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EXHIBIT 10.24
AMENDED AND RESTATED
CREDIT AGREEMENT
among
STARWOOD LODGING TRUST
(formerly known as
Hotel Investors Trust)
and
SLT REALTY LIMITED PARTNERSHIP
and
BANKERS TRUST COMPANY
as successor Collateral Agent to
▇▇▇▇▇ Fargo Bank, National Association
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.,
as assignee of
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company,
▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life Insurance Company,
Connecticut Mutual Life Insurance Company
The First National Bank of Boston
and
▇▇▇▇▇ Fargo Bank, National Association
______________________________
Dated as of March 24, 1995
______________________________
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TABLE OF CONTENTS
DEFINITIONS
ARTICLE 1.
Amount and Terms of the Credit
1.1 Restructuring of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.2 Assignment and Assumption; Third Closing Loans . . . . . . . . . . . . . . . . . . . . . . 26
1.3 Dating and Registration of Notes; Transfer of Third Closing Loans . . . . . . . . . . . . 27
1.4 Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Stated Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Notice by Collateral Agent . . . . . . . . . . . . . . . . . . . 28
1.6 Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.7 Acquisition Credit Facility; Severance of Loans . . . . . . . . . . . . . . . . . . . . . 28
1.8 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Extension Fee . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Service Charges . . . . . . . . . . . . . . . . . . . . . . . . 29
1.9 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . 29
(b) Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . 30
(c) Notices of Prepayments . . . . . . . . . . . . . . . . . . . . . 31
(d) Formula for Application of Prepayments . . . . . . . . . . . . . 31
1.10 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
1.11 Form and Terms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
1.12 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1.13 Increased Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1.14 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 2.
Use of Proceeds
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ARTICLE 3.
Representations and Warranties
3.1 Organization, Standing, etc. of the Borrower and the Other Companies; Authorization . . . 33
(a) Realty Partnership . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Operating Partnership. . . . . . . . . . . . . . . . . . . . . . 34
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.3 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4 Financial Information; Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.7 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.8 Indebtedness, Liens and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.9 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.10 Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.11 Authorization; Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . 37
3.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.13 Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.14 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.15 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.16 Employee Retirement Income Security Act of 1974 . . . . . . . . . . . . . . . . . . . . . 39
3.17 Ownership of Borrower and SLT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) SLT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.19 Trademarks, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.20 Burdensome Court Orders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.21 Fire, Explosion, Labor Disputes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.22 Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.23 Lien Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.24 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.25 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.26 All Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.27 Certain Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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ARTICLE 4.
Gaming Partnership
4.1 Consent to Transfer of Assets of HICN to Gaming Partnership . . . . . . . . . . . . . . . 42
(a) Security Documents . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Operating Partnership Guaranty . . . . . . . . . . . . . . . . . 42
(c) Solvency Certificate . . . . . . . . . . . . . . . . . . . . . . 43
(d) Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 43
(e) Local Counsel Opinion . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 5.
Affirmative Covenants
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(a) Annual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(b) Quarterly . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(c) Monthly . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(d) Projections and Capital Expenditures Budget . . . . . . . . . . 46
(e) Auditors' Letters . . . . . . . . . . . . . . . . . . . . . . . 47
(f) Management Company Reports . . . . . . . . . . . . . . . . . . . 47
5.2 Other Information and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Communications With Shareholders . . . . . . . . . . . . . . . . 47
(b) Notices of Default on Other Documents . . . . . . . . . . . . . 48
(c) Notice of Litigation or Other Material
Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.3 Legal Existence: Franchises: Compliance with Laws . . . . . . . . . . . . . . . . . . . . 50
5.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.5 Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.6 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.7 Payment of Other Indebtedness. etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(b) Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . . . 56
(c) Additional Collateral . . . . . . . . . . . . . . . . . . . . . 56
(d) Management Contracts . . . . . . . . . . . . . . . . . . . . . . 57
5.9 Cash Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.10 Action Under Hazardous Materials Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.11 Asbestos Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.12 Appraisals and Marketing Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.13 Termination of Material Licenses and Material Agreements . . . . . . . . . . . . . . . . . 59
5.14 Covenant regarding Second Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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ARTICLE 6.
Negative Covenants
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.5 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.6 Intercompany Loans and Leases, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.7 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.8 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.9 Mergers and Consolidations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.10 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.11 Issuance of Additional Shares. etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.12 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.13 Prohibition on Sale of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.14 Modification of Certain Documents, Agreements and Instruments . . . . . . . . . . . . . . 77
6.15 Employment and Compensation Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
6.16 Cash and Cash Equivalents Held by Other Companies . . . . . . . . . . . . . . . . . . . . 77
6.17 Management Companies and Management Contracts . . . . . . . . . . . . . . . . . . . . . . 78
6.18 Compliance with ERISA, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
6.19 No Additional Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 7.
Financial Covenants
7.1 Minimum Adjusted Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.2 Available Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.3 Illustrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE 8.
Defaults; Remedies
8.1 Events of Default: Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.2 Remedies on Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE 9.
Setoff
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ARTICLE 10.
Expenses: Indemnification
10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.3 Residual Indemnity Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE 11.
Amendments and Waivers, etc.
11.1 Waivers in Writing, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE 12.
Nature of the Senior Lender's Obligations
ARTICLE 13.
Limitation of Liability
ARTICLE 14.
Miscellaneous
14.1 Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
14.2 Extensions of Time: Calculations. etc . . . . . . . . . . . . . . . . . . . . . . . . . . 88
(a) [OMITTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
(b) Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . 88
14.3 Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . 89
14.4 Counterparts, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
14.5 Entire Agreement. etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
14.6 Construction of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
14.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.8 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
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14.9 Choice of Law and Waiver of Jury . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(a) Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . 93
(b) Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 94
14.10 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
14.11 Cross References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
EXHIBITS
A-3A Form of Third Closing Residual Note
A-3B Form of Third Closing State Note
F-3 Form of Gaming Partnership Solvency Certificate
K-3 Form of Operating Partnership Guaranty from Gaming Partnership
O Form of Management Subordination Agreement
V Form of Deviation Report
W Form of Capital Expenditures Budget
X Cash Management Memorandum
Y Form of Management Contract
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SCHEDULES
1.7 Terms of Acquisition Credit Facility
1.9 Aggregate Asset Value
3.1 Organization, Standing, etc. of Borrower
3.2 Subsidiaries
3.3 Qualifications
3.4 Financial Statements
3.5(a) Gaming Licenses and Alcohol Beverage Licenses
3.5(b) Exceptions to Material Licenses
3.6(a) Material Agreements
3.6(b) Exceptions to Material Agreements
3.7 Tax Returns and Payments
3.8(a) Indebtedness
3.8(b) Liens
3.8(c) Investments
3.8(d) Contingent Obligations
3.10 Litigation
3.11 Compliance with Other Instruments
3.14(c) Consents - General
3.16 Employee Benefit Plans
3.17(a) Capital Structure of Borrower
3.17(b) Capital Structure of SLT
3.18 Environmental Matters
3.19 Trademarks, etc.
3.21 Fire, Explosion, Labor Disputes, etc.
3.23 Lien Validity
3.24 Solvency
3.25 Accounts
3.26 Assets
4.2(q) Restructuring Plan
6.10 Minimum Release Prices
7 Illustrations of Calculation of Financial Covenants
14.11 Cross-Reference Table
ATTACHMENTS
I Address for Payments of Notes; Allocation of Payments on the Notes
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AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), dated as of
March 24, 1995, among Starwood Lodging Trust (formerly known as Hotel Investors
Trust) ("SLT"), SLT Realty Limited Partnership (the "Realty Partnership"),
Bankers Trust Company in its capacity as the collateral agent, its successors
and assigns ("Collateral Agent") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
("▇▇▇▇▇▇▇" or the "Senior Lender") as assignee of and successor to The First
National Bank of Boston, National Association, ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life
Insurance Company, ▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life Insurance Company, Connecticut
Mutual Life Insurance Company and ▇▇▇▇▇ Fargo Bank, National Association. This
Agreement amends and restates the terms and conditions of the Prior Credit
Agreement (as hereinafter defined).
Preliminary Statement
SLT, ▇▇▇▇▇▇▇ (by way of its predecessors in interest) and the
predecessor to the Collateral Agent entered into a Credit Agreement dated as of
January 28, 1993, as amended (the "Prior Credit Agreement") pursuant to which
the First Closing Loans and the Second Closing Loans were made to SLT. The
Third Closing (as defined therein) was to have occurred on or before the date
that was one hundred fifty (150) days after the date of the First Closing,
which period was subject to extension as provided in the Prior Credit
Agreement.
As set forth in detail in the Formation Agreement, dated November 11,
1994, among SLT, Starwood Lodging Corporation ("SLC"), Starwood Capital Group,
L.P. ("Starwood") and certain affiliates of Starwood, including any and all
amendments or other modifications, supplements, extensions or renewals thereto
or thereof that have been approved by the Senior Lender in writing, and
together with the letter agreement, dated November 11, 1994, among SLT, SLC and
Starwood (the "Formation Agreement"), SLT, SLC and Starwood have engaged in a
transaction (the "Starwood Reorganization") which, in general, involved the
transfer to the Realty Partnership of all or substantially all of the assets
and liabilities of SLT, the transfer to SLC Operating Limited Partnership (the
"Operating Partnership," and together with the Realty Partnership, the
"Partnerships") of all or substantially all of the assets and liabilities of
SLC other than HICN (as hereinafter defined) and each subsidiary of SLC, and
the transfer of certain additional assets, subject to certain liabilities, of
the Starwood Partners to the Realty Partnership and the Operating Partnership.
The Starwood Reorganization was substantially completed pursuant to the
Formation Agreement effective as of January 1, 1995.
The transfer of certain of the assets (the "Gaming Assets") of one of
the subsidiaries of SLC, Hotel Investors Corporation of Nevada ("HICN"), is
subject to prior approval (such approvals collectively the "Nevada Gaming
Approvals") by various Nevada regulatory authorities (collectively, the "Nevada
Gaming Authorities"), which approvals have not been obtained as the date
hereof. As part of the Starwood Reorganization, all of the assets, including
the Gaming Assets, and liabilities of HICN have been retained by HICN until the
Nevada Gaming Approvals have been received or are no longer necessary, at which
time such Assets and liabilities will be transferred to a limited partnership
(the "Gaming Partnership"), the partners of which will be the Operating
Partnership and HICN.
Pursuant to the Second Amendment to the Prior Credit Agreement, the
Senior Lender has given its written consent to the Starwood Reorganization, the
transfer of substantially all of
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the assets and liabilities of SLT, SLC and each Subsidiary of SLC other than
HICN to the Partnerships, subject to the terms of this Agreement, the transfer
of all of the assets and liabilities of HICN to the Gaming Partnership, and the
modification of certain terms of the Prior Credit Agreement and of the other
Loan Documents and Intercompany Loan Documents executed in connection
therewith.
The Senior Lender and the Borrower desire to amend and restate the
Prior Credit Agreement in its entirety and to provide for, among other things,
an additional advance to the Borrower in the amount of $13,436,672.08, the
pledge of certain of the Starwood Assets, as defined herein, as additional
security for the Loans, and the $75,000,000 Acquisition Credit Facility, as
defined herein.
The terms and conditions set forth herein and in the other Loan
Documents and Intercompany Loan Documents being executed and delivered in
connection herewith expressly provide for the continuation of all of the
Required Liens and Intercompany Liens in all of the Assets, other than Excluded
Assets and Excluded Intercompany Assets, of SLT, SLC and each SLC Subsidiary,
whether such Assets were or are transferred to either of the Partnerships or
the Gaming Partnership or retained by SLT, SLC or any SLC Subsidiary.
In consideration hereof the parties hereto hereby agree as follows:
DEFINITIONS
As used herein, the following terms have the following respective
meanings:
"ACM" has the meaning set forth in Section 5.11.
"ACM Requirements" means all Hazardous Materials Laws relating to the
presence of ACM on any Hotel Property, and comparable state laws, rules and
regulations, if any, to the extent relating to the presence of ACM on any Hotel
Property, and the Occupational Safety and Health Act of 1970, as amended from
time to time, and regulations thereunder and comparable state laws, rules and
regulations, if any.
"Acquisition Credit Facility" means the credit facility made available
hereunder pursuant to the terms, conditions and consents set forth in Section
1.7 and Schedule 1.7.
"Acquisition Loan" has the meaning set forth in subsection 1.7(a).
"Adjusted London Interbank Offered Rate" means as to any Interest
Period a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to 1/100 of 1%) by dividing (i) the applicable London Interbank
Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
"Adjusted Net Worth" means the combined partners' equity of the
Borrower and of the Operating Partnership, determined in accordance with GAAP.
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"Affiliate" means, at any time, any Person that satisfies any one or
more of the following criteria: (a)(i) any Person known to the Borrower to
hold, of record or beneficially, five percent (5.00%) or more of the shares of
beneficial interest or the shares of capital stock of SLT or SLC then
outstanding, (ii) any Person then occupying the position of trustee or director
of any of the Companies, (iii) any Person then occupying the position of
officer of any of the Companies, or (iv) any Person then known to the Borrower
to be controlled by or under direct or indirect common control with the
Borrower or any other Company or controlled by any Person described in clauses
(ii) or (iii) above (including Moorland Hotel Limited Partnership); (b) any
general partner, limited partner or other holder of any of the Partnership
Interests in the Borrower and/or the Operating Partnership and any Affiliate of
any general partner, limited partner or holder of any of the Partnership
Interests in the Borrower and/or the Operating Partnership, and (c) any Person
then known to the Borrower to be controlled by or under direct or indirect
common control with Starwood. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), means the possession, directly or indirectly, of the
power to direct or to cause the direction of the management and policy of that
Person, whether through the ownership of Voting Stock, a partnership interest
or interests, by contract or otherwise.
"Aggregate Asset Value" means as of any date of determination the
combined total value of all the Assets then held by the Senior Lender as
collateral for the Loans as each such value is set forth on Schedule 1.9. If
the Borrower or any Company shall acquire a Hotel Property or Mortgage Note
after the date hereof, pursuant to Article 6, the value of such Asset and all
Assets acquired in connection therewith shall be determined by the Senior
Lender. Schedule 1.9 shall be amended to include such value, provided the
Senior Lender shall have a Required Lien encumbering such Asset.
"Applicable Amount" has the meaning set forth in Section 6.7.
"Appraisal" means an appraisal of a Hotel Property or an Indirect
Hotel Property prepared by PKF Consulting who shall be M.A.I. approved and with
appropriate state licenses (or such other Person as may be reasonably
satisfactory to the Senior Lender) and that otherwise satisfies the
requirements of all applicable statutes and regulations, if any, applicable at
the time in question to the Senior Lender.
"Asset" means any property or other asset of any kind that a Person
owns, leases or otherwise has the right to possess or use, whether real,
personal or mixed real and personal, whether tangible or intangible and whether
such ownership or other interest exists on the date of this Agreement or is
hereafter acquired.
"Asset Sale" has the meaning set forth in Section 6.10. However, the
granting of a security interest in, or the placing of a mortgage, deed of
trust, deed to secure debt or other encumbrance on, an Asset shall in no event
constitute an Asset Sale.
"Available Cash" means for any period the Companies' consolidated net
income or loss for such period, determined in accordance with GAAP, after
restoring thereto amounts
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deducted for provision for investment losses, provision for income taxes,
depreciation and amortization, losses on sales of hotel and hotel/casino
Assets, interest paid or accrued with respect to the Loans and interest paid or
accrued with respect to the other Indebtedness of SLT or the Realty Partnership
for such period, other costs incurred by the Companies in connection with the
execution and delivery hereof and performance of the Companies' obligations
hereunder, costs incurred by the Companies in connection with the Starwood
Reorganization, litigation and settlement costs and other extraordinary costs
paid or accrued during or for such period and after subtracting therefrom
amounts included for gain on sales of hotel and hotel/casino Assets and income
tax benefits.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978 (11 U.S.C.
Sections 101-1330), as amended or supplemented from time to time, and any
successor statute, and all of the rules issued or promulgated in connection
therewith.
"Borrower" means the Realty Partnership. However, SLT, the primary
obligor with respect to the Loans prior to the Starwood Reorganization, shall
remain fully liable for the payment and performance of the Realty Partnership's
obligations under this Agreement, the Third Closing Notes and the other Loan
Documents and Intercompany Loan Documents to the extent provided herein and
therein.
"Borrower's Residual General Intangibles" has the meaning set forth in
the Mortgage Note Assignment.
"Business Day" means (i) for all purposes, any day, excluding Saturday
and Sunday and excluding any other day that shall be in New York, New York a
legal holiday or a day on which banking institutions are authorized or required
by law to close, and (ii) with respect to all notices and determinations in
connection with, and payment of principal and interest on, the Loans, any day
that is a Business Day described in (i) above and that is a day for trading by
and between banks for U.S. dollar deposits in the interbank euro-dollar market.
"Capital Expenditure" means any payment made directly or indirectly
for the purpose of acquiring or constructing or restoring fixed assets, real
property or equipment, which in accordance with GAAP, would be added as a debit
to the fixed asset account of the Person making such expenditure, including
amounts paid or payable as principal under any conditional sale or other title
retention agreement or under any lease or other periodic payment arrangement
which is of such a nature that payment obligations of the lessee or obligor
thereunder would be required by GAAP to be capitalized and shown as liabilities
on the balance sheet of such lessee or obligor. However, no payment pursuant to
any ground lease, or hotel operating lease or Capital Lease shall be considered
a Capital Expenditure.
"Capital Expenditures Budget" has the meaning set forth in subsection
5.1(d).
"Capital Lease" means any lease or other periodic payment arrangement
in respect of property (real, personal or mixed) which, in accordance with
GAAP, should be capitalized on
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the lessee's balance sheet or for which the amount of the asset and liability
thereunder as if so capitalized should be disclosed in a note to such balance
sheet.
"Cash and Cash Equivalents" means all cash and/or cash equivalents
derived from any source whatsoever, including all "instruments" (as defined in
Section 9105 of the California Uniform Commercial Code), "checks" (as defined
under Section 3104(2)(b) of the California Uniform Commercial Code), "drafts"
(as defined pursuant to Section 3104(a) of the California Uniform Commercial
Code), credit card or charge card receipts or other forms of payments for the
provision of goods or services from any of the Hotel Properties or from other
activities of any of the Companies, the collection or payment of which is
normally accomplished through the deposit or delivery of such items with a
commercial bank or other financial institution for payment and collection.
However, Cash and Cash Equivalents of the Companies shall not include any
amount or amounts paid to or on behalf of any Company pursuant to any policy of
directors' (or trustees') and officers' insurance if and to the extent that
such Cash and Cash Equivalents are required by the issuer or issuers of such
policy to be, and such Cash and Cash Equivalents are, paid on behalf of insured
trustees, directors or officers pursuant to one or more claims made pursuant to
such policy (or if payment of such claim has already been advanced by such
trustee, director or officer, reimbursed to such Person).
"Cash Interest" means having the amount of interest required to be
paid by the Borrower to the Senior Lender or paid or accrued to other holders
of Indebtedness of the Companies during such period.
"Cash Management Accounts" has the meaning set forth in the Cash
Management Memorandum.
"Cash Management Memorandum" means the memorandum attached hereto as
Exhibit X describing the system agreed upon by SLT, the Realty Partnership and
the Senior Lender to administer the Borrower's (and the other Companies') Cash
and Cash Equivalents, including any and all amendments or other modifications
or supplements thereto or thereof.
"Cash Management System" has the meaning set forth in the Cash
Management Memorandum.
"Cash Threshold" means $10,000,000 in the aggregate in (a) Cash and
Cash Equivalents (other than Excluded Cash) held in the aggregate by all
Companies and deposited in the Cash Management Accounts, and (b) Liquid
Investments held by the Companies or any of them. Nothing in this definition
shall be construed as requiring any specific level of cash reserves or as
requiring that amounts in excess of the Cash Threshold be applied to amortize
the Loans.
"Change of Control" means any of the following events, unless the
Senior Lender by its consent deems any such event not to constitute a Change of
Control : (i) the removal or replacement for any reason of SLT as the general
partner of the Realty Partnership, (ii) the removal or replacement for any
reason of SLC as the managing general partner of the
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Operating Partnership, (iii) the failure of a nominee of Starwood to be elected
to, or at any time for any reason to serve as, a member of SLT's Board of
Trustees, SLC's Board of Directors after receipt of the Nevada Gaming Approvals
and, prior to receipt of the Nevada Gaming Approvals, the management committee
of the Operating Partnership entrusted with control over decisions of the
Operating Partnership other than with respect to the Gaming Assets or (iii)
Starwood Partners' ceasing to own or control at least fifteen percent (15%) of
the issued and outstanding units of limited partnership interests in the Realty
Partnership, unless its ownership or control of such interests falls below such
percentage as a result of (1) a public offering of equity securities by SLT,
SLC or the Partnerships, (2) a merger permitted by Section 6.9 or (3)
distribution of OP units with respect to the Partnerships by Starwood Partners
pursuant to contracts entered into prior to the date hereof; provided, however,
with respect to this clause (3) the fifteen percent (15%) requirement shall not
be reduced below ten percent (10%).
"Closing" means any of the First Closing, the Second Closing or the
Third Closing.
"Closing Date" means the date on which a Closing actually occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all Assets now owned or hereafter acquired by the
Borrower in which or upon which a Lien is granted, or for which an assignment
for security is made, under the Security Documents.
"Collateral Accounts" has the meaning set forth in the Cash Management
Memorandum.
"Collateral Agent" means Bankers Trust Company in its capacity as
collateral agent for the Senior Lender hereunder and pursuant to a separate
agreement, if any, as the same may be amended from time to time and any
successor collateral agent selected by the Senior Lender in accordance with the
terms of any such separate agreement. The Senior Lender may delegate any and
all of the Senior Lender's rights, remedies and responsibilities under this
Agreement to the Collateral Agent and the Borrower and the other Companies may
rely on the statements and actions of the Collateral Agent in connection with
the Loans as having the full and complete authority of the Senior Lender.
"Company" means any of SLT, SLC, the Realty Partnership, the Operating
Partnership and each Subsidiary of SLT, SLC, the Realty Partnership or the
Operating Partnership.
"Companies" means, collectively, SLT, SLC, the Partnerships and their
respective Subsidiaries.
"Condemnation" has the meaning set forth in subsection 5.5(a).
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"Confirmation of Position Agreement" means that certain Confirmation
of Position Agreement dated as of January 28, 1993, among SLT, SLC and each of
their respective Subsidiaries.
"Consents" has the meaning set forth in Section 3.14.
"Contingent Obligation" means as to any Person and without duplication
of amounts, any obligation of such Person guaranteeing or intended to guarantee
(whether guaranteed, endorsed, co-made, discounted or sold with recourse to
such Person) any indebtedness, lease, dividend, reimbursement obligation
relating to letters of credit, or other obligation ("primary obligation") of
any other Person ("primary obligor") in any manner, whether directly or
indirectly, including any obligation of such Person, irrespective of whether
contingent, (a) to purchase any such primary obligation, (b) to advance or
supply funds (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise) (i) for the purchase, repurchase or payment of any
such primary obligation or any Asset constituting direct or indirect security
therefor, or (ii) to maintain working capital or equity capital of the primary
obligor, or otherwise to maintain the net worth, solvency or other financial
condition of the primary obligor, (c) to purchase or make payment for any
Asset, securities, services or lease if such obligation is primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) to
otherwise assure or hold harmless the owner of such primary obligation against
loss in respect thereof. However, the Contingent Obligations of any Person
shall not include (i) trade payables or accrued liabilities of such Person
incurred in the ordinary course of business of such Person, (ii) endorsements
of instruments for deposit or collection in the ordinary course of such
Person's business, or (iii) indemnities arising in the ordinary course of such
Person's business, including indemnities arising in connection with the sale or
other disposition of Assets or in connection with the incurring of
indebtedness.
"Daily Cash Worksheet" has the meaning set forth in the Cash
Management Memorandum.
"Damage" has the meaning set forth in subsection 5.5(a).
"Debt Service" means for any period all amounts payable by any of the
Companies in respect of interest and scheduled amortization with respect to
that Company's Indebtedness.
"Default" means any event, breach, occurrence or failure of condition
that, with the giving of notice or the expiration of any applicable grace
period or both, would constitute an Event of Default.
"Direct Note Collateral" has the meaning set forth in the Mortgage
Note Assignment.
"Earnings Projection" has the meaning set forth in paragraph (i)(B) of
subsection 6.5(f).
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"Environmental Indemnity" means that certain Environmental Indemnity
dated as of January 28, 1993, and executed by SLT in favor of the Senior
Lender, including any and all amendments or other modifications, supplements,
extensions or renewals thereto or thereof.
"Environmental Situation" has the meaning set forth in Section 5.10.
"ERISA" has the meaning set forth in Section 3.16.
"ERISA Affiliates" means (i) any corporation that is a member of a
"controlled group" of corporations (within the meaning of Section 414(b) of the
Code) of which any Company is a member, (ii) any trade or business (whether or
not incorporated) that is a member of a group of trades or businesses under
"common control" (within the meaning of Section 414(c) of the Code) of which
that Company is a member, and (iii) any member of an "affiliated service group"
(within the meaning of Sections 414(m) and (o) of the Code) of which any
Company, any corporation described in clause (i) of this paragraph or any trade
or business described in clause (ii) of this paragraph is a member.
"Euro-Dollar Margin" means 300 basis points.
"Euro-Dollar Reference Bank" means a leading bank, as designated by
the Collateral Agent, engaged in transactions in Euro- Dollar deposits in the
international Eurocurrency market having an established place of business in
London. Initially, the Euro- Dollar Reference Bank shall be any of the Bank of
Tokyo, Ltd., Barclays Bank, plc, National Westminster Bank, plc and Bankers
Trust Company. If any Euro-Dollar Reference Bank should be removed from the
Telerate Service or in any other way fails to meet the qualifications of a
Euro-Dollar Reference Bank, the Collateral Agent, in its sole discretion, may
designate another bank meeting the criteria specified in above.
"Euro-Dollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal) that is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on the Third Closing Loans is determined
or any category of extensions of credit or other assets which includes loans by
a non-United States office of any bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted automatically on and
as of the effective date of any change in the Euro-Dollar Reserve Percentage.
The parties acknowledge that the Euro-Dollar Reserve Percentage on the Third
Closing Date is -0-%.
"Event of Default" has the meaning set forth in Section 8.1.
"Excluded Asset" means (a) any Asset of SLT or the Borrower listed on
Schedule 3.26; (b) any gaming license, liquor license or other governmental
license or permit or deposit (including any extensions, renewals or
replacements) as to which any applicable statute, rule,
17
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regulation, decision or other law precludes SLT or the Borrower from granting
to the Collateral Agent for the benefit of the Senior Lender a Required Lien;
(c) all Assets as to which any applicable statute, rule, regulation, decision
or other law precludes SLT or the Borrower from granting to the Collateral
Agent for the benefit of the Senior Lender a Required Lien; (d) any Asset
subject to an equipment or other personal property lease which precludes SLT or
the Borrower from granting to the Collateral Agent for the benefit of the
Senior Lender a Required Lien; (e) the trust or corporate seal, the charter
document or documents, the trustees' regulations or bylaws, the partnership
agreement and certificates of limited partnership, the minute book or books,
the share or stock book or books and the original tax returns or reports of the
Borrower and SLT (or any predecessor of either), and the personnel files of the
Borrower's and SLT's executive officers; (f) any Hotel Property that is defined
as an Excluded Asset in paragraph (ii) of subsection 6.5(f) and any Hotel
Property or Assets that have been refinanced as provided in subsection 6.2(i);
(g) any Assets acquired in whole or in part with the proceeds of a ▇▇▇▇▇▇▇
Loan; (h) any other Asset as to which the Collateral Agent has elected in a
writing delivered to the Borrower or SLT not to require the granting of a
Required Lien; and (i) any Asset as to which an amount equal to the Minimum
Release Price has been paid by the Borrower to the Senior Lender to amortize
the Loans. The Senior Lender's determination that an Asset is an Excluded
Asset as defined in this paragraph shall be conclusive absent manifest error.
The Collateral Agent may from time to time request that the Borrower
or SLT confirm in writing that any particular Asset (or category of Assets) in
which the Borrower or SLT has any right, title or interest but which was
previously disclosed as an Excluded Asset has become Collateral. However, the
failure of the Borrower or SLT to execute any such requested confirmation shall
in no way invalidate or otherwise impair any Required Lien in that Asset.
"Excluded Cash" means, collectively, all Cash and Cash Equivalents of
the Companies or any of them:
(a) held in the form of surety bonds up to an aggregate
of $700,000;
(b) held in the form of utility and worker's compensation
insurance deposits; or
(c) held in the form of impounds for taxes and insurance
or other liens or impounds pursuant to requirements of any Prior
Mortgage Note or other liens encumbering the property of the Borrower.
"Excluded Disposition" means any sale from inventory or of furniture,
fixtures, equipment or similar property in the ordinary course of business or
any disposition of obsolete property or equipment. However, if any such
property or equipment sold or otherwise disposed of is necessary for the
operation of the business of the Company disposing of the same, such property
or equipment shall be promptly restored or replaced with other property or
equipment having such value and utility as such Company shall reasonably
determine necessary for the sound operation of the business of such Company,
and such replacement
18
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property or equipment shall (unless such replacement property or equipment
constitutes an Excluded Asset or Excluded Intercompany Asset) immediately upon
acquisition by any of the Companies or installation in any Hotel Property
become subject to the Required Liens or the Intercompany Liens, as applicable.
Any transfer of title to a Hotel Property pursuant to an exercise of remedies
by the holder of a Prior Mortgage Note also shall constitute an Excluded
Disposition provided that any proceeds in excess of those necessary to satisfy
the Prior Mortgage Note (up to the amount of the applicable Minimum Release
Price) are paid to the Senior Lender for application to the Loans concurrently
with such transfer of title.
