EXHIBIT 10(d)
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FIFTH AMENDED AND RESTATED
MASTER COVENANT AGREEMENT
Dated as of
September 12, 1995
between
LA QUINTA INNS, INC.
and
THE BANKS PARTY HERETO
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TABLE OF CONTENTS
PAGE
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Section 1. PARTIES...................................................... 1
Section 2. BACKGROUND................................................... 1
Section 3. DEFINITIONS.................................................. 1
Section 4. BUSINESS COVENANTS OF LA QUINTA.............................. 10
4.1 MAINTENANCE OF PROPERTY, INSURANCE, ACCOUNTING PRACTICES,
CORPORATE EXISTENCE.......................................... 10
4.2 INSPECTION OF PROPERTIES AND BOOKS........................... 11
4.3 MERGER AND SALE OF ASSETS.................................... 11
4.4 NET WORTH.................................................... 12
4.5 CONTINGENT LIABILITIES....................................... 12
4.6 INCURRENCE AND RETENTION OF DEBT............................. 12
4.7 INVESTMENTS.................................................. 12
4.8 NOTICE OF LITIGATION......................................... 12
4.9 TOTAL DEBT RATIO............................................. 13
4.10 CASH FLOW RATIO.............................................. 13
4.11 SENIOR DEBT RATIO............................................ 13
4.12 LIENS........................................................ 13
4.13 ACCOUNTING CHANGES........................................... 13
4.14 AMENDMENT AND MODIFICATION OF SUBORDINATED DEBT DOCUMENTS.... 13
4.15 LEASE-BACKS.................................................. 14
4.16 ENVIRONMENTAL MATTERS........................................ 14
4.17 ERISA COMPLIANCE............................................. 15
4.18 BUSINESS..................................................... 15
4.19 DEBT......................................................... 15
4.20 BANK DEBT.................................................... 16
4.21 TRANSACTIONS WITH AFFILIATES................................. 16
Section 5. INFORMATION AS TO LA QUINTA.................................. 16
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS BY LA QUINTA.......... 16
5.2 OFFICER'S CERTIFICATE........................................ 18
Section 6. DEFAULT...................................................... 19
Section 7. MISCELLANEOUS................................................ 19
7.1 NOTICE....................................................... 19
7.2 AMENDMENT, WAIVER, CONSENTS AND APPROVALS.................... 20
7.3 NOTICE OF DEFAULT ON BANK DEBT............................... 20
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7.4 CONFLICTS.................................................... 20
7.5 PAYMENT OF EXPENSES.......................................... 20
7.6 GOVERNING LAW................................................ 20
7.7 BINDING UPON SUCCESSORS...................................... 20
7.8 COUNTERPARTS................................................. 21
7.9 TERMINATION AND EFFECTIVENESS OF THIS AGREEMENT.............. 21
7.10 ADJUSTMENT OF PERCENTAGES.................................... 21
7.11 EXCEPTIONS TO COVENANTS...................................... 21
7.12 CONFIDENTIALITY.............................................. 21
7.13 ASSIGNMENT................................................... 22
7.14 ACCOUNTING TERMS............................................. 22
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Exhibit A: Bank Debt
Exhibit B: Existing Investments
Exhibit C: Subsidiaries and Unincorporated Ventures Investments
Exhibit D: Existing Liens
Exhibit E: Guarantees and Contingent Obligations
Exhibit F: Confidentiality Agreement
Exhibit G: Significant Investments
Exhibit H: Investment Policy
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FIFTH AMENDED AND RESTATED
LA QUINTA INNS, INC.
MASTER COVENANT AGREEMENT
SECTION 1. PARTIES.
This Fifth Amended and Restated Master Covenant Agreement ("Agreement") is
by and among La Quinta Inns, Inc., a Texas corporation ("La Quinta"), First
Interstate Bank of Texas, N.A., and any other bank from time to time a party
hereto pursuant to Section 7.13 (individually, a "Bank", collectively, the
"Banks").
SECTION 2. BACKGROUND.
La Quinta and certain banks are parties to a Fourth Amended and Restated
Master Covenant Agreement, dated as of April 21, 1995 (said Fourth Amended and
Restated Master Covenant Agreement, as amended, the "Prior Master Covenant
Agreement"), the effect of which is to incorporate the definitions, provisions
and covenants set forth therein into certain credit facilities that La Quinta
has with certain Banks.
La Quinta and the Banks desire to enter into this Agreement in order to
amend certain terms of, and restate in its entirety, the Prior Master Covenant
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, La Quinta and the Banks agree as
follows:
SECTION 3. DEFINITIONS.
For purposes hereof, the terms defined in this Section 3 shall have the
following meanings, and the singular shall include the plural, and vice versa,
unless otherwise specifically required by the context (capitalized terms used
herein and not otherwise defined herein shall have the meaning given to such
terms in the Credit Agreement hereinafter defined):
"AFFILIATE" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person or (ii) any other Person that owns or controls 10% or more of any
class of equity securities of that Person or any of its Affiliates. For
purposes of this definition, "CONTROL" (including with correlative meanings,
the terms "CONTROLLING," "CONTROLLED BY," and UNDER COMMON CONTROL
WITH"), as applied to any Persons, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGREEMENT DATE" means the date of this Agreement.
"AUTHORIZED OFFICER" means any of the following officers of La Quinta:
President, Senior Vice President-Accounting & Administration, Senior Vice
President-Finance, Vice President & General Counsel or Vice President-Treasurer.
"BANK DEBT" means (i) all obligations, indebtedness and liabilities,
direct, contingent or otherwise (including through participations), whether
funded or unfunded, of La Quinta listed on EXHIBIT A attached hereto and made
a part hereof (pursuant to Section 7.13), arising under and otherwise in
connection with the loans and/or credit facilities briefly described in EXHIBIT
A, as modified to indicate adjustments of percentages (and related amounts)
from time to time as provided for in Sections 5.1(a)(2), 5.1(b)(3), 7.10 and
7.13 hereof and (ii) all interest accruing on all or any part thereof and
attorneys' fees incurred in the enforcement or the collection of all or any part
thereof.
"BOND LETTERS OF CREDIT" has the meaning given to them in the Credit
Agreement.
"CAPITAL LEASES" mean all capital leases and subleases, as defined in
the Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13, dated November 1976, as amended.
"CAPITAL STOCK" means, with respect to any Person, any capital stock,
partnership or joint venture interests of such Person and shares, interests,
participations or other ownership interests (however designated) of any Person
and any rights (other than debt securities convertible into corporate stock),
warrants or options to purchase any of the foregoing.
"COMBINED" includes, with respect to financial statements and the
calculations of the covenants herein and the definitions related thereto, the
combined accounts of La Quinta and its Subsidiaries and Unincorporated Ventures
which are included in La Quinta's Annual Report to Shareholders and in La
Quinta's Form 10-K filed with the S.E.C. (the "COMBINED FINANCIAL
STATEMENTS").
"CONSOLIDATED NET INCOME" means, for any period, determined in
accordance with GAAP, on a Combined basis, consolidated net income for such
period.
