Exhibit 10.1
CREDIT AGREEMENT
DATED AS OF JUNE 24, 1997
AMONG
EQUITY INNS PARTNERSHIP, L.P.,
EQUITY INNS TRUST,
EQUITY INNS, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO,
CREDIT LYONNAIS NEW YORK BRANCH,
AMSOUTH BANK,
AS LENDERS
AND
CREDIT LYONNAIS NEW YORK BRANCH,
AS DOCUMENTATION AGENT
AND
AMSOUTH BANK,
AS CO-AGENT
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS ADMINISTRATIVE AGENT AND SYNDICATION AGENT
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS........................................... 2
1.1 Definitions................................................... 2
-----------
1.2 Financial Standards........................................... 13
ARTICLE II
THE FACILITY............................................................... 13
2.1 The Loan...................................................... 13
2.2 Requests for Advance; Responsibility for Advance.............. 14
2.3 Evidence of Credit Extensions................................. 14
2.4 Repayment..................................................... 14
2.5 Interest...................................................... 15
2.6 Selection of Rate Options and LIBOR Interest Periods.......... 15
2.7 Method of Payment............................................. 17
2.8 Default....................................................... 17
2.9 Lending Installations......................................... 18
2.10 Non-Receipt of Funds by Agent................................. 18
2.11 Grant of Security Interest.................................... 18
2.12 Release of Properties......................................... 18
ARTICLE Ill
CHANGE IN CIRCUMSTANCES.................................................... 19
3.2 Changes in Capital Adequacy Regulations....................... 19
3.3 Funding Indemnification....................................... 20
3.4 Lender Statements; Survival of Indemnity...................... 20
ARTICLE IV
CONDITIONS PRECEDENT; ADDITIONAL INFORMATION............................... 21
4.1 Conditions Precedent to Closing............................... 21
4.2 Additional Information........................................ 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES............................................. 25
5.1 Existence..................................................... 25
5.2 Authorization................................................. 26
5.3 Perfection of Security Interests.............................. 27
5.4 Financial Statements.......................................... 27
5.5 Litigation.................................................... 28
5.6 Ownership of Assets........................................... 28
5.7 Taxes......................................................... 28
5.8 No Defaults................................................... 29
5.9 Insurance..................................................... 30
5.10 Accuracy of Furnished Information............................. 30
5.11 Compliance with Laws.......................................... 30
5.12 Condition of Properties....................................... 30
5.13 Franchise Agreements.......................................... 30
5.14 Leases........................................................ 30
5.15 Condemnation.................................................. 31
5.16 Margin Stock.................................................. 31
5.18 Use of Loan Proceeds.......................................... 31
5.19 Solvency...................................................... 31
5.20 Investment Company Act........................................ 31
5.21 Public Utility Holding Company Act............................ 31
5.22 Brokers....................................................... 32
5.23 (Intentionally Deleted.)...................................... 32
5.24 Foreign Person................................................ 32
ARTICLE VI
AFFIRMATIVE COVENANTS...................................................... 33
6.1 Notices....................................................... 33
6.3 Existence and Conduct of Operations........................... 35
6.5 Maintenance of Properties..................................... 35
6.6 Insurance..................................................... 35
6.7 Payment of Obligations........................................ 36
6.8 Compliance with Laws.......................................... 36
6.9 Adequate Books................................................ 36
6.10 ERISA......................................................... 36
6.11 Maintenance of Status......................................... 36
6.12 Use of Proceeds............................................... 36
6.13 FF&E Replacement and Capital Expenditures..................... 36
6.14 Material Agreements........................................... 37
ARTICLE VII
NEGATIVE COVENANTS......................................................... 38
7.1 Change in Business............................................ 38
7.2 Change of Ownership of Properties............................. 38
7.3 Ratio of Net Rent to Interest Expense......................... 38
7.4 Use of Proceeds............................................... 38
7.5 Purchase Price................................................ 38
7.6 Value of Property as a Percentage of Purchase Price........... 39
7.7 Liens......................................................... 39
7.8 Regulation U.................................................. 39
7.9 Net Worth..................................................... 39
7.10 Partnership Distributions..................................... 39
7.11 Total Liabilities............................................. 39
7.12 Level Two Adjusted Earnings................................... 40
7.13 Cost Basis.................................................... 40
7.14 Other Indebtedness............................................ 40
7.15 Material Agreements........................................... 41
ARTICLE VIII
DEFAULTS................................................................... 41
8.1 Nonpayment of Principal and Interest.......................... 41
8.2 Certain Covenants............................................. 41
8.3 Security Documents............................................ 41
8.4 Representations and Warranties................................ 41
8.5 Property Assessments.......................................... 42
8.6 Federal Tax Lien.............................................. 42
8.7 FF&E.......................................................... 42
8.8 Insurance..................................................... 42
8.9 Crossroads Lease.............................................. 42
8.10 Ground Lease.................................................. 42
8.11 Material Agreements........................................... 42
8.12 Property Liens................................................ 43
8.13 Certain Covenants............................................. 43
8.14 Bankruptcy.................................................... 43
8.15 Loan Documents................................................ 44
8.16 Revolving Credit Facility..................................... 44
8.17 Cross Default................................................. 44
8.18 Material Adverse Effect....................................... 44
8.19 Furnishing Information........................................ 44
8.20 Monetary...................................................... 44
ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES............................. 45
9.1 Acceleration.................................................. 45
9.2 Preservation of Rights; Amendments............................ 45
ARTICLE X
THE AGENT.................................................................. 45
10.1 Appointment................................................... 45
10.2 Powers........................................................ 45
10.3 General Immunity.............................................. 45
10.4 No Responsibility for Loans, Recitals, etc.................... 46
10.5 Action on Instructions of Lenders............................. 46
10.6 Employment of Agents and Counsel.............................. 46
10.7 Reliance on Documents; Counsel................................ 46
10.8 Agent's Reimbursement and Indemnification..................... 46
10.9 Rights as a Lender............................................ 47
10.10 Lender Credit Decision........................................ 47
10.11 Successor Agent............................................... 47
ARTICLE XI
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.......................... 48
11.1 Successors and Assigns........................................ 48
11.2 Participations................................................ 48
11.3 Assignments................................................... 49
11.4 Dissemination of Information.................................. 50
11.5 Tax Treatment................................................. 50
ARTICLE XII
GENERAL PROVISIONS......................................................... 50
12.1 Survival of Representations................................... 50
12.2 Governmental Regulation....................................... 50
12.3 Taxes......................................................... 50
12.4 Headings...................................................... 51
12.5 No Third Party Beneficiaries.................................. 51
12.6 Expenses; Indemnification..................................... 51
12.7 Severability of Provisions.................................... 51
12.8 Nonliability of the Lenders................................... 52
12.9 Choice of Law................................................. 52
12.10 Consent to Jurisdiction....................................... 52
12.11 Waiver of Jury Trial.......................................... 52
12.12 Successors and Assigns........................................ 52
12.13 Entire Agreement; Modification of Agreement................... 52
12.14 Dealings with the Borrower.................................... 53
12.15 Set-Off....................................................... 53
12.16 Counterparts.................................................. 53
ARTICLE XIII
NOTICES.................................................................... 54
13.1 Giving Notice................................................. 54
13.2 Change of Address............................................. 55
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of June 24, 1997, by and among
the following:
EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited partnership
("Borrower") having its principal place of business at c/o Equity Inns, Inc.,
0000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000, the sole general partner
of which is Equity Inns Trust;
EQUITY INNS TRUST, a Maryland real estate investment trust ("General
Partner"), whose principal place of business is 0000 Xxxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxx 00000;
EQUITY INNS, INC., a Tennessee corporation (the "Company") whose
principal place of business is 0000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx
00000, the owner of 100% of the beneficial interest in General Partner;
THE FIRST NATIONAL BANK OF CHICAGO ("First Chicago."), a national bank
organized under the laws of the United States of America having an office at Xxx
Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000;
CREDIT LYONNAIS NEW YORK BRANCH ("Credit Lyonnais"), a branch licensed
under the laws of the State of New York of a foreign banking corporation
organized under the laws of the Republic of France, having an office at 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
AMSOUTH BANK ("AmSouth"), an Alabama banking corporation having an
office at 0000 Xxxxx Xxxxxx Xxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000;
Credit Lyonnais, as Documentation Agent for the Lenders (as defined
below);
AmSouth, as Co-Agent for the Lenders; and
First Chicago, as Administrative Agent ("Agent") and as Syndication
Agent for the Lenders.
RECITALS
A. Borrower is primarily engaged in the business of acquiring,
developing and owning hotel properties.
B. First Chicago, Borrower, certain other lenders and Agent are parties
to a Credit Agreement dated as of November 29, 1995, as amended by (i) a First
Amendment to Credit Agreement and Facility Notes dated as of Xxxxx 0, 0000, (xx)
a Second Amendment to Credit Agreement dated as of July 25, 1996, (iii) a Third
Amendment to Credit Agreement and Other Credit Facility Documents dated as of
November 14, 1996, (iv) a Fourth Amendment to Credit Agreement and Other Credit
Facility Documents dated as of December 15, 1996, and (v) a Fifth Amendment and
Other Credit Facility Documents dated April 1, 1997 (as heretofore and hereafter
amended, the
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"Revolving Credit Agreement"), which Revolving Credit Agreement contains certain
covenants and agreements pertaining to the Revolving Credit Facility (as defined
below).
C. Borrower requires interim financing for the acquisition of up to 27
"Hampton Inn" hotel properties located in 13 states, and Borrower has requested
that First Chicago and the other Lenders provide Borrower with a term credit
facility for such purpose in an aggregate principal amount of up to $75,000,000.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. As used in this Agreement, the following terms
have the meanings set forth below:
"Adjusted LIBOR Rate" means, with respect to a LIBOR Advance for the
relevant LIBOR Interest Period, the sum of (i) the quotient of (a) the Base
LIBOR Rate applicable to such LIBOR Interest Period, divided by (b) one minus
the Reserve Requirement (expressed as a decimal) applicable to that LIBOR
Interest Period, plus the (ii) LIBOR Rate Spread in effect from time to time
during such LIBOR Interest Period.
"Advance" means the loan to the Borrower hereunder by the Lenders
pursuant to Section 2.1 (a) hereof, whether all or a portion of such Advance is
from time to time an Alternate Base Rate Advance or a LIBOR Advance.
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with any other Person.
A Person shall be deemed to control another Person if the controlling Person
owns fifty-one percent (51%) or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means First Chicago, acting as administrative agent for the
Lenders in connection with the transactions contemplated by this Agreement, and
its successors in such capacity.
"Aggregate Commitment" means, as of any date, the sum of all of the
Lenders' then-current Commitments.
"Agreement" means this Credit Agreement and all amendments,
modifications and supplements hereto.
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"Agreement Execution Date" shall mean June 24, 1997, the date on which
each of the parties hereto has executed this Agreement.
"Alternate Base Rate" means, on any day, a fluctuating rate of interest
per annum equal to the higher of (a) the Federal Funds Effective Rate for such
day, and (b) the Corporate Base Rate for such day.
"Alternate Base Rate Advance" means that portion of the Advance that
bears interest at the Alternate Base Rate.
"Appraised Value" shall have the meaning ascribed to such term in the
Revolving Credit Agreement.
"Assignment of Leases and Rents" means the assignments of the leases
and rents for each of the Properties, the generic form of which is attached
hereto as Exhibit F.
"Base LIBOR Rate" means, with respect to a LIBOR Advance for the
relevant LIBOR Interest Period, the rate determined by the Agent to be the rate
at which deposits in immediately available funds in U.S. dollars are offered by
the Agent to first-class banks in the London interbank eurodollar market at
approximately 11:00 a.m. London time two Business Days prior to the first day of
such LIBOR Interest Period, in the approximate amount of the relevant LIBOR
Advance and having a maturity approximately equal to such LIBOR Interest Period.
"Borrower" means Equity Inns Partnership, L.P., together with its
permitted successors and assigns, if any.
"Business Day" means a day, other than a Saturday, Sunday or holiday,
on which banks are open for business in Chicago, Illinois and in London,
England.
"Code" means the Internal Revenue Code of 1986 as amended from time to
time, or any replacement or successor statute, and the regulations promulgated
thereunder from time to time.
"Collateral" means all of the now existing or hereafter acquired rights
of the Borrower in (a) the Properties and all rents, leases, easements, options,
personal property and other rights and property related to the owner-ship or
operation thereof, and (b) all of the proceeds of the foregoing.
"Commitment" means the obligation of each Lender, subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties herein, to make an Advance not exceeding in the aggregate the amount
set forth opposite its signature below, or the amount stated in any subsequent
amendment hereto.
"Company" means Equity Inns, Inc., a Tennessee corporation.
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"Consolidated Operating Partnership" means the Borrower, the General
Partner, the Company and any other subsidiary partnerships or entities of either
of them which are required under GAAP to be consolidated with the Borrower and
the General Partner for financial reporting purposes.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with all or any of the entities in the
Consolidated Operating Partnership, are treated as a single employer under
Sections 414(b) or 414(c) of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as such corporate base rate changes.
"Cost Basis" for any Property shall mean the aggregate of (y) the costs
actually incurred by Borrower in connection with the acquisition of such
Property, as substantiated by evidence in form and detail reasonably
satisfactory to Agent, including, without limitation, a detailed breakdown by
item and category of costs so incurred and certified to by Borrower, and (z) the
cost actually incurred by Borrower within twelve (12) months after Borrower's
acquisition of such Property in completing the initial PIP (as defined below)
for such Property, which costs (together with evidence of payment of such costs)
shall be substantiated by evidence in form and detail reasonably satisfactory to
Agent, including, without limitation, a detailed breakdown by item and category
of costs so incurred and certified to by Borrower, shall not include any costs
which are incurred more than twelve (12) months after such acquisition and which
costs shall be added to the Cost Basis of such Property on the earlier to occur
of (i) completion of such PIP or (ii) twelve (12) months after the date of the
acquisition of such Property, and upon receipt by Agent from Borrower or a
request for such increase in the Cost Basis of such Property.
"Crossroads Lease" shall mean that certain Consolidated Lease Agreement
dated as of June 24, 1997, by and between Borrower and Lessee pertaining to the
operation and management of the Properties, including that certain Guaranty of
even date therewith by Interstate Hotels Company and Interstate Hotels
Corporation.
"Default" means an event which, with notice or lapse of time or both,
would become an Event of Default.
"Default Rate" means (a) with respect to an Alternate Base Rate
Advance, a rate equal to the Alternate Base Rate plus three percent (3 %) per
annum, or (b) with respect to any LIBOR Advance, a rate equal to the applicable
Adjusted LIBOR Rate plus three percent (3 %) per annum.
"Dollars" and "$" mean United States Dollars.