"Excluded Intercompany Asset" means (a) any Asset of any Company
listed on Schedule 3.26; (b) any gaming license, liquor license or other
governmental license or permit or deposit as to which any applicable statute,
rule, regulation, decision or other law precludes the Company owning or
otherwise having an interest in such Asset from granting to another Company an
Intercompany Lien; (c) any Assets as to which any applicable statute, rule,
regulation, decision or other law precludes any of the Companies owning or
otherwise having an interest in such Asset from granting to another Company an
Intercompany Lien; (d) any Asset subject to an equipment or other personal
property lease that precludes the Company that is the lessee thereunder from
granting to another Company an Intercompany Lien; or (iii) is cancelable by
such Company without penalty; (e) the corporate seal, the charter document or
documents, the bylaws, the partnership agreement and certificate of limited
partnership, the minute book or books, the share or stock book or books and the
original tax returns or reports of SLC (or any predecessor), the SLC
Subsidiaries, the Operating Partnership and the Gaming Partnership and the
personnel files of any Company's executive officers; (f) any Hotel Property
that is defined as an Excluded Asset pursuant to paragraph (ii) of subsection
6.5(f) and any Hotel Property or other Assets that have been refinanced as in
subsection 6.2(i); (g) any Asset acquired in whole or in part with the proceeds
of a ▇▇▇▇▇▇▇ Loan; (h) any other Asset as to which the Collateral Agent has
elected in a writing delivered to the Borrower not to cause to be granted an
Intercompany Lien; and (i) any Asset of any of the Companies as to which an
amount equal to the Minimum Release Price has been paid by the Borrower to the
Senior Lender to amortize the Loans. The Senior Lender's determination that an
Asset is an Excluded Intercompany Asset shall be conclusive absent manifest
error.
The Collateral Agent may from time to time request that the Borrower
or SLT confirm in writing that any particular Asset (or category of Assets) in
which the Borrower or SLT has an Intercompany Lien but that was previously
disclosed as an Excluded Intercompany Asset has become Intercompany Collateral.
However, the failure of the Borrower or SLT to execute any such requested
confirmation shall in no way invalidate or otherwise impair any Intercompany
Lien in that Asset.
"Existing Mortgage Notes" means each of the promissory notes and other
evidences of Indebtedness identified as "Existing Mortgage Notes" on Schedule 1
to the Mortgage Note Assignment, as each such note may from time to time, in
accordance with the terms of this Agreement and the Mortgage Note Assignment,
be amended or otherwise modified, renewed or extended, and all notes or other
evidences of Indebtedness hereafter given in substitution or
19
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exchange therefor or replacement thereof, in accordance with the terms of this
Agreement and the Mortgage Note Assignment.
"Extended Termination Date" has the meaning set forth in subsection
1.4(a).
"Extension Fee" has the meaning set forth in subsection 1.8(a).
"Extension Option" has the meaning set forth in Section 1.4.
"First Closing, First Closing Date and First Closing Notes" has the
meanings set forth in the Prior Credit Agreement.
"First Closing Loans" means the Loans made pursuant to the First
Closing Notes.
"Formation Agreement" has the meaning set forth in the recitals to
this Agreement.
"Franchise Agreement" means each of the franchise (or similar license)
agreements for the operation of any Hotel Property to which any of the
Companies is a party as of the date of the Third Closing, as each may from time
to time, in accordance with the terms of this Agreement, be amended or
otherwise modified, renewed or extended, together with any and all new
franchise or license agreement(s) for the operation of any Hotel Property
entered into by any of the Companies from and after the Third Closing Date,
whether in substitution of or exchange for or replacement of a franchise or
license agreement listed on Schedule 3.6(a) or otherwise, in accordance with
the terms of this Agreement.
"Future Mortgage Notes" means each of the promissory notes and other
evidences of secured Indebtedness executed by a maker in favor of any of the
Companies after January 28, 1993 and evidencing the unpaid portion of the
purchase price of any of the Assets comprising a Hotel Property, as each may
from time to time be or have been amended or otherwise modified, renewed or
extended, and all notes or other evidences of Indebtedness hereafter given in
substitution of or exchange therefor or replacement thereof, in each case in
accordance with the terms of this Agreement (or the Prior Credit Agreement, as
applicable) and the Mortgage Note Assignment.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis.
"Gaming Assets" has the meaning set forth in the recitals to this
Agreement.
"Gaming Partnership" has the meaning set forth in recitals to this
Agreement.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, quasi-judicial, regulatory or administrative
functions of or pertaining to government.
20
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"Ground Lease" means each ground lease to which any Company is a party
of land upon which all or any substantial portion of any Hotel Property is
located or that is otherwise material to the operation of such Hotel Property,
as each may from time to time be amended or otherwise modified, renewed or
extended, together with any and all new ground lease(s) of land upon which all
or any substantial portion of any Hotel Property acquired by any Company from
and after the date of this Agreement is located or that is otherwise material
to the operation of such Hotel Property.
"▇▇▇▇▇▇ Notes" has the meaning given such term on Schedule 3.26.
"Hazardous Materials" means any chemical, material or substance
included in the definition of "hazardous substances," "hazardous wastes",
"hazardous materials", "extremely hazardous waste", "restricted hazardous
waste", or "toxic substances," or words of similar import under any applicable
local, state or federal law or under the regulations adopted or publications
promulgated pursuant thereto relating to pollution or protection of the
environment, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601, et. seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sec. 1801, et.
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sec.
6901, et. seq.; and the Federal Water Pollution Control Act, as amended, 33
U.S.C. Sec. 1251, et. seq.
"Hazardous Materials Activities" means any use, handling,
transportation, production, management, release, emission, generation, removal,
disposal, discharge or storage of Hazardous Materials.
"Hazardous Materials Laws" means any federal, state or local laws,
ordinances or regulations now or hereafter existing or enacted relating to
Hazardous Materials (including without limitation, the use, handling,
transportation, production, management, release, emission, generation, removal,
disposal, discharge or storage thereof).
"HIC" means SLC.
"HIC Operating Account" has the meaning set forth in the Cash
Management Memorandum.
"HIT" means SLT.
"HICN" has the meaning set forth in the recitals to this Agreement.
"HIT Operating Account" has the meaning set forth in the Cash
Management Memorandum.
"Hotel Property" means each hotel, hotel/casino, retail space and/or
office building now or hereafter owned or leased by SLT, the Realty Partnership
or any other Company, including all Real Property, inventory, furnishings,
equipment, fixtures, Franchise Agreements, Material
21
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Agreements and any and all other agreements, instruments, general intangibles,
accounts, licenses (including Material Licenses), chattel paper, documents,
books and records and other Assets specifically or primarily relating to such
hotel, hotel/casino, retail space and/or office building whether such Assets
are now or hereafter owned or leased by the SLT, the Realty Partnership or any
other Company.
"Hotel Specific Accounts" means as to each applicable Hotel Property
each of the accounts described below as defined in the Cash Management
Memorandum (i) if such Hotel Property is managed by one of the Companies, the
Hotel Collection Account, Hotel Disbursement Account and any new Deposit
Account created for purposes of depositing credit card receipts arising from
the operations carried on at such Hotel Property; (ii) if such Hotel Property
is the subject of a Management Agreement, then the applicable Local
Disbursement Account, Local Deposit Account and Management Company
Consolidation Account (but only if deposits to such Management Company
Consolidation Account are limited solely to Cash and Cash Equivalents arising
directly from the operations of such Hotel Property); (iii) if such Hotel
Property is the Bourbon Street Hotel/Casino, then the Bourbon Street General
Disbursement Account, Bourbon Street Cage Account, Bourbon Street Travel
Agent's Commission Account and Bourbon Street Visa/MC Account; or (iv) if such
Hotel Property is the King 8 Hotel/Casino and Truck Plaza, then the King 8
General Disbursement Account, King 8 Visa/MasterCard Account and King 8 Cage
Account.
"Improvements" means all buildings, structures and other improvements
located or being constructed on any Real Property (specifically including any
such property in which the Borrower or any other Company holds a leasehold
estate).
"Increased Capital Costs" has the meaning set forth in Section 1.13.
"Indebtedness" means, as applied to any Person, the aggregate, without
duplication, of (a) all items (except items of capital or surplus or of
retained earnings) that in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of the balance
sheet of such Person as of the date of which Indebtedness is to be determined,
including any Capital Lease but excluding (i) any such items as would be
included under the caption "Shareholders Equity" or "Partners Equity" on the
liability side of such balance sheet or (ii) any Capital Lease the primary
purpose of which is not intended to be a financing of real estate, improvements
or personalty, and (b) all Indebtedness secured by any Lien to which any Asset
owned or held by such Person is subject, whether or not the indebtedness
secured thereby shall have been assumed but excluding all Contingent
Obligations of such Person.
"Indemnified Liabilities" has the meaning set forth in Section 10.2.
"Indemnitee and Indemnitees" has the meaning set forth in Section 10.2.
"Indirect Hotel Property" means a hotel or hotel/casino (including all
real, personal and mixed property thereof) with respect to which SLT or the
Borrower holds a Mortgage.
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"Initial Termination Date" has the meaning set forth in subsection
1.4(a).
"Intercompany Collateral" means the Assets of the Companies that
secure the Intercompany Liens.
"Intercompany Lease" means a lease between SLT or the Realty
Partnership, on the one hand, and SLC, a Subsidiary of SLC or the Operating
Partnership, on the other hand.
"Intercompany Liens" means the Liens granted and to be granted by the
obligors of the Intercompany Notes to the obligees thereof to secure the
payment of the Intercompany Notes, together with the Liens granted and to be
granted to secure the Subsidiary Guaranties and the Operating Partnership
Guaranties.
"Intercompany Loan Documents" means, collectively, all Intercompany
Notes, all Operating Partnership Guaranties, all Subsidiary Guaranties and all
Intercompany Security Documents executed in connection with the perfection of
any Lien in any Intercompany Collateral, including any and all amendments or
other modifications, supplements, extensions or renewals thereto or thereof and
any other document that recites that it is an "Intercompany Loan Document."
"Intercompany Loans" means all outstanding intercompany advances,
loans and extensions of credit by, among or to the Companies which are made and
cross-collateralized to the extent feasible with the security given for the
Intercompany Loans or otherwise governed by the terms of this Agreement.
"Intercompany Notes" means all negotiable promissory notes payable by
any of the Companies to any of the other Companies.
"Intercompany Security Documents" means all agreements, documents or
instruments delivered from time to time by any Person in connection with the
transactions contemplated by this Agreement and granting or creating an
Intercompany Lien in any Asset to secure any Subsidiary Guaranty, the
Intercompany Loans or the Operating Partnership Guaranties, including any and
all amendments, modifications, supplements, extensions or renewals thereto or
thereof.
"Intercreditor Agreement" means any agreement entered into on or after
the Third Closing Date by and among the Senior Lenders (if at the time there is
more than one Senior Lender) or by and among the Senior Lender or Senior
Lenders and the Collateral Agent with respect to the transactions contemplated
hereby.
"Interest Period" means a period of thirty (30) days, provided that:
(a) the initial Interest Period for the Loans shall
commence on the date hereof and end on the last day of the month in
which such date occurs, and each
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Interest Period occurring thereafter in respect of the Loans shall
commence on the date on which the next preceding Interest Period
expires;
(b) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day. However, if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding
Business Day; and
(c) if any Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period, such Interest Period shall end on the
last Business Day of such calendar month.
"Investment" means, as applied to any Person, any direct or indirect
purchase or other acquisition by that Person of legal title to or a beneficial
interest in stock or other securities of any other Person, or any direct or
indirect loan, advance or capital contribution by the first Person to any other
Person.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind, including any conditional sale or
other title retention agreement or any lease in the nature thereof, but
excluding other imperfections of title.
"Liquid Investments" means Investments described in subsection 6.3(b)
(other than intercompany equity investments) and in subsections 6.3(c) through
6.3(f).
"Loans" means the loans made by the Senior Lender pursuant to this
Agreement, including the First Closing Loans, the Second Closing Loans, the
Third Closing Loans and any Acquisition Loans.
"Loan Documents" means collectively, this Agreement, the Notes, the
Security Documents, the Subsidiary Guaranties, the Operating Partnership
Guaranties, the Confirmation of Position Agreement, the Waiver and Release, the
Solvency Certificates, the Environmental Indemnity, any certificate of any
Responsible Officer of any of the Companies or any of such Companies general
partner delivered to the Collateral Agent or any of the Senior Lender at any of
the Closings or on any Pledge Date and any other document that recites that it
is a "Loan Document."
"London Interbank Offered Rate" applicable to any Interest Period
means (i) the rate for deposits in dollars for a period of 30 days which
appears on Telerate page 3750 as of 11:00 a.m. (New York time) on the date that
is two Business Days before the first day of such Interest Period (each such
date a "Euro-Dollar Interest Determination Date"); or (ii) if on any
Euro-Dollar Interest Determination Date no quotation is given on the Telerate
page 3750, the rate for deposits in dollars for a period of 30 days which
appears on the display page designated as "LIBO" on the Reuters Monitor Money
Rates Service (the "Reuters Screen LIBO Page") (or such other page as may
replace the LIBO page on that service for the purposes of
24
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displaying London interbank offered rates of major banks); or (iii) if no
quotation is given on the Reuters Screen LIBO Page, the average (rounded
upward, if necessary, to the next higher 1/16 of 1%) of the respective rates
per annum at which deposits in dollars are offered by the Euro-Dollar Reference
Banks in the London interbank market to the Euro-Dollar Interest Determination
Date in an amount approximately equal to the principal amount of the Loans and
for a period of time comparable to such Interest Period.
"Major Damage and Major Condemnation" have the respective meanings set
forth in subsection 5.5(d).
"Maker" has the meaning set forth in the Mortgage Note Assignment.
"Management Company" means any Person who from time to time is the
manager or operator under any Management Contract, and any successor or
assignee to or of such Person's rights thereunder.
"Management Contract" means any contract or agreement between any of
the Companies and any non-Company Person for the management of any Hotel
Property, as amended, modified or restated from time to time.
"Management Subordination Agreement" means a written agreement
executed by a Management Company and in substantially the form of Exhibit O or
such other form as shall be reasonably acceptable to the Senior Lender.
"Margin Stock" has the meaning set forth in Article 2.
"Material Adverse Change" means any adverse change in the condition or
value of any one or more Hotel Properties, in the collectibility of any one or
more Mortgage Notes or otherwise in the business, operations, Assets or
financial condition of the Borrower or any of the other Companies, which change
materially and adversely affects the ability of the Borrower to pay the
principal of or interest on the Notes or any other amount due to the Senior
Lender under this Agreement and the other Loan Documents, or materially impairs
the rights and remedies of the Senior Lender under the Security Documents or
the Intercompany Security Documents or the value of the Collateral and the
Intercompany Collateral, in each case taken as a whole.
"Material Adverse Effect" means (i) a loss in the value of any Hotel
Property in an amount that exceeds the greater of $300,000 or seven percent
(7.00%) of the value of such Hotel Property immediately prior to such loss;
(ii) a material adverse change in the collectibility of any Mortgage Note with
a then outstanding principal balance of more than $300,000; (iii) a material
adverse change in the business, operations, Assets (other than as set forth in
the immediately preceding clauses (i) and (ii)) or financial condition of the
Borrower or of the Borrower and the other Companies taken as a whole; or (iv) a
material adverse change in the ability of the Borrower or any of the other
Companies to perform its obligations under, and/or to consummate the
transactions contemplated to be consummated by such
25
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Company by, this Agreement and the other Loan Documents or Intercompany Loan
Documents.
"Material Agreements" means (i) Franchise Agreements; (ii) Ground
Leases; (iii) Material Subleases; (iv) Intercompany Leases; (v) each equipment
or personal property lease to which any Company is a party and that
individually requires the expenditure of more than $25,000 by any Company in
any year, has a remaining term of more than one year and is not cancelable by
the Company party to the same without penalty; (vi) leases, partnership
agreements and management agreements under which any of the Companies leases,
manages or otherwise operates any hotel other than the limited partnership
agreement of the Realty Partnership and the limited partnership agreement of
the Operating Partnership and the Intercompany Leases; (vii) Management
Contracts; (viii) Union Contracts binding on any of the Companies; (ix) each
contract or other agreement that individually requires the expenditure of more
than $25,000 by any Company and that is not cancelable by such Company without
penalty or payment, whether or not such agreement has a remaining term of less
than one year and is otherwise described in the immediately preceding clauses
(i) through (viii); and (x) all executory construction, engineering,
architectural, maintenance and other similar contacts or other agreements that
individually requires the expenditure of more than $25,000 by any Company in
any year, has a remaining term of more than one year and is not cancelable by
such Company without penalty.
"Material License" means each material certificate, permit and license
of any Governmental Authority, including certificates of occupancy, innkeepers'
licenses, liquor licenses and gaming licenses necessary for the Companies'
operation in the ordinary course of business of each Hotel Property.
"Material Sublease" means any sublease (or, if no Intercompany Lease
exists for such Hotel Property, then any lease) to which any Company is a party
now existing or hereafter created affecting any of the Hotel Properties with
monthly rents (including basic and percentage) payable to any of the Companies
in excess of $5,000 per month.
"Merger" means the previously contemplated merger of SLT and SLC.
"▇▇▇▇▇▇▇ Loans" has the meaning set forth in subsection 1.7(a).
"Minimum Aggregate Balances" has the meaning set forth in Section 6.16.
"Minimum Amount" has the meaning set forth in paragraph (ii) of
subsection 5.1(d).
"Minimum Release Price" has the meaning set forth in Section 6.10.
"Minor Damage and Minor Condemnation" have the respective meanings set
forth in subsection 5.5(d).
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"Mixed-Use Property" means a Hotel Property as to which ten percent
(10%) or more the total gross revenues of such property does not result from
the operation of a hotel or casino. For the foregoing purposes income which is
typically ancillary to the operation of a hotel or casino such as income from
the operation of a restaurant, shops, parking lot, health club or other
recreational facilities typically associated with the operation of a hotel or
casino shall be deemed income from the operation of a hotel or casino.
"Mortgage" means a mortgage, deed of trust, security deed, installment
land sale contract or similar security interest creating a Lien against Real
Property and Improvements.
"Mortgage Note" and "Mortgage Notes" means, collectively, the Existing
Mortgage Notes, the Future Mortgage Notes and the Starwood Mortgage Notes, or
any other mortgage notes held by either of the Partnerships from time to time,
but shall not include the ▇▇▇▇▇▇ Notes.
"Mortgage Note Assignment" means the Collateral Assignment of Mortgage
Notes dated as of January 28, 1993, between the Borrower and the Collateral
Agent, including without limitation the Amendment to Collateral Assignment of
Mortgage Notes dated as of the Third Closing Date and any and all other
amendments or other modifications, supplements, extensions or renewals thereto
or thereof.
"Mortgage Note Security Documents" has the meaning set forth in the
Mortgage Note Assignment.
"Nevada Gaming Approvals" has the meaning set forth in the recitals to
this Agreement.
"Nevada Gaming Authorities" has the meaning set forth in the recitals
to this Agreement.
"Note" and "Notes" means the promissory note(s) issued by the Borrower
to the Senior Lender on the First Closing Date, the Second Closing Date and the
Third Closing Date, as the same may be amended from time to time, together with
any notes issued in exchange therefor or in substitution thereof.
"O&M Manual" means one of the Operations and Maintenance Procedures
Manuals prepared by Dames & ▇▇▇▇▇ in connection with the First Closing and
containing the O&M Procedures.
"O&M Procedures" means the procedures contained in the O&M Manuals for
the monitoring, disclosure and, if required by applicable law, encapsulation
and/or removal of all ACM present at the Best Western in Albuquerque, New
Mexico, the ▇▇▇▇▇ Tower in Seattle, Washington and the Portland Inn in
Portland, Oregon.
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"Obligations" means all present and future obligations, indebtedness
or liabilities of every kind or nature of the Borrower at any time and from
time to time owed to the Collateral Agent or the Senior Lender (i) under any
one or more of the Loan Documents, any amendments, extensions, restatements or
renewals of, supplements to, or substitutions or replacements for, any one or
more of the foregoing, or (ii) arising under successive transactions renewing,
increasing, extending or continuing the obligations described in the
immediately preceding clause (i), changing the interest rate or other terms
thereof, or creating new or additional obligations after prior obligations have
been in whole or in part satisfied, and without limiting the generality of the
foregoing, including all such obligations, indebtedness and liabilities,
whether for principal, interest (including interest that, but for the filing of
a petition in bankruptcy with respect to the Borrower, would have accrued on
the Obligations), reimbursement obligations, fees, costs, expenses, premiums,
charges, attorneys' fees or indemnities, whether heretofore, now or hereafter
made, incurred or created, whether voluntarily or involuntarily and however
arising, whether secured or unsecured (and if secured, regardless of the nature
or extent of the security), whether or not now due, whether absolute or
contingent, liquidated or unliquidated, or determined or undetermined, whether
the Borrower may be liable individually or jointly with others.
"Operating Cash Threshold" means $7,000,000. Nothing in this
definition shall be construed as requiring any specific level of cash reserves
or as requiring that amounts in excess of the Operating Cash Threshold be
applied to amortize the Loans.
"Operating Partnership Guaranties" means, collectively, the Operating
Partnership Guaranty by the Operating Partnership, the Operating Partnership
Guaranty by SLC, the Operating Partnership Guaranty by HICN, the Operating
Partnership Guaranty of Western Host, Inc. (each of the foregoing as delivered
in connection with the Third Closing) and the Operating Partnership Guaranty by
the Gaming Partnership (to be delivered by the Gaming Partnership as provided
in Article IV).
"PBGC" has the meaning set forth in Section 3.16.
"Partnership Interests" means all right, title and interest of any
partner in either the Realty Partnership, the Operating Partnership or the
Gaming Partnership.
"Partnerships" has the meaning set forth in the recitals to this
Agreement.
"Pass-Through Transfer" means a sale or other transfer (which may
include one or more related, intermediate transfers in a whole loan format to
one or more Affiliates of the Senior Lender) of all or a portion of the Loans
to a trust or another Person as a part of a transaction that involves the sale
of participation certificates evidencing an interest in such Loans or the
public issuance or private placement of securities evidencing an interest in
such Loans, which securities also may evidence an interest in other mortgage
loans, may be issued through a REMIC and may, as a condition to their issuance,
be required to be rated (which rating may be required to be "AA/Aa" or higher)
by one or more Rating Agencies.
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"Permitted Closing Expenses" means for any (i) Asset Sale, (ii)
issuance of any debt or equity security or (iii) renewal, extension or
refinancing of Indebtedness, customary and reasonable expenses incurred in
connection therewith, including brokers' and finders' fees and commissions,
title premiums and other amounts paid or payable to title insurance companies,
survey costs, recording and filing fees, documentary transfer Taxes, the cost
of documentary stamps, escrow costs, points and other financing or refinancing
fees, fees and expenses of counsel, accountants, investment bankers and
consultants, customary prorations and the portion of any termination fee under
any Management Contract required to be paid because of the sale of the Hotel
Property being sold in such Asset Sale. However, Permitted Closing Expenses
shall include payments and/or reimbursements of fees, commissions, expenses
and/or costs to an Affiliate only if and to the extent permitted by Section
6.12. The Borrower expressly acknowledges and agrees, however, that only
commercially reasonable franchise or management termination fees (no matter how
designated) payable by any of the Companies in connection with any Asset Sale
shall be included within the definition of Permitted Closing Expenses.
"Permitted Deductions" means (x) in the case of any payment received
on account of any Asset Sale or refinancing permitted hereunder, the amount of
outstanding principal, interest and expenses paid to the holder of the Prior
Mortgage Note secured by the Hotel Property or mortgage note that is the
subject of such Asset Sale or refinancing permitted hereunder, and (y) in the
case of any payment received on account of an Asset Sale or the issuance of any
debt or equity security or refinancing of a Hotel Property or mortgage note
Permitted Closing Expenses incurred in connection with that Asset Sale,
securities issuance or refinancing.
"Permitted Distributions" has the meaning set forth in Section 6.7.
"Permitted Indebtedness" has the meaning set forth in Section 6.1.
"Permitted Investments" has the meaning set forth in Section 6.3.
"Permitted Liens" has the meaning set forth in Section 6.2.
"Permitted Prior Mortgage" has the meaning set forth in paragraph (i)
of subsection 6.10(b).
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
irrespective of whether a legal entity, or any government, or agency or
political subdivision thereof.
"Plan" has the meaning specified in paragraph (i) of subsection
3.16(a).
"Pledge Date" means the date on which a Hotel Property or a Mortgage
Note has been or shall be acquired and Required Liens or Intercompany Liens
granted in that Asset.
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"Prior Credit Agreement" has the meaning set forth in the recitals to
this Agreement.
"Prior Mortgage Note" means any evidence of any Indebtedness of any
Company for borrowed money that is secured by a Permitted Lien against any
Hotel Property or other Real Property and Improvements, which Permitted Lien is
senior to the Required Liens, if any, against that Hotel Property or Real
Property and Improvements.
"Rating Agencies" means, in connection with any Pass-Through Transfer,
any nationally recognized statistical rating organizations from which the
Senior Lender or its Affiliate may seek a rating with respect to such
Pass-Through Transfer.
"Real Property" means all real property owned or leased by the
Companies, whether owned or leased on the date of this Agreement or hereafter
owned or leased, including all Improvements thereon, whether existing on the
date of this Agreement or existing hereafter.
"Relevant States" has the meaning set forth in subsection 15.6(h).
"REMIC" means a "real estate mortgage investment conduit" as defined
in Section 860D of the Code.
"REO Subsidiary" means a Subsidiary owned by the Senior Lender that
takes title to any of the Hotel Properties in a deed in lieu transaction or
pursuant to the exercise of remedies under the Security Documents.
"Reorganization Proxy Statement" means the joint proxy statement of
SLT and SLC dated November 11, 1994.
"Required Liens" has the meaning set forth in Section 1.10.
"Residual Notes" means the promissory notes issued by the Borrower to
the Senior Lender at the Third Closing in substantially the form of Exhibit
A-3A.
"Responsible Officer" means the president, chief executive officer,
chief operating officer, chief financial officer, executive vice president,
senior vice president, treasurer, controller, assistant treasurer or assistant
controller of a Person (or, in the case of a partnership, of a general partner
or, in the case of the Operating Partnership, the managing general partner, of
that partnership).
"Restoration Fund" has the meaning set forth in subsection 5.5(b).
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on or on account of partnership interests in a Partnership,
shares of beneficial interest of SLT or shares of capital stock of SLC now or
hereafter outstanding, and (b) any redemption, purchase or other acquisition,
direct or indirect, of any of the above-described partnership interests or
shares or of any warrant or right to purchase any such partnership interest or
30
-22-
share, including the repurchase of any such partnership interest, shares or
warrants or any refund of the purchase price thereof in connection with the
exercise by the holder thereof of any right of rescission or similar remedies
with respect thereto.
"Restructuring Plan" means the plan described in Schedule 4.2(q).
"Second Closing, Second Closing Date and Second Closing Notes" have
the respective meanings set forth in the Prior Credit Agreement.
"Second Closing Loans" means the Loans made pursuant to, and evidenced
by, the Second Closing Notes.
"Security Documents" means each of the security documents executed and
delivered at the First Closing, the Second Closing, the Third Closing and all
other agreements, documents or instruments delivered from time to time by any
Person in connection with the transactions contemplated by this Agreement or
any other Loan Document granting or creating a Required Lien in any Asset of
the Borrower to secure any of the Obligations (other than Obligations under the
Environmental Indemnity).
"Senior Lender" has the meaning set forth in the preamble to this
Agreement and includes without limitation all of the Senior Lender's successors
and, assigns and all participants, if any, in the Loans.
"Senior Lenders" means the Senior Lender.
"Senior Lender's Expenses" has the meaning set forth in subsection
10.1(d).
"SLC" has the meaning set forth in the recitals to this Agreement, and
any reference to HIC in any Loan Document or Intercompany Loan Document shall
mean SLC.
"SLT" has the meaning set forth in the preamble to this Agreement, and
any reference to HIT in any Loan Document or Intercompany Loan Document shall
mean SLT.
"Solvency Certificate" has the meaning set forth in subsection 4.1(c).
"Solvent" means, as applied to any Person on any date, that on such
date: (a) the present fair valuation of assets of such Person is greater than
such Person's probable liabilities in respect of existing debts; (b) such
Person does not intend to, and does not believe that it will, incur debts
beyond such Person's ability to pay as such debts mature and (c) such Person is
not engaged in business or a transaction, and is not about to engage in a
business or transaction which business or transaction would leave such Person
with assets remaining that would constitute unreasonably small capital after
giving effect to the nature of the particular business or transaction. For
purposes of this definition: (i) the "fair valuation" of any assets means the
amount realizable within a reasonable time, either through collection or sale
of such assets at their regular market value, which is the amount obtainable by
a capable and diligent
31
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businessman from an interested buyer willing to purchase such assets within a
reasonable time under ordinary circumstances and (ii) the term "debts" includes
any legal liability, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent.
"Stated Rate" has the meaning set forth in subsection 1.5(a).
"Starwood" has the meaning set forth in the recitals to this Agreement.
"Starwood Account" has the meaning set forth in the Cash Management
Memorandum.
"Starwood Assets" means the Starwood Hotels, the Starwood Mortgage
Notes and all other Assets contributed to the Partnerships by the Starwood
Partners prior to the Third Closing or thereafter and includes the membership
interest in SLT Realty Company, L.L.C. owned by the Borrower and SLT.
"Starwood Hotels" means those hotel (and mixed-use) properties
contributed by the Starwood Partners to the Partnerships prior to the Third
Closing or thereafter, including all Real Property, inventory, furnishings,
equipment, fixtures, Franchise Agreements, Material Agreements and any and all
other agreements, instruments, general intangibles, accounts, licenses
(including Material Licenses), chattel paper, documents, books and records and
other Assets specifically or primarily relating to each such hotel or mixed-use
property, whether such Assets are now or hereafter owned or leased by a
Partnership.
