$125,000,000.00
SECOND AMENDED AND RESTATED
SYNDICATED CREDIT AGREEMENT
dated as of
December 19, 2001
among
WINSTON HOTELS, INC., XXXX LIMITED PARTNERSHIP,
THE BANKS LISTED HEREIN,
and
WACHOVIA BANK, N.A.,
as Agent
TABLE OF CONTENTS
SECOND AMENDED AND RESTATED CREDIT AGREEMENT..................................................................1
ARTICLE I.....................................................................................................1
DEFINITIONS..............................................................................................1
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Accounting Terms and Determinations......................................................22
SECTION 1.03. Use of Defined Terms.....................................................................22
SECTION 1.04. Terminology..............................................................................22
SECTION 1.05. References...............................................................................22
SECTION 1.06. "Borrower" References; Joint and Several Obligations; Notice.............................22
ARTICLE II...................................................................................................23
REVOLVING CREDIT FACILITY...............................................................................23
SECTION 2.01. Commitments to Make Loans; Maximum Advance; Borrowing Base Value.........................23
SECTION 2.02. Method of Borrowing......................................................................25
SECTION 2.03. Restrictions on Use of Loan Proceeds Generally...........................................27
SECTION 2.04. Notes....................................................................................29
SECTION 2.05. Termination Date, Repayment of Loans.....................................................29
SECTION 2.06. Interest Rates...........................................................................29
SECTION 2.07. Fees.....................................................................................31
SECTION 2.08. Mandatory Termination of Commitments.....................................................32
SECTION 2.09. Optional and Mandatory Prepayments.......................................................32
SECTION 2.10. Mandatory Prepayments....................................................................32
SECTION 2.11. General Provisions as to Payments........................................................32
SECTION 2.12. Computation of Interest and Fees.........................................................34
SECTION 2.13. Facility Limit Reduction or Termination by Borrower......................................34
SECTION 2.14. Term Loans Secured by Hotels in Specific States..........................................34
SECTION 2.15. The Letter of Credit Subfacility.........................................................35
ARTICLE III..................................................................................................41
SECURITY AND COLLATERAL FOR THE LOANS; CONDITIONS TO BORROWINGS.........................................41
SECTION 3.01. Typology of Hotels.......................................................................41
SECTION 3.02. Collateral Release Provisions............................................................44
SECTION 3.03. Conditions of Closing and to First Borrowing.............................................45
SECTION 3.04. Conditions to All Borrowings.............................................................47
ARTICLE IV...................................................................................................47
REPRESENTATIONS AND WARRANTIES..........................................................................47
SECTION 4.01. Existence and Power......................................................................47
SECTION 4.02. Corporate, Partnership and Governmental Authorization; No Contravention..................48
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SECTION 4.03. Binding Effect...........................................................................48
SECTION 4.04. Financial Information....................................................................48
SECTION 4.05. Litigation...............................................................................48
SECTION 4.06. Compliance with ERISA....................................................................49
SECTION 4.07. Taxes....................................................................................49
SECTION 4.08. Subsidiaries.............................................................................49
SECTION 4.09. Not an Investment Company................................................................49
SECTION 4.10 Public Utility Holding Company Act.......................................................49
SECTION 4.11. Ownership of Property; Liens.............................................................49
SECTION 4.12. No Default...............................................................................50
SECTION 4.13. Full Disclosure..........................................................................50
SECTION 4.14. Environmental Matters...................................................................50
SECTION 4.15. Compliance with Laws.....................................................................50
SECTION 4.16. Capital Stock............................................................................50
SECTION 4.17. Margin Stock.............................................................................51
SECTION 4.18. Insolvency...............................................................................51
SECTION 4.19. Americans with Disabilities Act..........................................................51
SECTION 4.20. Compliance with Certain Lease Provisions.................................................51
SECTION 4.21. Condemnation Awards......................................................................51
ARTICLE V....................................................................................................52
AFFIRMATIVE COVENANTS...................................................................................52
SECTION 5.01. Information..............................................................................52
SECTION 5.02. Inspection of Property, Books and Records................................................54
SECTION 5.03. Required Room Reserves...................................................................54
SECTION 5.04. Maintenance of Property..................................................................54
SECTION 5.05. Maintenance of Existence.................................................................54
SECTION 5.06. Sole General Partner.....................................................................54
SECTION 5.07. Compliance with Laws; Payment of Taxes...................................................55
SECTION 5.08. Insurance................................................................................55
SECTION 5.09. Environmental Notices....................................................................55
SECTION 5.10. Environmental Reports; Environmental Release.............................................55
SECTION 5.11. Upstream of Cash Flow from Special Purpose Entity........................................55
SECTION 5.12. Special Purpose Entity to Remain a Subsidiary Consolidated with the Borrower.............56
SECTION 5.13. Intercompany Transactions................................................................56
SECTION 5.14. Notice of Exercise of Remedies Under Deeds of Trust......................................56
SECTION 5.15. Notice of Default of any Lease...........................................................56
SECTION 5.16. Guaranty by Subsidiaries.................................................................56
SECTION 5.17. Notice of Default under Completion Guarantees............................................56
ARTICLE VI...................................................................................................56
NEGATIVE COVENANTS......................................................................................56
SECTION 6.01. Base Rent and Percentage Rent of Hotel Leases............................................57
SECTION 6.02. Prohibition of Secured Debt on Borrowing Base Hotels.....................................57
SECTION 6.03. Contingent Liabilities; Completion Guarantees............................................57
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SECTION 6.04. Limitation on Hotels under Development...................................................58
SECTION 6.05. No Material Modifications to Permitted Operating Leases; Percentage
of Rooms Leased Under Permitted Operating Leases.........................................59
SECTION 6.06. Limitations on Foreign Investments and Investments in Ventures and
Loans to Development Parties.............................................................59
SECTION 6.07. Major Ground Lease Limitations...........................................................59
SECTION 6.08. Limitation on Dividends and Distributions................................................59
SECTION 6.09. Limitation on Floating Rate Debt.........................................................59
SECTION 6.10. Dissolution..............................................................................59
SECTION 6.11. Consolidations, Mergers and Sales of Assets..............................................59
SECTION 6.12. Use of Proceeds..........................................................................60
SECTION 6.13. Change in Fiscal Year or Fiscal Quarters.................................................60
SECTION 6.14. Environmental Matters....................................................................60
SECTION 6.15. Operations...............................................................................60
SECTION 6.16. No Modifications to Organizational Documents.............................................60
ARTICLE VII..................................................................................................60
FINANCIAL COVENANTS.....................................................................................60
SECTION 7.01. Maximum Leverage Ratio...................................................................60
SECTION 7.02. Maximum Unsecured Debt...................................................................63
SECTION 7.03. Maximum Secured Debt.....................................................................63
SECTION 7.04. Minimum Interest Coverage................................................................63
SECTION 7.05. Minimum Fixed Charge Coverage............................................................63
SECTION 7.06. Minimum Consolidated Tangible Net Worth..................................................63
ARTICLE VIII.................................................................................................64
DEFAULTS; REMEDIES......................................................................................64
SECTION 8.01. Events of Default........................................................................64
SECTION 8.02. Notice of Default........................................................................67
ARTICLE IX...................................................................................................67
THE AGENT .........................................................................................67
SECTION 9.01. Appointment, Powers and Immunities.......................................................67
SECTION 9.02. Reliance by the Agent....................................................................68
SECTION 9.03. Defaults.................................................................................68
SECTION 9.04. Rights of Agent as a Bank; Rights of Agent to Lend.......................................68
SECTION 9.05. Indemnification..........................................................................68
SECTION 9.06. Consequential Damages....................................................................69
SECTION 9.07. Payee of Note Treated as Owner...........................................................69
SECTION 9.08. Non-Reliance on Agent and Other Banks....................................................69
SECTION 9.09. Failure to Act...........................................................................69
SECTION 9.10. Resignation or Removal of the Agent......................................................69
SECTION 9.11. Intercreditor Agreement..................................................................70
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ARTICLE X....................................................................................................70
CHANGE IN CIRCUMSTANCES; COMPENSATION...................................................................70
SECTION 10.01. Basis for Determining Interest Rate Inadequate or Unfair................................70
SECTION 10.02. Illegality..............................................................................70
SECTION 10.03. Increased Cost and Reduced Return.......................................................71
SECTION 10.04. Base Rate Loans Substituted for Affected Euro-Dollar Loans..............................72
SECTION 10.05. Compensation............................................................................73
ARTICLE XI...................................................................................................73
MISCELLANEOUS...........................................................................................73
SECTION 11.01. Notices.................................................................................73
SECTION 11.02. No Waivers..............................................................................74
SECTION 11.03. Expenses; Documentary Taxes; Indemnification............................................74
SECTION 11.04. Setoffs; Sharing of Set-Offs............................................................74
SECTION 11.05. Amendments and Waivers..................................................................75
SECTION 11.06. Margin Stock Collateral.................................................................76
SECTION 11.07. Successors and Assigns..................................................................76
SECTION 11.08. Confidentiality.........................................................................78
SECTION 11.09. Swap Obligations........................................................................78
SECTION 11.10. Representation by Banks.................................................................78
SECTION 11.11. Obligations Several.....................................................................78
SECTION 11.12. Survival of Certain Obligations.........................................................78
SECTION 11.13. North Carolina Law......................................................................79
SECTION 11.14. Severability............................................................................79
SECTION 11.15. Interest................................................................................79
SECTION 11.16. Interpretation..........................................................................79
SECTION 11.17. Defaulting Bank.........................................................................79
SECTION 11.18. Consent to Jurisdiction.................................................................79
SECTION 11.19. Counterparts............................................................................79
EXHIBIT A-1 Form of Bank Notes
EXHIBIT A-2 Form of Term Notes
EXHIBIT B Form of Opinion of Counsel for the Borrower
EXHIBIT C Form of Opinion of Special Counsel for the Agent
EXHIBIT D Form of Closing Certificate
EXHIBIT E Form of Assistant Secretary's Certificate
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Assignment and Acceptance
EXHIBIT H Form of Notice of Borrowing
EXHIBIT I Form of Borrowing Base Values Certificate
EXHIBIT J Conduit Debt Hotels
EXHIBIT K-1 Initial Hotels
EXHIBIT K-2 Supplemental Borrowing Base Hotels
EXHIBIT L Form of Permitted Operating Lease
EXHIBIT M Allocated Loan Amount
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SECOND AMENDED AND RESTATED
SYNDICATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED SYNDICATED CREDIT AGREEMENT
dated as of December 19, 2001, among WINSTON HOTELS, INC., a North Carolina
corporation (the "Company"), XXXX LIMITED PARTNERSHIP, a North Carolina limited
partnership (the "Partnership"), the BANKS listed on the signature pages hereof,
and WACHOVIA BANK, N.A., as Agent.
RECITALS
1. The parties hereto previously entered into that certain
Syndicated Credit Agreement, dated as of January 15, 1999 (the "Original Credit
Agreement"). The parties have previously amended and restated the Original
Credit Agreement by that certain Amended and Restated Syndicated Credit
Agreement, dated as of April 1, 2000 (the "Restated Credit Agreement").
2. The Borrower has requested that the Restated Credit Agreement
be again amended to reduce the amount available under the credit facility, to
extend the term of the Restated Credit Agreement, and to make other changes to
the terms of the Restated Credit Agreement. The Banks and the Agent have agreed
to such changes subject to certain conditions described herein.
3. In lieu of executing an amendment to the Restated Credit
Agreement, the parties desire to consolidate the amendments agreed upon into a
Second Amended and Restated Credit Agreement and to amend and restate the
Restated Credit Agreement in its entirety.
AGREEMENT
NOW, THEREFORE, the parties agree that from and after the date hereof
(the "Amendment Effective Date"), the Restated Credit Agreement is amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section 1.01
shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context otherwise requires),
have the meanings set forth herein:
"Accessibility Laws" means all laws and regulations governing
accessibility of public facilities to the handicapped, specifically including,
but not limited to the physical accessibility requirements of Title III of the
Americans with Disabilities Act of 1990, and the implementing regulations
promulgated thereunder by the Department of Justice and the Americans with
Disabilities Act Accessibility Guidelines (ADAAG) associated therewith.
1
"Accommodation Period" means any calendar quarter (not exceeding two
calendar quarters in total) following a Measurement Date in calendar year 2002
in which the Leverage Ratio or the Fixed Charge Coverage Ratio qualifies the
Borrower for Level 4 Pricing, provided the Borrower has pledged the Supplemental
Borrowing Base Hotels as additional collateral for the Loans, pursuant to
Section 3.01(d) of this Agreement.
"Accumulated Depreciation" means the cumulative sum of all Depreciation
Expense recognized on the financial statements of the Borrower and Subsidiaries
in accordance with GAAP.
"Additional Hotels" means all Hotels now owned or hereafter owned by
the Borrower and any Subsidiary (specifically including Supplemental Borrowing
Base Hotels), with the exclusion of (i) the Initial Hotels; (ii) the Conduit
Debt Hotels owned by the Special Purpose Entity; and (iii) any Joint Venture
Hotels.
"Adjusted London Interbank Offered Rate" means a rate per annum equal
to the quotient obtained (rounded upward or downward, if necessary, to the
closest 1/10,000th of 1%, with 5,000/10,000th being rounded upward) by dividing
(i) the applicable London Interbank Offered Rate for such Interest Period by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
"Adjusted EBITDA" means EBITDA for such period, less Required Room
Reserves.
"Affiliate" of any Person means (i) any other Person which directly, or
indirectly through one or more intermediaries, controls such Person, (ii) any
other Person which directly, or indirectly through one or more intermediaries,
is controlled by or is under common control with such Person, or (iii) any other
Person of which such Person owns, directly or indirectly, 20% or more of the
common stock or equivalent equity interests. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means Wachovia Bank, N.A., a national banking association
organized under the laws of the United States of America, in its capacity as
agent for the Banks hereunder, and its successors and permitted assigns in such
capacity.
"Agent's Letter Agreement" means that certain letter agreement, dated
as of October 29, 2001, between the Borrower and the Agent relating to the
structure of the Loans, and certain fees from time to time payable by the
Borrower to the Agent, together with all amendments and modifications thereto
and all restatements thereof.
"Agreement" means this Second Amended and Restated Syndicated Credit
Agreement, together with all amendments and supplements hereto and all
restatements thereof.
"Allocated Loan Amount" means the portion of the Loans allocated to
each Borrowing Base Hotel, as set out in Exhibit M attached hereto and
incorporated herein by reference.
"Amendment Effective Date" has the meaning given to such term on page 1
of this Agreement.
2
"Applicable Margin" means for any Euro-Dollar Loan the following
interest spread corresponding to the Performance Pricing Level set forth below
for which Borrower qualifies, such spread being expressed as a percentage, that
shall be added to the Adjusted London Interbank Offered Rate for an Interest
Period:
Performance
Pricing
Level Leverage Ratio Applicable Margin
----------- -------------- -----------------
[SEE SECTION 7.01]
Level O Less than 40% 1.75%
Level 1 Equal to or Greater than 40%
but Less than 45% 2.00%
Level 2 Equal to or Greater than 45%
but Less than 50% 2.25%
Level 3 Equal to or Greater than 50%
but Equal to or Less than 55% 2.50%
*Level 4 Greater than 55% but Equal to
or Less than 60% 3.00%
*Level 4 Pricing shall only be effective during any Accommodation Period (as
herein defined). If the Leverage Ratio is 60% or more, or if the Leverage Ratio
exceeds 55% but is less than 60% in a period other than an Accommodation Period,
the Default Rate shall govern inasmuch as a violation of the Maximum Leverage
Ratio has occurred.
"Approved Franchisor" means any franchisor approved by all of the Banks
from time to time. The following franchisors have been preapproved by the Banks
as "Pre-Approved Franchisors": Hampton Inn; Hampton Inn & Suites; Embassy
Suites; Homewood Suites; Staybridge Suites; Holiday Inn; Holiday Inn Select;
Holiday Inn Express; Marriott Courtyard; Residence Inn; Fairfield Inn; Hilton
Garden Inn; Comfort Inn; Comfort Suites; and Quality Suites.
"Assignee" has the meaning set forth in Section 11.07(c).
"Assignment and Acceptance" means an Assignment and Acceptance executed
in accordance with Section 11.07(c) in the form attached hereto as Exhibit G.
"Assignments of Rents" means any assignments of rents, leases and
profits now or hereafter executed by the Borrower for the benefit of the Agent,
specifically including (but not limited to) any assignments of rents
incorporated within any Deed of Trust and given with respect to the Initial
Hotels, and any and all amendments and modifications thereof and all
restatements thereof.
3
"Authority" has the meaning set forth in Section 10.02.
"Bank" means each bank listed on the signature pages hereof as having a
Commitment, and its successors and assigns. "Banks" means more than one Bank.
Where approval of any matter is required to be obtained from the "Banks,"
approval must be obtained from all of the Banks.
"Bank Notes" means the promissory notes of the Borrower payable to the
Banks, substantially in the form of Exhibit A-1 attached hereto, evidencing the
obligation of the Borrower to repay the Loans, together with all amendments,
consolidations, modifications, replacements, renewals and supplements thereto.
"Bank Note" means any one of such Bank Notes.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half
of one percent above the Federal Funds Rate for such day. For purposes of
determining the Base Rate for any day, changes in the Prime Rate and the Federal
Funds Rate shall be effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear interest at a
rate based upon the Base Rate.
"Borrower" means one or more of the Partnership and the Company, and
their successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower at the same time by the Banks pursuant to Article II or, in the case of
a Swing Line Borrowing, by the Swing Line Bank only. In addition, the term
"Borrowing" includes any unreimbursed draw under a Facility Letter of Credit, as
set out in Section 2.15(e). A Borrowing is a "Base Rate Borrowing" if such Loans
are Base Rate Loans or a "Euro-Dollar Borrowing" if such Loans are Euro-Dollar
Loans.
"Borrowing Base Value" means the sum of the following:
(a) For all Non-Stabilized Borrowing Base Hotels, the
Hotel Cost for all such Hotels; and
(b) For all Stabilized Borrowing Base Hotels, the
Capitalized Value for all such Hotels.
"Borrowing Base Value Certificate" has the meaning set forth in Section
2.01(b)(1).
"Borrowing Base Hotel" is a Hotel as described and meeting the criteria
specified in Section 3.01(c) hereof.
"Borrowing Base Hotel Release Entitlement Event" has the meaning given
in Section 3.02.
4
"Capital Stock" means any nonredeemable capital stock of the Borrower
or any Subsidiary (to the extent issued to a Person other than the Borrower),
whether common or preferred.
"Capitalized Lease Obligation" means that portion of any obligation of
a Person, as a lessee under a lease, which at the time would be required to be
capitalized on the balance sheet of such Person in accordance with GAAP.
"Capitalized Value" means (a) the aggregate Property Operating Income
for Stabilized Borrowing Base Hotels during the most recent four Fiscal Quarters
for which financial results have then been reported less the Required Room
Reserves (hereinafter defined) applicable thereto for such four Fiscal Quarters,
divided by (b) 11.5%.
"Cash Equivalents" means cash on hand, deposits in financial
institutions, and the market value of readily marketable securities, provided
that any such amounts that are restricted in any way shall be excluded.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. `9601 et seq. and its implementing regulations and
amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 10.02.
"Closing Certificate" has the meaning set forth in Section 3.03(e).
"Closing Date" means February 1, 1999, the date on which the Original
Credit Agreement was effective.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Collateral Assignments of Franchise Agreements" means all collateral
assignments of franchise agreements, if any, now or hereafter executed by a
Lessee, and any and all amendments and modifications thereof and all
restatements thereof.
"Collateral Assignments of Management Agreements" means all collateral
assignments of all or any portion of a Lessee's rights in and under any one or
more Management Agreements, and any and all amendments and modifications thereof
and all restatements thereof.
"Collateral Documents" means all Deeds of Trust, all Assignments of
Rents, all Security Agreements, all Collateral Assignments of Franchise
Agreements, all Collateral Assignments of Management Agreements, all UCC-1
Financing Statements and any other loan documentation now or hereafter executed
by the Borrower or any Subsidiary establishing the Agent's collateral rights in
one or more Properties.
5
"Commitment" means, with respect to each Bank, (i) the amount set forth
opposite the name of such Bank on the signature pages hereof, or (ii) as to any
Bank which enters into an Assignment and Acceptance (whether as transferor Bank
or as Assignee thereunder), the amount of such Bank's Commitment after giving
effect to such Assignment and Acceptance, in each case as such amount may be
reduced from time to time pursuant to Sections 2.08 and 2.09.
"Company" means Winston Hotels, Inc., and its successors and permitted
assigns.
"Completion Guaranty" means any agreement by the Borrower with or for
the benefit of any Joint Venture Hotel Lender whereby the Borrower guarantees
the completion of such Joint Venture Hotel and any agreement by the Borrower
with or for the benefit of any Development Hotel Lender whereby the Borrower
guarantees the completion of such Development Hotel. "Completion Guarantees"
refer to more than one Completion Guaranty.
"Compliance Certificate" has the meaning set forth in Section 5.01(c).
"Conduit Debt" means that certain non-recourse loan from the Conduit
Lender to the Special Purpose Entity in the original principal amount of
$71,000,000, evidenced by a promissory note executed by the Special Purpose
Entity, dated November 3, 1998, and payable to the Conduit Lender.
"Conduit Lender" means CMF Capital Company LLC, its successors and
assigns.
"Conduit Debt Hotels" means all those Hotels owned by the Special
Purpose Entity and serving as collateral security for the Conduit Debt. The
Hotels initially pledged as collateral for the Conduit Debt are listed in
Exhibit J.
