REIT or a Restricted
Subsidiary and other than Disqualified Stock or debt securities that have been
converted into or exchanged for Disqualified Stock, excluding any Equity
Interests or debt securities that have been converted into Equity Interests, the
proceeds of which were applied, directly or indirectly, to the costs or expenses
of the Acquisition), plus (Z) to the extent not otherwise included in Combined
Funds From Operations or Combined Net Income, as the case may be, 100% of the
cash dividends or distributions or the amount of the cash principal and interest
payments received since the Original Closing Date by the Borrower, Starwood REIT
or any Restricted Subsidiary from any Unrestricted Subsidiary or in respect of
any Restricted Investment (other than dividends or distributions to pay
obligations of or with respect to such Unrestricted Subsidiary such as income
taxes) until the entire amount of the Investment in such Unrestricted Subsidiary
has been received or the entire amount of such Restricted Investment has been
returned, as the case may be, and 50% of such amounts thereafter. In the event
that the Borrower or Starwood REIT converts an Unrestricted Subsidiary to a
Restricted Subsidiary, the Borrower and Starwood REIT may add back to this
clause (c) the aggregate amount of any Investment in such Subsidiary that was a
Restricted Payment at the time of such Investment, with such Investment to be
valued at the lower of book value or fair market value at the time of
conversion.
51
58
The foregoing provisions will not prohibit
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at the date of declaration such payment would
have complied with the provisions of this Agreement;
(ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Borrower, Starwood REIT or any
Restricted Subsidiary, in each case, in exchange for, or out of the
proceeds of, the substantially concurrent sale or issuance (other than to
the Borrower, Starwood REIT or a Restricted Subsidiary) of Equity
Interests of the Borrower or Starwood REIT (other than any Disqualified
Stock); provided that the amount of any net cash proceeds from the sale of
such Equity Interests shall be excluded from clause (c) (Y) of the
preceding paragraph;
(iii) the defeasance, redemption, repurchase, retirement or
other acquisition of any Subordinated Indebtedness of the Borrower,
Starwood REIT or any Restricted Subsidiary in exchange for, or out of the
proceeds of, the substantially concurrent sale or issuance (other than to
the Borrower, Starwood REIT or a Restricted Subsidiary) of Subordinated
Indebtedness of the Borrower, Starwood REIT or such Restricted Subsidiary
or Equity Interests of the Borrower or Starwood REIT (other than
Disqualified Stock); provided, however, that (1) the principal amount of
such Subordinated Indebtedness incurred pursuant to this clause (iii)
shall not exceed the principal amount of the Subordinated Indebtedness so
redeemed, repurchased, retired or otherwise acquired (plus the amount of
reasonable expenses incurred and any premium paid in connection
therewith), (2) such Subordinated Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of the Subordinated Indebtedness being redeemed,
repurchased, retired or otherwise acquired, (3) such Subordinated
Indebtedness shall be subordinate in right of payment to the Senior
Secured Notes and Affiliate Guaranty on terms at least as favorable to the
Lenders in respect of the Senior Secured Notes and the Affiliate Guaranty
as those contained in the documentation governing the Subordinated
Indebtedness being redeemed, repurchased, retired or otherwise acquired
and (4) the net cash proceeds from the sale of any Equity Interests issued
pursuant to this clause (iii) shall be excluded from clause (c) (Y) of the
preceding paragraph;
(iv) any redemption or purchase by the Borrower, Starwood REIT
or any Restricted Subsidiary of Equity Interests or Subordinated
Indebtedness of the Borrower or Starwood REIT required by a Gaming
Authority in order to preserve a material Gaming License; provided, that
so long as such efforts do not jeopardize any material Gaming License, the
Borrower, Starwood REIT or such Restricted Subsidiary shall have
diligently tried to find a third-party purchaser for such Equity Interests
or Subordinated Indebtedness and no third-party purchaser acceptable to
the applicable Gaming Authority was
52
59
willing to purchase such Equity Interests or Subordinated Indebtedness
within a time period acceptable to such Gaming Authority;
(v) for so long as Starwood REIT is a REIT under the Code for
Federal income tax purposes, Starwood REIT may make cash distributions to
its shareholders in amount necessary to maintain its status as a REIT
under the Code;
(vi) intercompany payments, including without limitation, debt
repayments, between or among the Borrower, Starwood REIT and their
Restricted Subsidiaries or the payment of any dividend by a Subsidiary of
the Borrower or Starwood REIT to the Borrower, Starwood REIT or any
Restricted Subsidiary as the holder of its Equity Interests;
(vii) the repurchase of shares of, or options to purchase,
common stock of either of the Borrower or Starwood REIT from employees,
former employees, directors or former directors of the Borrower or
Starwood REIT or any Restricted Subsidiary (or permitted transferees of
such individuals), pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto), in each case, as
in effect on the date of this Agreement and as approved by the Board of
Directors under which such individuals purchase or sell, or are granted
the option to purchase or sell, shares of such common stock (the "Employee
Stock Buybacks");
(viii) repurchases of Capital Stock of the Borrower or
Starwood REIT deemed to occur upon exercise of stock options if such
Capital Stock represents a portion of the exercise price of such options;
(ix) WD Parent Corp. to pay regularly scheduled cash dividends
on the VNU Preferred Stock at a rate not to exceed 6% per annum and any
mandatory redemptions thereunder;
(x) WD Parent Corp. to otherwise redeem outstanding shares of
VNU Preferred Stock;
(xi) the purchase of UBS Shares prior to December 31, 1998 for
an aggregate consideration of up to $200,000,000;
(xii) other Restricted Payments not to exceed $135 million in
the aggregate in any calendar year pursuant to this clause (xii);
(xiii) the purchase for cash of up to $1.0 billion of the
Paired Common Shares of the Borrower and Starwood REIT;
(xiv) the acquisition or retirement for value of Equity
Interests in Newco and Starwood REIT pursuant to the Reorganization; and
53
60
(xv) Restricted Investments of up to $350,000,000 outstanding
at any one time,
provided, that at the time of, and after giving effect to, any Restricted
Payment permitted under clauses (ii) (to the extent that any Equity Interests
are redeemed, retired or acquired from the cash proceeds from the sale or
issuance of Equity Interests), (iii) (to the extent that any Subordinated
Indebtedness is defeased, redeemed, retired, repurchased or otherwise acquired
from the cash proceeds from the sale or issuance of other Subordinated
Indebtedness or Equity Interests), (v), (vii), (ix), (x), (xi), (xii), (xiii),
(xiv) and (xv) no Event of Default (and, in the case of clauses (xiii), (xiv)
and (xv), no Default) shall have occurred and be continuing or would occur as a
consequence thereof.
For purposes of determining the amount of Restricted Investments
outstanding at any time, all Restricted Investments shall be valued at their
fair market value at the time made, and no adjustments will be made for
subsequent changes in fair market value.
Not later than the date of filing any quarterly or annual report,
the Borrower and Starwood REIT shall deliver to each Lender an Officers'
Certificate stating that each Restricted Payment made in the prior fiscal
quarter was permitted and setting forth the basis upon which the calculations
required by this Section 5.7 were computed, which calculations may be based upon
the Borrower's and Starwood REIT's latest available financial statements.
SECTION 5.8. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Borrower and Starwood REIT shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to (a) (i) pay dividends
or make any other distributions to the Borrower or Starwood REIT or any
Restricted Subsidiary (A) on their Capital Stock or (B) with respect to any
other interest or participation in, or measured by, its profits, or (ii) pay any
Indebtedness owed to the Borrower, Starwood REIT or any Restricted Subsidiary
(other than in respect of the subordination of such Indebtedness to the Senior
Secured Notes, the Affiliate Guaranty or any other Indebtedness incurred
pursuant to the terms of this Agreement, as the case may be), (b) make loans or
advances to the Borrower, Starwood REIT or any Restricted Subsidiary or (c)
sell, lease, or transfer any of their properties or assets to the Borrower,
Starwood REIT or any Restricted Subsidiary, except (in each case) for such
encumbrances or restrictions existing under or by reason of (1) contractual
encumbrances or restrictions in effect on the Original Closing Date, (2) the
Bank Credit Facility (and any related security agreements) and any Guaranties
thereof, this Agreement, the Senior Secured Notes, the Affiliate Guaranty,
indebtedness incurred pursuant to clause (h) and (j) of Section 5.9 and any
related security agreements, (3) this Agreement, the Senior Secured Notes and
the Affiliate Guaranty, (4) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Borrower, Starwood REIT or any Restricted
Subsidiary as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (5) by reason of customary
non-assignment provisions in leases entered into in the
54
61
ordinary course of business, (6) purchase money obligations for property
acquired in the ordinary course of business or secured indebtedness permitted to
be incurred and secured hereby that impose restrictions of the nature discussed
in clause (c) above on the property so acquired or which secures such
indebtedness, (7) applicable law or any applicable rule or order of any Gaming
Authority, (8) customary restrictions imposed by asset sale or stock purchase
agreements relating to the sale of assets or stock by the Borrower, Starwood
REIT or any Restricted Subsidiary, (9) any encumbrances or restrictions imposed
by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (1) through (8) above,
provided, that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are, in the
good faith judgment of the Borrower and Starwood REIT, no more restrictive with
respect to such dividend and other payment restrictions than those contained in
the dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding, replacement
or refinancing, or (10) customary encumbrances or restrictions, pursuant to the
terms of Preferred Stock permitted to be issued pursuant to Section 5.9, on the
payment of dividends or distributions on the other Capital Stock of the issuer
of such Preferred Stock.
SECTION 5.9. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE
OF DISQUALIFIED STOCK. The Borrower and Starwood REIT shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable with
respect to (collectively, "incur" and correlatively, an "incurrence" of) any
Indebtedness (including Acquired Indebtedness) or any shares of Disqualified
Stock or Subsidiary Preferred Stock; provided, however, that the Borrower,
Starwood REIT or a Restricted Subsidiary may incur Indebtedness or issue shares
of Disqualified Stock or Subsidiary Preferred Stock if:
(1) the Fixed Charge Coverage Ratio for the most recently
ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date of such incurrence would have
been at least 2.0 to 1.0 determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the Disqualified Stock had been issued,
as the case may be, and application of proceeds had occurred at the
beginning of such four-quarter period,
(2) Combined Debt is no greater than 60% of Combined Adjusted
Total Assets, determined on a pro forma basis after giving effect to such
incurrence, and
(3) the aggregate principal amount of (A) all Indebtedness of
the Borrower and Starwood REIT that is secured by any Lien on any property
of the Borrower or Starwood REIT plus (B) all Disqualified Stock issued by
any Restricted Subsidiary other than Starwood REIT plus (C) all other
outstanding Subsidiary Preferred Stock plus (D) all Indebtedness of any
Restricted Subsidiary other than Starwood REIT (whether or not secured by
a Lien),
55
62
excluding (X) (so long as they are equally and ratably secured) the Bank
Credit Facility and the Senior Secured Notes and Guaranties thereof, (Y)
other Guaranties of Indebtedness of the Borrower or Starwood REIT and (Z)
any such Indebtedness, Disqualified Stock or Subsidiary Preferred Stock
that is owed to or held by the Borrower, Starwood REIT or any Restricted
Subsidiary, does not exceed 40% of Combined Adjusted Total Assets,
determined on a pro forma basis after giving effect to such incurrence.