"Draw Request" means a written request of the Borrower for an Advance,
specifying (i) the date of the proposed Advance, which shall be a Business Day;
(ii) the aggregate principal amount of
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such proposed Advance, which amount in the case of an Alternate Base Rate
Advance shall be at least One Hundred Thousand Dollars ($100,000) and which
amount in the case of a LIBOR Advance shall be at least One Million Dollars
($1,000,000), provided that if such LIBOR Advance is in excess of $1,000,000
then such LIBOR Advance shall be made only in multiples of $100,000; (iii) the
Rate Option or Rate Options selected for such Advance; and (iv) in the case of a
LIBOR Advance, the LIBOR Interest Period applicable thereto.
"Environmental Indemnity" means the Hazardous Material Guaranty and
Indemnification Agreement dated as of the Agreement Execution Date, executed by
Borrower, the General Partner and the Company, substantially in the form of
Exhibit D hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder from time to time.
"Event of Default" means any event set forth in Article VIII hereof.
"Facility" means the term loan described in Section 2.1.
"FDICIA" means the Federal Deposit Insurance Corporation Improvement
Act of 1991, as the same may be amended from time to time, and the regulations
promulgated thereunder from time to time.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized-standing selected by the Agent in its sole
discretion.
"FF&E" shall mean, collectively, all goods (as such term is defined in
the Uniform Commercial Code of the state in which a given Property is located),
now owned or hereafter acquired by Borrower, located at or used in connection
with the Properties and the operation of the Properties, including, without
limitation, (i) all furniture and furnishings and all other items of personal
property (including inventory now owned or hereafter acquired by Borrower but
excluding inventory and personal property owned by Lessee or any Other Lessee)
located on, or used in connection with the operation of the Properties, together
with all replacements, modifications, alterations and additions thereto; and
(ii) all equipment, machinery, fixtures and other items of property required or
incidental to the use of the Properties, including all components thereof, now
and hereafter permanently affixed to or incorporated into the Properties,
including, without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste, disposal, air-cooling and
air conditioning systems and apparatus, sprinkler
5
systems and fire and theft protection equipment, all of which to the greatest
extent permitted by law are deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
"Financing Statement" means Form UCC-1 and Form UCC-2 financing
statements, in form and content acceptable to Lenders.
"FIRREA" means the Financial Institutions, Reform, Recovery and
Enforcement Act, as amended, and the regulations promulgated thereunder from
time to time.
"First Chicago" means The First National Bank of Chicago.
"Franchise Agreements" means the "Hampton Inn License Agreements" between
Lessee and Promus Hotels, Inc. with respect to the Properties (each
individually, a "Franchise Agreement").
"GAAP" means generally accepted accounting principles, consistently
applied.
"General Partner" means Equity Inns Trust, a Maryland real estate
investment trust.
"Ground Leases" shall mean (i) the Ground Lease dated September 16,
1986, as amended by Amendment to Lease dated December 17, 1987, and as assigned
by assignment dated December 21, 1987, for the Hampton Inn Hotel located at 0000
X.X. Xxxxxxx 000, Xxxxxxxxxx, Xxxxxxx, (ii) the Ground Lease dated December 1,
1983 for the Hampton Inn Hotel located at 0000 Xxxxxxxx Xxxx Xxxxx, Xxxxxxx,
Xxxxxxxxx, (iii) the Ground Lease dated April 11, 1985 as amended by Amendment
to Lease dated May 24, 1985, as assigned by Assignment of Lease dated March 4,
1987, for the Hampton Inn Hotel located at 0000 Xxx Xxxx Xxxxxxx, Xxxxxxxxx,
Xxxxxxxxx, and (iv) the Ground Lease dated August 18, 1988, as amended by
Amendment No. 1 to Ground Lease dated September 30, 1988 for the Hampton Inn
Hotel located at 0000 Xxxxx Xxxx Xxxxxxx, Xxxxxxx, Xxxxxxx.
"Ground Lease Property" shall mean any Property which is subject to one
of the Ground Leases.
"Guaranties" means any agreement or agreements by which any Person
assumes, guarantees, endorses, contingently agrees to provide funds for the
payment of, or otherwise becomes liable upon the obligation of any other Person,
or agrees to maintain the net worth or working capital or other financial
condition of any other Person or otherwise assure any creditor of such other
Person against loss.
"Guarantors" means General Partner and the Company, jointly and severally.
"Guaranty" means, collectively, (i) the Guaranty of Performance of
Lessor's Obligation under Crossroads Lease, and (it) the Guaranty of Payment,
each dated as of the Agreement Execution Date,
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and each executed by General Partner and the Company, substantially in the forms
of Exhibits Q-1 and Q-2 attached hereto.
"Hazardous Material" means any hazardous, toxic or dangerous waste,
substance or material subject to regulation under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and federal,
state or local so-called "Superfund" or "Superlien" laws, or any other federal,
state or local laws, ordinances, rules or regulations governing or regulating
hazardous materials, pollution, the environment or public health, as now or at
any time hereafter in effect.
"Indebtedness" means for any Person, without duplication, the following
(including all indebtedness secured by a Lien on property owned by such Person,
whether or not such Person has assumed or become liable for the payment thereof)
(i) all obligations of such Person for or with respect to (including without
limitation all fees, costs or unpaid accrued interest) borrowed money (including
without limitation the Obligations) or for the deferred purchase price of
property or services, (ii) all obligations of such Person created or arising
under any conditional sale or other title retention agreement with respect to
any property acquired by such Person and all obligations created or arising
under such agreement even though the rights and remedies of the seller or lender
thereunder are limited to repossession or sale of such property in the event of
default, (iii) all obligations of such Person under leases which shall have been
or should under GAAP be recorded as capitalized leases, (iv) all direct or
indirect Guaranties or endorsements of such Person (other than, in the case of
instruments, for deposit or collection or similar transactions in the ordinary
course of business), (v) all obligations (contingent or otherwise) by such
person to assure a creditor against loss including, without limitation, letters
of responsibility or comfort, arrangements to purchase or repurchase property or
obligations to pay for property, goods or services, whether or not delivered or
rendered, (vi) all obligations (contingent or otherwise) to maintain working
capital, equity capital or other financial condition or to lend or contribute to
or invest in, made by any such Person in respect of obligations of any other
Person (including any obligations to such Person with respect to any Plan), and
(vii) all obligations of such Person for Letters of Credit or extensions of
credit to or on behalf of such Person, whether or not representing obligations
for borrowed money.
"Insolvency" means insolvency as defined in the United States
Bankruptcy Code, as amended. "Insolvent" when used with respect to a Person,
shall refer to a Person who satisfies the definition of Insolvency.
"Lenders" means, collectively, First Chicago, Credit Lyonnais and
AmSouth, or any Person which subsequently executes and delivers any amendment
hereto in such capacity and each of their respective permitted successors and
assigns. Where reference is made to "the Lenders" in any Loan Document it shall
be read to mean "all of the Lenders".
"Lending Installation" means any U.S. office of any Lender authorized to
make loans similar to the Advance described herein.
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"Lessee" shall mean Crossroads Future Company, L.L.C., a Delaware
limited liability company.
"Level Two Adjusted Earnings" shall mean consolidated earnings of
Borrower, the General Partner and the Company before minority interests,
interest, income taxes, depreciation and amortization, as determined on a
consolidated basis and according to generally accepted accounting principles
consistently applied, for the period in question and which relates directly to
payments made by Lessee and any Other Lessee under the Crossroads Lease or any
other lessees under any other leases entered into with respect to the hotels
from time to time owned by Borrower irrespective of whether constituting part of
the Collateral for the Facility, which earnings (i) shall not include any
earnings of Borrower or the General Partner which do not directly relate to
payments made by Lessee or any Other Lessee under such Crossroads Lease or any
other lessees under any other leases, (ii) shall be reduced by an amount equal
to four (4%) percent of the gross room revenues for the hotels which will be
assumed to be allocated to the replacement of FF&E, and (iii) shall be
determined on a rolling 12-month basis (i.e., for the 12 month period preceding
the date of each determination). If any such hotel has been owned for a period
of less than 12 months, the earnings derived from such hotel will be determined
for the portion of the prior 12-month period during which such hotel was not
owned by Borrower on a pro-forma basis based upon earnings relating to payments
made by Lessee or such Other Lessee under the Crossroads Lease entered into with
respect to such hotel during the period of ownership, as adjusted pursuant to
the provisions of this definition, and otherwise in a manner reasonably
satisfactory to Agent.
"LIBOR Advance" means that portion of the Advance that bears interest
at the Adjusted LIBOR Rate.
"LIBOR Interest Period" means, with respect to a LIBOR Advance, a
period of one (1) month, two (2) months or three (3) months, as selected in
advance by the Borrower.
"LIBOR Rate Spread" shall mean (x) 1.625% per annum for the first six
calendar months of the Facility term, and (y) 1.875% per annum for the second
six calendar months of the Facility term, it being understood and agreed that
the LIBOR Rate Spread will be increased for any LIBOR Advance outstanding on the
first day of such second six calendar month period.
"Lien" means any mortgage, pledge, security title, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any filing or agreement to file a financing statement as debtor under
the Uniform Commercial Code on any property leased to any Person under a lease
which is not in the nature of a conditional sale or title retention agreement,
or any subordination agreement in favor of another Person).
"Loan Documents" means this Agreement, the Notes, the Environmental
Indemnity, the Guaranty, the Security Documents and any and all other agreements
or instruments creating or evidencing the Lenders' interest in any Collateral
provided to the Lenders by the Borrower or the
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General Partner and any other instrument or agreement required and/or provided
to Lenders hereunder or thereunder, as any of the foregoing may be amended from
time to time,
"Majority Lenders" means, as of any date, those Lenders holding, in the
aggregate more than one-half (1/2) of the then-current Aggregate Commitment.
"Margin Stock" has the meaning ascribed to it in Regulation U of the
Board of Governors of the Federal Reserve System.
"Material Adverse Effect" means, with respect to any matter, that such
matter in the Supermajority Lenders' good faith judgment may (x) materially and
adversely affect the business, properties, condition or results of operations of
the Consolidated Operating Partnership taken as a whole, or (y) constitute a
non-frivolous challenge to the validity or enforceability of any material
provision of any Loan Document against any obligor party thereto.
"Material Adverse Financial Change" shall be deemed to have occurred if
the Lenders, in their good faith judgment, determine that a material adverse
financial change has occurred which could prevent timely repayment of any
Advance hereunder or materially impair Borrower's ability to perform its
obligations under any of the Loan Documents.
"Material Agreements" means, collectively, the Crossroads Lease, the Ground
Leases and the Franchise Agreements.
"Maturity Date" means the earliest to occur of:
(a) June 23, 1998; or
(b) the first date, if any, on which Borrower's right to
receive advances under the Revolving Credit Facility is terminated; or
(c) the date on which the Agent and Majority Lenders
accelerate the Obligations pursuant to Article IX hereof.
"Mortgages" means the first mortgages, first deeds of trust or first
deeds to secure debt in form satisfactory to the Agent, executed by the Borrower
as the owner of fee title or leasehold title, as the case may be, with respect
to the Properties, including all improvements thereon and rights and easements
appurtenant thereto, securing all of the Obligations, as the same may be
modified or amended from time to time.
"Net Purchase Price" means, for any Property or Properties, the
price(s) for such Property or Properties shown on Schedule 1 attached hereto and
made a pan hereof.
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"Note" means the promissory note payable to the order of each Lender in
the amount of such Lender's maximum Commitment in the form attached hereto as
Exhibit A (collectively, the "Notes").
"Obligations" means the Advance and all accrued and unpaid fees and all
other obligations of Borrower to the Agent or the Lenders arising under this
Agreement or any of the other Loan Documents.
"Other Lessee" means any other lessee approved by Agent from time to
time with respect to any replacement lease or leases for the Crossroads Lease.
"Other Permitted Debt" shall have the meaning ascribed to such term in
Section 7.14 hereof.
"Payment Date" means the last Business Day of each calendar quarter.
"Participants" is defined in Section 11.2.1 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Percentage" means, with respect to each Lender, the applicable
percentage of the then-current Aggregate Commitment represented by such Lender's
then-current Commitment.
"Permitted Exceptions" means those matters to which the interest of
Borrower in the Properties is permitted by the Lenders to be subject on the
Agreement Execution Date, and thereafter that do not adversely affect the
Collateral, and such other title exceptions or objections, if any, as the
Lenders or their counsel may approve in advance in writing, which approval or
consent shall not be unreasonably withheld.
"Permitted Liens" means:
(a) Liens for current taxes, assessments or other governmental
charges which are not delinquent or remain payable without any penalty,
or the validity of which are being contested in good faith by
appropriate proceedings which have the effect of staying any
enforcement for non-payment thereof;
(b) Liens imposed by mandatory provisions of law such as for
materialmen, mechanics, warehousemen, workmen and repairmen arising in
the' ordinary course of business and which have been bonded over and
removed of record or have otherwise been insured over by the title
insurer for the property to which such liens apply;
(c) Liens imposed by mandatory provisions of law related to
workers' compensation, unemployment insurance, social security or other
similar legislation arising in the ordinary course of business and
which are being contested and/or removed in a continuous and
businesslike manner;
10
(d) Equipment liens in favor of any lessor of equipment (e.g.,
computer reservation system) leased pursuant to a capital equipment
lease between such lessor and Lessee (or any Other Lessee);
(e) Judgment and other similar liens arising in connection
with court proceedings, provided that the execution or other
enforcement of such liens is effectively stayed and the claims secured
thereby are vigorously and continuously contested by appropriate
proceedings; and
(f) Easements, rights of way, restrictions and other similar
encumbrances which alone and/or in the aggregate, do not materially
interfere with the occupation, use and enjoyment of the Properties.
"Person" means an individual, a corporation, a limited or general
partnership, an association, a joint venture or any other entity or
organization, including a governmental or political subdivision or an agent or
instrumentality thereof.
"PIP" means for any Property, the renovations and capital improvements
contemplated by the property improvement plan for such Property which property
improvement plan for each of the Properties previously have been submitted to,
and approved by, Agent.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA, whether or not terminated, as to which the Borrower or any member of the
Controlled Group may have any liability.
"Properties" means, as of any date, all of those 27 "Hampton Inn" hotel
properties approved by the Lenders (or such lesser number of said hotel
properties as actually purchased by Borrower) which are encumbered by Mortgages
in favor of the Agent for the benefit of the Lenders pursuant to the terms of
this Agreement which properties are listed on Exhibit H attached hereto and made
a part hereof.
"Property" means one of the Properties, individually.
"Purchasers" is defined in Section 11.3.1 hereof.
"Qualified Officer" means, with respect to any entity, the chief
financial officer, chief accounting officer or controller of such entity if it
is a corporation or of such entity's general partner if it is a partnership.
"Rate Option" means the Alternate Base Rate or the Adjusted LIBOR Rate.
The Rate Option in effect on any date shall always be the Alternate Base Rate
unless the Borrower has properly selected the Adjusted LIBOR Rate pursuant to
Section 2.6 hereof.
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"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waivers in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Reserve Requirement" means, with respect to the LIBOR Rate applicable
to a LIBOR Interest Period. the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed under
Regulation D on eurocurrency liabilities on the date of determination of such
LIBOR Rate.
"Revolving Credit Agreement" shall have the meaning ascribed to such
term in the Recitals hereof.