"Starwood Mortgage Notes" means each of the secured promissory notes
and other secured evidences of Indebtedness executed by a maker in favor of or
endorsed or assigned to any of the Starwood Partners and contributed by the
Starwood Partners to the Partnerships in connection with the Starwood
Reorganization or thereafter, as each may from time to time be or have been
amended or otherwise modified, renewed or extended, and all secured notes or
other secured evidences of Indebtedness hereafter given in substitution of or
exchange therefor or replacement thereof, in each case in accordance with the
terms of this Agreement and the Mortgage Note Assignment (to the extent
applicable).
"Starwood Partners" means those affiliates of Starwood that are
parties to the Formation Agreement.
"Starwood Reorganization" means the transactions provided for in the
Formation Agreement.
"Subsidiary" means (i) as applied to the Borrower or the Operating
Partnership, (x) any subsidiary of any general partner of the Borrower or the
Operating Partnership and (y) the Gaming Partnership, and (ii) as applied to
any other Person, any other Person of which more than 50% (by number of votes)
of the outstanding Voting Stock (other than director's qualifying shares) is at
the time owned, directly or indirectly, by such first Person or by one or more
Subsidiaries of such first Person or by such first Person and one or more
Subsidiaries of such first Person. However, none of Western Host Palm Springs
Partners, a California limited
32
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partnership, SLT Realty Company L.L.C. and Moorland Hotel Limited Partnership
shall be deemed a Subsidiary of SLT, SLC or either Partnership. Starwood and
Starwood Partners are not Subsidiaries of the Borrower or the Operating
Partnership.
"Subsidiary Guaranty" means each of those certain Subsidiary
Guaranties dated as of January 28, 1993, and executed by a Subsidiary of SLC.
"Taxes" means any taxes, charges, fees, levies or other assessments
based upon or measured by net or gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, withholding, payroll, employment, excise,
occupation, premium, property, or conduct of business, together with any
interest and penalties, additions to tax and additional amounts imposed by any
federal, state, local or foreign taxing authority.
"Third Closing, Third Closing Loans and Third Closing Notes" have the
respective meanings set forth in Section 1.2.
"Third Closing Date" has the meaning set forth in Section 1.1.
"Title Insurer" means the title company or companies that issued or
issue the Title Policy and any other title insurance company or companies
selected by the Borrower and approved by the Senior Lender.
"Title Policy" means the title insurance policies issued to the
Collateral Agent for the benefit of the Senior Lender, at the First Closing and
the Second Closing, including all endorsements and modifications or amendments
to such policies or new title insurance policies, issued or made prior to or as
of the Third Closing, and at any time any Hotel Property or Mortgage Note
becomes subject to Required Liens, an ALTA standard form title insurance policy
issued by the Title Insurer and complying with the written title instructions
given from time to time by the Collateral Agent, for the benefit of the
Collateral Agent, in accordance with this Agreement, insuring the validity and
priority of the Required Liens with respect to such Hotel Property and of the
assignment, as security for the Obligations (other than Obligations under the
Environmental Indemnity), of such Mortgage Note payable to or held by the
Borrower and the mortgage securing such Mortgage Note, (with such reinsurance
or coinsurance as the Collateral Agent may reasonably require, any such
reinsurance to be with direct access endorsements) or (if such title company is
unable or unwilling to issue the same) by another Title Insurer, and which
shall not contain exceptions for mechanics' liens, persons in occupancy or
matters which would be shown by a survey except as specifically permitted by
this Agreement or as specifically permitted in writing by the Senior Lender not
to be unreasonably withheld, and shall contain (to the extent available with
respect to such Hotel Property) such of the following endorsements as the
Senior Lender, in its reasonable discretion, shall require: (i) comprehensive
endorsement, (ii) variable rate of interest endorsement, (iii) usury
endorsement, (iv) revolving credit endorsement, (v) doing business endorsement,
(vi) tie-in endorsement; (vii) negative amortization endorsement; and (viii)
such additional endorsements as the Senior Lender may reasonably require.
However, such policy at the Borrower's option need not include as to such Hotel
Property any additional
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endorsement or endorsement(s), the cost(s) of which (individually or in the
aggregate), would increase the basic premium otherwise payable in respect of
such Hotel Property by ten percent (10%) or more.
"Total Loss" has the meaning set forth in subsection 5.5(d).
"Under-Performing Asset" has the meaning set forth in paragraph (i)(B)
of subsection 6.5(f).
"Union Contract" means any union contract, collective bargaining
agreement or multi-employer labor agreement.
"Voting Stock" means securities (including shares of stock,
partnership interests, shares of beneficial interest and the like) having
ordinary voting power to elect a majority of the board of directors or board of
trustees or to elect the general partner (or other governing body) of the
Person in question, irrespective of whether or not at the time securities of
any class or classes of such Person shall have or might have voting power by
reason of the happening of any contingency.
"Waiver and Release" means that certain Waiver and Release dated as of
January 28, 1993, executed by the predecessors in interest of the Senior Lender
in favor of SLT, SLC and certain of their respective Subsidiaries.
"Warrant Agreement" means that certain Warrant Agreement dated as of
January 28, 1993, among SLT, SLC and the predecessors in interest of the Senior
Lender, including any and all amendments or other modifications, supplements,
extensions or renewals thereto or thereof.
"Warrants" means the warrants issued to the Senior Lenders pursuant to
the Warrant Agreement.
ARTICLE 1.
Amount and Terms of the Credit
1.1 Restructuring of Indebtedness. The Borrower is indebted to
the Senior Lender under the Second Closing Notes in the principal amount of
$118,313,327.92. On the date hereof, the principal amount of the Loans has
been increased by $13,436,672.08 so that the Third Closing Notes executed and
delivered on the date hereof evidence the Loans in the aggregate principal
amount of $131,750,000. In addition, the Senior Lender has advanced on the
date hereof the sum of $12,000,000 and received from the Partnerships an
unsecured promissory note in the amount of $11,400,000 and an unsecured
promissory note of $600,000. Such unsecured notes shall not be governed by
this Agreement and shall not be construed as Third Closing Notes.
34
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The Prior Credit Agreement is hereby amended and restated in its
entirety as hereinafter set forth effective on the date hereof (the "Third
Closing Date"). Without limiting the generality of the foregoing, the
provisions of this Agreement shall supersede any and all covenants, conditions
or other provisions of the Loan Documents or the Intercompany Loan Documents
executed and delivered on or prior to the date hereof that conflict with or are
inconsistent with the provisions of this Agreement. However, nothing in this
Agreement is intended or shall be deemed to waive, limit or otherwise modify or
affect any representation, warranty, covenant, condition or other provision of
the Prior Credit Agreement or of any other Loan Document or Intercompany Loan
Document executed and delivered prior to the Third Closing Date to the extent
that such representation, warranty, covenant, condition or other provision
relates to a fact, circumstance or event occurring prior to the Third Closing
Date.
1.2 Assignment and Assumption; Third Closing Loans.
(a) The Borrower shall fully pay, perform and discharge
each and all of its duties, liabilities and obligations hereunder and under the
Loan Documents and the Intercompany Loan Documents when due. The Realty
Partnership shall issue on the date hereof to the Senior Lender promissory
notes substantially in the forms of Exhibit A-3A and Exhibit A-3B
(collectively, the "Third Closing Notes") in exchange and substitution for the
Second Closing Notes and to evidence the increased indebtedness described in
Section 1.1 (the indebtedness evidenced by the Third Closing Notes, the "Third
Closing Loans"). The Second Closing Notes are hereby deemed automatically
superseded and replaced by the Third Closing Notes. The Second Closing Notes
shall be so marked and shall be held by the Collateral Agent until the Third
Closing Loans and all other amounts due under the Loan Documents and the
Intercompany Loan Documents have been paid in full.
(b) Except as otherwise provided herein, nothing
contained herein shall (i) discharge SLT from or result in a novation of any of
its duties, liabilities or obligations under any of the Loan Documents or
Intercompany Loan Documents or (iii) operate to diminish or impair in any
manner the Required Liens or Intercompany Liens existing as of the date hereof.
(c) The Realty Partnership hereby confirms:
(i) it has assumed, effective as of January 1, 1995, all
of the payment and performance obligations of HIT set
forth in the Second Closing Notes, the Prior Credit
Agreement, the Loan Documents and the Intercompany
Loan Documents; and
(ii) the Operating Partnership has assumed, effective
January 1, 1995, all of the payment and performance
obligations of SLC and the SLC Subsidiaries (other
than HICN) set forth in the Prior Credit Agreement,
the Loan Documents and the Intercompany Loan
Documents, including, but not limited to any
Subsidiary Guaranty, Consent to Assignment of Rents,
Subordination, Estoppel, Attornment Agreement, as
modified, and any guaranties or security agreements
relating to any of the foregoing,
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and further has agreed to be bound by all of the terms
and provisions of said agreements, all as though each
of said agreements had been made, executed and
delivered by the Operating Partnership.
1.3 Dating and Registration of Notes; Transfer of Third Closing
Loans. Each Third Closing Note shall be dated as of the Third Closing Date and
shall be in such denomination and registered in such name as the Senior Lender
may request. The Senior Lender shall have the right but not the obligation,
subject to compliance with applicable securities and other laws, to divide the
Loans into one or more separate Loans evidenced by one or more separate Notes.
1.4 Maturity Date.
(a) The term of the Third Closing Loans shall commence on
the date hereof and shall terminate on April 1, 1997 (the "Initial Termination
Date"). However, the Borrower shall have the option to extend the term of the
Third Closing Loans (the "Extension Option") for a period of one (1) year after
the Initial Termination Date to April 1, 1998 (the "Extended Termination
Date"). The Extension Option shall be exercisable by the delivery by the
Borrower to the Collateral Agent of irrevocable written notice not less than
one (1) month prior to the Initial Termination Date, time being of the essence
with respect to the delivery of the such notice. The Borrower's right to
exercise the Extension Option shall be subject to the following terms and
conditions: (i) no Event of Default shall have occurred and be continuing on
the date the Borrower delivers the Extension Notice or on the Initial
Termination Date; (ii) the Borrower shall have paid to the Senior Lender the
Extension Fee pursuant to Section 1.8 and (iii) the Borrower shall make the
Mandatory Prepayment required in paragraph (iv) of subsection 1.9(b).
(b) If the Borrower does not exercise its Extension
Option in accordance with subsection 1.4(a), the principal balance of the Loans
outstanding, together with accrued unpaid interest thereon, shall be due and
payable on the Initial Termination Date; if the Extension Option is exercised,
the principal balance of the Loans, together with accrued unpaid interest
thereon shall be due and payable on the Extended Termination Date.
1.5 Interest.
(a) Stated Rate. The Third Closing Notes shall bear
interest on the principal amount thereof outstanding during each Interest
Period, at a rate per annum equal to the lesser of (i) the sum of the
Euro-Dollar Margin and the applicable Adjusted London Interbank Offered Rate
(the "Stated Rate") and (ii) the maximum rate permitted under applicable law.
Interest shall be payable monthly in arrears, on the first Business Day of each
month, on the basis of a 360-day year for the actual number of days elapsed.
The first payment of interest on the outstanding principal balances of the
Loans shall be due and payable on April 1, 1995. A payment of interest on the
outstanding principal balances shall be due and payable on the first Business
Day of each calendar month thereafter through the Initial Termination Date or,
if the Extension Option is exercised, through the Extended Termination Date, on
which date the Borrower shall pay in full the aggregate outstanding principal
balances of the Loans, all
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accrued unpaid interest thereon and all other amounts payable with respect to
the Loans or otherwise to the Senior Lender.
(b) Notice by Collateral Agent. The Collateral Agent
shall determine the Stated Rate for each Interest Period. The Collateral Agent
shall give prompt notice to the Borrower and the Senior Lender of each Stated
Rate so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
1.6 Additional Interest. Upon the occurrence and during the
continuance of an Event of Default and in all events from and after the Initial
Termination Date (or if the Extension Option has been exercised, the Extended
Termination Date), the Third Closing Notes shall bear interest on the unpaid
principal amount thereof, and on any overdue payment of interest thereon, at a
rate per annum equal to the lesser of (i) three percent (3.00%) above the
Stated Rate and (ii) the maximum rate permitted under applicable law.
1.7 Acquisition Credit Facility; Severance of Loans.
(a) Until December 24, 1995, ▇▇▇▇▇▇▇, in its individual
capacity and not as a Senior Lender, shall either provide to the Borrower one
or more additional loans as acquisition financing up to an aggregate of
$75,000,000 or arrange for such loans to be provided by the Senior Lender. Any
such loans, if made by the Senior Lender shall be made upon the terms and
subject to the conditions set forth in the Terms of Acquisition Credit Facility
set forth on Schedule 1.7 (the "Acquisition Credit Facility"). Such loans made
by the Senior Lender shall be cross-collateralized, to the extent practicable,
with the Loans. Any such loan by the Senior Lender is referred to herein as an
"Acquisition Loan." The principal amount of each Acquisition Loan shall reduce
the amount of the Acquisition Credit Facility specified above.
(b) Notwithstanding the foregoing, any such loans
described in the first sentence of subsection 1.7(a) above, if made by ▇▇▇▇▇▇▇,
in its individual capacity and not as a Senior Lender hereunder, or by any of
its Affiliates shall be made under the Acquisition Credit Facility (any such
loan, a "▇▇▇▇▇▇▇ Loan"), except for those terms, provisions and conditions that
▇▇▇▇▇▇▇ may waive, in its sole discretion. The original principal amount of
each ▇▇▇▇▇▇▇ Loan shall reduce the aggregate amount of the Acquisition Credit
Facility specified above. The Senior Lenders hereby consent to the making of
the ▇▇▇▇▇▇▇ Loans, which shall be the secured recourse obligations of the
Borrower collateralized and guarantied in a manner similar to the Loans and the
Intercompany Loans, provided that none of the ▇▇▇▇▇▇▇ Loans shall be
cross-collateralized with the Loans made or Collateral and Intercompany
Collateral granted, pursuant to this Agreement. Notwithstanding any other
provisions of this Agreement, (i) the term "Cash and Cash Equivalents" shall be
deemed not to include the proceeds of any ▇▇▇▇▇▇▇ Loan, (ii) any acquisition of
Assets by any Company in whole or in part with the proceeds of a ▇▇▇▇▇▇▇ Loan
shall be deemed a "Permitted Investment," (iii) any Assets so acquired shall be
deemed "Excluded Assets" and "Excluded Intercompany Assets," (iv) any Liens in
favor of ▇▇▇▇▇▇▇, in its individual capacity and not as a Senior Lender, or any
of its Affiliates with respect to any Assets so acquired shall be deemed
"Permitted Liens" and (v) all Indebtedness of any Company to ▇▇▇▇▇▇▇ or any of
its Affiliates in connection with any ▇▇▇▇▇▇▇ Loan shall be
37
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deemed "Permitted Indebtedness." Notwithstanding the provisions of subsection
5.8(c) (relating to additional Collateral) and any other provisions of this
Agreement, the Senior Lender shall not have the right to elect to require that
any Assets acquired by any Company in whole or in part with the proceeds of any
▇▇▇▇▇▇▇ Loan shall become part of the Collateral or Intercompany Collateral.
(c) If ▇▇▇▇▇▇▇ is the sole Senior Lender under this
Agreement and there are no participants in the Loans, ▇▇▇▇▇▇▇ may require that
one or more Loans (or any portions thereof) made pursuant to this Credit
Agreement be split and severed into one or more separate and distinct loans
that are not cross-collateralized to the Assets securing the Loans. The
Borrower agrees to cooperate and shall cause the Companies to cooperate in such
severance. Any new loan created by the severance shall be governed by a credit
agreement substantially similar to this Agreement and the loan documents and
intercompany loan documents executed and delivered with respect thereto shall
be substantially similar to the Loan Documents and the Intercompany Loan
Documents. The principal balance of the Third Closing Notes shall be reduced
by the applicable value of the Assets set forth in Schedule 1.9 and the
Borrower shall execute and deliver a new separate note in such amount in
connection with the new, severed loan.
1.8 Fees.
(a) Extension Fee. If the Borrower exercises its Extension
Option pursuant to Section 1.4, then, simultaneously with the delivery of the
notice exercising such option, the Borrower shall pay to the Collateral Agent
for the benefit of the Senior Lender a fee (the "Extension Fee") in an amount
equal to one-half of one percent (0.50%) of the aggregate of the Loans
outstanding on the date of the delivery of such notice, which balance shall be
determined after reducing same for the mandatory prepayment of principal in
connection with the exercise of the Extension Option as provided in paragraph
(v) of subsection 1.9(a).
(b) Service Charges. The Borrower shall pay from time to
time to the Person at the time serving as manager of the Cash Management System
the customary service charges of such Person for maintenance and administration
of the Cash Management System. A copy of such service charges as in effect as
of December 31, 1994 has been provided by ▇▇▇▇▇ Fargo Bank, National
Association, to SLT.
1.9 Prepayment.
(a) Optional Prepayment. Upon not less than ten (10)
Business Days' notice to the Senior Lender and the Collateral Agent, at its
option the Borrower may permanently prepay the Third Closing Notes then
outstanding in whole at any time or in part from time to time without penalty
or premium. Any such prepayment of the principal amount of the Notes in part
shall be in an aggregate principal amount of not less than $500,000. Any such
prepayment shall include an additional amount equal to accrued interest on the
amount prepaid to the date of such prepayment.
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(b) Mandatory Prepayments. From and after the Third
Closing, the Borrower shall pay or cause to be paid each of the following
amounts to the Senior Lender in a prepayment of principal of the Third Closing
Notes together with the accrued interest thereon through the date of such
prepayment:
(i) If any of the Companies shall, directly or
indirectly, receive any payment in Cash and Cash
Equivalents on account of any public issuance of any
debt or equity security or on account of any private
issuance of any debt or equity security which when
aggregated with all such other private issuances
since December 31, 1994 exceeds $60,000,000, the
Borrower shall immediately pay, or cause the
Companies to pay an amount equal to all such proceeds
received less Permitted Closing Expenses until the
outstanding principal amounts of the Loans are
reduced to an aggregate amount equal to 50% or less
of the Aggregate Asset Value of all the Companies'
Assets.
(ii) An amount equal to the aggregate of all amounts
received by any of the Companies during each fiscal
quarter in respect of payments of principal of
Mortgage Notes (but as to each Mortgage Note not in
excess of the Minimum Release Price) or any other
promissory notes payable to any of the Companies
other than the ▇▇▇▇▇▇ Notes and the Intercompany
Notes, on the earlier to occur of the last day of the
fiscal quarter of the Borrower and the date on which
the aggregate amount of such payments received by the
Companies since the date of such then most recent
prepayment exceeds $250,000. Interest received by
any of the Companies in respect of the principal of
the Mortgage Notes or of other promissory notes
payable to any of the Companies may be retained by
the Company receiving the same.
(iii) If the Borrower or any of the Companies shall sell or
refinance any Asset and in connection therewith shall
seek the release of the Required Lien or Intercompany
Lien on such Asset, if any, then, an amount equal to
the amount of the Minimum Release Price in connection
with that Asset; provided, however, that in the case
of any sale of a Hotel Property in which a portion of
the total consideration to the Companies is deferred
or consists of a Future Mortgage Note, as provided in
subsection 6.10(b), such amount shall be an amount at
least equal to twenty-five percent (25%) of the
applicable Minimum Release Price.
(iv) If the Borrower exercises its Extension Option, on
the Initial Termination Date, the amount of
$10,000,000 as a prepayment of principal, which
amount shall be increased pursuant to Schedule 1.7
with respect to Acquisition Loans which are
cross-collateralized with the Third Closing Loans.
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(c) Notices of Prepayments. Concurrently with each
prepayment made pursuant to this Section, the Collateral Agent and the Borrower
shall furnish by facsimile transmission to the Senior Lender a notice showing
in reasonable detail the amount paid with respect to each Note then outstanding
and the manner of calculating the amount of each such prepayment.
(d) Formula for Application of Prepayments.
(i) All mandatory principal payments with respect to the
Third Closing Loans shall be applied to principal on
the Third Closing Notes.
(ii) Notwithstanding anything to the contrary in this
Agreement, no payment or prepayment of principal
shall be applied to any Note other than the Residual
Notes, except to the extent that (A) such payment or
prepayment is made from the proceeds of Collateral
securing such Note, (B) all of the Notes then
outstanding are paid in full, or (C) such payment is
made at a time when the Senior Lender's Residual
Notes have no principal balance outstanding in which
case such payment or prepayment may be applied in the
Senior Lender's discretion to any of the Notes held
by such Senior Lender.
1.10 Security. The Notes and the other Obligations other than
Obligations under the Environmental Indemnity shall be secured by valid and
perfected Liens that are first in priority, except for the Permitted Liens
described in subsection 6.2(b) through the end of Section 6.2, in favor of the
Collateral Agent for the benefit of the Senior Lender in all of the Assets of
the Borrower and all of the Assets of SLT, except for Excluded Assets
(collectively, the "Required Liens"). Each Intercompany Loan and each
Operating Partnership Guaranty shall be secured by valid and perfected Liens
that are first in priority except for Permitted Liens described in subsection
6.2(c) through the end of Section 6.2 and, in the case of each Intercompany
Loan, in all the assets of the obligor as to each such Intercompany Loan and,
in the case of each Operating Partnership Guaranty, in all the assets of the
Company giving such Operating Partnership Guaranty, as applicable, except in
each case for Excluded Intercompany Assets.
1.11 Form and Terms of Payment. All payments by the Borrower of
principal of or interest on the Notes shall be made in immediately available
funds at the addresses specified for such purpose by the Senior Lender on
Attachment I or by such other method and/or at such other address as the Senior
Lender shall have furnished to the Borrower in writing. Concurrently with each
such payment, the Borrower shall furnish by facsimile transmission to the
Senior Lender and the Collateral Agent a notice showing in reasonable detail
the amount paid with respect to each Note then outstanding and the manner of
calculating each such amount. If any payment of principal of or interest on
the Notes shall become due on a day which is not a Business Day, such payment
may be made on the next succeeding Business Day and such extension shall be
included in computing interest in connection with such payment.
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1.12 Pro Rata Treatment. If there is more than one Senior Lender,
each payment and prepayment of the principal of the Notes shall be allocated to
each Senior Lender as set forth on Attachment I. Such allocation may be
changed with respect to any Senior Lender from time to time by notice to the
Borrower from that Senior Lender and the transferee of that Senior Lender's
interest of any portion of the Loans.
1.13 Increased Capital. If any Senior Lender shall have determined
in good faith that compliance with any applicable law, rule, regulation,
guideline, request or directive, whether or not having the force of law, which
shall be imposed, issued or amended from and after the date of this Agreement
by any governmental authority, central bank or comparable agency, has or would
have directly or indirectly the effect of reducing the rate of return on the
capital or assets of such Senior Lender or its participant as a consequence of
its commitments or obligations hereunder, then from time to time, upon such
Senior Lender's delivering a written demand therefor to the Collateral Agent
and the Borrower setting forth its reasonable calculations, the Borrower shall
pay to such Senior Lender on demand such additional amount or amounts
("Increased Capital Costs") as will compensate such Senior Lender for such
reduction. However, (a) if the Collateral Agent or the applicable Senior
Lender shall fail to notify the Borrower promptly after making such
determination, the Borrower shall not be liable to pay to such Senior Lender
any Increased Capital Costs relating to the period prior to such Senior
Lender's notifying the Borrower. The determination by such Senior Lender of
any such amount shall, in the absence of manifest error, be conclusive. If so
requested by the Borrower, such Senior Lender shall demonstrate the basis for
such determination.
1.14 Additional Costs. If any Governmental Authority shall:
(a) subject any Senior Lender, directly or indirectly, to
any tax, levy, impost, duty, charge, fee, deduction or withholding of any
nature with respect to this Agreement, the Loans or any loan commitments
maintained hereunder, other than Taxes; or
(b) materially change the basis of taxation, except for
changes in Taxes, directly or indirectly, of the principal of or the interest
on any Loans or any other amounts payable to such Senior Lender under this
Agreement; or
(c) impose on any Senior Lender, directly or indirectly,
any other conditions or requirements with respect to this Agreement, the Loans,
any loan commitments maintained hereunder or any class of loans or commitments
of which any of the Loans forms a part;
and the result of any of the foregoing is:
(i) to increase the cost to such Senior Lender, directly
or indirectly, of making, funding, issuing, renewing,
extending or maintaining any of the Loans; or
41
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(ii) to reduce the amount of principal, interest or other
amount payable to such Senior Lender, directly or
indirectly, hereunder on account of any of the Loans;
or
(iii) to require such Senior Lender, directly or
indirectly, to make any payment or to forego any
interest or other sum payable hereunder, the amount
of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any
sum receivable or deemed received by such Senior
Lender from the Borrower hereunder;
then, and in each such case, the Borrower shall, within ten (10) Business Days
following receipt of notice from such Senior Lender including calculations of
the amounts payable, pay to such Senior Lender such additional amounts as will
be sufficient to compensate such Senior Lender for such additional cost,
reduction, payment or foregone interest or other sum. The determination by
such Senior Lender of any such amount shall, in the absence of manifest error,
be conclusive. At the Borrower's request, such Senior Lender shall demonstrate
the basis for such determination.
ARTICLE 2.
Use of Proceeds
The Borrower shall not use, and shall not permit any other Company to
use, directly or indirectly, any part of the proceeds of the Loans (a) for any
purpose which would cause any of the representations or warranties of the
Borrower set forth in this Agreement or any other Loan Document to be untrue
when made or deemed to have been made, (b) for the purpose of making any
Restricted Payment, (c) for the purpose of purchasing or carrying any "margin
stock" within the meaning of Regulation G (12 CFR Part 207) or Regulation U (12
CFR Part 221) of the Board of Governors of the Federal Reserve System ("Margin
Stock") or (d) for any purpose which would cause the violation of any covenant
contained in Article 5, 6 or 7.
ARTICLE 3.
Representations and Warranties
In order to induce the Senior Lender to agree to the amendment and
restatement reflected in this Agreement and to accept the Third Closing Notes,
the Borrower hereby makes the following representations and warranties to the
Collateral Agent and the Senior Lender as of the Third Closing Date. All of
such representations and warranties shall survive the execution and delivery of
this Agreement and the other Loan Documents and Intercompany Loan Documents
executed and delivered at the Third Closing.
3.1 Organization, Standing, etc. of the Borrower and the Other
Companies; Authorization. Except as otherwise set forth on Schedule 3.1:
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(a) Realty Partnership. The Realty Partnership is a
Delaware limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
partnership power and authority to own and operate its properties, to carry on
its business as now conducted and proposed to be conducted, to enter into this
Agreement and the other Loan Documents and Intercompany Loan Documents to be
executed and delivered by the Realty Partnership, to issue the Third Closing
Notes and to carry out the terms hereof and thereof.
(b) Operating Partnership. The Operating Partnership is
a Delaware limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
partnership power and authority to own and operate its properties, to carry on
its business as now conducted and proposed to be conducted, to enter into the
Loan Documents and Intercompany Loan Documents to be executed and delivered by
the Operating Partnership and to carry out the terms thereof.
(c) SLT. SLT is a real estate investment trust duly
organized, validly existing and in good standing under the laws of the State of
Maryland and has all requisite real estate investment trust power and authority
to own and operate its properties, to carry on its business as now conducted
and proposed to be conducted, to enter into this Agreement, the other Loan
Documents and the Intercompany Loan Documents to be executed by SLT and to
carry out the terms hereof and thereof.
(d) SLC. SLC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now conducted and proposed to be conducted, to
enter into the Loan Documents and Intercompany Loan Documents to be executed by
it and to carry out the terms thereof.
(e) Authorization. The execution and delivery of and the
performance by the Companies of their obligations under this Agreement, the
other Loan Documents and the Intercompany Loan Documents, including the
granting of the Required Liens and the Intercompany Liens, (a) have been duly
authorized by all necessary real estate investment trust, corporate or
partnership action on the part of the Borrower and each of the other Companies
party thereto or bound thereby, and (b) will not result in any violation of or
be in conflict with or constitute a default under any declaration of trust,
articles of incorporation, partnership agreement, trustees regulations, by-laws
or other organizational or similar charter document of any of the Companies.
3.2 Subsidiaries. Schedule 3.2 correctly sets forth as to (a)
each Subsidiary of the Borrower or the Operating Partnership that is a
corporation, that Subsidiary's name, the jurisdiction of that Subsidiary's
incorporation, the number of shares of that Subsidiary's capital stock of each
class outstanding and the number of such outstanding shares owned by each other
Company, and (b) as to each Subsidiary of the Borrower or the Operating
Partnership that is not a corporation, that Subsidiary's name, the jurisdiction
of that Subsidiary's organization or formation and a detailed description of
that Subsidiary's capital structure which description
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indicates the direct or indirect interest of the Borrower and/or the Operating
Partnership in that Subsidiary. Except as otherwise set forth on Schedule 3.2,
each Subsidiary of the Borrower and/or the Operating Partnership is a
corporation, partnership or other entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of that Subsidiary's
formation, and has all requisite real estate investment trust, corporate,
partnership or other similar power and authority to own and operate that
Subsidiary's properties, to carry on that Subsidiary's business as now
conducted and as proposed to be conducted and to enter into the Loan Documents
and/or the Intercompany Loan Documents to be executed by that Subsidiary.
Except as otherwise set forth on Schedule 3.2, all of the outstanding shares of
capital stock, partnership interests or other equity securities of each
Subsidiary of the Borrower and/or of the Operating Partnership are validly
issued, fully paid and nonassessable, and are owned by the Borrower and/or the
Operating Partnership as and to the extent specified in Schedule 3.2, in each
case free of any Lien, right of first refusal, preemptive right or option other
than the Required Liens, the Intercompany Liens and other Permitted Liens.