"CREDIT AGREEMENT" means that certain Amended and Restated Credit
Agreement (Facility A), dated as of September 12, 1995, among La Quinta, the
lenders a party thereto and NationsBank of Texas, N.A., as Administrative
Lender, as amended, supplemented, modified or restated from time to time.
"CURRENT MATURITIES" means, with respect to any Person, the principal
portion payable by such Person on Long Term Debt during the twelve-month period
immediately succeeding the date of determination.
"DEBT" of any Person means, at any date, without duplication, all
obligations, contingent or otherwise, (i) of such Person for borrowed money
(whether or not the recourse of the lender
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is to the whole of the assets of such Person or only to a portion thereof), (ii)
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) representing the balance deferred and unpaid of the purchase
price of any property or services (other than accounts payable or other
obligations arising in the ordinary course of business), if and to the extent
any of the foregoing described in clauses (i), (ii) and (iii) would appear as a
liability on the balance sheet of such Person, (iv) of such Person in respect of
bankers' acceptances, letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), (v) of such Person under
Capital Leases, (vi) all liabilities secured by a Lien on any asset of such
Person to the extent of the value of such asset, whether or not such liability
is an obligation of such Person, (vii) all liability of others guaranteed by
such Person (but only to the extent of such guarantees), (viii) to the extent
not otherwise included, obligations of such Person under currency risk-hedging
agreements and Interest Rate Protection Agreements, (ix) the liquidation
preference and any mandatory redemption payment obligations (without
duplication) of such Person's Subsidiaries in respect of preferred stock issued
by any such Subsidiary, (x) in the case of such Person, the liquidation
preference and any mandatory redemption payment obligations (without
duplication) in respect of Disqualified Capital Stock and (xi) in the case of
such Person, unfunded vested benefits under any Plan.
"DEFAULT" means any default with respect to any Bank Debt which would
permit the acceleration of such Bank Debt, whether or not there has been
satisfied any requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further condition, event
or act.
"DISQUALIFIED CAPITAL STOCK" means with respect to any Person any series
or class of Capital Stock of such Person which is or may be required to be
redeemed, in whole or in part, or may be put to such Person or any of its
Subsidiaries, in whole or in part, at the option of the holder thereof, on or
prior to the final maturity of the Senior Subordinated Notes, or is or may be
convertible or exchangeable into or exercisable for such Capital Stock on or
prior to the final maturity of the Senior Subordinated Notes; PROVIDED, that
Capital Stock will not be deemed to be Disqualified Capital Stock if it may only
be so redeemed or put solely in consideration of Qualified Capital Stock.
"DOMESTIC SUBSIDIARY" means any Subsidiary of La Quinta organized under
the laws of any state within the United States.
"EBITDA" means, for any period, determined in accordance with GAAP on a
Combined Basis, the sum of (i) Operating Income, plus (ii) nonrecurring,
non-cash charges which decrease Operating Income, plus (iii) depreciation,
amortization and non-cash fixed asset retirements, minus (iv) nonrecurring
credits which are included in Operating Income.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means any default with respect to any Bank Debt which
would permit the acceleration of such Bank Debt, provided there has been
satisfied any requirement in
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connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act.
"EXISTING INVESTMENTS" means those Investments described on EXHIBIT B
hereto.
"FOREIGN SUBSIDIARY" means any Subsidiary which is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles , set forth in the
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and/or in statements of the Financial Accounting
Standards Board, which are applicable in the circumstances as of the date in
question and which shall be applied by the independent accounting firm which
certifies La Quinta's Combined Financial Statements and Parent Company financial
statements, and the requisite that such principles be applied on a consistent
basis shall mean that the accounting principles observed in a current period are
comparable in all material respects to those applied in a preceding period,
other than as a result of changes required by modifications to GAAP. Unless
otherwise indicated herein, all accounting terms will be defined according to
GAAP. Notwithstanding the foregoing, all determinations and computations with
respect to financial covenants and ratios provided for in this Agreement shall
be made in accordance with GAAP as in effect on the date hereof.
"INTEREST EXPENSE" of any Person means, for any period, the aggregate
interest expense in respect of Debt (including amortization of original issue
discount and non-cash interest payments or accruals, and dividends on
Disqualified Capital Stock, but excluding amortization of Debt issuance costs)
of such Person and all commissions, discounts, other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and costs
associated with currency and Interest Rate Agreements, all in accordance with
GAAP; PROVIDED, that interest expense attributable to that portion of the Debt
of another Person that is a direct or indirect, contingent or primary, recourse
obligation of such Person subsequent to the Agreement Date shall be added
thereto.
"INTEREST RATE PROTECTION AGREEMENTS" means any obligation of any Person
under interest rate exchange, collar, cap, swap or similar agreements providing
interest rate protection.
"INVESTMENT" means, in one or a series of related transactions, any
direct or indirect acquisition of all or substantially all assets of any Person,
or any direct or indirect purchase or other acquisition of, or beneficial
interest in, capital stock or other securities of any other Person, or any
direct or indirect loan, advance (other than advances to employees for moving
and travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution or transfer of property, assets or
value to, or investment in, any other Person, including, without limitation the
incurrence or sufferance of Debt or the purchase of accounts receivable by any
other Person that are not current assets or do not arise in the ordinary course
of business.
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"INVESTMENTS" means La Quinta Investments, Inc., a Delaware corporation
and wholly-owned Subsidiary of La Quinta.
"INVESTMENT POLICY" means that certain Amended and Restated La Quinta
Inns, Inc. Statement of Investment Policy as of October 1989 in effect on the
Agreement Date as set forth as EXHIBIT H hereto.
"LIEN" means, with respect to any property, any mortgage, lien, pledge,
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other
encumbrance of any kind in respect of such property, whether or not ▇▇▇▇▇▇,
vested or perfected.
"LONG TERM DEBT" means any obligation which is due one year or more from
the date of creation thereof which under GAAP is shown as a liability, plus
(without duplication) amounts equal to the aggregate net rentals (after making
allowances for any interest, taxes or other expenses included therein) payable
more than one year from the date of creation thereof under Capital Leases.
"MAINTENANCE CAPITAL EXPENDITURES" means an amount equal to the product
of room revenues (as disclosed in La Quinta's Form 10-K and 10-Q) of La Quinta,
its Subsidiaries and Unincorporated Ventures multiplied by 5%, calculated for
the four consecutive fiscal quarters immediately preceding the date of such
determination.
"MATERIAL ADVERSE EFFECT" has the meaning given to such term in the
Credit Agreement.
"MATERIAL AMOUNT" has the meaning given to such term in the Credit
Agreement.
"NET CASH PROCEEDS" means the aggregate amount of cash received by La
Quinta in respect of the sale of Capital Stock of La Quinta, less the sum of all
fees, commissions and other expenses incurred in connection with such sale.
"NET INCOME" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, as determined in accordance with
GAAP.
"NET INTEREST EXPENSE" means, with respect to any Person for any period,
the sum of (i) Interest Expense of such Persons for such period minus (ii)
interest income of such Person for such period as reflected on an income
statement of such Person prepared in accordance with GAAP.