"Revolving Credit Facility" shall mean the revolving credit facility
currently in place among Borrower, General Partner and a syndicate of lenders
having First Chicago as the administrative agent thereof. The Revolving Credit
Facility consists of (i) a base facility of 5127,000,000, and (ii) a swing line
facility of $3,000,000, and the Revolving Credit Facility currently has a
maturity date of November 30, 1998.
"Security Documents" means:
(a) the Mortgages;
(b) the Assignments of Leases and Rents;
(c) Financing Statements securing the first priority security
interest of the Lenders in all of Borrower's interest in the fixtures
on the Properties and all personal property owned by Borrower and
located on the Property and/or necessary or useful in the operation of
the Properties;
(d) The Security Agreements, each in the form attached
hereto as .Exhibit E; and
(e) all estoppels, consents, acknowledgments and other
documentation executed in connection with the creation and perfection
of the Lenders' security interest.
"Subsidiaries" means the partnerships and companies set forth on Schedule
3. attached hereto and made a part hereof.
"Total Liabilities" shall have the meaning ascribed to such term in
Section 7.11 hereof.
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"Transferee" is defined in Section 11.4 hereof.
The foregoing definitions shall be equally applicable to both the
singular and the plural forms of the defined terms.
All capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed to such terms in the Revolving Credit
Agreement.
1.2 Financial Standards. All financial computations required of a
Person under this Agreement shall be made, and all financial information
required under this Agreement shall be prepared, in accordance with GAAP, except
that if any Person's financial statements are not audited, such Person's
financial statements shall be prepared in accordance with the same sound
accounting principles utilized in connection with the financial information
submitted to Lenders with respect to the Borrower or the General Partner or the
Properties in connection with this Agreement and shall be certified by an
authorized representative of such Person.
ARTICLE II
THE FACILITY
2.1 The Loan.
(a) Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Borrower and
General Partner contained herein, Lenders agree to make a single
Advance of Facility proceeds through the Agent to Borrower on the
disbursement date set forth in Borrower's Draw Request. The maximum
principal amount of the Facility disbursed to Borrower in accordance
with the preceding sentence shall not exceed the lesser of (x)
forty-five percent (45 %) of the Net Purchase Price paid by Borrower
for the Properties (after deduction of all credits to Borrower as
provided in the purchase agreements for the Properties), and (y) the
Aggregate Commitment. Each Lender shall fund its Percentage of such
Advance and no Lender will be required to fund any amounts which are in
excess of such Lender's Commitment. This facility ("Facility") is a
term credit facility, Borrower shall not be entitled to receive
multiple advances of Loan proceeds, and any portion of the Advance,
once repaid, may not be reborrowed.
(b) The Loan created by this Agreement shall be due and
payable on the Maturity Date, unless sooner due and payable in
accordance with the terms of this Agreement.
(c) If Borrower acquires fewer than all 27 of the Properties,
then the Lenders shall reduce the Aggregate Commitment proportionately,
based on the Net Purchase Price (and the per property allocation of
such Net Purchase Price) for those Properties actually purchased by
Borrower. In no event shall the Aggregate Commitment exceed
Seventy-Five Million Dollars ($75,000,000).
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2.2 Requests for Advance; Responsibility for Advance. The sole Advance
of Loan proceeds shall be made available to Borrower by Agent in accordance with
Section 2. l (a) and Section 2.6(a) hereof. The obligation of each Lender to
fund its Percentage of each Advance shall be several and not joint; however,
Agent shall coordinate the funding of the Advance.
2.3 Evidence of Credit Extensions. The Advance of each Lender
outstanding at any time shall be evidenced by the Notes. Each Note executed by
the Borrower shall be in a maximum principal amount equal to each Lender's
Percentage of the current Aggregate Commitment. Each Lender shall record its
Advance and principal payments thereof on the schedule attached to its Note or,
at its option, in its records, and each Lender's record thereof shall be
conclusive absent Borrower furnishing to such Lender conclusive and irrefutable
evidence of an error made by such Lender with respect to that Lender's records.
Notwithstanding the foregoing, the failure to make, or an error in making, a
notation with respect to any Advance shall not limit or otherwise affect the
obligations of Borrower hereunder or under the Notes to pay the amount actually
owed by Borrower to Lenders.
2.4 Repayment. The outstanding principal balance of the Loan, plus all
accrued and unpaid interest thereon and other amounts owed by Borrower under the
Loan Documents, shall be due and payable on the Maturity Date.
2.5 Interest.
(a) The outstanding principal balance under the Notes shall
bear interest from time to time at a rate per annum equal to:
(i) the Alternate Base Rate; or
(ii) at the election of Borrower with respect to all
or portions of the Obligations, the Adjusted LIBOR Rate.
(b) All interest shall be calculated for actual days elapsed
on the basis of a 360-day year. Interest accrued on each Alternate Base
Rate Advance shall be payable in arrears on (i) the first day of each
calendar month, commencing with the first such date to occur after the
date hereof, (ii) on any date on which the Alternate Base Rate Advance
is prepaid, whether due to acceleration or otherwise, and (iii) on the
Maturity Date. Interest accrued on each LIBOR Advance shall be payable
(i) on the first day of each calendar month, (ii) on any date on which
the LIBOR Advance is prepaid, whether due to acceleration or otherwise,
and (iii) on the Maturity Date. Interest shall not be payable for the
day of any payment on the amount paid if payment is received by Agent
prior to noon (Chicago time). If any payment of principal or interest
under the Notes shall become due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in
the case of a payment of principal, such extension of time shall be
included in computing interest due in connection with such payment;
provided that for purposes of Section 8.1 hereof, any payments of
principal described in this sentence shall be considered to be "due" on
such next succeeding Business Day.
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2.6 Selection of Rate Options and LIBOR Interest Periods.
(a) Borrower, from time to time, may select the Rate Option
and, in the case of each LIBOR Advance, the commencement date (which
shall be a Business Day) and the length of the LIBOR Interest Period
applicable to each LIBOR Advance. Not later than noon (Chicago time) on
the proposed borrowing date contained in Borrower's Draw Request, each
Lender shall make available its Percentage of the Advance requested in
funds immediately available in Chicago, Illinois to Agent; provided
that, if any portion of the Advance is a LIBOR Advance, then Borrower
shall give Agent the Draw Request not later than 11:00 a.m. (Chicago
time) at least three (3) Business Days prior to such Advance. Agent
will make the funds so received from Lenders available to Borrower by
transfer to Borrower's account at Agent.
(b) Agent shall, as soon as practicable after receipt of the
Draw Request, determine the Adjusted LIBOR Rate initially applicable to
that portion of the Advance which Borrower requests to be LIBOR Advance
and inform Borrower and Lenders of the same. The determination of the
Adjusted LIBOR Rate by Agent shall be conclusive and binding upon
Borrower in the absence of manifest error.
(c) If Borrower shall prepay any portion of the LIBOR Advance
other than on the last day of the LIBOR Interest Period applicable
thereto, Borrower shall be responsible to pay all amounts due to
Lenders as required by Section 3.3 hereof.
(d) As of the end of each LIBOR Interest Period selected for a
LIBOR Advance, the interest rate on the LIBOR Advance will become the
Alternate Base Rate, unless Borrower has once again selected a LIBOR
Interest Period in accordance with the timing and procedures set forth
in Section 2.6(g).
(e) The right of Borrower to select the Adjusted LIBOR Rate
for an Advance pursuant to this Agreement is subject to the
availability to Lenders of a similar option. If Agent determines that
(i) deposits of U.S. dollars in an amount approximately equal to the
LIBOR Advance for which the Borrower wishes to select the Adjusted
LIBOR Rate are not generally available at such time in the London
interbank eurodollar market, or (ii) the rate at which the deposits
described in subsection (i) herein are being offered will not
adequately and fairly reflect the costs to Agent of maintaining an
Adjusted LIBOR Rate on an Advance or of funding the same in such market
for such LIBOR Interest Period, or (iii) reasonable means do not exist
for determining an Adjusted LIBOR Rate, or (iv) the Adjusted LIBOR Rate
would be in excess of the maximum interest rate which Borrower may by
law pay, then in any of such events, Agent shall so notify Borrower and
such Advance shall bear interest at the Alternate Base Rate.
(f) In no event may Borrower elect a LIBOR Interest Period
which would extend beyond the Maturity Date. Unless Lenders agree
thereto, in no event may Borrower have more than three (3) different
LIBOR Interest Periods for the LIBOR Advance outstanding at any one
time.
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(g) Conversion and Continuation.
(i) Borrower may elect from time to time, subject to
the other provisions of this Section 2.6, to convert all or
any part of the Advance into a LIBOR Advance or a Alternate
Base Rate Advance, as the case may be; provided that any
conversion of any LIBOR Rate Advance shall be made on, and
only on, the last day of the LIBOR Interest Period applicable
thereto.
(ii) The Alternate Base Rate Advance shall continue
as an Alternate Base Rate Advance unless and until such
Alternate Base Rate Advance is converted into a LIBOR Rate
Advance pursuant to a Conversion/Continuation Notice from
Borrower in accordance with Section 2.6(g)(iv). The LIBOR Rate
Advance shall continue until the end of the then applicable
LIBOR Interest Period therefor, at which time each such
Advance shall be automatically converted into an Alternate
Base Rate Advance unless the Borrower shall have given the
Agent a Conversion/Continuation Notice in accordance with
Section 2.6(g)(iv) requesting that, at the end of such LIBOR
Interest Period, such Advance either continue as an Advance of
such type for the same or another LIBOR Interest Period.
(iii) Notwithstanding anything to the contrary
contained in Sections 2.6(g)(i) or (g)(ii), no Advance may be
converted into a LIBOR Rate Advance or continued as a LIBOR
Rate Advance (except with the consent of the Majority Lenders)
when any Event of Default has occurred and is continuing.
(iv) The Borrower shall give the Agent irrevocable
notice (a "Conversion/Continuation Notice") of each conversion
of an Advance or continuation of a LIBOR Rate Advance not
later than 11:00 a.m. (Chicago time) on the Business Day
immediately preceding the date' of the requested conversion,
in the case of a conversion into an Alternate Base Rate
Advance, or 11:00 a.m. (Chicago time) at least three (3)
Business Days prior to the date of the requested conversion or
continuation, in the case of a conversion into or continuation
of a LIBOR Rate Advance, specifying: (1) the requested date
(which shall be a Business Day) of such conversion or
continuation; (2) the amount and type of the Advance to be
convened or continued; and (3) the amounts and type(s) of
Advance(s) into which such Advance is to be converted or
continued and, in the case of a conversion into or
continuation of a LIBOR Rate Advance, the duration of the
LIBOR Interest Period applicable thereto.
2.7 Method of Payment. All payments of the Obligations hereunder shall
be made, without set-off, deduction, or counterclaim, in immediately available
funds to Agent at Agent's address specified herein, or at any other Lending
Installation of Agent specified in writing by Agent to Borrower, by noon (local
time) on the date when due and shall be applied ratably by Agent among Lenders.
Each payment delivered to Agent for the account of any Lender shall be delivered
promptly by Agent to such Lender in the same type of funds that Agent received
at its address specified herein or at any Lending Installation specified in a
notice received by Agent from such Lender. Agent is
16
hereby authorized to charge the account of Borrower maintained with First
Chicago for each payment of principal, interest and fees as it becomes due
hereunder.
2.8 Default. Notwithstanding the foregoing, during the continuance of
an Event of Default, Borrower shall not have the right to request a LIBOR
Advance, select a new LIBOR Interest Period for an existing LIBOR Advance or
convert any Alternate Base Rate Advance to a LIBOR Advance. During the
continuance of an Event of Default, at the election of the Majority Lenders, by
notice to Borrower, the outstanding Advance shall bear interest at the
applicable Default Rates until such Event of Default is cured or the Obligations
are paid in full.
2.9 Lending Installations. Each Lender may book its Advance at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this. Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and Borrower, designate a Lending Installation through which
the Advance will be made by it and for whose account payments are to be made.
2.10 Non-Receipt of Funds by Agent. Unless Borrower or a Lender, as the
case may be, notifies Agent prior to the date on which it is scheduled to make
payment to Agent of (i) in the case of a Lender, such Lender's Percentage of the
Advance, or (ii) in the case of Borrower, a payment of principal, interest or
fees to the Agent for the account of the Lenders, that it does not intend to
make such payment, Agent may assume 'that such payment has been made. Agent may,
but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If such Lender or Borrower,
as the case may be, has not in fact made such payment to Agent, the recipient of
such payment shall, on demand by Agent, repay to Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by Agent until
the date Agent recovers such amount at a rate per annum equal to (i) in the case
of payment by a Lender, the Federal Funds Effective Rate (as determined by
Agent) for such day or (ii) in the case of payment by Borrower, the interest
rate applicable to the Advance Agent shall not make the single Advance of Loan
proceeds described in Section 2.1 hereof until such time as Agent has received
from each Lender an amount equal to such Lender's Percentage of the Advance.
2.11 Grant of Security Interest. Borrower hereby grants to the
Lenders a security interest in the Collateral to secure payment of the
Obligations.
2.12 Release of Properties. Borrower may from time to time make written
request to the Agent for the release of one or more Properties from the lien or
security title of the applicable Security Document(s), provided that (i) such
release is being made in connection with either the sale of such Property to a
third party which is not an Affiliate of the Borrower or a refinancing of such
Property, (ii) concurrently with each release of a Property or Properties,
Borrower makes a partial repayment of the principal amount of the Facility in an
amount which is the greater of (A) 80% of the Net Purchase Price for such
released Property or Properties, and (B) 100% of net cash sales proceeds or net
refinancing proceeds, as the case may be, received by the Borrower on account of
the sale or refinancing of such Property or Properties, after deduction of any
amounts payable to third parties in connection therewith (including the amount
payable to Crossroads as a result of a termination of
17
the Crossroads Lease as to such Property or Properties) and of Borrower's
estimated income tax liability on such sale; (iii) after giving effect to the
release of any Property or Properties, Borrower is in compliance with the
provisions of Sections 7.5 and 7.6 hereof and the other covenants contained in
this Agreement; and (iv) at the time of such release, no Event of Default then
exists hereunder or under any other Loan Document. In all cases Borrower shall
pay or reimburse Agent for all fees, reasonable legal fees and expenses, and
other costs and expenses incurred by Agent in connection with such release.