3.3 Qualification. Except as otherwise set forth on Schedule 3.3,
each of the Companies is duly qualified, licensed or otherwise authorized to do
business and in good standing as a foreign real estate investment trust,
corporation, partnership or other entity in each jurisdiction in which the
character of the properties owned or the nature of the activities conducted by
that Company makes such qualification, licensing or other authorization
necessary.
3.4 Financial Information; Disclosure. SLT and the Realty
Partnership have furnished the Senior Lender with the annual, quarterly and
other reports listed in Schedule 3.4. The financial statements included in
those reports have been prepared in accordance with GAAP applied on a
consistent basis or in such financial statements themselves, and fairly present
the financial position and results of operations of the Person or Persons to
which those financial statements purport to relate as of the dates and for the
periods indicated. Except as otherwise set forth on Schedule 3.4, since the
end of the most recent fiscal period shown in any of such financial statements,
there has not been any change in the business, results of operations, Assets or
financial condition of any Company resulting in any Material Adverse Effect.
Neither this Agreement, nor any report filed with the Securities and Exchange
Commission and listed on Schedule 3.4 nor any of the financial statements
included in the reports listed in Schedule 3.4, when this Agreement and such
reports and financial statements are read as a whole, contains any materially
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein contained not materially
misleading. After giving effect to the disclosures made on Schedule 3.4, there
are no circumstances involving any of the Companies or with respect to any
Hotel Property or Mortgage Note or, to the knowledge of the Borrower, any
Indirect Hotel Property, not disclosed by the Borrower to the Senior Lender in
writing that, based upon facts and circumstances currently known to the
Borrower or the Operating Partnership, will result in any Material Adverse
Effect. The Borrower is not contemplating either the filing of a petition by
the Borrower under the Bankruptcy Code or any other federal or state bankruptcy
or insolvency law or the liquidation of all or a major portion of the
Borrower's Assets. The
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Borrower has no knowledge of any Person contemplating the filing of any such
petition against the Borrower.
3.5 Licenses. Schedule 3.5(a) accurately and completely lists
each gaming license and each alcohol beverage license currently held by any of
the Companies. Except as otherwise set forth in Schedule 3.5(b), each such
gaming license, each such alcohol beverage license and all of the Material
Licenses are validly issued and in full force and effect, and each of the
Companies has fulfilled and performed in all material respects all of that
Company's obligations with respect thereto and has all requisite real estate
investment trust, corporate or partnership power and authority to operate
thereunder. Except as otherwise set forth on Schedule 3.5(b), there is no
outstanding notice from any Governmental Authority to the effect that any
Company fails to hold any Material License necessary for that Company's
operation of a Hotel Property or of any violation by any Company of any
Material License (other than violations that are not material), and no such
Material License is presently suspended or subject to any pending or overtly
threatened legal, administrative or investigatory proceeding that could result
in a suspension or revocation of such Material License.
3.6 Material Agreements. Schedule 3.6(a) accurately and
completely lists all executory Material Agreements. Except as otherwise set
forth on Schedule 3.6(b), neither the Borrower nor any of the other Companies
is in default, nor does the Borrower know of any claim by any Person that the
Borrower or any other Company is or, upon the passage of time or giving of
notice or both, will be in default under any material term of any Material
Agreement to which such Company is a party or by which that Company or any of
its Assets may be bound, except for such defaults that will not result in a
Material Adverse Effect. All of the Material Agreements are valid, subsisting
agreements of the Companies party thereto and are in full force and effect.
Except as otherwise set forth on Schedule 3.6(b), to the knowledge of the
Borrower or the Operating Partnership, there exists no violation or breach of
any material term of any Material Agreement on the part of any Person other
than a Company that is a party to such agreement, which violation or breach
will, or in the reasonable business judgment of the Borrower or the Operating
Partnership based upon facts and circumstances currently known to the Borrower
or the Operating Partnership, is likely to have a Material Adverse Effect.
Except as otherwise set forth on Schedule 3.6(b), none of the Material
Agreements listed therein contains any provision restricting the incurring of
indebtedness by any of the Companies or that, in the reasonable business
judgment of the Borrower or the Operating Partnership based upon facts and
circumstances currently known to the Borrower or the Operating Partnership, is
likely to result in a Material Adverse Effect.
3.7 Tax Returns and Payments. The Companies have each filed all
tax returns required by law to be filed and have paid all Taxes, assessments
and other governmental charges levied upon any of their respective Assets,
income or franchises, other than those not yet delinquent and those, not
substantial in aggregate amount, being or about to be contested as provided in
Section 5.6 (relating to the payment of certain taxes). The charges, accruals
and reserves on the books of the Companies in respect of their respective Taxes
are adequate in the opinion of the Borrower to discharge all such tax
liabilities. Except as otherwise set forth on Schedule 3.7, the Borrower does
not know of any deficiency proposed, asserted, or assessed
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by any Governmental Authority in respect of Taxes against the Borrower or any
of the other Companies that if paid would result in a Material Adverse Change.
Neither the Borrower nor any of the other Companies is a party to, bound by or
obligated under any tax sharing or similar agreement.
3.8 Indebtedness, Liens and Investments. Schedules 3.8(a), (b),
(c) and (d) accurately and completely describe, as of the date or dates
indicated therein, (a) all outstanding Indebtedness of the Companies to Persons
other than the Senior Lender and other Companies in respect of borrowed money
and the deferred purchase price of property, including all Capital Leases; (b)
all existing Liens in respect of Assets of any of the Companies other than the
Required Liens, the Intercompany Liens and Permitted Liens described in
subsection 6.2(b) (relating to Liens securing an Intercompany Loan or a
Subsidiary Guaranty, including Intercompany Liens) and, except for those Liens
of record, in subsection 6.2(d) (relating to Liens for certain Taxes, certain
Liens to secure performance, mechanics' and similar Liens, certain judgment
Liens and certain other Liens); (c) all outstanding Investments of any of the
Companies in any Person other than another Company; and (d) all existing
Contingent Obligations of any of the Companies other than to the Senior Lender
or the Collateral Agent under the Loan Documents or the Intercompany Loan
Documents.
3.9 Title to Assets. Except as otherwise set forth on Schedule
3.8(b), each of the Companies has good and marketable title to all of the Real
Property owned by that Company, and good title to or a valid leasehold interest
in or other right to possess and use all of such Company's other Assets. None
of such Assets is subject to any Lien or to an agreement to give any Lien,
except the Permitted Liens. The Companies enjoy quiet possession under all
Ground Leases, Intercompany Leases and equipment and personal property leases
listed on Schedule 3.6(a) to which the Companies are parties as lessees.
3.10 Litigation, etc. Except as otherwise set forth on Schedule
3.10, there is no litigation, or any proceeding or investigation by any
Governmental Authority, pending or presently overtly threatened against any of
the Companies that (a) questions the validity or enforceability of this
Agreement, the other Loan Documents or the Intercompany Loan Documents, or any
action taken or required to be taken pursuant hereto or thereto; or (b) in the
reasonable business judgment of the Borrower based upon facts and circumstances
currently known to the Borrower, is likely to result in a Material Adverse
Effect.
3.11 Authorization; Compliance with Other Instruments. The
execution and delivery of and performance of the Companies' obligations under
this Agreement, the other Loan Documents and the Intercompany Loan Documents,
including the granting of the Required Liens and the Intercompany Liens; (a)
will not result in any violation of or be in conflict with or constitute a
default under any term of (i) any Material Agreement, Existing Mortgage Note,
Prior Mortgage Note or other agreement or instrument to which any of the
Companies is a party or by which any of the Companies is bound, (ii) any
judgment, decree or order issued against any of the Companies, or (iii) to the
knowledge of the Borrower or the Operating Partnership, any statute, rule or
regulation of any Governmental Authority applicable to any of the Companies;
and (b) will not result in the creation of any Lien upon any of the Assets of
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any of the Companies pursuant to any such term, except pursuant to this
Agreement and the Security Documents and Intercompany Security Documents, or
otherwise result in the acceleration of any Indebtedness or obligation of any
of the Companies, except for, in the case of each of clauses (a) and (b), such
conflicts, breaches, defaults, Liens and/or such accelerations of Indebtedness
or obligations as are set forth on Schedule 3.11 or as will not, individually
or in the aggregate, result in a Material Adverse Effect. Except as otherwise
set forth on Schedule 3.11, none of the Companies is in violation of any term
of that Company's declaration of trust, articles of incorporation, partnership
agreement or other charter or other organizational document or trustees'
regulations or by-laws or other similar document.
3.12 Compliance with Laws. Neither the Borrower nor any of the
other Companies is in violation of any judgment, decree or order served on any
Company, or any other judgment, decree, order, statute, rule or regulation of
any Governmental Authority to which such Company or any of its Hotel Properties
or Mortgage Notes is subject, the failure to comply with which would have a
Material Adverse Effect.
3.13 Government Regulation. None of the Companies is: (a) an
"investment company," or a company directly or indirectly "controlled" by or
acting on behalf of an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended, or an "investment adviser" within
the meaning of the Investment Advisers' Act of 1940, as amended; (b) a "Holding
Company" or a "Subsidiary Company" of a "Holding Company", or an "affiliate" of
a "Holding Company" or of a "Subsidiary Company" of a "Holding Company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended; or (c) subject to any other federal or state regulation limiting that
Company's ability to incur the Obligations other than Obligations under the
Environmental Indemnity or, in the case of any Company other than the Borrower,
obligations incurred or to be incurred by that Company under the Intercompany
Loan Documents to which that Company is a party.
3.14 Consents. Except for the orders, consents, approvals, other
authorizations and filings specified in Schedule 3.14(c) and those orders,
consents, approvals, other authorizations and filings obtained or given in
connection with the Third Closing (and in connection with the First Closing and
the Second Closing to the extent they are effective on the date hereof) none of
the Companies is or was required to obtain any order, consent, approval or
other authorization of, or required to give any notification to or make any
other filing other than the filing of UCC financing statements, fixture filings
and Mortgages with, any other Person, including any Governmental Authority and
any other Person party to any Material Agreement, in connection with the
Companies' execution and delivery of and performance of their obligations under
any Loan Document or any Intercompany Loan Document, including the granting of
the Required Liens and the Intercompany Liens granted on the date hereof and
the performance of the Companies' other obligations under the Security
Documents and the Intercompany Security Documents. All of the orders,
consents, approvals, other authorizations and filings described in this Section
3.14 are herein referred to as the "Consents."
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3.15 Margin Stock. None of the Companies owns or has any present
intention of acquiring any Margin Stock.
3.16 Employee Retirement Income Security Act of 1974. (a) Except
as otherwise set forth on Schedule 3.16, to the Borrower's knowledge:
(i) Each "employee benefit plan" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), each "Plan" within the meaning of
Section 4975(e)(1) of the Code (a "Plan") sponsored by a
Company or an ERISA Affiliate, as defined below, of a Company,
and each "multi-employer plan" within the meaning of Section
3(37) of ERISA to which any Company or any ERISA Affiliate of
a Company makes contributions, complies in all material
respects with all applicable provisions of ERISA and the Code;
(ii) Neither any Company nor any ERISA Affiliate of a Company has
incurred any material liability to the Pension Benefit
Guaranty Corporation ("PBGC"), any "employee benefit plan" or
any "Plan" on account of any of the following: any failure to
meet the contribution requirements of such plan, any failure
to meet minimum funding requirements of such plan, one or more
transactions prohibited by Section 406 of ERISA, one or more
"prohibited transactions" within the meaning of Section
4975(c) of the Code, any termination of a single employer
plan, any partial or complete withdrawal from a
"multi-employer plan", or the insolvency, reorganization or
termination of any "multi- employer plan"; and
(iii) No event has occurred or condition exists that presents a
material risk that any Company or any ERISA Affiliate of a
Company will incur any material liability on account of any of
the foregoing circumstances.
(b) The consummation of the transactions contemplated by this
Agreement, will not result in any of the Companies' engaging in any transaction
prohibited by Section 406 of ERISA, or any "prohibited transaction", for which
an exemption is not available. Schedule 3.16 sets forth (i) all "employee
benefit plans" and "Plans" of the Companies including any group or individual
severance or other payment plans, (ii) whether or not such plans are funded in
whole or in part and (iii) the amount of such funding or the amount of any
unfunded obligation or liability under each of such plans.
3.17 Ownership of Borrower and SLT.
(a) Borrower. Schedule 3.17(a) correctly sets forth a detailed
description of the Borrower's capital structure, the number of Units, as
defined in the Borrower's partnership agreement, outstanding and, to the
knowledge of the Borrower, each Person who has the authority, directly or
indirectly, to vote and/or transfer Percentage Interests, as also defined in
the Borrower's partnership agreement, constituting five percent (5.00%) or more
of all such
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Percentage Interests. Except as otherwise set forth in Schedule 3.17(a), the
Borrower is not obligated in any manner to issue any one or more additional
Units.
(b) SLT. Schedule 3.17(b) correctly sets forth a detailed
description of SLT's capital structure, the number of SLT's shares of
beneficial interest outstanding and, to the knowledge of SLT, each Person who
has the authority, directly or indirectly, to vote and/or transfer shares of
beneficial interest of SLT constituting five percent (5.00%) or more of all
such outstanding shares. All of those outstanding shares of beneficial
interest are validly issued, fully paid and nonassessable. Except as otherwise
set forth in Schedule 3.17(b), SLT is not obligated in any manner to issue any
additional shares of beneficial interest.
3.18 Environmental Matters. The Senior Lender and the Collateral
Agent have been furnished by the Borrower with a "Phase I" and/or a "Phase II"
environmental survey or report with respect to each Hotel Property currently
owned or leased by the Borrower or SLT (collectively, the "Environmental
Surveys"). Except as otherwise set forth in the Environmental Surveys or in
Schedule 3.18, the Borrower has no knowledge that the Companies' ownership or
operation of the Hotel Properties or the current physical condition of any of
the Hotel Properties violates any applicable Hazardous Materials Law, except
for such violations as will not, individually or in the aggregate, result in a
Material Adverse Effect.
3.19 Trademarks, etc. The Borrower and each of the other Companies
own or hold licenses in all trademarks, trade names, copyrights, patents,
patent rights and patent licenses that are necessary to conduct the Companies'
respective businesses in all material respects as currently operated. The
consummation of the transactions contemplated by this Agreement, the other Loan
Documents and the Intercompany Loan Documents will not adversely alter or
impair any of such rights of the Borrower or any of the other Companies, except
as otherwise set forth on Schedule 3.19. Neither the Borrower nor any of the
other Companies has been charged or is overtly being threatened to be charged
with any infringement of, nor to the Borrower's knowledge has any Company
infringed on, any unexpired trademark, trademark registration, trade name,
patent, copyright, copyright registration or other proprietary right of any
Person which infringement, in the reasonable business judgment of the Borrower
based upon facts and circumstances currently known to the Borrower or the
Operating Partnership, would if proved be likely to have a Material Adverse
Effect.
3.20 Burdensome Court Orders, etc. The Borrower and the other
Companies are not, individually or in combination, subject to any court order,
writ, injunction or decree of any court or Governmental Authority that has had
or, in the reasonable business judgment of the Borrower based upon facts and
circumstances currently known to the Borrower or the Operating Partnership, is
likely to have, a Material Adverse Effect.
3.21 Fire, Explosion, Labor Disputes, etc. Except as otherwise set
forth on Schedule 3.21, no Hotel Property is presently affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty,
whether or not covered by insurance, that, in the reasonable
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business judgment of the Borrower based upon the facts and circumstances
currently known to the Borrower, is likely to have a Material Adverse Effect.
3.22 Binding Obligations. This Agreement, the Notes and the other
Loan Documents and the Intercompany Loan Documents executed and delivered at or
prior to the Third Closing are the legally valid and binding obligations of the
Company or Companies party thereto, enforceable against each such Company in
accordance with those agreements' respective terms, except as enforcement may
be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally.
3.23 Lien Validity. Except in each case as otherwise set forth in
Schedule 3.23, each of the Required Liens and Intercompany Liens that has been
granted by SLT and/or SLC in their respective Assets prior to the Third Closing
Date has been validly created and perfected to the extent that each such Lien
in such Assets can be perfected by the proper filing of financing statements
and recordation of fixture filings, Mortgages and other applicable Security
Documents and Intercompany Security Documents with the appropriate filing or
recording officer in each of the necessary jurisdictions, and giving effect to
the delivery to the Collateral Agent or its agent of the original share
certificates so delivered at or in connection with the First Closing. Except
as otherwise set forth in Schedule 3.23, the Required Liens and the
Intercompany Liens granted or to be granted by the Realty Partnership and/or
the Operating Partnership in their respective Assets, including the increases
thereof, in the amounts accrued thereby, other than the Excluded Assets and
Excluded Intercompany Assets, on or after the Third Closing Date have been or
when granted shall be validly created and, upon the proper filing of financing
statements and recordation of fixture filings, Mortgages and other applicable
Security Documents and Intercompany Security Documents with the appropriate
filing or recording officers in each of the necessary jurisdictions, and upon
delivery of original share certificates and promissory notes to the Collateral
Agent, those Required Liens and Intercompany Liens will be perfected to the
extent that Liens in such Assets can be perfected by such filing, recordation
and pledge.
3.24 Solvency. Subject to the assumptions set forth on Schedule
3.24, the Borrower and each of the other Companies is Solvent. Neither the
execution and delivery of this Agreement or any of the other Loan Documents or
Intercompany Loan Documents, nor the granting of the Required Liens or the
Intercompany Liens, nor, based upon facts and circumstances known to the
Borrower or the Operating Partnership, the consummation of any of the
transactions contemplated by this Agreement to be consummated on or after the
Third Closing Date, will in any way render the Borrower or any of such other
Companies not Solvent.
3.25 Accounts. Schedule 3.25 accurately and completely describes
each Cash Management Account, each Collateral Account and each other deposit
account, demand, time or money market account or certificate of deposit
currently maintained at any financial institution by any Company in which any
Excluded Cash is held, including the name and address of each financial
institution at which any such account is maintained. There is no
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account or certificate of deposit maintained or held by any of the Companies
other than the accounts and certificates listed on Schedule 3.25.
3.26 All Assets. The Collateral subject to the Required Liens
includes all Assets of the Borrower other than Excluded Assets, and the
Intercompany Collateral includes all Assets of each Company that is an obligor
under an Intercompany Note or a guarantor under a Subsidiary Guaranty other
than, in each case, Excluded Intercompany Assets, shown on the latest balance
sheets included in Schedule 3.4, except for Assets sold or otherwise disposed
of in the ordinary course of business as heretofore conducted or as otherwise
set forth on Schedule 3.26. Schedule 3.26 also indicates which of the Assets
shown on such balance sheets constitute Excluded Assets or Excluded
Intercompany Assets other than such Assets that may constitute Excluded Assets
or Excluded Intercompany Assets solely at the election of the Senior Lender.
3.27 Certain Schedules. Set forth on Schedule 4.2(q) is a true and
correct copy of the Restructuring Plan. Set forth on Schedule 7.3 are
illustrations of the calculation of certain financial covenants set forth in
this Agreement.
ARTICLE 4.
Gaming Partnership
4.1 Consent to Transfer of Assets of HICN to Gaming Partnership.
Subject to the fulfillment or waiver by Senior Lender of each
of the following conditions, Senior Lender shall consent to the transfer of the
Assets of HICN to the Gaming Partnership:
(a) Security Documents. The Borrower shall have, or
shall have caused the Gaming Partnership and the Operating Partnership to have,
executed, acknowledged and delivered to the Collateral Agent execute any
agreements or other documents reasonably requested by the Collateral Agent or
the Senior Lender in order to confirm matters relating to the Reorganization
and to assume and perform the obligations or HICN in connection with the Third
Closing, including without limitation an amendment to real property security
documents in substantially the form executed the Borrower and the Operating
Partnership in connection with the transfer of the other Hotel Properties to
the Borrower and the Operating Partnership, and (ii) if and to the extent the
Gaming Partnership then maintains any disbursement, deposit or other account in
the name of the Gaming Partnership, such additional security documents as are
necessary to perfect the Intercompany Liens in all Cash and Cash Equivalents of
the Gaming Partnership and an amendment to the Cash Management Memorandum as
necessary to reflect the transfer of any one or more deposit accounts to the
Gaming Partnership.
(b) Operating Partnership Guaranty. The Gaming
Partnership shall have executed, acknowledged and delivered an Operating
Partnership Guaranty in substantially the form of Exhibit K-3, a security
agreement securing the Operating Partnership Guaranty in the
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form executed by the Operating Partnership at the Third Closing and related
UCC-1 financing statements and other documents perfecting the Liens granted by
such security agreement.
(c) Solvency Certificate. The Gaming Partnership shall
have delivered a certificate (a "Solvency Certificate") in substantially the
form of Exhibit F-3, dated as of the date the Assets of HICN are transferred to
the Gaming Partnership, signed by the chief financial officer of the general
partner of the Gaming Partnership, certifying that the Gaming Partnership is
Solvent as of the date of such Solvency Certificate.
(d) Officer's Certificate. The Borrower shall have
delivered an officer's certificate, dated as of the date the Assets of HICN are
transferred to the Gaming Partnership, signed by a Responsible Officer of the
general partner of the Borrower, certifying that the Nevada Gaming Approvals
have been obtained and that true and correct copies of all such Nevada Gaming
Approvals are attached to the certificate.
(e) Local Counsel Opinion. The Borrower shall have
delivered an opinion of the Companies' Nevada counsel, in form acceptable to
the Collateral Agent, that all Gaming Approvals required by applicable law in
connection with the transfer of Assets to the Gaming Partnership have been
obtained.
(f) Notwithstanding any other provision of this Agreement
including the Restructuring Plan, the Senior Lender has not consented, nor
shall it be deemed to have consented, to the transfer of any of the Assets of
HICN to the Gaming Partnership prior to the fulfillment or waiver by Senior
Lender of each of the foregoing conditions.
ARTICLE 5.
Affirmative Covenants
The Borrower covenants and agrees that, until the payment in full all
of the principal and interest on the Loans and all other sums due under the
Loan Documents and Intercompany Loan Documents, the Borrower shall perform, and
shall cause each of the other Companies to perform, each and all of the
following covenants applicable to that Company, unless such performance shall
be waived by the Senior Lender:
5.1 Financial Statements The Borrower shall furnish or cause to
be furnished to Senior Lender:
(a) Annual. Within ninety (90) days after the end of
each fiscal year of the Realty Partnership and the Operating Partnership:
(i) such financial statements as are required to be
included in SLT's and SLC's annual report on
Securities and Exchange Commission Form 10-K, which
shall include audited financial statements of the
Operating Partnership and the Realty Partnership,
together with the opinion of
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Deloitte & Touche or other independent public
accountants selected by the Borrower and satisfactory
to the Senior Lender, whose approval shall not be
unreasonably delayed or withheld, on the
aforementioned financial statements, which opinion
shall state that such financial statements have been
prepared in accordance with GAAP and that the audit by
such accountants in connection with such financial
statements has been made in accordance with generally
accepted auditing standards related to reporting;
(ii) a statement signed by the accountants who have
delivered the opinion described in the preceding
paragraph to the effect that in connection with their
examination of the financial statements to which such
opinion relates such accountants have reviewed the
provisions of this Agreement, specifically including
the provisions of Sections 7.1 (relating to the
covenant regarding Adjusted Net Worth) and 7.2
(relating to the covenant regarding Available Cash),
and have no knowledge of any event or condition that
constitutes a Default or Event of Default or, if such
accountants have such knowledge, specifying the nature
and period of existence thereof. However, in issuing
such statement such accountants shall not be required
to go beyond normal auditing procedures conducted in
connection with the aforesaid opinion; and
(iii) a certificate signed by the chief financial
officer or controller of the general partner of the
Borrower, and the chief financial officer or
controller of the managing general partner of the
Operating Partnership, separately identifying and
describing all material Contingent Obligations of the
Borrower and its Subsidiaries (if any) and of the
Operating Partnership and its Subsidiaries.
(b) Quarterly. Within forty-five (45) days after the end
of each of the first three quarterly accounting periods in each fiscal year of
the Borrower:
(i) such financial statements as are required to be
included in SLT's and SLC's quarterly report on
Securities and Exchange Commission Form 10-Q (which
will include the financial statements of the Operating
Partnership and the Realty Partnership), signed by the
chief financial officer of the general partner of the
Borrower and the chief financial officer or controller
of the managing general partner of the Operating
Partnership;
(ii) a report, specifying in reasonable detail any material
developments with respect to any litigation,
proceeding or investigation described in paragraph
(ii) or (iii) of subsection 5.2(c), signed by a
Responsible Officer of the general partner of the
Borrower; and
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(iii) a report signed by the chief financial officer of the
general partner of the Borrower, setting forth the
status of the Companies' relations with franchisors,
non-Company lessors and lienholders, and the status
of the Borrower's efforts to maximize the value of
each Mortgage Note with respect to which the
mortgagor is in default and each Hotel Property owned
by the Borrower with respect to which the ground
lessee is in default.
(c) Monthly. As soon as available, but in any event not
later than forty-five (45) days after the end of each monthly accounting period
in each fiscal year of the Borrower, or, in the case of each monthly accounting
period ending in January, within seventy-five (75) days after the end of such
period:
(i) (A) unaudited balance sheets of the Borrower as at
the end of such period and the related unaudited
statements of income and partners' equity and the
related consolidated statement of cash flows for such
period and for the period from the beginning of the
current fiscal year to the end of such period and
(B)(I) the unaudited balance sheets of the Operating
Partnership as at the end of such period and the
related unaudited statements of income and partners'
equity and the related consolidated statement of cash
flows for such period and for the period from the
beginning of the current fiscal year to the end of
such period and (II) the unaudited combined and
combining balance sheets of the Borrower and of the
Operating Partnership as at the end of such period
and the related unaudited combined and combining
statements of income and partners' equity and related
combined statement of cash flows for such period and
for the period from the beginning of the current
fiscal year to the end of such period, in each case
setting forth in comparative form with respect to
such combined financial statements, figures for the
same period and portion of the previous fiscal year,
signed by the chief financial officer of the general
partner of the Borrower and the chief financial
officer, the principal accounting officer or the
controller of the managing general partner of the
Operating Partnership;
(ii) either (A) with respect to each Hotel Property and
each Indirect Hotel Property, if any, operated during
such period by any Company, an operating report
prepared in accordance with the American Hotel &
Motel Association's Uniform System of Accounts for
Hotels, signed by a Responsible Officer of the
Company responsible for the operations of the Hotel
Property or Indirect Hotel Property in question,
setting forth the revenues, expenses and cash flows
of such Hotel Property or Indirect Hotel Property and
including with respect to each Hotel Property in
comparative form figures for such month as set forth
in the Borrower's budget for such month or (B) with
respect to each Hotel Property or Indirect Hotel
Property operated by a Person other than a Company, a
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copy of any similar operating report with
respect to such property received by the Borrower or
any other Company from the Person responsible for the
operations of such Hotel Property or Indirect Hotel
Property; and
(iii) a deviation report substantially in the form of
Exhibit V on a cumulative year-to-date basis;
(iv) a three-month monthly consolidated rolling cash
receipts and cash disbursement forecast for the
Companies taken as a whole, including a roll-forward
of the corporate cash balance; and
(v) the report required each month regarding the Mortgage
Notes required by the Portfolio Management System as
defined in the Mortgage Note Assignment.
(vi) The Borrower shall use all reasonable efforts to
deliver each of the annual, quarterly and monthly
reports of information described above in a uniform
complete package consisting of all related specified
items.
(d) Projections and Capital Expenditures Budget. Not
more than thirty (30) days after the commencement of each fiscal year of the
Borrower:
(i) monthly projected balance sheets and statements of
income, partners' equity and cash flows for the
Borrower and for the Operating Partnership for such
fiscal year, and annual projected statements of
income and cash flows for each Hotel Property and
each Indirect Hotel Property, in each case signed by
the chief financial officer of the general partner of
the Borrower and the chief financial officer of the
managing general partner of the Operating
Partnership, and promptly upon the preparation
thereof any other significant projections that the
Borrower or the Operating Partnership prepares and
revisions of all such projections; and
(ii) a Capital Expenditures budget in substantially the
form of Exhibit W (a "Capital Expenditures Budget")
for each Hotel Property as to which Capital
Expenditures are proposed to be made by any of the
Companies during such fiscal year, which Capital
Expenditures Budget shall include allocations for
Capital Expenditures necessary to comply with
applicable Franchise Agreements, ground and other
leases, management agreements and health and safety
laws. Such Capital Expenditures Budget shall be
subject to the approval of the Senior Lender, which
approval shall not be unreasonably delayed or
withheld and may not be withheld if such Capital
Expenditures Budget (A) provides for the expenditure
of an aggregate amount that does not exceed the sum
of (1) five percent (5.00%) of the Companies' total
hotel revenues for the previous fiscal
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year, (2) five percent (5.00%) of the
Companies' total gaming revenues for the previous
fiscal year and (3) $6,000,000 with respect to
Capital Expenditures to be made prior to the Initial
Termination Date for the Hotel Properties of Park
Central, Dallas, Texas, French Quarter, Lexington,
Kentucky, and Capitol Hill, Washington, D.C.. The
Capital Expenditures Budget shall not be less than
the sum of (a) three percent (3.00%) of the
Companies' total hotel revenues for the previous
fiscal year plus (b) one percent (1.00%) of the
Companies' total gaming revenues for the previous
fiscal year or such lower amount as the Collateral
Agent shall reasonably approve (the "Minimum
Amount"). Capital Expenditures shall be made to each
Hotel Property at which Capital Expenditures are
proposed to be made that are consistent with Capital
Expenditures then customarily being made by prudent
hotel owners/operators with respect to properties
comparable to that Hotel Property. To the extent
the Companies do not spend the Minimum Amount, the
Companies shall reserve the unspent amount and spend
such amount in the next succeeding fiscal year in
addition to complying with that fiscal year's
requirement.