The foregoing limitations will not apply to:
(a) the incurrence by the Borrower, Starwood REIT or any Restricted
Subsidiary of Indebtedness under the Bank Credit Facility and any Guaranties
thereof in an aggregate principal amount not to exceed at any one time
$3,100,000,000, less the aggregate amount of all principal repayments and
mandatory prepayments of term loans outstanding thereunder made after the
Original Closing Date and the amount of all reductions to revolving loan
commitments made after the Original Closing Date (in each case to the extent
that all required repayments in respect of such revolving loan commitment
reductions have actually been made), but excluding any principal repayments or
prepayments or commitment reductions to the extent same are made in connection
with the incurrence of refinancing indebtedness, whether in whole or in part,
under the Bank Credit Facility or a successor Bank Credit Facility;
(b) the incurrence by the Borrower, Starwood REIT or any Restricted
Subsidiary of any Existing Debt;
(c) the incurrence by the Borrower, Starwood REIT or any Restricted
Subsidiary of Indebtedness represented by the Senior Secured Notes and the
Affiliate Guaranty;
(d) the incurrence by the Borrower, Starwood REIT or any Restricted
Subsidiary of Indebtedness (the "Refinancing Indebtedness") issued in exchange
for, or the proceeds of which are used to extend, refinance, renew, replace,
substitute or refund Indebtedness referred to in the first paragraph of this
covenant or in clauses (b), (c), this clause (d), (h) or (j); provided, however,
that (1) the principal amount of such Refinancing Indebtedness shall not exceed
the principal amount of Indebtedness (or, in the case of Indebtedness with
original issue discount, the accreted value of such Indebtedness) so extended,
refinanced, renewed, replaced, substituted or refunded (plus the amount of
reasonable expenses incurred and any premium paid in connection therewith), (2)
if the Indebtedness being extended, refinanced, renewed, replaced, substituted
or refunded is subordinate in right of payment to the Senior Secured Notes, such
Refinancing Indebtedness shall be subordinate in right and priority of payment
to the Senior Secured Notes and the Affiliate Guaranty on terms at least as
favorable to the Lenders in respect of Senior Secured Notes and the Affiliate
Guaranty as those contained in the documentation governing any subordinated
Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded, and (3) the Refinancing Indebtedness shall have a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of the Indebtedness being extended, refinanced, renewed, replaced, substituted
or refunded;
56
63
(e) (1) intercompany Indebtedness between or among the Borrower,
Starwood REIT and any Restricted Subsidiary; provided, however, the obligations
to pay principal, interest or other amounts under such intercompany Indebtedness
is subordinated to the payment in full of the Senior Secured Notes and the
Affiliate Guaranty or (2) Disqualified Stock or Subsidiary Preferred Stock
issued to the Borrower, Starwood REIT or any Restricted Subsidiary;
(f) Hedging Obligations that are incurred (1) for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is not prohibited by the terms of this Agreement to be
outstanding or (2) for the purpose of fixing or hedging currency exchange rate
risk with respect to any currency exchanges;
(g) to the extent that such incurrence does not result in the
incurrence by the Borrower, Starwood REIT or any Restricted Subsidiary of any
obligation for the payment of borrowed money of others, Indebtedness incurred
solely in respect of performance bonds, completion guarantees and similar
obligations (other than standby letters of credit or bankers acceptances);
provided, that such Indebtedness was incurred in the ordinary course of business
of the Borrower, Starwood REIT or a Restricted Subsidiary;
(h) Acquired Indebtedness, provided that (i) such Indebtedness was
not incurred in connection with or in contemplation of the acquisition by which
such Acquired Indebtedness was acquired, and (ii) such Acquired Indebtedness
does not exceed 100% of the total value of the assets or of the entity so
acquired;
(i) the incurrence by the Borrower, Starwood REIT or any Restricted
Subsidiary of additional Indebtedness not otherwise permitted hereunder in an
aggregate amount at any time outstanding not to exceed $500 million; and
(j) the guaranty by the Borrower, Starwood REIT or any Restricted
Subsidiary of Indebtedness of the Borrower, Starwood REIT or a Restricted
Subsidiary that was permitted to be incurred by another provision of this
covenant.
The Borrower and Starwood REIT shall not permit any of their
Unrestricted Subsidiaries to incur any Indebtedness (including Acquired
Indebtedness) or issue any shares of Disqualified Stock, other than Non-Recourse
Indebtedness; provided, however, that if any such Unrestricted Subsidiary ceases
to remain an Unrestricted Subsidiary, such event shall be deemed to constitute
the incurrence of the Indebtedness in such Subsidiary by a Restricted
Subsidiary.
For purposes of determining compliance with this Section 5.9, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Indebtedness permitted in clauses (a) through (j) above or is
entitled to be incurred pursuant to the first paragraph of this Section 5.9, the
Borrower and Starwood REIT shall, in their sole discretion, classify such item
of Indebtedness in any manner that complies with this Section 5.9 and such item
of Indebtedness will be treated as having been incurred pursuant to only such
clause or clauses or pursuant to the first paragraph hereof. Accrual of
interest, the accretion of accreted
57
64
value or principal and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this Section 5.9.
The Borrower covenants and agrees that the Note Liabilities will at
all times rank pari passu in right of payment with all other senior indebtedness
of the Borrower and the Guarantors, including all Obligations under the Bank
Credit Facility, and that the Note Liabilities will at all times be senior in
right of payment to all Indebtedness of the Borrower and the Guarantors which is
contractually subordinated to any other Indebtedness of the Borrower or any
Guarantor.
SECTION 5.10. ASSET SALES. The Borrower and Starwood REIT shall not,
and shall not permit any Restricted Subsidiary to, consummate an Asset Sale,
unless (a) no Default or Event of Default exists or is continuing immediately
prior to or after giving effect to such Asset Sale, (b) the Borrower, Starwood
REIT, or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined by an Officer for any Asset Sale of less than $50.0 million
and as determined by the Board of Directors for any Asset Sale in excess of
$50.0 million and, in each case, as set forth in an Officers' Certificate
delivered to the Lenders annually) of the assets sold or otherwise disposed of
and (c) at least 75% of the consideration therefor received by the Borrower,
Starwood REIT or any Restricted Subsidiary, as the case may be, is in the form
of cash or Cash Equivalents or Investments that are not prohibited to be made
under Section 5.7; provided, however, that the amount of (A) any liabilities (as
shown on the Borrower's, Starwood REIT's, or such Restricted Subsidiary's, as
the case may be, most recent balance sheet or in the notes thereto) of the
Borrower, Starwood REIT, or such Restricted Subsidiary, as the case may be
(other than liabilities that are by their terms expressly subordinated to the
Senior Secured Notes and the Affiliate Guaranty), that are assumed by the
transferee of any such assets and (B) any notes or other obligations received by
the Borrower, Starwood REIT or any Restricted Subsidiary, as the case may be,
from such transferee that are converted by the Borrower, Starwood REIT or such
Restricted Subsidiary, as the case may be, into cash (to the extent of the cash
received) within 5 Business Days following the closing of such Asset Sale, shall
be deemed to be cash only for purposes of satisfying clause (y) of this Section
5.10 and for no other purpose.
Within 365 days after the Borrower's, Starwood REIT's or any
Restricted Subsidiary's receipt of the Net Proceeds of any Asset Sale (the
"Reinvestment Period"), such Person may apply the Net Proceeds from such Asset
Sale (i) to permanently reduce Credit Facility Liabilities (in such manner as to
reduce the amount available under Section 5.9(a)) or other Indebtedness that is
not Subordinated Indebtedness or (ii) in an investment in any one or more
business, capital expenditure or other tangible asset of the Borrower, Starwood
REIT or any Restricted Subsidiary, in each case, engaged, used or useful in the
business, in each case, with no concurrent obligation to make an offer to
purchase any Senior Secured Notes. Pending the final application of any such Net
Proceeds, the Borrower, Starwood REIT or such Restricted Subsidiary may
temporarily reduce Credit Facility Liabilities, if any, or otherwise invest such
Net Proceeds in Cash Equivalents. Any Net Proceeds from the Asset Sale that are
not invested or used to repay Indebtedness or as working capital within the
Reinvestment Period as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." When the aggregate
58
65
amount of Excess Proceeds exceeds $50.0 million, the Borrower shall, subject to
any repayment obligations owed to the lenders under the Bank Credit Facility,
make a Purchase Offer to all Lenders in respect of Senior Secured Notes to
purchase the maximum principal amount of Senior Secured Notes, that is an
integral multiple of $1,000, that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the aggregate principal
amount thereof, in each case, plus accrued and unpaid interest to the date fixed
for the closing of such offer, in accordance with the procedures set forth in
Section 2.5. To the extent that the aggregate amount of Senior Secured Notes
tendered pursuant to a Purchase Offer is less than the applicable Excess
Proceeds, the Borrower may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Senior Secured Notes
tendered by Lenders exceeds the amount of Excess Proceeds, the Senior Secured
Notes to be purchased shall be prepaid in accordance with Section 2.5. Upon
completion of any such Purchase Offer, the amount of Excess Proceeds shall be
deemed reset at zero.
SECTION 5.11. TRANSACTIONS WITH AFFILIATES. The Borrower and
Starwood REIT shall not, and shall not permit any Restricted Subsidiary to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guaranty with, or for the benefit of,
any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a)
such Affiliate Transaction is on terms that are no less favorable to the
Borrower, Starwood REIT or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Borrower, Starwood
REIT or such Restricted Subsidiary with an unrelated Person and (b) the Borrower
delivers to the Lenders (i) with respect to any Affiliate Transaction involving
aggregate payments in excess of (A) $5.0 million, an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above, or
(B) $10.0 million, a resolution adopted by a majority of the disinterested
directors of the Board of Directors approving such Affiliate Transaction and set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (a) above or if there are no disinterested members of the
Board of Directors, an opinion as to the fairness to the Borrower, Starwood REIT
or such Restricted Subsidiary from a financial point of view issued by an
Independent Financial Advisor. The foregoing provisions shall not apply to the
following: (1) any employment, indemnification, noncompetition or
confidentiality agreement entered into by any of the Borrower, Starwood REIT or
any of their Restricted Subsidiaries with their employees or directors in the
ordinary course of business; (2) the payment of reasonable fees to directors of
the Borrower, Starwood REIT or their Restricted Subsidiaries who are not
employees of the Borrower, Starwood REIT or their Restricted Subsidiaries; (3)
transactions between or among the Borrower, Starwood REIT and/or any of their
Restricted Subsidiaries; (4) with respect to the Borrower, Starwood REIT and any
Restricted Subsidiary, Restricted Payments permitted under Section 5.7; or (5)
the transactions contemplated by Schedule 9.06 in the Disclosure Schedule.
SECTION 5.12. LIENS.
(a) The Borrower and Starwood REIT shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly create, incur, assume or
suffer to exist any Lien on any asset owned as of the Original Closing Date or
thereafter acquired by the Borrower,
59
66
Starwood REIT or any such Restricted Subsidiary, or any income or profits
therefrom, or assign or convey any right to receive income therefrom, except, in
each case, Permitted Liens.
(b) The Borrower and Starwood REIT shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly create, incur, assume or
suffer to exist any Lien on any of their property or assets securing any
Obligations with respect to the Bank Credit Facility or any Guaranty thereof,
unless all Obligations under this Agreement and the Senior Secured Notes or the
Affiliate Guaranty, as the case may be, are equally and ratably secured until
such time as the Obligations with respect to the Bank Credit Facility and any
Guaranty thereof are not so secured; provided, that in the circumstances and to
the extent provided in the Bank Credit Facility, cash (and Cash Equivalents)
collateral may be delivered from time to time in accordance with the
requirements of the Bank Credit Facility without equally and ratably securing
the Note Liabilities.
(c) The Borrower and Starwood REIT shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create or assume any Lien
on the Collateral described in the Pledge Agreement, except for the Lien of the
Pledge Agreement. The Borrower and Starwood REIT shall not, and shall not permit
any Restricted Subsidiary to, permit or consent to any Indebtedness becoming an
Obligation secured by the Lien of the Pledge Agreement except for Credit
Facility Liabilities, the Senior Secured Liabilities, Eligible Hedging
Liabilities or the Senior Secured Notes or Affiliate Guaranty, the ITT Notes and
any refinancings thereof.
SECTION 5.13. CORPORATE EXISTENCE.
(a) MAINTAIN EXISTENCE. Subject to Article V and Article VI, each of
the Borrower and Starwood REIT and each of the other Guarantors shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate, trust or limited liability company existence, and the
corporate, limited liability company, partnership or other existence of each of
its Subsidiaries, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Borrower, Starwood REIT, any
such other Guarantor or any such Subsidiary and (ii) the material rights
(charter and statutory), licenses and franchises of the Borrower, Starwood REIT,
the other Guarantors and their respective Subsidiaries; provided, however, that
the Borrower, Starwood REIT and the other Guarantors shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of their respective Subsidiaries, if the Boards of
Directors of the Borrower and Starwood REIT shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Borrower, Starwood REIT, the other Guarantors and their Subsidiaries, taken
as a whole, and that the loss thereof would not have a Material Adverse Effect.
(b) PAIRED SHARE STATUS. Each of the Borrower and Starwood REIT
shall do or cause to be done all things necessary to maintain its "paired share"
status such that all holders of the Common Stock of the Borrower and Starwood
REIT own the same proportionate interest in both Borrower and Starwood REIT.
60
67
(c) REORGANIZATION. Notwithstanding anything in this Section 5.13 to
the contrary, each of the Borrower and Starwood REIT shall be permitted to
consummate the Reorganization.
SECTION 5.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. Upon the
occurrence of a Change of Control, the Borrower shall make an offer to each
Lender of Senior Secured Notes to purchase all or any part (equal to $1,000 or
an integral multiple thereof) of the Senior Secured Notes held by each such
Lender pursuant to a Purchase Offer at an Offer Amount in cash equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest to the
date of purchase. Such Purchase Offer shall be made in accordance with the
procedures set forth in Article II hereof. The Borrower shall commence such
Purchase Offer by mailing the notice set forth in Section 2.5(c) to the Lenders
in respect of Senior Secured Notes.