ARTICLE Ill
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If the adoption of or change in any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender therewith,
(a) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from
Borrower (excluding federal and state taxation of the overall net
income of any Lender or applicable Lending Installation), or changes
the basis of such taxation of payments to any Lender in respect of its
Advance or other amounts due it hereunder; or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to the LIBOR Advance); or
(c) imposes any other condition, and the result is to increase
the cost of any Lender or any applicable Lending Installation of
making, funding or maintaining loans or reduces any amount receivable
by any Lender or any applicable Lending Installation in connection with
loans, or requires any Lender or any applicable Lending Installation to
make any payment calculated by reference to the amount of loans held,
or interest received by it, by an amount deemed material by such
Lender,
then, within fifteen (15) days of demand by such Lender, Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines (using customary and reasonable allocation
methods) is attributable to making. funding and maintaining its Advance and its
Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporate entity controlling such
Lender is increased as a result of a Change (as defined below), then, within
fifteen (15) days of demand by such Lender, Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines (using customary
and reasonable allocation methods)
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is attributable to this Agreement, its Advance, or its obligation to make
Advance hereunder (after taking into account such Lender's policies as to
capital adequacy). "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines (as defined below) or (ii) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. "Risk-Based
Capital Guidelines" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards",
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
3.3 Funding Indemnification. If any payment of a LIBOR Advance occurs
on a date which is not the last day of the applicable LIBOR Interest Period,
whether because of acceleration, prepayment or otherwise, or a LIBOR Advance is
not made on the date specified by Borrower for any reason other than default by
one or more of the Lenders, Borrower will indemnify each Lender for any loss or
cost incurred by such Lender resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund or
maintain the LIBOR Advance.
3.4 Lender Statements; Survival of Indemnity. If, in respect of any
Lender, circumstances arise which result in an increase in the liability of the
Borrower to such Lender under Section 3.1 or 3.2 then, without in any way
limiting, reducing or otherwise qualifying the Borrower's obligations under any
of the Sections referred to above in this Section 3.4, such Lender shall
promptly upon becoming aware of such circumstances notify the Agent thereof and
such Lender shall, in consultation with the Agent and the Borrower and to the
extent that it can do so without disadvantaging itself, take such reasonable
steps as may be reasonably open to it to mitigate the effects of such
circumstances (including, without limitation, the designation of an alternate
Lending Installation or the transfer of its Percentage of the Advance to another
Lending Installation). If and so long as a Lender has been unable to take, or
has not taken, steps acceptable to the Borrower, to assign all its rights and
obligations herein to another Person nominated by the Borrower with the approval
of the Agent (which shall not be unreasonably withheld) and willing to
participate in the facility in place of such Lender; provided that: (i) the
assigning Lender receives repayment of all amounts then owing to it with respect
to the Facility, and (ii) such Person satisfies all of the requirements of this
Agreement. Notwithstanding any such assignment, the obligations of the Borrower
under Sections 3.1, 3.2 and 3.3 shall survive any such assignment and be
enforceable by such Lender. Each Lender shall deliver a written statement of
such Lender as to the amount due, if any, under Sections 3.1, 3.2 or 3.3 hereof.
Such written statement shall set forth in reasonable detail the calculations
upon which such Lender determined such amount and shall be final, conclusive and
binding on Borrower in the absence of manifest error. Determination of amounts
payable under such Sections in connection with a LIBOR Advance shall be
calculated as though each Lender funded its LIBOR Advance through the purchase
of a deposit of the type and maturity corresponding to the deposit used as a
reference in determining the LIBOR Rate applicable to such Advance, whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the written
19
statement shall be payable on demand after receipt by Borrower of the written
statement. The obligations of Borrower under Sections 3.1, 3.2 and 3.3 hereof
shall survive payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT; ADDITIONAL INFORMATION
4.1 Conditions Precedent to Closing. The obligation of each Lender to
make its Advance is subject to the condition precedent that on the Agreement
Execution Date, the following (or updates thereof, as applicable) shall have
been delivered to the Agent in form and substance reasonably satisfactory to
each of the Lenders:
(a) Certificates of Limited Partnership/Incorporation. A copy
of the Certificate of Limited Partnership for Borrower and a copy of
the articles of incorporation of each of General Partner and the
Company, each certified by the appropriate Secretary of State or
equivalent state official.
(b) Agreements of Limited Partnership/Bylaws. A copy of the
Agreement of Limited Partnership for Borrower and a copy of the bylaws
of each of the General Partner and the Company, including all
amendments thereto, each certified by the Secretary or an Assistant
Secretary of the General Partner as being in full force and effect on
the Agreement Execution Date.
(c) Good Standing Certificates. A certified copy of a
certificate from the Secretary of State or equivalent state official of
the states of organization, dated as of the most recent practicable
date, showing the good standing or partnership qualification (if
issued) of (i) Borrower, (ii) General Partner, and (iii) the Company.
(d) Foreign Qualification Certificates. A certified copy of a
certificate from the Secretary of State or equivalent state official of
each of the states in which a Property is located, dated as of the most
recent practicable date, showing the qualification to transact business
in such state as a foreign limited partnership or foreign corporation,
as the case may be, for (i) Borrower, (ii) in those states where
General Partner is required by law to be qualified to transact
business, General Partner, and (iii) in those states where the Company
is required by law to be qualified to transact business, the Company.
(e) Resolutions. A copy of a resolution or resolutions and
adopted by the Board of Directors of the General Partner, certified by
the Secretary or an Assistant Secretary of the General Partner as being
in full force and effect on the Agreement Execution Date, authorizing
the Advance provided for herein and the execution, delivery and
performance of the Loan Documents by the General Partner to be executed
and delivered by it hereunder on behalf of itself and Borrower.
Borrower shall also provide similar documentation for the Company.
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(f) Incumbency Certificate. A certificate, signed by the
Secretary or an Assistant Secretary of the General Partner and dated
the Agreement Execution Date, as to the incumbency, and containing the
specimen signature or signatures, of the Persons authorized to execute
and deliver the Loan Documents to be executed and delivered by it and
Borrower hereunder. Borrower shall also provide similar documentation
for the Company.
(g) Loan Documents. Originals of the Loan Documents (in
such quantities as the Lenders may reasonably request), duly executed
by authorized officers of the appropriate entity.
(h) Opinion of Borrower's Counsel. A written opinion, dated
the Agreement Execution Date, from outside counsel for the Borrower
which counsel is reasonably satisfactory to Agent, substantially in the
form attached hereto as Exhibit G.
(i) Opinion of General Partner's and Company's Counsel. A
written opinion, dated the Agreement Execution Date, from outside
counsel for the General Partner and the Company which counsel is
reasonably satisfactory to Agent, substantially in the form attached
hereto as Exhibit G.
(j) Financing Statements. Financing Statements, duly
executed by Borrower, as reasonably requested by Agent.
(k) ALTA Loan Policy. One or more ALTA loan policies of title
insurance (or "marked-up" and binding commitments for title insurance)
in the amount of the Aggregate Commitment (or, if more than one policy
is obtained, such portion of the Aggregate Commitment as may be
allocable to the particular Property as determined by Agent) as of the
applicable Property Acceptance Date issued by a title insurance company
satisfactory to the Agent insuring the Lenders' first mortgage lien
with respect to each of the Properties, showing only Permitted
Exceptions and containing all endorsements (including, without
limitation, a so-called "comprehensive" endorsement or, if applicable,
an endorsement deleting the "standard exceptions" from such title
policies) required by the Agent (except to the extent that the issuance
of a particular endorsement is prohibited by applicable state law),
together with:
(i) copies of all documents referred to therein;
and
(ii) satisfactory reinsurance agreements relating
thereto, if required by Agent.
(l) ALTA Surveys. A Survey of each of the Properties prepared
in accordance with the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys (1992)" and which are dated not earlier
than sixty (60) days prior to the Agreement Execution Date .and
certified to the Agent for the benefit of the Lenders. The survey for
each Property shall specify any flood zone designation(s) (based on
federal flood insurance rate maps or the state or local equivalent with
proper annotation) applicable to all or any portion of that Property.
21
(m) Property Agreements. Copies of all management and
leasing agreements (including, without limitation, all reciprocal
easement agreements) for the Properties in full force and effect as of
the Agreement Execution Date.
(n) Local Counsel Opinions. Written opinions, each dated the
Agreement Execution Date, from outside counsel in each of those
jurisdictions in which the Properties are located (which counsel shall
be reasonably satisfactory to Agent).
(o) Crossroads Lease. A copy of the Crossroads Lease,
certified as complete, true and correct by the Secretary or Assistant
Secretary of the General Partner.
(p) Ground Leases. Copies of all of the Ground Leases,
certified as complete, true and correct by the Secretary or Assistant
Secretary of the General Partner. Borrower shall hold a leasehold
interest only in the Ground Lease Properties.
(q) Ground Lease Estoppel Letters. Estoppel letters from
all ground lessors under the Ground Leases.
(r) Subordination and Attornment Agreement. A
subordination and attornment agreement executed by the Lessee with
respect to the Crossroads Lease.
(s) Franchise Agreements. Copies of the Franchise Agreements,
certified as true, correct and complete by the Secretary or the
Assistant Secretary of the General Partner, together with a "comfort
letter" addressed to Agent and executed by the franchisor under such
agreements.
(t) Insurance. Original or certified copies of insurance
policies or binders therefore, with accompanying receipts showing
prepayment of all premiums for one full year after the Agreement
Execution Date, evidencing that Borrower carries insurance on the
Properties which satisfies the Agent's insurance requirements,
including, without limitation:
(i) Property and casualty insurance (including
coverage for flood and other water damage for any Properties
located within a 100-year flood plain) in the amount of the
replacement cost of the improvements at the Properties;
(ii) Loss of rental income insurance in the
amount not less than one year's Gross Revenues from the
Properties; and
(iii) Comprehensive general liability insurance
in the amount of $1,000,000 per occurrence.
All insurance must be carried by companies with a Best
Insurance Reports (1992) Policyholder's and Financial Size Rating of "A-VII" or
better. All insurance required under this Agreement shall have endorsed thereon
the standard Deed of Trust or Mortgage clause in favor of Agent as agent for the
Lenders and shall include the Lenders as loss payees. All insurance required
22
under this Agreement shall contain provisions stating that (i) the insurance
policy is non-cancelable without at least thirty (30) days' notice to the Agent,
and (ii) no claims shall be paid without at least ten (10) days' notice to the
Agent.
(u) Searches. UCC financing statement, judgment,
bankruptcy and tax lien searches with respect to the Borrower and
Borrower's predecessor in title.
(v) Environmental Reports. A Phase I or, at the Lenders'
request, a Phase II or other environmental survey or audit for each of
the Properties dated within sixty (60) days of the Agreement Execution
Date in form and substance satisfactory to all of the Lenders and
prepared by a qualified environmental consultant satisfactory to the
Agent.
(w) Financial and Operating Statements. Actual operating
statements for the Properties for at least a full fiscal quarter for
the most recent fiscal quarter for which results are available as of
the Agreement Execution Date.
(x) No ERISA. Violations. Evidence that the Facility and
each Plan do not violate any laws, statutes, orders or regulations
governing pension or ERISA plans.
(y) Waiver. Execution and delivery by the lenders under the
Revolving Credit Facility of a waiver under such facility authorizing
the Facility described in this Agreement.
(z) Equity Contribution. Evidence that Borrower has
received an equity contribution of not less than $95,000,000 from the
Guarantors as the proceeds of a stock or other equity offering by the
Guarantors.
(aa) Other Evidence as Lenders May Require. Such
other evidence as Agent may reasonably request to establish
the consummation of the transactions contemplated hereby, the
taking of all necessary actions in any proceedings in
connection herewith and compliance with the conditions set
forth in this Agreement.
Each of AmSouth and Credit Lyonnais also shall approve or
disapprove in writing each item furnished to such Lender pursuant to Sections
4.1(o), 4. l(p), 4.1(v) and 4.1(w) within a reasonable period of time not to
exceed ten (10) Business Days following such Lender's receipt of a complete copy
of the final version of each such item and the failure of any such Lender to so
notify Agent on a timely basis shall be deemed to be an approval by such Lender
of such items.
4.2 Additional Information. Agent shall, at Borrower's sole cost and
expense, order appraisals (which appraisals shall conform to FIRREA
requirements) and engineering reports for each of the Properties on or after the
150th day following the Agreement Execution Date (the "Order Date"), unless
prior to the Order Date Borrower has furnished the Lenders with evidence (in
form and substance satisfactory to the Lenders) that, not later than the 180th
day following the Agreement Execution Date, the Facility and all other amounts
due and owing to the Agent and the Lenders under
23
the Loan Documents will be repaid in full. If Borrower notifies Agent of
Borrower's intent to repay the Loan and fails to make such repayment in full by
such 180th day, then Agent shall immediately order such appraisals and reports
at Borrower's expense.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower, General Partner and the Company hereby represent and warrant to the
Lenders as follows:
5.1 Existence. Borrower is and will continue to be a limited
partnership duly organized. validly existing and in good standing under the laws
of the State of Tennessee; the General Partner is and will continue to be a real
estate investment trust duly organized, validly existing and in good standing
under the laws of the State of Maryland and is and will at all times continue to
maintain its tax status as a real estate investment trust under Section 856 of
the Code; the Company is and will continue to be a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee
and is and will at all times continue to maintain its tax status as a real
estate investment trust under Section 856 of the Code; each of Borrower, the
General Partner and the Company is and will continue to be duly licensed and
qualified as a foreign partnership, corporation or otherwise in each
jurisdiction in which a Property is located or failure to be qualified or
licensed would have a materially adverse effect on Borrower, the General
Partner, the Company, any Property, or on any other Collateral or on the
business, assets, operations, property or financial or other condition of
Borrower, the General Partner or the Company; Borrower has and will continue to
have all requisite power and authority to borrow under the Facility and to
execute and deliver, and to observe and perform all of its obligations under,
this Agreement and the other Loan Documents; each of the General Partner and the
Company has and will continue to have all requisite power and authority to
execute and deliver, and to observe and perform all of their respective
obligations under, this Agreement and the other Loan Documents; the General
Partner has and will continue to have all requisite power and authority to be
the sole general partner of the Borrower and to execute and deliver on behalf of
the Borrower, as general partner, all of the Loan Documents, and to observe and
perform all of its obligations, as general partner of the Borrower, under the
Loan Documents; and each of Borrower, the General Partner and the Company has
and will continue to have all requisite power and authority to own their
respective assets and property and to carry on the business in which they are
engaged.
5.2 Authorization. The execution, delivery and performance by Borrower
and the Company of this Agreement and the other Loan Documents, the borrowings
by the Borrower under the Agreement and the other Loan Documents, and the
execution, delivery and performance by the Borrower, the Company and the General
Partner, individually and as the sole general partner of the Borrower, of all
other agreements and instruments (not mentioned above) to be executed and
delivered by them pursuant hereto or thereto or in connection herewith or
therewith, have been or will be duly authorized by all necessary corporate
action (including any necessary stockholder action), partnership action or other
action on the part of each of them, and do not and will not (i) violate (A)
24
any provision of any law, rule, regulation, order, writ, judgment, decree,
determination or award presently in effect having applicability to Borrower, the
General Partner or the Company, or of any of the organizational documents of
Borrower, the General Partner or the Company, or (B) any indenture, agreement or
other instrument to which Borrower or the General Partner is a party, or by
which Borrower, the General Partner or the Company or any of their respective
property or assets is bound, except in cases where such violation will not have
a materially adverse effect on any Property, any Collateral or the business,
assets, operations, property or financial or other condition of Borrower, the
General Partner or the Company, or (ii) be in conflict with, result in a breach
of or constitute (with the notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, except in cases where such
conflict, breach or default will not have a materially adverse effect on any
Property, any Collateral or on the business, assets, operations, property or
financial or other condition of Borrower. the General Partner or the Company, or
(iii) result in or require (except as specifically contemplated by this
Agreement) the creation or imposition of any lien of any nature upon any of the
assets or property of Borrower or the General Partner. This Agreement has been
duly executed and constitutes, and (when executed and delivered by Borrower
and/or the General Partner and/or the Company) each other Loan Documents now or
hereafter executed and delivered by Borrower and/or the General Partner and/or
the Company pursuant hereto or thereto or in connection herewith, or therewith,
will each constitute the legal, valid and binding obligation of Borrower and/or
the General Partner and/or the Company, respectively, enforceable against them
in accordance with their terms, except as enforcement may be limited by
bankruptcy insolvency and other similar laws affecting the enforcement of
creditors' rights generally and by moratorium laws from time to time in effect.