(e) Auditors' Letters. Promptly upon receipt thereof, a
copy of each comment letter (and any supplement or supplements thereto)
submitted to the management of the Borrower, the Operating Partnership, SLT or
SLC in respect of that Company's internal control matters by that Company's
independent public accountants in connection with an annual, interim or special
audit of the financial statements of that Company made by such accountants.
The Borrower shall obtain such a letter in connection with each of its annual
audits.
(f) Management Company Reports. The Borrower shall
direct each Management Company to deliver to the Senior Lender, at the same
time such document is delivered to the Borrower, a copy of each notice of
default delivered by such Management Company to any of the Companies, and the
Borrower shall provide upon the request of the Senior Lender a copy of any and
all material reports and analysis received by the Borrower from any Management
Company.
5.2 Other Information and Reports. The Borrower shall furnish or
cause to be furnished to the Senior Lender:
(a) Communications With Shareholders. Promptly following
the mailing or other public distribution or release thereof, one (1) copy of
(i) each annual, quarterly or other regular or periodic report including
financial statements, notice of meeting or proxy statement sent by the
Borrower, the Operating Partnership, SLT or SLC to each of that Company's
partners, shareholders or stockholders, as applicable, (ii) any registration
statement or prospectus filed by any of the Companies with any securities
exchange or with the Securities and Exchange Commission or any successor
agency, and (iii) any press release or other similar
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statement made available generally by any of the Companies to the public
concerning material developments in such Company's business.
(b) Notices of Default on Other Documents. Within five
(5) Business Days after any Responsible Officer of the Borrower obtains
knowledge that any party to any Material Agreement or any Material License or
the holder of any evidence of material Indebtedness or other security of the
Borrower or any of the other Companies, including any Prior Mortgage Note, has
given notice of or taken any other material action with respect to, a claimed
default or event of default by any of the Companies, a copy of any written
notice received with respect to such claimed default or event of default,
together with a certificate signed by the chief financial officer of the
general partner of the Borrower specifying the notice given or action taken by
such holder and the nature of the claimed default or event of default and what
action the Borrower or such other Company as is claimed to have committed the
default or event of default has taken and proposes to take with respect
thereto.
(c) Notice of Litigation or Other Material Development.
Within five (5) Business Days after any Responsible Officer of the Borrower
obtains knowledge of:
(i) any condition or event that constitutes an Event of
Default or, to the knowledge of the president, chief
executive officer or chief financial officer of the
general partner of the Borrower, a Default;
(ii) any litigation, or any investigation or proceeding by
any Governmental Authority, that (A) alleges any
criminal conduct on the part of any of the Companies
or any of their respective general partners,
trustees, directors, officers, employees or agents in
their capacity as such, (B) alleges any material
violation by any of the Companies of any Hazardous
Materials Law or (C) involves a claim against any of
the Companies that arises other than in the ordinary
course of business, as to which the insurance carrier
has denied coverage or that is not covered by
insurance and that seeks damages in an amount which,
individually, or when aggregated with all other such
claims not theretofore reported to the Senior Lender,
is greater than or equal to $500,000;
(iii) any other investigation of, or proceeding against,
the Companies or any of them by any Governmental
Authority, or any other litigation against the
Companies that, in the reasonable business judgment
of the Borrower, is likely to result in a Material
Adverse Change;
(iv) any material labor controversy resulting in or
threatening to result in a strike against any of the
Companies;
(v) the adoption or termination by any Company of any
Plan as defined by the Code or the occurrence of any
"reportable event" as defined in ERISA as to any Plan
of any Company;
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(vi) any written proposal by any Governmental Authority to
acquire any Hotel Property or any material portion
thereof, or any other material written communication,
notice, order or report furnished, other than in the
ordinary course of business, by any of the Companies
to, or received by any of the Companies, other than
in the ordinary course of business from the PBGC, the
Department of Labor or any other Governmental
Authority having jurisdiction over any of the
Companies or their Assets;
(vii) any change in the composition of the Board of
Trustees of SLT, the Board of Directors of SLC or the
executive officers of the general partner of the
Borrower or the managing general partner of the
Operating Partnership; or
(viii) any Person's seeking to obtain or threatening in
writing to seek to obtain a decree or order for
relief with respect to the Borrower or any of the
other Companies in an involuntary case under the
Bankruptcy Code or any other federal or state
bankruptcy, insolvency or other similar law now or
hereafter in effect;
the Borrower shall deliver to the Senior Lender and the Collateral Agent a
certificate signed by a Responsible Officer of the Borrower specifying the
nature and period of existence of such event or condition and what action the
Borrower or, if appropriate, another Company or Companies has taken, is taking
and proposes to take with respect thereto.
The Borrower shall also furnish or cause to be furnished to the Senior
Lender and the Collateral Agent such other information regarding the business,
affairs and condition of the Companies as the Senior Lender or the Collateral
Agent may from time to time reasonably request if and to the extent that such
information is then readily available to the Borrower or another Company in the
ordinary course of business without unreasonable cost or expense. In addition,
the Borrower shall permit, and shall cause each of the other Companies to
permit, at least once during each quarterly accounting period in each fiscal
year of the Borrower, the Senior Lender, or if there is more than one Senior
Lender, the Senior Lenders as a group, or the Collateral Agent on their behalf,
through their respective agents and employees, to inspect the Companies' books
and to make copies thereof and extracts therefrom and, to the fullest extent
permitted by law, any of the Hotel Properties or other Assets of the Companies
and to discuss the affairs, finances and accounts of the Companies with, and to
be advised as to the same by, the Companies' respective executive officers and,
at least once during each fiscal year of the Borrower, the Companies'
independent public accountants, all at such reasonable times as the Senior
Lender or the Collateral Agent may from time to time request. However, the
Senior Lender or the Collateral Agent, as the case may be, shall notify the
Borrower in advance of any discussion between any Senior Lender or the
Collateral Agent and the Companies' accountants, and the Borrower shall have
the right to be present during such discussions. The inspection rights of the
Senior Lender and the Collateral Agent set forth in this Section shall be in
addition to the inspection rights of the Collateral Agent under the
Intercompany Security Documents.
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5.3 Legal Existence: Franchises: Compliance with Laws. (a) The
Borrower shall, and shall cause each of the other Companies to: maintain its
existence and business (except as otherwise contemplated by the Restructuring
Plan); maintain its licensing, qualification or other authorization to do
business as a foreign partnership, foreign real estate investment trust,
foreign corporation or other foreign business entity in all states where
necessary for the conduct of such Company's business as from time to time
conducted; maintain all Assets which are necessary for the conduct of such
business now or hereafter owned, in good repair, working order and condition,
ordinary wear and tear excepted; take all actions to maintain and keep in full
force and effect all such Material Agreements and Material Licenses as are
necessary for the conduct of such business; and, except as otherwise provided
herein, comply in all material respects with all applicable statutes, rules,
regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities in respect of the conduct of such business and the
ownership of such Company's Assets. However, neither the Borrower nor any of
the other Companies shall be required by reason of this Section to comply with
any such statute, rule, regulation, order or restriction at any time while the
Borrower or such other Company shall be contesting its obligation to do so in
good faith by appropriate proceedings promptly initiated and diligently
conducted, and if the Borrower or such other Company shall have set aside on
its books such reserves, if any, with respect to that matter as are required by
GAAP and deemed adequate by such Company and its independent public
accountants.
(b) The Borrower shall not, and shall not permit any of the
other Companies to, engage in any business other than the businesses of hotel
and hotel/casino ownership, operation and/or management as heretofore conducted
and activities incidental thereto. The foregoing shall not be construed to
prohibit the ownership or operation of a Mixed-Use Property; provided, however,
that the aggregate non-hotel and non-casino gross revenues of Mixed-Use
Properties shall not constitute more than ten percent (10%) of the gross
revenues of all the Companies' Assets. In addition, the Borrower and the other
Companies may acquire additional casino properties provided the total asset
value of all casinos does not exceed twenty percent (20%) of the Aggregate
Asset Value.
5.4 Insurance.
(a) The Borrower shall maintain or cause to be maintained
at the Borrower's expense with companies satisfactory to the Senior Lender,
whose approval shall not be unreasonably delayed or withheld and shall not be
withheld as to any Company rated A-VII or better in the most current issue of
Best's Key Rating Guide, the following minimum insurance coverages, which
coverages may be included as part of a blanket policy, insuring the Hotel
Properties and other Assets of the Companies:
(i) insurance that complies with the worker's
compensation and employer's liability laws of all
states in which the Borrower or any other Company
shall have employees;
(ii) comprehensive general liability insurance covering
all operations of the Borrower and the other
Companies and with a combined single limit of
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not less than $1,000,000 per occurrence for bodily
injury, including death, and property damage;
(iii) fire, extended coverage, vandalism and malicious
mischief insurance in an amount not less than one
hundred (100%) of the full replacement cost of the
personal property and Improvements on the Real
Property associated with the Hotel Properties and the
Companies' other Assets, with deductibles not to
exceed $100,000 for any one occurrence (or in the
case of earthquake or flood insurance, ten percent
(10%) of the total insurable value), with a
replacement cost coverage endorsement, an agreed
amount endorsement if requested by the Senior Lender,
a contingent liability from operation of building
laws endorsement, a demolition cost endorsement and
an increased cost of construction endorsement ("full
replacement cost", as used herein, meaning the cost
of replacing the Improvements exclusive of the cost
of excavations, foundations and footings below the
lowest basement floor) and the Companies' personal
property therein without deduction for physical
depreciation thereof);
(iv) umbrella liability insurance in addition to the
coverage specified in (ii) above, in an amount not
less than $10,000,000 per occurrence;
(v) for each Hotel Property in an area designated by the
Secretary of Housing and Urban Development as having
special flood hazards, flood insurance on the
Improvements included in such Hotel Property and any
and all Company personal property used or to be used
in connection therewith, up to the maximum limits of
insurance available under the National Flood
Insurance Program as authorized by the Flood Disaster
Protection Act of 1973, as amended or recodified from
time to time;
(vi) business interruption insurance and/or loss of rental
value insurance, as appropriate, payable for a period
of twelve (12) months and sufficient to cover eighty
percent (80%) of the gross income from the Hotel
Properties for a period of twelve (12) months, as
determined at the commencement of each insurance
policy year; and
(vii) products and completed operations, business
automobile liability, liquor liability, personal and
advertising injury liability, false arrest and libel
and slander insurance.
Notwithstanding the foregoing provisions of subparagraphs
(iii), (v), (vi) and (vii), the Borrower shall, with respect to acquired
mortgage notes and Existing Mortgage Notes, fully enforce the coverage (with
the intention of attaining the maximum coverage allowed) and related terms
provided for in the applicable mortgage note but which may be less coverage
than specified above.
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(b) The Borrower shall furnish to the Collateral Agent
originals or, if not available, certified copies of such policies of insurance
upon execution hereof and upon the renewal or replacement of existing coverage
or the obtaining of additional coverage.
(c) Each insurance policy required by paragraphs (i),
(ii) (iv) and (vii) of subsection 5.4(a) shall name the Collateral Agent, for
the benefit of the Senior Lender, as an additional insured party with respect
to the Collateral insured by such policy. Each insurance policy required by
paragraphs (iii), (v) and (vi) of subsection 5.4(a) and any and all other
policies applicable to the Collateral shall name the Collateral Agent, for the
benefit of the Senior Lender, as a loss payee with respect to the Collateral
and shall provide that all proceeds payable thereunder shall be paid to the
Collateral Agent to be applied as provided herein. Except as may be otherwise
approved by the Senior Lender, none of such insurance policies shall include
any non- Company Assets.
(d) Each insurance policy required by paragraphs (iii)
and (v) of subsection 5.4(a) shall be on a non-reporting form basis and to the
extent the same relates to the Collateral shall contain a provision (i)
requiring the insurer to notify the Senior Lender and the Collateral Agent in
writing at least ten (10) days in advance of any cancellation or material
change in such policy; and (ii) stating that any loss otherwise payable
thereunder shall be payable notwithstanding any change in title to or ownership
of the covered Hotel Property after the event giving rise to the loss.
(e) In the event of an insured loss to all or any portion
of the Borrower's Assets which loss is estimated to be in an amount in excess
of $200,000, the Borrower shall give immediate written and oral notice thereof
to the Collateral Agent, and the Collateral Agent may make proof of loss with
respect to the Collateral or Intercompany Collateral if not made promptly by
the Borrower or another Company. However, any adjustment or proof of loss in
excess of $200,000 shall require the prior written consent of the Senior
Lender, which consent shall not be unreasonably delayed or withheld. Each
insurance company concerned with the circumstances described in the immediately
preceding sentence is hereby authorized and directed to make payment under such
insurance to the Collateral Agent instead of to the Borrower and the Collateral
Agent jointly, other than with respect to the return of unearned premiums
which, except as otherwise provided in subsection 5.4(g), shall be returned to
the Borrower. The Borrower irrevocably appoints the Collateral Agent as the
Borrower's attorney-in-fact to endorse any draft for such payment, which
appointment, being for security, is irrevocable. The Collateral Agent shall
immediately, and in any event within ten (10) Business Days, notify the
Borrower of the Collateral Agent's receipt of any payment pursuant to the
immediately preceding sentence.
(f) The proceeds of any business interruption insurance
carried in accordance with paragraph 5.4(a)(vi) and paid to the Collateral
Agent shall be promptly paid by the Collateral Agent to the Borrower.
(g) All right, title and interest of the Borrower in and
to the policies contemplated in this Section, and all renewals thereof, have
been assigned pursuant to the
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Security Documents by the Borrower to the Collateral Agent as additional
security for payment of the Obligations, other than Obligations under the
Environmental Indemnity, to the extent permitted by applicable law and subject
to the rights of the Borrower's insurance premium finance company, if any. The
Borrower hereby agrees (i) to give notice of such assignment to the companies
issuing such policies as herein required, and (ii) if an Event of Default shall
have occurred and be continuing, any amount that would otherwise be available
under said insurance policies to any of the Companies upon cancellation or
termination of any of such policies or renewals, whether in the form of return
of premiums or otherwise, shall be payable to the Collateral Agent as assignee
thereof.
5.5 Restoration.
(a) In the event that there occurs any damage to or
destruction of any Improvements forming a part of any Hotel Property owned by
the Borrower or SLT and subject to the Required Liens ("Damage") or that any
portion of the Real Property or other Assets constituting such a Hotel Property
is taken under the power of eminent domain (a "Condemnation") and such Damage or
Condemnation constitutes Major Damage or a Major Condemnation or a Total Loss as
hereinafter defined, then, except for such proceeds of any insurance as the
Borrower may require in order to effect any demolition of the remaining portion
of Improvements that may be required by applicable law, which proceeds shall be
paid to the Borrower by the Senior Lender, the Senior Lender shall have the
absolute right to (i) retain and apply the proceeds of any insurance or sums
received as a result of such Condemnation, at its sole election, to principal
payable on the Notes then outstanding; or (ii) require the Borrower to restore
or repair, or cause to be repaired or otherwise restored, the damaged or taken
Hotel Property or portion thereof according to plans and specifications approved
by the Senior Lender and in accordance with the requirements of subsection
5.5(b), if and to the extent that such repair or restoration is then permitted
by applicable law. However, if (i) such Damage or Condemnation does not
constitute a Total Loss, (ii) no Event of Default has occurred and is
continuing, (iii) the Borrower certifies to the Senior Lender that, in that
Company's reasonable business judgment, there are sufficient net proceeds from
insurance or sums received as a result of such Condemnation or from Company
funds to complete repair or the restoration of the Improvements affected thereby
to, in the case of a casualty, substantially the same value, condition and
character as existed immediately prior to such damage or, in the case of a
Condemnation, to such condition and character as shall permit the continued
operation of such Hotel Property, and (iv) the insurer, in the case of an
insured casualty loss, does not deny liability as to the insureds, the Senior
Lender shall, if the Borrower shall so request, consent to the use of the net
proceeds of any insurance or any sums received as the result of such
Condemnation for restoration of such Hotel Property. In the event that there
occurs any Minor Damage or Minor Condemnation as hereinafter defined to any
Hotel Property owned or leased by the Borrower or SLT and subject to the
Required Liens, the Borrower shall have the right to apply the proceeds of any
insurance received as a result of such Minor Damage or sums received as a result
of such Minor Condemnation to principal payable on the Notes then outstanding,
or repair or restore or cause the restoration of the damaged or taken Hotel
Property or portion thereof according to plans and specifications approved by
the Senior Lender and in accordance with the requirements of subsection 5.5(b).
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(b) All restorations made pursuant to subsection 5.5(a)
shall be conducted in accordance with the following conditions:
(i) Prior to the commencement of restoration, if the cost
to restore is anticipated to exceed $500,000, the
architect, contracts, contractors, plans and
specifications for the restoration shall have been
approved in advance in writing by the Senior Lender,
whose approval shall not be unreasonably delayed or
withheld, and the Senior Lender shall have been
provided with proof of the effective filing of a
waiver of mechanics' liens so as to prevent to the
maximum extent permitted by law such liens from
attaching to such Hotel Property;
(ii) Such restoration is then allowed by applicable law
and all necessary permits and approvals shall have
been obtained;
(iii) The net proceeds of such insurance or condemnation
award (the "Restoration Fund") shall have been
deposited with the Collateral Agent, and any interest
earned on such deposited funds shall be a part of and
follow the Restoration Fund;
(iv) At the time of any disbursement from the Restoration
Fund, no Event of Default shall have occurred and be
continuing, no mechanic's or material supplier's
liens shall have been filed and remain undischarged,
and a bring-down of title insurance with respect to
the damaged or condemned Hotel Property shall have
been delivered to the Collateral Agent;
(v) Disbursements from the Restoration Fund shall be made
by the Collateral Agent from time to time in an
amount not exceeding the cost of the work completed
since the last disbursement, upon receipt by the
Collateral Agent of customary evidence of the stage
of completion and of performance of the work in a
good and workmanlike manner in accordance with the
contracts, plans and specifications; and
(vi) The Collateral Agent may retain ten percent (10%) of
all requests for disbursements from the Restoration
Fund as retainage until the restoration is fully
completed.
Notwithstanding the foregoing, no Restoration Fund shall be
required in connection with Minor Damage or Minor Condemnation.
(c) If the estimated cost of restoration, as determined
by the Borrower in its reasonable business judgment from time to time and
certified to the Senior Lender, exceeds the net amount of insurance proceeds or
condemnation proceeds awarded for the cost of such restoration and deposited in
the Restoration Fund, the amount of such excess shall be paid promptly, but in
no event later than sixty (60) days after notification by the Collateral Agent,
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by the Borrower to the Collateral Agent to be added to the Restoration Fund.
Any insurance or condemnation proceeds remaining in the Restoration Fund after
completion of repairs or restoration, other than any retainage, shall be
distributed by the Collateral Agent or the Borrower. Upon certification by the
Borrower to the Senior Lender that all conditions under the applicable
construction contract for the release of any retainage have been fulfilled, any
such retainage shall be made available by the Collateral Agent to the Borrower
and shall be used by the Borrower for payment of such construction costs.
(d) For purposes of this Section 5.5, "Major Damage" or
"Major Condemnation" shall mean a loss to the extent that the costs of repair
or other restoration equal or exceed the lesser of (i) 15% of the appraised
value of the damaged or taken Hotel Property or portion thereof based on the
most recent insurance appraisal for such Hotel Property or, if there is no such
insurance appraisal or in the case of a Major Condemnation, based on the most
recent Appraisal of such Hotel Property, excluding land for any Major Damage
only, and (ii) $500,000; "Minor Damage" or "Minor Condemnation" shall mean a
loss to the extent that the costs of repair or other restoration do not exceed
the lesser of (i) 15% of such appraised value and (ii) $500,000; and "Total
Loss" shall mean a loss with respect to which replacement cost of the
Improvements and personal property is greater than or equal to 80% of such
appraised value of such Improvements and personal property.
5.6 Payment of Taxes. The Borrower shall, and shall cause each of
the other Companies to, pay and discharge before delinquency or the imposition
of any penalty or interest all Taxes imposed upon such Company or its income
or upon any of that Company's Assets or upon any part thereof, as well as all
lawful claims of any kind including claims for labor, materials and supplies
that, if unpaid, might by law become a Lien, other than an inchoate Lien, upon
such Company's Assets. However, neither the Borrower nor any of the other
Companies shall be required to pay any such Taxes or claims if (i) the Lien
securing such Taxes or claims shall remain inchoate or any statutory bond with
respect to any Lien securing such delinquent Taxes or claims shall have been
provided, (ii) the amount, applicability or validity of the Taxes or claim
shall currently be contested in good faith by appropriate proceedings promptly
initiated and diligently conducted, (iii) enforcement of the Lien is being
stayed and (iv) the Borrower or such other Company shall have set aside on its
books such reserves with respect to the Taxes or claim as are required by GAAP
and deemed appropriate by such Company and its independent public accountants.
Upon the request of the Senior Lender, the Borrower shall furnish to the Senior
Lender copies of all federal income tax returns filed by the Borrower or the
Operating Partnership within ten (10) Business Days after the filing thereof.
5.7 Payment of Other Indebtedness. etc. Except as to matters
being contested in good faith and, where the Borrower deems necessary or
appropriate, by appropriate proceedings, the Borrower shall, and shall cause
each of the other Companies to, pay promptly when due or in conformance with
customary trade terms all other material Indebtedness of that Company and
perform in all material respects all other material obligations incident to the
conduct of such Company's business, except as otherwise permitted under Section
6.6 (relating to Intercompany Loans and Leases).
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5.8 Further Assurances.
(a) General. From time to time the Borrower shall
execute and deliver, or shall cause to be executed and delivered, such
additional instruments, certificates or documents, and shall take all such
additional actions, as may be necessary for the purposes of implementing or
effectuating the provisions of this Agreement and the other Loan Documents or
Intercompany Loan Documents, or of more fully perfecting or renewing the Senior
Lender's rights with respect to the Collateral pursuant hereto or thereto.
Upon the exercise by the Senior Lender of any power, right, privilege or remedy
pursuant to this Agreement or any other Loan Document which exercise requires
any consent, approval, registration, qualification or authorization of any
Person, including any Governmental Authority, the Borrower shall, at its
expense, execute and deliver, or shall cause the execution and delivery by the
other Companies, and shall use all reasonable efforts to cause the execution
and delivery by any other Governmental Authority or other Person of, all
applications, certifications, instruments and other documents that the Senior
Lender may require to be obtained for such consent, approval, registration,
qualification or authorization.
(b) Mortgage Notes. Without limiting the generality of
the foregoing, the Borrower shall, as more fully set out in the Mortgage Note
Assignment, assign to the Collateral Agent, as security for the Obligations
other than Obligations under the Environmental Indemnity, all of the Borrower's
right, title and interest in and to all Mortgage Notes, all Direct Note
Collateral and all Borrower's Residual General Intangibles, in each case
arising on account of any sale or other disposition of a Hotel Property after
the Third Closing (except Excluded Assets), and such Mortgage Notes, Direct
Note Collateral and Borrower's Residual General Intangibles shall constitute
Collateral for all purposes hereof. The Borrower shall deliver to the
Collateral Agent copies of all documents and instruments related to such
Collateral upon the receipt of such documents or instruments by the Borrower or
any of the other Companies.
(c) Additional Collateral.
(i) If: (A) the Borrower acquires any right, title or interest in
any Asset other than an Excluded Asset, which Asset does not
upon acquisition become subject to the Required Liens, or any
Asset other than an Excluded Intercompany Asset is acquired by
a non-Borrower Company that has granted Intercompany Liens,
which Asset does not upon acquisition become subject to an
Intercompany Lien, in each case by virtue of an after-acquired
property clause in any then existing Security Document or
Intercompany Security Document, (B) the Borrower prepays in
full any Prior Mortgage Note applicable to any Hotel Property
owned by the Companies and the holder of which Prior Mortgage
Note had not previously consented to the granting of the
Required Liens and/or Intercompany Liens (regardless of
whether such holder has previously consented to the granting
of second liens to the Collateral Agent for the benefit of the
Senior Lender), or (C) the Senior Lender for any reason
elects, in its sole and absolute discretion, to require that
any Asset, that theretofore constituted an Excluded
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Asset or an Excluded Intercompany Asset solely at the election
of the Senior Lender, become a part of the Collateral or the
Intercompany Collateral, then the Borrower shall and/or shall
cause each other Company with any right, title or interest in
such Asset to execute, acknowledge and deliver to the
Collateral Agent such additional Security Documents or
Intercompany Security Documents as are necessary to grant and
perfect the Required Lien or Intercompany Lien with respect to
such Asset, which Security Documents or Intercompany Security
Documents shall be in all material respects consistent in form
and substance with the Security Documents or Intercompany
Security Documents theretofore executed.
(ii) If the Borrower or any of the Companies shall acquire one
hundred percent (100%) of the ownership or operation of the
Hotel Asset located in Milwaukee, Wisconsin, then if requested
by the Senior Lender, the Borrower will cooperate with the
Senior Lender to restructure the Moorland Debt so that the
Indirect Hotel Property located in Milwaukee, Wisconsin shall
be direct Collateral for the Loans or, if the ownership is
acquired by a Company other than the Borrower, direct
Intercompany Collateral for the Intercompany Loans, in each
case in substitution for the currently existing pledge of the
Moorland Debt. The Borrower's obligations under this
paragraph (ii) shall be subject to the rights of any and all
other lenders holding prior Liens secured by the Hotel
Property and to the Companies' ability to grant the Required
Liens and the Intercompany Liens in the Asset in compliance
with the terms of the Companies agreements with such third
party lenders.
(d) Management Contracts. If at any time or from time to
time any of the Companies enters into a new Management Contract, including
replacing an existing Management Contract but excluding any Management Contract
for a Hotel Property that is at the time in question an Excluded Asset, then
the Borrower shall cause each Management Company that is a party thereto to
execute, acknowledge and deliver a Management Subordination Agreement.
5.9 Cash Management System. The Borrower shall, and shall cause
each of the other Companies and Management Companies to deposit all receipts,
regardless of the form in which they are received, but excluding all receipts
that constitute Excluded Assets or Excluded Intercompany Assets and all
receipts from the operation of Hotel Property that is subject to a Prior
Mortgage Note and that are required by the holder thereof to be deposited in an
account other than the Cash Management Account, in the Cash Management Accounts
and otherwise to comply with the terms and conditions of the Cash Management
System described in the Cash Management Memorandum, subject to the provisions
of Section 6.16 of this Agreement. Notwithstanding the foregoing, certain
accounts not in the Cash Management System on the Third Closing Date are to be
included in such system after the Third Closing Date as provided in Section
6.16 of this Agreement.
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5.10 Action Under Hazardous Materials Laws.
(a) Upon the Borrower's obtaining knowledge of (i) the
presence on any Real Property of any Hazardous Materials in violation of
applicable Hazardous Materials Laws, (ii) the conduct at such Real Property of
Hazardous Materials Activity in violation of applicable Hazardous Materials
Laws or (iii) the existence of any environmental liability on the part of the
Borrower or any of the other Companies under applicable Hazardous Material Laws
with respect to any Real Property (any of the foregoing items (i), (ii), and
(iii), an "Environmental Situation"), which Environmental Situation, in the
reasonable business judgment of the Borrower, is likely to result in a Material
Adverse Change, the Borrower shall, at its sole cost and expense (A) promptly
notify the Senior Lender, (B) take all material actions as shall be required by
applicable Hazardous Materials Laws and (C) provide the Senior Lender upon its
request from time to time with one or more reports as to the status of any such
remediation efforts.
(b) After reasonable notice to the Borrower, whether or
not a Default or an Event of Default shall have occurred, the Senior Lender
may, in its discretion for the purpose of assessing and ensuring the value of
the Real Property, obtain one or more environmental assessments or audits of
the Real Property prepared by a hydrogeologist, an independent engineer or
other qualified consultant or expert approved by the Senior Lender to evaluate
or confirm (i) whether any Hazardous Materials are present in the soil or water
at any Real Property and (ii) whether the use and operation of Real Property
complies with all Hazardous Materials Laws. Environmental assessments may
include detailed visual inspections of any Real Property, including any and all
storage areas, storage tanks, drains, dry ▇▇▇▇▇ and leaching areas, the taking
of soil samples, surface water samples and ground water samples and any other
investigations or analyses as the Senior Lender deems appropriate. With
respect to any parcel of Real Property and all related Improvements, the first
such environmental assessment requested by the Senior Lender after the Third
Closing shall be obtained at the sole cost and expense of the Borrower. Any
environmental assessments subsequently requested by the Senior Lender with
respect to such parcel of Real Property shall be at the sole cost and expense
of the Senior Lender. However, if (i) at the time of any such request, a
Default or Event of Default shall have occurred and shall not have been cured,
or (ii) such request is the result of an Environmental Situation that shall
have come to the attention of the Senior Lender, then any such environmental
assessments subsequently requested shall be obtained at the sole cost and
expense of the Borrower. Each environmental assessment obtained pursuant to
this subsection 5.10(b) at the cost and expense of the Borrower shall be
prepared by the consultant or expert that prepared the environmental assessment
of that Real Property provided by the Borrower prior to the Third Closing and
to the extent practicable shall take the from of a update of the original
environmental assessment. (Any reference to the Senior Lender in this
subsection 5.10(b) shall be deemed to be a reference to the Senior Lenders
collectively if at the applicable time there is more than one Senior Lender.)
5.11 Asbestos Monitoring. The Borrower shall comply with all of
the O&M Procedures set forth in the O&M Manuals, and with all applicable laws,
rules and regulations
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relating to the presence of asbestos or asbestos-containing materials ("ACM")
on any of the Hotel Properties.