SECTION 5.15. DESIGNATION OF UNRESTRICTED SUBSIDIARY. The Boards of
Directors of the Borrower and Starwood REIT may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary; provided, that (a) at the time of
designation, the Investment by either of the Borrower or Starwood REIT and any
Restricted Subsidiary in such Subsidiary (other than Permitted Investments)
shall be deemed a Restricted Investment (to the extent not previously included
as a Restricted Investment) made on the date of such designation in the amount
of the fair market value of such Investment as determined in good faith by the
Board of Directors, (b) since the Original Closing Date, such Unrestricted
Subsidiary has not acquired any assets from the Borrower, Starwood REIT or any
Restricted Subsidiary other than as permitted by the provisions of this
Agreement, including Sections 5.7 and 5.10; (c) at the time of designation, no
Default or Event of Default has occurred and is continuing or results
immediately after such designation or as a result of any Restricted Investment
made in such Subsidiary at the time of such designation; (d) at the time of
designation, such Subsidiary has no Indebtedness other than Non-Recourse
Indebtedness of such Subsidiary; and (e) such Subsidiary does not own any Equity
Interests in a Restricted Subsidiary.
A Subsidiary shall cease to be an Unrestricted Subsidiary and shall
become a Restricted Subsidiary if either (i) at any time while it is a
Subsidiary of the Borrower or Starwood REIT (A) such Subsidiary acquires any
assets from the Borrower, Starwood REIT or any Restricted Subsidiary other than
as permitted by this Agreement, including Sections 5.7 and 5.10 hereof; (B) such
Subsidiary has any Indebtedness other than Non-Recourse Indebtedness of such
Subsidiary; or (C) such Subsidiary owns any Equity Interests in a Restricted
Subsidiary of the Borrower or Starwood REIT; or (ii) the Boards of Directors of
the Borrower and Starwood REIT designates such Unrestricted Subsidiary to be a
Restricted Subsidiary and no Default or Event of Default occurs or is continuing
immediately after such designation.
SECTION 5.16. LIMITATION ON STATUS AS INVESTMENT COMPANY. None of
the Borrower, Starwood REIT or the Restricted Subsidiaries shall become subject
to registration as an "investment company" (as that term is defined in the
Investment Company Act of 1940).
SECTION 5.17. SPECIAL COVENANTS. The Borrower and Starwood REIT
shall, and shall cause each of the Restricted Subsidiaries to, comply with
Article X.
61
68
ARTICLE VI.
SUCCESSORS
SECTION 6.1. MERGER, CONSOLIDATION, OR SALE OF ASSETS. Neither the
Borrower nor Starwood REIT shall consolidate or merge with or into or wind up
into (whether or not such entity is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless
(a) the Borrower or Starwood REIT, as the case may be, is the surviving Person
or the Person formed by or surviving any such consolidation or merger (if other
than the Borrower or Starwood REIT) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a Person
organized or existing under the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof; (b) the Person formed by or
surviving any such consolidation or merger (if other than the Borrower or
Starwood REIT) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Borrower and Starwood REIT under this Agreement pursuant to a
supplemental agreement or other documents or instruments in form reasonably
satisfactory to the Required Lenders; (c) immediately after such transaction no
Default or Event of Default exists; (d) such transaction will not result in the
loss or suspension or material impairment of any material Gaming License; (e)
the Borrower or Starwood REIT or any Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made shall, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the clauses (1) and
(2) (but not clause (3)) of first paragraph of Section 5.9; and (f) such
transactions would not require any Lender (other than any Person acquiring the
Borrower or Starwood REIT or their assets or any Affiliate thereof) to obtain a
gaming license or be qualified under the laws of any applicable gaming
jurisdiction; provided, that such Lender would not have been required to obtain
a gaming license or be qualified under the laws of any applicable gaming
jurisdiction in the absence of such transactions. Notwithstanding the foregoing,
the Borrower and Starwood REIT or Starwood REIT and Newco may consolidate or
merge with or wind up into each other without meeting the requirements set forth
in clause (e) above.
SECTION 6.2. SUCCESSOR CORPORATION SUBSTITUTED. Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Borrower or
Starwood REIT in accordance with Section 6.1 hereof, the successor corporation
formed by such consolidation or into or with which one of the Borrower or
Starwood REIT is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Agreement referring to
the "Borrower" or "Starwood REIT," as the case may be, shall refer instead to
the successor corporation and not to the Borrower or Starwood REIT, as the case
may be), and may exercise every right and power of a Loan Party under this
Agreement with the same effect as if such successor Person had been named as
such Loan Party
62
69
herein; provided, that the surviving entity or acquiring corporation shall (a)
assume all of the obligations of the acquired Person incurred under this
Agreement and the Senior Secured Notes, (b) acquire and own and operate,
directly or through Restricted Subsidiaries, all or substantially all of the
properties and assets then constituting the assets of the Borrower or Starwood
REIT, as the case may be, or any of their Restricted Subsidiaries, as the case
may be, (c) have been issued, or have a combined Subsidiary which has been
issued, Gaming Licenses to operate the acquired casino operations and entities
substantially in the manner and scope operated prior to such transaction, which
Gaming Licenses are in full force and effect, (d) be in compliance fully with
Section 6.1 and (e) the Borrower and Starwood REIT have delivered to the Lenders
an Officers' Certificate and opinion of counsel, subject to customary
assumptions and exclusions, stating that the proposed transaction complies with
this Agreement; provided further, however, that the predecessor Person shall not
be relieved from the obligation to pay the principal of and interest on the
Senior Secured Notes.
ARTICLE VII.
TRANSFER OF THE SENIOR SECURED NOTES
SECTION 7.1. TRANSFER OF THE SENIOR SECURED NOTES. Each Lender
represents and agrees that it is acquiring the Senior Secured Notes for its own
account and that it will not, directly or indirectly, transfer, sell, assign,
pledge or otherwise dispose of such Senior Secured Notes unless such transfer,
sale, assignment, pledge or other disposition is made pursuant to an available
exemption from registration under, or otherwise in compliance with, the
Securities Act. Each of the Lenders also represents and warrants to the Borrower
that it is an "accredited investor" (as that term is defined in Rule 501 of
Regulation D under the Securities Act). Subject to the foregoing, each Loan
Party agrees that each Lender will be free to sell or transfer all or any part
of the Senior Secured Notes to any third party and to pledge any or all of the
Senior Secured Notes to any commercial bank, federal reserve bank or other
institutional lender.
SECTION 7.2. REGISTRATION OF TRANSFER OR EXCHANGE. Against receipt
of evidence of cancellation, discharge or surrender of any Senior Secured Note
by a Lender for registration of transfer or exchange, the Borrower and Starwood
REIT will execute and deliver in exchange therefor a new Senior Secured Note or
Senior Secured Notes of the same aggregate tenor and principal amount,
registered in such names and in such denominations as such Lender may request.
The Borrower will pay any stamp tax or governmental charge imposed in respect of
any such transfer.
SECTION 7.3. TRANSFERS BY THE LENDERS.
(a) ASSIGNMENT BY LENDERS. Any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Tranche Two Commitment and the Loans at the
time owing to it), without the consent of any Loan Party or any other Lender,
but in compliance with all applicable laws; provided, however, that no interest
in the Tranche Two Commitments or any Loans may be sold, assigned or otherwise
transferred except with the prior consent of ▇▇▇▇▇▇ Commercial Paper, Inc., as
the Administrative Agent (which consent shall not unreasonably be withheld or
63
70
delayed). Except in the case of an assignment to a Lender or an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning Lender's
Tranche Two Commitment or Loans, the amount of the Tranche Two Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $10 million unless
the Borrower otherwise consents. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement with respect to the applicable Tranche. The
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance. Upon recording thereof pursuant to Section 7.3(b),
from and after the effective date specified in each Assignment and Acceptance
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.6,
2.7, 2.8, 2.9 and 11.3). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 7.3(a)
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 7.3(c).
(b) NOTE REGISTER. The Administrative Agent shall keep a copy of
each Assignment and Acceptance delivered to it and maintain a register of the
names and addresses of each Lender, its Tranche Two Commitment, if any, and the
principal amount of the Loans owing to it pursuant to the terms hereof from time
to time (the "Note Register"). Upon its receipt of each duly executed and
completed Assignment and Assumption Agreement, the Administrative Agent will
give prompt notice thereof to the Borrower, deliver to the Borrower a copy of
the Assignment and Assumption Agreement and modify the Register to give effect
to such Assignment and Assumption Agreement. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Note Register
as provided in this Section 7.3(b). Within ten (10) Business Days after its
receipt of such notice, the Borrower shall execute and deliver to the applicable
Lenders one or more new Senior Secured Notes in accordance with Section 2.2(d).
The entries in the Note Register shall be rebuttably presumed to be correct,
absent manifest error, and the Administrative Agent, the Loan Parties and the
Lenders may treat each Person whose name is recorded in the Note Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Note Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(c) PARTICIPATIONS. Any Lender may, without the consent of any
Person, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
this Agreement (including all or a portion of its Tranche Two Commitment and the
Loans owing to it), but in such event (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible
64
71
to the other parties hereto for the performance of such obligations and (iii)
the Loan Parties 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. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce the Note Documents and to approve any amendment,
modification or waiver of any provision of the Note Documents, except that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in clauses (i) through (vii) in Section 11.2(b) that affects such
Participant. Subject to Section 7.3(d), the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.6, 2.7, 2.8 and 2.9
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 7.3(a). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.8 as though it
were a Lender, if such Participant agrees to be subject to Section 2.10 as
though it were a Lender.
(d) PARTICIPANT NOT ENTITLED TO A GREATER PAYMENT. A Participant
shall not be entitled to receive any greater payment under Section 2.6, 2.7 or
2.8 than the applicable Lender would have been entitled to receive with respect
to the participation sold to such Participant, unless the receipt of a greater
payment pursuant to the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.8 unless
(i) the Borrower is notified of the participation sold to such Participant and
such Participant agrees, for the benefit of the Borrower, to comply with Section
2.8(e) as though it were a Lender and (ii) such Participant is eligible for
exemption from the withholding tax referred to therein, following compliance
with Section 2.8(e).
(e) PLEDGE OR ASSIGNMENT AS SECURITY. Any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section 7.3
shall not apply to any such pledge or assignment of a security interest. No such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
ARTICLE VIII.
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. An "Event of Default" with
respect to the Senior Secured Notes occurs if:
(a) the Borrower defaults in payment when due and payable, upon
redemption or otherwise, of principal on any of the Senior Secured Notes;
(b) the Borrower defaults for 30 days or more in the payment when
due of interest on any of the Senior Secured Notes or in the payment when due of
any other Note Liability;
65
72
(c) the Borrower fails to offer to purchase, or fails to purchase
the Senior Secured Notes, in each case when required under Section 5.10 or
Section 5.14 or under an offer made pursuant to Section 2.5;
(d) the Borrower, Starwood REIT or any other Guarantor fails to
comply with Section 5.7 or Section 5.9;
(e) any of the Borrower, Starwood REIT or any other Guarantor for 45
days after receipt of written notice from Lenders holding at least 25% in
outstanding principal amount of Senior Secured Notes fails to comply with any of
their other agreements under this Agreement or any other Note Document;
(f) default (except an Excluded Default) under any mortgage,
indenture or instrument under which there is issued or by which there is secured
or evidenced any Indebtedness for money borrowed by any of the Borrower,
Starwood REIT or any Restricted Subsidiary or the payment of which is guaranteed
by the Borrower, Starwood REIT or any Restricted Subsidiary, whether such
Indebtedness or Guaranty existed as of the Original Closing Date, now exists or
is created after the Effective Date, which default (i) is caused by a failure to
pay when due (giving effect to any grace period or waiver related thereto) any
principal or interest of such Indebtedness (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which a Payment Default
then exists or with respect to which the maturity thereof has been so
accelerated or which has not been paid at maturity, aggregates $50.0 million or
more;
(g) failure by any of the Borrower, Starwood REIT or any of their
Restricted Subsidiaries to pay final judgments aggregating in excess of $50.0
million, which final judgments remain unpaid, undischarged and unstayed for a
period of more than 60 consecutive days (and is not fully covered by a reputable
and solvent insurance company);
(h) the repudiation by any of the Borrower, Starwood REIT or any of
their Subsidiaries of their obligations under, or any judgment or decree by a
court or governmental agency of competent jurisdiction declaring the
unenforceability of, (i) the Affiliate Guaranty in any respect for any reason
that, in each case, would materially and adversely impair the benefits to the
Lenders in respect of the Senior Secured Notes or (ii) the Pledge Agreement;
(i) any representation, warranty or factual statement made by the
Borrower or Starwood REIT or any of their Subsidiaries in this Agreement
(including those incorporated by reference herein) or in any of the other Credit
Facility Documents or the Note Documents is in any material respect not true and
correct on the date as of which made or deemed made and failure by any of the
Borrower, Starwood REIT or other applicable Guarantor for 45 days after receipt
of written notice from Lenders holding at least 25% in outstanding principal
amount of Senior Secured Notes to cure such breach, if such breach is
susceptible of cure;
66
73
(j) any of the Borrower, Starwood REIT, any other Guarantor that is
a Significant Subsidiary or any group of Guarantors that would together
constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its
creditors; or
(k) any proceeding is commenced involuntarily against the Borrower,
Starwood REIT or another Guarantor that is a Significant Subsidiary or any group
of Guarantors that would together constitute a Significant Subsidiary in a court
of competent jurisdiction under any Bankruptcy Law and:
(i) such proceeding is not dismissed within 60 days
thereafter;
(ii) an order for relief is entered in such proceeding;
(iii) the court in such proceeding appoints a Custodian of any
of the Borrower, Starwood REIT or another Guarantor that is a Significant
Subsidiary or any group of Guarantors that would together constitute a
Significant Subsidiary of the Borrower or Starwood REIT or for all or
substantially all of the property of any of the Borrower or Starwood REIT
or a Guarantor that is a Significant Subsidiary or any group of Guarantors
that would together constitute a Significant Subsidiary; or
(iv) the court in such proceeding orders the liquidation of
the Borrower, Starwood REIT or a Guarantor that is a Significant
Subsidiary of any Borrower or Starwood REIT or any group of Guarantors
that would together constitute a Significant Subsidiary.