No authorization, consent, approval, license or formal exemption from, nor any
filing, declaration or registration with, any court, governmental agency or
regulatory authority (Federal, state, local or foreign), including, without
limitation, the Securities and Exchange Commission,. or with any securities
exchange, is required by Borrower, the General Partner or the Company in
connection with the making and performance by Borrower of this Agreement or the
Notes or with respect to the borrowings hereunder or for the execution, delivery
and performance by Borrower, the General Partner and the Company of the other
Loan Documents, except for those already obtained or completed.
5.3 Perfection of Security Interests. When duly recorded or filed in
the appropriate public records, the Mortgages .and the Financing Statements
shall each create in the Lenders, valid and perfected first liens upon the
property purportedly subject thereto (other than capital leases of a type
described in the definition of "Permitted Liens" contained herein) and no
further action will be required to perfect such liens.
5.4 Financial Statements.
(a) The December 31, 1996, audited consolidated financial
statements of each of Borrower, the General Partner and the Company
previously delivered by Borrower to the Lenders are correct in all
material respects and fairly set forth the financial condition of
Borrower, the General Partner and the Company, respectively, as of
December 31, 1996, and the results of Borrower's, the General Partner's
and the Company's respective operations and
25
changes in Borrower's, the General Partner's and the Company's
respective financial position for the period then ended, all in
accordance with generally accepted accounting principles applied on a
consistent basis. Since December 31, 1996, there has not occurred any
material adverse change in the business, assets, operations, property
or financial or other condition of Borrower, the General Partner or the
Company.
(b) All quarterly consolidated and consolidating unaudited
financial statements for the calendar quarter ending March 31, 1997 of
each of Borrower, the General Partner and the Company previously
delivered by Borrower to the Lenders are correct in all material
respects and fairly set forth the financial condition of Borrower, the
General Partner and the Company, respectively, as of the dates set
forth therein, and the results of Borrower's, the General Partner's and
the Company's respective operations and changes in Borrower's, the
General Partner's and the Company's respective financial position for
the period then ended, all in accordance with generally accepted
accounting principles applied on a consistent basis. Since the date of
such statements delivered by Borrower to the Lenders, there has not
occurred any material adverse change in the business, assets,
operations, property or financial or other condition of Borrower, the
General Partner or the Company.
(c) All monthly unaudited individual and consolidated
operating statements and all annual individual and consolidated
operating statements covering each of the Properties previously
delivered by Borrower to the Lenders are correct in all material
respects and fairly set forth the operating results of the Properties
as of the dates set forth therein, and the results of each Property's
respective operations and changes in each Property's operating
activities for the period then ended, all in accordance with generally
accepted accounting principles applied on a consistent basis. Since the
date of such statements, there has not occurred any material adverse
change in the operations of any Property.
5.5 Litigation. Except as set forth on Schedule 2 attached to this
Agreement, there are no actions, audits or proceedings pending or, to the best
knowledge of Borrower, threatened against Borrower, the General Partner or the
Company or any of their respective properties or assets by or before any court
or any Federal, state, local, foreign or other governmental agency or regulatory
authority which, in the reasonable judgment of Borrower, after consultation with
counsel, would have or could have a materially adverse effect on any of the
Properties or the Collateral or on the business, assets, operations, property or
financial or other condition of Borrower, the General Partner or the Company or
would or could materially impair its ability of Borrower, the General Partner or
the Company to perform their respective obligations under this Agreement, the
Notes and the other Loan Documents.
5.6 Ownership of Assets.
(a) Each of Borrower, the General Partner and the Company own
fee title to, or a leasehold estate in, or other title or ownership
interest in all their respective properties and assets including,
without limitation, the properties and assets reflected on the audited
26
consolidated financial statements referred to in Section 5.4(a) above
and assets and properties acquired since December 31, 1996, except for
such properties and assets as have been disposed of since December 31,
1996.
(b) The Borrower owns fee title to all of the Properties
(other than the Ground Lease Properties with respect to which
Borrower's interest is a leasehold estate). The fee title to and
leasehold estates in the Properties are and will continue to be owned
and held by the Borrower free and clear of all liens and monetary
encumbrances of any nature whatsoever (except for the Permitted
Exceptions). The Ground Leases are in full force and effect and no
event has occurred, which but for the passage of time or notice, or
both, would constitute a default under any Ground Lease, and no action
has commenced and no notice has been given or received for the purposes
of terminating any Ground Lease. All non-monetary encumbrances
affecting the Properties will either benefit the Properties or will
enhance the integrated use, operation and management of the Properties
or will not otherwise have a materially adverse effect on the title,
ownership, value, use or operation of any of the Properties.
5.7 Taxes. Each of Borrower, the General Partner and the Company has
filed or caused to be filed all United States and state income tax returns which
are required to be filed and has paid or caused to be paid all taxes shown on
such returns or on any assessment made against it, except in cases where such a
failure to file or to pay would not have a materially adverse effect on any
Property, any Collateral or on the business, assets, operations, property or
financial or other condition of Borrower or the General Partner. Each of
Borrower, the General Partner and the Company has filed or caused to be filed
all United States, state, local and foreign tax returns (other than income tax
returns) which are required to be filed and has paid or caused to be paid all
taxes shown on such returns or on any assessment made against it and all other
taxes, fees or other charges imposed on it by any governmental authority, agency
or instrumentality which have become due and payable (other than taxes,
assessments, fees and other charges the validity or amount of which is being
contested in good faith by appropriate proceeding or the failure to pay which
would not have a materially adverse effect on any Property, any Collateral or on
the business, assets, operations, property or financial or other condition of
Borrower, the General Partner or the Company). No tax liens have been filed
against Borrower, the General Partner or the Company or against their respective
assets and property (other than those the validity or amount of which is being
contested in good faith by appropriate proceedings or the foreclosure of which
would not have a materially adverse effect on any Property, any Collateral or on
the business, assets, operations, property or financial or other condition of
Borrower, the General Partner or the Company), and no material claims are being
asserted in respect of any taxes (other than those being contested as aforesaid
or those that are not material as aforesaid).
5.8 No Defaults.
(a) Neither Borrower, the General Partner nor the Company
is in default in any respect under or in respect of any contract,
agreement or other instrument to which it is a party or by which it or
27
or its property or assets may be bound, except in Case where such
default has no materially adverse effect on any Property, any
Collateral or on the business, assets, operations, property or
financial or other condition of Borrower or the General Partner. No
Event of Default has occurred and is continuing and no event has
occurred which but for notice, lapse of time, or both, would
constitute an Event of Default. Neither Borrower, the General Partner
nor the Company is in default under any order, judgment, award or
decree of any court, arbitrator or other governmental authority binding
upon or effecting it or by which any of its property or assets may be
bound or affected, except in cases where such default has no materially
adverse effect on any Property, any Collateral or on the business,
assets, operations, property or financial or other condition of
Borrower or the General Partner, and no such order, judgment, award or
decree materially adversely affects the ability of Borrower, the
General Partner or the Company, to carry on its business as now
conducted or the ability of Borrower, the General Partner or the
Company, to perform their respective obligations under this Agreement,
the Notes and the other Loan Documents.
(b) There exists no default by Borrower, the General Partner
or the Company under any deed of trust, mortgage, pledge or other
security agreement affecting any Property or any Collateral, or any
portion thereof, or under any Material Agreement pertaining to any
Property, or by which any portion of any of the Property or the
Collateral may be bound.
5.9 Insurance. Each of Borrower, the General Partner and the Company
maintains or causes to be maintained by Lessee or Other Lessee with financially
sound and reputable insurance companies, with premiums at all times currently
paid, property and casualty insurance upon fixed assets and inventories, public
liability insurance, fidelity bond coverage, business interruption insurance,
and all insurance required by law, all in form and amounts required by law and
customary to the respective natures of their businesses and properties, and
including, without limitation, the insurance policies required pursuant to
Section 4. l(s) of this Agreement, except in cases where failure to maintain
such insurance will not have or potentially have a materially adverse effect on
any of the Properties or the Collateral or on the business, assets, operations,
property or financial or other condition of Borrower, the General Partner or the
Company.
5.10 Accuracy of Furnished Information. Neither this Agreement, any
other Loan Document nor any document, financial statement, report, notice,
schedule, certificate, statement or other writing furnished to or to be
furnished to the Lenders by Borrower, the General Partner or the Company in
connection with the Facility or otherwise in connection with the transaction
contemplated hereby, contains or will contain any untrue or misleading statement
of, or omission of, any material fact as of the date upon which the same is so
furnished.
5.11 Compliance with Laws.
(a) All of the Properties and their use comply and will
continue to comply to all material respects with all applicable zoning
resolutions, building codes, fire safety, environmental subdivision and
other applicable laws, rules and regulations including, without
limitation, the Americans with Disabilities Act.
28
(b) Borrower has no knowledge of any notices of violation of
Federal law or municipal ordinances or orders or requirements of the
states in which the Properties are located or an)' municipal department
or other governmental authority.
5.12 Condition of Properties. No portion of any Property nor any
improvements located on any Property which are material to the operations, use
or value of a Property are damaged or injured in any material respect as a
result of any fire, explosion, accident, flood or other casualty.
5.13 Franchise Agreements. All required Franchise Agreements are
in full force and effect and are free from default.
5.14 Leases. Except for the Crossroads Leases, the Ground Leases, the
space leases described on Schedule 2 attached to this Agreement and the other
leases described on Schedule 3 attached to this Agreement, there are no other
leases concerning or with respect to any of the Properties or any portions
hereof, including any personal property located thereon to which Borrower is a
party.
5.15 Condemnation. Except for the proposed condemnation of a
non-material portion of the Greenville, North Carolina Property in connection
with a local sanitary sewer project (as previously disclosed in writing to, and
approved by, Agent), no condemnation or eminent domain proceeding has been
commenced or to the knowledge of Borrower is threatened against any Property.
5.16 Margin Stock. Neither Borrower, the General Partner nor the
Company is engaged in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation G or U
of the Board of Governors of the Federal Reserve System of the United States).
No part of the proceeds of any advance made under the Facility will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for the purpose of
repaying any loan the proceeds of which were used for such purpose. If requested
by Agent, Borrower, the General Partner will furnish to Agent a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in said
Regulation U. No part of the proceeds of any advance made under the Facility
will be used for any purpose that violates, or which is inconsistent with, the
provisions of Regulation G, T, U or X or any other regulation of the Board of
Governors of the Federal Reserve System of the United States.
5.17 ERISA. Neither Borrower, the General Partner nor the Company has
taken any action which would cause it to become an "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended from time to time ("ERISA"), or a "governmental plan" as defined in
Section 3(32) of ERISA or a "plan" as defined in Section 4975(e)(1) of the
Internal Revenue Code, or which would cause its assets to become "plan assets"
as defined in 29 C.F.R. Section 2510.3-101.
5.18 Use of Loan Proceeds. The proceeds of any and all advances
under the Facility shall be used for the purposes set forth in this Agreement
and for no other purposes.
29
5.19 Solvency. Borrower, the General Partner and the Company taken as a
whole are each and, after giving effect to all of the transactions contemplated
by this Agreement and the other Loan Documents, will each continue to be, in a
solvent condition. As used herein, "solvent" means, when used with respect to
any Person, that (i) the present fair saleable value of such Person's assets is
in excess of the total amount of its liabilities (including contingent
liabilities); (ii) such Person is able to pay its debts as they become due; and
(iii) such Person does not have unreasonably small capital to carry on such
Person's business as therefore operated and all businesses in which such Person
is about to engage.
5.20 Investment Company Act. Borrower is not, and will by such acts
as may be necessary, continue not to be, an investment company within the
meaning of the Investment Company Act of 1940.
5.21 Public Utility Holding Company Act. Borrower is not a "holding
company" or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company," or a "subsidiary company" of a "holding company" within the
definitions of the "Public Utility Company Act of 1935", as amended.
5.22 Brokers. Borrower has dealt with no brokers in connection with the
Facility, and no brokerage fees or commissions are payable by or to any Person
in connection with this Agreement or the Facility. The Lenders shall not be
responsible for the payment of any fees or commissions to any broker and
Borrower shall indemnify, defend and hold the Lenders harmless from and against
any claims, liabilities, obligations, damages, costs and expenses any claims,
liabilities; obligations, damages, costs and expenses (including reasonable
attorneys' fees and disbursements) made against or incurred by the Lenders as a
result of claims made or actions instituted by any broker or Person claiming by,
through or under Borrower in connection with the Facility.
5.23 (Intentionally Deleted.)
5.24 Foreign Person. Borrower is not a "foreign person" within the
meaning of Section 1445 or 7701 of the Internal Revenue Code.
5.25 Trade Name. Borrower uses no trade name and has not and does
not do business under any name other than its actual name set forth herein. The
principal place of business of Borrower is as stated in the recitals hereto.
The representations and warranties of Borrower, General Partner and the
Company under this paragraph shall be deemed to be continuing representations
and warranties which may at all times during the term of the Credit Facility be
relied upon by the Lenders (and each Participant) unless Agent shall have been
informed by Borrower of any change in fact or circumstances which would effect
the continuing accuracy of the representations and warranties set forth in this
paragraph. Borrower shall promptly inform Agent (but in no event later than five
(5) business days after Borrower shall have knowledge thereof) of the occurrence
of any fact, circumstance or event which
30
would change or materially affect in any way the continuing accuracy of the
representations and warranties set forth in this paragraph or which would render
any such representation or warranty inaccurate or false in any material respect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower (and the General Partner and the Company, if expressly
included in Sections contained in this Article) covenant and agree that until
the full and final payment of all obligations incurred under the Loan Documents
they will:
6.1 Notices. Promptly give written notice to Agent of:
(a) any Default or Event of Default, specifying the nature and
the period of existence thereof and what action has been taken or been
proposed to be taken with respect thereto;
(b) all claims filed against any property owned by the
Borrower or the General Partner which, if adversely determined, could
have a material adverse effect on any Collateral or the ability of the
Borrower, the General Partner or the Company to meet any of their
obligations under the Loan Documents;
(c) effect or cause a General Partner, the occurrence of any
other event which might have a material adverse material adverse
financial change on or with respect to the Borrower, the Company or any
Collateral;
(d) any change in the equity ownership of any Collateral;
(e) any Reportable Event or any "prohibited transaction" (as
such term is defined in Section 4975 of the Code) in connection with
any Plan or any trust created thereunder, which may, singly or in the
aggregate materially impair the ability of the Borrower or the General
Partner to repay any of its obligations under the Loan Documents,
describing the nature of each such event and the action, if any, the
Borrower, the General Partner, the Company, as the case may be,
proposes to take with respect thereto;
(f) any default under any Ground Lease, deed of trust or
mortgage relating to any Collateral, or any breach or default under any
Material Agreement relating to any Collateral; and
(g) any notice from any federal, state, local or foreign
authority regarding any Hazardous Material, asbestos, or other
environmental condition, proceeding, order, claim or violation
affecting any of the Properties.