"Consolidated Liabilities" means the sum of (i) all liabilities that,
in accordance with GAAP, should be classified as liabilities on a consolidated
balance sheet of Borrower and its Consolidated Subsidiaries, and (ii) to the
extent not included in clause (i) of this definition, the Borrower's redemption
obligations with respect to all Redeemable Preferred Stock.
"Consolidated Secured Debt" means the aggregate principal amount of all
Debt of the Borrower or any Consolidated Subsidiary, outstanding as of such
date, which is secured by a Lien on any asset or Capital Stock of the Borrower
or any Consolidated Subsidiary, including without limitation loans secured by
mortgages, stock, or partnership interests.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date (specifically including the Special Purpose Entity).
"Consolidated Tangible Net Worth" means, at any time, Stockholders'
Equity, plus any deferred revenue and less any receivable resulting from
implementation of Staff Accounting Bulletin 101 of the Securities Exchange
Commission, less the sum of the value, as set forth or reflected on the most
recent consolidated balance sheet of the Borrower, prepared in accordance with
GAAP, of
6
(A) Any surplus resulting from any write-up of
assets subsequent to June 30, 2001;
(B) All assets which would be treated as
intangible assets for balance sheet presentation purposes
under GAAP, including without limitation goodwill (whether
representing the excess of cost over book value of assets
acquired, or otherwise), trademarks, tradenames, copyrights,
patents and technologies, and unamortized debt discount and
expense;
(C) To the extent not included in (B) of this
definition, any amount at which shares of capital stock of the
Borrower appear as an asset on the consolidated balance sheet
of the Borrower;
(D) Loans or advances to stockholders,
directors, officers or employees; and
(E) To the extent not included in (B) of this
definition, deferred expenses.
"Consolidated Total Indebtedness" means at any date all of the Debt of
the Borrower and its Consolidated Subsidiaries (excluding however, without
duplication, Intercompany Debt), determined on a consolidated basis as of such
date. For purposes hereof, any Completion Guarantees shall be considered to be
Debt of the Borrower if (but only if) a monetary claim against the Borrower has
been established and quantified according to GAAP, and the amount of such Debt
shall be deemed to be an amount equal to such established and quantified
monetary claim.
"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 the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, (i) all
obligations (whether recourse or non-recourse) of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under capital leases, (v) all obligations of such Person to reimburse
any bank or other Person in respect of amounts payable under a banker's
acceptance, (vi) all Redeemable Preferred Stock of such Person (in the event
such Person is a corporation), (vii) all obligations (absolute or contingent) of
such Person to reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument (and, in the case of the
Borrower, specifically including any Facility Letters of Credit issued by the
Agent pursuant to the Letter of Credit Subfacility established under Section
2.15 hereof), (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of
others Guaranteed by such Person.
7
"Debt Service" means all interest due and payable by the Borrower or
its Subsidiaries on its Debt, all dividends due and payable on Redeemable
Preferred Stock, all sinking fund payments or similar payments required to be
paid in connection with Redeemable Preferred Stock, and all regularly scheduled
principal payments required to be paid on any Debt other than the final payment
due on such Debt if such final payment is substantially greater than the
periodic payments required in connection with such Debt. For purposes of
calculating Debt Service, one shall exclude (without duplication) Intercompany
distributions or dividends and Debt Service payable in connection with
Intercompany Debt.
"Deeds of Trust" means all deeds of trust, deeds to secure debt,
mortgages or similar instruments now or hereafter executed by the Borrower to or
for the benefit of the Agent in its capacity as agent to secure the indebtedness
evidenced by the Notes, specifically including (but not limited to) those deeds
of trust, mortgages, and deeds to secure debt given with respect to the Initial
Hotels, and any and all amendments and modifications thereof and all
restatements thereof.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived in writing, become an Event of Default.
"Defaulting Bank" means, at any time, any Bank that (a) has failed to
make a Loan or failed to purchase a participation interest in a Swing-Line Loan
or a Facility Letter of Credit as so required pursuant to the terms of this
Agreement, or (b) has failed to pay to the Agent or to any other Bank an amount
owed by such Bank pursuant to the terms of this Agreement (but only for so long
as such amount has not been paid).
"Default Rate" means, with respect to any Loan, a rate per annum equal
to 150% of the Prime Rate.
"Deferred Revenue" means deferred revenue of the Borrower or any
Subsidiary under hotel operating leases which was recognized as Income under
GAAP prior to the implementation of EITF 98-9 issued by Financial Accounting
Standards Board's Emerging Issues Task Force ("EITF 98-9") and Staff Accounting
Bulletin 101 issued by the Securities and Exchange Commission ("SAB 101") but is
no longer recognized as such pursuant to EITF 98-9 and SAB 101.
"Depreciation Expense" means for any period the sum of all depreciation
expenses of the Borrower and its Subsidiaries for such period, as determined in
accordance with GAAP.
"Development Hotel" means any hotel owned by a Development Party with
respect to which the Borrower is providing a Development Party Loan.
"Development Hotel Lender" means any lender providing project financing
for a Development Hotel.
"Development Party" means a partnership, corporation, or a limited
liability company in which the Borrower has no ownership interest but to which
the Borrower has made a Development Party Loan. A Development Party must be
engaged only in the development or
8
ownership of hotels or motels or the operation of such hotels or motels. An
entity may be a "Development Party" even though the Borrower has a security
interest in some or all of the ownership interests in such Development Party. A
Development Party remains qualified as such even though the Borrower has
acquired ownership of some or all of the ownership interests in such Development
Party through foreclosure of such security interests or other remedial measures
with respect to such security interests.
"Development Party Loan" means a loan provided by the Borrower, acting
alone or together with one or more co-lenders, to a Development Party, such loan
being (i) not less than ten percent (10%) of the total capitalization of the
Development Party, and (ii) secured by a pledge of controlling ownership
interests in the Development Party or by a pledge of all the ownership interests
of an entity owning controlling ownership interests in the Development Party.
"Dividends" means for any period the sum of all dividends paid or
declared by the Company during such period and applicable thereto in respect of
any Capital Stock and Preferred Stock (other than dividends paid or payable in
the form of additional Capital Stock or Preferred Stock) and, with respect to
interests in the Partnership held by partners other than the Company, all
distributions paid or declared during such period and applicable thereto in
respect to partnership interests (other than distributions paid or payable in
the form of additional partnership interests).
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia are authorized or
required by law to close.
"EBITDA" means, with respect to the accounts of Borrower and
Subsidiaries, consolidated income in accordance with GAAP (before Minority
Interests) of the Borrower and its Subsidiaries, (a) before extraordinary items,
and (b) before gains or losses from the sale of assets, plus the following: (i)
Deferred Revenue, (ii) Interest Expense, (iii) rents payable under Ground
Leases, (iv) Depreciation Expense, (v) amortization expense and (vi) provisions
for income tax.
"Effective Date" with respect to the Borrowing Base Value has the
meaning given such term in Section 2.01(c)(iv).
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower or any Subsidiary required by any Environmental
Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from
9
or in any way associated with any Environmental Requirement, whether or not
incorporated in a judgment, decree or order.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Reports" means those environmental reports which were
rendered with respect to the Initial Hotels and copies of which were delivered
to the Banks in connection with the Loans and any environmental reports
hereafter delivered to the Banks with respect to Additional Hotels. These
reports include, but are not limited to, reports concerning asbestos located in
and about one or more of the Properties.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any Subsidiary
or the Properties, including but not limited to any such requirement under
CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan which bears or is to bear interest at a
rate based upon the London Interbank Offered Rate.
10
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents). The Adjusted London Interbank Offered Rate
shall be adjusted automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
"Event of Default" has the meaning set forth in Section 8.01.
"Facility Letters of Credit" means any letters of credit issued from
time to time by the Agent for the benefit of a party designated by the Borrower
pursuant to the terms of Section 2.15 hereof.
"Facility Letter of Credit Obligations" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of the
Borrower with respect to Facility Letters of Credit, including the sum of (a)
the Reimbursement Obligations and (b) the aggregate undrawn face amount of the
then-outstanding Facility Letters of Credit.
"Facility Limit" shall mean $125,000,000 or such lesser sum as shall be
available upon reduction in the Facility Limit, as provided in Section 2.13
herein.
"FF&E" means furniture, fixtures and equipment now or hereafter located
on one or more of the Properties of the Borrower and Subsidiaries and required
for the operation of such Properties as hotels.
"FF&E Deficiency" means the amount, if any, as of each Measurement
Date, by which the cumulative amount of Required Room Reserves accrued
commencing January 1, 2002, and continuing during the term of the Loan, exceeds
the accrued cumulative expenditures by the Borrower for the replacement and
enhancement of FF&E located within the Borrowing Base Hotels.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) 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 by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to Wachovia on such day on such
transactions as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower. As of the
Second Amended and Restated Agreement Closing Date the Fiscal Quarters end on
March 31, June 30, September 30, and December 31.
11
"Fiscal Year" means any fiscal year of the Borrower. As of the Second
Amended and Restated Agreement Closing Date, the Fiscal Year ends on December
31.
"Fixed Charge Coverage Ratio" has the meaning given such term in
Section 7.05 hereof.
"Fixed Charges" means the sum of (a) Debt Service for such period plus
(b) Ground Lease Expenses for such period.
"Floating Rate Debt" means any Debt which bears interest at an interest
rate that is subject to change more frequently than once per calendar year.
"Franchisor" means any franchisor of a Hotel, specifically including
any Pre-Approved Franchisor.
"Franchise Agreement" means the written agreement between a Lessee and
the Franchisor pursuant to which such Lessee is granted a franchise to operate a
Hotel, and any and all amendments and modifications thereof and all restatements
thereof.
"Funds from Operations" means for any period net income (loss) of the
Borrower and Subsidiaries, determined on a consolidated basis in accordance with
GAAP plus Deferred Revenue, before Preferred Dividends and before deducting the
portion of such net income (loss) allocable to Minority Interests, gains (or
losses) from debt restructuring and sales of income producing Property, before
depreciation, and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect "Funds from Operations" consistent with the basis as
presented by Borrower. It is acknowledged that the computation of "Funds from
Operations" may be adjusted from time to time to be consistent with the
conventions adopted by the National Association of Real Estate Investment
Trusts.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Ground Lease" means a ground lease demising to the Borrower or any
Subsidiary the land on which improvements (buildings, parking, roadways) are
situated.
"Ground Lease Expenses" means all rents and other sums required to be
paid by the tenant under a Ground Lease.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for
12
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. `6901 et seq. and its implementing regulations and amendments,
or in any applicable state or local law or regulation, (b) any "hazardous
substance", "pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Hotels" means a hotel (specifically including land, building,
improvements, FF&E and all related personal property used or useful in
connection with such hotel operations) owned by the Partnership, the Company, or
the Special Purpose Entity. "Hotels" collectively refers to the Initial Hotels,
all Additional Hotels, and all Conduit Debt Hotels, but does not include Joint
Venture Hotels.
"Hotel Cost" means for any Non-Stabilized Hotel the total investment at
cost of the land, buildings, improvements and the FF&E located therein according
to GAAP before Accumulated Depreciation.
"Initial Hotels" mean those Hotels owned by the Partnership and pledged
to secure the Loans, as generally described in Exhibit K-1 attached hereto and
incorporated herein by reference.
"Intercompany Debt" means Debt owing by the Company or the Partnership
or any Subsidiary, on the one hand, to the Company or the Partnership or any
Subsidiary, on the other hand.
"Interest Expense" means during any period interest or similar fees and
charges accrued by the Borrower and its Consolidated Subsidiaries in accordance
with GAAP on all Debt constituting Consolidated Total Indebtedness other than
Intercompany Debt (including the portion of any Capitalized Lease Obligation
treated under GAAP as an interest component), but specifically excluding
therefrom interest that is capitalized in accordance with GAAP.
"Interest Period" means:
(1) with respect to each Euro-Dollar Borrowing other than a Swing Line
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period (subject to clause (c) below)
which would otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in
13
another calendar month, in which case such Interest Period shall end on
the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of the appropriate subsequent calendar month;
and
(c) no Interest Period may be selected which begins
before the Termination Date and would otherwise end after the
Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the
date of such Borrowing and ending one day thereafter; provided that any Interest
Period which would otherwise end on a day which is not a Domestic Business Day
shall be extended to the next succeeding Domestic Business Day.
(3) with respect to each Swing Line Borrowing, the period commencing on the
date of such Borrowing and (i), in the case of a Swing Line Borrowing that is a
Euro-Dollar Borrowing, ending 7 days thereafter, or (ii) in the case of a Base
Rate Borrowing, ending one day thereafter, provided that:
(a) in the case of a Swing Line Borrowing that is a Base
Rate Borrowing, any Interest Period (subject to clause (c) below) which
would otherwise end on a day which is not a Domestic Business Day shall
be extended to the next succeeding Domestic Business Day;
(b) in the case of a Swing Line Borrowing that is a
Euro-Dollar Loan, any Interest Period (subject to clause (c) below)
which would otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar Business Day;
and
(c) no Interest Period may be selected which begins
before the Termination Date and would otherwise end after the
Termination Date.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise (in either case, whether direct or indirect).
"Joint Venture" means any undertaking and agreement between (i) the
Company or the Partnership or both or any Consolidated Subsidiary of either and
(ii) any other entity or entities (collectively, the "Other Venturer") [(i) and
(ii) being collectively referred to as "Joint Venturers"] for the construction,
development and ownership of any Joint Venture Hotel or for the rehabilitation,
renovation and ownership of any Joint Venture Hotel. For purposes hereof, a
"Joint Venture" can be a partnership, a corporation, or a limited liability
company in which the Joint Venturers have an ownership interest and specifically
includes any fund or series of funds in which the Company, the Partnership, or
any Consolidated Subsidiary participates for such purpose.
14
"Joint Venture Hotel" means any Hotel owned directly or indirectly by a
Joint Venture.
"Joint Venture Hotel Lender" means any lender providing project
financing for a Joint Venture Hotel.
"Lease" or "Leases" means any and all lease agreements now or hereafter
executed between the Borrower or a Subsidiary and any Lessee and any and all
amendments and modifications thereof and any replacements thereof, pursuant to
which such Lessee operates one or more of the Hotels.
"Lending Office" means, as to each Bank, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as such Bank may
hereafter designate as its Lending Office by notice to the Borrower and the
Agent.
"Lessee" means any party operating a Hotel pursuant to a Lease.
"Leverage Ratio" means the ratio of Consolidated Total Indebtedness to
Total Value. [SEE SECTION 7.01. THE LEVERAGE RATIO SHALL BE CALCULATED USING THE
GREATER OF METHOD A AND METHOD B AS SET OUT IN SECTION 7.01 HEREOF.]
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, ground
lease, capital lease or other title retention agreement relating to such asset.
"Loan" means any loan made by any Bank to the Borrower and any
unreimbursed draws under any Facility Letter of Credit pursuant to the
provisions hereof, and "Loans" means any of all such loans and unreimbursed
draws, as the context shall require.
"Loan Documents" means this Agreement, the Notes, all Deeds of Trust,
all Assignments of Rents, all Security Agreements, all Collateral Assignments of
Franchise Agreements, all Collateral Assignments of Management Agreements, any
other document evidencing, relating to or securing the Loans, and any other
document or instrument delivered from time to time in connection with this
Agreement, the Notes or the Loans, as such documents and instruments may be
amended, supplemented or restated from time to time.
"London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such Euro-Dollar Loan the rate per annum
determined on the basis of the offered rate for deposits in Dollars of amounts
equal or comparable to the principal amount of such Euro-Dollar Loan offered for
a term comparable to such Interest Period, which rate appears on the display
designated as Page "3750" of the Telerate Service in the case of the One-Month
LIBOR Option, the Two-Month LIBOR Option, the Three-Month LIBOR Option or the
Six-
15
Month LIBOR Option and "Page 3875" of the Telerate Service in the case of the
Seven-Day LIBOR Option or, in the case of any LIBOR Option, such other page as
may replace such page of that service or such other service or services as may
be designated by the British Bankers' Association for the purpose of displaying
the London Interbank Offered Rates for United States dollar deposits (the
"Telerate Service") determined as of 11:00 a.m. London time, as that rate is set
two (2) Euro-Dollar Business Days prior to the first day of the Interest Period,
provided that (i) if more than one such offered rate appears on the applicable
Telerate Service, the "London Interbank Offered Rate" will be the arithmetic
average (rounded upward or downward, if necessary, to the closest 1/10,000th of
1%, with 5,000/10,000th being rounded upward) of such offered rates; and (ii) if
no such offered rates appear on such page, or if there is no such service
designated by the British Bankers' Association, the "London Interbank Offered
Rate" for such Interest Period will be the arithmetic average (rounded upward or
downward, if necessary, to the closest 1/10,000th of 1%, with 5,000/10,000th
being rounded upward) of rates quoted by not less than 2 major banks in New York
City, selected by the Agent, at approximately 10:00 a.m., New York City time, 2
Euro-Dollar Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered to leading European banks for a period comparable to
such Interest Period in an amount comparable to the principal amount of such
Euro-Dollar Loan.
"Major Ground Lease" means a ground lease demising to the Borrower or
any Subsidiary all of the land on which a Hotel is situated or any portion of
such land which the Agent, in its reasonable judgment, deems necessary for the
operation of the Hotel, or which, without the benefit of such ground lease,
would materially impair the marketability of the Hotel in the reasonable
judgment of the Agent.
"Manager" means any manager of a Hotel.
"Management Agreement" means the written agreement between a Lessee and
a Manager pursuant to which a Manager undertakes the management of a Hotel, and
any and all amendments and modifications thereof and all restatements thereof.
"Margin Stock" means "margin stock" as defined in Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System, as in effect from
time to time, together with all official rulings and interpretations issued
thereunder.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business or properties of the Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Agent or the Banks under the Loan Documents, or the ability of the Borrower to
perform its obligations under the Loan Documents to which it is a party, as
applicable, or (c) the legality, validity or enforceability of any Loan
Document.
"Maximum Advance" has the meaning set forth in Section 2.01(b).
"Measurement Date" shall mean December 31, 1998, and each March 31,
June 30, September 30 and December 31 thereafter.
16
"Minority Interests" shall mean the partnership interests in the
Partnership held by limited partners other than the Company.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Non-Stabilized Borrowing Base Hotel" means a Borrowing Base Hotel that
does not constitute a Stabilized Borrowing Base Hotel.
"Non-Stabilized Hotel" means a Hotel that does not constitute a
Stabilized Hotel.
"Notes" means collectively the Term Notes and the Bank Notes. "Note"
means any one of such Notes.
"Notice of Borrowing" has the meaning set forth in Section 2.02(a).
"Officer's Certificate" has the meaning set forth in Section 3.03(f).
"Participant" has the meaning set forth in Section 11.07(b).
"Partnership" means XXXX Limited Partnership, a North Carolina limited
partnership, its successors and permitted assigns.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Performance Pricing Determination Date" means the first date
immediately following a Measurement Date (that is, January 1, April 1, July 1,
and October 1).
"Permitted Operating Lease" means any Lease with respect to a Hotel
owned by Borrower or a Subsidiary, such Lease being between such Borrower or
Subsidiary, as lessor, and either of Capstar Winston Company, L.L.C., Capstar
Management Company, L.P., Capstar Hotel Company or another entity directly or
indirectly owned wholly by MeriStar Hospitality Corporation (herein a "Capstar
Entity"), as lessee, or such other entity approved by the Required Banks and
provided further that the obligations of any Capstar Entity are guaranteed by
MeriStar Hospitality Corporation and further provided that each such Lease shall
conform to any one or more of the following requirements:
(a) Such Lease is a lease with respect an Initial Hotel;
(b) Such Lease is with respect to a Conduit Debt Hotel;
(c) If such Lease is a lease with respect to any
Additional Hotel that is or becomes a Borrowing Base
Hotel, such Lease shall be in substantially the same
form as evidenced by the Form of Permitted Operating
Lease shown in Exhibit L, provided, however, that the
terms affecting the payments thereunder shall be
acceptable to all of the Banks;
17
(d) If such Lease is with respect to any Hotel that is
not a Borrowing Base Hotel or a Conduit Debt Hotel,
such lease shall be in substantially the form shown
in Exhibit L;
(e) If such Lease described in paragraph (d) above is not
with a Capstar Entity, such lease shall be in
substantially the form shown in Exhibit L or shall be
approved by the Required Banks.
The Banks have approved the existing lease with Secaucus Holding Corp.
with respect to Hotel #19 located in Secaucus, New Jersey, and have also
approved the existing lease with Bristol Hotel Tenant Company for Hotel #27
located in Las Vegas, Nevada. Such approval for these particular hotels does not
constitute approval of the forms of lease applicable to these Hotels for other
hotel properties.
"Person" means an individual, a corporation, a partnership (including
without limitation, a joint venture), a limited liability company, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"Prior Indebtedness" means outstanding indebtedness evidenced by the
Restated Credit Agreement dated as of April 1, 2001, in the principal amount of
$140,000,000 among the Borrower, Wachovia, as agent, and the banks listed
therein.
"Prime Rate" refers to that interest rate so denominated and set by the
Agent from time to time as an interest rate basis for borrowings. The Prime Rate
is but one of several interest rate bases used by the Agent. The Agent lends at
interest rates above and below the Prime Rate.
"Property" or "Properties" means any and all real property owned,
leased or otherwise used or occupied by the Borrower or any Subsidiary, wherever
located.