SECTION 8.2. ACCELERATION. If an Event of Default (other than an
Event of Default as to the Borrower or Starwood REIT specified in Sections
8.1(j) and (k)) occurs and is continuing, the Lenders holding at least 25% in
principal amount of the then outstanding Senior Secured Notes by written notice
to the Borrower, may declare the unpaid principal of and any accrued interest on
all the Senior Secured Notes to be due and payable. Upon such declaration the
principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 8.1(j) or (k) occurs as to the Borrower or Starwood
REIT, such an amount shall ipso facto become and be immediately due and payable
without any declaration or other act or notice on the part of any Lender.
67
74
SECTION 8.3. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Lenders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent or subsequent assertion or employment of any
other appropriate right or remedy.
SECTION 8.4. DELAY OR OMISSION NOT WAIVER. No delay or omission by
any Lender to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Agreement or by law to the Lenders may be exercised from time to time, and as
often as may be deemed expedient, by the Lenders.
SECTION 8.5. WAIVER OF PAST DEFAULTS. Subject to Section 11.2, the
Required Lenders by written notice to the Borrower may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
ARTICLE IX.
GUARANTY AND INDEMNITY
SECTION 9.1. GUARANTY. Each Guarantor hereby absolutely and
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of (a) the principal of and interest on
the Senior Secured Notes and all other Note Liabilities now outstanding or
hereafter arising under or in connection with this Agreement or any other Note
Document, whether for principal of or interest on any Loan or for the principal
of or interest on any other credit extended by any Lender or for fees, taxes,
additional compensation, expense reimbursements, indemnification or otherwise,
(b) each other debt, liability or obligation of the Borrower or any Guarantor
now outstanding or hereafter arising under this Agreement or any other Note
Document, and (c) any and all Post-Petition Interest and Expense Claims arising
in respect of any of the foregoing (the Senior Secured Notes and all other Note
Liabilities and all such other debts, liabilities and obligations and
Post-Petition Interest and Expense Claims, collectively, are the "Guaranteed
Obligations").
SECTION 9.2. JOINT AND SEVERAL INDEMNITY. Each Guarantor hereby
agrees, jointly and severally with each other Guarantor, to pay and assume all
risk of, and to defend, indemnify and hold harmless each Beneficiary and all of
its Related Parties from and against, any and all claims, damages, liabilities,
losses, costs and expenses (including all fees and disbursements of legal
counsel, whether or not suit is brought) arising from, based on or relating in
any manner to (a) any inaccuracy in or breach of any of the representations and
warranties set forth in this Agreement or any other Note Document or any failure
by any Loan Party to perform or observe, or any breach of, any of the covenants
and agreements set forth in this Agreement or any other Note Document, in each
case whether or not such inaccuracy, failure or breach was caused by the
Borrower or a Guarantor or any other Person or resulted
68
75
from an Act of God or otherwise and whether or not such inaccuracy, failure or
breach is otherwise within the control of the Borrower or such Guarantor or any
other Person, or (b) any and all Post-Petition Interest and Expense Claims,
whether or not allowed or enforceable in any bankruptcy case or insolvency,
reorganization, receivership, dissolution or liquidation proceeding and even if
disallowed or not enforceable therein.
SECTION 9.3. ACCELERATION OF PAYMENT. If (a) any Event of Default
occurs and notice of demand for payment under this Section 9.3 is given by the
Required Lenders to any Guarantor, or (b) any Guarantor becomes a debtor in any
bankruptcy case or the subject of any insolvency, reorganization, receivership,
dissolution or liquidation proceeding commenced voluntarily by such Guarantor or
(if it remains pending for more than 60 days or such Guarantor consents to entry
of an order for relief therein) commenced involuntarily against such Guarantor,
then (in each such event) all liability of such Guarantor under this Agreement
that is not then due and payable shall thereupon become and be immediately due
and payable, without notice or demand.
SECTION 9.4. GUARANTY OF PAYMENT, INDEPENDENTLY ENFORCEABLE. Each
Guarantor (a) guarantees that the Guaranteed Obligations will be paid in
accordance with the terms of this Agreement and the other Note Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights and claims of any holder
of Guaranteed Obligations against the Borrower or any other Guarantor with
respect thereto and even if any such rights or claims are modified, reduced or
discharged in any bankruptcy case or insolvency, reorganization, receivership,
dissolution or liquidation proceeding or otherwise and (b) agrees that such
guaranty is a guaranty of payment when due and not of collectibility. The
obligations of each Guarantor under this Agreement are independent of the
Guaranteed Obligations, and a separate actions or actions may be brought and
prosecuted against each Guarantor to enforce this Agreement, whether or not any
action is brought against the Borrower or any other Guarantor and whether or not
the Borrower or any other Guarantor is joined in any such action or actions.
SECTION 9.5. FRAUDULENT TRANSFER LIMITATION. Each Guarantor
represents and warrants that, on the date it becomes bound as a Guarantor
hereunder and after giving effect to the liability incurred by it under this
Agreement and the rights granted to it in Section 9.11, (a) the fair value of
the assets of each Loan Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) each Loan Party will
not have unreasonably small capital with which to conduct the business in which
it is engaged as such business is now conducted and is proposed to be conducted
following such date. If, notwithstanding the foregoing, enforcement of the
liability of any Guarantor under this Agreement for the full amount of the
Guaranteed Obligations would be an unlawful or voidable transfer under any
applicable fraudulent conveyance or fraudulent transfer law or any comparable
law, then the liability of such Guarantor hereunder shall be reduced to the
highest amount for which such
69
76
liability may then be enforced without giving rise to an unlawful or voidable
transfer under any such law.
SECTION 9.6. SUBORDINATED LIABILITIES. Each Guarantor hereby agrees
that any and all present and future debts, liabilities and obligations of every
type and description (whether for money borrowed, on intercompany accounts, for
provision of goods or services, under cash management arrangements or tax
sharing, management or contribution agreements, for reimbursement, contribution
or otherwise on account of this Agreement or any other agreement of such
Guarantor by which any Indebtedness or other liability is guaranteed or on
account of any payment made under this Agreement or any such other agreement, or
on account of any other transaction, agreement, occurrence or event and whether
absolute or contingent, secured or unsecured, direct or indirect, matured or
unmatured, liquidated or unliquidated, created directly or acquired from
another, or sole, joint, several or joint and several) now outstanding or
hereafter incurred, arising or owed to such Guarantor by the Borrower, by
Starwood REIT or by any of their Subsidiaries (collectively, the "Subordinated
Liabilities") shall be, and hereby are, postponed and subordinated to the prior
payment of all Guaranteed Obligations in full and in cash.
SECTION 9.7. PROHIBITED PAYMENTS. Until Discharge of the Note
Liabilities, no Guarantor will demand, ▇▇▇ for, accept or receive, or cause or
permit any other Person to make, any payment on or transfer of property on
account of any Subordinated Liabilities, except a Permitted Payment.
SECTION 9.8. PROHIBITED ACTIONS. Until Discharge of the Note
Liabilities, no Guarantor will, without the prior written consent of the
Required Lenders, commence or join with any other Person in commencing any
bankruptcy case or insolvency, reorganization, receivership, dissolution or
liquidation proceeding of or against the Borrower, Starwood REIT or any of their
Subsidiaries.
SECTION 9.9. PROCEEDINGS. In any bankruptcy, insolvency,
reorganization, receivership, dissolution or liquidation proceeding by, against
or affecting the Borrower, Starwood REIT or any of their Subsidiaries:
(a) PRIORITY OF PAYMENT. The holders of Senior Secured Liabilities
shall be entitled to receive payment of all amounts due or to become due on or
in respect of the Senior Secured Liabilities (including all Post-Petition
Interest and Expense Claims), in full and in cash, before any Guarantor is
entitled to receive any payment or distribution of any kind or character,
whether in cash, property or securities or otherwise, on account of any of the
Subordinated Liabilities.
(b) TURNOVER OF PAYMENTS AND DISTRIBUTIONS. The holders of Senior
Secured Liabilities (including Post-Petition Interest and Expense Claims) shall
be entitled to receive, for application to the payment thereof, all payments and
distributions of any kind or character, whether in cash, property or securities
or otherwise (including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other debt or liability of the
Borrower or any Subsidiary of the Borrower or any Guarantor being subordinated
to the
70
77
payment of the Subordinated Liabilities), which may be payable or deliverable in
respect of the Subordinated Liabilities, or any Lien securing Subordinated
Liabilities, in any such case or proceeding.
(c) DISALLOWED POST-PETITION INTEREST AND EXPENSE CLAIMS. Each
Guarantor expressly acknowledges and agrees that, pursuant to the provisions of
Section 9.9(b), any such payment or distribution payable or deliverable in
respect of Subordinated Liabilities will be turned over to, and will become the
property of, the holders of Senior Secured Liabilities until the holders of
Senior Secured Liabilities have received payment in full and in cash of all
Senior Secured Liabilities, including any and all Post-Petition Interest and
Expense Claims that are not enforceable, allowable or allowed in such case or
proceeding and as to which, as a consequence, such Guarantor will not have any
subrogation claim in such case or proceeding. Each Guarantor acknowledges and
agrees that all such Post-Petition Interest and Expense Claims shall be included
in the Senior Secured Liabilities and shall be paid from any such payment or
distribution because it is the intention of the Guarantors and Beneficiaries
that the Senior Secured Liabilities shall be determined and shall be guaranteed
and paid by each Guarantor without regard to any rule of law or order which may
relieve Borrower or any other obligor, or the estate in any such case or
proceeding, of liability therefor.
(d) CLAIMS IN BANKRUPTCY. Each Guarantor will file all claims
against the Borrower or any Subsidiary of the Borrower or any Guarantor in any
case under the Bankruptcy Law and in each other insolvency, reorganization,
receivership, dissolution or liquidation proceeding in which the filing of
claims is required or permitted by law upon any of the Subordinated Liabilities
and will assign to the holders of Senior Secured Liabilities all rights of such
Guarantor thereunder. If any Guarantor does not file any such claim at least 30
days prior to any applicable claims bar date, each holder of Senior Secured
Liabilities is hereby authorized (but shall not be obligated), as
attorney-in-fact for such Guarantor with full power of substitution, to file
such claim or proof thereof in the name of such Guarantor.
SECTION 9.10. HELD IN TRUST. If any payment, transfer or
distribution is made to any Guarantor upon any Subordinated Liabilities or any
Lien securing Subordinated Liabilities that is not permitted to be made under
this Article IX or that the holders of Senior Secured Liabilities are entitled
to receive under this Article IX, such Guarantor shall receive and hold the same
in trust, as trustee for the benefit of the holders of Senior Secured
Liabilities, and shall forthwith transfer and deliver the same to the holders of
Senior Secured Liabilities, in precisely the form received (except for any
required endorsement), for application to the payment of Senior Secured
Liabilities.