"NET WORTH" means an amount equal to the sum of the Capital Stock and
additional paid-in-capital plus retained earnings (or minus accumulated deficit)
of La Quinta and its Subsidiaries and less (i) treasury stock and (ii) amounts
attributable to the extent included, (1) to any write-up in book value of assets
resulting from a revaluation thereof subsequent to June 30, 1995, and (2) to
Disqualified Capital Stock, all in accordance with GAAP.
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"OFFICER'S CERTIFICATE" means a certificate signed in the name of La
Quinta by an Authorized Officer.
"OPERATING INCOME" means, with respect to any Person for any period, the
operating income (loss) of such Person, as determined in accordance with GAAP.
"OPERATING LEASE" means any operating lease, as defined in the Financial
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP.
"PARENT COMPANY" means, with respect to financial statements and the
calculations of the covenants herein and the definitions related thereto, the
uncombined, consolidated financial statements of La Quinta and its Subsidiaries,
including equity method investments, as defined by GAAP, in Unincorporated
Ventures, and designated "La Quinta Inns, Inc. (Parent Company and Wholly-Owned
Subsidiaries)" on La Quinta's audit report.
"PARTNERS' CAPITAL" means the equity in the net assets of Unincorporated
Ventures of all the partners or venturers (other than La Quinta or a Subsidiary)
of such Unincorporated Ventures, or minority interest holders, as determined in
accordance with GAAP.
"PERMITTED INVESTMENT" means Investments in (i) wholly-owned Domestic
Subsidiaries (a) that are subject to the provisions of this Agreement, (b) that
concurrently therewith unconditionally guarantee the performance of La Quinta's
obligations under the Bank Debt and (c) that concurrently deliver to the Banks
(1) an opinion acceptable to the Banks with respect to the validity and
enforceability of such guarantee and (2) such other documents, such as corporate
resolutions, certificates of incumbency, by-laws and articles of incorporation,
as the Banks shall reasonably require, (ii) Investments in any Person other than
a wholly-owned Subsidiary in any one or a series of related transactions with a
fair market value not in excess of $25,000,000 in the aggregate for all
Investments in all such Persons, (iii) Investments for the purpose of satisfying
La Quinta's or any Subsidiary's guarantee obligations with respect to the Debt
of any Person in which La Quinta or any Subsidiary owned any interest and which
obligation was in existence as of the Agreement Date; (iv) Investments in
Subsidiaries and Unincorporated Ventures which do not guarantee the performance
of La Quinta's obligations under the Credit Agreement made in the ordinary
course of business, consistent with past practices for the purpose of providing
for the day to day operating requirements of such Subsidiary or Unincorporated
Venture, PROVIDED, that such Investments shall (a) not be used for acquisition
or conversion of any inns and (b) be evidenced by a note or other evidence of
indebtedness and (c) not at any time exceed $10,000,000 in aggregate principal
amount, (v) Investments permitted by Sections II.B., II.C. (provided that,
notwithstanding Section II.C.3. of the Investment Policy, Banks shall be
required to have at least $150,000,000 in capital and surplus), II.E. and II.H.
of the Investment Policy, (vi) loans or advances to employees as compensation
for services in the ordinary course of business not in excess of $2,000,000
aggregate principal amount, (vii) Investments in the ordinary course of
business, consistent with past practice, in La Quinta Inns' National Advertising
Fund, (viii) Existing Investments, (ix) Investments in Capital Stock
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of Subsidiaries and Unincorporated Ventures listed on EXHIBIT C hereto for the
purpose of acquiring no less than 100% of the capital stock or partnership
interests, as appropriate, of such Subsidiaries and Unincorporated Ventures, (x)
Investments in notes payable to La Quinta as a result of the sale of inns in an
aggregate principal amount not in excess of $10,000,000, provided that La Quinta
shall obtain and continue to hold a perfected first Lien (subject to Permitted
Liens) in such inns, and (xi) Investments in wholly-owned Foreign Subsidiaries
(a) that are subject to the provisions of this Agreement and (b) not to exceed
in aggregate amount $1,000,000 for all Investments in all Foreign Subsidiaries.
For purposes of the calculation of the amount of any Investments permitted
hereunder, Investments will be calculated at all times at the amount of the
original Investment with no reduction for write-offs or write-downs. No
Investment which is a Permitted Investment other than pursuant to clause (ii) of
the definition of "Permitted Investments" shall reduce the amount of Investments
permitted pursuant to such clause (ii).
"PERMITTED LIENS" means, as applied to any Person:
(i) any Lien in favor of any Bank or a trustee on its behalf to secure
the Bank Debt;
(ii) (a) Liens on real estate for real estate taxes not yet delinquent,
(b) Liens created by lease agreements to secure the payments of rental amounts
and other sums not yet due thereunder, (c) Liens on leasehold interests created
by the lessor in favor of any mortgagee of the leased premises, and (d) Liens
for taxes, assessments, governmental charges, levies or claims that are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on such Person's books, but only so
long as no foreclosure, restraint, sale or similar proceedings have been
commenced with respect thereto;
(iii) Liens of carriers, warehousemen, mechanics, laborers and materialmen
and other similar Liens incurred in the ordinary course of business for sums not
yet due or being contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
(iv) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(v) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person;
(vi) Liens created to secure the purchase price of fixed assets acquired
by such Person, which is incurred solely for the purpose of financing the
acquisition of such assets and incurred at the time of acquisition, so long as
(a) each such Lien shall at all times be confined solely to the asset or assets
so acquired (and proceeds thereof), (b) the Liens were placed on such assets at
the time such assets were acquired and (c) the aggregate principal amount of
Debt secured by such Liens does not exceed, together with Debt secured by Liens
permitted pursuant to
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clause (vii) below, $25,000,000, and refinancings thereof so long as any such
Lien remains solely on the asset or assets acquired and the amount of Debt
related thereto is not increased;
(vii) Liens existing on any property acquired by such Person prior to the
acquisition of such property by such Person, provided (a) such Lien shall at all
times be confined solely to the property so acquired (and proceeds thereof) and
(b) the aggregate principal amount of Debt secured by such Liens does not
exceed, together with the Liens permitted pursuant to clause (vi) above,
$25,000,000 and refinancings thereof so long as any such Lien remains solely on
the asset or assets acquired and the amount of the Debt related thereto is not
increased;
(viii)Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been secured,
provided that (a) such Person shall have established adequate reserves for such
judgments or awards, (b) such judgments or awards shall be fully insured and the
insurer shall not have denied coverage, or (c) such judgments or awards shall
have been bonded to the satisfaction of the Banks;
(ix) Any Liens existing on the Agreement Date which are described on
EXHIBIT D hereto, and Liens resulting from the refinancing of the related
Debt, provided that the Debt secured thereby shall not be increased and the
Liens shall not cover additional assets of the Borrower;
(x) any obligations or duties, affecting any property, to any
municipality or public authority with respect to any franchise, grant, license
or permit which do not materially impair the use of any material property for
the purposes for which such property is held by such Person;
(xi) zoning laws or ordinances and municipal regulations which do not
materially impair the use of any material property for the purposes for which
such property is held by such Person;
(xii) Liens, minor irregularities in or deficiencies of title on any
property which do not materially impair the use of any material property for the
purposes for which such property is held by such Person; and
(xiii)Liens otherwise permitted or contemplated by the Loan Papers.