"Property Operating Income" means with respect to any Hotel, for any
period, Borrower's rental revenue derived under a Lease and accrued according to
GAAP plus Deferred Revenue for such Hotel for such period, (i) less all expenses
incurred by the Borrower and not reimbursed by tenants that are directly related
to such Hotel, including real estate taxes, common area maintenance charges,
casualty insurance, liability insurance, and ground lease payments (where
applicable), (ii) less $10,000 per Hotel to cover general and administrative
expenses for the Borrower and its Subsidiaries for all Hotels owned by the
Borrower and its Subsidiaries, and (iii) plus, to the extent included in (i)
above, Depreciation Expense, and amortization expense and Interest Expense with
respect to such Hotel for such period. If such period is less than a year, such
expenses shall be adjusted by straight lining various expenses which are payable
less
18
frequently than monthly during every such period (e.g. real estate taxes, ground
lease payments and insurance premiums).
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reimbursement Obligations" means at any time the aggregate of the
obligations of the Borrower to the Banks and the Agent in respect of all
unreimbursed payments or disbursements made by the Banks and the Agent under or
in respect of the Facility Letters of Credit.
"Related Parties" shall mean, collectively, (a) the Company, (b) the
Partnership, (c) all Subsidiaries of the Borrower, (d) all non-consolidated
ventures in which the Borrower and/or any Consolidated Subsidiaries own at least
20% of the equity interests and over which the Borrower and/or any Consolidated
Subsidiaries have control, and (e) all non-consolidated ventures in which the
Borrower and/or any Consolidated Subsidiaries own at least 50% of the equity
interests.
"Rents" means, for any period, the revenue accrued according to GAAP
pursuant to the "annual base rent" and the Deferred Revenue to be received
according to the "annual percentage rent formula" schedule of the Lease for any
Hotel.
"Required Banks" means at any time Banks (exclusive of Defaulting
Banks) having at least 66 2/3% of the aggregate amount of the Commitments
(exclusive of Commitments of Defaulting Banks) or, if the Commitments are no
longer in effect, Banks (exclusive of Defaulting Banks) holding at least 66 2/3%
of the aggregate outstanding principal amount of the Notes (exclusive of Notes
payable to Defaulting Banks).
"Required Room Reserves" means, for any period, a sum equal to the
greater of (a) 5% of gross room revenues of the Hotels or (b) the amount
required to be "set aside" for replacement of FF&E for Hotels under the Leases
for such Hotels.
"Second Amended and Restated Agreement Closing Date" means December 31,
2001.
"Security Agreements" mean all security agreements now or hereafter
executed by the Borrower, specifically including but not limited to those
security agreements given incorporated within the Deed of Trust which have been
given with respect to the Initial Hotels, and any and all amendments and
modifications thereof and all restatements thereof.
"Senior Revolving Debt" means the principal amount outstanding under
the Loans.
"Special Purpose Entity" means Winston SPE, LLC, a Virginia limited
liability company, a wholly owned subsidiary of the Borrower.
"Stabilized Borrowing Base Hotel" means, as of each Measurement Date, a
Borrowing Base Hotel that has been owned by the Borrower and continuously
operated by the Borrower or its Lessee for eight or more full Fiscal Quarters.
19
"Stabilized Hotel" means, as of each Measurement Date, a Hotel that has
been owned by the Borrower and continuously operated by the Borrower or its
Lessee for eight or more full Fiscal Quarters.
"Stockholders' Equity" means, at any time, the shareholders' equity of
the Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Borrower prepared in accordance
with GAAP, but excluding any Redeemable Preferred Stock of the Borrower or any
of its Consolidated Subsidiaries. Shareholders' equity generally would include,
but not be limited to (i) the par or stated value of all outstanding Capital
Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various
deductions such as (A) purchases of treasury stock, (B) valuation allowances,
(C) receivables due from an employee stock ownership plan, (D) employee stock
ownership plan debt guarantees, and (E) translation adjustments for foreign
currency transactions.
"Subordination Agreements" mean collectively those agreements pursuant
to which a Lease is subordinated to the lien of a Deed of Trust given with
respect to such Hotel.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Substitute Hotels" has the meaning given such term in Section
3.02(a)(i).
"Supermajority of Banks" means at any time Banks (exclusive of
Defaulting Banks) having at least 80% of the aggregate amount of the Commitments
(exclusive of the Commitments of Defaulting Banks) or, if the Commitments are no
longer in effect, Banks (exclusive of Defaulting Banks) holding at least 80% of
the aggregate outstanding principal amount of the Notes (exclusive of Notes
payable to Defaulting Banks).
"Supplemental Borrowing Base Hotels" means those Hotels owned by the
Partnership and described on Exhibit K-2 attached hereto and incorporated herein
by reference.
"Swing Line Bank" shall mean Wachovia, in its capacity as one of the
Banks providing a Commitment hereunder.
"Swing Line Borrowing" is a borrowing pursuant to the Swing Line
established under Section 2.03(a).
"Swing Line Loan" means a loan constituting a borrowing under the Swing
Line established under Section 2.03(a).
"Syndicated Borrowing" means a Borrowing with respect to a Loan or
Loans (as the case may be) other than Swing Line Loans made pursuant to this
Credit Agreement.
"Taxes" has the meaning set forth in Section 2.11(c).
"Term Notes" mean the promissory notes of the Borrower payable to the
Agent for the benefit of the Banks, substantially in the form of Exhibit A-2
attached hereto, evidencing the
20
obligation of the Borrower to repay a designated portion of the Loans, together
with all amendments, consolidations, modifications, replacements, renewals and
supplements thereto. "Term Note" means any one of such Term Notes.
"Termination Date" means December 31, 2004.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's business and on a temporary basis.
"Total Cost" means as of each Measurement Date, the sum of (a) the book
value according to GAAP of all Hotels then owned by the Borrower and its
Subsidiaries (including the Capitalized Value of any Major Ground Lease of such
Properties) plus (b) all Accumulated Depreciation on such Hotels reflected on
the Borrower's financial statements.
"Total Value" means as of each Measurement Date, the sum of (a) all
Cash Equivalents then held by the Borrower and its Consolidated Subsidiaries
plus (b) for Stabilized Hotels, their aggregate Capitalized Value, plus (c) for
Non-Stabilized Hotels, their aggregate Hotel Cost, plus (d) the aggregate amount
of investments in, loans and advances of the Borrower and its Consolidated
Subsidiaries in and to Joint Ventures or Development Parties as reflected on the
balance sheet of the Borrower and its Consolidated Subsidiaries, according to
GAAP (net of any amounts owed by the Borrower to such Joint Ventures or
Development Parties), plus (e) [but without duplication of amounts set out in
(c)] the amount of the Borrower's unfunded capital contribution obligation or
obligation to make credit available to a Joint Venture or a Development Party
that is equal to the undrawn balance of any outstanding Facility Letters of
Credit issued for the purpose of guaranteeing the Borrower's capital
contribution to such Joint Venture or Development Party.
"Transferee" has the meaning set forth in Section 11.07(d).
"Unused Commitment" means at any date, with respect to any Bank, an
amount equal to its Commitment less the aggregate outstanding principal amount
of its Loans and less the aggregate amount of such Bank's proportionate share of
any outstanding Facility Letters of Credit.
"Unutilized Commitment Fee Payment Date" means each January 10, April
10, July 10, and October 10.
"Unutilized Commitment Fees" shall have the meaning set forth in
Section 2.07(b).
"Venture Value" has the meaning given to such term in Section 7.01.
"Venture Indebtedness" has the meaning given to such term in Section
7.01.
"Wachovia" means Wachovia Bank, N.A., a national banking association,
and its successors.
21
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower delivered to the Banks, unless with respect
to any such change concurred in by the Borrower's independent public accountants
or required by GAAP, in determining compliance with any of the provisions of
this Agreement or any of the other Loan Documents: (i) the Borrower shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements, or (ii) the Required Banks shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 5.01 hereof, shall mean
the financial statements referred to in Section 4.04).
Notwithstanding the foregoing, all accounting determinations
(specifically including the Financial Covenants in Article VIII) and all
financial statements required to be delivered with respect to the "Borrower and
its Consolidated Subsidiaries" or with respect to the "Company and its
Consolidated Subsidiaries" shall include the operations of the Company, the
Partnership, the Special Purpose Entity and any Consolidated Subsidiary of any
of the foregoing.
SECTION 1.03. Use of Defined Terms. All terms defined in this Agreement
shall have the same meanings when used in any of the other Loan Documents,
unless otherwise defined therein or unless the context shall otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 1.05. References. Unless otherwise indicated, references in
this Agreement to "Articles," "Exhibits," "Schedules," and "Sections" are
references to articles, exhibits, schedules and sections hereof.
SECTION 1.06. "Borrower" References; Joint and Several Obligations;
Notice. Where this Agreement imposes obligations upon the "Borrower," such
reference shall mean that both the Partnership and the Company shall be jointly
and severally obligated for the payment and performance of the obligations.
Where any notice is required hereunder to be given to or by the "Borrower," any
notice given by the Company (and any signature of a Company representative on
behalf of the Company) shall be deemed to have been given on the Company's own
behalf and as general partner of the Partnership, even though not specifically
delineated in such notice.
22
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.01. Commitments to Make Loans; Maximum Advance; Borrowing
Base Value.
(a) Generally. Upon the satisfaction of each of the conditions of
Article III, the Banks shall extend a line of credit to the Borrower under which
the Banks will, ratably in accordance with their respective Commitments, subject
to the conditions of Article III and all other terms and conditions of this
Agreement, from time to time at the Borrower's request, make Loans to the
Borrower in amounts not to exceed either the Facility Limit or the Maximum
Advance, which may be borrowed, repaid (subject to the provisions of Section
2.09) and reborrowed (subject to the limitations set out herein, specifically
including, but not limited to, Section 2.14 hereof), from time to time, in
minimum principal amounts as set forth herein, in one or more borrowings prior
to the Termination Date.
Each Syndicated Borrowing shall be in an aggregate principal amount of
$1,000,000 or any larger multiple of $100,000 (except that any such Borrowing
may be in the aggregate amount of the Unused Commitments) and shall be made from
the several Banks ratably in proportion to their respective Commitments. Each
Swing Line Borrowing, however, shall be in an aggregate principal amount of
$100,000 or any larger multiple of $100,000, except that any such Swing Line
Borrowing may be in the aggregate amount of the unused portion of the Swing
Line.
(b) Maximum Advance. The maximum amount of credit available to be
drawn upon from time to time under this Agreement, determined as of each
Measurement Date and being effective as set out in Section 2.01(c), but in no
event to exceed the Facility Limit (the "Maximum Advance"), is the product of
(a) 55% and (b) the sum of (i) Total Cost of each Non-Stabilized Borrowing Base
Hotel, and (ii) the Capitalized Value of each Stabilized Borrowing Base Hotel
less (iii) the FF&E Deficiency.
(c) Borrowing Base Value. The Borrowing Base Value shall be
calculated from time to time in accordance with the following procedure:
(i) Borrowing Base Value Certificate. Simultaneously with
the submission of the financial statements required
in Section 5.01 of this Agreement, the Borrower shall
provide to the Agent and to each Bank a
certification, signed by the chief financial officer
of the Borrower, providing its calculation of the
Borrowing Base Value, such certification to be in a
form set out in Exhibit I and otherwise in form
satisfactory to the Agent and the Required Banks (the
"Borrowing Base Value Certificate"). The Borrower in
the Borrowing Base Value Certificate shall certify as
to which Borrowing Base Hotels constitute
Non-Stabilized Borrowing Base Hotels and which
Borrowing Base Hotels constitute Stabilized Borrowing
Base Hotels and shall certify as to the amount of the
FF&E Deficiency for all such Borrowing Base Hotels in
the aggregate.
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(ii) Property-Level Information. The Borrower shall
provide to the Agent and to each Bank, together with
the quarterly financial statements required by
Section 5.01 of this Agreement, a financial statement
with respect to the operations of the Borrowing Base
Hotels during the preceding four Fiscal Quarters
ending as of the Measurement Date. Such financial
statements shall be delivered no later than 55 days
after each Measurement Date. Such financial
statements shall be in form and detail satisfactory
to the Required Banks with respect to each Borrowing
Base Hotel individually and with respect to all
Borrowing Base Hotels in the aggregate for each
Lessee.
(iii) Review; Agent's Determination. The Agent shall be
entitled to review such information and to request
such additional information as it or any of the Banks
deems necessary to verify and assess such
calculations. Within twenty-five (25) days of receipt
of the certified Borrowing Base Value Certificate,
the Agent shall notify the Borrower (x) whether it
has not accepted the Borrower's Borrowing Base Value
Certificate determinations, and (y) if not, the
Agent's computation of the Borrowing Base Value. The
Agent's determination of the Borrowing Base Value
shall be conclusive, absent manifest error.
(iv) Effective Date. Except in the case of a release of or
revocation of status of a Borrowing Base Hotel or
Borrowing Base Hotels, such Borrowing Base Value and
the Maximum Advance determined thereby shall be
effective as of the first day of the next Fiscal
Quarter commencing after such determination (the
"Effective Date"). [For example, for the Fiscal
Quarter ending March 31, the Borrower would supply
financial statements and the Borrowing Base Value
Certificate on or before May 25; the Agent would
review and respond to the Borrowing Base Value
Certificate (and establish the Borrowing Base) on or
before June 20, with such computations to be
effective on July 1, the first day of the next Fiscal
Quarter.]
(v) Releases; Additions. Prior to the time that a
Borrowing Base Hotel is released or added, the
Borrower shall supply to the Agent and each of the
Banks a pro forma Borrowing Base Value Certificate
giving effect to the release or addition of any
Borrowing Base Hotel. In the case of a reduction in
the Maximum Advance, such reduction shall be
effective immediately subject to review and
adjustment by the Agent as described in (iii) above.
In the case of an increase in the Maximum Advance,
such an increase shall be effective only following
review and approval of the Borrowing Base Value
Certificate by the Agent as set out above.
(d) Required Paydown Due to a Reduction in the Maximum Advance.
If, upon a reduction in the Maximum Advance as a result of a reduction in the
Borrowing Base Value, the outstanding principal balance of the Loans exceeds the
permitted Maximum Advance available as of the first day of the next Fiscal
Quarter, then on or before such date the Borrower shall pay down the principal
balance to that amount available under the new Maximum Advance. In addition, the
Borrower at any time (but subject to the limitations for approval set out in
Section
24
3.01(c) entitled Borrowing Base Hotels) may request the Banks to approve one or
more additional hotels as Borrowing Base Hotels. If, after reviewing the
information to which they are entitled to review in connection with their
determination of Borrowing Base Hotels, all of the Banks consent to such
addition or additions, the Borrower shall provide a replacement Borrowing Base
Value Certificate that includes such additional Borrowing Base Hotels. The
recomputed Maximum Advance shall be effective as of the date on which the Agent
establishes the recomputed Maximum Advance.
(e) Title Insurance Amounts Subject to Increases Upon Increases in
Maximum Advance. As of the Closing Date, the Borrower has obtained title
insurance policies aggregating more than $140,000,000.00. In connection with the
reduction in the credit facility as of the Second Amended and Restated Closing
Date, the amount of title insurance for certain Borrowing Base Hotels has been
reduced. The Borrower shall obtain additional title coverage such that, at all
times, the amount of title coverage, if requested by the Required Banks, shall
be at least $5 million greater than the Maximum Advance (the "Title Coverage
Spread"). Amounts of title insurance coverage provided for Additional Hotels
that become Borrowing Base Hotels shall be included for purposes of determining
whether this requirement has been satisfied. The Required Banks may require a
greater Title Coverage Spread if a "Tie In Endorsement" cannot be issued in any
jurisdiction other than Texas and Florida.
SECTION 2.02. Method of Borrowing.
(a) The Borrower shall give the Agent notice in the form attached
hereto as Exhibit H (a "Notice of Borrowing") prior to 11:00 A.M. (Atlanta,
Georgia time) on the date of each Base Rate Borrowing, and at least three
Euro-Dollar Business Days before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or
a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be
Base Rate Loans, or Euro-Dollar Loans, and whether
any portion of such Loans comprising such Borrowing
are to be Swing Line Loans,
(iv) in the case of a Euro-Dollar Borrowing, the duration
of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period,
and
(v) such other information as is required to be provided
in the Notice of Borrowing.
(b) Upon receipt of a Notice of Borrowing for a Syndicated
Borrowing, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such Syndicated Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
25
(c) Not later than 11:00 A.M. (Atlanta, Georgia time) on the date
of each Syndicated Borrowing, each Bank shall (except as provided in subsection
(d) of this Section) make available its ratable share of such Syndicated
Borrowing, in Federal or other funds immediately available in Atlanta, Georgia,
to the Agent at its address referred to in or specified pursuant to Section
11.01. Unless the Agent determines that any applicable condition specified in
Article III has not been satisfied, the Agent will make the funds that the Agent
has so received from the Banks available to the Borrower.
Unless the Agent receives notice from a Bank, at the Agent's address
referred to in Section 11.01, no later than 4:00 P.M. (local time at such
address) on the Domestic Business Day before the date of a Syndicated Borrowing
stating that such Bank will not make a Loan in connection with such Syndicated
Borrowing, the Agent shall be entitled to assume that such Bank will make a Loan
in connection with such Syndicated Borrowing and, in reliance on such
assumption, the Agent may (but shall not be obligated to) make available such
Bank's ratable share of such Syndicated Borrowing to the Borrower which provided
the Notice of Borrowing for the account of such Bank. If the Agent makes such
Bank's ratable share available to the Borrower which provided the Notice of
Borrowing and such Bank does not in fact make its ratable share of such
Syndicated Borrowing available on such date, the Agent shall be entitled to
recover such Bank's ratable share from such Bank or the Borrower (and for such
purpose shall be entitled to charge such amount to any account of the Borrower
maintained with the Agent), together with interest thereon for each day during
the period from the date of such Syndicated Borrowing until such sum shall be
paid in full at a rate per annum equal to the rate at which the Agent determines
that it obtained (or could have obtained) overnight Federal funds to cover such
amount for each such day during such period, provided that (i) any such payment
by the Borrower of such Bank's ratable share and interest thereon shall be
without prejudice to any rights that the Borrower may have against such Bank,
and (ii) until such Bank has paid its ratable share of such Loan, together with
interest pursuant to the foregoing, it shall have no interest in or rights with
respect to such Loan for any purpose hereunder.
(d) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank, such
Bank shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by such Bank to the Agent as
provided in subsection (c) of this Section, or remitted by the Borrower to the
Agent as provided in Section 2.11, as the case may be.
(e) Notwithstanding anything to the contrary contained in this
Agreement, no Euro-Dollar Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived in writing.
(f) In the event that a Notice of Borrowing fails to specify
whether the Loans comprising such Borrowing are to be Base Rate Loans or
Euro-Dollar Loans, such Loans shall be made as Base Rate Loans.
If the Borrower is otherwise entitled under this Agreement to repay any
Loans maturing at the end of an Interest Period applicable thereto with the
proceeds of a new Syndicated Borrowing, and the Borrower does not repay such
Loans using its own moneys and fails to give a Notice of Borrowing in connection
with such new Syndicated Borrowing, a new Borrowing shall
26
be deemed to be made on the date such Loans mature in an amount equal to the
principal amount of the Loans so maturing, and the Loans comprising such
Syndicated Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein, (i)
there shall not be more than five different Euro-Dollar Borrowings (each request
for a Borrowing being treated as a single Borrowing, even though more than one
Bank may provide funds for such Borrowing) outstanding at the same time and (ii)
the proceeds of any Base Rate Borrowing shall be applied first to repay the
unpaid principal amount of all Base Rate Loans (if any) outstanding immediately
before such Base Rate Borrowing.
SECTION 2.03. Restrictions on Use of Loan Proceeds Generally.
(a) Swing Line. The Commitment of Wachovia, as a Bank, includes a
Swing Line available to the Borrower. Swing Line Loans may be used for any of
the purposes for which the Loans may be utilized.
(i) The Borrower may prior to the Termination Date,
borrow Swing Line Loans from the Swing Line Bank and
may repay and reborrow such Swing Line Loans, in an
aggregate principal amount at any one time
outstanding not exceeding $15,000,000, provided that
the aggregate principal amount of all Loans
(including Swing Line Loans) at any one time
outstanding shall not exceed the lesser of (i) the
aggregate amount of the Commitments of all of the
Banks at such time; or (ii) the Maximum Advance.
(ii) When the Borrower wishes to request a Swing Line
Loan, it shall give the Agent notice of such a
borrowing (a "Swing Line Loan Request") on the Notice
of Borrowing hereunder described, so as to be
received by 11:00 A.M. on the day of the Borrowing.
(iii) The Swing Line Bank shall make the amount of such
Swing Line Loan available to the Borrower on such
date by depositing the proceeds of such Swing Line
Loan in immediately available funds in an account of
such Borrower maintained with the Swing Line Bank.
(iv) Swing Line Loans shall be considered a utilization of
the Commitment of the Swing Line Bank under this
Agreement for purposes of calculating the Unutilized
Commitment Fee.