SECTION 9.11. REIMBURSEMENT AND CONTRIBUTION RIGHTS. The Guarantors
desire to agree upon and allocate among themselves, in a fair and equitable
manner, their rights of reimbursement and contribution when any payment is made
by one of the Guarantors under this Agreement. Accordingly:
(a) REIMBURSEMENT CLAIMS AGAINST THE BORROWER. Each Guarantor
reserves the right to claim reimbursement from the Borrower for the entire
amount of any payment made by such Guarantor on account of Guaranteed
Obligations pursuant to this Agreement, but each
71
78
Guarantor agrees that its claim for such reimbursement shall not arise until,
and is subject in all respects to, Discharge of the Note Liabilities and the
prior payment of all Guaranteed Obligations in full and in cash. Accordingly,
each Guarantor agrees not to assert, ▇▇▇ upon, collect or otherwise enforce
against the Borrower (by set-off or otherwise) any claim for reimbursement on
account of any payment made by such Guarantor hereunder, until Discharge of the
Note Liabilities and the prior payment of all Guaranteed Obligations in full and
in cash.
(b) CONTRIBUTION AMONG SUBSIDIARY GUARANTORS. The Guarantors agree
that if the Borrower at any time fails to pay any reimbursement that has become
due and payable to any Guarantor as contemplated in Section 9.11(a) and such
failure continues for a period of 60 days after Discharge of the Note
Liabilities and payment of all outstanding Guaranteed Obligations in full and in
cash, then if and to the extent any such unreimbursed payment due to such
Guarantor under this Agreement is such that the Aggregate Unreimbursed Payments
of such Guarantor are greater than its Fair Share of the Aggregate Unreimbursed
Payments of all Guarantors, such Guarantor shall be entitled to a contribution
from each other Guarantor in the amount necessary to cause each Guarantor's
Aggregate Unreimbursed Payments to equal its Fair Share. For these purposes:
(i) "Fair Share" means, with respect to a Guarantor as of any
date of determination, an amount equal to (A) the ratio of (1) the
Adjusted Maximum Amount of such Guarantor to (B) the Adjusted Maximum
Amounts of all Guarantors, multiplied by (2) the Aggregate Unreimbursed
Payments of all Guarantors.
(ii) "Adjusted Maximum Amount" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount of
the liability of such Guarantor under this Agreement limited to the extent
required under Section 9.5 (except that, for purposes solely of this
calculation, any assets or liabilities arising by virtue of any rights to
or obligations of reimbursement or contribution under this Section 9.11
shall not be counted as assets or liabilities of such Guarantor).
(iii) "Aggregate Unreimbursed Payments" means, with respect to
a Guarantor as of any date of determination, the aggregate net amount of
all payments made on or before such date by such Guarantor under this
Agreement for which reimbursement by the Borrower to such Guarantor is
then due and payable as contemplated in Section 9.11(a) but has not been
paid to such Guarantor.
The allocation and right of contribution among the Guarantors set
forth in this Section 9.11(b) shall not in any respect limit the Guarantors'
liability under this Agreement to the holders of the Guaranteed Obligations.
(c) REIMBURSEMENT AND CONTRIBUTION RIGHTS UNSECURED. All rights of
reimbursement reserved in Section 9.11(a) shall be unsecured obligations of the
Borrower, and
72
79
all contribution rights arising under Section 9.11(b) shall be unsecured
obligations of the Guarantors.
(d) RELEASE OF ALL OTHER REIMBURSEMENT, SUBROGATION, AND
CONTRIBUTION RIGHTS. Each Guarantor hereby waives, releases and discharges,
absolutely, unconditionally, irrevocably and forever, all rights of recourse,
reimbursement, contribution or indemnity and all other claims that such
Guarantor might otherwise have or acquire against the Borrower, Starwood REIT or
any other Guarantor or any other Person liable for the payment of any of the
Guaranteed Obligations (including the owner of any interest in collateral
subject to a Lien securing any of the Guaranteed Obligations) and all rights of
subrogation that such Guarantor might otherwise have or acquire against any
Beneficiary by reason of any payment made by such Guarantor under this Agreement
or otherwise as a result of or in connection with this Agreement, whether such
rights or claims are conferred by agreement, implied or created by law or
otherwise, except only the reimbursement rights reserved by such Guarantor in
Section 9.11(a) and the contribution rights granted to such Guarantor under
Section 9.11(b).
(e) NO CLAIMS. Neither the execution and delivery of this Agreement
by any Guarantor nor any payment by any Guarantor under this Agreement shall
give rise to any claim (as that term is defined in the Bankruptcy Code) in favor
of such Guarantor against the Borrower or Starwood REIT or any of their
Subsidiaries, except as set forth in Section 9.11(a) and Section 9.11(b).
(f) SUBORDINATION OF SECTION 9.11 RIGHTS. All rights and claims
reserved in or arising under this Section 9.11 shall be included among the
Subordinated Liabilities. Until Discharge of the Note Liabilities, no Guarantor
will assert, exercise or enforce against any other Guarantor any right or claim
arising under this Section 9.11.
SECTION 9.12. THE LIABILITY OF EACH GUARANTOR.
(a) ABSOLUTE AND UNCONDITIONAL. The liability of each Guarantor
under this Agreement shall be absolute and unconditional.
(b) NOT LIMITED. Subject only to Section 9.5, the liability of each
Guarantor under this Agreement shall be unlimited in amount.
(c) IRREVOCABLE AND CONTINUING. The liability of each Guarantor
under this Agreement shall constitute an irrevocable and continuing offer and
agreement guaranteeing payment of any and all Guaranteed Obligations and
granting indemnification and subordination as herein set forth and shall extend
to all Guaranteed Obligations and indemnified matters and Subordinated
Liabilities whether now outstanding or created or incurred at any future time,
whether or not created or incurred pursuant to any agreement presently in effect
or hereafter made, until Discharge of the Note Liabilities. To the extent any
contingent Obligation survives the expiration or termination of the Note
Documents and the repayment of the Note Liabilities that are then due, each
Guarantor's liability under this Agreement shall likewise survive.
(d) JOINT AND SEVERAL. The liability of each Guarantor under this
Agreement shall be the joint and several obligation of each Guarantor and may be
freely enforced against
73
80
each Guarantor, for the full amount of the Guaranteed Obligations and all other
liabilities of such Guarantor hereunder, without regard to whether enforcement
is sought or available against any other Guarantor.
(e) NOT AFFECTED OR IMPAIRED. The liability of each Guarantor under
this Agreement shall not be affected or impaired in any manner by (a) the
failure of any Person to become or remain a Guarantor hereunder or the failure
of any holder of Guaranteed Obligations to preserve, protect or enforce any
right to require any Person to become or remain a Guarantor hereunder, (b) any
lack of validity or enforceability of this Agreement or any other Note Document
or any other agreement, instrument or document relating thereto, (c) any change
in the time, manner or place of payment of, or in any other term of, any of the
Guaranteed Obligations, or any other amendment or waiver of or any consent to
departure from the terms of any Note Document, including any extension or
renewal of the Guaranteed Obligations (whether or not for longer than the
original period) and any increase in the Guaranteed Obligations resulting from
the extension of additional credit to the Borrower or otherwise, (d) any taking,
failure to take, failure to create, perfect or ensure the priority of, or
exchange, release or termination or lapse of any Lien securing any Guaranteed
Obligations, or any taking, failure to take, release or amendment or waiver of
or consent to departure from any other guaranty of, any of the Guaranteed
Obligations, (e) any manner or order of sale or other enforcement of any Lien
securing any of the Guaranteed Obligations or any manner or order of application
of the proceeds of any such Lien to the payment of the Guaranteed Obligations or
any failure to enforce any Lien or to apply any proceeds thereof, (f) any
change, restructuring or termination of the corporate structure or existence of
the Borrower, or Starwood REIT or any of their Subsidiaries or Affiliates or any
other Person, or (g) any other circumstance which might otherwise constitute a
defense (except the defense of payment) available to, or a discharge of, a
surety or guarantor.
(f) REMAINS VALID AND ENFORCEABLE. The liability of each Guarantor
under this Agreement shall remain valid and enforceable and shall not be subject
to any reduction, limitation, impairment, discharge or termination for any
reason (other than indefeasible payment in full of the Guaranteed Obligations),
including the occurrence of any of the following, whether or not any Guarantor
shall have had notice or knowledge of any of them: (a) any failure or omission
to assert or enforce or agreement or election not to assert or enforce, or the
stay or enjoining, by order of court, by operation of law or otherwise, of the
exercise or enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Note Documents, at law, in equity or otherwise) with
respect to the Guaranteed Obligations or any agreement relating thereto, or with
respect to any other guaranty of or security for the payment of the Guaranteed
Obligations; (b) any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including provisions
relating to events of default) of this Agreement, any of the other Note
Documents or any agreement or instrument executed pursuant thereto, or of any
other guaranty or security for the Guaranteed Obligations, in each case whether
or not in accordance with the terms of this Agreement, such Note Document or any
agreement relating to such other guaranty or security; (c) the Guaranteed
Obligations, or any agreement relating thereto, at any time being found to be
illegal, invalid or unenforceable in any respect; (d) the application of
payments received from
74
81
any source to the payment of any liability other than the Guaranteed
Obligations, even though any Beneficiary might have elected to apply such
payment to any part or all of the Guaranteed Obligations; (e) any Beneficiary's
consent to the change, reorganization or termination of the corporate structure
or existence of the Borrower or Starwood REIT or any of their Subsidiaries and
to any corresponding restructuring of the Guaranteed Obligations; (f) any
failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guaranteed Obligations; (g) any defenses,
set-offs or counterclaims which the Borrower or any other Loan Party or any
other Guarantor may allege or assert against any Beneficiary in respect of the
Guaranteed Obligations, including, for example, failure of consideration, breach
of warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury; and (h) any other act or thing or omission, or delay to
do any other act or thing, which may or might in any manner or to any extent
vary the risk of any Guarantor as an obligor in respect of the Guaranteed
Obligations.
(g) RELEASED ONLY BY A SIGNED WRITING. The liability of each
Guarantor under this Agreement and each right, remedy, interest or power granted
herein or arising hereunder may be released only by a writing signed by the
Beneficiary against which enforcement of such release is sought.
(h) DISCHARGE UPON SALE OF GUARANTOR. If (i) all outstanding Equity
Interests issued by any Guarantor and owned by any Loan Party are at any time
sold to any Person not an Affiliate of the Borrower or Starwood REIT (including
by merger or consolidation) in any transaction which (A) is not prohibited by
this Agreement or (B) is otherwise consented to by the Required Lenders and (ii)
at the time such transaction is consummated any and all liabilities of such
Guarantor under any and all guaranties of any other Indebtedness of any Loan
Party (including all liabilities of such Guarantor in respect of the Bank Credit
Facility) are discharged and released, then the liability of such Guarantor
under this Agreement shall automatically be discharged and released without any
further action by any Beneficiary or any other Person effective as of the time
such transaction is consummated.