5.12 Appraisals and Marketing Studies. The Collateral Agent shall
from time to time after the Third Closing, at the request of the Senior Lender,
arrange for an Appraisal or market study of any Hotel Property and/or Indirect
Hotel Property or a market study of the business of any Hotel Property and/or
Indirect Hotel Property. In connection with any such Appraisal or any such
market study, the Borrower shall furnish or cause to be furnished to the Person
conducting such Appraisal or market study in a timely manner such information
as is necessary to enable such Person to conduct and complete such Appraisal or
market study. With respect to each Hotel Property and each Indirect Hotel
Property, the first such Appraisal and, with respect to the businesses of such
Hotel Property or such Indirect Hotel Property, the first such market study,
requested by the Senior Lender after the Third Closing shall be obtained at the
sole cost and expense of the Borrower. Any Appraisal requested after the first
such requested Appraisal, and any market study requested after the first such
requested market study, with respect to such Hotel Property or Indirect Hotel
Property, shall be at the sole cost and expense of the Senior Lender. However,
if at the time of any such request any Material Adverse Effect shall have
occurred and be continuing with respect to such Hotel Property or Indirect
Hotel Property or a Default or Event of Default shall have occurred and shall
not have been cured, then any such subsequently requested Appraisal or market
study shall be obtained at the sole cost and expense of the Borrower. Each
Appraisal or market study obtained pursuant to this Section 5.12 at the cost
and expense of the Borrower shall be prepared by the consultant or expert that
prepared the Appraisal or market study of that Hotel Property or Indirect
Property provided by the Borrower to the Senior Lender in connection with the
Third Closing, if any, and may, if acceptable to the Senior Lender in its sole
discretion, take the form of an update of that original Appraisal or market
study. (Any reference to the Senior Lender in this Section 5.12 shall be
deemed to be a reference to the Senior Lenders collectively if at the
applicable time there is more than one Senior Lender.)
5.13 Termination of Material Licenses and Material Agreements.
Except in connection with an Asset Sale pursuant to and in accordance with the
provisions of Section 6.10 (relating to Sales of Assets) or an Excluded
Disposition, the Borrower shall, and shall cause each of the other Companies
to, keep in full force and effect and not terminate, surrender or amend any
Material License or Material Agreement (other than any Intercompany Loan
Document or Intercompany Lease, which items are governed by Section 6.6), the
loss, termination, surrender or amendment of which would, after giving effect
to any replacement license or agreement then or theretofore obtained, result in
a Material Adverse Effect.
5.14 Covenant regarding Second Liens. Within sixty (60) days after
the Third Closing Date, the Borrower shall use its best efforts to obtain a
second mortgage Lien in the highest amount practical as a Required Lien on the
Park Central Hotel, Dallas, Texas, and shall use its best efforts to execute
and deliver all documentation in recordable form requested by the Senior Lender
to grant to the Senior Lender such Lien. The Borrower shall also use its best
efforts to obtain, with respect to the Best ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, the ground lessor's consent to increase the Required Lien amount
with respect to a
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second mortgage Lien on such hotel, and shall satisfy the first mortgage on
Embassy Suites, Phoenix, Arizona, which first mortgage amount shall be
deposited as additional security for the Loans with the Senior Lender until
payment can be made.
ARTICLE 6.
Negative Covenants
The Borrower covenants and agrees that until payment in full of all
principal of and interest on the Loans and all costs and expenses payable by
the Borrower pursuant to Section 10.1 (relating to certain expenses of the
Third Closing and certain other expenses), the Borrower shall, and shall cause
each of the other Companies to, perform each and all of the following covenants
applicable to it unless such compliance shall be waived by the Senior Lender:
6.1 Indebtedness. The Borrower shall not, and shall not permit
any of the other Companies to, create, incur, assume or become or remain liable
in respect of any Indebtedness, except the following (collectively, the
"Permitted Indebtedness"):
(a) Indebtedness to the Senior Lender hereunder;
(b) Indebtedness consisting of Intercompany Loans.
However, at all times such Intercompany Loans shall be evidenced by
Intercompany Notes and all right, title and interest of the obligee of each
such Intercompany Note in and to such note and the related Intercompany
Collateral shall have been assigned to the Collateral Agent, for the benefit of
the Senior Lender, as security for the Obligations (other than Obligations
under the Environmental Indemnity);
(c) Current liabilities (other than for borrowed money)
incurred in the ordinary course of the Companies' respective businesses and in
accordance with customary trade practices;
(d) Indebtedness, if any, of the Companies existing as of
the Third Closing and referred to in Schedule 3.8(a), in not more than the
respective unpaid principal amounts thereof specified in such Schedule and all
renewals, extensions or refinancings of any such Indebtedness in an amount not
exceeding the lesser of (i) the principal amount thereof outstanding as of the
Third Closing or (ii) the principal amount thereof remaining unpaid immediately
prior to such renewal, extension or refinancing, together with, in each
instance, Permitted Closing Expenses incurred in connection with the renewal,
extension or refinancing (and any Indebtedness permitted under this
subparagraph (d) may be recourse to the extent the same is recourse on the date
hereof);
(e) Indebtedness of the Companies in respect of
Contingent Obligations to the extent permitted under Section 6.4, or in respect
of any Operating Partnership Guaranty;
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(f) Indebtedness of a Partnership to SLT, SLC, a
Subsidiary, incurred pursuant to Section 7.3 of the partnership agreement of
the Realty Partnership or Section 7.3 of the partnership agreement for the
Operating Partnership. However, (i) at the election of the Senior Lender such
Indebtedness must be evidenced by an Intercompany Note and the other conditions
set forth in subsection 6.1(b) (relating to Intercompany Loans) must be
satisfied with respect to such Indebtedness, and (ii) at the time such
Indebtedness is incurred, the general partner to which such Indebtedness is
owed shall execute a subordination agreement, in form reasonably acceptable to
the Senior Lender, subordinating such Indebtedness to the Loans;
(g) Non-recourse Indebtedness incurred or assumed by the
Partnerships in connection with the acquisition of Hotel Properties or other
Assets after the Third Closing Date in accordance with the provisions of
Section 6.5 or a non-recourse refinancing of such Indebtedness in a principal
amount not exceeding the amount being refinanced;
(h) With respect to a Hotel Property or a direct or
indirect interest therein acquired by the Borrower or any other Company as
permitted by, and subject to the conditions of, Section 6.5, any non-recourse
Indebtedness to which such Hotel Property or a direct or indirect interest
therein is subject to at the time of such acquisition or a non-recourse
refinancing of such Indebtedness in a principal amount not exceeding the amount
being refinanced;
(i) Indebtedness, which may be recourse Indebtedness,
incurred in connection with the Acquisition Credit Facility or the ▇▇▇▇▇▇▇
Loans, and additional loans similar to the ▇▇▇▇▇▇▇ Loans made by the originator
of the ▇▇▇▇▇▇▇ Loans up to an aggregate amount of $50,000,000 after the
expiration of the Acquisition Loan Facility, as provided in Schedule 1.7.;
(j) Indebtedness of the Companies secured as permitted
by, and subject to the provisions of, subsections 6.2(e) and 6.2(h) (which
Section 6.2(h) obligations may be recourse);
(k) Non-recourse Indebtedness of the Companies secured as
permitted by, and subject to the provisions of, subsection 6.2(i);
(l) Indebtedness of the Companies (which may be
unsecured) incurred to Starwood or any Affiliate of Starwood concurrently with
the execution and delivery of this Agreement in connection with the
cancellation of the Warrants, and all extensions or renewals of the same.
However, the maximum principal amount of such Indebtedness shall not exceed
$800,000;
(m) subject to the Borrower's and the other Companies'
prior compliance with the provisions of paragraph (i) of subsection 1.9(b) in
connection with the application of the proceeds of any public issuance of debt
or equity securities, Indebtedness of the Partnerships to Starwood upon
consummation of the Reorganization and which are payable
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only if (i) SLT and SLC consummate a public offering of shares of beneficial
interest of SLT and shares of the common stock of SLC within eighteen (18)
months following the consummation of the Reorganization and (ii) such offering
results in the receipt by SLT and SLC of gross proceeds of not less than
$150,000,000 and as otherwise described in the Reorganization Proxy Statement;
and
(n) obligations under ground leases, operating leases and
Capital Leases which are not financing devices.
6.2 Liens. The Borrower shall not, and shall not permit any of
the other Companies to, directly or indirectly, create, incur, assume or suffer
to exist, any Lien, or any agreement to give or refrain from giving any Lien,
with respect to any Asset now owned or hereafter acquired by the Borrower or
any of the other Companies, except the following (collectively, the "Permitted
Liens"):
(a) Any Lien securing the Obligations (other than
Obligations under the Environmental Indemnity), including the Required Liens;
(b) Any Lien securing an Intercompany Loan or a
Subsidiary Guaranty, including the Intercompany Liens, but only if all right,
title and interest of the lienholder in and to such Lien shall have been
assigned to the Collateral Agent, for the benefit of the Senior Lender, as
security for the Obligations (other than Obligations under the Environmental
Indemnity);
(c) The Liens existing as of the Third Closing referred
to in Schedule 3.8(b) as delivered at the Third Closing, or any Liens securing
any renewal, extension or refinancing of the Indebtedness secured by any such
Lien(s), but only if (i) such renewed, extended or refinanced Indebtedness,
which may include revolving debt, is in an amount not exceeding the lesser of
(A) the principal amount thereof secured as of the Third Closing Date or (B)
the principal amount thereof remaining unpaid immediately prior to such
renewal, extension or refinancing, in each case together with Permitted Closing
Expenses incurred in connection with the renewal, extension or refinancing; and
(ii) the Lien(s) securing such renewed, extended or refinanced Indebtedness,
which may include revolving debt, are confined to the Assets originally
encumbered or replacements thereof (or, in the case of renewed, extended or
refinanced Prior Mortgage Note Indebtedness existing as of the Third Closing
Date, the applicable Hotel Property (together with that Hotel Property's
"Leases," "Hotel Occupancy Leases" and "Rents" as each such term is defined in
the Absolute Assignment of Leases, if any, for the Hotel Property) and the
Companies' Cash and Cash Equivalents contained from time to time solely in the
Hotel Specific Accounts relating to the applicable Hotel Property). In any
event, the Required Liens and Intercompany Liens, as applicable, shall be
subordinate to any Lien securing any such renewed, extended or refinanced
Indebtedness if and to the extent that the Required Liens and/or the
Intercompany Liens, as applicable, were subordinate to the Lien(s) securing the
renewed, extended or refinanced Indebtedness prior to such renewal, extension
or refinancing. However, in the case of renewed, extended or refinanced Prior
Mortgage Note Indebtedness existing as of the Third Closing Date, the Required
Liens
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and/or the Intercompany Liens, as applicable, with respect to the applicable
Hotel Property (together with the applicable Leases, Hotel Occupancy Leases and
Rents and the Hotel Specific Accounts) shall be subordinate to any Liens(s)
that secure such renewed, extended or refinanced Prior Mortgage Note
Indebtedness and that are limited solely to the applicable Hotel Property,
including that Hotel Property's Leases, Hotel Occupancy Leases, Rents and Hotel
Specific Accounts. It is the intent of the foregoing provisions that the
Borrower shall have the right to grant to the holder of the renewed, extended
or refinanced Prior Mortgage Note Indebtedness existing as of the Third Closing
Date such security therefor as is customarily granted to institutional mortgage
lenders by owners and operators of hotel properties.
(d) Liens for Taxes not yet delinquent or subject to
interest or penalty or which are being contested in good faith as provided in
Section 5.6 (relating to the payment of certain taxes); Liens in connection
with workmen's compensation, unemployment insurance or other social security
obligations; Liens securing the performance of bids, tenders, contracts, surety
and appeal bonds; Liens to secure progress or partial payments and other Liens
of like nature arising in the ordinary course of business of the Companies;
mechanics', workmen's, materialmen's or other like Liens arising in the
ordinary course of business of the Companies in respect of obligations which
are not yet overdue or are being contested in good faith by appropriate
proceedings promptly initiated and diligently conducted, and enforcement
thereof is being stayed and with respect to which such Company shall have set
aside on its books such reserves, if any, as are required by GAAP and deemed
appropriate by such Company and its independent public accountants; Liens of or
resulting from any judgment or award the time for the appeal or the hearing of
which shall not have expired or in respect of which any of the Companies shall
at any time in good faith be prosecuting an appeal or proceeding for a review
and in respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured; as to Excluded Cash, the Liens described in
clause (c) of the definition thereof; and other Liens incidental to the
ordinary course of business of the Companies or to the ownership of their
respective Assets (including survey exceptions, easements or reservations or
rights of others for rights of way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real property), which were not
incurred in connection with the borrowing of money or the obtaining of credit
and which do not materially detract from the value of the Assets of the
Companies or materially and adversely affect the use thereof in the operation
of the Companies' respective businesses;
(e) All Liens permitted under Section 9(b)(1) of the
Mortgage Note Assignment;
(f) All Liens granted in connection with the Acquisition
Credit Facility or the ▇▇▇▇▇▇▇ Loans and additional loans similar to the
▇▇▇▇▇▇▇ Loans made by the originator of the ▇▇▇▇▇▇▇ Loans up to an aggregate
$50,000,000 after the expiration of the Acquisition Loan Facility as provided
in Schedule 1.7;
(g) Liens referred to as Permitted Liens in paragraph
(ii) of subsection 6.5(f) or otherwise permitted under Section 6.5;
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(h) Purchase money Liens, including Capital Leases the
principal purpose of which is financing, created in respect of personal
property or fixtures acquired by any of the Companies after the date hereof or
existing in respect of personal property or fixtures so acquired at the time of
acquisition thereof. However, (i) each such Lien shall at all times be
confined solely to the item or items of property so acquired and (ii) the
aggregate outstanding principal amount of Indebtedness secured by all such
Liens shall at no time exceed the greater of $2,000,000 or one percent (1.00%)
of the Aggregate Asset Value. However, if the aggregate principal amount of
such Indebtedness is in excess of $2,000,000 with respect to any subsequent
expenditures of $50,000 or more the Borrower shall use its best efforts to
obtain a recognition agreement from such lienholder for the benefit of Senior
Lender;
(i) Liens of Mortgages or similar arrangements granted,
given or incurred by a Company or Companies after the date hereof on one or
more Hotel Properties to secure any refinancing of any Acquisition Loan or
▇▇▇▇▇▇▇ Loan up to the outstanding principal balance of such loan immediately
prior to such refinancing. However,
(A) in connection with any refinancing, upon the
closing of such refinancing with respect to which the Senior Lender
releases a Lien, an amount equal to the Minimum Release Price
applicable to the transaction, with respect to such loan in connection
with such Hotel Property or Properties shall have been paid by the
Borrower to the Senior Lender in amortization of the Loans; and
(B) the Borrower shall have furnished or caused
to be furnished to the Senior Lender, copies of the agreements,
instruments and other documents evidencing such Indebtedness and/or
creating any such Lien or Liens, the terms of which documents, when
read as a whole, be at least as favorable to the Borrower as the terms
of the corresponding Security Documents or the security documents
delivered in connection with any ▇▇▇▇▇▇▇ Loan.
(j) Liens of lessors which have been granted by any of
the Companies in connection with the acquisition of leasehold estates relating
to a Hotel Property, provided such leasehold interest and the leases which
create those interests are not principally financings.
6.3 Investments. The Borrower shall not, and shall not permit any
of the other Companies to, directly or indirectly, make or permit to remain
outstanding any Investment in any Person unless such Investment is one of the
following and unless the Collateral Agent holds the Required Lien thereon (or
if such Investment is held by any of the other Companies, the Borrower has an
Intercompany Lien thereon, which has been assigned to the Collateral Agent, for
the benefit of the Senior Lender, as security for the Obligations (other than
Obligations under the Environmental Indemnity)) (collectively, the "Permitted
Investments"):
(a) extensions of trade credit by the Companies in the
ordinary course of business in the operation of the Hotel Properties, but
excluding any Intercompany Loans;
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(b) the Investments outstanding as of the Third Closing
Date, if any, referred to in Schedule 3.8(c);
(c) marketable direct obligations of the United States of
America or of any department or agency thereof if backed by the full faith and
credit of the United States of America, maturing not more than one year from
the date of acquisition by any of the Companies thereof;
(d) repurchase obligations with respect to any security
described in subsection 6.3(c) above, provided that the long term unsecured
debt obligations, or the short term deposit or debt obligations, of the party
agreeing to repurchase such obligations are rated in the highest rating
category of each of Standard & Poor's Corporation and ▇▇▇▇▇'▇ Investors
Service, Inc.;
(e) securities bearing interest or sold at a discount for
a term of no more than one year issued by any corporation incorporated under
the laws of the United States of America or any state thereof, which securities
have credit ratings from Standard & Poor's Corporation and ▇▇▇▇▇'▇ Investors
Service, Inc. of AAA and Aaa, respectively, at the time of such investment or
contractual commitment providing for such investment;
(f) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof)
having the highest credit ratings from Standard & Poor's Corporation at the
time of such investment;
(g) certificates of deposit, money market deposits,
bankers' acceptances or other similar types of investments maturing not more
than one year from the date of acquisition thereof and evidencing direct
obligations of any commercial bank or trust company organized and operating in
the United States or any state thereof or the District of Columbia, the debt
securities of which are rated within the two (2) highest grades by either
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.;
(h) Intercompany Loans permitted by subsection 6.1(b)
(relating to Indebtedness in connection with Intercompany Loans);
(i) Investments acquired in connection with Asset
acquisitions permitted by Section 6.5 or otherwise permitted by this Agreement
and Asset Sales permitted by Section 6.10;
(j) loans or advances in the ordinary course of the
Companies' businesses to trustees, directors, officers and employees for
expenses (including moving expenses relating to a transfer) incidental to
carrying on the respective businesses of the Companies. However, the aggregate
principal amount of all such loans and advances outstanding shall at no time
exceed $250,000;
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(k) acquisitions by one Company of the securities of
another Company (including, but not limited to, shares of beneficial interest,
shares of capital stock, membership interests and interests in the Partnerships
and the Gaming Partnership subject to compliance with each of the conditions of
Section 4 in the case of the Gaming Partnership) to the extent contemplated by
the Restructuring Plan;
(l) investments contributed to the Partnerships by the
Starwood Partners pursuant to the Starwood Reorganization;
(m) any investment in or origination of a Mortgage Note
that is secured by a mortgage or mortgages encumbering one or more hotel
properties or Mixed-Use Properties provided (i) no payment default has occurred
under such Mortgage Note during the preceding twelve (12) month period; (ii)
the hotel property or Mixed-Use Properties that are encumbered by the mortgage
conform to the financial characteristics set forth in Section 6.5(f)(i)(A);
(iii) the Borrower or any applicable Company shall grant a Required Lien or an
Intercompany Lien on such Mortgage Note; (iv) the Senior Lender shall approve
the mortgage loan servicer in connection with said Mortgage Note or, if the
Borrower shall service the Mortgage Note itself, the Borrower shall service
such Mortgage Note under standards approved by the Senior Lender; (v) the
Mortgage Note together with all other such Mortgage Notes so acquired which are
not first priority Liens shall not exceed ten (10%) percent of the Aggregate
Asset Value. However, if (i) and (ii) above have not been complied with with
respect to a particular Mortgage Note which the Borrower or any of the
Companies intends to acquire, then the Borrower may purchase such Mortgage Note
if the Borrower or any of the Companies can demonstrate to the reasonable
satisfaction of the Senior Lender that the price of the Mortgage Note is
adequately discounted to reflect the value as reasonably determined by the
Senior Lender provided that the aggregate values of all such Mortgage Notes
held by the Borrower and the Companies at any time shall not exceed ten percent
(10%) of the Aggregate Asset Value. The Mixed-Use Property constraints
contained in Section 5.3(b) shall apply with respect to investments in Mortgage
Notes secured by Mixed-Use Properties.
(n) investments permitted by subsection 6.5(h).
6.4 Contingent Obligations. The Borrower will not, and will not
permit any of the other Companies to, directly or indirectly, create or become
or be liable with respect to any Contingent Obligation, except:
(a) Contingent Obligations existing as of the Third
Closing Date and referred to on Schedule 3.8(d) as delivered at the Third
Closing;
(b) Any renewal, extension or refinancing of any
Contingent Obligation described in subsection 6.4(a) in an amount not exceeding
the lesser of (A) the amount thereof outstanding as of the Third Closing or (B)
the amount thereof remaining unpaid immediately prior to such renewal,
extension or refinancing, together with, in each instance, Permitted Closing
Expenses incurred in respect of such renewal, extension or refinancing;
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(c) Contingent Obligations incurred in connection with
Asset acquisitions permitted by Section 6.5 or Asset Sales permitted by Section
6.10;
(d) Contingent Obligations incurred as of the Third
Closing pursuant to the Partnerships' acquisition of the Starwood Assets;
(e) Any renewal, extension or refinancing of any
Contingent Obligation described in subsection 6.4(d) in an amount that together
with the amount of all other Contingent Obligations described in subsection
6.4(d) then outstanding does not exceed the lesser of (A) the aggregate amount
of Contingent Obligations described in subsection 6.4(d) outstanding as of the
Third Closing or (B) the aggregate amount of Contingent Obligations described
in subsection 6.4(d) remaining unpaid immediately prior to such renewal,
extension or refinancing, together with, in each instance, Permitted Closing
Expenses incurred in respect of such renewal, extension or refinancing;
(f) Any guaranties of the Companies in connection with
any ▇▇▇▇▇▇▇ Loan; and
(g) the Contingent Obligation given in connection with
the ▇▇▇▇▇▇ Notes.
6.5 Acquisitions. The Borrower will not, and will not permit any
of the other Companies to, directly or indirectly, acquire (except in the
ordinary course of business of the Companies) the Assets of any Person, except:
(a) Assets acquired pursuant to the making of Capital
Expenditures to the extent permitted by Section 6.8;
(b) acquisitions of Assets of some or all of SLC's
Subsidiaries and/or some or all of the Subsidiaries of the Operating
Partnership, in each case by the Borrower, by the Operating Partnership, by
another Subsidiary of SLC or by SLC;
(c) Assets acquired from the Starwood Partners pursuant
to the Starwood Reorganization;
(d) Assets acquired pursuant to the Borrower's or SLT's
exercise of any remedy under any Mortgage Note or the consummation of any deed
in lieu of foreclosure transaction;
(e) Assets acquired with the proceeds of an Acquisition
Loan from the Senior Lender or the proceeds of a ▇▇▇▇▇▇▇ Loan;
(f) Assets (other than those acquired with the proceeds
of an Acquisition Loan or a ▇▇▇▇▇▇▇ Loan referred to in subsection 6.5(e)) that
make up, are included in or acquired as a part of a Hotel Property or Mortgage
Note if as to any such Hotel Property (or any Hotel Property relating to any
Mortgage Note) each and all of the following conditions are satisfied:
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(i) (A) As of the date the definitive agreement to
acquire those Assets is signed and as of the date of
the closing thereunder, the Hotel Property's EBITDA
(defined for this purpose as income from operations
after deducting all expenses (including management
expenses equal to the greater of the actual amount of
such expenses and an amount equal to four percent
(4.00%) of total gross revenues) other than interest,
income taxes, depreciation and amortization and after
elimination of all extraordinary items) for the
immediately preceding 12 months is equal to or
greater than 1.2 times the sum of:
(1) the acquired Hotel Property's annualized debt
service (defined for this purpose as
principal and interest scheduled to be paid
with respect to the 12-month period beginning
on the scheduled acquisition date on any debt
(other than the Loans) to which that property
will be subject after the acquisition, with
the interest to be paid calculated by
dividing the total interest that will be
payable with respect to the five-year period
beginning on the scheduled acquisition date
and dividing that amount by five), and
(2) three percent (3.00%) of the property's total
gross revenues from operations for the
12-month period ended on the acquisition
date.
(B) Notwithstanding the foregoing subparagraph
(A) of this subsection 6.5(f), if the Borrower wishes
to acquire Assets that make up, are included in or
are to be acquired as a part of a Hotel Property and
(1) such Hotel Property's EBITDA for the immediately
preceding 12 months does not equal or exceed the
amount provided in such subparagraph (A) (an
"Under-Performing Asset"), (2) the outstanding
principal amounts of the Loans then outstanding have
been reduced to an aggregate amount equal to fifty
percent (50%) or less of the Aggregate Asset Value,
and (3) the EBITDA of all of the Companies Assets on
a combined basis including the Hotel Property
intended to be acquired shall comply with the
requirements set forth in subparagraph (A) above,
then, for purposes of determining whether the
Borrower's acquisition of such Hotel Property would
be permitted by the terms of this Section 6.5, the
condition set forth in such subparagraph (A) shall
nevertheless be deemed to have been complied with if
the Borrower can demonstrate to the reasonable
satisfaction of the Senior Lender that it is
expected, based on pro forma financial information,
that the EBITDA (as defined above) of the Hotel
Property for the immediately ensuing 12 months will
equal or exceed the amount provided in subparagraph
(A) (the "Earnings Projection"). The Borrower shall
acquire no more than two (2) Hotel Properties subject
to an Earnings Projection. However, if the EBITDA of
an acquired Hotel Property subject to an Earnings
Projection equals or exceeds the Earnings Projection
at any time before or after the first
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anniversary of such acquisition, the Borrower may
thereafter acquire another such Hotel Property subject
to an Earnings Projection such that the Company shall
own no more than two (2) Hotel Properties at any time
each of which either has not yet met its Earnings
Projection or has failed to meet its Earnings
Projection. In no event, however, shall the Company
acquire Hotel Properties which are Under-Performing
assets if following such acquisition, the applicable
Asset values set forth on the Aggregate Asset Value
Schedule 1.9 for all such Under-Performing Assets
(including the proposed acquisition) would equal or
exceed $15,000,000. However, if at the time of any
proposed acquisition of an Under-Performing Asset (1)
the outstanding principal amounts of the Loans then
outstanding have been reduced to an aggregate amount
equal to fifty percent (50%) or less of the Aggregate
Asset Value and (2) the ratio of (a)(i) Available Cash
plus (b) Capital Expenditures for the prior four (4)
consecutive fiscal quarters of the Borrower to the sum
of (b)(x) Cash Interest, (y) three percent (3%) of
total gross revenues from Hotel Properties and (z) one
percent (1%) of total gross revenue from casinos
during such period is at least 2:1, then such Hotel
Property may be acquired not subject to an Earnings
Projection so long as the value of all such Hotel
Properties so acquired (including any other Hotel
Properties acquired subject to an Earnings Projection
which has not yet been met) shall not at any time
exceed an amount equal to twenty percent (20%) of the
Aggregate Asset Value. Notwithstanding the foregoing,
the 2:1 coverage test will not be deemed satisfied if,
as a result of the acquisition of an Under-Performing
Asset otherwise, permitted the 2:1 coverage test would
not continue to be met following such acquisition.
(ii) The Required Liens and the Intercompany Liens shall
be granted by the Borrower in each Hotel Property or
Mortgage Note acquired by the Borrower as permitted
by this subsection 6.5(f). However, if and to the
extent that any such Hotel Property or Mortgage Note
is so acquired subject to any Indebtedness and the
consent of the holder of that Indebtedness is
required to grant the Required Liens and the
Intercompany Liens in that Hotel Property or Mortgage
Note, the Borrower shall use all reasonable efforts
to obtain such consent. If such consent is obtained,
the Borrower shall grant the Required Liens and the
Intercompany Liens in that Hotel Property or Mortgage
Note; if such consent is not obtained, that Hotel
Property or Mortgage Note shall constitute an
Excluded Asset and Excluded Intercompany Asset. All
such Required Liens and Intercompany Liens shall be
subordinate to the Liens granted to secure the
repayment of any Indebtedness described above and to
all extensions, renewals or refinancings, if any, of
such Indebtedness the principal amounts of which do
not exceed the then outstanding principal balances
being extended, renewed or refinanced. All such
Indebtedness or permitted refinancing thereof shall
constitute
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Permitted Indebtedness and all Liens, if any, securing such
Indebtedness or permitted refinancing shall constitute
Permitted Liens.
The Borrower shall not be deemed to have fulfilled the foregoing
conditions until the Collateral Agent and its counsel have received the
necessary due diligence materials to review in a reasonable time before the
date upon which the requested closing of the acquisition is to occur;
(g) Acquisitions of Assets described in subsection 6.3(m).
Mortgage Notes originated pursuant to subsection 6.3(m) that are other than
Mortgage Notes received in connection with a sale of Assets by the Companies
may be financed or refinanced and such financing or refinancing may be secured
by Liens on such Mortgage Notes; and
(h) Assets constituting an interest in a business or property in a
hotel-related field, including any hotel management company or hotel franchisor
or an entity that owns Hotel Properties (where the ownership of the Companies
in such entity is less than or equal to sixty-six percent (66%)). However,
the terms of any such acquisition shall not include (i) any contingent
obligations on the part of any of the Companies after the closing of such
acquisition; or (ii) any obligation on the part of any of the Companies to
make additional equity investments or meet capital calls in any Person after
such acquisition, if deducting the present value of the aggregate of such
obligations described in clauses (i) and (ii) above would result in an Adjusted
Net Worth which is less than the minimum Adjusted Net Worth required in Section
7.1. In addition, such acquisition shall be subject to the prior consent of
the Senior Lender based on, among other things, its sole but good faith
determination as to whether such acquisition would have a Material Adverse
Effect on any of the Companies, its business operations or income or on
Adjusted Net Worth, and such determination may take into account, without
limitation, whether such acquisition would constitute an evasion of any of the
other requirements or limitations set forth in this Article VI. Subject to the
foregoing, acquisitions permitted hereunder may be acquired subject to
non-recourse secured indebtedness which indebtedness may be refinanced
non-recourse from time to time.