(v) At any time, upon the request of the Swing Line Bank,
each Bank other than the Swing Line Bank shall, on
the third Domestic Business Day after such request is
made, purchase a participating interest in Swing Line
27
Loans in an amount equal to its ratable share (based
upon its respective Commitment) of such Swing Line
Loans. On such third Domestic Business Day, each Bank
will immediately transfer to the Swing Line Bank, in
immediately available funds, the amount of its
participation. Whenever, at any time after the Swing
Line Bank has received from any such Bank its
participating interest in a Swing Line Loan, the
Agent receives any payment on account thereof, the
Agent will distribute to such Bank its participating
interest in such amount (appropriately adjusted, in
the case of interest payments, to reflect the period
of time during which such Bank's participating
interest was outstanding and funded); provided,
however, that in the event that such payment received
by the Agent is required to be returned, such Bank
will return to the Agent any portion thereof
previously distributed by the Agent to it. Each
Bank's obligation to purchase such participating
interests shall be absolute and unconditional and
shall not be affected by any circumstance, including,
without limitation: (v) any set-off, counterclaim,
recoupment, defense, or other right which such Bank
or any other Person may have against the Swing Line
Bank requesting such purchase or any other Person for
any reason whatsoever; (w) the occurrence or
continuance of a Default or an Event of Default or
the termination of the Commitments; (x) any adverse
change in the condition (financial or otherwise) of
the Borrower or any other Person; (y) any breach of
this Agreement by the Borrower or any other Bank; or
(z) any other circumstance, happening or event
whatsoever, whether or not similar to any of the
foregoing.
(b) Use Restrictions for Loans Generally. Proceeds of the Loans
may be used only for the following purposes: (i) development or acquisition by
the Borrower or Subsidiaries (specifically including investments by the Borrower
and its Subsidiaries in joint ventures or partnerships, subject to the
limitations in Section 6.06) of premium "limited service" hotels, premium
"extended stay" hotels, premium "all-suite" hotels, and premium "full service"
hotels; (ii) development, expansion and renovation of any of the Properties then
owned by the Borrower; and (iii) other general corporate and working capital
needs of the Borrower and its Subsidiaries, specifically including day-to-day
operations, payment of debt, the making of Development Loans, payment of
dividends and distributions, and repayment of the Swing Line.
(c) Restriction on Use of Proceeds to Purchase Company Stock or
Partnership Interests. The Borrower shall not use proceeds of the Loans
(directly or indirectly) to acquire shares of the Capital Stock of the Company
or the partnership interests in the Partnership. Notwithstanding the foregoing,
the Borrower shall be permitted to use the proceeds from the issuance of equity
securities or the sale of its assets (other than such assets comprising
Borrowing Base Hotels) to acquire Capital Stock of the Company or partnership
interests in the Partnership provided that, after giving effect to any such
purchases, the Borrower shall be in compliance with the terms of this Agreement.
The cumulative amount of such shares or interests repurchased shall not exceed
the proceeds of equity issuance which occur on or after January 1, 2002, and
which are approved by the Required Banks. Borrower shall provide to the Banks an
accounting of the issuance of equity and repurchase of its shares or partnership
interests after each Fiscal Quarter simultaneously with the financial
information supplied by the Borrower pursuant to Section 5.01.
28
SECTION 2.04. Notes.
(a) The Loans of each Bank shall be evidenced by a single Note
payable to the order of such Bank for the account of its Lending Office in an
amount equal to the original principal amount of such Bank's Commitment. A
portion of the Loans shall also be evidenced by Term Notes payable to the Agent
for the pro rata benefit of the Banks.
(b) Upon receipt of each Bank's Note pursuant to Section 3.03, the
Agent shall deliver such Note to such Bank. Each Bank shall record, and prior to
any transfer of its Notes shall endorse on the schedule forming a part thereof
appropriate notations to evidence, the date, amount and maturity of, and
effective interest rate for, each Loan made by it, the date and amount of each
payment of principal made by the Borrower with respect thereto and whether, in
the case of such Bank's Note, such Loan is a Base Rate Loan or Euro Dollar Loan,
and such schedule shall constitute rebuttable presumptive evidence of the
principal amount owing and unpaid on such Bank's Note; provided that the failure
of any Bank to make, or any error in making, any such recordation or endorsement
shall not affect the obligation of the Borrower hereunder or under its Note or
the ability of any Bank to assign its Note. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and when required.
SECTION 2.05. Termination Date, Repayment of Loans.
(a) As provided in Section 2.01(a) of this Agreement, but subject
to the limitations of Section 2.14 hereof, the Borrower is entitled to borrow,
repay and reborrow Loans at any time before the Termination Date.
(b) Each Loan included in any Borrowing other than a Loan
evidenced by a Term Note shall mature and the principal amount thereof shall be
due and payable on the first to occur of (1) the Termination Date, or (2),
except where principal is repaid through a rollover borrowing as described in
Section 2.02(d) of this Agreement, the last day of the Interest Period
applicable to such Borrowing. As provided in Section 2.02(d) in this Agreement,
a new Borrowing sufficient to repay the principal of such Loans shall be deemed
to have been made where the Borrower does not repay such otherwise maturing
Loans. Notwithstanding anything herein to the contrary, each Loan evidenced by a
Term Note shall mature and the principal amount thereof shall be due and payable
on the Termination Date (and not the last day of the Interest Period for such
Loan). As provided in Section 8.01, the Banks may accelerate the maturity date
of each Loan prior to the Termination Date upon the occurrence of an Event of
Default.
SECTION 2.06. Interest Rates.
(a) Interest Rate Options Generally. Subject to the provisions
hereof, the Borrower may elect one or more of the following Interest Rate
Options:
(i) One-Month LIBOR Option.
(ii) Two-Month LIBOR Option.
(iii) Three-Month LIBOR Option.
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(iv) Six-Month LIBOR Option.
(v) Base Rate Option.
(vi) Seven-Day LIBOR Option [available for Swing Line
Borrowings only].
Of the foregoing, the Borrower may select (i) through (v) for
Syndicated Borrowings, and the Borrower may select either (v) or (vi) for Swing
Line Borrowings. All Swing Line Borrowings outstanding at any one time must be
in the same interest rate option.
(b) Base Rate Loan Interest Rate. Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it is repaid, at a rate per annum equal to the Base Rate
for each day. Such interest shall be payable on the last day of each calendar
month. Any overdue principal of and, to the extent permitted by applicable law,
overdue interest on any Base Rate Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the Default Rate.
(c) Euro-Dollar Loan Interest Rate. Each Euro-Dollar Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the
Applicable Margin plus the applicable Adjusted London Interbank Offered Rate for
such Interest Period. Interest on each Euro-Dollar Loan shall be payable for
each Interest Period on the last day thereof, but in no event greater than three
months. Any overdue principal of and, to the extent permitted by applicable law,
overdue interest on any Euro-Dollar Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the Default Rate.
(d) Agent's Determination of Applicable Margin. The Applicable
Margin shall be determined by the Agent as of each Performance Pricing
Determination Date, shall be retroactive to such Performance Pricing
Determination Date, and shall remain effective until the next Performance
Pricing Determination Date. On the date that the Borrower provides to the Agent
and each Bank the Borrowing Base Value Certificate and the financial statements
required by Section 5.01 of this Agreement, the Borrower shall also provide to
the Agent and to each Bank as a part of the Compliance Certificate a
certification, signed by the chief financial officer of the Borrower, providing
its calculation of the ratio of Consolidated Total Indebtedness to Total Value
(the "Leverage Ratio"), upon which the Performance Pricing Level is determined.
Within twenty-five days of receipt, the Agent shall notify the Borrower (x)
whether it has not accepted the Borrower's computation of the Leverage Ratio and
(y) if not, the Agent's computation of the Leverage Ratio. The Agent's
determination of the Leverage Ratio and the Applicable Margin shall be
conclusive, absent manifest error.
(e) Agent Calculation of Rates and Notice of Rates. The Agent,
using the formulas set out herein for the various options hereunder, shall
calculate (for selection by the Borrower pursuant to Section 2.02 hereof) each
interest rate applicable to the Loans hereunder. The Agent shall give prompt
notice to the Borrower and the Banks by telecopy of each rate of interest so
calculated, and the Agent's calculation thereof shall be conclusive in the
absence of manifest error.
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(f) Default Rate. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate. After the occurrence and during the continuance of a Default, the
principal amount of the Loans (and, to the extent permitted by applicable law,
all accrued interest thereon) may, at the election of the Required Banks, bear
interest at the Default Rate.
SECTION 2.07. Fees.
(a) Up-Front Commitment Fee. The Borrower shall pay to the Agent,
for the pro rata benefit of the Banks, on the Second Amended and Restated
Agreement Closing Date a non-refundable, fully earned commitment fee of
$937,500.00 (the "Up Front Fee").
(b) Unutilized Commitment Fee for Unused Commitment. The Borrower
shall pay to the Agent for the ratable account of each Bank a commitment fee
calculated at the rate of one-fifth of one percent (.20%) per annum on the daily
average amount of such Bank's Unused Commitment during each Fiscal Quarter
(collectively, the "Unutilized Commitment Fees"). Such Unutilized Commitment
Fees shall accrue from and including the Second Amended and Restated Closing
Date to but excluding the Termination Date and shall be payable quarterly on
each Unutilized Commitment Fee Payment Date and on the Termination Date;
provided, that should the Commitments be terminated at any time prior to the
Termination Date for any reason, the entire accrued and unpaid Unutilized
Commitment Fee shall be paid on the date of such termination. The Unutilized
Commitment Fee for each Bank shall be computed by (a) multiplying the percentage
determined as set forth above by the average daily Unused Commitment for such
Bank in effect on the due date thereof, (b) dividing the product so obtained by
360, and (c) multiplying the quotient so obtained, in the case of the Unutilized
Commitment Fee due and payable on the effective date of this Agreement, by the
actual number of days in the period commencing on such effective date and ending
on December 31, 2001, and in the case of each subsequent Unutilized Commitment
Fee, the actual number of days in the calendar quarter for which the Unutilized
Commitment Fee is due. The Unutilized Commitment Fees shall be based upon the
Facility Limit available (without deduction for the Swing Line), even though the
Maximum Advance may be a lesser sum. In the case of any period not constituting
a full Fiscal Quarter (specifically including both the initial and final Fiscal
Quarters within which the Commitment is available), the amount of the Unutilized
Commitment Fees shall be prorated and shall be payable only for the period in
which the Commitment is available.
(c) [INTENTIONALLY DELETED].
(d) Agent's Fees Due Under Letter Agreement. The Borrower shall
pay to the Agent, for the account and sole benefit of the Agent, such fees and
other amounts at such times as set forth in the Agent's Letter Agreement.
(e) Additional Fees; Reimbursement of Expenses.
(i) The Agent shall be entitled to the reimbursement of
its expenses that it shall incur and to the payment
of fees that it shall determine to be reasonable in
connection with (x) the administration of the
Borrowing Base Hotel documentation (including,
without limitation, the cost of
31
appraisals, inspections, flood certifications,
environmental reports and other such costs with
respect to the Borrowing Base Hotels), (y) any
additions to or deletions from the Borrowing Base
Hotels, and (z) the administration of any
documentation as to the Borrowing Base Hotels that
was not delivered on or before the Second Amended and
Restated Agreement Closing Date.
(ii) The Borrower shall also pay to the Agent, for the
account of the Banks, a fee equal to the greater of
$20,000 or such higher amount assessed by the Agent
with respect to the administration or any amendment
of this Agreement, or with respect to obtaining any
waiver or consent. The first 25% of such fee shall be
paid to the Agent, with the balance distributed to
the Banks pro rata based upon their Commitments.
SECTION 2.08. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable on such date.
SECTION 2.09. Optional and Mandatory Prepayments.
(a) The Borrower may repay any Base Rate Borrowing in whole or in
part at any time, or from time to time, by paying the principal amount to be
repaid together with accrued interest thereon to the date of repayment. Each
such repayment shall be applied to repay ratably the Base Rate Loans of the
several Banks included in such Base Rate Borrowing.
(b) Except as provided in Section 10.02 and except for prepayment
arising out of a reduction in the Maximum Advance, the Borrower may not prepay
all or any portion of the principal amount of any Euro-Dollar Loan prior to the
maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
(d) At no time shall the principal balance of all Loans
outstanding exceed the Maximum Advance, as calculated from time to time as
provided herein. In the event the outstanding principal balance exceeds such
amount, the Borrower shall immediately repay such excess to the Agent.
SECTION 2.10. Mandatory Prepayments. On each date on which the
Commitments are terminated pursuant to Section 2.08, or on each date a
prepayment is required in order to achieve compliance with the Maximum Advance
permitted hereunder, the Borrower shall repay or prepay such principal amount of
the outstanding Loans, if any together with interest accrued thereon and any
amounts due under Section 10.05(a).
SECTION 2.11. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of Unutilized Commitment Fees and other fees due
hereunder, not later than 11:00 A.M. (Atlanta, Georgia time) on the date when
due, in Federal or other funds immediately available in
32
Atlanta, Georgia, to the Agent at its address referred to in Section 11.01. The
Agent will promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the Base
Rate Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on, the
Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day,
the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Loan or fee relating thereto shall be paid without deduction for, and free
from, any tax, imposts, levies, duties, deductions, or withholdings of any
nature now or at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of each Bank,
taxes imposed on or measured by its net income, and franchise taxes imposed on
it, by the jurisdiction under the laws of which such Bank is organized or any
political subdivision thereof and, in the case of each Bank, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction of such
Bank's applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, imposts, levies, duties, deductions or withholdings of any
nature being "Taxes"). In the event that the Borrower is required by applicable
law to make any such withholding or deduction of Taxes with respect to any Loan
or fee or other amount, the Borrower shall pay such deduction or withholding to
the applicable taxing authority, shall promptly furnish to any Bank in respect
of which such deduction or withholding is made all receipts and other documents
evidencing such payment and shall pay to such Bank additional amounts as may be
necessary in order that the amount received by such Bank after the required
withholding or other payment shall equal the amount such Bank would have
received had no such withholding or other payment been made. If no withholding
or deduction of Taxes are payable in respect of any Loan or fee relating
thereto, the Borrower shall furnish any Bank, at such Bank's request, a
certificate from each applicable taxing authority or an opinion of counsel
acceptable to such Bank, in either case stating that such payments are exempt
from or not subject to withholding or deduction of Taxes. If the Borrower fails
to provide such original or certified copy of a receipt evidencing payment of
Taxes or certificate(s) or opinion of counsel of exemption, the Borrower hereby
agrees to compensate such Bank for, and indemnify them with respect to, the tax
consequences of the Borrower's failure to provide evidence of tax payments or
tax exemption.
In the event any Bank receives a refund of any Taxes paid by the
Borrower pursuant to this Section 2.11, it will pay to the Borrower the amount
of such refund promptly upon receipt thereof; provided, however, if at any time
thereafter it is required to return such refund, the Borrower shall promptly
repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.11 shall be applicable with respect to any Participant, Assignee
or other Transferee, and any calculations required by
33
such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the payment in
full or cancellation of the Notes.
SECTION 2.12. Computation of Interest and Fees. Interest on the Base
Rate Loans shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day). Interest on Euro-Dollar Loans shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed, calculated as to each
Interest Period from and including the first day thereof to but excluding the
last day thereof. Unutilized Commitment Fees and any other fees payable
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.13. Facility Limit Reduction or Termination by Borrower. The
Borrower shall have the option, from time to time, to reduce the Facility Limit
by $5,000,000 or any greater integral multiple of $1,000,000, by (a) giving
written notice of its election to exercise such option to the Agent no later
than five (5) Domestic Business Days before the date the reduction is to be
effective, and (b) giving such notice of, and making such, prepayment, if any,
as is required by the provisions of Section 2.10 on account of such reduction of
the Facility Limit. In no event shall the Borrower, as a result of any such
election, be entitled to a refund of any fees paid to the Agent or any Bank
hereunder or be entitled thereafter, without the written consent of the Agent
and all Banks, to a restoration of the amount, or any part thereof, by which the
Facility Limit shall have been reduced. Upon receipt of any such written notice,
the Agent shall deliver a copy of the same to each Bank.
SECTION 2.14. Term Loans Secured by Hotels in Specific States.
(a) Generally. Certain states in which some of the Borrowing Base
Hotels are located impose a mortgage tax upon each borrowing and reborrowing. In
light of the foregoing, the Borrower has elected to borrow (and the Banks have
agreed to permit the Borrower to do so upon the terms and conditions herein set
out) a portion of the Loans as term loans under Term Notes. The original
principal amount of the term loans evidenced by any outstanding Term Notes (not
merely the then-outstanding principal balance of such Term Notes) shall reduce
the amount otherwise available on a revolving basis to the Borrower under
Section 2.01(a). hereof.
Any Term Notes shall be payable to the Agent, as agent for the Banks,
and the Agent shall be responsible for paying to each Bank the pro rata portion
of payments made by the Borrower under the Term Notes. The indebtedness
evidenced by the Term Notes shall constitute a portion of the overall
indebtedness evidenced by the Bank Notes and represents funds made available by
the Banks to the Borrower, rather than additional funds advanced by the Agent to
the Borrower.
(b) Collateral for Term Notes. The Term Note reflecting the
Allocated Loan Amount for Hotels in a particular state for which a Term Note is
executed (a "Term Note State") shall be secured by the hotels within such Term
Note State, as well as all other Borrowing Base Hotels. The Deeds of Trust and
other Collateral Documents for each Term Note State, however, secure only the
Term Note for that Term Note State and shall not secure other indebtedness
evidenced by the Notes or the Credit Agreement.
34
(c) New York Term Note; Florida Term Note; Future Term Notes. As
of the Closing Date, the Borrower has requested that the Allocated Loan Amounts
for Borrowing Base Hotels in Florida and New York be evidenced by two separate
Term Notes: (i) a Term Promissory Note, executed by the Borrower and payable to
the Agent, for the benefit of the Banks, in the amount of $7,500,000.00 (such
note being referred to as the "New York Term Promissory Note"), with respect to
Hotel #28, Albany, New York (the "New York Hotel"), and (ii) a Term Promissory
Note, executed by the Borrower and payable to the Agent, for the benefit of the
Banks, in the amount of $11,200,000.00 (such note being referred to as the
"Florida Term Promissory Note"), with respect to Hotel #00, 000 Xxxxxxxx Xxxxxx,
Xxxxxxx-Xxxx Xxxx, Xxxxxxx; Hotel #17, 00000 Xxxx Xxxx., Xxxxxxxxxx, Xxxxxxx;
and Hotel #18, 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx (collectively, the
"Florida Hotels"). If future Borrowing Base Hotels would be subject to recurring
mortgage taxes, the Borrower may request that the Banks permit additional Term
Notes. The Banks, however, in their sole and absolute discretion shall be
entitled to not permit such additional Term Notes.
(d) Principal Reduction of Term Notes; No Reborrowings Except in
Specified Circumstances. To the extent that the principal amount of the Loans
evidenced by the Bank Notes shall be reduced through repayment of principal,
such reductions shall be applied (x) first to all indebtedness evidenced by the
Notes other than the indebtedness evidenced by the Term Notes and, (y) second,
after all other such indebtedness has been repaid, then to indebtedness
evidenced by the Term Notes in such order as the Banks may elect. Any principal
repaid on any Term Note may not be reborrowed unless the full amount of such
Term Note has been repaid in full, and all the Borrowing Base Hotels in the Term
Note State securing such Term Note have been released and excluded from the
Borrowing Base Value, in which event the Borrower may borrow, repay and reborrow
such sums subject to the terms and conditions of this Credit Agreement.
SECTION 2.15. The Letter of Credit Subfacility.
(a) Obligations to Issue. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of the
Borrower set forth in this Agreement, the Agent hereby agrees to issue, for the
account of Borrower, one or more Facility Letters of Credit in accordance with
this Section 2.15, from time to time during the period commencing on the
Amendment Effective Date and ending on the Domestic Business Day prior to the
Termination Date.
(b) Types and Amounts. The Agent shall not have any obligation to:
(i) issue any Facility Letter of Credit if the aggregate
maximum amount then available for drawing under
Letters of Credit issued by the Agent, after giving
effect to the Facility Letter of Credit requested
hereunder, shall exceed any limit imposed by law or
regulation upon the Agent; or
(ii) issue any Facility Letter of Credit if, after giving
effect thereto, the Facility Letter of Credit
Obligations would exceed $10,000,000 or if the sum of
all Facility Letter of Credit Obligations and all
Borrowings exceeds the lesser of: (x) the Maximum
Advance, or (y) the Facility Limit in effect; or
35
(iii) issue any Facility Letter of Credit having an
expiration date, or containing automatic extension
provisions to extend such date to a date, which is
more than eighteen (18) months after the Termination
Date; or
(iv) issue any Facility Letter of Credit having an
expiration date, or containing automatic extension
provisions to extend such date to a date, which is
more than twenty-four (24) months after the date of
its issuance; or
(v) issue any Facility Letter of Credit for a purpose
other than in connection with a Joint Venture Hotel
or a Development Hotel or for the payment of any
other obligation of the Borrower, its Subsidiaries or
affiliates for undertakings consistent with the
permitted business activities and investments of the
Borrower.
(c) Conditions. In addition to being subject to the satisfaction
of the conditions contained in this Agreement for any Borrowing, the obligation
of the Agent to issue any Facility Letter of Credit is subject to the
satisfaction in full of the following conditions:
(i) the Borrower shall have delivered to the Agent at
such times and in such manner as the Agent may
reasonably prescribe such documents and materials as
may be reasonably required pursuant to the terms of
the proposed Facility Letter of Credit and the
proposed Facility Letter of Credit shall be on the
Agent's standard form (as such form may be amended,
in a manner satisfactory to the Agent and the
Borrower, in order to address the particular
situation for which the Facility Letter of Credit is
being issued) and shall be in content satisfactory to
the Agent;
(ii) as of the date of issuance, no order, judgment or
decree of any court, arbitrator or governmental
authority shall purport by its terms to enjoin or
restrain the Agent from issuing the requested
Facility Letter of Credit and no law, rule or
regulation applicable to the Agent and no request or
directive (whether or not having the force of law)
from any governmental authority with jurisdiction
over the Agent shall prohibit or request that the
Agent refrain from the issuance of Letters of Credit
generally or the issuance of the requested Facility
Letter or Credit in particular; and
(iii) there shall not exist any Default or Event of
Default.