31
6.2 Financial Statements, Reports, Etc. Borrower shall furnish or
cause to be furnished to each Lender each of the following:
(a) annually, within ninety (90) days next following the end
of each calendar year during the term of the Facility, individual and
consolidated financial and operating statements in the form attached
hereto as Exhibit I covering the operation of each of the Properties
from time to time constituting part of the Collateral for the Facility
for such calendar year, which financial and operating statements shall
show the actual performance of each of the Properties from time to time
constituting part of the Collateral for the Facility for the
immediately preceding calendar year and shall otherwise be in form and
substance reasonably satisfactory to Agent;
(b) annually, within ninety (90) days next following the end
of each calendar year during the term of the Facility, complete
executed copies of annual audited consolidated and annual unaudited
consolidating financial statements in the form attached hereto as
Exhibit J for each of Borrower, the General Partner and the Company for
such fiscal year, and containing a fully itemized statement of profit
and loss and of surplus and a balance sheet;
(c) annually, not later than the first business day of each
calendar year during the term of the Facility, individual and
consolidated operating and capital expenditure budgets pertaining to
such calendar year in the form attached hereto as Exhibit K with
respect to each of the Properties from time to time constituting part
of the Collateral for the Facility;
(d) quarterly, within forty-five (45) days next following the
end of each calendar quarter during the term of the Facility, quarterly
consolidated and consolidating unaudited financial statements in the
form attached hereto as Exhibit L for each of Borrower, the General
Partner and the Company;
(e) quarterly (unless otherwise requested by Agent more
frequently than quarterly, but in no event more frequently than
monthly) not later than thirty (30) days after the end of each calendar
quarter (or such shorter period of time if requested more frequently
than quarterly) during the term of the Facility, monthly unaudited
individual and consolidated operating statements in the form attached
hereto as Exhibit M covering each of the Properties from time to time
constituting part of the Collateral for the Facility, reconciled to the
then current annual individual and consolidated operating budgets for
the Properties;
(f) copies of all other quarterly and annual filings of
Borrower, the General Partner or the Company with the Securities and
Exchange Commission and other publicly released information concurrent
with such filing or public releases;
(g) copies of all correspondence (other than non-material
correspondence pertaining to administrative or other day-to-day matters
of operation) between Borrower and (y) the issuer of the Franchise
Agreement for the Properties and (z) the Lessee of the
32
Crossroads Lease, concurrent with Borrower's sending any such
correspondence to such issuer or such lessee and within five (5) days
following the receipt by Borrower of any such correspondence from any
such issuer or such lessee;
(h) within ninety (90) days next following the end of each
calendar year during the term of the Facility, (i) a compliance
certificate in the form of Exhibit P attached hereto, and (ii) a
certificate signed by the chief financial officer or the chief
executive officer of Borrower certifying on the date thereof either
that there does not exist an event which constitutes, or which upon
notice or lapse of time or both would constitute, a Default or an Event
of Default under. any of the Loan Documents, and if such Default or
Event of Default exists, the nature thereof and the period of time it
has existed; and
(i) within ten (10) days after Agent's request, such further
detailed financial or other information with respect to Borrower, the
General Partner, the Company, the Properties or the operation of the
Properties, as may be reasonably requested by Agent.
All audited financial statements required to be prepared pursuant to
the provisions of this paragraph shall be prepared and certified by an
independent certified public accountant acceptable to Agent, shall be prepared
in accordance with GAAP, and shall be in form and substance satisfactory to
Agent. All unaudited financial statements delivered to Lenders' pursuant to the
provisions of this paragraph shall be certified to be true and correct in all
material respects by the chief financial officer or the chief executive officer
of the General Partner.
6.3 Existence and Conduct of Operations. Except as permitted herein,
maintain and preserve its existence and all rights, privileges and franchises
now enjoyed and necessary for the operation of its business, including remaining
in good standing in each jurisdiction in which business is currently operated.
The Borrower, the General Partner and the Company shall carry on and conduct
their respective businesses in substantially the same manner and in
substantially the same fields of enterprise as presently conducted.
6.4 Appraisals of Properties. Reimburse the Lenders for all costs and
expenses incurred in connection with Agent's obtaining the appraisals for each
of the Properties if ordered by Agent pursuant to Section 4.2 hereof.
6.5 Maintenance of Properties. Cause the Properties to be maintained,
preserved, protected and kept in good repair, working order and condition, and
make all necessary and proper repairs, renewals and replacements, normal wear
and tear excepted.
6.6 Insurance. Cause to be provided a certificate of insurance from all
insurance carriers who maintain policies with respect to the Properties within
thirty (30) clays after the end of each fiscal year, evidencing that the
insurance required to be furnished to the Lenders pursuant to Section 4. l(s)
hereof is in full force and effect. Borrower shall timely pay, or cause to be
paid, all premiums on all insurance policies required under this Agreement from
time to time. Borrower shall promptly notify
33
the insurance carriers or agents therefor (with a copy of such notification
being provided simultaneously to Agent) if there is any occurrence which, under
the terms of any insurance policy then in effect with respect to the Properties,
requires such notification from Borrower.
6.7 Payment of Obligations. Cause the payment of all taxes,
assessments, governmental charges and other obligations when due, except such as
may be contested in good faith or as to which a bona fide dispute may exist, and
for which adequate reserves have been provided in accordance with sound
accounting principles used by Borrower on the date hereof.
6.8 Compliance with Laws. Cause compliance in all material respects
with all applicable laws; rules, regulations, orders and directions of any
governmental authority having jurisdiction over Borrower, General Partner, the
Company, any of the Collateral or any of their respective businesses, except in
cases where such default has no materially adverse effect on any Property, any
Collateral or on the business, assets, operations, property or financial or
other condition of Borrower, the General Partner or the Company, and no such
order, judgment, award or decree materially adversely affects the ability of
Borrower, the General Partner or the Company, to carry on its business as now
conducted or the ability of Borrower, the General Partner or the Company, to
perform their respective obligations under this Agreement, the Notes and the
other Loan Documents.
6.9 Adequate Books. Maintain adequate books, accounts and records in
order to provide financial statements in accordance with GAAP and, if requested
by the Lenders, permit employees or representatives of Lenders at any reasonable
time and upon reasonable notice to inspect and audit the properties of Borrower,
the General Partner, the Company and of the Consolidated Operating Partnership,
and to examine or audit the inventory, books, accounts and records of each of
them and make copies and memoranda thereof.
6.10 ERISA. Comply in all material respects with all requirements
of ERISA applicable to it with respect to each Plan.
6.11 Maintenance of Status. The Company shall at all times (i) remain
as a corporation listed and in good standing on the New York Stock Exchange
(NYSE), and (ii) maintain the Company's status as a real estate investment trust
in compliance with all applicable provisions of the Code. General Partner shall
at all times maintain its status as a real estate investment trust in compliance
with all applicable provisions of the Code.
6.12 Use of Proceeds. Use the proceeds of the Facility for the
acquisition of the Properties.
6.13 FF&E Replacement and Capital Expenditures. Commencing in the first
calendar quarter of 1998 and thereafter during succeeding calendar quarter,
Borrower shall expend and/or reserve for FF&E replacement or capital
expenditures approved by Agent for each Property an amount which is not less
than four percent (4 %) of the cumulative gross hotel revenues from the
Properties as measured for the Applicable Period (as defined below). As used
herein, the term
34
"Applicable Period" shall mean the period commencing on July 1, 1997 and ending
on the last day of the calendar quarter immediately preceding the date on which
Borrower's cumulative expenditures are determined. If in any given calculation
period less than four percent (4%) of the gross room revenues of the Properties
for such period is incurred by Borrower on replacement of FF&E used in
connection with the Properties and for capital expenditures (as determined in
accordance with GAAP) for the Properties, as substantiated by evidence in form
and detail reasonably satisfactory to Agent, then Borrower shall establish and
maintain with Agent an FF&E replacement and/or capital expenditure reserve as
provided in this Section. The amount to be deposited by Borrower into the
reserve for any quarter shall equal the difference between four percent (4%) of
the gross hotel revenues for the Properties and the actual amount of FF&E
replacement and capital expenditures made by Borrower for such quarter. All
reserve amounts shall be held by Agent in an interest-bearing account entitled
"Equity Inns/Term Loan FF&E Reserve Account, in trust for Agent" established at
The First National Bank of Chicago (the "FF&E Reserve"), and shall, until
disbursed in accordance with the provisions of this paragraph hereinafter set
forth, constitute additional collateral for the payment of the Obligations. Each
deposit to be made by Borrower pursuant to the Section shall be made with Agent
not later than the forth-fifth (45th) day following the beginning of each
calendar quarter (commencing in 1998), which Upon Borrower's delivery to Agent
of a request for disbursement in the form of Exhibit N attached hereto (the
"FF&E Reserve Request"), which FF&E Reserve Request shall not be submitted more
than once in any given calendar month and not less than twenty (20) days after
submission of the immediately preceding FF&E Reserve Request, and to the extent
that there are available funds in the FF&E Reserve, Agent shall authorize and
shall make a disbursement to Borrower from the FF&E Reserve in an amount equal
to the amount of such excess to the extent that the amounts requested by
Borrower are for items of FF&E or for such capital expenditure items. Borrower
shall reimburse Agent for any out-of-pocket costs or expenses incurred by Agent
in connection with evaluating such FF&E Reserve Requests provided that Agent
shall have notified Borrower prior to retaining any consultant in connection
with such evaluation and Borrower shall have failed to furnish the additional
evidence deemed necessary by Agent to satisfactorily substantiate such costs.
Unless otherwise agreed to by Agent in the exercise of its sole discretion, the
FF&E Reserve shall only be available to fund amounts owed by Borrower to
third-party vendors or providers of services pursuant to written bona fide
third-party contracts or agreements and shall not be available to fund amounts
owed by Borrower to any Affiliates.
6.14 Material Agreements. Borrower shall comply; with all of the
material terms and conditions of all of the Material Agreements.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower, the General Partner and the Company covenants and agrees
that, so long as the Commitment shall remain available and until full and final
payment of all obligations incurred under the Loan Documents, without the prior
written consent of the Lenders, they will not:
35
7.1 Change in Business. Engage in any business activities or operations
other than (i) the ownership and operation of the Properties and other hotel
properties owned by Borrower from time to time, or (ii) other business functions
and transactions related to the financing, ownership, acquisition and/or
development of hotel properties compatible with the Properties, or expand the
Properties or otherwise materially change the nature of the use of the
Properties. Nothing contained in the foregoing shall be deemed to prohibit
Borrower, the General Partner, the Company or any of their respective Affiliates
or subsidiaries from acquiring mortgages secured by hotels which are generally
comparable in nature to the Properties constituting part of the Collateral for
the Facility provided that (i) Borrower shall inform Agent in advance of its
intention to acquire such mortgages, (ii) Borrower shall provide such
information with respect thereto as shall be requested by Agent and (iii) the
Lenders shall be reasonably satisfied that the acquisition of any such mortgages
are for the sole purpose of enabling Borrower to acquire ownership of the
collateral therefor through foreclosure of such mortgages or deed-in-lieu
thereof.
7.2 Change of Ownership of Properties. Change the ownership and/or
management of the Properties.
7.3 Ratio of Net Rent to Interest Expense. Permit the ratio of (i)
"Base Rent" and "Percentage Rent" (as defined in the Crossroads Lease) payable
to the Borrower under the Crossroads Lease (or any replacement lease) for any
full or partial calendar quarter after the Agreement Effective Date on account
of all Properties owned by the Borrower as of the last day of such full or
partial calendar quarter, less an FF&E reserve charge of 4% of "Gross Revenues"
(as defined in the Crossroads Lease) from such Properties, less real estate
taxes and ground lease rent payable by the Borrower on such Properties, as
accrued on a straight-line basis, for such full or partial calendar quarter, to
(ii) all interest accrued for such full or partial calendar on that portion of
the Loan for such quarter attributable to such Properties to be less than 1.75
to 1.
7.4 Use of Proceeds. Apply or permit to be applied any proceeds of any
Advance directly or indirectly, to the funding of any purchase of, or offer for,
any share of capital stock of any publicly held corporation unless the board of
directors of such corporation has consented to such offer prior to any public
announcements relating thereto and the Lenders have consented to such use of the
proceeds of the Facility.
7.5 Purchase Price. Permit the aggregate Net Purchase Price of all
Properties securing the Facility at any time, excluding the Ground Lease
Properties), to be less than (i) $100,000,000, or (ii) if and only if the
then-current outstanding principal balance of the Facility is less than
thirty-five percent (35%) of the aggregate Net Purchase Price of all Properties
then securing the Facility, $75,000,000.
7.6 Value of Property as a Percentage of Purchase Price. Permit the
percentage of the aggregate Net Purchase Price of all Properties then securing
the Facility (excluding the Ground Lease Properties) represented by the Net
Purchase Price of any single Property then securing the Facility
36
to be greater than (i) eleven percent (11%), or (ii) if and only if the
then-current outstanding principal balance of the Facility is less than
thirty-five percent (35 %) of the aggregate Net Purchase Price of all Properties
then securing the Facility, fifteen percent (15 %).
7.7 Liens. Create, assume or suffer to exist any Lien (including the
Lien of an attachment, judgment or execution) on the Properties or on any
Collateral, whether now owned or hereafter acquired, except Permitted Liens.
Create, assume or suffer to exist any Lien (including the Lien of an attachment,
judgment or execution) on the General Partner's partnership interest in
Borrower.
7.8 Regulation U. Use any of the proceeds of the Advance to
purchase or carry any Margin Stock.
7.9 Net Worth. At any time maintain a net worth (i.e. value of total
assets less total liabilities, as determined on the basis of GAAP) less than the
aggregate of $190,000,000 plus ninety percent (90%) of the net proceeds (i.e.,
after the expenses incurred in connection with such offerings) of all equity
offerings of the Borrower after May 9, 1997. The Borrower shall deliver to Agent
on or before the thirtieth (30th) day following the commencement of each
calendar quarter during the term of the Facility evidence reasonably
satisfactory to Agent substantiating compliance with the provisions of this
Section.