6.6 Intercompany Loans and Leases, etc. The Borrower shall not, and shall
not permit any of the other Companies to, effect any waiver, amendment or
other modification to, or any restatement or termination of, any Intercompany
Loan Document or Intercompany Lease, or effect any accrual, deferral or
forgiveness of any obligation owing to the Borrower by any of the other
Companies under any Intercompany Loan or Intercompany Lease. Notwithstanding
the foregoing:
(a) if and to the extent that from time to time, the gross revenues
less the operating and other expenses of any obligor under any Intercompany
Lease or Intercompany Note as then in effect shall be insufficient to pay all
obligations as and when due thereunder, each such obligor and obligee shall be
permitted to accrue or defer any such deficiency; and
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(b) Intercompany Leases may be terminated in connection
with the sale of a Hotel Property (or an Excluded Disposition) pursuant to
Section 6.10 (relating to Sale of Assets); and
(c) if the Borrower so elects, the aggregate principal
amount of the Intercompany Loans owing to the Borrower may be reduced (whether
through amendment of one or more of said notes, waiver, forbearance,
extinguishment or other form of termination or otherwise). However, (i) no
Operating Partnership Guaranty shall be deemed amended, extinguished, decreased
or in any way affected by any such reduction in the Intercompany Loans; and
(ii) the Borrower shall not agree to any such reduction of the Intercompany
Loans other than in connection with federal and state income tax requirements
applicable to the maintenance of SLT's status under income tax laws as a real
estate investment trust; and the Borrower shall comply as to the Moorland Debt
with the provisions of paragraph (ii) of Subsection 5.8(c); and
(d) none of the Companies shall be precluded from making
advances or loans to any one or more other Companies in the ordinary course of
business to the extent permitted under subsection 6.1(b) or to fund deficits
under 6.6(a) or an acquisition permitted under Section 6.5.
6.7 Restricted Payments. The Borrower shall not, and shall not
permit any of SLT, the Operating Partnership or SLC to, directly or indirectly
declare, order, pay or make any Restricted Payment, or set aside any sum or
Asset therefor, and shall not permit any of the other Companies to directly or
indirectly declare, order, pay or make any dividend or distribution on or on
account of its equity securities at any time outstanding or, in the case of any
SLC Subsidiary that is a partnership, on partnership interests therein (or to
redeem any such equity securities or partnership interests, as the case may
be), except for the following ("Permitted Distributions"): (i) dividends and
distributions by the SLC Subsidiaries to SLC, or by SLT Subsidiaries to SLT,
pursuant to the Restructuring Plan; (ii) distributions by the Realty
Partnership to its partners (including SLT) each fiscal year of the Realty
Partnership in an aggregate amount that does not exceed the greatest of (A) the
greatest of (x) thirty percent (30%) of the combined net income (determined for
book purposes and without deduction for income tax liabilities, if any) of the
Realty Partnership and the Operating Partnership, (y) $3,000,000, (B) an amount
such that SLT's proportionate share of such amount shall be sufficient for SLT
to make distributions to SLT's shareholders sufficient to maintain SLT's status
for federal income tax purposes as a real estate investment trust, or (C) the
Applicable Amount; (iii) distributions by the Operating Partnership to its
partners each fiscal year of the Operating Partnership in an aggregate amount
that does not exceed the greater of (x) thirty percent of the combined net
income, determined as provided above, of the Realty Partnership and the
Operating Partnership, (y) $3,000,000 or (z) the Applicable Amount; and (iv)
such distributions of the Realty Partnership to its partners (including SLT)
and the Operating Partnership to its partners (including SLC) to which the
Senior Lender may from time to time consent. For purposes of this Section 6.7,
Restricted Payments "required by applicable law to maintain SLT's status for
federal income tax purposes as a real estate investment trust" shall include
Restricted Payments necessary to satisfy the ninety-five percent (95%)
distribution test
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of Section 857(a) of the Code. The "Applicable Amount" is defined as, for each
fiscal year, an amount equal to eighty-five percent (85%) of the sum of (i) the
combined taxable income of the Partnerships (determined for purposes of applying
the ninety-five percent (95%) distribution test of Section 857(a) of the Code
for the applicable fiscal year) plus (ii) an amount equal to the aggregate of
all depreciation deducted in (i) above during the applicable fiscal year in
determining the Partnerships' respective taxable income for such fiscal year.
Amounts distributed to SLT or SLC pursuant to the foregoing may in turn be
distributed or dividended to the shareholders of SLT or SLC, as appropriate.
However, (A) the foregoing limitations on dividends and distributions shall not
apply if, at the time of any such dividend or distribution, (1) the aggregate
outstanding principal amounts of the Loans equals or is less than fifty percent
(50%) of the Aggregate Asset Value and (2) no Event of Default has occurred and
is continuing; and (B) there shall be no limitation of any redemption, purchase
or other acquisition of any partnership interests, shares, warrants or rights
included in the definition of Restricted Payments if at the time of such
redemption, purchase or other acquisition No Event of Default has occurred and
is continuing. Notwithstanding the foregoing, no distribution or dividend shall
be permitted if as a result an Event of Default would occur under any provisions
of this Agreement.
6.8 Capital Expenditures. Except as expressly provided to the
contrary below, the Borrower shall not, and shall not permit any of the other
Companies to, use Cash or Cash Equivalents of the Borrower or any of the other
Companies to make any Capital Expenditure (except for emergency repairs and
emergency replacements required in order to permit the continued operation of
the Assets to which such repairs or restorations are made) other than in
accordance with the Capital Expenditure Budget, and then only in accordance
with the following terms and conditions:
(a) Subject to any title retention agreements in
connection with a transaction permitted under subsection 6.2(h), title to any
Asset acquired pursuant to any such Capital Expenditure shall be vested in the
Company operating the Hotel Property in respect of which said Asset was
purchased (unless the Asset is a fixture installed in a Hotel Property, in
which event title shall be vested in the Realty Partnership or SLT, as
applicable) or as otherwise agreed to by the Senior Lender;
(b) Any Asset (other than an Excluded Asset or Excluded
Intercompany Asset) acquired pursuant to any such Capital Expenditure shall,
immediately upon acquisition by any of the Companies and installation in any
Hotel Property then subject to the Required Liens and the Intercompany Liens,
also become subject to the Required Liens or the Intercompany Liens, as
applicable; and
(c) Each Capital Expenditure shall maintain or improve
the value of the affected Hotel Property.
6.9 Mergers and Consolidations. The Borrower shall not, and shall
not permit any of the other Companies to, enter into any merger or
consolidation other than as contemplated by the Restructuring Plan or by the
Mortgage Note Assignment with respect to an REO
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Nominee (as defined in the Mortgage Note Assignment) unless the Borrower and
the Operating Partnership are the surviving entities, SLT continues to be the
managing general partner of the Borrower, SLC continues to be the managing
general partner of the Operating Partnership and the Borrower, after such
merger or consolidation, continues to comply with Section 7.1 relating to its
Adjusted Net Worth and otherwise complies with all the provisions of this
Agreement.
6.10 Sale of Assets. The Borrower shall not, and shall not permit
any of the other Companies to, directly or indirectly, sell, assign or lease or
otherwise dispose of any Asset owned by such Company to a non-Company Person,
other than non- real estate items sold in the ordinary course of business or in
connection with permitted replacements of renovations or an Asset acquired in
whole or in part with the proceeds of any ▇▇▇▇▇▇▇ Loan or a sale or other
disposition that is an Excluded Disposition (an "Asset Sale"), unless each of
the following conditions shall have been satisfied:
(a) No Default or Event of Default shall have occurred
and be continuing;
(b) Such Asset is disposed of for a consideration and
upon terms deemed by the Borrower (and any other Company disposing of any Asset
in such transaction) to be fair and adequate and, with respect to any Hotel
Property or Mortgage Note owned by the Borrower or SLT as of the date hereof or
acquired hereafter, for a consideration that will result in payments to the
Senior Lender (in the form of Cash and Cash Equivalents and principal payments
pursuant to Mortgage Notes) of not less than the minimum release price (the
"Minimum Release Price") applicable to such Hotel Property or Mortgage Note as
specified on Schedule 6.10. (Subject to Section 14.10, the aggregate of the
Minimum Release Prices, and the Minimum Release Price on an Asset by Asset
basis, shall not exceed one hundred twenty-five percent (125%) of the allocated
loan amount set forth on Schedule 1.9 in the aggregate, or on an Asset by Asset
basis, except as set forth on the initial Schedule 6.10; and no loan amount
allocated to a Mortgage Note shall exceed the outstanding principal balance of
such Mortgage Note; and the Minimum Release Price for a Mortgage Note shall not
exceed the greater of the outstanding principal balance of the Mortgage Note as
of the date hereof or, if later, as of the date of acquisition of such Mortgage
Note (subject to such added allowances as provided in Section 14.10.) On the
closing of the sale of such Asset, the Borrower or such other Company disposing
of such Asset shall pay to the Senior Lender an amount equal to the Minimum
Release Price, as provided in paragraph (iii) of subsection 1.9(b). However,
in the case of any sale of a Hotel Property in which a portion of the total
consideration to the Companies for such sale is deferred or consists of a
promissory note of the buyer, the economic terms of the Future Mortgage Note
shall comply with the requirements specified in (i) below. The documentation
for the Future Mortgage Note shall include each of the instruments, agreements
and documents referred to in paragraph (ii) below.
(i) Any Future Mortgage Note shall be pledged to the
Senior Lender and shall provide the maximum term of
such note shall be no more than seven (7) years; all
principal payments with respect to such Future
Mortgage Notes shall be paid to the Senior Lender to
amortize the Loans
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as and to the extent provided in paragraph (ii) of
subsection 1.9(b); such Future Mortgage Note shall not
provide for payment of interest that results in
negative amortization; the mortgage securing the
Future Mortgage Note shall constitute a first lien on
the Hotel Property of the mortgagor (unless there is
prior mortgage debt secured by the underlying
collateral that will be assumed or taken subject to by
the buyer and that was not increased in connection
with such sale (a "Permitted Prior Mortgage"), in
which event the mortgage securing the Future Mortgage
Note may be a second lien) and the loan-to-value ratio
of the lien securing the Future Mortgage Note in
combination with any Permitted Prior Mortgage shall
not at closing exceed 80%; at least twenty five
percent (25%) of the Minimum Release Price of the
Hotel Property sold shall be paid in Cash or Cash
Equivalents by the purchaser to the seller and then
simultaneously paid in Cash or Cash Equivalents to the
Senior Lender to amortize the Loans as and to the
extent provided in paragraph (ii) of Subsection
1.9(b); the Cash or Cash Equivalents portion of the
sale consideration, together with the lesser of the
outstanding principal balance of the Future Mortgage
Note or the market value of the Future Mortgage Note
(which shall be discounted to present value using
current market rates of interest equal to the
comparable U.S. Treasury Bond issue plus 350 basis
points) shall be equal to at least the applicable
Minimum Release Price; and the aggregate market value
of all such Future Mortgage Notes pledged to the
Senior Lender at any one time shall not exceed
$20,000,000. Notwithstanding, the foregoing, in the
event a buyer acquires a Hotel Property with new
acquisition indebtedness, then the liens securing same
("Acquisition Indebtedness Liens") may be prior to the
security for the Future Mortgage Note (which in no
event shall have a lower lien priority than a Second
Lien) and the combined loan-to-value ratio with the
Future Mortgage Note shall not be greater than eighty
percent (80%) and with respect to the related sale
twenty-five percent (25%) of the Minimum Release Price
in Cash or Cash Equivalents requirement is increased
by the amount of such Acquisition Indebtedness Lien.
(ii) The documentation for the Future Mortgage Note shall
include:
(A) a Future Mortgage Note;
(B) a Mortgage;
(C) an assignment of rents and leases;
(D) a security agreement and one or more UCC
financing statements;
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(E) documentation for creating a security
interest in the liquor license associated
with the property sold, if such license is
sold and to the extent that a granting of
such security interest is permitted by
applicable law;
(F) a collateral assignment of the franchise
agreement applicable to such Hotel Property,
if the applicable franchisor routinely
consents to such assignment and of the
accounts receivable applicable to such Hotel
Property; and
(G) Where the original principal amount of a
Future Mortgage Note is in excess of
$3,000,000, (i) the Mortgage Note Security
Documents either will require the applicable
Maker (as defined in the Mortgage Note
Assignment) to pay to the Borrower periodic
installments for Taxes and insurance premiums
(in which event such amounts will
automatically become subject to the Required
Lien of the Borrower's Security Agreement or
other applicable Security Document) or to
establish separate accounts, in which event
such amounts will be subject to the Lien of
the Mortgage Note Security Documents, but in
either case only during any period in which a
prior mortgage does not require same.
The form of each of the agreements, instruments, provisions
and documents described in subparagraphs (A) through (G) of this paragraph (ii)
shall be subject to the approval of the Collateral Agent on behalf of the
Senior Lender, such approval not to be unreasonably delayed or withheld.
(c) In each sale of a Hotel Property (other than an
Excluded Asset) involving a promissory note or the deferred payment of a
portion of the total consideration for such sale, each of the applicable
requirements of the Mortgage Note Assignment, if any, shall have been
fulfilled.
Upon the fulfillment of each of the conditions listed above in this
Section 6.10, the Collateral Agent shall execute, acknowledge and deliver to
the escrow agent for such Asset Sale (or if there is no such escrow agent, the
Borrower's counsel), such documents as the Borrower shall reasonably require to
evidence the release of the Required Liens and, to the extent the same have
been assigned for security to the Collateral Agent, the Intercompany Liens
against each item of Collateral and Intercompany Collateral included in such
Asset Sale.
6.11 Issuance of Additional Shares. etc. The Borrower shall not,
and shall not permit any of the other Companies to, directly or indirectly:
(a) issue any additional shares of capital stock or
beneficial interest (including treasury shares) or additional partnership
interests (or options to acquire any such shares or partnership interests),
whether now or hereafter authorized, other than (i) shares
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issued pursuant to the exercise of options outstanding as of January 28, 1993
(or extension(s), renewal(s) or replacement(s) thereof), (ii) shares issued
pursuant to the exercise of options granted under or in connection with an
employment agreement or other transaction permitted under Sections 6.10
(relating to transactions with Affiliates) or 6.15 (relating to certain
employment and compensation matters), (iii) shares issued by a Subsidiary of
SLT, the Realty Partnership, SLC or the Operating Partnership to that
Subsidiary's parent entity and pledged, directly or indirectly and
simultaneously with issuance, to the Collateral Agent, for the benefit of the
Senior Lender, pursuant to the Security Documents and the Intercompany Security
Documents, (iv) shares or Partnership Interests issued in connection with
acquisitions of Assets permitted under Section 6.5, or (v) other shares (or
other securities) of SLT, SLC, the Borrower or the Operating Partnership as long
as the applicable provisions of paragraph (i) of Subsection 1.9(b) are complied
with; or
(b) except as permitted in subsection 6.11(a) above,
sell, assign, pledge or otherwise encumber or dispose of any shares of capital
stock or beneficial interest of any of the Subsidiaries of SLC (or options to
acquire any such shares), or any partnership interests held by any of the
Companies, other than as contemplated by the Restructuring Plan and except for
the pledge of such shares and interests to the Collateral Agent, for the
benefit of the Senior Lender.
6.12 Transactions with Affiliates. The Borrower shall not, and
shall not permit any of the other Companies to, directly or indirectly, enter
into any lease or other transaction, including any loan, advance, guarantee,
credit accommodation, waiver of rights or amendments to existing transactions,
transfers of assets, investments, distributions or similar transactions, with
any Affiliate other than (a) has occurred pursuant to the Starwood
Reorganization, (b) other transactions expressly described by the Restructuring
Plan, including new Intercompany Leases, (c) employment and consulting
agreements and other compensation arrangements permitted under Section 6.15,
(d) other transactions (other than agreements and arrangements permitted under
Section 6.15) on fair and reasonable terms no less favorable to the Borrower or
such other Company as would obtain in a comparable arm's-length transaction
with an unrelated Person, and no more favorable to the Affiliate than the
Affiliate would have received on commercially reasonable terms and conditions
in the marketplace generally, and (e) payments pursuant to any engagement of
any counsel, accountant or investment banker that is, or to any law, accounting
or investment banking firm, a member, partner or shareholder of which is,
directly or through a professional corporation, an Affiliate. In addition, the
Borrower shall not, and shall not permit any of the other Companies to,
directly or indirectly purchase or acquire or otherwise enter into any
transaction to purchase or acquire the legal or beneficial interest in any
Prior Mortgage Note (in lieu of satisfaction thereof), without the Senior
Lender's prior written consent.
6.13 Prohibition on Sale of Receivables. Except in connection with
the sale of a Hotel Property in accordance with the provisions of Section 6.10
or a Hotel Property acquired in whole or in part with the proceeds of a ▇▇▇▇▇▇▇
Loan, the Borrower shall not, and shall not permit any of the other Companies
to, sell, transfer, assign or otherwise dispose of with recourse or for less
than the face value thereof any of the Companies' respective accounts
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receivable. However, nothing in this Section 6.13 shall prohibit the Borrower
or any other Company from settling, compromising or similarly discounting
accounts receivable in the ordinary course of such Company's business.
6.14 Modification of Certain Documents, Agreements and Instruments.
Except as otherwise provided for in the Restructuring Plan, the Borrower shall
not, and shall not permit any of the other Companies to, amend that Company's
declaration of trust, articles or certificate of incorporation, partnership
agreement, by-laws or other organizational or similar charter document, as
applicable, without the prior written consent of the Senior Lender, which
consent shall not be unreasonably delayed or withheld.
6.15 Employment and Compensation Matters. The Borrower shall not,
and shall not permit any of the other Companies to, directly or indirectly,
enter into any employment agreement, consulting agreement or other compensation
arrangement with any officer, director or employee of the Borrower or of any of
the other Companies, except for (i) agreements and arrangements terminable by
the Company party thereto at will, and agreements and arrangements for a term,
which, in either case must provide for not more than usual and customary
compensation and employment benefits and (ii) that certain employment agreement
between SLT and ▇▇. ▇▇▇▇▇ described in the Reorganization Proxy Statement.
6.16 Cash and Cash Equivalents Held by Other Companies. The
Borrower hereby covenants that on or before the Third Closing Date it shall
deliver and deposit into the HIT Operating Account and the HIC Operating
Account (or such other account in California where the Senior Lender has a
Required Lien or an Intercompany Lien) funds in an aggregate amount equal to at
least two (2) month's interest payments on the Loans calculated at the then
current Stated Rate, and shall maintain aggregate minimum balances in such
accounts until after all of the Obligations shall have been paid in full equal
to at least two (2) months interest payments on the Loans calculated at the
Stated Rate, as the same may increase or decrease from time to time (the
"Minimum Aggregate Balances"). For purposes of the Cash Management Memorandum,
the definitions of "Cash Threshold" and "Operating Cash Threshold" shall be as
provided in this Agreement. The Borrower agrees that the Cash Management
Memorandum shall be amended, within ninety (90) days after the Third Closing
Date, to include in the Cash Management System the accounts of the Hotel
Properties included in the Starwood Assets. Upon the Third Closing, the
Borrower and the Senior Lender shall instruct the manager of the Cash
Management System that on and after the Third Closing Date, such manager shall
continue to manage the Cash Management System in accordance with the terms of
the Cash Management Memorandum but that, notwithstanding any provisions of the
Cash Management Memorandum, provided no Event of Default has occurred and is
continuing, such manager shall no longer routinely apply any funds in the HIT
Operating Account and the HIC Operating Account to payment of the Loans. In
addition, the Borrower and the Senior Lender shall inform the manager of the
Borrower's obligation to maintain the Minimum Aggregate Balances in the HIT
Operating Account and the HIC Operating Account and shall instruct such manager
to permit withdrawals or transfers from such accounts only to the extent of the
excess over the Minimum Aggregate Balances until after a Responsible Officer of
the Senior Lender shall have certified to such manager that all of the
Obligations have been paid in full. Once the Borrower
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has performed its covenant set forth above to fund the Minimum Aggregate
Balances in the HIT Operating Account and the HIC Operating Account, and so
long as such Minimum Aggregate Balances are maintained, the Borrower shall be
permitted to transfer, dispose of or invest all other funds in all accounts in
the Cash Management System in any manner not inconsistent with the terms of
this Agreement the Loan Documents or the Intercompany Loan Documents.
6.17 Management Companies and Management Contracts. The Borrower
shall not, and shall not permit any of the other Companies to, enter into any
Management Contract other than with a Management Company and pursuant to a
Management Contract (substantially in the form of Exhibit Y or another form
reasonably acceptable to the Senior Lender) that has been approved by the
Senior Lender, such approval not to be unreasonably withheld or delayed.
However, the Senior Lender may withhold such consent in its sole and unfettered
discretion if the Borrower shall not have delivered to the Senior Lender
written acknowledgement of any proposed Management Company that the lien of the
Management Contract is subordinate to all Liens granted under the Security
Documents.
6.18 Compliance with ERISA, etc. The Borrower shall make, and
shall cause all other Companies to make, all payments or contributions to Plans
required under the terms of such Plans and in accordance with applicable
minimum funding requirements of ERISA and the Code. The Borrower shall cause
all Plans sponsored by the Companies to be maintained in material compliance
with ERISA and the Code. The Borrower shall not engage, and shall not permit
or suffer any other Company, or any Person entitled to indemnification or
reimbursement from the Borrower or any other Company in respect of such
transaction to engage, in any "prohibited transaction" for which an exemption
is not available. No Company will terminate, and each Company will use all
reasonable efforts to prevent the PBGC from terminating, any Plan, and no
Company shall withdraw from any multi-employer Plan, in each case in any manner
which in the reasonable business judgment of the Borrower, is likely to result
in a Material Adverse Change.
6.19 No Additional Accounts. The Borrower shall not, and shall not
permit any of the other Companies to, maintain any account at any financial
institution other than the Cash Management Accounts, except accounts opened in
connection with any Merrill Loan. However, any of the Companies shall be
permitted to maintain one or more accounts into which Excluded Cash or Liquid
Investments have been deposited, but only if such Company shall have, to the
maximum extent permitted by any other party claiming an interest in the
Excluded Cash or Liquid Investment, granted the Required Liens or the
Intercompany Liens in such Company's interest in such Excluded Cash or Liquid
Investment (except to the extent the same constitutes an Excluded Asset or an
Excluded Intercompany Asset) and the Borrower shall take or assist the
Collateral Agent in taking all steps necessary to perfect such Required Liens
and Intercompany Liens.
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ARTICLE 7.
Financial Covenants
The Borrower covenants and agrees that, during the term of the Loans,
the Borrower shall perform each and all of the following covenants:
7.1 Minimum Adjusted Net Worth. The Borrower shall not permit
Adjusted Net Worth as at the last day of any fiscal quarter to be less than the
sum of (a) $40,000,000, (b) 75% of the net proceeds of any equity contributed
to the Borrower after the date hereof (other than equity contributed to the
Borrower and used to acquire hotel assets within six months of contribution or
which constitutes equity in contributed hotel assets both of which are governed
by clause (c) following) and (c) 50% of the net equity book value of any hotel
assets contributed to or acquired by Borrower after the Third Closing Date and
prior to the Initial Termination Date or, if the Extension Option is exercised,
the Extended Termination Date.
7.2 Available Cash. The Borrower shall not permit the ratio of the
Companies' Available Cash for any period of four (4) consecutive quarters of the
Borrower ending on or after January 1, 1995 to the sum of Cash Interest for, and
Capital Expenditures made, during such period to be less than 1.075 to 1.
7.3 Illustrations. Schedule 7.3 constitutes a worksheet showing a
calculation of Adjusted Net Worth and Available Cash.
ARTICLE 8.
Defaults; Remedies
8.1 Events of Default: Acceleration. If any of the following
events (each an "Event of Default") shall occur:
(a) The Borrower shall default (and shall not cure such
default within five (5) Business Days thereafter) more than twice in any period
of twelve (12) months in the payment of principal of or interest on any Note,
whether at maturity or at a date fixed for the payment of any installment or
prepayment thereof or any Commitment Fee; or
(b) The Borrower shall default in the payment of any
amount due under the Loan Documents or the Intercompany Loan Documents or any
other amount due to the Senior Lender or the Collateral Agent from the Borrower
hereunder or thereunder, and such default shall not have been remedied within
three (3) Business Days after Senior Lender (or the Collateral Agent on its
behalf) notifies the Borrower in writing of such default; or
(c) The Borrower shall default in the performance of or
compliance with any term contained herein and such default shall not have been
remedied within thirty (30) days
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after written notice of such default has been given to the Borrower by the
Senior Lender (or the Collateral Agent on its behalf); or
(d) The Borrower or any of the other Companies that is a
party to any of the other Loan Documents or any Intercompany Loan Documents
shall default in the performance of or compliance with any term contained in
any of the other Loan Documents or any Intercompany Loan Documents, and such
default shall not have been remedied within (i) the period of grace, if any,
specified therein or (ii) if no such period of grace is specified therein,
thirty (30) days after written notice of such default has been given to the
Borrower by the Senior Lender (or the Collateral Agent on its behalf).
However, such 30-day cure period shall only apply if such default is capable of
cure; or
(e) Any representation or warranty made by the Borrower
herein or in any other Loan Document or any Intercompany Loan Document shall
have been false or incorrect in any material respect when made or deemed to
have been made; or
(f) The Borrower or any of the other Companies shall
default in any payment due on any Indebtedness (other than Indebtedness
evidenced by Prior Mortgage Notes) in respect of borrowed money, any Capital
Lease or the deferred purchase price of property or in the performance of or
compliance with any other material term of any evidence of such Indebtedness,
any such Capital Lease or any such deferred purchase price agreement or of any
mortgage, indenture or other agreement relating thereto, and such default shall
continue for more than the period of grace, if any, specified therein, or
applicable thereto and shall not have been waived pursuant thereto, and the
effect of such default is to permit the holder of such Indebtedness (including
by action of such holder of such Indebtedness or a trustee or receiver for such
holder) to cause such Indebtedness to become due prior to its stated maturity
or the exercise of default remedies, but only if the Borrower or any of the
other Companies shall have received any notice of default or has knowledge of
such default; or
(g) Any holder of Indebtedness in respect of borrowed
money, any lessor under any Capital Lease or the payee under any contract for
the purchase of property (or any Person claiming under, by or through any such
holder, lessor or payee) shall accelerate any payment of any obligation owing
thereunder (or seek to exercise default remedies under or relating to such
Indebtedness for borrowed money, Capital Lease or contract for purchase of
property), but only if the amount of accelerated obligations and obligations as
to which the exercise of default remedies has been sought in the aggregate
exceeds $2,000,000. However, in calculating such $2,000,000 amount, the
aggregate amount of all recourse claims for all Prior Mortgage Notes shall be
included; or
(h) Any of the Companies shall discontinue its business
(except pursuant to the Restructuring Plan) or shall make an assignment for the
benefit of creditors, or shall fail generally to pay that Company's debts as
such debts become due, or shall apply for or consent to the appointment of or
taking possession by a trustee, receiver or liquidator (or other similar
official) of or for such Company or any substantial part of the Assets of such
Company, or shall file a petition or commence a case under the Bankruptcy Code
or any other applicable
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federal or state bankruptcy, insolvency or other similar law, or any of the
Companies shall take any corporate or trust action to dissolve or liquidate any
of the Companies (except pursuant to the Restructuring Plan); or
(i) There shall be filed against any of the Companies an
involuntary petition, or commenced against any of the Companies a case under
the Bankruptcy Code or any other applicable federal or state bankruptcy,
insolvency or other similar law, which petition or case is not dismissed within
sixty (60) days after such filing or commencement, or there shall be entered
any decree appointing a trustee, receiver or liquidator (or other similar
official) of or for any of the Companies or any substantial part of the Assets
of any of the Companies and such decree is not dismissed within thirty (30)
days after entry of the same; or
(j) A final judgment in an amount that, together with the
amounts of all other outstanding final judgments against any of the Companies,
if any, exceeds in the aggregate $2,000,000 (in each case net of any insurance
proceeds or awards to be received in respect of the same) shall be rendered
against any of the Companies and, within thirty (30) days after entry thereof,
such judgment shall not have been discharged or execution thereof stayed
pending appeal, or, within thirty (30) days after the expiration of any such
stay, such judgment shall not have been discharged, or any such judgment shall
not be discharged forthwith upon the commencement of proceedings to foreclose
any Lien that may attach as security therefor and before any of the Assets of
any of the Companies shall have been seized in satisfaction thereof; or
(k) There shall occur any event or condition that results
in a Material Adverse Change. However, it shall not be an Event of Default
under this subsection 8.1(k) if such Material Adverse Change arose from the
occurrence of an event of default described in subsections 18(b) or 18(d) of
any of the Mortgages securing the Obligations, so long as the Collateral Agent
has available the rights and remedies provided in the Security Documents and
Intercompany Security Documents with respect to such an event of default; or
(l) A Change of Control shall occur; or
(m) Any Gaming License of any of the Companies shall be
terminated or suspended and such suspension shall not have been lifted within
thirty (30) days after receipt by the Borrower or such other Company of notice
of such suspension other than in connection a sale of Assets related to such
Gaining License and permitted by the terms of this Agreement; or
(n) The Collateral Agent shall fail to have the Required
Liens on any item of Collateral for the benefit of the Senior Lender or any
Intercompany Lien shall be invalidated (unless such failure or invalidation
results solely from action or inaction on the part of the Collateral Agent or
any Senior Lender), and such failure or invalidation shall continue for fifteen
(15) or more days after written notice thereof from any Senior Lender or the
Collateral Agent to the Borrower. However, it shall not be an Event of Default
if the Collateral Agent shall not have a Required Lien in any Collateral
Account (as defined in the Cash Management
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Memorandum) or an Intercompany Lien in any Collateral Account shall be
invalidated, if the Borrower has done or caused the other Companies to do all
acts provided for or required by the Cash Management Memorandum; or
(o) The Borrower shall fail, or shall fail to cause any
other Company or fail to require any Management Company, to comply with any
transfer of any Cash or Cash Equivalents required by the Cash Management
System, which failure to transfer has not been cured within two (2) Business
Days after delivery of written notice to the Borrower by the Manager of the
Cash Management System; or
(p) The Borrower shall fail to deliver the Daily Cash
Worksheet for three (3) consecutive Business Days, which failure has not been
cured by the delivery of all such delinquent Daily Cash Worksheets within three
(3) Business Days after delivery of written notice to the Borrower by manager
under the Cash Management System; or
(q) The Borrower shall fail to deliver to the Collateral
Agent a copy of any notice of default or notice of event of default given under
any Prior Mortgage Note or loan or security document related thereto or any
Ground Lease within five (5) Business Days after receipt of such notice by the
Borrower; or
(r) The Borrower shall fail to timely perform the
covenant set forth in Section 5.14;
then, if any Event of Default of the character described in subsections 8.1
(a), (b), (c), (d), (e), (f), (g), (j), (k), (l), (m) (n), (o), (p), (q) or (r)
shall occur, the Senior Lender may, by written notice to the Borrower, declare
the principal of and accrued interest in respect of its Notes to be forthwith
due and payable, whereupon the principal of and accrued interest in respect of
such Notes shall become forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
by the Borrower. Upon the occurrence of an Event of Default of the character
described in subsections 8.1(h) or 8.1(i), the principal of and accrued
interest in respect of all the Notes shall become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower.