(d) Procedure for Issuance of Facility Letters of Credit.
(i) Borrower shall give the Agent at least five (5)
Domestic Business Days prior written notice of any
requested issuance of a Facility Letter of Credit
under this Agreement by submitting a Notice of
Borrowing (a "Letter of Credit Request") [except
that, in lieu of such written notice, the Borrower
may give the Agent telephonic notice of such request
if confirmed in writing by delivery to the Agent (x)
immediately of a telecopy of the written notice
required hereunder which has been signed by an
authorized officer, and (y) promptly (but in no event
later than the requested date of
36
issuance) of the written notice required hereunder
containing the original signature of an authorized
officer]. Such notice shall specify:
(1) the stated amount of the Facility Letter of
Credit requested;
(2) the effective date (which day shall be a
Domestic Business Day) of issuance of such
requested Facility Letter of Credit (the
"Issuance Date");
(3) the date on which such requested Facility
Letter of Credit is to expire (which date
shall be a Domestic Business Day and shall
in no event be later than the earlier of
twenty-four (24) months after the Issuance
Date and eighteen (18) months after the
Facility Termination Date);
(4) the purpose for which such Facility Letter
of Credit is to be issued; and
(5) the Person for whose benefit the requested
Facility Letter of Credit is to be issued.
Such notice, to be effective, must be
received by the Agent not later than 2:00
p.m. (Eastern time) on the last Domestic
Business Day on which notice can be given
under this Section 2.15(d)(i).
(ii) Subject to the terms and conditions of this
Section 2.15 and provided that the applicable
conditions for Borrowings as specified herein have
been satisfied, unless the issuance of such a
Facility Letter of Credit would violate Section
2.15(b), the Agent shall, on the Issuance Date, issue
a Facility Letter of Credit on behalf of the Borrower
in accordance with the Letter of Credit Request and
the Agent's usual and customary business practices
unless the Agent has actually received written notice
from the Borrower specifically revoking the Letter of
Credit Request with respect to such Facility Letter
of Credit.
(iii) The Agent shall give the Borrower and the Banks
written notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance of a
Facility Letter of Credit (the "Issuance Notice").
(iv) The Agent shall not extend or amend any Facility
Letter of Credit unless the requirements of this
Section 2.15(d) are met as though a new Facility
Letter of Credit was being requested and issued.
(e) Reimbursement Obligations; Duties of Issuing Bank.
(i) The Agent shall promptly notify the Borrower of any
draw under a Facility Letter of Credit. The Agent is
entitled to treat such a draw as a Borrowing, even
though the Borrower is then in default hereunder or
even
37
though the Borrower is not then otherwise entitled to
make a Borrowing of some or all of such sums. Any
such draw shall be deemed automatically to be a
Borrowing in the amount of the Reimbursement
Obligation with respect to such Facility Letter of
Credit and shall bear interest from the date of the
relevant drawing(s) under the pertinent Facility
Letter of Credit at a rate selected by Borrower in
accordance with Section 2.06 hereof. Notwithstanding
the foregoing, (i) if an Event of Default involving
the payment of money exists at the time of any such
drawing(s), or (ii) if the Borrower is not entitled
to borrow additional funds under this Agreement, or
(iii) if the Borrower is not entitled to borrow the
entire amount of a draw under a Facility Letter of
Credit, then the Borrower shall reimburse the Agent
for drawings under a Facility Letter of Credit issued
by the Agent [or, in the case of (iii), the portion
of such draw that the Borrower is not entitled to
borrow] no later than the next succeeding Domestic
Business Day after the payment by the Agent, and
until repaid such Reimbursement Obligation shall bear
interest from the date funded at the Default Rate.
(ii) Any action taken or omitted to be taken by the Agent
under or in connection with any Facility Letter of
Credit, if taken or omitted in the absence of willful
misconduct or gross negligence, shall not put the
Agent under any resulting liability to Borrower or
any Bank or relieve a Bank of its obligations
hereunder to the Agent. In determining whether to pay
under any Facility Letter of Credit, the Agent shall
have no obligation relative to the Banks other than
to confirm that any documents required to be
delivered under such Facility Letter of Credit appear
to have been delivered in compliance, and that they
appear to comply on their face with the requirements
of such Facility Letter of Credit.
(f) Participation.
(i) Immediately upon issuance by the Agent of any
Facility Letter of Credit in accordance with the
procedures set forth in Section 2.15(d), each Bank
shall be deemed to have irrevocably and
unconditionally purchased and received from the
Agent, without recourse, representation or warranty,
an undivided interest and participation equal to such
Bank's pro rata share in such Facility Letter of
Credit (including, without limitation, all
obligations of the Borrower with respect thereto) and
any security therefor or guaranty pertaining thereto.
Each Bank's obligation to make further Loans to the
Borrower (other than any payments such Bank is
required to make under subparagraph (ii) below) shall
be reduced by such Bank's pro rata share of each
Facility Letter of Credit outstanding
(ii) In the event that the Agent makes any payment under
any Facility Letter of Credit and the Borrower shall
not have repaid such amount to the Agent pursuant to
Section 2.15(g) and Section 2.15(e) hereof, the Agent
shall promptly notify each Bank of such failure, and
each Bank shall promptly and unconditionally pay to
the Agent the amount of such Bank's pro rata
38
share of the unreimbursed amount of such payment. The
failure of any Bank to make available to the Agent
its pro rata share of the unreimbursed amount of any
such payment shall not relieve any other Bank of its
obligation hereunder to make available to the Agent
its pro rata share of the unreimbursed amount of any
payment on the date such payment is to be made, but
no Bank shall be responsible for the failure of any
other Bank to make available to the Agent its pro
rata share of the unreimbursed amount of any payment
on the date such payment is to be made. Any Bank
which fails to make any payment required pursuant to
this Section 2.15(f)(ii) shall be deemed to be a
Defaulting Bank hereunder.
(iii) Whenever the Agent receives a payment on account of a
Reimbursement Obligation, including any interest
thereon, the Agent shall promptly pay to each Bank
which has funded its participating interest therein,
in immediately available funds, an amount equal to
such Bank's participating interest thereof.
(iv) Upon the request of any Bank, the Agent shall furnish
to each Bank copies of any Facility Letter of Credit
and such other documentation as may reasonably be
requested by any Bank.
(v) The obligations of a Bank to make payments to the
Agent with respect to a Facility Letter of Credit
shall be absolute, unconditional and irrevocable, not
subject to any counterclaim, set-off, qualification
or exception whatsoever other than a failure of the
Agent to comply with the terms of this Agreement
relating to the issuance of such Facility Letter of
Credit and shall be made in accordance with the terms
and conditions of this Agreement under all
circumstances.
(g) Payment of Reimbursement Obligations.
(i) The Borrower agrees to pay to the Agent the amount of
all Reimbursement Obligations, interest and other
amounts payable to the Agent under or in connection
with any Facility Letter of Credit when due in
accordance with Section 2.15(e)(i) above,
irrespective of any claim, set-off, defense or other
right which the Borrower may have at any time against
the Agent, any Bank or any other Person, under all
circumstances, including without limitation any of
the following circumstances:
(A) any lack of validity or enforceability of
this Agreement or any of the other Loan
Documents;
(B) the existence of any claim, setoff, defense
or other right which the Borrower may have
at any time against a beneficiary named in a
Facility Letter of Credit or any transferee
of any Facility Letter of Credit (or any
Person for whom any such transferee may be
acting), the Agent, any Bank, or any other
Person, whether in connection with this
Agreement, any Facility Letter of Credit,
the
39
transactions contemplated herein or any
unrelated transactions (including any
underlying transactions between the Borrower
and the beneficiary named in any Facility
Letter of Credit);
(C) any draft, certificate or any other document
presented under the Facility Letter of
Credit proving to be forged, fraudulent,
invalid or insufficient in any respect of
any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security
for the performance or observance of any of
the terms of any of the Loan Documents; or
(E) the occurrence of any Default or Event of
Default.
(ii) In the event any payment by the Borrower received by
the Agent with respect to a Facility Letter of Credit
and distributed by the Agent to the Banks on account
of their participations is thereafter set aside,
avoided or recovered from the Agent in connection
with any receivership, liquidation, reorganization or
bankruptcy proceeding, each Bank which received such
distribution shall, upon demand by the Agent,
contribute such Bank's proportional Commitment of the
amount set aside, avoided or recovered together with
interest at the rate required to be paid by the Agent
upon the amount required to be repaid by the Agent.
(h) Compensation for Facility Letters of Credit.
(i) The Borrower shall pay to the Agent, for the ratable
account of the Banks, a one-time fee (the "Facility
Letter of Credit Fee") with respect to each Facility
Letter of Credit calculated by multiplying the face
amount of the Facility Letter of Credit by a per
annum amount equal to the Applicable Margin in effect
from time to time less .20%. The Facility Letter of
Credit Fee for each Facility Letter of Credit shall
not be less than $1,000. The Agent shall promptly
remit to each Bank its pro rata share of such
Facility Letter of Credit Fee, when paid.
Each Letter of Credit Fee shall be fully earned and
payable upon the issuance, increase in amount or
extension of the expiration date of any Facility
Letter of Credit issued hereunder. Letter of Credit
Fees shall be calculated on the basis of a year of
360 days and paid according to the number of days
from the date of issuance (or amendment) through and
including the initial expiration date or any
extension thereof.
(ii) The Agent also shall receive solely for its own
account a Facing Fee equal to the greater of $500.00
or .10% per annum of the face amount of each Facility
Letter of Credit, payable by the Borrower on the
Issuance Date for each such Facility Letter of
Credit. The Agent shall also be entitled to receive
its reasonable out-of-pocket costs and the Agent's
standard
40
charges of issuing, amending and servicing Facility
Letters of Credit and processing draws thereunder.
(i) Letter of Credit Collateral Account. The Borrower shall
immediately establish a Letter of Credit Collateral Account at the Agent's
office, in the name of the Borrower, but under the sole dominion and control of
the Agent, for the ratable benefit of the Banks (the "Letter of Credit
Collateral Account") upon the occurrence of any one or more of the following
circumstances: (i) an Event of Default has occurred and the Agent has declared
the Notes to be due and payable pursuant to Section 8.01 hereof, or (ii) this
Agreement shall be terminated or shall expire. If either of such events shall
occur, the Borrower shall establish such Letter of Credit Collateral Account
with the Agent and deposit into such Letter of Credit Collateral Account funds
equal to the amount of any then-outstanding Facility Letters of Credit, even
though no draws have been made under such Facility Letters of Credit. If the
Borrower has not immediately established such Letter of Credit Collateral
Account and funded such account as hereinabove set out following its receipt of
a request from the Agent, the Agent shall be entitled to establish the Letter of
Credit Collateral Account in the name of the Borrower as set out above and to
fund such account with a Borrowing under this Agreement, even though the
Borrower is then in default or is not otherwise then entitled to borrow such
funds under this Agreement, and such Borrowing will bear interest at the
prevailing interest rate of Borrowings hereunder. The Agent shall release from
time to time to the Borrower any funds in such Letter of Credit Collateral
Account in excess of the outstanding Facility Letters of Credit as such Facility
Letters of Credit expire. The Agent shall be entitled to withdraw sums in such
Letter of Credit Collateral Account to reimburse the Agent for any draws made
from time to time under a Facility Letter of Credit. The Borrower hereby grants
to the Agent, for the benefit of the Banks, a properly perfected security
interest in and to such Letter of Credit Collateral Account, any funds that may
hereafter be on deposit in such account and the proceeds thereof. In addition,
the Borrower shall execute such additional documentation as the Agent may
require at the time such Letter of Credit Collateral Account is established, to
establish such Letter of Credit Collateral Account and to further evidence such
security interest.
ARTICLE III
SECURITY AND COLLATERAL FOR THE LOANS;
CONDITIONS TO BORROWINGS
SECTION 3.01. Typology of Hotels.
(a) Initial Hotels. As of the Second Amended and Restated
Agreement Closing Date, the Borrower has granted to the Agent, for the ratable
benefit of the Banks, a first lien on the twenty-eight Initial Hotels.
(b) Additional Hotels. The Borrower owns hotels not securing
repayment of the Loans. In addition, subsequent to the date hereof, the Borrower
may acquire additional hotel properties. Such hotels now owned by the Borrower
(but not constituting Initial Hotels) and such other hotels hereafter acquired
are included within the definition of "Additional Hotels."
The Borrower shall be entitled to utilize Loan proceeds at the time of
acquisition of an Additional Hotel, without contemporaneously granting a first
lien to the Agent on such
41
Additional Hotel and without providing to the Agent or the Banks any information
with respect to such Additional Hotel except as otherwise required hereby. If
the Borrower elects to submit such Additional Hotel (specifically including the
Supplemental Borrowing Base Hotels) for consideration as a Borrowing Base Hotel,
however, the Borrower shall provide to the Agent the information and
documentation (e.g., cost breakdown, operating statements, budgets, survey,
title insurance commitment, environmental report, appraisals, etc.), in form and
scope meeting the requirements for Borrowing Base Hotels and as may be requested
by the Banks at the time of such request by the Borrower.
If all of Banks agree that such Additional Hotel (specifically
including the Supplemental Borrowing Base Hotels) is to be accepted as a
Borrowing Base Hotel, the Borrower shall execute and cause to be recorded
Collateral Documents (as the Agent deems necessary) with respect to such
Additional Hotel, and shall thereafter promptly provide such related
documentation (for example, the title policy) that can be obtained only after
recordation of a Deed of Trust.
(c) Borrowing Base Hotels. The Banks' right to review and approve
certain matters set out herein differentiate between those hotels that are
"Borrowing Base Hotels" and other hotels. "Borrowing Base Hotels," as defined in
this Agreement, are (i) all Initial Hotels, and (ii) such Additional Hotels
(specifically including the Supplemental Borrowing Base Hotels), if any, that
all of the Banks, in their sole discretion, have accepted as a Borrowing Base
Hotel. In order for a Hotel to be eligible for approval and qualification and in
order to remain eligible for continued approval and qualification as a Borrowing
Base Hotel, the Hotel (i) must be open and fully operational and must be owned
in its entirety by the Borrower (rather than a Subsidiary of the Borrower), (ii)
must be subject to a first-priority Lien in favor of the Agent, (iii) must be
free and clear of all Liens and other encumbrances of any nature whatsoever,
except for the first-priority Lien in favor of the Agent and except for
encumbrances acceptable to all of the Banks; (iv) must be in substantial
compliance with all applicable law and regulations including zoning,
Accessibility Laws, and building codes, (v) must have access to public roadways
and all required utilities, (vi) must not be subject to any environmental
contamination that, in the reasonable opinion of Agent, materially adversely
affects the leasing, operation, marketability or value of such Hotel, (vii) must
be subject to a Permitted Operating Lease, under which neither the Borrower (as
lessor) nor the Lessee shall be in default after the expiration of any
applicable cure period set out in such Permitted Operating Lease; (viii) must be
subject to a franchise agreement with an Approved Franchisor, (ix) at least 90%
of all rooms in such Hotel must be in service other than rooms temporarily
unavailable due to renovation, and (x) with the exception of Hotel #19 located
in Secaucus, New Jersey, must not be subject to a Major Ground Lease. [Items (i)
through (ix) are herein referred to as the "Qualifying Criteria."] The Banks
shall have sole and absolute discretion in determining whether to accept the
offered hotel as a "Borrowing Base Hotel" and, in their sole discretion, may
reject a Hotel meeting the foregoing criteria. In that regard, the Banks can
take into consideration any additional factors the Banks deem pertinent, in
their sole and absolute discretion. Prior to determining whether to accept a
hotel as a Borrowing Base Hotel, the Banks (i) shall be provided all
underwriting documentation for each such hotel received in connection with an
Initial Hotel (appraisal, environmental reports, title policy, "as-built"
survey, etc.), (ii) shall have the right to review and approve the lessee, the
Rent schedule, and Lease associated with such hotel, and (iii) shall have a
right of review/approval over all other matters for which the Banks may deem
pertinent, in their sole discretion. Except for Supplemental Borrowing Base
Hotels in the circumstances described in 3.01(d) below, the Borrower is not
obligated to offer any Additional Hotel to the Banks for consideration as a
42
Borrowing Base Hotel. If the Borrower has requested that the Banks accept an
Additional Hotel as a Borrowing Base Hotel and has submitted all documentation
required hereby for such consideration, the Agent shall within 30 days of its
receipt of such request and required supporting information inform the Borrower
whether all of the Banks have accepted such hotel as a Borrowing Base Hotel.
Failure of the Agent to inform the Borrower in writing that a Hotel has been
accepted as a Borrowing Base Hotel shall constitute a rejection by the Banks of
such Hotel as a Borrowing Base Hotel.
(i) The Required Banks shall have the right, in their
reasonable discretion, to revoke their prior approval
of any property as a Borrowing Base Hotel which the
Required Banks determine no longer meets the
Qualifying Criteria described in 3.01(c) above. The
Agent shall provide the Borrower with written notice
of any such revocation.
(ii) The Borrower shall have the right, within thirty (30)
days after notice of the Banks' revocation of
approval of Borrowing Base Hotel, to designate
substitute property or additional property for the
Banks' consideration for approval as Borrowing Base
Hotel.
COVENANTS PROVIDED FOR HEREIN WITH RESPECT TO THE INITIAL HOTELS SHALL
BE AUTOMATICALLY APPLICABLE TO ANY ADDITIONAL HOTEL (SPECIFICALLY INCLUDING, BUT
NOT LIMITED TO, ANY SUPPLEMENTAL BORROWING BASE HOTEL) THAT BECOMES A BORROWING
BASE HOTEL.
(d) Supplemental Borrowing Base Hotels. The Supplemental Borrowing
Base Hotels may become Borrowing Base Hotels in any of the following events:
(i) The Borrower elects, in its sole discretion, to
submit one or more Supplemental Borrowing Base Hotels
to the Banks for consideration as a Borrowing Base
Hotel.
(ii) Either the Agent or the Required Banks demand that
one or more of the Supplemental Borrowing Base Hotels
serve as collateral for the Loans. Such demand can be
made at any time that (x) the Leverage Ratio exceeds
55%, (y) the Fixed Charge Coverage Ratio falls below
1.75 to 1, or (z) an Event of Default occurs and is
continuing at the time the Agent or the Required
Banks make such demand.
The Borrower shall provide to the Banks the documentation required to
be submitted for an Additional Hotel to be considered as a Borrowing Base Hotel.
Such information and documentation shall be provided on the earlier of (x) March
31, 2002, or (y) the date on which such Supplemental Borrowing Base Hotel is
otherwise submitted to the Banks for consideration as a Borrowing Base Hotel.
Upon the submission of the documentation with respect to a Supplemental
Borrowing Base Hotel, the Agent shall confirm whether such Hotel has been
tentatively accepted as a Borrowing Base Hotel, at the time and in the manner
described in Section 3.01(c). If such Hotels have been tentatively approved, the
Banks or the Agent shall be entitled to require updated information or
certifications at the time the Borrower subsequently submits such Supplemental
Borrowing Base Hotels for inclusion as Borrowing Base Hotels pursuant to this
paragraph.
43
Prior to the date (if any) on which a Supplemental Borrowing Base Hotel
becomes a Borrowing Base Hotel, the Borrower shall cause each such Supplemental
Borrowing Base Hotel to comply with the requirements of a Borrowing Base Hotel,
including those specified in Section 3.01(c) hereof. Such Supplemental Borrowing
Base Hotel shall not be subject to any Liens and must remain owned by the
Borrower. The parties shall determine the Borrowing Base Value for each
Supplemental Borrowing Base Hotel in the same manner as the Initial Hotels and
other Additional Hotels which become Borrowing Base Hotels.
Notwithstanding any provision herein to the contrary, specifically
including Section 7.01 and 7.05 hereof, the Borrower shall be entitled to sell
any one or more of the Supplemental Borrowing Base Hotels provided: (x) such
sale is pursuant to an arms length contract with a third party unrelated to the
Borrower at a purchase price not less than such Hotel's fair market value; and
(y) the terms of such contract and documentation related thereto (contract,
closing statement, all other documentation with respect to funds received or
property to be received) are provided to the Banks and the Agent. If (and only
if) the Borrower then owns one or more Additional Hotels or thereafter acquires
one or more Additional Hotels, such Additional Hotels shall be offered as a
replacement Supplemental Borrowing Base Hotels; such replacement, however, shall
not be a condition precedent to the release of a Supplemental Borrowing Base
Hotel if the terms of the sale meet the foregoing criteria.