"PERSON" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, and a
government or any department, tribunal, agency or political subdivision thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
to all or any of the Pension Benefit Guaranty Corporation's functions under
ERISA.
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"PLAN" means any plan subject to Title IV of ERISA and maintained by La
Quinta or any Subsidiary, or any such plan to which La Quinta or any Subsidiary
or any Unincorporated Venture is required to contribute on behalf of all or any
of its employees; PROVIDED, HOWEVER, "Plan" shall not include those
agreements with former employees described on Schedule 7 of the Credit
Agreement, the obligations pursuant to which do not exceed $450,000 in aggregate
amount.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of La Quinta that is
not Disqualified Capital Stock.
"REPORTABLE EVENT" has the meaning specified in Title IV of ERISA.
"S.E.C." means the United States Securities and Exchange Commission.
"SENIOR DEBT" means Total Debt of La Quinta, its Subsidiaries and
Unincorporated Ventures, as appropriate, other than Subordinated Debt.
"SENIOR SUBORDINATED NOTE" has the meaning given to such term in the
Credit Agreement.
"SIGNIFICANT INVESTMENTS" means those investments of La Quinta in the
joint ventures or partnerships set forth on EXHIBIT G hereto.
"SUBORDINATED DEBT" means any debt, obligation or liability (whether
primary, contingent or otherwise) of La Quinta, a Subsidiary or an
Unincorporated Venture which by its terms is subordinate in right of payment to
the Bank Debt, provided that the Banks approve the terms thereof prior to or at
the time of the issuance thereof.
"SUBSIDIARY" with respect to any Person, means (a) a corporation at
least a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person or (b) a partnership, joint venture or
similar entity in which 100% of the ownership, capital, interest or profits is
at the time, directly or indirectly, owned by such Person, by such Person and
one or more Subsidiaries of such Person or by one or more Subsidiaries of such
Person.
"SUBSIDIARY GUARANTY" shall have the meaning given to such term in the
Credit Agreement.
"TOTAL DEBT" means, with respect to any Person, the sum, without
duplication, of (a) all Debt of such Person minus (b)(i) the aggregate face
amount of Bond Letters of Credit outstanding and (ii) all Debt of such Person of
the type described in (1) clauses (vi) and (vii) of the definition of "Debt"
herein which are set forth in EXHIBIT E hereto and (2) clauses (viii) and (ix)
of the definition of "Debt" herein.
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"TRIBUNAL" means any state, commonwealth, federal, foreign territorial,
or other court or governmental department, commission, board, bureau, agency or
instrumentality.
"UNINCORPORATED VENTURE" means those Persons designated as
"Unincorporated Ventures" on EXHIBIT C hereto.
SECTION ▇.▇▇▇▇▇▇▇▇ COVENANTS OF LA QUINTA.
4.1 MAINTENANCE OF PROPERTY, INSURANCE, ACCOUNTING PRACTICES, CORPORATE
EXISTENCE. La Quinta covenants and agrees to, and will cause each Subsidiary
and Unincorporated Venture to:
(A) Maintain its material property in good condition and make all
necessary renewals, replacements, additions, betterments and improvements
thereto, consistent with sound business practice and as is customary in the case
of corporations or other entities of established reputation engaged in the same
or a similar business and similarly situated;
(B) Maintain, with financially sound and reputable insurers, or through
its own program of self-insurance, insurance with respect to its material
properties and business against such casualties and contingencies, of such
types, and in such amounts as is customary in the case of corporations or other
entities of established reputation engaged in the same or a similar business and
similarly situated;
(C) Keep books of record and accounts in which entries will be made of
all of its business transactions, and will reflect in it financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP;
(D) Do or cause to be done all things necessary to preserve and keep in
full force and effect its material rights;
(E) Do or cause to be done all things necessary to preserve and keep in
full force and effect its existence (except as may be specifically permitted by
this Agreement); and
(F) Cause to be paid and discharged (i) all lawful taxes assessments and
governmental charges imposed from the income or profits of La Quinta, its
Subsidiaries and Unincorporated Ventures or upon any property belonging to La
Quinta, any Subsidiary or any Unincorporated Venture and (ii) all lawful claims,
whether for labor, materials, supplies, services or anything else, which have
become due and payable and which by law have or may become a Lien upon the
property of La Quinta or any of its Subsidiaries; or Unincorporated Ventures;
PROVIDED, HOWEVER, that La Quinta, its Subsidiaries and Unincorporated
Ventures shall not be required to cause to be paid or discharged any such tax
assessment, charge or claim so long as the amount, applicability or validity
thereof shall be contested in good faith by appropriate proceedings, and
adequate book reserves shall have been established to the extent required by
GAAP with respect thereto.
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4.2 INSPECTION OF PROPERTIES AND BOOKS. La Quinta covenants and
agrees that it will permit, and will cause each Subsidiary and Unincorporated
Venture to permit, any Bank, upon (i) reasonable request, if such request is
prior to the occurrence of a Default or an Event of Default or (ii) request, if
such request is after the occurrence of a Default or an Event of Default, to any
Authorized Officer, to visit and inspect any of the properties of, to examine
the books of account and records of La Quinta, any Subsidiary or Unincorporated
Venture and to take extracts therefrom and to discuss the affairs, finances or
accounts of La Quinta, any Subsidiary or Unincorporated Venture, and to be
advised as to the same by the officers of La Quinta, at all such times during
normal business hours, in such detail and through such agents and
representatives as such Bank may reasonably desire.
4.3 MERGER AND SALE OF ASSETS.
(A) La Quinta covenants and agrees that it will not, and will cause each
Subsidiary and Unincorporated Venture to not, directly or indirectly sell,
transfer or otherwise dispose of any of its assets (whether now owned or
hereafter acquired, and including any interest in a joint venture or
partnership) unless immediately prior to, and after giving effect to, such sale,
transfer or other disposition, La Quinta, its Subsidiaries and Unincorporated
Ventures are and will be in compliance with all covenants hereunder and there
shall otherwise be no Default or Event of Default hereunder; and
(B) La Quinta covenants and agrees that it will not, and will cause each
Subsidiary and Unincorporated Venture to not, merge into or consolidate with any
other Person; provided, however, if after giving effect to any such merger or
consolidation, (i) the business of La Quinta or any Subsidiary or Unincorporated
Venture, as appropriate, will not be materially changed and (ii) La Quinta or
any Subsidiary or Unincorporated Venture, as appropriate, will not be in default
in respect of any of the covenants contained in any material agreement,
including, without limitation, this Agreement, to which La Quinta or any
Subsidiary or Unincorporated Venture is a party or by which its property may be
bound,
(1) Any corporation, partnership or joint venture may merge or
consolidate with La Quinta, provided that La Quinta shall be the
continuing and surviving corporation,
(2) Any Subsidiary may merge with or consolidate with any
corporation, partnership or joint venture, provided that, unless such
merger or consolidation shall be with La Quinta, such Subsidiary shall be
the continuing and surviving corporation, and
(3) Any Unincorporated Venture may merge with or consolidate with
any corporation, partnership or joint venture, provided that, unless such
merger or consolidation shall be with La Quinta or a Subsidiary, such
Unincorporated Venture shall be the continuing and surviving person.
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4.4 NET WORTH. La Quinta covenants and agrees that it will not allow
its Net Worth at any time to be less than the sum of (i) $285,000,000, plus (ii)
50% of Consolidated Net Income (excluding Consolidated Net Income for any fiscal
quarter in which Consolidated Income was a negative number) earned on or after
the Agreement Date, plus (iii) 75% of the Net Cash Proceeds of any equity issues
of La Quinta's Capital Stock after the Agreement Date.
4.5 CONTINGENT LIABILITIES. La Quinta covenants and agrees that it
will not, and will cause each Subsidiary and Unincorporated Venture to not,
guarantee, endorse, contingently agree to purchase, or otherwise become liable,
directly or indirectly, upon the obligation of or in connection with the
earnings, the assets, the stock, or the dividends of any other Person (other
than La Quinta or any Subsidiary), including obligations of La Quinta, each
Subsidiary and Unincorporated Venture arising solely by virtue of any of them
being a general partner or venturer of any Unincorporated Venture, except (i)
the obligations in respect of the written agreements in existence on the
Agreement Date in respect of any Significant Investments, (ii) the guarantees
and other contingent obligations set forth on EXHIBIT E hereto, (iii)
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection, (iv) guarantees of loans to any employee; PROVIDED,
THAT any such guaranty of an employee loan shall not exceed the amount of
$100,000 per employee, and the amount of such guaranties of employee loans,
together with the amount of Investments permitted pursuant to clause (vi) of the
definition of "Permitted Investments," shall not exceed, in the aggregate, more
than $2,000,000, and (v) guarantees and contingent obligations incurred after
the date of this Agreement not to exceed $20,000,000 in aggregate principal
amount.
4.6 INCURRENCE AND RETENTION OF DEBT. La Quinta covenants and agrees
that it will not, and will cause each Subsidiary and Unincorporated Venture to
not, incur, create, assume, or suffer to exist any Debt (other than Debt
existing on the Agreement Date) unless, immediately prior to, and after the
incurrence of, such Debt, La Quinta, its Subsidiaries and Unincorporated
Ventures are and will be in compliance with all covenants hereunder and there
shall otherwise be no Default or Event of Default hereunder.
4.7 INVESTMENTS. La Quinta will not, and will cause each Subsidiary
and Unincorporated Venture to not, make or permit to remain any Investment other
than a Permitted Investment.
4.8 NOTICE OF LITIGATION. La Quinta covenants and agrees that it
will, and will cause each Subsidiary and Unincorporated Venture to, promptly
give notice in writing to its Banks (i) of any litigation to which La Quinta,
any Subsidiary or Unincorporated Venture becomes a party, if (a) the amount in
controversy exceeds $500,000 and (b) La Quinta's insurance carrier does not
acknowledge coverage with respect to such litigation, and (ii) of all
proceedings before any governmental or regulatory agencies (a) affecting or
potentially affecting the business or property of La Quinta, any Subsidiary or
Unincorporated Venture in an amount in excess of $500,000 or (b) materially
affecting the ability of La Quinta, any Subsidiary or Unincorporated Venture to
perform their respective covenants and obligations hereunder or under any Bank
Debt.
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4.9 TOTAL DEBT RATIO. La Quinta covenants and agrees that it will not
allow the ratio of (i) Total Debt to (ii) EBITDA, in each case for the four
consecutive fiscal quarters immediately preceding the date of determination, to
be greater than 4.00 to 1 at the end of any fiscal quarter. For purposes of
this Section 4.9, with respect to assets not owned at all times during the four
consecutive quarters immediately preceding the date of determination of EBITDA,
there shall be (i) included in EBITDA (without duplication) the EBITDA of any
assets acquired during any such four consecutive fiscal quarters immediately
preceding the date of determination and (ii) excluded from EBITDA the EBITDA of
any asset disposed of during any such four consecutive fiscal quarters
immediately preceding the date of determination.
4.10 CASH FLOW RATIO. La Quinta covenants and agrees that it will not
allow the ratio of (i)(a) EBITDA, plus (b) lease expense pursuant to Operating
Leases, minus (c) Maintenance Capital Expenditures to (ii)(a) Net Interest, plus
(b) lease expense pursuant to Operating Leases, plus (c) Current Maturities, in
each case other than Current Maturities (which, with respect to Current
Maturities, shall be for the four consecutive fiscal quarters immediately
succeeding the date of determination) for the four consecutive fiscal quarters
immediately preceding the date of determination, to be less than 1.50 to 1 at
the end of any fiscal quarter.
4.11 SENIOR DEBT RATIO. La Quinta covenants and agrees that it will
not allow the ratio of (i) Senior Debt to (ii) EBITDA, in each case for the four
consecutive fiscal quarters immediately preceding the date of determination, to
be greater than 3.0 to 1 at the end of any fiscal quarter. For purposes of this
Section 4.11, with respect to assets not owned at all times during the four
consecutive quarters immediately preceding the date of determination of EBITDA,
there shall be (i) included in EBITDA (without duplication) the EBITDA of any
assets acquired during any such four consecutive fiscal quarters immediately
preceding the date of determination and (ii) excluded from EBITDA the EBITDA of
any asset disposed of during any such four consecutive fiscal quarters
immediately preceding the date of determination.
4.12 LIENS. La Quinta covenants and agrees that it will not create,
assume or suffer to exist, or permit any Subsidiary or Unincorporated Venture to
create, assume or suffer to exist, any Lien on any asset now owned or hereafter
acquired by it except Permitted Liens.
4.13 ACCOUNTING CHANGES. La Quinta covenants and agrees that it will
not, and will not permit an of its Subsidiaries or Unincorporated Ventures to,
make any change in its accounting treatment or financial reporting practices,
except as permitted or required by GAAP in effect from time to time. La Quinta
will not change its fiscal year or the calculation of its fiscal quarter ends.
4.14 AMENDMENT AND MODIFICATION OF SUBORDINATED DEBT DOCUMENTS. La
Quinta covenants and agrees that it will not, and it will not permit any
Subsidiary or Unincorporated Venture to, directly or indirectly, amend, modify,
supplement, waive compliance with, or assent to noncompliance with, any term,
provision or condition of any of the documents governing or evidencing the
Subordinated Debt, which (i) the Banks deem material (including, without
limitation, relating to events of default, acceleration rights, interest rates,
tenor, maturity date,
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subordination, covenants, prohibition against amending any documents related to
the Bank Debt and definitions with respect thereto (including, without
limitation, the definition of "Senior Debt")) or (ii) places any further
restrictions on La Quinta, its Subsidiaries or Unincorporated Ventures or
increases the obligations of La Quinta, its Subsidiaries or Unincorporated
Ventures thereunder or confers on the holders thereof any additional rights.
4.15 LEASE-BACKS. La Quinta covenants and agrees that it will not, and
will not permit any Subsidiary or Unincorporated Venture to, enter into any
arrangements, directly or indirectly, with any Person, whereby La Quinta, any
Subsidiary or Unincorporated Venture shall sell or transfer any property,
whether now owned or hereafter acquired, used or useful in its business, and
thereafter rent or lease the property sold or transferred in an aggregate amount
(determined at the greater of fair market value or net book value) in excess of
$20,000,000 while this Agreement is in effect.
4.16 ENVIRONMENTAL MATTERS.
(a) La Quinta covenants and agrees that it will not, and will not permit
any of its Subsidiaries or Unincorporated Ventures to, use, generate,
manufacture, produce, store, release, discharge or dispose of on, under or about
any real property owned or leased by La Quinta or any of its Subsidiaries or
Unincorporated Ventures (such owned or leased real property, the "PROPERTY"),
or transport to or from the Property, any Hazardous Substance (as defined
below), or (to the extent within La Quinta's or such Subsidiary's or
Unincorporated Venture's control) permit any other Person to do so, where such
could reasonably be expected to have a Material Adverse Effect.
(b) La Quinta shall keep and maintain and shall cause each Subsidiary
and Unincorporated Venture to keep and maintain, the Property in compliance with
any Environmental Law (as defined below) where the failure to do so could
reasonably be expected to have a Material Adverse Effect.
(c) In the event that any investigation, site monitoring, containment,
cleanup, removal, restoration or other remedial work of any kind or nature (the
"REMEDIAL WORK") with respect to the Property is required to be performed by
La Quinta or any of its Subsidiaries or Unincorporated Ventures under any
applicable local, state or federal law or regulation, any judicial order, or by
any governmental entity because of, or in connection with, the current or future
presence, suspected presence, release or suspected release of a Hazardous
Substance in or into the air, soil, groundwater or surface water at, on, under
or within the Property (or any portion thereof), La Quinta or such Subsidiary or
Unincorporated Venture shall within thirty (30) days after written demand for
performance thereof by the Banks (or such shorter period of time as may be
required under any applicable law, regulation, order or agreement), commence and
thereafter diligently prosecute to completion, all such Remedial Work.
(d) La Quinta will defend, indemnify and hold harmless the Banks, and
their respective employees, agents, officers and directors, from and against any
claims, demands,
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penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising out
of, or in any way relating to the violation of, noncompliance with or liability
under any Environmental Law applicable to the operations of La Quinta or any
Subsidiary or Unincorporated Venture or the Property, or any orders,
requirements or demands of Tribunal related thereto, including, without
limitation, attorneys' and consultants' fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor. This indemnity shall continue in
full force and effect regardless of the termination of this Agreement.
(e) As used herein, (i) "ENVIRONMENTAL LAW" means any federal, state
or local law, statute, ordinance, or regulation now or hereafter in effect
pertaining to health, industrial hygiene, or the environmental conditions on,
under or about the Property, and (ii) the term "HAZARDOUS SUBSTANCE" means
those substances included within the definitions of "HAZARDOUS SUBSTANCES",
"HAZARDOUS MATERIALS", "TOXIC SUBSTANCES", or "SOLID WASTE" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Sections 9601 ET SEQ., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Sections 6901 ET SEQ. and the Hazardous
Materials Transportation Act, 49 U.S.C. Sections 1801 ET SEQ., and in the
regulations promulgated pursuant to said laws, and such other substances,
materials and wastes which are or become regulated under applicable local,
state or federal law, or which are classified as hazardous or toxic under
federal, state, or local laws or regulations.
4.17 ERISA COMPLIANCE. La Quinta covenants and agrees that it shall,
and shall cause each Subsidiary and Unincorporated Venture to (i) at all times,
make prompt payment of all contributions required under all Plans and required
to meet the minimum funding standard set forth in ERISA with respect to its
Plans, (ii) after the discovery by an Authorized Officer, notify Banks
immediately of any fact, including, but not limited to, any Reportable Event
arising in connection with any of its Plans, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such Plan, together with a
statement, if requested by any Bank, as to the reason therefor and the action,
if any, proposed to be taken with respect thereto, and (iii) not permit any Plan
to be subject to any involuntary termination proceedings.
4.18 BUSINESS. La Quinta covenants and agrees that it will not, and
will not permit any Subsidiary or Unincorporated Venture to, engage in, directly
or through other Persons, any business other than the businesses now carried on
and other businesses directly related thereto.
4.19 DEBT. La Quinta covenants and agrees that it will not, and will
cause each Subsidiary and Unincorporated Venture to not, (i) default, beyond any
notice, grace or cure period, in any payment equal to or exceeding the aggregate
amount of $1,000,000 of principal of or interest on any Debt with respect to
which recourse may be made against La Quinta or any Subsidiary or Unincorporated
Venture beyond any period of grace provided with respect thereto, or (ii)
default, beyond any notice, grace or cure period, in the performance of any
other agreement, term, covenant or condition contained in any agreement or
instrument under or by
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which any such Debt, the unpaid principal amount of which then equals or exceeds
$1,000,000 is created, evidenced or secured if the effect of such default is to
cause such Debt to become due before its stated maturity.
4.20 BANK DEBT. La Quinta covenants and agrees that it will not, and
will cause each Subsidiary to not, (i) default in any payment of principal of or
interest on any Bank Debt beyond any grace period with respect thereto, or (ii)
default, beyond any notice, grace or cure period, in the performance of any
other covenant or agreement contained in any Bank Debt or made by La Quinta
under or in connection with any Bank Debt, if the effect of such default is to
cause such Bank Debt to become due before its stated maturity.
4.21 TRANSACTIONS WITH AFFILIATES. La Quinta covenants and agrees that
it will not, and will not permit any Subsidiary or Unincorporated Venture to,
directly or indirectly, enter into any transaction (including, but not limited
to, the sale or exchange of property or the rendering of service) with any of
its Affiliates, other than in the ordinary course of business and upon fair and
reasonable terms no less favorable than La Quinta or any Subsidiary or
Unincorporated Venture could obtain or could become entitled to in an
arm's-length transaction with a Person which was not an Affiliate.
SECTION 5. INFORMATION AS TO LA QUINTA.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS BY LA QUINTA. La Quinta
will deliver to each Bank which has Bank Debt:
(A) As soon as practicable after the end of each of the first three
quarterly fiscal periods in each fiscal year of La Quinta, and in
any event within 45 days thereafter, duplicate copies of
(1) Combined balance sheets, statements of earnings, shareholders'
equity and cash flows for the portion of the fiscal year
ending with such quarter; all in reasonable detail and
accompanied by an Officer's Certificate certifying that the
aforementioned financial statements present fairly the
financial position of La Quinta (Combined Company) at the end
of such quarter and the results of operations and the changes
in financial position for the portion of the fiscal year
ending with such quarter, determined in accordance with GAAP;
(2) An Officer's Certificate certifying to the amount of Bank Debt
outstanding at the end of the fiscal quarter identified on an
EXHIBIT A attached thereto, which for the purpose of this
Agreement shall become EXHIBIT A hereto; and
(3) An Officer's Certificate (with calculations and a new EXHIBIT
E attached thereto) certifying (i) as to any increases or
reductions in interest in the
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Significant Investments, and (ii) compliance with Sections
4.4, 4.5, 4.9, 4.10 and 4.11.
(B) As soon as practicable after the end of each fiscal year of La
Quinta, and in any event within 120 days thereafter, duplicate
copies of:
(1) Combined balance sheets, statements of earnings, shareholders'
equity and cash flows of La Quinta for such year; all in
reasonable detail, prepared on a basis consistent with the
financial statements delivered to all Banks in prior periods
and accompanied by an unqualified opinion and report of KPMG
Peat Marwick, or other independent certified accountants of
recognized standing selected by La Quinta and reasonably
consented to by Banks, which report shall state that no
default under this Agreement and no condition or event which
after notice or lapse of time or both would constitute a
default under this Agreement has come to the knowledge of such
accountants or, if such is not the case, the details of such
default or such condition or event;
(2) Operating statements for such year and the preceding two years
with respect to all properties pledged to any Bank to secure
Bank Debt;
(3) An Officer's Certificate certifying to the amount of Bank Debt
outstanding at the last day of such year identified on an
EXHIBIT A attached thereto, which for the purpose of this
Agreement shall become EXHIBIT A hereto; and
(4) An Officer's Certificate (with calculations and a new EXHIBIT
E attached thereto) certifying (i) as to any increases or
reductions in interest in the Significant Investments, and
(ii) compliance with Sections 4.4, 4.5, 4.9, 4.10 and 4.11.
(C) As soon as practicable after La Quinta or any Subsidiary files with
the S.E.C. any of the following documents and in any event within 10
days thereafter, a copy of:
(1) Any final Registration Statement filed for the registration of
any securities under the Securities Act of 1933, as amended
(except a Registration Statement on Form S-8 for the
registration of stock to be issued in connection with any
Stock Plan);
(2) Each Annual and Periodic Report filed under Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended;
(3) Each definitive Proxy Statement filed pursuant to the
Securities Exchange Act of 1934, as amended; and
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together with any other document filed with the S.E.C. or the New
York Stock Exchange, Inc., as may be requested by any Bank.
(D) Upon request by any Bank, copies of the following:
(1) Each annual report/return, as well as all schedules and
attachments required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the
regulations promulgated thereunder, in connection with each of
its Plans for each Plan year; and
(2) Such additional information concerning any of its Plans as may
be reasonably requested.
(E) Notice to each Bank which has Bank Debt that any warranty or
representation made by La Quinta contained in any instrument or
document delivered pursuant to the Bank Debt shall have been
incorrect in any material respect when made not later than one
business day after the discovery or awareness thereof by an
Authorized Officer.
(F) Promptly, notice to each Bank which has Bank Debt of the breach of
any covenant contained in Section 4.19 hereof.
(G) With reasonable promptness, such other data and information as from
time to time may be reasonably requested by any Bank.
(H) Notwithstanding anything in this Section 5.1 to the contrary, (i) if
the terms of any Subordinated Debt of La Quinta requires delivery of
Parent Company financial statements and (ii) any Bank shall request
delivery of Parent Company financial statements, La Quinta shall
also deliver to such Bank the financial statements required to be
delivered pursuant to (1) Section 5.1(A) on a Parent Company basis
within 60 days after the end of the first three quarterly fiscal
periods of La Quinta and (2) Section 5.1(B) on a Parent Company
basis within 120 days after the end of each fiscal year of La
Quinta.
5.2 OFFICER'S CERTIFICATE. Each set of financial statements delivered
pursuant to Subsection 5.1(A) and (B) shall be accompanied by an Officer's
Certificate stating whether there exists on the date of such certificate any
condition or event which then constitutes, or which after notice or lapse of
time or both, would constitute, a breach of any covenant herein, and if any such
condition or event then exists, specifying the nature and period of existence
thereof and the action La Quinta is taking or proposes to take with respect
thereto.
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SECTION 6. DEFAULT.
La Quinta hereby covenants, acknowledges and agrees that the failure of La
Quinta, any Subsidiary or Unincorporated Venture to perform or observe (i) any
covenant contained in Sections 4.3, 4.4, 4.5, 4.6, 4.7, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, 4.19, 4.20, or 4.21 of this Agreement or (ii) any covenant
contained in Sections 4.1, 4.2, 4.8, 4.16, 4.17 or 4.18 failure to perform or
observe any such covenant has become known to an Authorized Officer or (b)
written notice thereof shall have been given by any Bank to La Quinta or (iii)
any other covenant contained in this Agreement to be performed or observed by it
and such failure continues for a period of 30 days after any Bank has given
written notice specifying such failure to La Quinta, shall be deemed, subject to
the waiver provisions of Section 7.2 hereof, to be a default or event of default
(however designated) under any Bank Debt, notwithstanding the specific
enumeration of the specific defaults or events of default with respect to such
Bank Debt, and any Bank may perform all rights and remedies granted such Bank
under the Bank Debt owing to such as if a default or event of default
specifically enumerated in such Bank Debt had occurred. La Quinta further
acknowledges and agrees that the covenants set forth in this Agreement and the
effect of the failure to perform such covenants as set forth in this Section 6
shall be deemed to be incorporated by reference in such Bank Debt, MUTATIS
MUTANDIS. The grace periods provided for in this Section 6 are in lieu of and
not in addition to any grace periods provided with respect to any Bank Debt.
SECTION 7. MISCELLANEOUS.
7.1 NOTICE. All notices, requests, consents and demands shall be in
writing and shall be delivered by hand or overnight courier service, mailed or
sent by telecopy, to the respective addresses specified below, or, as to any
party, to such other address as may be designated by it in written notice to all
other parties. All notices, requests, consents and demands hereunder shall be
deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by telecopy, or if mailed, on the earlier of
actual receipt or three (3) days after being mailed by certified mail, return
receipt requested, postage prepaid, addressed as aforesaid.
La Quinta Inns, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President - Treasurer
with a copy to:
La Quinta Inns, Inc.
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Office of General Counsel
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First Interstate Bank of Texas, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇'▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
7.2 AMENDMENT, WAIVER, CONSENTS AND APPROVALS. This Agreement may be
amended, and the observance of any provision of this Agreement may be waived and
consent or approval to any action described in this Agreement may be granted,
only with the written consent of La Quinta and Banks holding in aggregate at
least 66-2/3% in principal amount of the Bank Debt as of the last day of the
month preceding the month in which such written amendment, waiver, approval or
consent is requested; provided, however, that no such amendment, waiver,
approval or consent, without the written consent of all of the Banks, shall (i)
change this Section 7.2 or (ii) waive, modify or otherwise affect compliance
with Section 4.20 hereof. All Banks shall receive in writing the request for
any waivers, modifications, amendments, approvals or consents of any of the
provisions hereof.
7.3 NOTICE OF DEFAULT ON BANK DEBT. Each Bank agrees to give prompt
notice to each other Bank of (i) any default in the payment of principal of or
interest on any Bank Debt beyond any period of grace with respect thereto, (ii)
any default in the performance of any other agreement, term, covenant or
condition contained in any Bank Debt beyond any period of grace provided with
respect thereto and (iii) any default in the performance of any covenant of La
Quinta set forth in this Agreement. Each Bank agrees to simultaneously deliver
to each other Bank a copy of any notice delivered to La Quinta pursuant to
Section 6 hereof. Each Bank shall use its best efforts to deliver the notices
provided for in this Section 7.3; however, no Bank shall have any liability to
any other Bank for failing to comply with this Section 7.3.
7.4 CONFLICTS. In the event of any conflict between the terms of this
Agreement and the terms of any Bank Debt with respect to the subject matter
contained herein, the terms and provisions of this Agreement shall control and
prevail.
7.5 PAYMENT OF EXPENSES. La Quinta will pay all reasonable expenses
of the Banks, including, without limitation, the reasonable fees, expenses and
disbursement of counsel, incurred in connection with the transactions
contemplated by this Agreement.
7.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas and the laws of the United
States.
7.7 BINDING UPON SUCCESSORS. This Agreement shall be binding upon
La Quinta so long as any Bank Debt is outstanding, and each of the Banks and
their respective successors and assigns, and shall inure to the benefit of La
Quinta and the Banks and successors and assigns of the Banks, except that La
Quinta shall not have the right to assign any of its rights or obligations
hereunder without the written consent of all the Banks.
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7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart. It is not necessary that
each Bank execute the same counterpart, so long as counterparts are executed by
La Quinta and each Bank.
7.9 TERMINATION AND EFFECTIVENESS OF THIS AGREEMENT. This Agreement
shall remain in full force and effect so long as there is any Bank Debt
outstanding. At such time as there is no longer any Bank Debt outstanding, this
Agreement shall terminate and be of no further force and effect.
7.10 ADJUSTMENT OF PERCENTAGES. The percentages of each Bank set forth
on EXHIBIT A hereto shall be automatically adjusted subsequent to the date of
this Agreement as a result of (i) any payment or prepayment of any Bank Debt,
(ii) any renewals, extensions, or refinancings of Bank Debt among the Banks,
(iii) participations in Bank Debt sold by one Bank to another Bank or any
purchase or assumption of Bank Debt between or among Banks, or (iv) assignments
of Bank Debt pursuant to Section 7.13 hereof; otherwise, there shall be no
adjustments to the percentages set forth on EXHIBIT A. Further, except as set
forth in Section 7.13 hereof, no other Person may become a party to this
Agreement without the prior written consent of the Banks.
7.11 EXCEPTIONS TO COVENANTS. La Quinta shall not be deemed to be
permitted to take any action or fail to take any action which is permitted as an
exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
7.12 CONFIDENTIALITY. Each Bank agrees (on behalf of itself and each
of its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by La Quinta pursuant to this Agreement which is identified by La
Quinta as being confidential at the time the same is delivered to the Banks,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the Banks, (iii) to bank examiners, auditors or
accountants of any Bank, (iv) any other Bank, (v) in connection with any
litigation to which any one or more of the Banks is a party, provided, further,
that unless specifically prohibited by applicable laws or court order, each Bank
agrees, prior to disclosure thereof, to notify La Quinta of any request for
disclosure of any such non-public information (x) by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of La Quinta or any Subsidiary or
Unincorporated Venture or (y) pursuant to legal process, or (vi) to any
participant (or prospective participant) of any Bank Debt so long as such
participant (or prospective participant) first executes and delivers to the
respective Bank an agreement (a "CONFIDENTIALITY AGREEMENT") in substantially
the form of EXHIBIT F hereto; and provided finally that in no event shall any
Bank be obligated or required to return any materials
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furnished by the Company. The obligations of each Bank under this Section 7.12
shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of any Bank Debt initially signed and
delivered by such Bank to La Quinta prior to the date hereof.
7.13 ASSIGNMENT. Each Bank may assign to one or more financial
institutions or funds organized under the laws of the United States, or any
state thereof, or under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development, or a political
subdivision of any such country, which is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
(each, an "Assignee") its rights and obligations under the Bank Debt owned by
such Bank and its rights under this Agreement subject, to the extent applicable,
to the terms and provisions of Section 11.6 of the Credit Agreement. Upon the
effectiveness of such assignment, (i) the assignee Bank shall be party hereto
and, to the extent that rights hereunder have been assigned to it, have the
rights of a Bank hereunder and (ii) the assigning Bank shall, to the extent that
rights hereunder have been assigned by it, relinquish such rights under this
Agreement.
7.14 ACCOUNTING TERMS. All accounting terms used herein and not
otherwise defined herein shall be construed in accordance with GAAP, and all
financial computations and determinations shall be made on a Combined basis.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of September 12, ▇▇▇▇
▇▇ ▇▇▇▇▇▇ INNS, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
President-Treasurer
The following Subsidiaries of La Quinta
hereby acknowledge and agree to the covenants
and restrictions set forth herein by signing
below:
LA QUINTA REALTY CORP.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LA QUINTA PLAZA, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LA QUINTA FINANCIAL CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
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LA QUINTA INVESTMENTS, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LQI ACQUISITION CORPORATION
By:________________________________
Its:_______________________________
LQM OPERATING PARTNERS, L.P.
By: La Quinta Realty Corp., its General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LA QUINTA MOTOR INNS, LIMITED PARTNERSHIP
By: La Quinta Realty Corp., its General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
- 24 -
LQM OPERATING PARTNERS, L.P.
By: La Quinta Realty Corp., its General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LQ-BIG APPLE JOINT VENTURE
By: La Quinta Inns, Inc., its Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President-Treasurer
By: La Quinta Investments, Inc., its Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LQ-LNL LIMITED PARTNERSHIP
By: La Quinta Inns, Inc., its Managing General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President-Treasurer
- 25 -
LQ-EAST IRVINE JOINT VENTURE
By: La Quinta Inns, Inc., its Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President-Treasurer
By: La Quinta Investments, Inc., its Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LQ-INVESTMENTS I
By: La Quinta Inns, Inc., its Managing General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President-Treasurer
By: La Quinta Investments, Inc., a General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
- 26 -
LQ-INVESTMENTS II
By: La Quinta Inns, Inc., its Managing General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President-Treasurer
By: La Quinta Investments, Inc., a General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LA QUINTA INNS OF LUBBOCK, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LA QUINTA INNS OF PUERTO RICO, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LQ - BATON ROUGE JOINT VENTURE
By La Quinta Inns, Inc., its
Managing General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
- 27 -
LA QUINTA DENVER - PEORIA STREET, LTD.
By: La Quinta Inns, Inc.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President-Treasurer
LA QUINTA DEVELOPMENT PARTNERS, L.P.
By: La Quinta Inns, Inc.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President-Treasurer
FIRST INTERSTATE BANK OF TEXAS, N.A.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By:_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:_____________________________
- 28 -