7.10 Partnership Distributions. Except as otherwise shall be required
by law in order for General Partner and the Company to maintain their respective
status as real estate investment trusts, permit the aggregate amount of
dividends paid by General Partner and/or the Company (without duplication) for
the most recent four fiscal quarters for which financial reports are available
to exceed ninety percent (90%) of the consolidated "funds from operations" of
General Partner or the Company, as the case may be, for such four fiscal
quarters, as determined on a consistent basis with the prior financial
statements of General Partner and the Company, as approved by the Agent.
7.11 Total Liabilities. Permit the aggregate of (1) the outstanding
balance of the Facility, (2) the outstanding under the Revolving Credit
Facility, and (3) the maximum committed amount of Other Permitted Debt
(irrespective of whether such maximum committed amount of Other Permitted Debt
is fully outstanding) (items (1), (2) and (3) above are collectively, "Total
Liabilities") to exceed forty-five percent (45 %) of the aggregate of (i) the
lesser of (a) the Appraised Value of all hotels which are then part of the
collateral pool for the Revolving Credit Facility (the "Revolving Collateral"),
and (b) the Cost Basis of all Revolving Collateral and (ii) the Cost Basis of
the Properties and all other hotels owned by Borrower and its Affiliates
(including EQI Financing Partnership I, L.P., and Equity Inns Partnership/West
Virginia, L.P.) which do not constitute part of the Collateral for the Facility,
it being understood that the Cost Basis of hotels not constituting part of the
Collateral for the Facility will be determined in the same manner as the Cost
Basis of the Revolving Collateral.
7.12 Level Two Adjusted Earnings. At any time permit the ratio of
Level Two Adjusted Earnings of the Borrower, the General Partner and the
Company, on a consolidated basis, to debt service on the Total Liabilities
37
(including actual interest and scheduled principal payments as well as
interest and scheduled principal payments that would be required if all
committed but unfunded portions of Total Liabilities were funded) to be less
than 1.75 to 1.
7.13 Cost Basis. Permit: (a) more than thirty percent (30%) of the total
Cost Basis of all hotels owned by Borrower and its consolidated Subsidiaries to
be attributable to hotels located in a single state; or (b) more than ten
percent (10%) of the total Cost Basis of all hotels owned by Borrower and its
consolidated Subsidiaries to be attributable to a single hotel.
7.14 Other Indebtedness. Permit Borrower, the General Partner, the
Company or any of their respective Affiliates (excluding, however, companies
that are controlled by Xxxxxxx X. XxXxxxx, Xx.) or subsidiaries to incur (either
directly or as a guarantor) any liability (whether recourse or non-recourse) for
the payment of any indebtedness other than the Obligations and the Other
Permitted Debt. In addition to the outstanding under the Revolving Credit
Facility, (y) Borrower shall be permitted to borrower, assume loans, enter into
leases and acquire assets with purchase money financing provided that Borrower
shall otherwise remain in compliance with the provisions of this Agreement and
the other Loan Documents and that the aggregate indebtedness incurred by
Borrower shall in no event or under any circumstances exceed (A) $175,000,000
less (B) the then-current principal balance of the Obligations, and (z) the
General Partner and the Company shall be permitted to guaranty repayment of such
obligations to the extent required, provided that (i) no such obligation shall
be secured in whole or in party by any Property or any other Collateral from
time to time securing payment of the Facility, (ii) the Supplemental Debt
Service Coverage Ratio and the Supplemental Loan to Value Requirement contained
in the Revolving Credit Agreement shall continue to be complied with both before
and after the incurring of any such obligations by Borrower, (iii) Borrower
shall inform Agent in advance of its intention to incur such obligations and
shall provide to Agent a detailed term sheet setting forth the terms and
conditions which will pertain to such obligations and containing such other
information with respect thereto as shall be requested by Agent, (iv) all of the
other affirmative and negative covenants and representations and warranties
contained in this Agreement and the other Loan Documents shall continue to be
complied with both before and after the incurring of any such obligations by
Borrower, and (v) Agent shall be satisfied that such obligations will not have a
materially adverse effect on Borrower, the General Partner, the Company, Lessee
or any Other Lessee, or on their ability to perform their respective obligations
under the Loan Documents, or on any Property or any other Collateral and have
approved the incurrence of such obligations. Any obligations incurred by
Borrower in compliance with the provisions of the preceding sentence of this
subparagraph is herein referred to as "Other Permitted Debt". Borrower shall
furnish Agent, within fifteen (15) days after the end of each calendar quarter
during the term of this Agreement (or more frequently if requested by Agent),
with a detailed itemized list of all obligations of Borrower in respect of Other
Permitted Debt and which is otherwise in a form sufficient to enable Agent to
confirm Borrower's compliance with its obligations under this Agreement in
respect of the Other Permitted Debt. The occurrence of a default in respect of
any Other Permitted Debt shall constitute an Event of Default under this
Agreement and the other Loan Documents.
38
7.15 Material Agreements. Without the prior written consent of Agent,
(i) transfer, sell, assign, pledge, encumber or grant, or consent to or permit
the transfer, sale, assignment, pledge, encumbrance or granting of a security
interest in any Material Agreement (except pursuant to the Loan Documents) or
(ii) terminate, modify or amend, or consent to the termination, modification or
amendment of any Material Agreement.
ARTICLE VIII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute an Event of Default:
8.1 Nonpayment of Principal and Interest. Borrower fails to pay
any portion of the Obligations when due.
8.2 Certain Covenants. A breach of any of the covenants contained
in Article VII of this Agreement.
8.3 Security Documents. The occurrence of any fact, circumstance or
event which is specifically characterized under any provision of any Security
Document as an "Event of Default" within the meaning given to such term pursuant
to the provisions of this Agreement.
8.4 Representations and Warranties. Any representation or warranty of
Borrower, the General Partner, the Company or of any Person guaranteeing payment
of the Obligations or any portion thereof or performance by Borrower of any of
the terms of this Agreement or any of the other Loan Documents made in any such
guaranty, this Agreement or any of the other Loan Documents, or in any
certificate, reports, financial statement or other instrument furnished in
connection with the making of the Notes, the Mortgages, this Agreement, the
Guaranty, any other guaranty or any other Loan Document, proves false or
misleading in any material respect.
8.5 Property Assessments. Borrower fails to pay within twenty (20) days
of notice and demand by Agent any installment of any assessment against any
Property for local improvements heretofore or hereafter laid, which assessment
is or may become payable in annual or periodic installments and is or may become
a lien on such Property, notwithstanding the fact that such installment may not
be due and payable at the time of such notice and demand.
8.6 Federal Tax Lien. Any Federal tax lien shall be filed against
Borrower, the General Partner, the Company or any Property and the same is not
discharged of record within thirty (30) days after the same is filed (unless the
same is being contested in good faith by appropriate proceeding).
8.7 FF&E. Without the consent of Agent, any FF&E (except for normal
replacement of the FF&E) shall be removed from any Property, or if without the
consent of Agent any Property or any FF&E is demolished or materially altered.
39
8.8 Insurance. Borrower fails to keep the insurance policies in
full force and effect, or the insurance policies are not delivered to Lenders
upon request.
8.9 Crossroads Lease. Without the consent of Agent, the
Crossroads Lease is canceled or modified or if any portion of the rents
thereunder is paid for a period of more than one (1) month in advance or if any
of the rents thereunder are further assigned.
8.10 Ground Lease. Borrower shall default beyond the expiration of any
applicable notice and cure periods in the observance or performance of any term,
covenant or condition of any Ground Lease on the part of Borrower, as ground
lessee thereunder, to be observed or performed, unless any such observance or
performance shall have been waived or not required in writing by the ground
lessor under such Ground Lease, or if any one or more of the events referred to
in such Ground Lease shall occur which would or may cause such Ground Lease to
terminate without notice or action by the ground lessor thereunder or which
would entitle the ground lessor under such Ground Lease to terminate such Ground
Lease and the term thereof by giving notice to Borrower, as ground lessee
thereunder, or if the leasehold estate created by such Ground Lease shall be
surrendered, in whole or in pan, or if such Ground Lease shall be terminated or
canceled for any reason or under any circumstance whatsoever, or if any of the
terms, covenants or conditions of such Ground Lease shall in any manner be
modified, changed, supplemented, altered or amended without the consent of
Agent.
8.11 Material Agreements. Borrower or other Person shall be in default
under any mortgage, deed of trust, pledge or other security agreement
(including, without limitation, any such agreement now or hereafter held by
Lenders) affecting or relating to any of the Properties, or any other Collateral
or any portion thereof or under any Material Agreement affecting or relating to
the Properties or the Collateral, or any portion thereof.
8.12 Property Liens. Any of the Properties shall become subject (i) to
any tax lien, other than a lien for local real estate taxes and assessments not
due and payable, or (ii) to any lis pendens, notice of pendency, stop order,
notice of intention to file mechanic's materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same shall not
either be discharged of record or in the alternative insured over to the
satisfaction of Agent by the title company insuring the lien of the Mortgage
pertaining to the Property in question within a period of thirty (30) days after
the same is filed or recorded, and irrespective of whether the same is superior
or subordinate in lien or other priority to the lien of the Mortgage and
irrespective of whether the same constitutes a perfected or inchoate lien or
encumbrance on the Property in question or any portion thereof or is only a
matter of record or notice.
8.13 Certain Covenants. Borrower, General Partner or the Company fail
for any reason to comply in all respects with the covenants set forth in
Articles VI and VII of this Agreement at any time during the term of the
Facility, or if any representation or warranty set forth in Article V of this
Agreement or elsewhere in the Loan Documents shall at any time cease to be true
and accurate in all material respects;
40
8.14 Bankruptcy. If:
(a) Borrower, the General Partner or the Company shall
make an assignment for the benefit of creditors; or
(b) a court of competent jurisdiction (i) enters a decree or
order for relief with respect to Borrower, the General Partner or the
Company under Title 11 of the United States Code as now constituted or
hereafter amended or under any other applicable Federal or state
bankruptcy, insolvency or other similar law, rule or regulation; or (2)
if such court enters a decree or order appointing a receiver,
liquidator, assignee, trustee, custodian, examiner, magistrate,
arbitrator, sequestrator (or similar official) of Borrower, the General
Partner or the Company or of any substantial pan of their respective
properties; or (3) if such court decrees or orders the winding up or
liquidation of the affairs of Borrower, the General Partner or the
Company, and such order or decree is not dismissed, discharged or
vacated of record within thirty (30) days after the same has been
entered; or
(c) Borrower, the General Partner or the Company files a
petition for relief or answer or consent seeking relief under Title 11
of the United States Code as now constitute or hereafter amended, or
under any other applicable Federal or state bankruptcy, insolvency or
other similar law, rule or regulation, of if Borrower, the General
Partner or the Company fails to vigorously and diligently oppose or
shall otherwise consent to the commencement or prosecution of an
involuntary case under Title 11 of the United States Code as now
constituted or hereafter amended, or under any other applicable Federal
or state bankruptcy, insolvency or similar law, rule or regulation, or
to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, examiner, magistrate, arbitrator,
sequestrator (or other similar official) of Borrower, the General
Partner or the Company, or of any substantial pan of their respective
properties, or if Borrower, the General Partner or the Company fails
generally to pay their respective debts as such debts become due, or if
Borrower, the General Partner or the Company takes any action in
furtherance of any action described in this subsection.
8.15 Loan Documents. Borrower, General Partner or the Company shall be
in default beyond the expiration of any applicable notice and cure periods under
the Notes, the Mortgages, this Agreement or any other Loan Documents or any
other document or instrument otherwise executed and delivered in connection
therewith.
8.16 Revolving Credit Facility. The occurrence of a default under
the Revolving Credit Agreement or under any of the other documents evidencing or
securing the Revolving Credit Facility, which default is not cured within any
applicable cure period.
8.17 Cross Default. Any Indebtedness of Borrower, the General Partner
or the Company to any lender or Person shall be declared to be immediately due
and payable prior to its stated maturity and shall not be paid within thirty
(30) days after such declaration, or shall otherwise not be paid within thirty
(30) days after the same shall become due and payable.
41
8.18 Material Adverse Effect. There shall occur a complete or partial
suspension or liquidation of all or substantially all of any business of
Borrower, the General Partner or the Company and such occurrence in the opinion
of the Lenders has or may have materially adverse impact on any Property or any
Collateral or on the business, assets, operations, property, financial or other
condition of Borrower, the General Partner or the Company.
8.19 Furnishing Information. Borrower shall fail to furnish or cause to
be furnished to each Lender, any financial or other information required to be
provided in accordance with the provisions of this Agreement or the other Loan
Documents or otherwise reasonably requested by the Lenders or shall fail to
permit, or to arrange for, the inspection by the Lenders (or their respective
employees and agents) of any books or records of Borrower, the General Partner
or the Company and such default shall continue for twenty (20) days after notice
by Agent to Borrower.
8.20 Monetary. Borrower, the General Partner or the Company shall
continue to be in default under any of the other terms, covenants or conditions
of this Agreement for five (5) days after notice from Agent in the case of any
default which can be cured by the payment of a sum of money, or for twenty (20)
days after notice from Agent in the case of any other default. provided that if
such default cannot reasonably be cured within such twenty (20) day period and
Borrower, the General Partner or the Company, as the case may be, shall have
commenced to cure such default within such twenty (20) day period and thereafter
diligently (20) day period shall be extended for so long as it shall require
Borrower, the General Partner or the Company, as the case may be, in the
exercise of due diligence to cure such default, it being agreed, however, that
no such extension shall be for a period in excess of sixty (60) days.
ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
9.1 Acceleration. If any Event of Default described in Section 8.14
hereof occurs, the Obligations shall immediately become due and payable. If any
other Event of Default described in Article VIII hereof occurs, such obligation
to make the Advance shall be terminated and at the election of the Majority
Lenders, the Obligations may be declared to be due and payable.
9.2 Preservation of Rights; Amendments. No delay or omission of the
Lenders in exercising any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or an acquiescence therein, and
the making of an Advance notwithstanding the existence of a Default or the
inability of the Borrower to satisfy the conditions precedent to such Advance
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Agent and the number of Lenders required
hereunder and then only to the extent in such writing specifically set forth.
All remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Lenders until the Obligations have
been paid in full.
42
ARTICLE X
THE AGENT
10.1 Appointment. First Chicago is hereby appointed Agent hereunder and
under each other Loan Document, and each of the Lenders authorizes the Agent to
act as the agent of such Lender. The Agent agrees to act as such upon the
express conditions contained in this Article X. The Agent shall not have a
fiduciary relationship in respect of any Lender by reason of this Agreement,
except to the extent the Agent acts as an agent with respect to the receipt or
payment of funds hereunder.
10.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
10.3 General Immunity. Neither the Agent (in its capacity as Agent) nor
any of its directors, officers, agents or employees shall be liable to the
Borrower, the Lenders or any Lender for any action taken or omitted to be taken
by it or them hereunder or under any other Loan Document or in connection
herewith or therewith, except for its or their own gross negligence or willful
misconduct.
10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent (in
its capacity as Agent) nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(i) any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (ii) the performance or observance of any
of the covenants or agreements of any obligor under any Loan Document; (iii) the
satisfaction of any condition specified in Article IV, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith.
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Majority Lenders or all Lenders, as the case may be, and such instructions and
any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders and on all holders of Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all
43
matters pertaining to the agency hereby created and its duties hereunder and
under any other Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note. notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of outside counsel selected by the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in accordance with their respective
Percentages (i) for any amounts payable to third parties which are not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (ii) for any other expenses payable to
third parties which are incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents, if not paid by Borrower, and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent (in its capacity as Agent
and not as a Lender) in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
10.9 Rights as a Lender. With respect to the Commitment, the Advance
made by it and the Note issued to it, the Agent shall have the same rights and
powers hereunder and under any other Loan Document as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. Each Lender (including Agent) in its individual
capacity, may accept deposits from, lend money to, and generally engage in any
kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
10.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
10.11 Successor Agent. Each Lender agrees that First Chicago shall
serve as Agent at all times during the term of this Facility, except that First
Chicago may resign as Agent in the event (x) First Chicago and Borrower shall
mutually agree in writing or (y) an Event of Default shall occur under the Loan
Documents (irrespective of whether such Event of Default subsequently is
waived),
44
or (z) First Chicago shall determine, in its sole reasonable discretion, that
because of its other banking relationships with Borrower and/or Borrower's
Affiliates at the time of such decision First Chicago's resignation as Agent
would be necessary in order to avoid creating an appearance of impropriety on
the pan of First Chicago. First Chicago (or any successor Agent) may be removed
as Agent by written notice received by Agent from all of the other Lenders at
any time with cause (i.e., a breach by First Chicago (or any successor Agent) of
its duties as Agent hereunder). Upon any such resignation or removal, the
Lenders shall have the right to appoint, on behalf of the Borrower and the
Lenders, a successor Agent. If no successor Agent shall have been so appointed
by the Lenders and shall have accepted such appointment within thirty days after
the retiring Agent's giving notice of resignation, then the retiring Agent may
appoint, on behalf of the Borrower and the Lenders, a successor Agent. Such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $100,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from all duties and
obligations of the agent hereunder and under the other Loan Documents which
first occur after the date of such succession. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article X shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent hereunder and under the other Loan
Documents.
ARTICLE XI
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
11.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of Borrower and the
Lenders and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents without the consent of all the Lenders and any assignment by any
Lender must be made in compliance with Section 11.3. The Agent may treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
such payee complies with Section 11.3 in the case of an assignment thereof or,
in the case of any other transfer, a written notice of the transfer is filed
with the Agent. Any assignee or transferee of a Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
11.2 Participations.
(a) Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities
("Participants") participating interests in any Advance owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under the Loan Documents, but
Borrower shall not be obligated to pay any fees and expenses incurred
by any Lender in connection with any participation interests sold
pursuant to this Section. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations
under the Loan Documents shall remain unchanged,
45
such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all
amounts payable by Borrower under this Agreement shall be determined as
if such Lender had not sold such participating interests, and Borrower
and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
the Loan Documents.
(b) Voting Rights. Each Lender shall retain the sole right to
vote its Percentage of the Aggregate Commitment, without the consent of
any Participant, for the approval or disapproval of any amendment,
modification or waiver of any provision of the Loan Documents, provided
that such Lender may grant such Participant the right to approve any
amendment, modification or waiver which forgives principal, interest or
fees or reduces the interest rate or fees payable hereunder, postpones
any date fixed for any regularly-scheduled payment of principal of or
interest on the Obligations, releases Collateral beyond any releases
expressly provided for herein or extends the Maturity Date.
11.3 Assignments.
(a) Permitted Assignments. Any Lender may, with the prior
written consent of Agent (which consent shall not be unreasonably
withheld or delayed), in the ordinary course of its business and in
accordance with applicable law, at any time assign to one or more banks
or other entities (collectively, "Purchasers") all or any part of its
rights and obligations under the Loan Documents, except that no consent
of Agent shall ever be required for (i) any assignment to a Person
directly or indirectly controlling, controlled by or under direct or
indirect common control with the assigning Lender or (it) the pledge or
assignment by a Lender of such Lender's Note and other rights under the
Loan Documents to any Federal Reserve Bank in accordance with
applicable law. The Borrower shall execute any and all documents which
are customarily required by such Lender (including, without limitation,
a replacement promissory note) in connection with any such assignment,
but Borrower shall not be obligated to pay any fees and expenses
incurred by any Lender in connection with any assignment pursuant to
this Section. Any Lender selling all or any part of its rights and
obligation hereunder in a transaction requiring the consent of the
Agent shall pay to the Agent a fee of $3,000.00 per assignee to
reimburse Agent for its involvement in such assignment. Notwithstanding
anything contained in this Agreement to the contrary, in no event shall
Borrower have the right to consent to any proposed assignment described
in this Section 11.3.1, and each Lender shall be entitled to freely
assign all or any portion of its respective Commitment.
(b) Effect; Effective Date of Assignment. Upon delivery to the
Agent of a notice of assignment executed by the assigning Lender and
the Purchaser, such assignment shall become effective on the effective
date specified in such notice of assignment. The notice of assignment
shall contain a representation by the Purchaser to the effect that none
of the consideration used to make the purchase of the o Commitment and
the Loan under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the Purchaser
in and under the Loan Documents will not be "plan assets"
46
under ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement
and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no further
consent or action by Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the
percentage of the Commitment and the Advance assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 11.3.2, the transferor Lender, the Agent and
Borrower shall make appropriate arrangements so that replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their respective Commitments, as adjusted
pursuant to such assignment.
11.4 Dissemination of Information. Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of Borrower and General Partner. Each Transferee
shall agree in writing to keep confidential any such information which is not
publicly available.
11.5 Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with all applicable provisions of the Code with respect to withholding and other
tax matters.
ARTICLE XII
GENERAL PROVISIONS
12.1 Survival of Representations. All representations and warranties
contained in this Agreement shall survive delivery of the Notes and the making
of the Advance herein contemplated.
12.2 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
12.3 Taxes. Any recording and other taxes (excluding 'franchise, income
or similar taxes) or other similar assessments or charges payable or ruled
payable by any governmental authority incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be paid by
the Borrower, together with interest and penalties, if any.
12.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
47
12.5 No Third Party Beneficiaries. This Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
12.6 Expenses; Indemnification. Subject to the provisions of this
Agreement, Borrower will pay (a) all out-of-pocket costs and expenses incurred
by the Agent (including the reasonable fees, out-of-pocket expenses and other
reasonable expenses of counsel, which counsel may be employees of Agent) in
connection with the preparation, execution and delivery of this Agreement, the
Notes, the Security Documents and any other agreements or documents referred to
herein or therein and any amendments thereto, (b) all out-of-pocket costs and
expenses incurred by the Agent (including the reasonable fees, out-of-pocket
expenses and other reasonable expenses of counsel to the Agent, which counsel
may be employees of Agent) in connection with the enforcement and protection of
the rights of the Lenders under this Agreement, the Notes, the Security
Documents or any other agreement or document referred to herein or therein, (c)
all costs of obtaining all appraisals, environmental reports, engineering
reports and all other documents or reports required to be requested or furnished
to the Agent (irrespective of whether any such Lenders first become parties to
this Agreement following the Agreement Execution Date) pursuant to Section 4.1
hereof, and (d) all reasonable and customary costs and expenses of periodic
audits by the Agent's personnel of the Borrower's books and records, provided
that prior to an Event of Default Borrower shall be required to pay for only one
such audit during any year. The Borrower further agrees to indemnify the
Lenders, their directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and reasonable expenses (including,
without limitation, all expenses of litigation or preparation therefor whether
or not the Lenders is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Advance hereunder, except that the
foregoing indemnity shall not apply to a Lender to the extent that any losses,
claims. etc. are the result of (i) such Lender's gross negligence or willful
misconduct, or (ii) any disputes between Lenders regarding the alleged failure
of a Lender or the Agent to perform its respective obligations under the Loan
Documents (where such alleged failure is in no way related to any alleged
failure of Borrower to perform its obligations under the Loan Documents). The
obligations of the Borrower under this Section shall survive the termination of
this Agreement.
12.7 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
12.8 Nonliability of the Lenders. The relationship between the Borrower
and the Lenders shall be solely that of borrower and lender. The Lenders shall
not have any fiduciary responsibilities to the Borrower. The Lenders undertake
no responsibility to the Borrower to review or inform the Borrower of any matter
in connection with any phase of the Borrower's business or operations.
48
12.9 Choice of Law. The loan documents (other than those containing a
contrary express choice of law provision) shall be construed in accordance with
the internal laws (and not the law of conflicts) of the state of illinois, but
giving effect to federal laws applicable to national banks.
12.10 Consent to Jurisdiction. The Borrower hereby irrevocably submits
to the non-exclusive jurisdiction of any United States Federal or Illinois state
court sitting in Chicago, Illinois in any action or proceeding arising out of or
relating to any loan documents and the Borrower hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in any such court and irrevocably waives any objection it may now or hereafter
have as to the venue of any such suit, action or proceeding brought in such a
court or that such court is an inconvenient forum. Nothing herein shall limit
the right of the lenders to bring proceedings against the borrower in the courts
of any other jurisdiction. Any judicial proceeding by the Borrower against the
lenders or any affiliate of the lenders involving, directly or indirectly, any
matter in any way arising out of, related to, or connected with any loan
document shall be brought only in a court in Chicago, Illinois.
12.11 Waiver of Jury Trial. The Borrower, the General Partner and the
lenders hereby waive trial by jury in any judicial proceeding involving,
directly or indirectly, any matter (whether sounding in tort, contract or
otherwise) in any way arising out of, related to, or connected with any loan
document or the relationship established thereunder.
12.12 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents. Any assignee or transferee of the Notes agrees by acceptance thereof
to be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of the Notes, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Notes or of
any note or notes issued in exchange therefor.
12.13 Entire Agreement; Modification of Agreement. The Loan Documents
embody the entire agreement among the Borrower, General Partner, Agent, and
Lenders and supersede all prior conversations, agreements, understandings,
commitments and term sheets among any or all of such parties with respect to the
subject .matter hereof. Any provisions of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the parties hereto.
12.14 Dealings with the Borrower. The Lenders and their affiliates may
accept deposits from, extend credit to and generally engage in any kind of
banking, trust or other business with the Borrower or the General Partner or any
of their Affiliates regardless of the capacity of the Lenders hereunder.
49
12.15 Set-Off.
(a) If an Event of Default shall have occurred, each Lender
shall, subject to and in accordance with Section 12.15(c) below, have
the right, at any time and from time to time without notice to the
Borrower, any such notice being hereby expressly waived, to set-off and
to appropriate or apply any and all deposits of money or property or
any other indebtedness at any time held or owing by such Lender to or
for the credit or the account of the Borrower against and on account of
all outstanding Obligations and all Obligations which from time to time
may become due hereunder and all other obligations and liabilities of
the Borrower under this Agreement, irrespective of whether or not such
Lender shall have made any demand hereunder and whether or not said
obligations and liabilities shall have matured.
(b) Each Lender agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of a
proportion of the aggregate amount of principal, interest or fees due
with respect to any Note held by it which is greater than the
proportion received by any other Lender in respect of the aggregate
amount of principal, interest or fees due with respect to any Note held
by such other Lender, the Lender receiving such proportionately greater
payment shall purchase such participation in the Notes held by the
other Lenders and such other adjustments shall be made as may be
required so that all such payments of principal, interest or Fees with
respect to the Notes held by the Lenders shall be shared by the Lenders
pro rata according to their respective Commitments.
(c) Each Lender agrees that in the event that any of the
Properties are located in California, that no Lender (or Participant or
assignee thereof) shall exercise its rights of set off contained in
this Section 12.15 or any other rights and remedies unless and until
the Agent and Supermajority Lenders are reasonably satisfied (by an
opinion from counsel satisfactory to Agent or such other proof that is
acceptable to Agent and Supermajority Lenders) that such actions (i)
will not cause California's so called "one action" rule to apply and
(ii) will not adversely affect the Agent and Lenders' ability to
exercise any other rights and remedies under the Loan Documents.
12.16 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower and each of the Lenders shown on the signature pages hereof.
ARTICLE XIII
NOTICES
13.1 Giving Notice. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below or at such other address as may be designated by
such party in a notice to the other parties. Any notice, if mailed and properly
50
addressed with postage prepaid, shall be deemed given when received; any notice,
if transmitted by telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of telexes). Notice may be given as follows:
To the Borrower:
Equity Inns Partnership, L.P.
c/o Equity Inns, Inc.
0000 Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
To General Partner:
Equity Inns Trust
0000 Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
To the Company:
Equity Inns, Inc.
0000 Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
Each of the above with a copy to:
Hunton & Xxxxxxxx
Suite 1700
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Best
Telecopy: (000) 000-0000
51
To the Lenders:
As shown below the Lender's signatures.
To the Agent:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Real Estate Finance Division
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
13.2 Change of Address. Each party may change the address for
service of notice upon it by a notice in writing to the other parties hereto.
52
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
BORROWER: EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST, its General Partner
By:
--------------------------------
Title:
--------------------------------
GENERAL PARTNER: EQUITY INNS TRUST
By:
--------------------------------
Title:
--------------------------------
COMPANY: EQUITY INNS, INC.
By:
--------------------------------
Title:
--------------------------------
LENDERS: THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Title:
--------------------------------
Commitment: $25,000,000
Percentage of Aggregate Commitment: 33.3334%
Address for Notices:
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Real Estate Finance Division
53
CREDIT LYONNAIS NEW YORK BRANCH
By:
--------------------------------
Title:
--------------------------------
Commitment: $25,000,000
Percentage of Aggregate Commitment 33.333%
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Hotel Finance Group
AMSOUTH BANK
By:
---------------------------------
Title:
---------------------------------
Commitment: $25,000,000
Percentage of Aggregate Commitment: 33.3333%
Address for Notices:
0000 Xxxxx Xxxxxx Xxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
ADMINISTRATIVE AGENT: THE FIRST NATIONAL BANK OF CHICAGO
By:
---------------------------------
Title:
---------------------------------
DOCUMENTATION AGENT: CREDIT LYONNAIS NEW YORK BRANCH
By:
---------------------------------
Title:
---------------------------------
54
CREDIT LYONNAIS NEW YORK BRANCH
By:
---------------------------------
Title:
---------------------------------
Commitment: $25,000,000
Percentage of Aggregate Commitment: 33.3333%
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Hotel Finance Group
AMSOUTH BANK
By:
---------------------------------
Title:
---------------------------------
Commitment: $25,000,000
Percentage of Aggregate Commitment: 33.3333%
Address for Notices:
0000 Xxxxx Xxxxxx Xxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
ADMINISTRATIVE AGENT: THE FIRST NATIONAL BANK OF CHICAGO
By:
---------------------------------
Title:
---------------------------------
DOCUMENTATION AGENT: CREDIT LYONNAIS NEW YORK BRANCH
By:
---------------------------------
Title:
---------------------------------
CO-AGENT: AMSOUTH BANK
By:
---------------------------------
Title:
---------------------------------
55