SECTION 9.13. CERTAIN WAIVERS BY GUARANTORS. Each Guarantor
hereby waives and agrees not to assert or take advantage of:
(a) PRIOR RESORT TO ANY OTHER PERSON, PROPERTY OR RIGHT. Any right
to require any holder of Guaranteed Obligations to proceed against or exhaust
its recourse against the Borrower, Starwood REIT, any other Guarantor or any
other Person liable for any of the Guaranteed Obligations or against any Lien
securing any of the Guaranteed Obligations or against any other Person or
property, before demanding and enforcing payment of the Guaranteed Obligations
from any Guarantor under this Agreement;
(b) CERTAIN DEFENSES. Any defense that may arise by reason of (i)
the incapacity, lack of authority, death or disability of the Borrower, Starwood
REIT, any other Guarantor or any other Person, (ii) the revocation or
repudiation of any of the Note Documents by the Borrower, Starwood REIT, any
other Guarantor or any other Person, (iii) the unenforceability in whole or in
part of the Note Documents or any other instrument, document or agreement, (iv)
the failure of any holder of Guaranteed Obligations to file or enforce a claim
75
82
against any Person liable for any of the Guaranteed Obligations or in any
bankruptcy case or insolvency, receivership, dissolution or liquidation
proceeding, (v) any election made by any holder of Guaranteed Obligations as to
any right or remedy granted or available to it under Bankruptcy Law, or (vi) any
other borrowing or grant of a security interest under any provision of
Bankruptcy Law;
(c) NOTICES AND DEMANDS. Presentment, demand for payment, protest,
notice of discharge, notice of acceptance of this Agreement, notice of the
incurrence of, or any default in respect of, any Guaranteed Obligation, and all
other indulgences and notices of every type or nature, including, to the maximum
extent permitted by law, notice of the disposition of any collateral security;
(d) ELECTION OF REMEDIES. Any defense based upon an election of
remedies (including, if available, an election to proceed by non-judicial
foreclosure) or any other act or omission of any holder of Guaranteed
Obligations or any other Person which destroys or otherwise impairs any right
that any Guarantor might otherwise have for subrogation, recourse,
reimbursement, indemnity, exoneration, contribution or otherwise against the
Borrower, Starwood REIT, any other Guarantor or any other Person;
(e) COLLATERAL SECURITY. Any defense based upon any grant of, any
failure to demand, take, perfect, protect or enforce, or any modification or
release of any Lien securing, or guaranty of, any or all of the Guaranteed
Obligations, or any failure to create or perfect or ensure the priority or
enforceability of any security interest in any collateral for any of the
Guaranteed Obligations or any act or omission related thereto;
(f) RECOUPMENT AND SETOFF. Any right to recoup from or offset
against any of the Guaranteed Obligations any claim that may be held or asserted
by or available to (i) the Borrower or Starwood REIT or any other Guarantor or
any other Person liable for any of the Guaranteed Obligations against any holder
of Guaranteed Obligations or (ii) any Guarantor against the Borrower, Starwood
REIT, any other Guarantor, any other holder of Guaranteed Obligations or any
other Person; and
(g) OTHER MATTERS. Any other claim, right or defense (including, for
example, such matters as failure or insufficiency of consideration, statute of
limitations, breach of contract, tortious conduct, accord and satisfaction, and
discharge by agreement or conduct or in any bankruptcy case or other insolvency
or liquidation proceeding), except the defense of payment, that may be held or
asserted by or available to (i) the Borrower or any other Guarantor or any other
Person liable for any of the Guaranteed Obligations against any holder of
Guaranteed Obligations or (ii) any Guarantor against the Borrower, any other
Guarantor, any other holder of Guaranteed Obligations or any other Person.
SECTION 9.14. WAIVER OF BENEFIT OF ANTI-DEFICIENCY LAWS. If, in the
exercise of any rights and remedies, any holder of Guaranteed Obligations shall
forfeit any of its rights or remedies, including its right to obtain a
deficiency judgment against the Borrower, Starwood REIT or any other Guarantor
or any other Person, whether because of any applicable laws pertaining to
recourse to collateral security or election of remedies or barring claims for a
76
83
deficiency following foreclosure of any Lien or the like, each Guarantor hereby
consents to such action by such holder and, to the maximum extent permitted by
applicable law, waives any claim or defense based upon such recourse to
collateral security, election of remedies, loss of claims for a deficiency or
the like, even if such action by such holder shall result in a full or partial
loss of any rights of subrogation, recourse, reimbursement, contribution or
indemnification which such Guarantor might otherwise have had but for such
action by such holder or but for the provisions of this Section 9.14.
Furthermore, each Guarantor waives all rights and defenses arising out of any
recourse to collateral security or election of remedies by any holder of
Guaranteed Obligations, even though such recourse to collateral security or
election of remedies, such as a nonjudicial foreclosure with respect to security
for any Guaranteed Obligation, has destroyed such Guarantor's rights of
subrogation, recourse, reimbursement, contribution or indemnification against
the Borrower, Starwood REIT or any other Guarantor or any other Person by the
operation of applicable law or otherwise. Any election of remedies which results
in the denial or impairment of the right of any holder of Guaranteed Obligations
to seek a deficiency judgment against the Borrower, Starwood REIT or any other
Guarantor shall not, to the maximum extent permitted by applicable law, impair
any other Guarantor's obligation to pay the full amount of the Guaranteed
Obligations. In the event any holder of Guaranteed Obligations shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or the
Note Documents, such holder may bid all or less than the amount of the
Guaranteed Obligations and (if expressly permitted under the Note Documents or
approved in writing by all of the Lenders) the amount of such bid need not be
paid by such holder but shall be credited against the Guaranteed Obligations. To
the extent permitted by applicable law, the amount of the successful bid at any
such sale, whether any holder of Guaranteed Obligations or any other Person is
the successful bidder, shall be conclusively deemed to be the fair market value
of the property being sold and the difference between such bid amount and the
remaining balance of the Guaranteed Obligations shall be conclusively deemed to
be the amount of the Guaranteed Obligations guaranteed under this Agreement,
notwithstanding that any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which any
holder of Guaranteed Obligations might otherwise be entitled if no holder had
bid at any such sale.
SECTION 9.15. REINSTATEMENT. If at any time any payment on any
Guaranteed Obligation is set aside, avoided or rescinded or must otherwise be
restored or returned, this Agreement and the liability of each Guarantor under
this Agreement and the indemnification and subordination granted hereby and all
other liabilities of each Guarantor hereunder shall remain in full force and
effect and, if previously released or terminated, shall be automatically and
fully reinstated, without any necessity for any act, consent or agreement of any
Guarantor, as fully as if such payment had never been made and as fully as if
any such release or termination had never become effective.
SECTION 9.16. AUTHORITY OF GUARANTORS OR BORROWER. It is not
necessary for any Beneficiary to inquire into the capacity or powers of any
Guarantor or the Borrower or the officers, directors or any agents acting or
purporting to act on behalf of any of them.
SECTION 9.17. CONDITION OF THE BORROWER AND OTHER GUARANTORS. Each
Guarantor is fully aware of the financial condition of the Borrower and each
other ▇▇▇▇▇▇▇▇▇
▇▇
▇▇
and is executing and delivering this Agreement based solely upon such
Guarantor's own independent investigation of all matters pertinent hereto and is
not relying in any manner upon any representation or statement by any holder of
Guaranteed Obligations. Each Guarantor represents and warrants that it is in a
position to obtain, and each Guarantor hereby assumes full responsibility for
obtaining, any additional information concerning the financial condition of the
Borrower, Starwood REIT or any other Guarantor or their respective properties,
financial condition and prospects and any other matter pertinent hereto as such
Guarantor may desire, and such Guarantor is not relying upon or expecting any
holder of Guaranteed Obligations to furnish to such Guarantor any information
now or hereafter in the possession of any holder of Guaranteed Obligations
concerning the same or any other matter. By executing this Agreement, each
Guarantor knowingly accepts the full range of risks encompassed within a
contract of this type, which risks each Guarantor acknowledges. No Guarantor
shall have the right to require any holder of Guaranteed Obligations to obtain
or disclose any information with respect to the Guaranteed Obligations, the
financial condition or prospects of the Borrower or Starwood REIT or any of
their Subsidiaries, the ability of the Borrower or Starwood REIT or any other
Guarantor to pay or perform the Guaranteed Obligations, the existence,
perfection, priority or enforceability of any collateral security for any or all
of the Guaranteed Obligations, the existence or enforceability of any other
guaranties of all or any part of the Guaranteed Obligations, any action or
non-action on the part of any holder of Guaranteed Obligations, the Borrower,
Starwood REIT, any of their Subsidiaries, any other Guarantor or any other
Person, or any other event, occurrence, condition or circumstance whatsoever.
SECTION 9.18. ACCEPTANCE AND NOTICE. Each Guarantor acknowledges
acceptance hereof and reliance hereon by the Lenders and each other holder of
Guaranteed Obligations and waives, irrevocably and forever, all notice thereof.
SECTION 9.19. RIGHTS CUMULATIVE. The rights, powers and remedies
given to the Beneficiaries by this Agreement are cumulative and shall be in
addition to and independent of all rights, powers and remedies given to any
Beneficiary by virtue of any statute or rule of law or in any of the other Note
Documents or any agreement between any Guarantor and one or more of the
Beneficiaries or between Borrower and one or more of the Beneficiaries. Any
forbearance or failure to exercise, and any delay by any Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
SECTION 9.20. NOTICE OF EVENTS. Ten Business Days after any
Guarantor obtains knowledge thereof, unless the Borrower has given the Lenders
written notice thereof, such Guarantor shall give the Lenders written notice of
any condition or event which has resulted in a Material Adverse Change, a
Default or an Event of Default.
SECTION 9.21. SET OFF. In addition to all other rights any Lender
may have under law or in equity, if any amount shall at any time be due and
payable by any Guarantor to any Lender under this Agreement, such Lender is
authorized at any time or from time to time, without notice (any such notice
being hereby expressly waived), to set off and to appropriate and to apply any
and all deposits (general or special, including but not limited to indebtedness
78
85
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness of any such Lender owing to such Guarantor and any other
property of such Guarantor held by any Lender to or for the credit or the
account of such Guarantor against and on account of the Guaranteed Obligations
and liabilities of such Guarantor to any Lender under this Agreement.
SECTION 9.22. NOTATION. Starwood REIT agrees to execute the form of
Confirmation of Guaranty appended to each Senior Secured Note as and when such
Senior Secured Note is issued at any time and reissued from time to time by the
Borrower. The provisions of this Article IX shall be fully enforceable against
Starwood REIT and each other Guarantor, whether or not any such Confirmation of
Guaranty, or any other instrument or document except this Agreement, is ever
signed by Starwood REIT or any other Guarantor.
ARTICLE X.
SPECIAL COVENANTS
SECTION 10.1. ADDITIONAL LOAN PARTIES. If at any time after the
Original Closing Date any Person who becomes a Subsidiary of the Borrower or
Starwood REIT or any other Subsidiary of the Borrower or Starwood REIT that is
not a Loan Party guarantees, assumes or otherwise becomes liable for any Credit
Facility Liabilities or grants, assumes or creates any Lien in favor of the
Collateral Agent or any other Person as security for any Credit Facility
Liabilities or ITT Notes, then (in each such event) the Borrower and Starwood
REIT will, within ten days thereafter, (a) notify the Lenders thereof, (b) cause
such Person to execute and deliver to the Lenders a Guarantor Joinder, (c) cause
such Person to grant the Collateral Agent a Lien upon all property of the type
described in the Pledge Agreement then owned or thereafter acquired by such
Person as security for the payment of the Senior Secured Liabilities and to
become bound by the Pledge Agreement in the same manner as each other Guarantor
that is a party thereto, and (d) cause such Person to deliver to the Collateral
Agent all certificated securities, instruments, Collateral, certificates,
financing statements, legal opinions and other documents that would have been
required from or as to such Person on the Original Closing Date pursuant to the
provisions of the Bank Credit Facility if such Person has been a party to this
Agreement and the Pledge Agreement on the Original Closing Date.
SECTION 10.2. FURTHER ASSURANCES. Each Loan Party will, from time to
time upon the request of the Required Lenders, at the expense of the Loan
Parties, execute, deliver and acknowledge all instruments, assignments, security
agreements, financing statements or other documents and take all other actions
as the Collateral Agent or Required Lenders may in good ▇▇▇▇▇ ▇▇▇▇ necessary or
appropriate to create, Perfect, ensure the priority and enforceability of,
protect or (if an Event of Default is continuing at the time) lawfully enforce a
Lien in favor of the Collateral Agent for the ratable benefit of the holders of
the Senior Secured Liabilities and (to the extent required) the ITT Notes upon
any and all property of such Person of the type described in the Pledge
Agreement or upon which such Person has granted, assumed or become subject to a
Lien as security for any Credit Facility Liabilities or ITT Notes.
SECTION 10.3. SECURITY DOCUMENTS. The Borrower will, and will cause
each of its Affiliates that is a party to the Pledge Agreement or any other
security document securing Senior Secured Liabilities to, duly and punctually
perform and observe each and all of their
79
86
respective covenants and agreements thereunder. Without limiting the generality
of the foregoing, on the Reorganization Date the Borrower shall pledge (and
deliver for pledge) the Class A Shares of Starwood REIT pursuant to the Pledge
Agreement, and the Borrower shall take or cause to be taken all actions required
so that at all times all Capital Stock of Starwood REIT owned the Borrower or
any of its Subsidiaries (including the Class A Shares to be issued pursuant to
the Reorganization) do not constitute Margin Stock.
SECTION 10.4. PERMANENT FINANCING. UNTIL THE DISCHARGE OF THE NOTE
LIABILITIES, EACH LOAN PARTY WILL TAKE ALL ACTIONS REQUIRED OF IT, OR
CONTEMPLATED TO BE TAKEN BY IT, UNDER THE ENGAGEMENT LETTERS.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to any Loan Party, to it at Starwood Hotels
and Resorts, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Telecopy No. (602)
852-0115 and Starwood Hotels and Resorts Worldwide, Inc., ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, and
(ii) if to any Lender, to it at the address set forth as to it
on Schedule B or in the Assignment and Acceptance by which it becomes a
Lender.
Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date set forth in a telecopy confirmation, the first Business Day
after personal service or delivery to an overnight courier service or the fifth
Business Day after mailing.
SECTION 11.2. WAIVERS; AMENDMENTS.
(a) NO WAIVER; RIGHTS AND POWERS CUMULATIVE. No failure or delay by
any Lender in exercising any right or power hereunder or under any other Note
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Lenders hereunder and under the other Note Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of any Note Document or consent to any departure by any
Loan Party therefrom shall
80
87
in any event be effective unless the same shall be permitted by Section 11.2(b),
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Under no circumstances shall the making of
a Loan be construed as a waiver of any Default, regardless of whether any Lender
may have had notice or knowledge of such Default at the time.
(b) WRITING REQUIRED. Neither this Agreement nor any other Note
Document nor any provision hereof or thereof may be waived, amended or modified
except, in the case of this Agreement, pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or, in the case of
any other Note Document, pursuant to an agreement or agreements in writing
entered into by the signatory parties thereto, in each case with the consent of
the Required Lenders, except that no such agreement shall (i) increase the
Commitment of any Lender without the written consent of such Lender, (ii) reduce
the principal amount of any Loan or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or any interest thereon or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of the Commitment, without the written consent of
each Lender affected thereby, (iv) change Section 2.9 in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (v) change any of the provisions of this Section 11.2 or
the definition of the term "Required Lenders" or any other provision of this
Agreement specifying the number or percentage of Lenders required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender, (vi) release any
Guarantor from its liability under the Affiliate Guaranty (except as expressly
provided in Section 9.12(h)), or limit such liability, without the written
consent of each Lender, or (vii) release all or any substantial part of the
Collateral, without the written consent of each Lender.
SECTION 11.3. EXPENSES; INDEMNITY; DAMAGE WAIVER.
(a) EXPENSES. The Borrower and Starwood REIT jointly and severally
agree to pay (i) all reasonable and documented out-of-pocket expenses incurred
by the Administrative Agent, LCPI or ▇▇▇▇▇▇ Brothers or its Affiliates,
including all reasonable fees, charges and disbursements of their counsel, in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation and administration of the Note Documents or any
drafts or agreements or proposals related or antecedent thereto, or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), and (ii)
all reasonable and documented out-of-pocket expenses incurred by the
Administrative Agent, LCPI, ▇▇▇▇▇▇ Brothers or its Affiliates or the Lenders,
including all reasonable fees, charges and disbursements of counsel for LCPI,
▇▇▇▇▇▇ Brothers or its Affiliates or the Lenders and any advisors, appraisers,
consultants, or other professional engaged by them or by such counsel, in
connection with the enforcement or protection of their respective rights in
connection with the Note Documents, including their rights under this Section
11.3, or in connection with the Loans made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
81
88
negotiations in respect of such Loans or during the pendency of any bankruptcy
or insolvency proceeding.
(b) INDEMNITY. The Borrower and Starwood REIT agree jointly and
severally to defend and indemnify LCPI, ▇▇▇▇▇▇ Brothers and its Affiliates, the
Administrative Agent and each Lender, and each Related Party of any of the
foregoing Persons (all, collectively, "Indemnitees"), against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable and documented fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Note Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Note Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or the use of the
proceeds therefrom, (iii) any actual or alleged presence or release of hazardous
materials on or from any property currently or formerly owned or operated by any
Loan Party or any of their Subsidiaries, or any environmental law liability
related in any way to any Loan Party or any of their Subsidiaries, (iv) the
inaccuracy of any representation or warranty made by any Loan Party in any of
the Transaction Documents, or (v) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto, except only that no Indemnitee shall be indemnified hereunder if
and to the extent that any such losses, claims, damages, liabilities or related
expenses incurred or sustained by it are determined by final judgment of a court
of competent jurisdiction to have resulted directly and primarily from the gross
negligence or willful misconduct of such Indemnitee.
(c) WAIVER OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL AND
PUNITIVE DAMAGES. Neither the Borrower nor Starwood REIT will assert, each of
them will cause each of their Subsidiaries never to assert, and each of them for
themselves and each of their present and future Subsidiaries and their
respective Related Parties hereby forever waives, releases and agrees not to ▇▇▇
upon, any claim against any Indemnitee, on any theory of liability (whether
based upon contract, or founded upon tort or any legal duty or otherwise), for
any special, indirect, consequential damages and, to the fullest extent a claim
for punitive damages is permitted to be waived by law, for punitive damages
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof or any act, omission, claim, breach, wrongful
conduct, or other occurrence or event in any respect relating hereto.
(d) PAYABLE UPON DEMAND. All amounts described in this Section 11.3
shall be payable promptly after written demand therefor.
SECTION 11.4. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon the parties hereto and their respective
successors and assigns permitted hereby and shall inure to the benefit of and be
enforceable by such parties and LCPI, ▇▇▇▇▇▇ Brothers and its Affiliates and
each Indemnitee and their Related Parties and each of their successors and
assigns. Neither the Borrower nor Starwood REIT may assign or otherwise transfer
any of its
82
89
rights or obligations hereunder without the prior written consent of each Lender
(and any such attempted assignment or transfer without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, LCPI, ▇▇▇▇▇▇
Brothers and its Affiliates and each Indemnitee, their Related Parties and each
of their respective successors and assigns) any legal or equitable right, remedy
or claim under or by reason of this Agreement.
SECTION 11.5. SURVIVAL. All covenants, agreements, representations
and warranties made by the Loan Parties in the Note Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Note Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Note Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Tranche Two Commitments
have not expired or terminated. The provisions of Sections 2.6, 2.7, 2.8, 2.9
and 11.3 shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 11.6. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Note Documents and any separate letter agreements with respect to fees
or compensation payable to any Person constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 3.1, this Agreement shall become effective
when it shall have been executed by the Loan Parties and the Lenders and when
LCPI and the Borrower shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto, including
each Lender identified on Schedule B, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 11.7. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 11.8. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from
83
90
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender or
Affiliate to or for the credit or the account of any Loan Party against any of
and all the obligations of any Loan Party now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section 11.8 are in addition to
other rights and remedies (including other rights of setoff) that such Lender
may have.
SECTION 11.9. GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) CONSENT TO JURISDICTION. Each Loan Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Note Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Note Document shall
affect any right that any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Note Document against any
Loan Party or their properties in the courts of any jurisdiction.
(c) WAIVER OF OBJECTIONS TO VENUE. Each Loan Party hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this
Agreement or any other Note Document in any court referred to in Section 11.9(b)
other than a court referred to in the last sentence thereof that is not referred
to elsewhere therein. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) SERVICE OF PROCESS. Each Loan Party hereby irrevocably and
unconditionally consents to service of process in the manner provided for
notices in Section 11.1. Nothing in this Agreement or any other Note Document
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 11.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
84
91
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER SENIOR
SECURED NOTE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10.
SECTION 11.11. ADDITIONAL GUARANTORS. The initial Guarantors
hereunder shall be Starwood REIT and such Subsidiaries of the Borrower or
Starwood REIT as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of the Borrower or
Starwood REIT may become party hereto, as additional Guarantors (each an
"Additional Guarantor"), by executing a counterpart of this Agreement and
delivery of a copy of any such counterpart to the Lenders. Upon such delivery,
notice of which is hereby waived by each Guarantor, each such Additional
Guarantor shall be a Guarantor and shall be as fully a party hereto as if such
Additional Guarantor were an original signatory hereof. Each Guarantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Guarantor hereunder, nor by
any election of any Beneficiary not to cause any Subsidiary of Borrower or
Starwood REIT to become an Additional Guarantor hereunder. This Agreement shall
be fully effective as to any Guarantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Guarantor hereunder.
SECTION 11.12. AGENTS. ▇▇▇▇▇▇ Commercial Paper Inc., as Arranger,
and BT Alex. ▇▇▇▇▇ Incorporated and Chase Securities, Inc., as Syndication
Agents (collectively, the "Agents"), shall not have under this Agreement any
rights, duties or responsibilities in their capacity as such. Without limiting
the generality of the foregoing, (a) no Agent shall be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing, (b) no Agent shall have any duty to take any discretionary action or
exercise any discretionary powers, (c) no Agent shall have any responsibility
with respect to the collection or distribution of any payments, documents or
notices delivered under this Agreement, and (d) no Agent shall have any duty to
disclose, and no Agent shall be liable for the failure to disclose, any
information relating to the Borrower or Starwood REIT or any of their
Subsidiaries that is communicated to or obtained by any Agent or any of its
Affiliates in any capacity. No Agent shall be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 11.2) or in the absence of such Agent's own
gross negligence or willful misconduct. No Agent shall be deemed to have
knowledge of any Default unless and until written notice thereof is given to
such Agent by the Borrower or a Lender, and no Agent shall be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Note Document,
85
92
(ii) the contents of any certificate, report or other document delivered
thereunder or in connection therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth in any
Note Document, (iv) the validity, enforceability, effectiveness or genuineness
of any Note Document or any other agreement, instrument or document, (v) the
creation, enforceability, perfection, priority or sufficiency of any Lien, or
(vi) the satisfaction of any condition set forth in Article III or elsewhere in
any Note Document. Each Agent shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not an Agent, and such Agent and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with any Loan Party
or Affiliate thereof as if it were not an Agent hereunder.
SECTION 11.13. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 11.14. OBLIGATIONS ABSOLUTE. The Borrower's obligation to
pay the Senior Secured Notes and all other Note Liabilities and each Guarantor's
obligation to pay the Guaranteed Obligations shall be absolute, unconditional,
and irrevocable, and shall be paid strictly in accordance with the terms hereof
and thereof, under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which any Loan Party may have or have had
against any Lender or any other Person.
SECTION 11.15. RECOURSE. Each Lender acknowledges and agrees that
the name "Starwood Hotels & Resorts" is a designation of Starwood REIT and its
Trustees (as Trustees but not personally) under a Declaration of Trust dated
August 25, 1969, as amended and restated as of June 6, 1988, as further amended
on February 1, 1995 and as further amended on June 19, 1995 and as the same may
by further amended from time to time, and all persons dealing with Starwood REIT
shall look solely to Starwood REIT's assets for the enforcement of any claims
against Starwood REIT, as the Trustees, officers, agents and security holders of
Starwood REIT assume no personal liability for obligations entered into on
behalf of Starwood REIT, and their respective individual assets shall not be
subject to the claims of any person relating to such obligations.
ARTICLE XII.
THE ADMINISTRATIVE AGENT
This Article XII is for the benefit of the Administrative Agent and the
Lenders only.
SECTION 12.1. APPOINTMENT OF ADMINISTRATIVE AGENT. Each Lender
hereby designates LCPI as its agent and irrevocably authorizes the
Administrative Agent to take action on its behalf under this Agreement and with
respect to the Notes, to exercise the powers and perform the duties described
herein, and to exercise such other powers reasonably incidental thereto. The
Administrative Agent may perform any of its duties through its agents or
employees. In addition, the Administrative Agent may designate one or more
subagents from time to time, with the consent of the Borrower (which consent
shall not be unreasonably
86
93
delayed or withheld and shall not be required if any Default is then
continuing), to perform administrative services with regard to the Tranche Two
Commitments, the Loans and the Notes. Any subagent so designated by the
Administrative Agent shall be entitled to the same protections, exculpations and
indemnities as are set forth in this Article XII with respect to the
Administrative Agent for all actions and omissions performed by such subagent
pursuant to such designation.
SECTION 12.2. NATURE OF DUTIES OF THE ADMINISTRATIVE AGENT. The
Administrative Agent has no duties or responsibilities except those expressly
set forth in this Agreement. Neither the Administrative Agent nor any of its
officers, directors, employees or agents shall be liable for any action taken or
omitted hereunder or in connection herewith, except for such Person's gross
negligence or willful misconduct. The duties of the Administrative Agent shall
be mechanical and administrative in nature. The Administrative Agent shall not
have a fiduciary relationship to any Loan Party, any Lender or any participant
of any Lender. The Administrative Agent shall act only for the Lenders and
neither the Administrative Agent nor any Lender assumes any agency or trust
relationship with any Loan Party. Except for the express obligations of the
Administrative Agent and the Lenders under this Agreement and the other Note
Documents, neither the Administrative Agent nor any Lender assumes any
obligation to any Loan Party. The Administrative Agent shall have no liability
for the acts or omissions of any subagents engaged or selected by the
Administrative Agent, provided that the Administrative Agent was not grossly
negligent in the engagement or selection of such subagents. The Administrative
Agent may deem and treat each Lender as the holder of the Loan held by it, as
reflected in the Note Register, for all purposes hereof. The Administrative
Agent shall not be required to deal with any Person that has acquired a
participation in any Loan.