8.2 Remedies on Default. In case any one or more Events of Default
shall occur and be continuing, the Collateral Agent acting on behalf of the
Senior Lender may proceed to protect, exercise and enforce its rights and
remedies hereunder and under the other Loan Documents or Intercompany Loan
Documents and any other rights and remedies provided by law or equity by an
action at law, suit in equity or other appropriate judicial or non-judicial
action, whether for the specific performance of any agreement contained herein
or in any Note or other Loan Document or Intercompany Loan Document, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law. No course of
dealing and no delay on the part of the Collateral Agent or the Senior Lender
in exercising any right shall operate as a waiver thereof or otherwise
prejudice the Senior Lender's rights. No right conferred hereby or by any Note
or
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other Loan Document or Intercompany Loan Document upon the Senior Lender shall
be exclusive of any other right referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
ARTICLE 9.
Setoff
In addition to all rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuation of any Event of Default, Senior Lender and the
Collateral Agent are hereby authorized by the Borrower at any time and from
time to time, without prior notice to the Borrower or to any other Person (any
such notice being hereby expressly waived) and without regard to the value of
the Collateral, to set off and to apply any and all deposits (general, special,
time or demand, including Indebtedness evidenced by certificates of deposit,
whether matured or unmatured) and any other Indebtedness to the Borrower at any
time held or owing by such Senior Lender or the Collateral Agent against and on
account of the Obligations (other than Obligations under the Environmental
Indemnity) of the Borrower to such party applying the setoff.
ARTICLE 10.
Expenses: Indemnification
10.1 Expenses. The Borrower shall pay or cause to be paid, within
30 (thirty) days after the Senior Lender or the Collateral Agent on its behalf
shall have so requested and the Borrower shall have received customary
documentation evidencing such costs and expenses, the costs and expenses
described in subsections (a) through (d) below (collectively, the "Senior
Lender's Expenses"). However, the Borrower shall not be obligated to make
payments of any expenses in connection with routine servicing of the Loans:
(a) reasonable and customary fees and disbursements of
the respective counsel for each of the Senior Lender and the Collateral Agent,
specifically including any local counsel retained by any such party, as well as
the reasonable allocated costs of any in-house counsel of any of the foregoing,
incurred after the Third Closing in connection with the negotiation,
documentation, preparation and/or interpretation of this Agreement or any of
the other Loan Documents and Intercompany Loan Documents, if any, (specifically
including any amendments, consents or waivers hereafter requested by the
Borrower);
(b) all recording and filing fees, transfer and document
stamp and similar Taxes which may be payable after the Third Closing in respect
of the execution, delivery or filing or recordation of any of the Loan
Documents and Intercompany Loan Documents, if any, (specifically including any
amendments, consents or waivers thereof); and
(c) all other reasonable and customary costs and expenses
incurred by the Senior Lender or the Collateral Agent after the Third Closing
in connection with the
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implementation of this Agreement and the other Loan Documents or Intercompany
Loan Documents, if any, including costs and expenses reasonably incurred in
connection with the non-routine administration (including the costs of
Appraisals obtained at the Borrower's expense as provided in Section 5.12, if
any) of any of the rights of the Senior Lender or the Collateral Agent under
this Agreement or under any of the other Loan Documents, and Intercompany Loan
Documents;
(d) all other reasonable and customary costs and expenses
incurred by the Senior Lender or the Collateral Agent at any time in connection
with the enforcement of any of the rights of the Senior Lender or the
Collateral Agent under this Agreement or under any of the other Loan Documents
in the event of any Event of Default;
10.2 Indemnification. The Borrower hereby indemnifies, defends
and holds harmless the Senior Lender and the Collateral Agent and any holder of
any interest in the Notes, and the officers, directors, employees and agents of
and counsel to the Senior Lender, the Collateral Agent and such holders
(collectively, the "Indemnitees" and each individually, an "Indemnitee") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, causes of action, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel (including the allocated costs of in-house counsel
of the Senior Lender or the Collateral Agent) for such Indemnitees in
connection with any investigative, administrative or judicial action, suit or
proceeding, whether or not such Indemnitee shall be designated a party thereto)
that may be imposed on, incurred by or asserted against such Indemnitee, if and
to the extent that the same arise from the transactions evidenced by the Loan
Documents, the Intercompany Loan Documents, the Borrower's use or intended use
of the proceeds of the Acquisition Loans, if any, the breach of any
representation, warranty or covenant by any Company in any of the Loan
Documents or any of the Intercompany Loan Documents, the consummation of the
Starwood Reorganization or the Companies' consummation of the other
transactions contemplated by this Agreement, including any matter relating to
or arising out of the execution, delivery, filing or recordation of any of the
Security Documents or the Intercompany Security Documents (collectively, the
"Indemnified Liabilities"). However, (i) except as to the Indemnified
Liabilities set forth in clause (iii) below, the Borrower shall have no
obligation hereunder to any Indemnitee with respect to Indemnified Liabilities
to the extent the same arise from any breach of any agreement made by such
Indemnitee under this Agreement or from the gross negligence or willful
misconduct of any Indemnitee, (ii) the rights of any Indemnitee hereunder
against the Borrower in respect of any act or omission of any of the Borrower
or any of the other Companies shall not be limited as a consequence of any act
or omission of any other Indemnitee, and (iii) the Indemnified Liabilities
shall include without limitation any and all claims against any Indemnitee
arising from the Third Closing and the execution and delivery of this Agreement
and any other Loan Documents or Intercompany Loan Document executed pursuant
hereto or thereto or in connection herewith or therewith, including any claim
that the granting of the Required Liens and/or Intercompany Liens by the
Borrower or any of the other Companies tortiously interferes with the right of
any other Person. Each Indemnitee shall promptly notify, or cause to be
notified, the Borrower of (i) each action, suit or proceeding involving an
Indemnified Liability that is served on such
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Indemnitee and (ii) each threatened action, suit or proceeding involving an
Indemnified Liability of which the officer of such Indemnitee who is the named
person for notices to be sent under the Loan Documents has written notice, but
the failure to give prompt notice shall not adversely affect the indemnity
rights granted to such Indemnitee herein except to the extent that the Borrower
can establish that it has been prejudiced by such failure. If any
investigative, judicial or administrative action, suit or proceeding arising
from any of the foregoing is brought against any Indemnitee indemnified or
intended to be indemnified pursuant to this Section 10.2, the Borrower, to the
extent directed by the Indemnitees or intended Indemnitees, shall resist and
defend such action, suit or proceeding or cause the same to be resisted and
defended by counsel designated by the Indemnitees (which counsel shall be
reasonably satisfactory to the Borrower, whose approval shall not be
unreasonably delayed or withheld). Each Indemnitee shall use its best efforts
to cooperate in the defense of any such action, suit or proceeding, but solely
at the cost of the Borrower. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section 10.2 may be unenforceable
because it is violative of any law or public policy, the Borrower shall make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The
obligations of the Borrower under this Section 10.2 shall survive the
termination of this Agreement and the discharge of the other Obligations.
10.3 Residual Indemnity Claims. Notwithstanding any provision in
any Security Document or Intercompany Security Document requiring the trustee
thereunder, the Collateral Agent (however designated) or the Senior Lender to
release, cause to be released or consent to the release of any Required Lien or
Intercompany Lien upon the payment in full in cash of the "Secured Obligations"
as defined by such Security Document or Intercompany Security Document, the
trustee, the Collateral Agent or the Senior Lender shall release, cause to be
released or consent to the release of such Lien notwithstanding the fact that
such Secured Obligations include continuing indemnification obligations at such
time as all other Secured Obligations then due and payable in cash to the
trustee, the Collateral Agent or any Senior Lender have been paid. However, if
at that time indemnification is reasonably claimed by the Collateral Agent or
the Senior Lender in accordance with the applicable indemnification provision
or provisions of that Security Document or Intercompany Security Document and
described in a written notice provided to the indemnifying Company in
accordance with said indemnification provision or provisions, the trustee, the
Collateral Agent or the Senior Lender may condition its or their release (or
actions taken to cause, or consent to, such release) upon the delivery to the
Collateral Agent of cash collateral (or other collateral acceptable to the
Collateral Agent) in an amount (or, in the case of any noncash collateral,
having a fair market value equal to 150% of the amount of the "Indemnified
Liabilities" (as such term is defined in the applicable Security Document or
Intercompany Security Document) for which indemnification has been claimed as
aforesaid.
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ARTICLE 11.
Amendments and Waivers, etc.
11.1 Waivers in Writing, etc. The failure of any of the parties
hereto to insist upon the strict performance of any term, condition or other
provision of this Agreement or any of the other Loan Documents or Intercompany
Loan Documents or to exercise any right or remedy hereunder or thereunder shall
not constitute a waiver by such party of any such term, condition or other
provision or (as to the Borrower) any Default or Event of Default in connection
therewith; and any waiver of any such term, condition or other provision or of
any such Default or Event of Default shall not affect or alter this Agreement
or any of the other Loan Documents or Intercompany Loan Documents, and each and
every term, condition and other provision of this Agreement and the other Loan
Documents and Intercompany Loan Documents shall, in such event, continue in
full force and effect and shall be operative with respect to any other then
existing or subsequent Default or Event of Default in connection therewith. No
waiver by the Senior Lender shall be effective unless it is in writing, signed
by the Senior Lender and delivered to the Borrower, and no waiver or approval
by the Borrower shall be effective unless it is in writing, signed by the
Borrower, and delivered to the Senior Lender. Similarly, no course of dealing
or delay on the part of the Borrower in exercising any right or remedy to which
the Borrower may be entitled as a result of any action or omission by the
Senior Lender with respect to any Loan or otherwise in connection with this
Agreement or any other Loan Document or Intercompany Loan Documents shall
operate as a waiver of such right or otherwise prejudice the Borrower's rights.
ARTICLE 12.
Nature of the Senior Lender's Obligations
The obligations of the Senior Lender or, if at the relevant time there
is more than one Senior Lender, the Senior Lenders and the Collateral Agent
under this Agreement and each of the other Loan Documents owed to the Borrower
or any of the Companies are several as if each such Senior Lender and the
Collateral Agent were a party to a separate agreement with the Borrower or such
Company. None of the Senior Lender or the Collateral Agent shall be jointly or
severally liable to the Borrower or any of the other Companies for any act or
omission of the Collateral Agent. To the extent that the Senior Lender or the
Collateral Agent fails to perform any of its obligations under this Agreement
or any of the other Loan Documents to the Borrower or any of the other
Companies, then the Collateral Agent may, in its own sole and absolute
discretion and without any obligation whatsoever to do so, perform the
obligations that such Senior Lender or the Collateral Agent shall have so
failed to have performed. However, under no circumstances shall any act by
such party in curing or attempting to cure such failure be deemed to have
caused such party to have assumed an obligation to do the same.
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ARTICLE 13.
Limitation of Liability
The name "Starwood Lodging Trust" is a designation of SLT 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 and as further
amended, and all Persons dealing with SLT shall look solely to SLT's Assets for
the enforcement of any claims against SLT, as the Trustees, officers, agents
and security holders of SLT, in such respective capacities, assume no personal
obligations of SLT, and their respective individual Assets shall not be subject
to the claims of any Person relating to such obligations by reason of such
capacity. All Persons dealing with the Partnership shall look solely to their
Assets and the Assets of their general partners for the enforcement of any
claims against the Partnerships, as the limited partners in the Partnerships
assume no personal obligations of the Partnerships and their respective
individual Assets shall not be subject to the claims of any Person relating to
such obligations.
Nothing in this Article 13 shall limit or impair: (i) the validity or
enforceability of any Intercompany Loan, Intercompany Lien or Intercompany Loan
Document; (ii) the rights of the Collateral Agent, including in its capacity as
Secured Party, granted in any Loan Document to enforce any rights or remedies
relating to any Intercompany Loan, Intercompany Lien or Intercompany Loan
Document; (iii) the rights of the Collateral Agent or the Senior Lender under
any Subsidiary Guaranty or any Security Document or Intercompany Security
Document securing any of the guarantor's obligations under any Subsidiary
Guaranty; or (iv) any other right of the Collateral Agent or Senior Lender
against any Company other than SLT.
ARTICLE 14.
Miscellaneous
14.1 Notices, etc. All communications provided for herein shall be
in writing delivered or mailed, as follows:
(a) If to the Senior Lender or the Collateral Agent, in
accordance with Attachment I hereto, with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Thacher, ▇▇▇▇▇▇▇▇ & ▇▇▇▇
Two ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
All communications required to be delivered to the Senior Lender
hereunder or under any of the other Loan Documents or Intercompany Loan
Documents and all other communications to the Senior Lender (unless pertaining
solely to the Collateral) shall, unless otherwise expressly provided, be
delivered in accordance with Attachment I hereto; and no
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such communication shall be effective as to Senior Lender unless a separate
copy of such communication shall have been delivered to such Senior Lender.
(b) If to SLT or Realty Partnership, to it at:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The address of any party may be changed at any time and from time to
time and shall be the most recent such address furnished in writing by such
party to each other party.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given hereunder to a Person
specified on Attachment I shall be in writing, shall be addressed as specified
thereon and may be delivered by hand or courier service or sent by
telefacsimile, telecopied, telexed, or sent by courier service or United States
mail, and shall be deemed to have been given (i) when delivered to the
addressee by hand or by courier service, if delivered on a Business Day, or if
delivered on a day other than a Business Day, on the next Business Day, or (ii)
upon receipt of a telefacsimile or telex if received on a Business Day or, if
received on a day other than a Business Day, on the next Business Day, or (iii)
four (4) Business Days after deposit in the United States mail (registered or
certified, with postage prepaid and properly addressed). For purposes hereof,
the address of each Person named on Attachment I shall be as set forth below
that Person's name on such Attachment unless and until notice of a change
thereof is delivered as provided in this Section to each other Person named on
such Attachment, whereupon notices shall be given to such other address.
14.2 Extensions of Time: Calculations. etc.
(a) [OMITTED]
(b) Calculations. Calculations hereunder shall be made
and financial data required hereby shall be prepared, both as to classification
of items and as to amounts, in accordance with GAAP recognized as such by the
American Institute of Certified Public Accountants in the opinions and
pronouncements of the Accounting Principles Board and statements and
pronouncements of the Financial Accounting Standards Board, which principles
and practices shall be consistently applied and in conformity with those used
in the preparation of the financial statements referred to herein. In
addition, all such calculations and financial
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data shall be prepared in accordance with the American Hotel and Motel
Association's Uniform System of Accounts for Hotels, as the same shall be in
effect from time to time. If (i) any changes in accounting principles from
those used in the preparation of the financial statements referred to in this
Agreement are hereafter occasioned by the promulgation of rules, regulations,
pronouncements, or opinions of, or required by, the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions), or there shall occur
any change in such Uniform System of Accounts for Hotels or in the Borrower's
or any of the other Companies' fiscal or tax years and, as a result of any such
change, there shall result a change in the method of calculating any of the
financial covenants, negative covenants, standards, or other terms or
conditions found in this Agreement, or (ii) the Borrower, for reasonable
business purposes, shall desire to change such accounting principles or the
application thereof (which change shall be consistent with accounting
principles then in effect pursuant to rules, regulations, pronouncements or
opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants and with such Uniform System of Accounts for
Hotels) and such desired change would result in a change in the method of
calculating any of the financial covenants, negative covenants, standard, or
other terms and conditions found in this Agreement, then the parties hereto
agree to enter into negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that the criteria for
evaluating the financial condition of the Borrower and the other Companies
shall be the same after such changes as if such changes had not been made.
14.3 Successors and Assigns; Participations. This Agreement and
the other Loan Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and the Senior Lender; provided that
Borrower may not sell, assign or transfer any interest in the Loan Documents
and the Intercompany Loan Documents, or any portion thereof, including, without
limitation, Borrower's rights, title, interests, remedies, powers and duties
hereunder or thereunder. The Senior Lender may, subject to compliance with
applicable law, sell, assign, transfer, or otherwise dispose of all or any part
of the Senior Lender's rights and benefits under each of the Notes, the Loan
Documents and the Intercompany Loan Documents in a Pass-Through Transaction or
otherwise or grant participations in the Notes. In the case of an assignment
by the Senior Lender, (i) the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would have if it
were the original "Senior Lender" hereunder, (ii) the Senior Lender shall be
relieved of all obligations hereunder upon any such assignment, and (iii) upon
any such substitution of the Senior Lender, an "Assignment and Acceptance"
shall be executed by the new Senior Lender. In the case of a participation
sold by the Senior Lender in the Notes, each participating lender shall be
entitled to receive all information received by the Senior Lender under this
Agreement; provided that Borrower and Collateral Agent shall have received
written notice of the address of each such participating lender.
Notwithstanding anything in this Agreement to the contrary, after an assignment
by the Senior Lender, the "Senior Lender" (prior to the assignment) shall
continue to have the benefits of any rights or indemnifications contained
herein that it had during the period such party was "Senior Lender" hereunder.
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Senior Lender and the Collateral Agent severally agree to use their
best efforts to maintain the confidentiality of the information obtained by
such Senior Lender or its agents, except when required to disclose such
information (i) for regulatory purposes; (ii) pursuant to legal process; (iii)
to its attorneys, accountants and auditors; (iv) for the purpose of selling
participations or interests in the Loans in accordance with the provisions of
this Section 14.3; or (v) as necessary for the enforcement of the Senior
Lender's or the Collateral Agent's rights hereunder. Notwithstanding the
foregoing sentence concerning confidentiality, the Borrower and the other
Companies (i) shall cooperate fully with the Senior Lender, any prospective
assignee or participant, any Rating Agency or any party to any agreement
executed in connection any sale of participations or other interests in the
Loans with respect to all reasonable requests and due diligence procedures and
to use their best efforts to facilitate such sale; and (ii) shall deliver, at
their reasonable expense, for inclusion in any prospectus, private placement
memorandum or other offering material or disclosure document such written
information regarding the Borrower or any of the other Companies and their
financial condition as shall be reasonably requested by the Senior Lender. All
fees of Rating Agencies and all other costs and expenses in connection with any
sale of participations or other interests in the Loans shall be paid by the
Senior Lender.
14.4 Counterparts, etc. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all the counterparts shall together constitute one and the same
instrument. Delivery of an executed counterpart hereof by telecopier shall be
equally effective as delivery of an executed counterpart by hand, courier
service or United States mail. Any party delivering an executed counterpart by
telecopier shall thereafter also promptly deliver an executed counterpart by
hand, courier service or United States mail, but the failure to deliver an
executed counterpart by one of such other means shall not affect the validity,
enforceability and binding effect of this Agreement.
14.5 Entire Agreement. etc. This Agreement (a) constitutes the
entire agreement between or among the parties hereto relating to the subject
matter hereof, (b) shall supersede and take the place of all negotiations,
drafts, instruments, and written or oral communications purporting to be an
agreement of the parties hereto relating to the subject matter hereof, and (c)
is intended by each of the parties hereto to be the complete statement of the
terms and conditions, and the final expression, of their agreement relating to
the subject matter hereof. The terms and conditions of Attachment I hereto and
of the Schedules and Exhibits referenced herein are incorporated herein and
shall be deemed to be a part hereof, whether or not such documents are actually
attached to this Agreement or constitute separate documents.
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14.6 Construction of this Agreement. The following principles
shall apply to the construction of this Agreement:
(a) This Agreement shall not be construed in favor of one
party rather than the other(s) based upon which party drafted the same, it
being acknowledged that all parties hereto contributed substantially to the
negotiation and preparation of this Agreement.
(b) The headings contained herein are included for
convenience of reference only and shall not affect the meaning or
interpretation of this Agreement. Each parenthetical description of a Section,
subsection, paragraph or subparagraph being referred to by cross-reference is
included for convenience of reference only and is not intended to limit the
substance of any such Section, subsection, paragraph or subparagraph being so
referred to by cross-reference or to affect the meaning or interpretation of
this Agreement.
(c) No course of dealing, course of performance, trade
usage or parol evidence of any nature shall be used to supplement or modify any
term or condition of this Agreement.
(d) Unless the context clearly requires otherwise, the
words "hereof", "herein", "hereby", "hereunder" and other similar terms used in
this Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement.
(e) Article, Section, subsection, Exhibit and Schedule
references are to this Agreement unless otherwise specified.
(f) Any reference in this Agreement to any of the
following documents includes any and all alterations, amendments, extensions,
modifications, renewals or supplements thereto or thereof, as applicable: this
Agreement; the other Loan Documents and Intercompany Loan Documents; the
Intercompany Notes; and the Mortgage Notes.
(g) Any reference in this Agreement to the "knowledge"
of any Person thereof shall mean such Person's actual, current knowledge, and
shall further mean (A) in the case of each of SLT, SLC and each of their
respective Subsidiaries, the actual, current knowledge of any of the
Responsible Officers of that Company, (B) in the case of the Realty
Partnership, the actual, current knowledge of any Responsible Officer of SLT,
and (C) in the case of the Operating Partnership, the actual, current knowledge
of any Responsible Officer of SLC. References herein to the foresight,
contemplation, reasonable business judgment and the like of the Companies shall
mean the foresight, contemplation, judgment or the like of such Companies'
respective principal executive officers.
(h) The Senior Lender shall have the right to require
such changes to the terms of the definitive documents the forms of which
constitute Exhibits to this Agreement (and all exhibits and schedules thereto)
as may be necessary (A) to implement or effectuate the provisions of this
Agreement or the Loan Documents (or to more fully perfect or renew the
Borrower's rights under the Intercompany Loan Documents), including such
changes as may
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be necessary to insure the effectiveness, perfection or priority of such
documents under the laws of each of the Relevant States (as defined in the
applicable Security Documents), or (B) to reflect the fact that the Starwood
Reorganization was not contemplated by the Restructuring Plan as originally
delivered to the Senior Lender, or other changes from time to time after the
First Closing in the corporate or operational structure of or among the
Companies; (ii) the Security Documents and Intercompany Security Documents
executed on any Pledge Date, as may be necessary based on the review of the
Starwood Assets conducted by the Senior Lender and/or the Collateral Agent
prior to any Pledge Date to insure the effectiveness, perfection and priority
of the Required Liens in the Starwood Realty Assets and the Required Liens and
Intercompany Liens in the Starwood Operating Assets granted to the Collateral
Agent, for the benefit of the Senior Lender, as of any Pledge Date; and (iii)
as to the form of opinion letter attached hereto as Exhibit C, as may be
necessary to reflect (A) changes necessitated by any changes made to the Loan
Documents pursuant to either of the preceding subparagraphs (i) or (ii) of this
subsection 14.6(h), (B) differences in the laws among the Relevant States or
changes from time to time after the Third Closing in the law of any Relevant
State, or (C) changes from time to time after the Third Closing in the
corporate or operational structure of or among the Companies.
(i) The word "including", as used in this Agreement,
shall be construed as "including without limitation".
(j) Any notice, certificate or other document (including
any financial statement or other document containing financial information)
required by the terms of this Agreement to be executed by a Responsible Officer
or another officer of any of the Companies shall be executed by such officer in
his or her capacity as such, solely on behalf of such Company and not in his or
her individual capacity.
(k) The words "ordinary course of business" to the extent
used in this Agreement with respect to any Company or Companies without further
modification, shall be construed as "ordinary course of business as heretofore
conducted or as conducted or proposed to be conducted pursuant to the
Restructuring Plan".
(l) Except as otherwise provided in Sections 1.13
(relating to the payment of certain amounts upon reductions of certain returns
on capital) and 1.14 (relating to certain additional costs), the words "rule"
and "regulation" shall include only such rules and regulations compliance with
which is required by applicable law.
(m) Time is of the essence of each provision of this
Agreement and all of the Loan Documents and Intercompany Loan Documents.
(n) For purposes of this Agreement, Indebtedness with
respect to which payments of principal and interest are non-recourse shall not
be construed as recourse indebtedness solely by reason of such Indebtedness
being subject to standard and customary recourse exceptions such as fraud,
waste, misappropriations or environmental matters.
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14.7 Severability. If any provision or provisions, or if any
portion of any provision or provisions, contained in this Agreement is or are
found by a court of competent jurisdiction to be in violation of any applicable
local, state or federal ordinance, statute, law, administrative or judicial
decision, or public policy, and if such court should declare any such portion,
provision or provisions of this Agreement to be illegal, invalid, unlawful,
void or unenforceable as written or applied, then it is the intent of the
parties hereto (i) that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and
enforceable, including by virtue of any suspension or stay of such ruling
pending appeal or other judicial review, by virtue of any reversal of such
decision by a higher court or by reducing the amount or degree of any
obligation or waiver which is unenforceably excessive by the minimum amount in
order to make the same enforceable, (ii) that the remainder of this Agreement
shall be construed as if such illegal, invalid, unlawful, void or unenforceable
portion, provision or provisions were either not contained therein or not
applied in such a manner as to be so unenforceable and (iii) that the rights,
obligations and interests of the parties hereto under the remainder of this
Agreement (including such portion, provision or provisions as otherwise
applied) shall continue in full force and effect.
14.8 No Third-Party Beneficiaries. The provisions of this
Agreement are solely for the purpose, and shall have the sole effect, of
defining the relative rights and obligations of the parties hereto and may not
be relied upon or enforced by any Person not a party hereto; no Person shall
have third-party beneficiary rights hereunder. The Borrower hereby expressly
acknowledges that the provisions of any Intercreditor Agreement are solely for
the purpose, and shall have the sole effect, of defining the relative rights
and obligations of the Senior Lender and the Collateral Agent and may not be
relied upon or enforced by any Person not a party thereto (including the
Borrower and the other Companies) and that no Person (including the Borrower
and the other Companies) shall have third-party beneficiary rights thereunder.
The Borrower hereby acknowledges and agrees that the Collateral Agent in taking
or refraining from taking any action under this Agreement or any of the other
Loan Documents shall act or refrain from acting on the instructions of such
requisite number or percentage of the Senior Lenders (if at the relevant time
there is more than one Senior Lender), as any Intercreditor Agreement may
require and the Borrower shall have no obligation or right to inquire as to the
authority of the Collateral Agent in taking or refraining from taking any such
action. The Borrower further acknowledges and agrees that any reference in
this Agreement or any of the other Loan Documents to the discretion, judgment
or the like of the Collateral Agent shall mean the collective discretion,
judgment or the like of such requisite number or percentage of the Senior
Lenders as any Intercreditor Agreement may require and that whenever in any of
the Loan Documents or Intercompany Loan Documents any standard of
reasonableness is applied to the discretion, judgment or the like of the
Collateral Agent, such standard shall be met if such collective discretion,
judgment or the like meets such standard.
14.9 Choice of Law and Waiver of Jury Trial.
(a) Choice of Law. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO, SHALL BE DETERMINED UNDER, GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.
(b) Waiver of Jury Trial. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING
ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT OR IN ANY WAY CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THIS
AGREEMENT OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO
HEREBY AGREES THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR
PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT OR OTHER
TRIBUNAL AS EVIDENCE OF THE CONSENT OF ANY OTHER PARTY TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY.
14.10 Exhibits and Schedules. The Exhibits and Schedules referred
to herein are those exhibits and schedules (i) attached to the Prior Credit
Agreement (which Exhibits shall remain effective notwithstanding the fact that
this Agreement amends and restates the Prior Credit Agreement), (ii) attached
to this Agreement, which Exhibits and Schedules either have been, are being or
will be delivered by the parties prior to, concurrently with or after the
execution and delivery of this Agreement; and (iii) the Senior Lender in its
reasonable discretion may correct errors in the determination of Aggregate
Asset Value, and the Senior Lender may amend the allocated Loan amounts on
Schedule 1.9 and the Minimum Release Prices subject to the constraints of this
Agreement. The Senior Lender shall give prompt written notice to the Borrower
of any such corrections or amendments accompanied by a full restatement of the
affected schedule; provided, however, that the initial schedules as to
Aggregate Asset Value, Minimum Release Prices and allocated loan amounts shall
control notwithstanding the constraints in this Agreement, including Section
6.10.
14.11 Cross References. The Loan Documents, Intercompany Loan
Documents, Security Documents and Intercompany Security Documents contain
references to specific provisions of the Prior Credit Agreement and any
subsequent modified, amended or restated versions thereof. Any such reference
shall be deemed to be a reference to a corresponding provision of this Amended
and Restated Credit Agreement as provided on Schedule 14.11.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
a sealed instrument as of the date first above written.
STARWOOD LODGING TRUST SLT REALTY PARTNERSHIP
By: Starwood Lodging Trust,
By: its general partner
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE
CAPITAL INC.
By:
--------------------------
Name:
Title:
BANKERS TRUST COMPANY, as
Collateral Agent
By:
--------------------------
Name:
Title:
