EXHIBIT 10.6
CONSOLIDATED AMENDMENT TO
LEASE AGREEMENTS
AND MASTER AGREEMENT
Dated as of March 31, 1999, By and Among:
EQUITY INNS, INC., a Tennessee corporation ("XXXX"),
EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited partnership ("EIP"),
EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P., a Tennessee limited
partnership ("EIP/WV"),
EQI FINANCING PARTNERSHIP I, L.P., a Tennessee limited partnership ("EQIF"),
EQUITY INNS PARTNERSHIP II, L.P., a Tennessee limited partnership ("EIP-II"),
CROSSROADS/MEMPHIS PARTNERSHIP, L.P., a Delaware limited partnership
("Crossroads/Memphis"),
STATE COLLEGE BBQ/CONCORD JOINT VENTURE ("Crossroads/State College"),
CROSSROADS/MEMPHIS FINANCING COMPANY, L.L.C., a Delaware limited
liability company ("Crossroads Finance"),
CROSSROADS FUTURE COMPANY, L.L.C., a Delaware limited liability company
("Crossroads/Future"),
PATRIOT AMERICAN HOSPITALITY, INC., a Delaware
corporation, successor by merger to Interstate Hotels
Company ("Patriot"),
INTERSTATE HOTELS, LLC, a Delaware limited liability
company, successor by merger to Interstate Hotels
Corporation ("IH-LLC"),
CROSSROADS HOSPITALITY COMPANY, L.L.C., a Delaware limited liability
company ("Crossroads Hospitality"), and
INTERSTATE HOTELS MANAGEMENT, INC., a Maryland corporation
("Interstate")
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
THIS CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS AND MASTER AGREEMENT
("Amendment"), dated as of March 31, 1999, by and among EQUITY INNS, INC.,
a Tennessee corporation ("XXXX"), EQUITY INNS PARTNERSHIP, L.P., a
Tennessee limited partnership ("EIP"), EQUITY INNS/WEST VIRGINIA
PARTNERSHIP, L.P., a Tennessee limited partnership ("EIP/WV"), EQI
FINANCING PARTNERSHIP I, L.P., a Tennessee limited partnership ("EQIF"),
EQUITY INNS PARTNERSHIP II, L.P., a Tennessee limited partnership
("EIP-II"), CROSSROADS/MEMPHIS PARTNERSHIP, L.P., a Delaware limited
partnership ("Crossroads/Memphis"), STATE COLLEGE BBQ/CONCORD JOINT VENTURE
("Crossroads/State College"), CROSSROADS/MEMPHIS FINANCING COMPANY, L.L.C.,
a Delaware limited liability company ("Crossroads Finance"), CROSSROADS
FUTURE COMPANY, L.L.C., a Delaware limited liability company
("Crossroads/Future"), PATRIOT AMERICAN HOSPITALITY, INC., a Delaware
corporation, successor by merger to Interstate Hotels Company ("Patriot"),7
INTERSTATE HOTELS, L.L.C., a Delaware limited liability company, successor
by merger to Interstate Hotels Corporation ("IH-LLC"), CROSSROADS
HOSPITALITY COMPANY, LLC ("Crossroads Hospitality"), and INTERSTATE HOTELS
MANAGEMENT, INC., a Maryland corporation ("Interstate"), recites and
provides as follows:
WITNESSETH:
WHEREAS, Interstate Hotels Corporation ("IH Corp."), Crossroads/Future,
Crossroads/Memphis, EIP and XXXX entered into that certain Master Agreement
dated November 4, 1996, as amended by First Amendment to Master Agreement
dated as of November 15, 1996 and Second Amendment to Master Agreement
dated as of February 6, 1997 (collectively, the "Master Agreement"); and
WHEREAS, under the Master Agreement, EIP, EIP/WV, EQIF and various
Affiliates (collectively, the "Lessors"), and Crossroads/Memphis,
Crossroads/State College, Crossroads Finance and Crossroads/Future
(collectively, the "Lessees") entered into various leases (collectively,
together with any future Leases between XXXX and its Affiliates and the
Lessees and their Affiliates, the "Leases") with respect to various hotels,
a complete list of the existing hotels currently under lease being attached
hereto as Exhibit A (collectively, the "Hotels"); and
WHEREAS, under the Master Agreement, IH Corp. and Interstate Hotels
Company ("IH Co.") entered into various lease guaranties (collectively, the
"Existing Lease Guarantees") guaranteeing the obligations of the Lessees
under the Leases; and
WHEREAS, effective June 2, 1998, IH Co. merged into Patriot and IH
Corp. merged into IH-LLC (together, the "Merger");
WHEREAS, Patriot and the company with which its shares are currently
paired and trade together, Wyndham International, Inc. ("Wyndham"), intend
to divest Interstate along with IH-LLC, Crossroads/Memphis, Crossroads
Finance, Crossroads Future, Crossroads Hospitality, all of which, together
with certain other entities, Patriot and Wyndham currently intend will be
partially or wholly-owned, direct or indirect subsidiaries of Interstate in
a manner which satisfies Patriot's and Wyndham's obligations in that regard
to Marriott International, Inc., ("Marriott") pursuant to a Settlement
Agreement dated as of May 27, 1998 (the "Settlement Agreement") among
Patriot, Wyndham, Marriott and certain other parties as those obligations
have been previously and are subsequently amended from time to time
pursuant to amendments to the Settlement Agreement (the "Divestiture"),
which Divestiture shall be deemed to be consummated on the date neither
Patriot nor Wyndham maintains effective management control over Interstate;
WHEREAS, Interstate shall after the Divestiture control the Lessees and
Crossroads Hospitality; and
WHEREAS, certain disputes have arisen among the parties and the parties
desire to resolve any and all such disputes between the Equity Group (as
hereinafter defined) on the one hand and the Patriot/Interstate Group (as
hereinafter defined) on the other; and
WHEREAS, the parties wish to amend the Master Agreement, the Leases and
the Existing Lease Guarantees in the manner set forth in this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the
Equity Group and the Patriot/Interstate Group hereby agree as follows:
1. Definitions. XXXX, EIP, EIP/WV, EQIF, EIP-II and their Affiliates are
hereinafter sometimes referred to as the "Equity Group." Patriot,
Interstate, IH-LLC, Crossroads/Memphis, Crossroads/State College,
Crossroads Finance Crossroads/Future and Crossroads Hospitality and their
Affiliates are hereinafter sometimes referred to as the "Patriot/Interstate
Group." Interstate together with those entities which will be partially or
wholly owned, direct or indirect subsidiaries of Interstate following the
Divestiture are sometimes referred to as "Interstate Group." Unless
otherwise defined herein, capitalized terms used in this Amendment have the
definitions ascribed to them in the Master Agreement or the Leases, as
applicable.
2. Termination of Right of First Offer.
(a) The Right of First Offer, the Development Option and the right of first
offer of EIP to purchase IHC First Offer Hotels (all as created by and
defined under Section 1.5, 1.6 and 1.7 of the Master Agreement,
respectively) are hereby irrevocably and unconditionally terminated, null
and void and of no further force or effect, except as provided in this
Section 2 and in Section 3 below. The Right of First Offer shall continue
in full force and effect with respect to the following two Hotels: (i) the
Homewood Suites being constructed in Orlando, Florida (the "Orlando
Hotel"), currently under contract for purchase by EIP, and (iii) the
Homewood Suites being constructed in Grand Avenue, Chicago, Illinois (the
"Grand Ave Hotel"), currently under contract for purchase by EIP, provided,
however, that, (a) the Equity Group shall offer each of the Orlando Hotel
and the Grand Ave Hotel under the Right of First Offer within 30 days after
the date the Equity Group consummates the purchase of such applicable Hotel
and (b) in the event the Right of First Offer is exercised with respect to
one or more of such two hotels, then the form of Lease required by the
Master Agreement shall be modified to incorporate the amendments to the
Leases created by this Amendment. If EIP or an Affiliate offers to lease
both the Orlando Hotel and the Grand Ave Hotel to Crossroads Future
pursuant to the Right of First Offer, then the Right of First Offer shall
terminate and be of no further force or effect after the procedures in the
Master Agreement with respect to the Right of First Offer have been met
with respect to the latter of the two hotels so offered.
(b) The Right of First Offer has been, is and shall forever remain
irrevocably and unconditionally waived, released and quitclaimed with
respect to the Hotel located in Boise, Idaho currently owned by EIP II.
(c) EIP II shall lease to Crossroads Future the Hotel located in Portland,
Oregon currently owned by EIP II in accordance with the economic terms
contained in the letter agreement dated April 20, 1998 related thereto, in
accordance with the form of lease agreement required by the Master
Agreement as amended by this Amendment. If the Lease for the Hotel located
in Portland, Oregon is entered into before the Divestiture, such Lease
shall be guaranteed by Patriot, Interstate (whose liability shall not be
effective until the Divestiture) and IH-LLC in the form of the Existing
Lease Guarantees, subject to automatic modification in accordance with this
Amendment upon Divestiture. If the Lease for the Hotel located in Portland,
Oregon is entered into after the Divestiture, such Lease shall be
guaranteed by Interstate and IH-LLC in the form of the Existing Lease
Guarantees as amended by this Amendment. Until such time as the lease for
the Portland, Oregon Hotel becomes effective, Crossroads Hospitality shall
continue to manage such Hotel pursuant to the management agreement
currently in effect.
3. Possible Survival of Right of First Offer. If, for any reason, EIP or
one of its Affiliates fails to offer to lease under the Right of First
Offer both the Orlando Hotel and the Grand Ave Hotel to Crossroads Future
pursuant to Section 2(a) above on or before January 1, 2000, then the Right
of First Offer shall continue in full force and effect with respect to
future Acquisition Hotels and Development Hotels until EIP or its
Affiliates have offered to lease to Crossroads Future, pursuant to the
Right of First Offer, Acquisition Hotels and Development Hotels which in
the aggregate at least equal in value and anticipated leakage the amount
allocated to whichever or both of the Orlando Hotel and Grand Ave Hotel
that are not offered to Crossroads Future pursuant to Section 2(a). For
purposes of this Section, the parties agree that value shall be measured by
the applicable gross purchase price paid by Equity Group and the
anticipated leakage from such Hotels, and that the value of the Grand Ave
Hotel is Thirty Million Dollars ($30,000,000) and the Orlando Hotel is
Twenty-Three Million Dollars ($23,000,000) and the leakage for each of such
Hotels is anticipated to be two and one-half percent (2.50%) of projected
gross revenues. If the Right of First Offer has not previously terminated
pursuant to Section 2(a) above, then the Right of First Offer shall
terminate and be of no further force or effect after the procedures in the
Master Agreement with respect to the Right of First Offer have been met
with respect to Acquisition Hotels and Development Hotels which satisfy in
the aggregate the value and anticipated leakage requirements of this
Section.
4. Interstate Board of Directors.
By separate board membership agreement of even date herewith (the "BOD
Agreement"), effective as of the date of consummation of the Divestiture,
Interstate has agreed that, so long as so desired by XXXX, the board of
directors of Interstate shall nominate and recommend either Xxxxxxx X.
XxXxxxx, Xx., Xxxxxx X. Silver or such other person serving as the Chief
Executive Officer or President of XXXX to be appointed to the initial board
of directors of Interstate with a term of two years.
5. Right of First Offer to Purchase the Leases.
(a) Commencing upon the effective date of the Divestiture and so long as
any of the Leases are still in full force and effect, then the Interstate
Group hereby grants to XXXX, or its designated Affiliate, a right of first
offer (the "RFO") in the event the Interstate Group desires to sell (a
"Sale") to an unaffiliated third party all of the Leases or all of the
direct equity interests in all of the Lessees, whether through an asset
sale of such equity interests or a merger of all of the Lessees into an
unaffiliated third party (the "RFO Assets"). The Equity RFO shall not apply
to or be triggered by any other transaction involving the Interstate Group,
including, without limitation, any merger, reorganization, sale of equity,
debt or convertible securities or any other similar transaction involving
Interstate or any other subsidiary of Interstate, such as IH-LLC,
Crossroads Hospitality or any parent of one or more of the Lessees, the
sale of less than all of the Leases or the sale of less than 75% of the
direct equity interests in all the Lessees or the sale of less than 75% of
the direct equity interests in less than all the Lessees, provided,
however, that the Interstate Group agrees not to sell less than all of the
Leases to any unaffiliated third party.
(b) The Interstate Group shall promptly notify XXXX of such a proposed Sale
and submit to XXXX a notice of offer (the "Notice"), including all
marketing or related material prepared by the Interstate Group with respect
to such proposed Sale, together with the proposed economic terms with
respect to such Sale (the "Proposed Economic Terms"). Notwithstanding that
the Sale the Interstate Group desires to consummate with a third party
relates to assets or liabilities not related to the RFO Assets any Sale
offered to XXXX shall relate only to the RFO Assets and the Interstate
Group shall not enter into a Sale of the RFO Assets and other assets or
liabilities with a third party without first offering to XXXX under the RFO
to sell or terminate only the Leases or all of the direct equity interests
in all of the Lessees, as applicable, in accordance with Proposed Economic
Terms reasonably allocable only to the RFO Assets.
(c) XXXX or its designated Affiliate shall have 21 business days from the
receipt of the Notice (including all materials required to be sent
therewith) to either (i) accept in writing the offer contained in the
Notice to, at the option of XXXX, either purchase or terminate the
applicable Leases or purchase all of the direct equity interests in all of
the Lessees, as applicable, on the Proposed Economic Terms or (ii) propose
to the Interstate Group alternative economic terms and reach an agreement
with the Interstate Group as to such terms with respect to the RFO Assets.
(d) If XXXX or its designated Affiliate fails to accept in writing the
offer contained in the Notice to purchase or terminate the applicable
Leases on the Proposed Economic Terms, or if XXXX and the Interstate Group
fail to agree to alternative economic terms for the RFO Assets, within the
21 business day period described above, the Interstate Group may thereafter
dispose of the RFO Assets on terms no more favorable to the transferee than
the terms which XXXX has rejected, provided such disposition is consummated
within six months after the date of the Notice, and subject to any
limitations, consent requirements or prohibitions contained in the Master
Agreement or the Leases, which are not amended, modified or waived hereby
or by any future failure of XXXX to exercise the RFO. In the event the
Interstate Group desire to dispose of the RFO Assets on terms more
favorable to a transferee than those last offered to XXXX, then the
Interstate Group must offer to XXXX by a Notice setting forth the new
Proposed Economic Terms under the RFO.
(e) Notwithstanding any contrary provision in a Notice or Proposed Economic
Terms, XXXX or its designated Affiliate shall have 120 days to consummate a
purchase or termination (if applicable) of the RFO Assets under the RFO.
(f) By definition, the RFO shall not be applicable to the Divestiture or to
any directly related transaction.
6. Net Worth Amendment to the Leases.
Each of the Leases is hereby amended to add and include the following as
new Section 3.10 of each of the Leases (which provisions shall also be
included in the "New Lease Guarantees," as defined herein below, executed
and delivered by Interstate); provided, however, that such provisions shall
not be effective as to any of the Leases or the New Lease Guarantees until
consummation of the Divestiture. With respect to each of the Leases or the
New Lease Guarantees where a Third Party Consent (as hereinafter defined)
is required for the release of Patriot under the Existing Lease Guarantees
(as expressly provided in this Amendment below) the following new Section
3.10 shall not become effective until such time after the Divestiture when
such Third Party Consent is obtained and the automatic release of Patriot
from the Existing Lease Guarantee occurs:
"Section 3.10. Net Worth.
(a) As used in this Section, the following capitalized terms shall have the
following ascribed meanings:
(i) Credit Enhancement: shall mean an unconditional letter of credit,
obtained and maintained by and at the expense of the Lessee, in form
reasonably acceptable to Lessor, provided by a financial institution
reasonably acceptable to Lessor, for the benefit of the Lessor. The form of
any Credit Enhancement shall be subject to the reasonable approval of
Lessor, and any Credit Enhancement shall be subject to the reasonable
approval of Lessor's REIT tax counsel.
(ii) Credit Enhancement Amount: shall mean the aggregate amount that is
currently available (without material restriction) under all forms of
Credit Enhancement obtained by a Lessee to make payments due under this
Lease and all Other Leases to which it is a party.
(iii) Interstate: as used in this Section 3.10, shall mean
Interstate and its subsidiaries on a consolidated basis in accordance with
GAAP.
(iv) Liquid Assets Amount: shall mean, for Interstate, the sum
of (i) the Working Capital of Interstate and (ii) the lesser of the
aggregate GAAP book value and aggregate current fair market value of the
assets of Interstate, of the following types: (A) any contracts to lease or
manage hotels or other hospitality properties owned by parties other than
Lessor, Interstate and their Affiliates (the parties agree the term
"Affiliates" here does not include Patriot, Wyndham or any wholly or
partially owned subsidiary of Patriot and/or Wyndham, other than members of
the Interstate Group) readily convertible to cash without the consent of
any third party other than the owner of the hotel, (B) any hotels,
hospitality properties or other marketable real property owned by
Interstate and its Subsidiaries, and (C) to the extent reasonably
acceptable to Lessor, any other income-producing or readily marketable
tangible property, equity interests, securities or other investments
owned by Interstate. In the case of assets described in clause (ii) of the
preceding sentence, both the GAAP book value and the current fair market
value of any such assets shall be determined net of any indebtedness or
liabilities (including liability of Interstate under any guaranty, but
specifically excluding commitments under office space leases and unadvanced
indebtedness under any credit agreement entered into by Interstate) not
expressly subordinated to the payment of Rent on terms reasonably
acceptable to Lessor. Any disputes regarding the fair market value of an
asset will be resolved in accordance with the appraisal procedure set
forth in this Lease.
(v) Liquid Net Worth: shall mean the lesser of (i) the sum of
(A) the Net Worth of Interstate and (B) Lessee's Credit Enhancement Amount,
and (ii) the sum of (C) Interstate's Liquid Assets Amount and (D) the
Lessee's Credit Enhancement Amount, as reasonably approved by Lessor's REIT
tax counsel.
(vi) Minimum Liquid Net Worth: shall mean, as of any pertinent
date, an aggregate Liquid Net Worth for Interstate equal to not less than
fifteen percent of the Rent paid under this Lease and all Other Leases
(excluding the Other Leases then being guaranteed by Patriot, if any),
under the approved Operating Budgets prepared in conformity with this Lease
and the Other Leases (excluding the Other Leases then being guaranteed by
Patriot, if any) during the then current Fiscal Year, as increased from
time to time as (i) projected (budgeted) Rent under the Operating Budgets
increase for new Fiscal Years and (ii) new Other Leases, if any, become
effective, as reduced only as the Other Leases (excluding the Other Leases
then being guaranteed by Patriot, if any) expire or terminate.
(vii) Net Worth: shall mean, with respect to Interstate, the
excess of total assets over total liabilities, each to be determined in
accordance with GAAP, excluding, however, from the determination of total
assets: (a) unamortized goodwill, organizational expenses, research and
development expenses, trademarks, trade names, copyrights, patents, patent
applications and other similar intangibles; (b) all deferred charges that
are required to be capitalized in accordance with GAAP or unamortized debt
discounts and expense; (c) treasury stock; (d) securities which are not
readily marketable; (e) any write-up in the book value of any asset
resulting from a revaluation thereof, other than as recognized pursuant to
the terms of this Lease; (f) this Lease and any Other Leases); and (g) any
items (other than assets included in Liquid Assets Amount) that are not
included in clauses (a) through (f) above that are treated as intangibles
in conformity with GAAP.
(viii) Working Capital: shall mean the excess of Interstate's
current assets over Interstate's current liabilities, both as determined in
accordance with GAAP.
(b) Liquid Net Worth. At all times during the term of this Lease, the
Lessee shall cause Interstate to maintain an aggregate Liquid Net Worth in
an amount at least equal to the Minimum Liquid Net Worth.
(c) Limitation on Distributions. No dividends or other distributions (other
than distributions in the form of additional equity interests in
Interstate) shall, for any period, be declared, paid or set apart for
payment on any equity interest in Interstate, and no such equity interest
in Interstate shall be redeemed, purchased or otherwise acquired by
Interstate for any consideration (except by conversion into or exchange for
other equity interests in Lessee), unless, after giving effect to such
proposed distribution, (i) the Liquid Net Worth of Interstate equals or
exceeds the Minimum Liquid Net Worth then applicable to Interstate, and
(ii) no uncured monetary default of the lessee exists under this Lease or
Other Lease, nor any uncured default in the payment of Rent (including,
without limitation, estimated or actual monthly payments of Percentage
Rent) under this Lease or Other Lease (unless such dividend or other
distribution will be used to cure such default).
(d) Payments to Affiliates. Interstate shall not make, directly or
indirectly, any payments (for services or otherwise) to Affiliates of
Interstate unless, after giving effect to such proposed payment, (i) the
Liquid Net Worth of Interstate shall equal or exceed the Minimum Liquid Net
Worth then applicable to Interstate and (ii) no uncured monetary default of
any lessee exists under this Lease or Other Lease, nor any uncured default
in the payment of Rent (including, without limitation, estimated or actual
monthly payments of Percentage Rent) under this Lease or Other Lease.
(e) Default of Liquid Net Worth Covenants. If, during the term of this
Lease, Interstate fails to maintain its Minimum Liquid Net Worth and fails
to cure such failure within thirty days following notice thereof from the
Lessor to the Lessee, or if Interstate makes any distribution prohibited by
this Section, then such failure or distribution shall, at the option of the
Lessor, constitute an Event of Default under this Lease and the Other
Leases without any further notice, and the Lessor shall have the right to
exercise any rights and remedies therefor under this Lease, the Other
Leases, at law or in equity.
(f) Security Deposit. The Credit Enhancement shall be delivered by the
Lessee to the Lessor to be held as a security deposit (the "Security
Deposit") held by Lessor as collateral security, and not as prepaid rent,
in order to secure Lessor against any damages arising from Lessee's breach
of any of the terms, covenants or conditions of this Lease and any Other
Lease which is cross defaulted with this Lease. The Security Deposit, or so
much as is then remaining, shall be delivered or repaid to Lessee after the
expiration of this Lease, provided Lessee shall have made all payments and
performed all covenants and agreements required under this Lease, it being
reasonable for the Security Deposit to be retained by Lessor following the
expiration or other termination of this Lease until the expiration of the
period Lessee pays in full all Rent, as set forth herein. Lessor may
appropriate and apply the entire Security Deposit or so much thereof as may
be necessary to compensate Lessor for any breach under this Lease and any
Other Leases and Lessee upon demand shall forthwith restore the Security
Deposit to the required sum. In the event Lessor is required by the terms
of any mortgage or deed of trust encumbering the
Leased Property, or any part thereof, to turn over security deposits to the
mortgagee or beneficiary thereunder, Lessor shall have the right to
transfer any and all amounts being held by it as security deposits,
including the Security Deposit, to such creditor, or the new owner of the
Leased Property following any such sale or transfer, or to said mortgagee
or beneficiary (provided such mortgagee or beneficiary thereafter holds the
Security Deposit subject to the terms of this Lease), as the case may be,
and Lessor shall be relieved of any obligations to Lessee or otherwise with
respect to said amounts, provided Lessor has actually delivered the
Security Deposit to such creditor or new owner, mortgagee or beneficiary
and such party has agreed in writing with Lessee to hold the same subject
to the terms of this Lease. No mortgagee or purchaser of the Leased
Property in any foreclosure proceeding or pursuant to any deed in lieu of
foreclosure shall be liable to Lessee for any or all of such sum unless
Lessor has actually delivered it in cash to such mortgagee or purchaser."
7. Performance Standards Amendment to the Leases. Each of the Leases is
hereby amended to add and include the following as new Section 3.11 of each
of the Leases:
"Section 3.11. Performance Standards.
This Lease shall be subject to the following performance standards:
(a) Revenue Per Available Room. In the event the Hotel does not produce
revenue per available room in an amount equal to or greater than 93% of the
amount estimated for revenue per available room ("RevPAR") under the then
applicable Operating Budget for any two consecutive quarters, Lessor shall
give Lessee notice of a potential termination. If, in each of the two
following quarters, the Hotel continues to achieve a negative RevPAR
variance to the estimated amount of 7% or more, then Lessor shall have the
option at any time thereafter to terminate this Lease upon not less than
thirty days written notice of such termination to the Lessee, unless during
such thirty day period Lessee pays to Lessor, as additional Rent, an amount
equal to the sum the Lessor would have received as Rent during such period
had the Hotel maintained a revenue per available room equal to 93% of the
amount budgeted therefor minus the amount of Rent previously received by
the Lessor for such period. In the event the Hotel does not meet or exceed
the revenue per available room budgeted in the Operating Budget for any
Fiscal Year, then the threshold dollar amounts of Room Revenues then
included in the Revenues Computations shall not be adjusted under Section
3.1(e) to reflect any changes in the Consumer Price Index, but the Base
Rent shall be so adjusted. The performance standards and net worth
requirement shall not be a factor in making or agreeing to the estimates
required in an Operating Budget.
(b) Revenue Per Available Room Yield Index. In the event the RevPAR yield
index, as reported by the STR reports prepared by Xxxxx Travel Research,
declines by five or more percentage points for any calendar year compared
with the previous calendar year, or in the event the Hotel performs at
below 100% of such RevPAR yield index for any four consecutive calendar
quarters, then in either event, the Lessor shall have the option at any
time thereafter to terminate this Lease upon thirty days written notice
thereof to the Lessee, unless during such thirty day period the Lessee
pays to the Lessor, as additional Rent, an amount equal to the amount of
Rent Lessor would have received for such period had the performance of the
Hotel met the criteria provided earlier in this sentence minus the amount
of Rent the Lessor actually received for such period. The STR Competitive
Set (as reported by the STR reports prepared by Xxxxx Travel Research) used
for RevPAR yield index comparisons will be agreed to by the Lessor and the
Lessee within 30 days after the date hereof, and thereafter during the
approval process for the Operating Budget and no changes in such
competitive set will be made until approval of the Operating Budget for
the next fiscal year, taking into account new hotels within the applicable
market and major reductions of demand within such applicable market.
During the budgeting process, Lessor and Lessee will take into account new
supply entering the market and the occurrences of a major element of demand
exiting a market. Neither the failure to meet any performance standard
under any Lease nor the termination of a Lease by Lessor or Lessee based
upon the failure to meet a performance standard shall cause a default or
Event of Default under this Lease or any Other Lease.
(c) Lessee Termination Right. In the event the Lessee fails either of the
performance standards contained in sections (a) or (b) immediately above
with respect to this Lease, then the Lessee may elect to terminate this
Lease by written notice thereof made within 30 days after such failure,
effective ninety (90) days after Lessee gives notice of its election to
terminate, all provided the Lessee timely pays to the Lessor on or before
such effective date, in immediately available funds, a termination fee
therefor equal to (A) the total estimated Rent for this Lease under the
Operating Budget if terminated during the first Fiscal Year, (B) the total
Rent accrued during the first Fiscal Year if terminated during the second
Fiscal Year, (C) 80% of the total Rent accrued during the Fiscal Year prior
to the date of termination if terminated during the third or fourth Fiscal
Year, (D) 60% of the total Rent accrued during the Fiscal Year prior to the
date of termination if terminated during the fifth or sixth Fiscal Year,
(E) 40% of the total Rent accrued during the Fiscal Year prior to the date
of termination if terminated during the seventh or eighth Fiscal Year and
(F) 20 % of the total Rent accrued during the Fiscal Year prior to the date
of termination if terminated during any Fiscal Year after the eighth Fiscal
Year.
(d) Expenditures. The Lessor shall have the right to terminate this Lease
upon thirty (30) days' written notice thereof if during any fiscal year the
Lessee actually expends or incurs in accordance with GAAP less than 95% of
the dollar amounts contained in the Operating Budget for sales and
marketing expenses, (excluding any Franchisor Advertising and Marketing
Assessment) and property maintenance.
(e) Personnel. The Lessor shall have the right to terminate this Lease upon
thirty (30) days' written notice thereof to the Lessee in the event any
general manager or director of sales of the Hotel is transferred to another
hotel or similar property owned, leased, or managed by Interstate, the
Lessee or an affiliate of the Lessee in the same market without the
consent of the Lessor, which consent shall not be unreasonably withheld,
delayed or conditioned and such person is not transferred back to the Hotel
within fifteen (15) days' written notice thereof from Lessor."
(f) Termination as Sole Remedy. Lessor's sole remedy in the event of any
failure to meet a performance standard pursuant to (a), (c) or (e) above
shall be the termination of the Lease in accordance with this Section
(absent any other Event of Default, for which the Lessor retains all its
rights and remedies). Neither the failure to meet any performance standard
under any Lease nor the termination of a Lease by Lessor or Lessee based
solely upon the failure to meet a performance standard shall cause a
default or Event of Default under any Other Lease. The Lessor shall not
incur any Termination Payment as a result of a termination of the Lease
under this section.
8. Outparcels, Leases, Licenses and Amendment to the Leases. Each of the
Leases is hereby amended to add and include the following as new Section
34.5 of each of the Leases:
"Section 34.5 Outparcels, Leases and Licenses. The Lessor, without the
consent of the Lessee, shall have the right to (a) with respect to the
Hotels listed on Exhibit B attached hereto, develop, subdivide, lease,
sell, construct, operate or maintain improvements on that portion of the
Land, the approximate acreage of which is listed on Exhibit B hereto,
provided the intended use of such portion of the Land would not materially
interfere with the operations of the Hotel (as determined by Lessee in its
reasonable discretion), and (b) lease or license portions of the Leased
Property for telecommunications and similar or related facilities,
billboards or other uses, to the extent such leases or licenses do not
materially interfere with the operations of the Hotel; provided, however,
that in the event such lease or license is for a rooftop telecommunications
antennae, then the revenues received by the Lessor shall be distributed 50%
to the Lessee and 50% to the Lessor. The Lessee agrees to (i) cooperate
with Lessor or any designee of Lessor with respect to any outparcel or
lease or license which is in compliance with the provisions of this section
and (ii) terminate this Lease as to any outparcel created under this
section."
9. Additional Rent. As additional 1999 incentive Rent under the Leases
(excluding the "CMBS Leases," as defined herein below), and not as a credit
against other Rent due under such Leases, the Lessees shall pay to the
Lessors, simultaneously with the execution hereof, in immediately available
funds by federal wire transfer, an aggregate amount equal to $2,000,000.
10. Sales\Termination Payments.
(a) The Lessors may market for sale the hotels listed on Exhibit C attached
hereto (individually, a "Sale Hotel," and collectively, the "Sale Hotels").
The applicable Lessor and Lessee shall terminate the applicable Lease upon
the closing of each such sale and release each other from their obligations
under such Lease accruing after the date of termination. Notwithstanding
the provisions of each of the Leases, each applicable Lessee hereby
unconditionally and irrevocably waives any (i) right of first refusal or
right of first offer to purchase the applicable Sale Hotel and (ii) right
to receive payment of a Termination Payment or any other consideration for
the termination of the applicable Leases of Sale Hotels upon a Lessor's
sale of a Sale Hotel to a purchaser not affiliated with the Lessors.
(b) Notwithstanding the termination of the Right of First Refusal, the
Equity Group shall have the right, but not the obligation, to offer new
leases to Crossroads/Future and its Affiliates, and any such lease offer
made prior to November 15, 2001, shall be included in the calculations made
under Section 42.4 of each of the Leases, excluding offers to lease a hotel
rejected by Crossroads/Future and its Affiliates that XXXX, EIP or any of
their Affiliates then lease to a third party on terms more favorable to the
lessee than those offered to Crossroads/Future and its Affiliates.
(c) Notwithstanding the provisions of Section 42.4 of each of the Leases,
in the event the Lessors sell more than five Hotels and terminate the
applicable Leases in any rolling twelve month period commencing on the date
of consummation of the Divestiture without there being an allocable
Substitute Lease, then with respect to each such Hotel sold and Lease
terminated in such twelve month period after the first five Hotels are sold
and Leases terminated, a Lessor shall not be entitled to defer payment of
the applicable Termination Payment until November 15, 2001, but instead the
applicable Lessor shall pay the applicable Termination Payment or offer a
Substitute Lease within 90 days following the expiration of such twelve
month period. Notwithstanding the foregoing sentence, the sale of the
following types of Hotels and termination of the applicable Leases shall
not be counted as a sale of a Hotel or termination of Lease in determining
the applicability of the obligation of Lessor to accelerate the obligation
to make a Termination Payment or offer Substitute Leases set forth in the
previous sentence: (a) the sale of any of the fourteen hotels listed on
Exhibit D attached hereto, (b) the sale of any Hotel in which, during the
twelve months prior to the date of termination of such Lease, the net
operating profit to the Lessee as to such Hotel calculated in accordance
with GAAP is less than the lesser of (i) one percent of the Gross Revenues
for such twelve month period or (ii) $40,000, and (c) the sale of any hotel
leased to Crossroads/Future or its Affiliates subsequent to the
consummation of the Divestiture (other than the hotels currently owned or
under contract by the Equity Group located in Portland, Oregon, Grand
Avenue, Chicago, Illinois, and Orlando, Florida).
(d) The following provisions are to be used in interpreting the calculation
that is to be made under Section 42.4 of all of the Leases as of November
15, 2001:
(i) Within a reasonable time after November 15, 2001, the Lessors and
the Lessees shall determine (A) the Net Present Value of the Leases
(excluding the Leases for the Hotels listed in Exhibit C attached hereto)
that were terminated during the period (the "Five Year Period") from
November 15, 1996 through November 15, 2001 (the "Terminated Leases"), (B)
the identity and Net Present Value of any hotels that the Equity Group
offered to lease to the Lessees during the Five Year Period that the
Lessors propose to characterize as Substitute Leases for the Terminated
Leases (the "Proposed Substitute Leases") and (C) the sum (the "Net New
Lease Offers") of the number of hotels that the Equity Group offered to
lease to the Lessees during the Five Year Period minus the number of
Proposed Substitute Leases.
(ii) In the event that the number of Net New Lease Offers equals or
exceeds 25 and the Net Present Value of the leases offered pursuant to such
Net New Lease Offers equals or exceeds the Net Present Value of the
Terminated Leases, the Lessors shall (A) have the right to have all of the
Proposed Substitute Leases be deemed to be Substitute Leases and (B) not be
obligated to pay any Termination Payments with respect to any of the
Terminated Leases.
(iii) In the event that the number of Net New Lease Offers is less than
25, then the Lessors shall be required to make Termination Payments in an
amount equal to the difference of the Net Present Value of the Terminated
Leases minus the Net Present Value of the Proposed Substitute Leases,
excluding from this calculation the Net Present Value of the Proposed
Substitute Leases selected by the Lessors to be offers to lease that are
not also Substitute Leases (which Proposed Substitute Leases shall not be
deemed to be Substitute Leases), so that the number of Net New Lease Offers
equals 25.
11. Lease Guarantees.
(a) Interstate is guaranteeing all of the obligations of the Lessees under
all of the Leases by various lease guarantees of even date herewith (the
"New Lease Guarantees"), which shall become the required form of lease
guarantee required under the Master Agreement; provided, however, that the
obligations of Interstate under the New Lease Guarantees are contingent
upon (i) the consummation of the Divestiture, and (ii) with respect to the
Leases, that require a third party consent to the release of Patriot under
Existing Lease Guarantees (as expressly provided in this Amendment below),
receipt of such applicable Third Party Consent (as defined in Section 12
(d) below). From and after the Divestiture, any New Lease Guarantees will
be executed by Interstate and IH-LLC only.
(b) The existing Section 2.15 of each of the Existing Lease Guarantees is
deleted and the substitute Section 2.15 set forth in Exhibit E attached
hereto is substituted in lieu thereof, effective as of the date of
consummation of the Divestiture.
12. Third Party Consents.
(a) Upon the consummation of the Divestiture, Patriot shall automatically
be unconditionally and fully released from any and all liability under all
of the Existing Lease Guarantees and any New Lease Guarantees excepting
only those for which a Third Party Consent (as that term is defined below)
has not been obtained on or before the Divestiture.
(b) As to the Leases in which Crossroads Finance is the lessee
(collectively, the "CMBS Leases"), the amendments to the CMBS Leases and
the release of Patriot under the Existing Lease Guarantees for the CMBS
Leases under this Amendment are contingent upon the receipt of any and all
necessary consents to such release and amendments by the appropriate rating
agencies, loan servicer, bond trustee and bondholders.
(c) As to the Leases under which the Lessor is a ground lessee as to the
Hotels located in Glen Burnie, Maryland, and Norfolk, Virginia
(collectively, the "Ground Lease Leases"), the amendments to the Ground
Lease Leases and the release of Patriot under the Existing Lease Guarantees
for the Ground Lease Leases under this Amendment are contingent upon
receipt of any and all necessary consents to such release and amendments by
any required ground lessors under the Ground Lease Leases.
(d) As to the Lease for the San Antonio, Texas Hotel (the "San Antonio
Lease"), the amendments to the San Antonio Lease and the release of Patriot
under the Existing Lease Guarantees for the San Antonio Lease under this
Amendment are contingent upon receipt of consent to such release and
amendments by the required mortgagee. The third parties referred to in (b),
(c) and (d) in this Section 12 are hereinafter collectively referred to as
the "Third Parties." The necessary consent of each Third Party to (i) the
amendments to the Lease and the Existing Lease Guarantees under Sections 6,
7, 8, 10, 11 and 13 of this Amendment and (ii) the release of the Existing
Patriot Lease Guarantees is referred to herein as a "Third Party Consent."
(e) (i) Each member of the Equity Group represents and warrants to Patriot
that no consent of any third party to any contract to which any member of
the Equity Group is a party other than the Third Parties is (or will be at
the time of the Divestiture) necessary to: (x) a release of all of the
Existing Lease Guarantees or the New Lease Guarantees by Patriot at
Divestiture, or (y) the effectiveness of any other provision of this
Amendment (provided, however, that the Equity Group shall not be liable
under this representation in the event a ground landlord with respect to
any of the ground leases, copies of which have been disclosed in writing to
the Patriot/Interstate Group, with respect to failure to obtain such ground
landlord's consent to this Amendment or any portion thereof). Each member
of the Equity Group acknowledges that a fundamental condition of the
execution and performance of this Amendment by Patriot is the
representation and warranty by the members of the Equity Group contained in
the preceding sentence and Patriot's reasonable reliance thereon. (ii) Each
member of Patriot/Interstate Group represents and warrants to the Equity
Group that no consent of any third party to any contract to which any
member of Patriot/Interstate Group is a party other than the Third
Parties is (or will be at the time of the Divestiture) necessary to the
effectiveness of any provision of this Amendment. Each member of
Patriot/Interstate Group acknowledges that a fundamental condition of the
execution and performance of this Amendment by the Equity Group is the
representation and warranty by the members of Patriot/Interstate Group
contained in the preceding sentence and the Equity Group's reasonable
reliance thereon.
(f) If any Third Party Consent is not obtained on or before the
Divestiture, then the respective Patriot Existing Lease Guaranty will stay
in effect (but only with respect to the Lease for the specific hotel for
which necessary consent was not obtained) until the requisite Third Party
Consent is obtained, if ever, at which time such Patriot Existing Lease
Guaranty shall automatically be unconditionally and fully released. The
parties hereto acknowledge and agree that in connection with each Patriot
Existing Lease Guaranty, the following shall occur on or before the
Divestiture: (i) the respective Lessee shall execute and deliver an
indemnity agreement ("Indemnity") in favor of Patriot in form acceptable to
Patriot indemnifying and defending Patriot from and against any liability
or claim under the Patriot Existing Lease Guaranty, and agreeing to
reimburse Patriot promptly for any amounts it spends under any Existing
Lease Guaranty or pays pursuant to paragraph (g) below plus amounts Patriot
pays or incurs for reasonable costs and expenses (ii) Crossroads
Hospitality, IH-LLC, Interstate and Crossroads/Memphis shall each execute
and deliver a guaranty in favor of Patriot in form acceptable to Patriot
guaranteeing each Lessee's obligations under the Indemnity, and (iii) as
security for its guaranty, Crossroads/Memphis shall pledge all of its
equity interests in Crossroads Finance in form acceptable to Patriot
(providing for foreclosure of such equity interest upon a default), and
(iv) Crossroads Hospitality shall agree that Patriot may, at its
discretion, upon acquiring the controlling equity interests in Crossroads
Finance and without compensation to Crossroads Hospitality, terminate any
one or more of the management agreements then existing between Crossroads
Finance and Crossroads Hospitality; provided, however, that (A) the failure
of Patriot and the Interstate Group to agree or otherwise execute and
deliver the documents evidencing the foregoing shall not adversely effect
the rights and remedies of the Equity Group under this Amendment, (B) such
documents shall not impose any additional obligation or liability upon the
Equity Group and (C) Patriot and Interstate Group shall provide the Equity
Group with true, correct and complete copies of all such documents within a
reasonable time after the execution and delivery thereof.
(g) So long as Patriot is a guarantor under any of the Leases the
provisions of this subparagraph (g) shall apply: (i) each Lessor shall give
Patriot the same: (A) notice of default and opportunity to cure such
default, and (B) notice of a performance standard failure or notice of
potential termination under each Lease, required or given to any of the
Lessees prior to the exercise of any remedies that such Lessor desires to
enforce against any Lessee or Patriot as a lease guarantor, (ii) as a
further condition to the enforcement of
any remedies against Patriot under an Existing Lease Guaranty of a Lease to
Crossroads Finance, Patriot shall have, in the case of any default not
involving the failure to pay a sum of money, such additional period of time
as may be reasonably required by Patriot to obtain control of Crossroads
Finance (by foreclosure or otherwise) which period of time shall not exceed
six (6) months; provided, however, that during such period all monetary
obligations of Crossroads Finance under the Lease are being duly performed
before the expiration of the applicable cure period and further provided
that any extension of the cure period provided in the Lease is conditioned
upon (A) Patriot diligently pursuing such control of Crossroads Finance
and, if commercially reasonable, simultaneously pursuing such cure of
default and (B) there not being, in the Lessor's reasonable opinion, a
substantial risk, caused by an ongoing operational problem at the Hotel,
that the Lessor will have a significant liability exposure to a third party
unless a change in operations occurs at the Hotel, and (iii) the Lessors
shall either (A) not declare an Event of Default under any of the Leases
then being guaranteed by Patriot based solely upon an Event of Default
under one or more of the Leases not then being guaranteed by Patriot, upon
the default by any other guarantor of one or more of the Leases or (B) to
the extent that any Lessor declares an Event of Default under any of the
Leases then being guaranteed by Patriot based solely upon an Event of
Default under one of more of the Leases not then being guaranteed by
Patriot, upon the default by any other guarantor of a Lease then the
Lessors shall not seek any sum from or assert any claim against Patriot.
The Lessors shall accept performance by Patriot of any obligation (and/or
payment to avoid the performance-related termination of a Lease) as though
performed by Lessee, although Patriot shall have no obligation to perform
any obligation of Lessee.
(h) Equity Group consents to the foregoing arrangements and in advance to
the exercise by Patriot of each of the remedies all as expressly set forth
in subsections (f) and (g) immediately above; including, without
limitation: (a) the acquisition of the equity interests in Crossroads
Finance, and (b) the termination of the management agreement with
Crossroads for one or more of the Hotels leased by Crossroads Finance,
subject to the right of the applicable Lessor to approve any replacement
management agreement, which consent shall not be unreasonably witheld,
delayed or conditioned with respect to any manager that is an affiliate of
Patriot provided further that the applicable franchisor consents.
(i) The Lessors and the Lessees shall use their commercially reasonable
efforts, both before and after the Divestiture, to obtain any and all Third
Party Consents.
(j) No Lease which is guaranteed by Patriot may be : (i) canceled or
terminated except as provided in the Leases as amended by this Amendment,
(ii) amended or modified, or (iii) assigned by any party thereto, without
the prior written consent of Patriot in each instance, which consent shall
not be unreasonably witheld, conditioned or delayed (except consent to
assignment (A) shall in all cases be subject to all of the rights of
Patriot under this Amendment, including, without limitation, (f), (g) and
(h) immediately above) (B) to a party not affiliated with Interstate may
be withheld in Patriot's sole discretion). Patriot agrees to cooperate
with respect to any amendment or modification of the existing CMBS loan to
the extent that such cooperation does not impose any additional financial
liability or obligation upon Patriot.
(k) The provisions of subsections (f), (g), (h) and (j) shall be deemed to
be a separate agreement between the Equity Group and the Patriot/Interstate
Group that is not an amendment of the Leases and Existing Lease Guarantees
and therefore is not binding upon any ground landlord, mortgagee, purchaser
at foreclosure or by deed in lieu thereof.
(1)The amendments to each Lease and/or the release of any Patriot Existing
Lease Guarantee for which a Third Party Consent is required, as provided in
this Amendment, shall become only effective in accordance with one of the
following: (i) if the respective Third Party consents to all of the
amendments to the applicable Lease contained herein and to the release of
the respective Patriot Existing Lease Guarantee, then such amendments and
release shall become effective upon the receipt of such consent, (ii) if
the respective Third Party consents to all of the amendments to the
applicable Lease contained herein, but does not consent to the release of
the respective Patriot Existing Lease Guarantee, then all of the amendments
to the applicable Lease shall become effective upon the receipt of such
consent and the respective Patriot Existing Lease Guarantee shall remain in
full force and effect or (iii) if the respective third party consents to a
release of the applicable respective Patriot Existing Lease Guarantee and
the minimum net worth requirements but does not consent to all of the
amendments to the applicable Lease, then the respective Patriot Existing
Lease Guarantee shall be released and the minimum net worth requirements
shall be effective and the other amendments to the applicable Lease
contained herein shall not become effective. The intent of the parties
hereto is that any Third Party Consent with respect to the amendments to
the applicable Lease contained herein may only be effective if the consent
of the Third Party is obtained to all of the amendments to the Lease
contained herein, but that the release of the Patriot Existing Lease
Guarantee is not a condition to the amendments to the Leases or other
provisions of this Agreement other than the effectiveness of the
obligations of Interstate under the applicable New Lease Guarantees.
Failure to obtain any required Third Party Consent shall not affect the
continuing validity of the provisions of this Amendment not requiring a
Third Party Consent.
13. Franchise Fees, PIPs and Expenses.
(a) The Interstate Group shall pay all franchise transfer fees or the like
incurred as a result of the Merger, the Divestiture and any related change
in control of franchisee or franchise transfer applications related thereto
(but specifically excluding any such fees incurred solely as the result of
any proposed securitized debt financing by XXXX, which shall be the sole
responsibility of the Equity Group).
(b) The Lessors acknowledge that neither the Lessees nor any other member
of the Patriot/Interstate Group is responsible for, and the Lessors shall
not seek payment from any member of the Patriot/Interstate Group for, any
of the capital expenditures required by any product improvement plan
incurred as a result of the Merger or the Divestiture.
(c) The Patriot Interstate Group each jointly and severally agrees to
reimburse the Lessors for all expenses (including attorneys' fees) incurred
by the Lessors as a result of the Mergers, the Divestiture and this
Amendment, and matters related thereto, as Additional Charges under the
Leases (excluding the CMBS Leases) in an amount not to exceed $100,000.
Within thirty (30) days following receipt of detailed invoices, the
Patriot/Interstate Group shall reimburse the Lessors for such amounts.
14. No Defaults. Each of the parties hereto acknowledge and agree that,
upon the execution of this Amendment: (i) the Master Agreement, the Leases
and the Existing Lease Guarantees are all each hereby ratified and
confirmed and are in full force and effect, (ii) no Event of Default exists
under any of the Leases or the Master Agreement, and, to the best knowledge
of the Equity Group and the Patriot/Interstate Group, no condition or event
exists which, with the giving of notice, the passage of time or both, would
constitute an Event of Default under any of the Leases or the Master
Agreement, (iii) no Event of Default (as that term is defined in the
respective Existing Lease Guarantees) exists under any of the Existing
Lease Guarantees, and to the best knowledge of the Equity Group and the
Patriot/Interstate Group, no condition or event exists which, with the
giving of notice, the passage of time or both, would constitute an Event of
Default under any of the respective Existing Lease Guarantees.
15. Mutual Release.
(a) Each member of the Equity Group, for itself and its directors,
officers, employees, stockholders, agents, successors, assigns, attorneys
and trustees (collectively, the "Equity Releasors"), does hereby
irrevocably and unconditionally remise, release, acquit, exonerate and
forever discharge each member of the Patriot/ Interstate Group and their
respective directors, officers, employees, stockholders, agents,
successors, assigns, attorneys, financial advisors, investment bankers,
lenders and trustees (collectively, the "Patriot and Interstate Released
Parties"), of and from any or all actions, causes of action, suits, debts,
dues, sums of money, accounts, claims, demands, covenants, contracts,
controversies, promises, agreements, damages, attorney's fees, costs and
expenses of suit, obligations, liabilities and judgments, of whatever kind
or nature, known or unknown, now existing or which may develop in the
future, in law or in equity, which each member of the Equity Group ever had
against the Patriot and Interstate Released Parties, now has or which any
of the Equity Releasors hereafter can, shall or may have, upon or by reason
of any act, omission, matter, cause or thing whatsoever, from the beginning
of time through the date of this Agreement, arising out of, related to, or
in connection with the Master Agreement, the Leases, the Merger, the
Divestiture, any applications for a new franchise agreement, including,
without limitation, claims arising under any statute or law of the United
States (excepting only such state statutory claims as may not be released,
regardless of the agreement of the parties, as a matter of Law). This
release shall not apply to (a) any existing obligations that members of
the Patriot/Interstate Group may have under the Leases, the Master
Agreement or the Existing Guarantees, none of which obligations are in
default as of the date hereof, and (b) the pending lawsuit and any related
claims which have been or may be brought by any person or entity, in
Pittsburgh, Pennsylvania by Xxxxxxx X. XxXxxxx, Xx., against Patriot and
its Affiliates.
(b) Each member of the Patriot/Interstate Group, for itself and its
respective directors, officers, employees, stockholders, agents,
successors, assigns, attorneys and trustees (collectively, the
"Patriot/Interstate Releasors"), does hereby irrevocably and
unconditionally remise, release, acquit, exonerate and forever discharge
each member of the Equity Group and its respective directors, officers,
employees, stockholders, agents, successors, assigns, attorneys, financial
advisors, investment bankers, lenders and trustees (collectively, the
"Equity Released Parties"), of and from any or all actions, causes of
action, suits, debts, dues, sums of money, accounts, claims, demands,
covenants, contracts, controversies, promises, agreements, damages,
attorney's fees, costs and expenses of suit, obligations, liabilities and
judgments, of whatever kind or nature, known or unknown, now existing or
which may develop in the future, in law or in equity, which each member of
the Patriot/Interstate Group ever had against the Equity Released Parties,
now has or which any of the Patriot/Interstate Releasors hereafter can,
shall or may have, upon or by reason of any act, omission, matter, cause or
thing whatsoever, from the beginning of time through the date of this
Agreement, arising out of, relating to, or in connection with the Master
Agreement, the Leases, the Merger, and the Divestiture, including, without
limitation, claims arising under any statute or law of the United States
(excepting only such state statutory claims as may not be released,
regardless of the agreement of the parties, as a matter of law). This
release shall not apply to (a) any existing obligations that members of the
Equity Group may have under the Leases, the Master Agreement and the
Existing Guarantees, none of which obligations are in default as of the
date hereof, and (b) any defenses by the Patriot/Interstate Releasors in
the pending lawsuit and any related claims which have been or may be
brought by any person or entity, in Pittsburgh, Pennsylvania by Xxxxxxx X.
XxXxxxx, Xx., against Patriot and its Affiliates.
16. Merger and Divestiture Consent. (a) Without any admission by the
Patriot/Interstate Group that any such consent is necessary, each member of
the Equity Group consents to the Merger and the Divestiture, in whatever
form it takes, including, without limitation, the related applications for
new franchise agreements for the Hotels and the issuance of new franchise
agreements for the Hotels. The Patriot/Interstate Group represents to the
Equity Group that if the Divestiture occurs, the Lessees will be direct or
indirect subsidiaries of Interstate (although Interstate is not expected to
receive all of the economic benefits of the Lessees) and the franchisees of
the Hotels shall remain the same, except for any changes requested by the
Equity Group in connection with the Equity Group's anticipated securitized
financing. Except for the foregoing sentence, Equity Group acknowledges
that the Patriot/Interstate Group makes no representations whatsoever
regarding the Divestiture, including, without limitation, whether the
Divestiture will occur, the form it will ultimately take and if it does
occur when the Divestiture will occur, and the Equity Group is not relying
upon any statements made with respect to any of the foregoing by any member
of the Patriot/Equity Group or any representative of any such member.
(b) References in the Master Agreement, the Leases and the Existing Lease
Guarantees to IH Company shall hereafter be deemed to be references to
Patriot until consummation of the Divestiture, and thereafter such
references shall be deemed to be references to Interstate. References in
the Master Agreement, the Leases and the Existing Lease Guarantees to IHC
shall be deemed to be references to IH-LLC.
17. Press Releases. Unless otherwise required by law, neither the Equity
Group nor the Patriot/Interstate Group will issue any press release
relating to this Amendment, or the Divestiture, without the other group's
prior written consent to such release. The Equity Group appoints Xxxxxx
Xxxxxx as the sole person with the authority to approve press releases on
behalf of the Equity Group and the Patriot/Interstate Group appoints Xxxx
Xxxxxxxx as the sole person with the authority to approve press releases on
behalf of the Patriot/Interstate Group.
18. Cooperation. The parties mutually agree to cooperate in good faith and
to deal fairly with one another to accomplish the terms of this Amendment,
including, without limitation, obtaining a new franchise agreement for each
of the Hotels, obtaining the Third Party Consents and consummating the
Divestiture. No member of the Equity Group shall object to, directly or
indirectly interfere with, delay or seek to delay, the consummation of the
Divestiture.
19. Confirmation. Except as expressly modified herein, the Master
Agreement, the Leases, the Existing Lease Guarantees and related agreements
are ratified and confirmed and remain in full force and effect.
20. Interpretation. The parties each acknowledge that they and their
respective legal counsel have actively participated in the negotiation and
drafting of this Amendment. In the event an ambiguity or question of intent
or interpretation arises, this Amendment shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Amendment.
21. Specific Performance. Each party agrees that a breach of any of the
terms, conditions, representations or warranties, or other obligations
under this Amendment, may result in irreparable harm to the non-breaching
party, and shall give rise to a right in the non-breaching party to seek
enforcement of this Amendment in a court of equity by a decree of specific
performance. This remedy is intended to be cumulative and in addition to
any other remedy a party may have.
22. Confidentiality. Except as required by law or judicial or
administrative proceedings, including proceedings between the parties with
respect to the transactions contemplated hereby, and then only to the
extent specifically required in any such proceedings, each of the parties
agrees (i) to take any and all action reasonably necessary to preserve the
confidentiality of the terms of this Amendment, and all settlement
discussions and negotiations held prior to the execution of this Amendment,
including any and all oral and written communications exchanged by the
parties hereto (or their legal counsel) as part of such discussions and
negotiations, (ii) not to disclose any confidential or proprietary
information ("Confidential Information") obtained from any other party in
connection with the transactions contemplated hereby, to any individual or
entity (other than its directors, officers, employees, agents and
representatives with a need to know such Confidential Information in order
to consummate the transactions contemplated hereby), and (iii) not to use
any Confidential Information for any purpose. If the parties fail to close
the transactions contemplated hereby, each party agrees to return to the
other party or to destroy all Confidential Information obtained from the
other party in its possession upon the written request of the other party.
23. Authorization. Each party hereto represents and warrants to the other
parties hereto that (a) it is an entity duly organized, validly existing
and in good standing under the laws of the state of its formation, and is
duly qualified as a foreign entity and in good standing under the laws of
each state wherein it conducts business, (b) it has the power, and has
taken all necessary actions, to execute and deliver, and to perform its
obligations under this Amendment, the Master Agreement, the Leases, the
Existing Lease Guarantees and the New Lease Guarantees, and such documents
are the binding obligations of it, enforceable in accordance with their
terms, without the need for the consent of any third party except for the
Third Party Consents.
24. Future Assurances. Each party hereto agrees to execute, deliver, and if
applicable, record, such additional instruments, documents, and agreements
as any other party hereto may reasonably require (including, without
limitation, restated lease guarantees) for the purpose of effectuating the
transactions contemplated by this Amendment.
25. Headings. The headings of the paragraphs herein are included solely
for convenience of reference and shall not control the meaning of the
interpretation of any provision of this Amendment.
26. Merger. This Amendment, contains the entire understanding between the
parties hereto as to the matters provided herein and supersedes any prior
or contemporaneous contracts, agreement, understandings and/or
negotiations, whether oral or written.
27. Necessary Consents. This entire Amendment is contingent upon each party
obtaining all necessary third party consents required for this Amendment
such party deems reasonably necessary (but not the Third Party Consents
provided in Section 12 above) within ten days after the date hereof,
including, without limitation, with respect to (i) the Equity Group, the
board of directors of XXXX, First National Bank of Chicago, NationsBank,
NA, GMAC Mortgage Commercial Mortgage Corporation, and their affiliates and
participants, and (ii) the Patriot/Interstate Group, Marriott (with respect
both to this Amendment and the franchise for the Portland, Oregon Hotel),
the board of directors of Patriot, Apollo Real Estate Management III, LP,
Xxxxxx X. Xxx Equity Fund IV, LP, Beacon Capital Partners LP and Xxxxx
Consulting Group and their affiliates. In addition, the parties shall
attempt to reach agreement regarding any "Year 2000" issues with respect to
the Hotels within such ten day period. In the event the parties fail to
obtain any such necessary consent required by this Section and provide the
other parties hereto with reasonable evidence of such consent, or fail to
reach agreement regarding "Year 2000" issues, within such ten day period,
then this Agreement shall be null and void ab initio and of no further
force and effect. Upon the satisfaction of the conditions subsequent
contained in this Section, the parties hereto shall ratify and confirm this
Amendment and execute and deliver the BOD Agreement and the applicable New
Lease Guarantees, together with reasonable reciprocal legal opinions
regarding the due authorization, execution and delivery of this Amendment,
the BOD Agreement and the New Lease Guarantees.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and the year first above-written.
[SIGNATURE PAGES FOLLOW]
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
EQUITY INNS, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
---------------------------------
Title: President
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
EQUITY INNS PARTNERSHIP, L.P.
By: Equity Inns Trust, general partner
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
---------------------------------
Title: President
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
EQUITY INNS/WEST VIRGINIA
PARTNERSHIP, L.P., a Tennessee limited
partnership
By: Equity Inns Services, Inc., general
partner
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
---------------------------------
Title: President
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
EQI FINANCING PARTNERSHIP I, L.P.
By: EQI Financing Corporation, its general
partner
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
---------------------------------
Title: President
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
EQUITY INNS PARTNERSHIP II, L.P., a
Tennessee limited partnership
By: Equity Inns Trust, general partner
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
---------------------------------
Title: President
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
CROSSROADS/MEMPHIS
PARTNERSHIP, L.P., a Delaware limited
partnership
By: Crossroads/Memphis Company,
L.L.C., its general partner
By: /s/ Xxxxxxx X. Breed
---------------------------------
Name: Xxxxxxx X. Breed
---------------------------------
Title: Vice President-Finance
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
STATE COLLEGE BBQ/CONCORD
JOINT VENTURE
By: Crossroads/Memphis Partnership,
L.P., joint venture partner
By: Crossroads/Memphis Company,
L.L.C., its general partner
By: /s/ Xxxxxxx X. Breed
----------------------------------
Name: Xxxxxxx X. Breed
----------------------------------
Title: Vice President-Finance
----------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
CROSSROADS/MEMPHIS FINANCING
COMPANY, L.L.C., a Delaware limited
liability company
By: /s/ Xxxxxxx X. Breed
---------------------------------
Name: Xxxxxxx X. Breed
---------------------------------
Title: Vice President-Finance
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND TERMINATION OF MASTER AGREEMENT
CROSSROADS FUTURE COMPANY,
L.L.C., a Delaware limited liability company
By: /s/ Xxxxxxx X. Breed
---------------------------------
Name: Xxxxxxx X. Breed
---------------------------------
Title: Vice President-Finance
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
PATRIOT AMERICAN HOSPITALITY,
INC., successor by merger to Interstate
Hotels Company
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
---------------------------------
Title: Chairman & CEO
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
INTERSTATE HOTELS, LLC, a Delaware
limited liability company, successor by
merger to Interstate Hotels Corporation
By: Interstate Hotels Management, Inc.,
Managing Member
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------------
Title: Executive Vice President
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
CROSSROADS HOSPITALITY
COMPANY, L.L.C., a Delaware limited
liability company
By: /s/ Xxxxxxx X. Breed
---------------------------------
Name: Xxxxxxx X. Breed
---------------------------------
Title: Vice President-Finance
---------------------------------
SIGNATURE PAGE
CONSOLIDATED AMENDMENT TO LEASE AGREEMENTS
AND MASTER AGREEMENT
INTERSTATE HOTELS MANAGEMENT,
INC., a Maryland corporation
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------------
Title: Executive Vice President
---------------------------------
EXHIBIT A
LIST OF HOTELS OWNED BY AFFILIATES OF EQUITY INNS, INC.,
AND LEASED TO AFFILIATES OF
PATRIOT AMERICAN HOSPITALITY CORPORATION,
SUCCESSOR BY MERGER TO
INTERSTATE HOTELS COMPANY
(As of March 30, 1999)
(Date of lease or purchase in parenthesis)
A. Tenant: Crossroads/Memphis Partnership, L.P.
Landlord: Equity Inns Partnership, L.P.
(21 Hotels)
1. Albany, New York/154 room Hampton Inn (3-94)
2. Enterprise, Alabama/78 room Comfort Inn (6-94)
3. Xxxxxxxx Xxxx, Xxxxxxxx/000 room Hampton Inn (6-94)
4. Arlington, Texas/141 room Hampton Inn (7-94)
5. Tinton Falls, New Jersey/96 room Residence Inn (9-94)
6. Eagan, Minnesota/120 room Residence Inn (9-94)
7. Wilkesboro, North Carolina/101 room Independent (11-94)
8. Oak Hill, West Virginia/119 room Holiday Inn (11-94)
9. Bluefield, West Virginia/120 room Holiday Inn (11-94)
10. Beckley, West Virginia/108 room Hampton Inn (11-94)
11. Morgantown, West Virginia/108 room Hampton Inn (11-94)
12. Xxxxxxx, Xxxxxxx/000 room Comfort Inn (6-95)
13. Scranton, Pennsylvania/129 room Hampton Inn (9-95)
14. Xxxx Xxxxxx, Xxxxxxxx/000 room Hampton Inn (3-96)
15. Xxxxxxxxxx, Xxxxxxxx/000 room Hampton Inn (5-96)
16. Windsor Locks, Connecticut/132 room Homewood Suites (5-96)
17. Scottsdale, Arizona/126 room Hampton Inn (7-96)
18. Chattanooga, Tennessee/168 room Hampton Inn (7-96)
19. San Antonio, Texas/123 room Homewood Suites (9-96)
20. Burlington, Vermont/96 room Residence Inn (10-96)
21. Camelback, Arizona/124 room Homewood Suites (11-96)
B. Tenant: State College BBQ/Concord Joint Venture
Landlord: Equity Inns Partnership, L.P.
(1 Hotel)
22. State College, Pennsylvania/120 room Hampton Inn (1-95)
C. Crossroads/Memphis Financing Company, L.L.C. (23 Hotels)
Landlord: EQI Financing Partnership I, L.P.
23. Milford, Connecticut/148 room Hampton Inn (9-94)
24. Meriden, Connecticut/125 room Hampton Inn (9-94)
25. Sarasota, Florida/97 room Hampton Inn (3-94)
26. Jacksonville, Florida/122 room Hampton Inn (9-95)
27. Jacksonville Beach, Florida/177 room Comfort Inn (11-95)
28. Columbus, Georgia/119 room Hampton Inn (3-94)
29. Gurnee, Illinois/134 room Hampton Inn (6-94)
30. Naperville, Illinois/130 room Hampton Inn (12-94)
31. Indianapolis, Indiana/129 room Hampton Inn (9-95)
32. Louisville, Kentucky/119 room Hampton Inn (3-94)
33. Ann Arbor, Michigan/150 room Hampton Inn (4-94)
34. Omaha, Nebraska/80 room Residence Inn (12-95)
35. Gastonia, North Carolina/109 room Hampton Inn (11-94)
36. Fayetteville, North Carolina/122 room Hampton Inn (9-95)
37. Winston-Salem, North Carolina/160 room Independent (6-96)
38. Westlake (Cleveland), Ohio/123 room Hampton Inn (3-94)
39. Mt. Pleasant, South Carolina/158 room Holiday Inn (9-95)
40. Alcoa, Tennessee/118 room Hampton Inn (2-96)
41. College Station, Texas/135 room Hampton Inn (3-94)
42. Fort Worth, Texas/125 room Hampton Inn (3-94)
43. Garland, Texas/125 room Hampton Inn (12-95)
44. Austin, Texas/122 room Hampton Inn (12-95)
45. Madison, Wisconsin/80 room Residence Inn (6-96)
D. Crossroads Future Company, L.L.C. (35 Hotels)
Landlord: Equity Inns Partnership, L.P.
46. Tucson, Arizona/128 room Residence Inn (1-97)
47. Colorado Springs, Colorado/96 room Residence Inn (1-97)
48. Oklahoma City, Oklahoma/135 room Residence Inn (1-97)
49. Savannah, Georgia/129 room Hampton Inn (2-97)
50. Norfolk, Virginia/119 room Hampton Inn (3-97)
51. Pickwick, Tennessee/50 room Hampton Inn (3-97)
52. Southaven, Mississippi/86 room Hampton Inn (3-97)
53. Overland Park, Kansas/134 room Hampton Inn (4-97)
54. Vestavia, Alabama/123 room Hampton Inn (6-24-97)
55. North Little Rock, Arkansas/123 room Hampton Inn (6-24-97)
56. Aurora, Colorado/132 room Hampton Inn (6-24-97)
57. Colorado Springs, Colorado/128 room Hampton Inn (6-24-97)
58. Xxxxxxx, Xxxxxxx/000 room Hampton Inn (6-24-97)
59. Madison Heights, Michigan/124 room Hampton Inn (6-24-97)
60. Kansas City, Missouri/120 room Hampton Inn (6-24-97)
61. St. Louis, Missouri/122 room Hampton Inn (6-24-97)
62. Chapel Hill, North Carolina/122 room Hampton Inn (6-24-97)
63. Dublin, Ohio/123 room Hampton Inn (6-24-97)
64. Charleston, South Carolina/125 room Hampton Inn (6-24-97)
65. Columbia, South Carolina/121 room Hampton Inn (6-24-97)
66. Brentwood, Tennessee/114 room Hampton Inn (6-24-97)
67. Nashville, Tennessee/120 room Hampton Inn (6-24-97)
68. Poplar, Tennessee/126 room Hampton Inn (6-24-97)
69. Sycamore, Tennessee/117 room Hampton Inn (6-24-97)
70. Addison, Texas/160 room Hampton Inn (6-24-97)
71. Richardson, Texas/130 room Hampton Inn (6-24-97)
72. Destin, Florida/104 room Hampton Inn (6-25-97)
73. Germantown, Tennessee/92 room Homewood Suites (6-25-97)
74. Augusta, Georgia/65 room Homewood Suites (7-10-97)
75. Mt. Brook, Alabama/131 room Hampton Inn (8-1-97)
76. Princeton, New Jersey/208 room Residence Inn (9-18-97)
77. San Antonio, Texas/169 room Hampton Inn (4-98)
78. Sharonville, Ohio/111 Room Homewood Suites (4-15-98)
79. Bartlett, Tennessee/125 Room Hampton Inn and Suites (5-1-98)
80. Seattle, Washington/161 Room Homewood Suites (8-7-98)
NOTE: West Virginia hotels owned off record by Equity Inns\West Virginia
Partnership, L.P.
EXHIBIT B
LIST OF HOTELS WITH OUTPARCELS
1. 00000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000 (Hampton Inn, Cleveland, Ohio,
estimate less than one acre)
2. 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 (Hampton Inn,
approximately 2.186 separately parceled acres)
3. 0000 Xxxxxx Xxxxx Xxxx, Xxxxxx, Xxxxxxx (Homewood Suites, Tract "B" Tax
map #12, parcel 90th Georgia militia district, approximately 0.6 acres)
4. 000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000 (Hampton Inn approximately
two acres)
5. 00 Xxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000 (Hampton Inn, approximately
2 acres)
6. 0000 XX-00 Xxxxx, Xxxxxx, Xxxxx 00000 (Hampton Inn, approximately
30,000 square feet)
7. XX 000 Xx-Xxxx, Xxxxxxxxx, Xxxx Xxxxxxxx (Holiday Inn - size unknown)
8. 000 X'Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxx 00000 (approximately 40,000
square feet)
9. Hampton Inn, Columbia South Carolina (approximately less than one acre)
10. Mt. Pleasant, South Carolina (approximately 2.5 acres)
11. Wilkesboro, North Carolina (approximately 1.0 - 1.5 acres)
EXHIBIT C
List of Hotels that the Equity Group May Sell and Terminate the Lease
Without a Termination Fee
Hampton Inn - Arlington , Texas
Hampton Inn - Garland, Texas
Hampton Inn - Southaven, Mississippi
Hampton Inn - Little Rock North, Arkansas
Holiday Inn - Oak Hill, West Virginia
EXHIBIT D
List of Hotels that the Equity Group May Sell and Terminate the Lease
Without an Accelerated Termination Fee
Hampton Inn - Arlington, Texas
Hampton Inn - Traverse City, Michigan
Hampton Inn - Nashville-Brentwood, Tennessee
Hampton Inn - Garland, Texas
Hampton Inn - Southaven, Mississippi
Hampton Inn - Columbia, South Carolina
Hampton Inn - Gurnee, Illinois
Hampton Inn - Little Rock North, Arkansas
Comfort Inn - Enterprise, Alabama
Holiday Inn - Oak Hill, West Virginia
Holiday Inn - Bluefield, West Virginia
Holiday Inn - Mt. Pleasant, South Carolina
Holiday Inn - Xxxxxxxxxx, Xxxxx Xxxxxxxx
Xxxxxxxx Xxxxxx - Xxxxxxx, Xxxxxxxxx
EXHIBIT E
LEASE GUARANTY
DEBT SUBORDINATION
SUBSTITUTE SECTION
Section 2.15. Subordination.
(a) Upon any distribution of assets of a Guarantor upon any
dissolution, winding up, total or partial liquidation or reorganization of
a Guarantor, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities (a "Triggering
Event"), the obligations of the Guarantors under this Guaranty are
subordinated and junior to all obligations (the "Debt Obligations", and to
the extent not excluded pursuant to the next succeeding sentence, the
"Senior Debt") of the Guarantors under all other credit agreements entered
into by the Guarantors and any lenders (the "Credit Agreements"),
including, in all cases, the obligation to pay interest on loans thereunder
after any bankruptcy filing by the Guarantors, or either of them (whether
or not an allowable claim), and under all "Credit Documents" as defined in
the Credit Agreements. Notwithstanding the foregoing, the Debt Obligations
will not constitute Senior Debt to which this Guaranty is subordinate (a)
if constituting principal indebtedness of the Guarantors ("Principal
Indebtedness") to the extent that, after giving effect thereto, at both the
time of the incurrence thereof and entering into of a Credit Agreement (or
amendment thereto) providing for same, the Principal Indebtedness exceeds
an amount equal to the sum of six multiplied the EBIDTA of Interstate (as
hereinafter defined) and (b) if not constituting Principal Indebtedness, to
the extent relating to any Principal Indebtedness described in clause (a)
above.
(b) Senior Debt shall not include any Principal Indebtedness
constituting pay-in-kind interest, unaccreted principal under any original
issue discount obligation or similar instrument or any other negatively
amortized indebtedness. To the extent any Principal Indebtedness
constitutes Senior Debt at the time of the issuance thereof or the entering
into of a Credit Agreement (or of an amendment thereto) providing for such
Principal Indebtedness, then such Principal Indebtedness (and all other
related Debt Obligations) shall at all times constitute Senior Debt.
(c) Interstate's EBITDA, at any point in time, shall mean the
earnings before interest, taxes, depreciation and amortization of
Interstate, as determined in accordance with generally accepted accounting
principles.
(d) Upon any Triggering Event, (i) the holders of all Senior
Debt will first be entitled to receive payment in full in cash or cash
equivalents before the Lessor is entitled to receive any payment hereunder
and (ii) any payment or distribution of assets of a Guarantor of any kind
or character from any source, whether in cash, property or securities to
which the Lessor would be entitled (by set-off or otherwise), except for
those subordination provisions, will be paid by the liquidating trustee or
agent or other person making such a payment or distribution directly to the
holders of such Senior Debt or their representative to the extent necessary
to make payment in full (or have such payment duly provided for) on all
such Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt.
(e) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of a Guarantor shall be received by the
Lessor at a time after the occurrence of a Triggering Event, such payment
or distribution shall be paid over to the agent(s) for the Senior Debt or
to a court, for application to the payment of all such Senior Debt
remaining unpaid, to the extent necessary to pay or to provide for the
payment of all such Senior Debt in full in cash or cash equivalents after
giving effect to any concurrent payment or distribution to the holders of
such Senior Debt, the Lessor not being responsible for such application by
such agent(s) or court.
(f) No provision contained in this section will affect the
obligation of the Guarantors, which is absolute and unconditional, to pay
when due the Indebtedness and perform the Debt Obligations.