SECTION 12.3. LACK OF RELIANCE ON THE ADMINISTRATIVE AGENT.
Independently and without reliance upon the Administrative Agent, each Lender
has made and shall continue to make its own independent investigation and
analysis of the content and validity of the Note Documents and of the
performance and creditworthiness of the Loan Parties thereunder. Each Lender
shall, independently and without reliance on upon the Administrative 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 analysis and decisions in
taking or not taking action under this Agreement and the other Note Documents.
The Administrative Agent assumes no responsibility and undertakes no obligation
to make inquiry with respect to such matters. The Administrative Agent shall not
be responsible to any Lender for any recitals, statements, representations or
warranties made by any Loan Party or any officer, employee or agent of any Loan
Party or any other Person, whether contained in this Agreement or any other Note
Document or otherwise, or for the value, legality, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Note
Document, or for the perfection or priority of any security interest or lien in
any Collateral or for any failure by any Loan Party to perform any obligations
hereunder or thereunder. The Administrative Agent shall not be required to keep
itself informed as to any Loan Party's compliance with any Note Document or to
inspect the properties or books and records of any Loan Party. Except for
notices and other documents and information that this Agreement expressly
requires the
87
94
Administrative Agent to furnish to the Lenders, the Administrative Agent shall
have no duty or obligation to provide any Lender with any credit or other
information concerning the business, operations, result of operations, assets,
liabilities, prospects or condition (financial or otherwise) of any Loan Party.
The Administrative Agent shall not be required to file this Agreement or any
other Note Document for record or to give notice to anyone of any of the
foregoing.
SECTION 12.4. CERTAIN RIGHTS OF THE ADMINISTRATIVE AGENT. The
Administrative Agent may request instructions from Required Lenders at any time.
If the Administrative Agent requests instructions from Required Lenders at such
time with respect to any action or inaction, the Administrative Agent shall be
entitled to await instructions from Required Lenders at such time before such
action or inaction. No Lender shall have any right of action based upon the
Administrative Agent's action or inaction in response to instructions from
Required Lenders at such time. Any action taken or failure to act pursuant to
instructions of Required Lenders shall be binding on all Lenders and any other
holder of all or any portion of any Loan or any interest or participation
therein. Except for actions expressly required of the Administrative Agent under
this Agreement, the Administrative Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include a requirement for cash collateral) of the Lender's
indemnity obligations under this Article XII in respect of any and all liability
and expense that the Administrative Agent may incur by reason of taking or
continuing to take any such action.
SECTION 12.5. RELIANCE BY THE ADMINISTRATIVE AGENT. The
Administrative Agent may rely upon written or telephonic communications it
believes to be genuine and to have been signed, sent or made by the proper
person. The Administrative Agent may obtain the advice of legal counsel
(including, for matters concerning the Borrower, counsel for the Borrower),
independent public accountants and other experts selected by it and shall have
no liability for action or inaction in good faith based upon such advice.
SECTION 12.6. INDEMNIFICATION OF THE ADMINISTRATIVE AGENT. To the
extent the Administrative Agent is not reimbursed and indemnified by the
Borrower, each Lender will reimburse and indemnify the Administrative Agent, to
the extent of such Lender's Percentage Share, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever (including all expenses) which may be imposed on, incurred
by or asserted against the Administrative Agent in performing its duties
hereunder or otherwise relating to the Note Documents or any other documents
contemplated hereby or thereby (including any costs and expenses that any Loan
Party is obligated but fails to reimburse) or in the enforcement of any of the
terms hereof or thereof. Notwithstanding the foregoing, no Lender shall be
liable to the Administrative Agent: (a) to the extent of losses directly
resulting from the Administrative Agent's gross negligence or willful
misconduct; or (b) with respect to any loss of principal of or interest on the
Administrative Agent's Loans.
SECTION 12.7. ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. In
its individual capacity, the Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise them as though it was not
performing the duties of an agent for
88
95
the Lenders. The Administrative Agent and its Affiliates may lend money to,
acquire equity interests in, and generally engage in any kind of investment
banking, financial advisory or other business with the Borrower or any Affiliate
of the Borrower as if it were not performing the duties of an agent for the
Lenders, and may accept fees and other consideration from the Borrower for
services in connection with this Agreement and otherwise without having to
account for the same to any Lender.
SECTION 12.8. SUCCESSOR ADMINISTRATIVE AGENT. (a) The Administrative
Agent may, upon five Business Days' notice to the Lenders and the Borrower,
resign at any time by giving written notice thereof to the Lenders and the
Borrower. Upon any such notice of resignation, the Required Lenders shall have
the right to appoint a successor Administrative Agent, with the consent of the
Borrower (which consent shall not be unreasonably delayed or withheld and shall
not be required if any Default is then continuing). If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty days after notice of the
Administrative Agent's retirement or resignation, then the retiring the
Administrative Agent may, on behalf of the Lenders, appoint one of the Lenders
as successor Administrative Agent.
(b) Upon its acceptance of the agency hereunder, a successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. The retiring Administrative Agent shall
continue to have the benefit of this Article XII for any action or inaction
while it was the Administrative Agent.
SECTION 12.9. COLLATERAL; REMEDIES. Each of the Loan Parties and the
Lenders hereby acknowledges that the Administrative Agent shall have no duties
or obligations with respect to any Collateral or the selection or enforcement of
any remedies hereunder or under any other Note Document.
SECTION 12.10. DEFAULTS. The Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default or Event of Default
unless the Administrative Agent has received notice from a Lender or from the
Borrower specifying such Default or Event of Default and stating that such
notice is a "Notice of Default." If the Administrative Agent receives such a
notice, then the Administrative Agent shall give prompt notice thereof to the
Lenders, but in no event shall the Administrative Agent be required to take or
refrain from taking any other action with respect to any Default or Event of
Default.
SECTION 12.11. MISCELLANEOUS. Notwithstanding anything to the
contrary in this Agreement, the Administrative Agent shall not be bound by any
waiver, amendment, supplement or modification of this Agreement or any other
Note Document that affects its duties, rights or functions hereunder or
thereunder in such capacity unless the Administrative Agent shall have given its
prior written consent thereto. The Administrative Agent shall have no
liabilities or responsibilities to any Loan Party or any Lender on account of
any Lender's (except the Administrative Agent's) or Loan Party's failure to
perform its obligations hereunder or under any other Note Document. Without
requiring the consent of any Loan Party
89
96
or any Lender, the Administrative Agent may at any time and from time to time
transfer its functions as the Administrative Agent hereunder and under the other
Note Documents to any of its offices wherever located in the United States,
provided that the Administrative Agent shall promptly notify the Borrower and
the Lenders of any such transfer.
90
97
LIST OF EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Tranche One Note
Exhibit B-2 Form of Tranche Two Note
Exhibit C Form of Closing Certificate
Exhibit D Form of Notice of Pledge Agreement Entitlement
Exhibit E Form of Notice of Borrowing
LIST OF SCHEDULES
Schedule A Guarantors
Schedule B Lenders, Commitment Amounts, Notice and Payment Information
Schedule C Disbursement Instructions
Schedule D Additional Conditions Precedent
Schedule 4.1 Disclosure Schedule (from Bank Credit Facility)
98
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
CHARLESTON HOTEL ASSOCIATES, LLC,
a New Jersey limited liability company,
CRYSTAL CITY HOTEL ASSOCIATES, LLC,
a New Jersey limited liability company,
LONG BEACH HOTEL ASSOCIATES, LLC,
a New Jersey limited liability company,
SANTA ▇▇▇▇ HOTEL ASSOCIATES, LLC,
a New Jersey limited liability company,
SLT ALLENTOWN LLC,
a Delaware limited liability company,
SLT ARLINGTON LLC,
a Delaware limited liability company,
SLT ASPEN ▇▇▇▇ STREET, LLC,
a Delaware limited liability company,
SLT BLOOMINGTON LLC,
a Delaware limited liability company,
SLT CENTRAL PARK SOUTH, LLC,
a Delaware limited liability company,
SLT DANIA LLC,
a Delaware limited liability company,
SLT DC MASSACHUSETTS AVENUE, LLC,
a Delaware limited liability company,
SLT INDIANAPOLIS LLC,
a Delaware limited liability company,
99
SLT KANSAS CITY LLC,
a Delaware limited liability company,
SLT LOS ANGELES LLC,
a Delaware limited liability company,
SLT MINNEAPOLIS LLC,
a Delaware limited liability company,
SLT PALM DESERT LLC,
a Delaware limited liability company,
SLT PHILADELPHIA LLC,
a Delaware limited liability company,
SLT REALTY COMPANY, LLC,
a Delaware limited liability company,
SLT SAN DIEGO LLC,
a Delaware limited liability company,
SLT SOUTHFIELD LLC.,
a Delaware limited liability company,
SLT ST. LOUIS LLC,
a Delaware limited liability company,
SLT TUCSON LLC,
a Delaware limited liability company,
STARLEX LLC,
a New York limited liability company,
STARWOOD ATLANTA II LLC,
a Delaware limited liability company,
STARWOOD ATLANTA LLC,
a Delaware limited liability company,
STARWOOD MISSION HILLS, L.L.C.,
a Delaware limited liability company,
STARWOOD ▇▇▇▇▇▇▇ LLC,
a Delaware limited liability company,
100
STARWOOD WALTHAM LLC,
a Delaware limited liability company,
By: SLT Realty Limited Partnership,
a Delaware limited partnership, the managing member of each of the
above listed entities
By: Starwood Hotels & Resorts,
a Maryland real estate investment trust,
its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
SLT REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Starwood Hotels & Resorts,
a Maryland real estate investment trust,
its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
STARWOOD HOTELS & RESORTS,
a Maryland real estate investment trust,
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
BW HOTEL REALTY, LP,
a Maryland limited partnership,
CP HOTEL REALTY, LP,
a Maryland limited partnership,
EDISON HOTEL ASSOCIATES, LP,
a New Jersey limited liability company,
101
NOVI HOTEL ASSOCIATES, LP,
a Delaware limited partnership,
PARK RIDGE HOTEL ASSOCIATES LP,
a Delaware limited partnership,
SLT FINANCING PARTNERSHIP,
a Delaware partnership,
SLT HOUSTON BRIAR OAKS, LP,
a Delaware limited partnership,
VIRGINIA HOTEL ASSOCIATES, LP,
a Delaware limited partnership,
PRUDENTIAL HEI JOINT VENTURE,
a Georgia general partnership,
BY: SLT Realty Limited Partnership,
a Delaware limited partnership, the general
partner of each of the above listed entities
By: Starwood Hotels & Resorts,
a Maryland real estate investment trust,
its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
102
HEI HOTELS, L.L.C.,
a Delaware limited liability company,
OPERATING PHILADELPHIA LLC,
a Delaware limited liability company,
SLC ALLENTOWN LLC,
a Delaware limited liability company,
SLC ARLINGTON LLC,
a Delaware limited liability company,
SLC ASPEN ▇▇▇▇ STREET, LLC,
a Delaware limited liability company,
SLC ATLANTA II LLC,
a Delaware limited liability company,
SLC ATLANTA LLC,
a Delaware limited liability company,
SLC BLOOMINGTON LLC,
a Delaware limited liability company,
SLC CENTRAL PARK SOUTH, LLC, a
Delaware limited liability company,
SLC DANIA LLC,
a Delaware limited liability company,
SLC DC MASSACHUSETTS AVENUE, LLC,
a Delaware limited liability company,
SLC INDIANAPOLIS LLC,
a Delaware limited liability company,
SLC KANSAS CITY L.L.C.,
a Delaware limited liability company,
SLC LOS ANGELES LLC,
a Delaware limited liability company,
SLC MINNEAPOLIS LLC,
a Delaware limited liability company,
103
SLC ▇▇▇▇▇▇▇ LLC,
a Delaware limited liability company,
SLC PALM DESERT LLC,
a Delaware limited liability company,
SLC SAN DIEGO LLC,
a Delaware limited liability company,
SLC SOUTHFIELD LLC,
a Delaware limited liability company,
SLC ST. LOUIS LLC,
a Delaware limited liability company,
SLC TUCSON LLC,
a Delaware limited liability company,
SLC WALTHAM LLC,
a Delaware limited liability company,
STARWOOD MANAGEMENT COMPANY, LLC,
a Delaware limited liability company,
By: SLC Operating Limited Partnership,
a Delaware Limited Partnership, the managing member of each of
the above listed entities
By: Starwood Hotels and Resorts
Worldwide, Inc., a Maryland corporation, its
general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
[SIGNATURES OF LENDERS OMITTED]