SECTION 3.02. Collateral Release Provisions. If the Borrower seeks to
obtain the release of a Borrowing Base Hotel, the Borrower shall provide to the
Agent and the Banks a replacement Borrowing Base Value Certificate reflecting
the deletion of such hotel from the calculations of the Borrowing Base Value, as
previously described in Section 2.01(b). The Agent shall not release such hotel
until the Agent (i) has reviewed and approved such Borrowing Base Value
Certificate and (ii) has determined that the principal balance outstanding under
the Loans shall not exceed the Maximum Advance after giving effect to the
release. The Borrower may obtain a release of any Borrowing Base Hotel or
Borrowing Base Hotels, provided (x) a Borrowing Base Hotel Release Entitlement
Event has occurred, (y) provided there is no existing Default hereunder and the
release of such Hotel would not cause a Default or an Event of Default to occur;
and also (z) provided that one of the following conditions, as selected by the
Borrower, in its sole discretion, is satisfied:
(i) Substitute Hotel. If the Borrower selects this
option, the Borrower shall deliver to the Banks
another hotel or hotels acceptable to all of the
Banks to serve as a "Borrowing Base Hotel" (a
"Substitute Hotel"), in which case the pro forma
Borrowing Base Value Certificate shall reflect the
inclusion of such hotel in the calculations of the
Maximum Advance, and the Borrower shall provide the
documentation necessary for the Banks to consider
such hotel as a Borrowing Base Hotel.
(ii) Alternative Collateral. If the Borrower selects this
option, the Banks shall receive alternative
collateral for release of a Borrowing Base Hotel,
such alternative collateral to be satisfactory to all
of the Banks in their sole and absolute discretion.
(iii) Reduction of Maximum Advance. If the Borrower selects
this option, the Borrower shall be entitled to a
release of any Borrowing Base Hotel upon
44
a reduction in the Maximum Advance as reflected in
the revised Borrowing Base Value Certificate
submitted by the Borrower calculating the Borrowing
Base Value and the Maximum Advance. Should the Loans
then outstanding exceed the Maximum Advance as
evidenced by the approved replacement Borrowing Base
Value Certificate, the Borrower shall immediately
repay the outstanding principal balance by such
excess on or before the release of such Hotel. The
reduction in the Maximum Advance shall be effective
upon the release of such Hotel. The Agent shall not
be obligated to release such a Hotel until any
repayment required hereunder has occurred.
"Borrowing Base Hotel Release Entitlement Event" as to any Borrower
Base Hotel means any one or more of the following events: (i) such Borrowing
Base Hotel is being sold by the Borrower in a commercially reasonable
transaction to a third party that is unrelated to the Borrower, any Subsidiary,
or any of the principal shareholders of the Company (or partners in the case of
the Partnership) or its Subsidiaries; (ii) such Borrowing Base Hotel is being
contributed to or transferred to a partnership or a joint venture in which the
Partnership or the Company is a partner or a joint venturer in a commercially
reasonable transaction with a third party that is unrelated to the Borrower, any
Subsidiary, or any of the principal shareholders of the Company (or partners in
the case of a Partnership) or its Subsidiaries; or (iii) such Borrowing Base
Hotel is being refinanced through a loan to be secured by a deed of trust
encumbering such Borrowing Base Hotel in a commercially reasonable transaction
with a third party institutional lender that is unrelated to the Borrower, any
Subsidiary, or any of the principal shareholders of the Company (or partners in
the case of a Partnership) or its Subsidiaries.
If a Borrowing Base Hotel located in a Term Note State is released
pursuant to the foregoing provisions, the Allocated Loan Amount for such
Borrowing Base Hotel shall be deemed to have been deducted from the principal
amount of the Term Note secured by such Borrowing Base Hotel, and the Borrower
shall be entitled to thereafter borrow, repay, and reborrow such Allocated Loan
Amount from the Banks, subject to the satisfaction of the other terms and
conditions of this Credit Agreement.
SECTION 3.03. Conditions of Closing and to First Borrowing. The
obligation of each Bank to make a Loan on the occasion of the closing of this
credit facility and the first Borrowing hereunder is subject to the satisfaction
of the conditions set forth in Section 3.04 and the following additional
conditions:
(a) receipt by the Agent from each of the parties hereto of either
(i) a duly executed counterpart of this Agreement signed by such party or (ii) a
facsimile transmission of the executed signature page accompanied by a statement
that such party has duly executed a counterpart of this Agreement and sent such
counterpart to the Agent;
(b) receipt by the Agent of a duly executed Note for the account
of each Bank complying with the provisions of Section 2.04;
(c) receipt by the Agent of (i) an opinion (together with any
opinions of local counsel relied on therein) of Xxxxx and Bunch, PLLC, counsel
for the Borrower, dated as of the Second Amended and Restated Agreement Closing
Date, substantially in the form of Exhibit C hereto
45
and covering such additional matters relating to the transactions contemplated
hereby as the Agent or any Bank may reasonably request and (ii) opinions as to
enforceability and related matters of the Deeds of Trust and other documents
with respect to the Agent's security interest in and lien upon the Borrowing
Base Hotels;
(d) receipt by the Agent of an opinion of Xxxxxx Xxxxxxx Xxxxxxxxx
& Xxxx, PLLC, special counsel for the Agent, dated as of the Second Amended and
Restated Agreement Closing Date, substantially in the form of Exhibit D hereto
and covering such additional matters relating to the transactions contemplated
hereby as the Agent may reasonably request;
(e) receipt by the Agent of a certificate (the "Closing
Certificate"), dated the date of the first Borrowing, substantially in the form
of Exhibit D hereto, signed by the principal financial officer of the Borrower,
to the effect that (i) no Default has occurred and is continuing on the date of
the first Borrowing and (ii) the representations and warranties of the Borrower
contained in Article IV are true on and as of the date of the first Borrowing
hereunder, and including (x) Certificate of Borrowing Base Values in the form
attached hereto as Exhibit I, (y) a calculation of the Leverage Ratio as of the
Second Amended and Restated Agreement Closing Date, and (z) a Certificate of
Compliance as of the Fiscal Quarter ended prior to the date hereof;
(f) receipt by the Agent of all documents which the Agent or any
Bank may reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement and the Notes, and
any other matters relevant hereto, all in form and substance satisfactory to the
Agent, including without limitation a certificate of incumbency of the Borrower
(the "Officer's Certificate"), signed by the Secretary or an Assistant Secretary
of the Company, substantially in the form of Exhibit E hereto, certifying as to
the names, true signatures and incumbency of the officer or officers of the
Company authorized to execute and deliver the Loan Documents on behalf of the
Company and the Partnership, and certified copies of the following items: (i)
the Company's Articles of Incorporation, (ii) the Company's Bylaws, (iii) a
certificate of the Secretary of State of the State of North Carolina as to the
good standing of the Company as a North Carolina corporation, (iv) a Certificate
of Limited Partnership for the Partnership issued by the Secretary of State for
North Carolina, and (v) the action taken by the Board of Directors of the
Company authorizing on behalf of the Company and on behalf of the Partnership
the Borrower's execution, delivery and performance of this Agreement, the Notes
and the other Loan Documents to which the Company and the Partnership are a
party;
(g) receipt by the Agent of a Notice of Borrowing;
(h) receipt and recordation of the Deeds of Trust and receipt and
recordation or filing (as the Agent deems appropriate) of other Collateral
Documents required by the Agent with respect to each of the Initial Hotels;
(i) receipt of certified copies of the executed Leases, any
Management Agreements, Franchise Agreements, and other documentation required
hereunder for the Initial Hotels. The form and substance of such Leases
(including the base rents and percentage rents due thereunder) and other
documents affecting the operation of the hotels described herein are subject to
the Banks' acceptance;
46
(j) receipt by the Agent of the Up Front Fee required by Section
2.07(a) hereunder; and
(k) receipt of such other documents, instruments, opinions, and
agreements as the Agent or the Banks may require in their discretion,
specifically including (but not limited to) all those items required hereunder.
The initial Borrowing shall be sufficient to pay the principal amount
of all Prior Indebtedness in full, and Borrower and the Agent shall have made
arrangements satisfactory to the Agent (a) for the proceeds of such Loan to be
applied, to the extent required, to pay such principal amount of the Prior
Indebtedness, and (b) for Borrower to pay immediately all accrued and unpaid
interest and unused commitment fees owing on account of the Prior Indebtedness.
SECTION 3.04. Conditions to All Borrowings. The obligation of each Bank
to make a Loan on the occasion of each Borrowing is subject to the satisfaction
of the following conditions:
(a) receipt by the Agent of Notice of Borrowing as required by
Section 2.02 unless the Borrowing is a "rollover borrowing" described in Section
2.02(f);
(b) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Borrower contained in Article IV of this Agreement shall be true on and as of
the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing (i) the
aggregate outstanding principal amount of the Loans of each Bank will not exceed
the amount of its Commitment and (ii) the aggregate outstanding principal amount
of the Loans will not exceed the Maximum Advance or the Facility Limit for all
of the Banks as of such date.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the truth and
accuracy of the facts specified in clauses (b), (c) and (d) of this Section;
provided that such Borrowing shall not be deemed to be such a representation and
warranty to the effect set forth in Section 4.04(b) as to any event, act or
condition having a Material Adverse Effect which has theretofore been disclosed
in writing by the Borrower to the Banks if the aggregate outstanding principal
amount of the Loans immediately after such Borrowing will not exceed the
aggregate outstanding principal amount thereof immediately before such
Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Existence and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such
47
qualification is necessary, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
The Partnership is a limited partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, is duly qualified to transact business in every jurisdiction where,
by the nature of its business, such qualification is necessary, and has all
partnership powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 4.02. Corporate, Partnership and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement, the Notes and the other Loan Documents (i) are within the Company's
corporate powers and the Partnership's partnership powers, (ii) have been duly
authorized by all necessary corporate and partnership action, (iii) require no
action by or in respect of, or filing with, any governmental body, agency or
official, (iv) do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the certificate of incorporation or
by-laws of the Company or the partnership agreement for the Partnership or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Borrower or any of its Subsidiaries, and (v) do not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries other than the Liens securing the Loans.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower enforceable in accordance with its terms, and
the Notes and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower as of December
31, 2000, and the related consolidated statements of income, shareholders'
equity and cash flows for the Fiscal Year then ended, audited by PriceWaterhouse
Coopers LLP, copies of which have been delivered to each of the Banks, and the
unaudited consolidated financial statements of the Borrower for the interim
period ended September 30, 2001, copies of which have been delivered to each of
the Banks, fairly present, in conformity with GAAP, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such dates and
their consolidated results of operations and cash flows for such periods stated.
(b) Since September 30, 2001, there has been no event, act,
condition or occurrence having a Material Adverse Effect other than has been
disclosed in writing to each Bank prior to the Second Amended and Restated
Agreement Closing Date, such notices set out in Schedule 4.04 attached hereto.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending, or to the knowledge of the Borrower threatened, against or affecting
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official which
48
could have a Material Adverse Effect or which in any manner draws into question
the validity or enforceability of, or could impair the ability of the Borrower
to perform its obligations under, this Agreement, the Notes or any of the other
Loan Documents. There is no litigation pending against the Borrower or any of
its Subsidiaries or with respect to any Borrowing Base Hotel (specifically
including, but not limited to, liens filed) or Lease with respect thereto,
except as described in Schedule 4.05 attached hereto.
SECTION 4.06. Compliance with ERISA.
(a) The Borrower and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all material respects
with the presently applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled Group is
or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf of the Borrower
and its Subsidiaries all Federal, state and local income, excise, property and
other tax returns which are required to be filed by them and all taxes due
pursuant to such returns or pursuant to any assessment received by or on behalf
of the Borrower or any Subsidiary have been paid. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.08. Subsidiaries. Each of the Borrower's Subsidiaries is a
corporation or partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, is duly qualified to
transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, and has all powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Borrower has no Subsidiaries except those
Subsidiaries listed on Schedule 4.08 attached hereto, which accurately sets
forth each such Subsidiary's complete name and jurisdiction of incorporation.
SECTION 4.09. Not an Investment Company. Neither the Borrower nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the Borrower and
its Subsidiaries has title to its properties sufficient for the conduct of its
business, and none of its hotels is subject to any Lien except as permitted in
this Agreement. Except for certain telephone equipment and vehicles used in the
operation of the Secaucus New Jersey Holiday Inn (Hotel #19), each of the
Borrower and its Subsidiaries has title to all personal property required for
the
49
operation of its Hotels, free and clear of any security interests of third
parties other than the Agent and (in the case of property owned by the Special
Purpose Entity) the Conduit Lender.
SECTION 4.12. No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which could have or cause a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure. All information heretofore furnished by
the Borrower to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to the Agent or any Bank will be, true,
accurate and complete in every material respect or based on reasonable estimates
on the date as of which such information is stated or certified. The Borrower
has disclosed to the Banks in writing any and all facts which could have or
cause a Material Adverse Effect.
SECTION 4.14. Environmental Matters.
(a) Except as disclosed in the Environmental Reports, neither the
Borrower nor any Subsidiary is subject to any Environmental Liability which
could have or cause a Material Adverse Effect and neither the Borrower nor any
Subsidiary has been designated as a potentially responsible party under CERCLA
or under any state statute similar to CERCLA. None of the Properties has been
identified on any current or proposed (i) National Priorities List under 40
C.F.R. ss 300, (ii) CERCLIS list or (iii) any list arising from a state statute
similar to CERCLA.
(b) Except as disclosed in the Environmental Reports, no Hazardous
Materials have been or are being used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed of, managed or otherwise handled
at, or shipped or transported to or from the Properties or are otherwise present
at, on, in or under the Properties, or, to the best of the knowledge of the
Borrower, at or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, and managed or otherwise handled in minimal amounts in the ordinary
course of business in compliance with all applicable Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and Affiliates, has
procured all Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Requirements in connection
with the operation of the Properties and the Borrower's, and each of its
Subsidiary's and Affiliate's, respective businesses.
SECTION 4.15. Compliance with Laws. The Borrower and each Subsidiary is
in compliance with all applicable laws, including, without limitation, all
Environmental Laws, except where any failure to comply with any such laws would
not, alone or in the aggregate, have a Material Adverse Effect.
SECTION 4.16. Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities of the Borrower and its Subsidiaries presently
issued and outstanding are validly and properly issued in accordance with all
applicable laws, including, but not limited to, the "Blue
50
Sky" laws of all applicable states and the federal securities laws. The issued
shares of Capital Stock of the Borrower's Wholly Owned Subsidiaries are owned by
the Borrower free and clear of any Lien or adverse claim. At least a majority of
the issued shares of Capital Stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free and clear
of any Lien or adverse claim.
SECTION 4.17. Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation X.
SECTION 4.18. Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loans under this Agreement,
the Borrower will not be "insolvent," as defined in ss. 101 of Title 11 of the
United States Code or Section 2 of the Uniform Fraudulent Transfer Act, or any
other applicable state law pertaining to fraudulent transfers, as each may be
amended from time to time, or be unable to pay its debts generally as such debts
become due, or have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated.
SECTION 4.19. Americans with Disabilities Act. The Borrower, to the
best of its knowledge, (but without any claim of expert knowledge as to
Accessibility Laws and without engaging consultants having such knowledge), is
in compliance with the Accessibility Laws, except as disclosed to the Banks in
writing. The Borrower agrees to notify the Agent of any grievance, complaint or
governmental investigation into whether the Borrower is in compliance with the
Accessibility Laws. The Borrower agrees to indemnify and hold the Banks harmless
from any loss, cost or expense in fact incurred by the Banks as a result of such
a violation of the Accessibility Laws.
SECTION 4.20. Compliance with Certain Lease Provisions. The Borrower
has spent or set aside all sums required to be spent or set aside under the
Leases and has paid to the Lessee all sums required to be paid to the Lessee as
room reserves under the Leases.
SECTION 4.21. Condemnation Awards. Subject to the terms and conditions
of each Lease, the Borrower agrees to pay to the Agent for the pro rata benefit
of the Banks sums equal to 125% of the Allocated Loan Amount for any Borrowing
Base Hotel subject to a taking or condemnation or deed in lieu of condemnation.
The terms and conditions of paragraph 6 of each Nondisturbance, Subordination
and `Attornment Agreement between the Partnership, a lessee, and the Agent with
respect to a Borrowing Base Hotel are incorporated herein by reference as if
fully set forth herein.
51
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid or any Facility
Letter of Credit remains outstanding:
SECTION 5.01. Information. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, a consolidated balance sheet of the Company as of the
end of such Fiscal Year and the related statements of income, shareholders'
equity and cash flows for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all audited by
PriceWaterhouse Coopers LLP or other independent public accountants of
nationally recognized standing, and whose opinion shall be to the effect that
such financial statements have been prepared in accordance with GAAP (except for
changes with which such accountants concur) and shall not be limited as to the
scope of the audit or qualified in any manner, except as acceptable to the
Required Banks. In addition, the Company shall concurrently provide such annual
information as to the Special Purpose Entity separate and apart from other
entities consolidated in the financial statements provided.
(b) as soon as available and in any event within 55 days after the
end of each of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated
balance sheet of the Company as of the end of such Fiscal Quarter and the
related statement of income for such Fiscal Quarter and for the portion of the
Fiscal Year ended at the end of such Fiscal Quarter setting forth in each case
in comparative form the figures for the corresponding Fiscal Quarter and the
corresponding portion of the previous Fiscal Year. In addition, the Company
shall concurrently provide such quarterly information as to the Special Purpose
Entity separate and apart from other entities consolidated in the financial
statements provided.
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit F (a "Compliance Certificate"), of the
chief financial officer or the chief accounting officer of the Company (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Article VII and
such other requirements of the Agreement as may be requested by the Agent or the
Banks on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto. In addition, simultaneously with the
delivery of the Compliance Certificate, such officer shall deliver a Borrowing
Base Value Certificate substantially in the form of Exhibit I.
In addition, simultaneously with the financial statements referred to
in Section 5.01 (a) and (b) above, the Company shall provide (i) a report
listing and describing all newly acquired properties of the Borrower and its
Subsidiaries, including their cash flow, cost and Debt (if any) secured by such
properties, and the record owner for such properties, (ii) a report listing all
capital expenditures of the Borrower and its Subsidiaries, and (iii) a summary
of property
52
information for all properties of the Borrower and its Subsidiaries and such
other information as may be requested by the Agent to evaluate any certificates
delivered hereunder.
(d) simultaneously with the delivery of each set of annual
financial statements referred to in Section 5.01 (a) above, a statement of the
firm of independent public accountants which reported on such statements to the
effect that nothing has come to its attention to cause it to believe that any
Default existed on the date of such financial statements.
(e) As to any Borrowing Base Hotel, the Company shall promptly
provide to the Agent and the Banks such information as to the Lessee and any
guarantor of the Leases with respect to Borrowing Base Hotels (collectively, the
"Borrowing Base Lessee Parties"), as is provided by the Borrowing Base Lessee
Parties under the Permitted Operating Leases for such Borrowing Base Hotel.
(f) within 5 Domestic Business Days after receipt by the Company
or any Subsidiary, a copy of any correspondence from the independent certified
public accountants preparing the certificate referenced in Section 5.01(a) or
(d) constituting a criticism of, or a notice of deficiency in, the internal
accounting practices or procedures of the Company or its Subsidiaries.
(g) within 5 Domestic Business Days after the Company becomes
aware of the occurrence of any Default, a certificate of the chief financial
officer or the chief accounting officer of the Company setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto.
(h) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed.
(i) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly or monthly reports which the
Company shall have filed with the Securities and Exchange Commission.
(j) if and when the Borrower or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy of
such notice.
(k) promptly after the Borrower knows of the commencement thereof,
notice of any litigation, dispute or proceeding or the filing of a Lien,
involving a claim against the Borrower and/or any Subsidiary for $250,000 or
more. In addition, the Borrower shall provide periodic update reports as to any
such matters previously reported by the Borrower.
53
(l) from time to time such additional information regarding the
financial position, business plans, budget forecasts or business of the Borrower
and its Subsidiaries as the Agent, at the request of any Bank, may reasonably
request.
SECTION 5.02. Inspection of Property, Books and Records. The Borrower
will (i) keep, and will cause each Subsidiary to keep, proper books of record
and account in which full, true and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its business and
activities; and (ii) permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the occurrence of an
Event of Default and at the Borrower's expense after the occurrence of an Event
of Default to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower agrees to cooperate
and assist in such visits and inspections, in each case at such reasonable times
and as often as may reasonably be desired.
SECTION 5.03. Required Room Reserves. The Borrower shall establish, and
shall make available to each Lessee on each of its leased Hotels or shall set
aside for each such leased Hotel Required Room Reserves to be expended by the
Lessee or the Borrower for the restoration and refurbishment of the Hotel for
which the Required Room Reserve was established pursuant to the terms of the
Lease with respect to each such Hotel.
SECTION 5.04. Maintenance of Property. The Borrower shall, and shall
cause each Subsidiary to, maintain each of its Properties and assets in good
condition, repair and working order, ordinary wear and tear excepted and
specifically shall (and cause each Subsidiary to) ensure that each Property is
renovated periodically in the manner appropriate for the industry and maintain
each of its Properties in a fully competitive position. Except for telephone
equipment and vehicles leased in connection with the Secaucus New Jersey Holiday
Inn (Hotel #19), the Borrower shall, and shall cause each Subsidiary to, own all
personal property required for operation of its Hotels free and clear of the
security interests of third parties other than the Agent and, in the case of the
Conduit Debt Hotels, the Conduit Lender.
SECTION 5.05. Maintenance of Existence. The Borrower shall, and shall
cause each Subsidiary to, maintain its existence as a corporation (in the case
of the Company) and as a partnership (in the case of the Partnership) and carry
on its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained. The Company shall
maintain its status as a Real Estate Investment Trust and shall be in compliance
with all applicable laws with respect to Real Estate Investment Trusts as well
as other applicable laws. The Borrower shall not make any material modifications
to its partnership agreement (in the case of the Partnership) or to its articles
of incorporation or by-laws (in the case of the Company) without the prior
written consent of the Required Banks. The issuance of limited partnership
interests in the Partnership shall not constitute a "material modification" to
the Partnership's partnership agreement.
SECTION 5.06. Sole General Partner. The Company shall at all times be
the sole general partner of the Partnership.
54
SECTION 5.07. Compliance with Laws; Payment of Taxes. The Borrower
will, and will cause each of its Subsidiaries and each member of the Controlled
Group to, comply with applicable laws (including but not limited to the
Accessibility Laws and ERISA), regulations and similar requirements of
governmental authorities (including but not limited to PBGC), except where the
necessity of such compliance is being contested in good faith through
appropriate proceedings diligently pursued. The Borrower will, and will cause
each of its Subsidiaries to, pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien against the property of the Borrower or
any Subsidiary, except liabilities being contested in good faith by appropriate
proceedings diligently pursued and against which, if requested by the Agent, the
Borrower shall have set up reserves in accordance with GAAP.
SECTION 5.08. Insurance. The Borrower will maintain, and will cause
each of its Subsidiaries and Lessees to maintain (either in the name of the
Borrower or in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on all its Property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or similar business.
In addition, the Borrower shall satisfy all requirements for insurance set out
in each Deed of Trust with respect to each Borrowing Base Hotel.
SECTION 5.09. Environmental Notices. The Borrower shall furnish to the
Banks and the Agent prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, and
all facts, events, or conditions that could lead to any of the foregoing. The
provisions of this Section, and Section 6.14 and 5.10, are applicable to all
Properties owned by the Borrower and any Subsidiary, and are not restricted to
Borrowing Base Hotels. Additional requirements with respect to environmental
matters are set out in each Deed of Trust encumbering a Borrowing Base Hotel.
SECTION 5.10. Environmental Reports; Environmental Release.
(a) The Borrower shall prepare or cause to be prepared, prior to
the acquisition of each Hotel by the Borrower or any Subsidiary, an
environmental report by an environmental firm approved by the Agent. Each
environmental report must be in scope and detail comparable to that required by
the Agent for each Initial Hotel. The foregoing covenant applies to all Hotels
acquired by the Borrower and each Subsidiary, and is not limited to Borrowing
Base Hotels.
(b) The Borrower agrees that upon the occurrence of an
Environmental Release at or on any of the Properties it will act immediately to
investigate the extent of, and to take appropriate remedial action to eliminate,
such Environmental Release, whether or not ordered or otherwise directed to do
so by any Environmental Authority.
SECTION 5.11. Upstream of Cash Flow from Special Purpose Entity. The
Borrower shall cause the Special Purpose Entity to remit to the Partnership at
least once each calendar month, to the extent available and to the extent
permitted by the loan documents executed by the Special Purpose Entity cash
receipts from the leases of its hotels received during the month after deducting
therefrom the following: principal and interest payments made on the Conduit
Debt,
55
all expenses incurred by the SPE for the operation of its Hotels including the
payment of property taxes and insurance premiums, sums required to maintain
reserves required under the Conduit Debt loan documents and any other reserves,
including working capital reserves (such other reserves, exclusive of the
reserves required to be established under the Conduit Debt loan documents, not
to exceed $500,000 in the aggregate).
SECTION 5.12. Special Purpose Entity to Remain a Subsidiary
Consolidated with the Borrower. The Borrower shall cause the Special Purpose
Entity to remain a Subsidiary whose operations are Consolidated with the
Borrower under GAAP.
SECTION 5.13. Intercompany Transactions. Any and all transactions,
agreements or undertakings of any nature whatsoever between Borrower or any
Related Party, on the one hand, and any Affiliate of such Person, on the other
hand, shall be arms-length and upon terms and conditions at least as favorable
to Borrower or such Related Party, as the case may be, as could reasonably be
obtained in a similar transaction with a party that is not an Affiliate of such
Person.
SECTION 5.14. Notice of Exercise of Remedies Under Deeds of Trust.
Borrower shall give prompt written notice to the Agent and the Banks of the
giving of a notice of any event of default under any deed of trust or loan
agreement to which the Borrower or any Subsidiary is a party by the holder
thereof, or upon the holder of any such indebtedness or deed of trust taking any
action to enforce its rights and remedies thereunder, including, without
limitation, any self-help or judicial remedies with respect to collateral or any
legal action to collect any indebtedness.
SECTION 5.15. Notice of Default of any Lease. The Borrower shall
provide to the Agent and to the Banks (i) any notice of any default received by
the Borrower from a Lessee claiming that the lessor is in default under a Lease,
and (ii) any notice of any default sent by the Borrower to a Lessee claiming
that the Lessee is in default under a Lease.
SECTION 5.16. Guaranty by Subsidiaries. The Borrower shall cause any
Subsidiary of the Borrower other than the Special Purpose Entity to execute a
guaranty agreement (in form and substance approved by the Agent) guaranteeing
the repayment of all principal, interest, fees and other sums due under this
Agreement and the Notes.
SECTION 5.17. Notice of Default under Completion Guarantees. The
Borrower shall notify the Agent and each of the Banks in writing of each demand
or default notice received from any Joint Venture Hotel Lender or Development
Hotel Lender as to any Completion Guaranty.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid or any Facility
Letter of Credit remains outstanding:
56
SECTION 6.01. Base Rent and Percentage Rent of Hotel Leases. The
Borrower shall not reduce the Base Rents or Percentage Rents as to any of the
Leases with respect to the Borrowing Base Hotels without the prior written
consent of a Supermajority of Banks.
SECTION 6.02. Prohibition of Secured Debt on Borrowing Base Hotels. The
Borrower may not incur Debt secured by a Lien on the Borrowing Base Hotels other
than the Liens in favor of the Banks.
SECTION 6.03. Contingent Liabilities; Completion Guarantees.
(a) The Borrower and any Subsidiaries or corporate or partnership
entities constituting Related Parties of the Borrower may not guaranty the
obligations of any party, become obligated for the obligations of any other
party as a result of becoming a partner or a joint venturer or incur contingent
liabilities or contingent debt other than (i) contingent liability with respect
to performance obligations, as distinct from Debt, arising under franchise
agreements for its Hotels, (ii) potential contingent liabilities incurred by the
Borrower pursuant to the Joinder Agreement executed in connection with the
Conduit Debt, (iii) indemnification obligations of the Borrower to the title
company insuring the properties securing the Conduit Debt, and (iv)
indemnification obligations of the Borrower under this Credit Agreement and
other documents now or hereafter executed in connection with the Loans.
(b) Notwithstanding the foregoing limitations, the Borrower may
execute one or more Completion Guarantees for the benefit of any Joint Venture
Hotel Lender or Development Hotel Lender, subject to the following limitations:
(i) Each Completion Guaranty shall guarantee the
performance elements relating to the construction and
development of a Joint Venture Hotel or a Development
Hotel, and shall not guarantee the repayment of
principal, interest or other sums owed under the
project loan made by the Joint Venture Hotel Lender
to the Joint Venture or by the Development Hotel
Lender to the Development Party.
(ii) Each Completion Guaranty shall be unsecured.
(iii) Each Completion Guaranty will relate (x) to a Joint
Venture Hotel in which the joint venture documents
between the Joint Venturers will provide that the
Borrower has administrative, overall responsibility
for the development and completion of such Joint
Venture Hotel, or (y) to a Development Hotel pursuant
to which a development agreement between the
Development Party and the Borrower will provide that
the Borrower has administrative, overall
responsibility for the development and completion of
such Development Hotel.
(iv) The Borrower (x), in the case of a Joint Venture
Hotel, shall have no less than a five percent (5%)
ownership interest in the Joint Venture or (y) in the
case of a Development Hotel, shall have provided,
individually or together with one or more co-lenders,
a loan to the Development Party (secured by a pledge
of controlling ownership interests in the
57
Development Party or by a pledge of all the ownership
interests of an entity owning controlling ownership
interests in the Development Party) of not less than
10% of the total capitalization of such Development
Party. The Borrower may, after making a loan to a
Development Party, through sales and through
participations, sell interests in such loans to third
parties. In addition, the Borrower and co-lenders may
make such a Development Party loan by establishing an
entity (such as a limited liability company) that
would make such a loan to a Development Party, with
the Borrower and other co-lenders contributing funds
directly to such an entity and owning ownership
interests in such an entity proportionate to their
contributions.
(v) The Completion Guaranty shall provide that the
Borrower's obligations thereunder shall cease upon
completion of the project, and shall require the
Joint Venture Hotel Lender or the Development Hotel
Lender (as the case may be) to execute a written
instrument discharging the Borrower from its
obligations under the Completion Guaranty within
sixty (60) days following such completion.
(vi) Each Completion Guaranty shall relate only to a Joint
Venture Hotel or a Development Hotel for which the
general contractor has obtained (and is required to
obtain) payment and performance bonds in favor of the
Joint Venture and the Joint Venture Hotel Lender (in
the case of a Joint Venture Hotel) or in favor of the
Development Party and the Development Hotel Lender
(in the case of a Development Hotel).
(vii) The aggregate remaining project costs for all Joint
Venture Hotels and Development Hotels for which the
Borrower has given a Completion Guaranty shall not
exceed $50,000,000 at any time.
(viii) The total development cost for any single Joint
Venture Hotel or Development Hotel for which the
Borrower has given a Completion Guaranty shall not
exceed $25,000,0000 at any time.
SECTION 6.04. Limitation on Hotels under Development. The sum of (i)
the aggregate cost (including construction in progress and estimated remaining
costs to complete) of all hotels under construction which are owned by the
Borrower and its Subsidiaries, (ii) the aggregate obligations of the Borrower
and its Subsidiaries to make investments in any Joint Ventures or otherwise, and
(iii) the aggregate obligations of the Borrower and its Subsidiaries to purchase
hotels under construction (including construction in progress and estimated
remaining costs to complete) shall not exceed 10% of Total Value.
Notwithstanding the foregoing, at all times the funding available under the
Loans pursuant to the terms hereof and such other sources available to the
Borrower must be sufficient to pay for the Hotels under development or under
contract for purchase.
58
SECTION 6.05. No Material Modifications to Permitted Operating Leases;
Percentage of Rooms Leased Under Permitted Operating Leases.
(a) The Borrower shall not make significant or material
modifications or amendments to any Permitted Operating Lease.
(b) The percentage of the total rooms in all hotels of the
Borrower and its Subsidiaries that are leased under Permitted Operating Leases
shall not be less than 85% of all rooms in Hotels of the Borrower and its
Subsidiaries.
SECTION 6.06. Limitations on Foreign Investments and Investments in
Ventures and Loans to Development Parties. Investments in, advances to, and
loans to any Joint Venture, to any Development Party, or to any other entity
other than a Wholly Owned Subsidiary, plus the investment in hotels located
outside of the continental United States, shall not exceed 10% of Total Value.
For purposes hereof, investments in Joint Ventures and credit to Development
Parties shall include the amount of unfunded capital contribution commitments
supported by Facility Letters of Credit.
SECTION 6.07. Major Ground Lease Limitations. No more than 10% of Total
Value shall consist of hotels subject to a Major Ground Lease.
SECTION 6.08. Limitation on Dividends and Distributions. The Borrower
shall not permit the aggregate amount of dividends and distributions (including
dividends and distributions on both common stock and preferred stock) paid for
any of the most recent four Fiscal Quarters to exceed 85% of the Funds From
Operations for such Fiscal Quarters, provided that Borrower may, so long as a
Default does not exist, pay the minimum amount of dividends required to maintain
its status as a real estate investment trust under the Code.
SECTION 6.09. Limitation on Floating Rate Debt. The Borrower shall not
permit the principal amount of Floating Rate Debt of the Borrower and any
Subsidiary that is not subject to an interest rate cap, a swap or other interest
rate protection that shall have the economic effect of insulating the Borrower
from increases in interest rates to exceed 50% of the Consolidated Total
Indebtedness.
SECTION 6.10. Dissolution. Neither the Borrower nor any of its
Subsidiaries shall undertake or commence a plan of dissolution or suffer or
permit dissolution or liquidation either in whole or in part or redeem or retire
any shares of its own stock or that of any Subsidiary, except through corporate
reorganization to the extent permitted by Section 5.05.
SECTION 6.11. Consolidations, Mergers and Sales of Assets. The Borrower
will not, nor will it permit any Subsidiary to, consolidate or merge with or
into, or sell, lease or otherwise transfer all or any substantial part of its
assets to, any other Person, unless (i) the Company or Partnership is the
surviving entity under any such transaction, (ii) such transaction does not
create a Default or Event of Default hereunder, and (iii) to the extent that
such transaction is a merger that is otherwise prohibited hereby, the
Supermajority of Banks shall consent to such transaction.
59
SECTION 6.12. Use of Proceeds. No portion of the proceeds of the Loans
will be used by the Borrower or any Subsidiary (i) in connection with, either
directly or indirectly, any tender offer for, or other acquisition of, stock of
any corporation with a view towards obtaining control of such other corporation,
(ii) directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose
in violation of any applicable law or regulation.
SECTION 6.13. Change in Fiscal Year or Fiscal Quarters. The Borrower
will not change its Fiscal Year or Fiscal Quarters without the consent of the
Required Banks.
SECTION 6.14. Environmental Matters. The Borrower and its Subsidiaries
will not, and will not permit any Third Party to, use, produce, manufacture,
process, treat, recycle, generate, store, dispose of, manage at, or otherwise
handle or ship or transport to or from the Properties any Hazardous Materials
except for Hazardous Materials such as cleaning solvents, pesticides and other
similar materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed, managed or otherwise handled in minimal amounts in
the ordinary course of business in compliance with all applicable Environmental
Requirements.
With respect to any Hotels that Environmental Reports disclose as
having asbestos or asbestos-containing material within the Property, the
Borrower agrees to establish an operations and maintenance plan satisfactory to
the Required Banks (the "O&M Plans") so as to minimize the risks associated with
such asbestos. The Banks may require periodic inspection of such Hotels in order
to assess such condition and to assess compliance with such O&M Plans and may
require modifications to the O&M Plans as necessary to minimize or eliminate
such risks.
SECTION 6.15. Operations. The Borrower and its Subsidiaries shall not
undertake any business other than the acquisition, development, ownership,
management and operation of hotels (specifically excluding from its business
undertaking the acquisition, development, ownership, management and operation of
"economy" hotels and "budget" hotels).
SECTION 6.16. No Modifications to Organizational Documents. The
Partnership shall not materially modify its Partnership Agreement. The Company
shall not materially modify its Articles of Incorporation or its Bylaws. Neither
the Partnership nor the Company shall change its name or change the state under
which it is organized.
ARTICLE VII
FINANCIAL COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid or any Facility
Letter of Credit remains outstanding, the Borrower and its Subsidiaries shall
satisfy the following financial covenants, each of which is to be calculated on
a Consolidated basis or as otherwise set forth herein:
SECTION 7.01. Maximum Leverage Ratio. Except as described in the last
paragraph of this Section 7.01, the Ratio of Consolidated Total Indebtedness to
Total Value (the "Leverage Ratio") shall not exceed 55% as of each Measurement
Date determined by each of Method A and Method B described below.
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The following defined terms are applicable to the computation of
Leverage Ratio according to Method B in this section:
"Venture Value" shall mean the Company's proportional interest in the
assets of any Joint Venture. The method of valuing assets included in Venture
Value shall be the same as provided in this Agreement for the Borrower's wholly
owned assets.
"Venture Indebtedness" shall mean the Company's proportional interest
in the Debt of any Joint Venture to parties other than the owners of the Joint
Venture. Borrower's investment in or loans and advances to any such Joint
Venture shall be excluded from the calculation of Total Value to eliminate
duplication.
Method A Leverage Ratio Calculation
Method A shall be determined by dividing Consolidated Total
Indebtedness of the Company and its Consolidated Subsidiaries by Total Value of
the Company and its Consolidated Subsidiaries as illustrated below:
ILLUSTRATION (Amounts shown are fictional.)
Total Value:
Cash and Equivalents $ 1,000,000
Aggregate Capitalized Value for Stabilized Hotels 200,000,000
Aggregate Total Cost for Non-Stabilized Hotels 200,000,000
Total Investments in and Advances to Joint Ventures 2,000,000
Total Loans to Development Parties 2,000,000
Benefit under Letters of Credit for Joint Venture Capital 10,000,000
Contributions
------------
Total Value (Sum A:F) $415,000,000
Total Indebtedness:
Unsecured Debt $ 0
Secured Debt - Borrowings Under the Credit Agreement $110,000,000
Secured Debt - Facility Letters of Credit $ 10,000,000
Secured Debt - Other $ 70,000.000
------------
Consolidated Total Indebtedness (Sum I:K) $190,000,000
Ratio of Consolidated Total Indebtedness to Total Value,
according to Method A (L/G) 45.8%
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Method B Leverage Ratio Calculation
Method B shall be determined by dividing Consolidated Total
Indebtedness of the Company and its Consolidated Subsidiaries by Total Value of
the Company and its Consolidated Subsidiaries, adjusted to reflect the Company's
proportional interests in the underlying assets and debt of Joint Ventures and
adjusted to eliminate duplication in the manner illustrated below:
ILLUSTRATION (Amounts shown are fictional.)
Total Value as adjusted for Joint Ventures:
Cash and Equivalents $ 1,000,000
Aggregate Capitalized Value for Stabilized Hotels $ 200,000,000
Aggregate Total Cost for Non-Stabilized Hotels $ 200,000,000
Total Investments in and Advances to Joint Ventures $ 2,000,000
Total Loans to Development Parties $ 2,000,000
Benefit under Letters of Credit for Joint Venture Capital Contributions 10,000,000
-------------
Total Value (Sum A:F) $ 415,000,000
Less Investments in and Advances to Joint Ventures (from Line D) $ (2,000,000)
Venture Value $ 5,000,000
-------------
Total Value as Adjusted for Joint Ventures (G less H plus I) $ 418,000,000
Total Indebtedness as adjusted for Joint Ventures:
Unsecured Debt $ 0
Secured Debt - Borrowings Under the Credit Agreement $ 110,000,000
Secured Debt - Facility Letters of Credit $ 10,000.000
Secured Debt - Other $ 70,000,000
-------------
Consolidated Total Indebtedness (Sum K:N) $ 190,000,000
Venture Indebtedness $ 3,000,000
-------------
Consolidated Total Indebtedness, Adjusted for Joint Venture Debt $ 193,000,000
(O+P)
Ratio of Consolidated Total Indebtedness to Total Value, as adjusted for
Joint Ventures according to Method B (Q/J) 46.1%
The following are the adjustments to Total Value and Consolidated Total
Indebtedness under Method B in a situation where Borrower is a 50% owner of a
Joint Venture having a Hotel with a Capitalized Value of $10,000,000 and
mortgage debt of $6,000,000. In this case, the Company carries as an asset its
50% equity interest at a value of $2,000,000, which amount is included in Total
Value calculated under Method A.
- For purposes of determining Total Value under Method B, Total
Value as calculated under Method A shall be adjusted by
deleting the Company's $2,000,000 carried equity interest in
the Joint Venture.
- For purposes of calculating Venture Value under Method B,
Total Value as calculated under Method A shall be adjusted by
adding the Company's Venture Value of $5,000,000. This Venture
Value of $5,000,000 is determined by
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multiplying the $10,000,000 Capitalized Value of the Hotel
owned by the Joint Venture by the Company's 50% interest in
the Joint Venture.
- For purposes of determining Consolidated Total Indebtedness
under Method B, Consolidated Total Indebtedness as calculated
under Method A shall be adjusted by adding the Company's
Venture Indebtedness of $3,000,000. This Venture Indebtedness
of $3,000,000 is determined by multiplying the Joint Venture's
$6,000,000 mortgage debt by the Company's 50% interest in the
Joint Venture.
With respect to Borrower's compliance with Section 7.01, the higher of the
leverage ratios calculated in accordance with Method A and Method B shall
govern, and the Borrower shall not be in default under this Section if the Ratio
of Consolidated Total Indebtedness does not exceed 55% of Total Value under
either Method A or Method B, as of each Measurement Date.
With respect to determining Borrower's Performance Pricing Level and Applicable
Margin, the higher of the Leverage Ratios determined under Method A and Method B
shall govern.
Notwithstanding the foregoing, the Borrower's Leverage Ratio calculated as
described above may exceed 55%, provided the Leverage Ratio does not exceed 60%,
for not more than two Measurement Dates occurring in calendar year 2002,
provided the Borrower shall have complied with any request of the Agent or the
Required Banks to encumber all of the Supplemental Borrowing Base Hotels as
additional collateral for the Loans, as described in Section 3.01(d).
SECTION 7.02. Maximum Unsecured Debt. The aggregate amount of
Consolidated Total Indebtedness of the Company and its Consolidated Subsidiaries
(exclusive of Consolidated Secured Debt and trade accounts payable and accruals
arising in the ordinary course of business) shall not exceed $500,000 at any
time.
SECTION 7.03. Maximum Secured Debt. Consolidated Secured Debt of the
Company and its Consolidated Subsidiaries, excluding Senior Revolving Debt,
shall not exceed twenty-five percent (25%) of the Total Value (determined in
accordance with Method A, set out in Section 7.01) as of each Measurement Date.
SECTION 7.04. Minimum Interest Coverage. As of each Measurement Date,
the ratio of Adjusted EBITDA to Interest Expense plus rent payments under Ground
Leases for the preceding four Fiscal Quarters shall not be less than 2.50 to 1.
SECTION 7.05. Minimum Fixed Charge Coverage. As of each Measurement
Date, for the four preceding Fiscal Quarters, the ratio of (a) the sum of (i)
Adjusted EBITDA plus (ii) all Ground Lease Expenses to (b) Fixed Charges shall
not be less than 1.75 to 1.
Notwithstanding the foregoing, the foregoing ratio may be less than
1.75 to 1, but not less than 1.65 to 1, for not more than two Measurement Dates
occurring in calendar year 2002, provided the Borrower shall have complied with
any request of the Agent or the Required Banks to encumber all of the
Supplemental Borrowing Base Hotels specified by the Agent or the Required Banks
as additional collateral for the Loans, as described in Section 3.01(d).
SECTION 7.06. Minimum Consolidated Tangible Net Worth. The Company and
its Consolidated Subsidiaries shall maintain at all times a minimum Consolidated
Tangible Net
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Worth of at least the Base Amount shown below, subject to increase as specified
in the following sentence:
$165,000,000 through September 30, 2002,
$155,000,000 from October 1, 2002, through December 31, 2003,
$150,000,000 from January 1, 2004, through December 31, 2004
In addition, such Base Amount shall be increased by eighty-five percent of the
net proceeds of any offerings of the Company's capital stock or partnership
units occurring subsequent to the Second Amended and Restated Agreement Closing
Date as valued in accordance with such offering. The computation of Consolidated
Tangible Net Worth for purposes of this Section shall exclude losses on the sale
of any Properties occurring after the Second Amended and Restated Closing Date,
provided that up to an aggregate amount of $5,000,000 of such losses shall be
excluded pursuant to this provision.
ARTICLE VIII
DEFAULTS; REMEDIES
SECTION 8.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan or shall fail to pay any interest on any Loan within five Domestic Business
Days after such interest shall become due, or shall fail to pay when due any
amount due the Agent under the Letter of Credit Facility established pursuant to
Section 2.15 hereof, or shall fail to pay any fee or other amount payable
hereunder within five Domestic Business Days after such fee or other amount
becomes due; or
(b) the Borrower shall fail to observe or perform any affirmative
covenant contained in Article V, any negative covenant in Article VI, or any
financial covenant in Article VII; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement (other than
those covered by clause (a) or (b) above) or under any of the other Loan
Documents for thirty days after the earlier of (i) the first day on which the
Borrower has knowledge of such failure or (ii) written notice thereof has been
given to the Borrower by the Agent; or
(d) any representation, warranty, certification or statement made
or deemed made by the Borrower in Article IV of this Agreement or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or
(e) the Borrower or any Subsidiary (specifically including the
Special Purpose Entity) shall fail to make any payment in respect of Debt
outstanding (other than the Notes but specifically including the Conduit Debt)
when due or within any applicable grace period set out in the loan documents
evidencing or securing such Debt; or
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(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of the Borrower or any
Subsidiary (i) that individually is in excess of $5,000,000, or (ii) that in the
aggregate is in excess of $10,000,000 (specifically including the Conduit Debt)
(such Debt being hereinafter referred to as the "Cross-Default Debt") or the
mandatory prepayment or purchase of such Cross-Default Debt (specifically
including the Conduit Debt) by the Borrower (or its designee) or such Subsidiary
(or its designee) prior to the scheduled maturity thereof, or which enables (or,
with the giving of notice or lapse of time or both, would enable) the holders of
such Cross-Default Debt or any Person acting on such holders' behalf to
accelerate the maturity thereof or require the mandatory prepayment or purchase
thereof prior to the scheduled maturity thereof, without regard to whether such
holders or other Person shall have exercised or waived their right to do so; or
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing, or suspends business, or generally
fails to pay its debts as such debts become due, or becomes insolvent, however
evidenced; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, provided, however, such involuntary case or
proceeding shall not constitute an Event of Default unless such involuntary case
or proceeding remains undismissed or unstayed for a period of 60 days or an
order for relief shall be entered against the Borrower or any Subsidiary under
the federal bankruptcy laws as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail
to pay when due any material amount which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans shall be filed under Title IV of ERISA by the Borrower, any
member of the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
any such Plan or Plans must be terminated; or the Borrower or any other member
of the Controlled Group shall enter into, contribute or be obligated to
contribute to, terminate or incur any withdrawal liability with respect to, a
Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money in an
amount in excess of $100,000 shall be rendered against the Borrower or any
Subsidiary and such judgment or order shall continue unsatisfied and unstayed
for a period of 30 days; or
65
(k) a federal tax lien shall be filed against the Borrower or any
Subsidiary under Section 6323 of the Code or a lien of the PBGC shall be filed
against the Borrower or any Subsidiary under Section 4068 of ERISA and in either
case such lien shall remain undischarged for a period of 25 days after the date
of filing; or
(l) the Company shall cease to be the sole general partner of the
Partnership or any amendment to the partnership agreement of the Partnership
shall be executed whereby the consent of limited partners is required for any
action to be taken by the Partnership except as provided in the existing
partnership agreement of the Partnership; or
(m) the occurrence of any event, condition or act having a
Material Adverse Effect.; or
(n) a termination of Franchise Agreements involving seven percent
(7%) or more of the aggregate number of rooms in hotels of the Borrower and its
Subsidiaries, and (ii) termination of Franchise Agreements voluntarily by the
lessee of the Borrower or its Subsidiary (as the case may be) where a substitute
franchise agreement by a Pre-Approved Franchisor or by a Franchisor approved by
all of the Banks is in effect; or
(o) the Borrower shall fail to perform any of its obligations
under a Completion Guaranty and, as a result thereof, a lawsuit or other
proceeding is instituted against the Borrower. Notwithstanding the foregoing,
the initiation of such a lawsuit or proceeding against the Borrower shall not
constitute a default so long as (i) no final judgment in an amount in excess of
$100,000 has been entered against the Borrower with respect to such Completion
Guaranty and such judgment or order shall continue unsatisfied and unstayed for
a period of 30 days, and (ii) the Borrower is pursuing its legal remedies in
challenging such a lawsuit or proceeding; or
(p) (i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
20% or more of the outstanding shares of the voting stock of the Company; or
(ii) as of any date a majority of the Board of Directors of the Company consists
of individuals who were not either (A) directors of the Company as of the
corresponding date of the previous year, (B) selected or nominated to become
directors by the Board of Directors of the Company of which a majority consisted
of individuals described in clause (A), or (C) selected or nominated to become
directors by the Board of Directors of the Company of which a majority consisted
of individuals described in clause (A) and individuals described in clause (B).
In connection with (ii), replacement of any director who is retiring from
service on the Board of Directors as a result of age or health shall be excluded
from the calculation as to whether a "majority" meets such criteria.
Then, and in every such event, the Agent shall (i) if requested by the
Required Banks, by notice to the Borrower terminate the Commitments
(specifically including, but not limited to, the Swing Line) and they shall
thereupon terminate, (ii) if requested by the Required Banks, by notice to the
Borrower, declare the Notes (together with accrued interest thereon) and all
other amounts payable hereunder and under the other Loan Documents to be, and
the Notes (together with all accrued interest thereon) and all other amounts
payable hereunder and under the other Loan Documents shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower;
66
provided that if any Event of Default specified in clause (g) or (h) above
occurs with respect to the Borrower, without any notice to the Borrower or any
other act by the Agent or the Banks, the Commitments (specifically including,
but not limited to, the Swing Line) shall thereupon automatically terminate and
the Notes (together with accrued interest thereon) and all other amounts payable
hereunder and under the other Loan Documents shall automatically become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower, and (iii) exercise
any rights, powers and remedies under any of the Loan Documents. Notwithstanding
the foregoing, the Agent shall have available to it all rights and remedies
provided under the Loan Documents and in addition thereto, all other remedies at
law or equity, and shall exercise any one or all of them at the request of the
Required Banks.
SECTION 8.02. Notice of Default. The Agent shall give notice to the
Borrower of any Default under Section 8.01(c) promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE IX
THE AGENT
SECTION 9.01. Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated to
the Agent by the terms hereof and thereof, together with such other powers as
are reasonably incidental thereto. The Agent: (a) shall have no duties or
responsibilities except as expressly set forth in this Agreement and the other
Loan Documents, and shall not by reason of this Agreement or any other Loan
Document be a trustee for any Bank; (b) shall not be responsible to the Banks
for any recitals, statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any Bank under, this Agreement or
any other Loan Document, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
any other document referred to or provided for herein or therein or for any
failure by the Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by the Required Banks, and then only on terms and conditions
satisfactory to the Agent, and (d) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other Loan Document or any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Agent may employ agent and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agent or
attorneys-in-fact selected by it with reasonable care. The provisions of this
Article IX are solely for the benefit of the Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and under the other Loan Documents, the Agent shall act solely as agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Borrower. The duties
of the Agent shall be
67
ministerial and administrative in nature, and the Agent shall not have by reason
of this Agreement or any other Loan Document a fiduciary relationship in respect
of any Bank.
SECTION 9.02. Reliance by the Agent. The Agent shall be entitled to
rely upon any certification, notice or other communication (including any
thereof by telephone, telefax, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
SECTION 9.03. Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default or an Event of Default (other than the
non-payment of principal of or interest on the Loans) unless the Agent has
received notice from a Bank or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". The Agent shall
give each Bank prompt notice of each non-payment of principal of or interest on
the Loans, whether or not it has received any notice of the occurrence of such
non-payment. The Agent shall (subject to Section 11.05) take such action with
respect to such Default or Event of Default as shall be directed by the Required
Banks, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
SECTION 9.04. Rights of Agent as a Bank; Rights of Agent to Lend. With
respect to the Loans made by it, Wachovia in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though Wachovia were not acting as the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates, include
Wachovia in its individual capacity. The Agent may (without having to account
therefor to any Bank) accept deposits from, lend money to, issue letters of
credit on behalf of, engage in interest rate swap or derivative transactions
with, and generally engage in any kind of banking, trust or other business with
the Borrower (and any of its Affiliates) as if it were not acting as the Agent,
and the Agent may accept fees and other consideration from the Borrower (in
addition to any agency fees and arrangement fees heretofore agreed to between
the Borrower and Agent) for services in connection with this Agreement or any
other Loan Document or otherwise without having to account for the same to the
Banks.
SECTION 9.05. Indemnification. Each Bank severally agrees to indemnify
the Agent, to the extent the Agent shall not have been reimbursed by the
Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is continuing,
the normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such
68
other documents; provided, however, that no Bank shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any purpose
shall, in the opinion of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
SECTION 9.06. Consequential Damages. THE AGENT SHALL NOT BE RESPONSIBLE
OR LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.07. Payee of Note Treated as Owner. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with the Agent and the provisions of Section 11.07(c) have been satisfied.
Any requests, 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 that
Note or of any Note or Notes issued in exchange therefor or replacement thereof.
SECTION 9.08. Non-Reliance on Agent and Other Banks. Each Bank agrees
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself (or any Bank) informed
as to the performance or observance by the Borrower of this Agreement or any of
the other Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Borrower or any
other Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Person (or any of
their Affiliates) which may come into the possession of the Agent.
SECTION 9.09. Failure to Act. Except for action expressly required of
the Agent hereunder or under the other Loan Documents, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction by the Banks of
their indemnification obligations under Section 9.05 against any and all
liability and expense which may be incurred by the Agent by reason of taking,
continuing to take, or failing to take any such action.
SECTION 9.10. Resignation or Removal of the Agent. Subject to the
appointment and acceptance of a successor Agent as provided in this Section
9.10, the Agent may resign at any time by giving notice thereof to the Banks and
the Borrower and the Agent may be removed at any time with or without cause by
the Required Banks. Upon any such resignation or removal,
69
the Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within 30 days after the retiring Agent's notice
of resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent. Any
successor Agent shall be a bank which has a combined capital and surplus of at
least $500,000,000. 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 its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article IX 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.
SECTION 9.11. Intercreditor Agreement. The Banks have entered into an
Intercreditor Agreement dated of even date herewith governing rights and
responsibilities of the Agent to the Banks and certain obligations of the Agent.
The Borrower acknowledges and agrees that it is not a third-party beneficiary of
any provisions of the Intercreditor Agreement and is not entitled to rely
thereon or enforce any provisions thereof. The Borrower also acknowledges that
the Intercreditor Agreement may be amended by the Banks without prior notice to
or approval by the Borrower. The Intercreditor Agreement and any such amendment,
however, shall not waive or amend any provision of this Agreement to the
contrary. The Agent shall provide the Borrower with a photocopy of the
Intercreditor Agreement and any amendment thereto within 10 days after execution
by all parties to such document.
ARTICLE X
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 10.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market for such
Interest Period, or
(b) the Required Banks advise the Agent that the London Interbank
Offered Rate, as determined by the Agent will not adequately and fairly reflect
the cost to such Banks of funding the Euro-Dollar Loans for such Interest
Period.
The Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks to
make Euro-Dollar Loans shall be suspended. Unless the Borrower notifies the
Agent at least 1 Domestic Business Day before the date of any Borrowing of
Euro-Dollar Loans for which a Notice of Borrowing has previously been given that
it elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Loan.
SECTION 10.02. Illegality. If, after the date hereof, the adoption of
any applicable law, rule or regulation, or any change in any existing or future
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or
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comparable agency charged with the interpretation or administration thereof (any
such authority, bank or agency being referred to as an "Authority" and any such
event being referred to as a "Change of Law"), or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any Authority shall make it unlawful or impossible for any Bank (or
its Lending Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to
the other Banks and the Borrower, whereupon until such Bank notifies the
Borrower and the Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that it may
not lawfully continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount of each
Euro-Dollar Loan of such Bank, together with accrued interest thereon and any
amount due such Bank pursuant to Section 10.05(a). Concurrently with prepaying
each such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an
equal principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 10.03. Increased Cost and Reduced Return.
(a) If after the date hereof, a Change of Law or compliance by any
Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority:
(i) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its
Euro-Dollar Loans, its Notes or its obligation to
make Euro-Dollar Loans, or shall change the basis of
taxation of payments to any Bank (or its Lending
Office) of the principal of or interest on its
Euro-Dollar Loans or any other amounts due under this
Agreement in respect of its Euro-Dollar Loans or its
obligation to make Euro-Dollar Loans (except for
changes in the rate of tax on the overall net income
of such Bank or its Lending Office imposed by the
jurisdiction in which such Bank's principal executive
office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including,
without limitation, any such requirement imposed by
the Board of Governors of the Federal Reserve System,
but excluding with respect to any Euro-Dollar Loan
any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of,
deposits with or for the account of, or credit
extended by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office) or
on the London interbank market any other condition
affecting its Euro-Dollar Loans, its Notes or its
obligation to make Euro-Dollar Loans; and the result
of any of the foregoing is to increase the cost to
such Bank (or its Lending Office)
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of making or maintaining any Euro-Dollar Loan, or to
reduce the amount of any sum received or receivable
by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by
an amount deemed by such Bank to be material, then,
within 15 days after demand by such Bank (with a copy
to the Agent), the Borrower shall pay to such Bank
such additional amount or amounts as will compensate
such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that after the date hereof
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any existing or future law, rule or regulation, or
any change in the interpretation or administration thereof, or compliance by any
Bank (or its Lending Office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Authority, has or would
have the effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 10.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any calculations
required by such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 10.04. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 10.02 or (ii) any Bank has demanded
compensation under Section 10.03, and the Borrower shall, by at least 5
Euro-Dollar Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans, shall be made instead as Base Rate Loans, as the Borrower may
elect in the notice to such Bank through the Agent referred to herein above (in
all cases interest and principal on such Loans shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and
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(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate Loans and its Base Rate Loans
instead.
In the event that the Borrower shall elect that the provisions of this
Section shall apply to any Bank, the Borrower shall remain liable for, and shall
pay to such Bank as provided herein, all amounts due such Bank under Section
10.03 in respect of the period preceding the date of conversion of such Bank's
Loans resulting from the Borrower's election.
SECTION 10.05. Compensation. Upon the request of any Bank, delivered to
the Borrower and the Agent, the Borrower shall pay to such Bank such amount or
amounts as shall compensate such Bank for any loss, cost or expense incurred by
such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.09, Section
2.10, Section 10.02 or otherwise) of a Euro-Dollar Loan on a date other than the
last day of an Interest Period for such Euro-Dollar Loan;
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on
the date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on
the date for the Borrowing of which such Euro-Dollar Loan is a part specified in
the applicable Notice of Borrowing delivered pursuant to Section 2.02.
Such compensation shall include, without limitation, an amount equal to
the excess, if any, of (x) the amount of interest which would have accrued on
the amount so paid or prepaid or not prepaid or borrowed for the period from the
date of such payment, prepayment or failure to prepay or borrow to the last day
of the then current Interest Period for such Euro-Dollar Loan (or, in the case
of a failure to prepay or borrow, the Interest Period for such Euro-Dollar Loan
which would have commenced on the date of such failure to prepay or borrow) at
the applicable rate of interest for such Euro-Dollar Loan provided for herein
over (y) the amount of interest (as reasonably determined by such Bank) such
Bank would have paid on deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the London
interbank market.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party at its address or telecopy
number set forth on the signature pages hereof or such other address or telecopy
number as such party may hereafter specify for the purpose by notice to each
other party. Each such notice, request or other communication shall be effective
(i) if given by telecopier, when such telecopy is transmitted to the telecopy
number specified in this Section and the telecopy machine used by the sender
provides a written confirmation that such telecopy has been so transmitted or
receipt of such telecopy transmission is otherwise confirmed, provided any
notice (other than a Notice of Borrowing) is also given by an alternative
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method set out herein, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, (iii) if given by reputable commercial courier for next day delivery,
one day following the date such communication is deposited with such reputable
courier, and (iv) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Agent under Article II
or Article X shall not be effective until received.
SECTION 11.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any Note or other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 11.03. Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket expenses of the
Agent, including fees and disbursements of special counsel for the Banks and the
Agent, in connection with the preparation of this Agreement and the other Loan
Documents, any waiver or consent hereunder or thereunder or any amendment hereof
or thereof or any Default or alleged Default or alleged hereunder or thereunder
and (ii) if a Default occurs, all out-of-pocket expenses incurred by the Agent
or any Bank, including fees and disbursements of counsel, in connection with
such Default and collection and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing this Agreement
and the other Loan Documents.
(b) The Borrower shall indemnify the Agent and each Bank against
any transfer taxes, documentary taxes, assessments or charges made by any
Authority by reason of the execution and delivery of this Agreement or the other
Loan Documents.
(c) The Borrower shall indemnify the Agent, the Banks and each
Affiliate thereof and their respective directors, officers, employees and agent
from, and hold each of them harmless against, any and all losses, liabilities,
claims or damages to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrower of the proceeds of any extension of credit by any
Bank hereunder or breach by the Borrower of this Agreement or any other Loan
Document or from investigation, litigation (including, without limitation, any
actions taken by the Agent or any of the Banks to enforce this Agreement or any
of the other Loan Documents) or other proceeding (including, without limitation,
any threatened investigation or proceeding) relating to the foregoing, and the
Borrower shall reimburse the Agent and each Bank, and each Affiliate thereof and
their respective directors, officers, employees and agent, upon demand for any
expenses (including, without limitation, legal fees) incurred in connection with
any such investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
SECTION 11.04. Setoffs; Sharing of Set-Offs.
(a) The Borrower hereby grants to each Bank, as security for the
full and punctual payment and performance of the obligations of the Borrower
under this Agreement, a continuing
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lien on and security interest in all deposits and other sums credited by or due
from such Bank to the Borrower or subject to withdrawal by the Borrower; and
regardless of the adequacy of any collateral or other means of obtaining
repayment of such obligations, each Bank may at any time upon or after the
occurrence of any Event of Default, and without notice to the Borrower, set off
the whole or any portion or portions of any or all such deposits and other sums
against such obligations, whether or not any other Person or Persons could also
withdraw money therefrom.
(b) Each Bank 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 and interest owing with respect to the Note held
by it which is greater than the proportion received by any other Bank in respect
of the aggregate amount of all principal and interest owing with respect to the
Note held by such other Bank, the Bank receiving such proportionately greater
payment shall purchase such participations in the Note held by the other Banks,
and/or such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to a Note shall be shared by the
Banks pro rata; provided that (i) nothing in this Section shall impair the right
of any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under a Note, and (ii) if all or any
portion of such payment received by the purchasing Bank is thereafter recovered
from such purchasing Bank, such purchase from each other Bank shall be rescinded
and such other Bank shall repay to the purchasing Bank the purchase price of
such participation to the extent of such recovery together with an amount equal
to such other Bank's ratable share (according to the proportion of (x) the
amount of such other Bank's required repayment to (y) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in a Note, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 11.05. Amendments and Waivers.
(a) Any provision of this Agreement, the Notes or any other Loan
Documents may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided that
no such amendment or waiver shall, unless signed by the Borrower and by each of
the Banks, (i) change the Commitment of any Bank or subject any Bank to any
additional obligation, (ii) change the principal of or rate of interest on any
Loan or any fees payable to the Banks hereunder, (iii) change the date fixed for
any payment of principal of or interest on any Loan or any fees hereunder, (iv)
change the amount of principal, interest or fees due on any date fixed for the
payment thereof, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the percentage of Banks,
which shall be required for the Banks or any of them to take any action under
this Section or any other provision of this Agreement, (vi) change the manner of
application of any payments made under this Agreement, the Notes, or any other
Loan Document, (vii) release or substitute all or any substantial part of the
collateral (if any) held as security for the Loans except where this Agreement
or other Loan Documents explicitly entitle the Borrower to such a release, or
(viii) release any guaranty given to support payment of the Loans.
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(b) The Borrower will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of
this Agreement unless each Bank shall be informed thereof by the Borrower and
shall be afforded an opportunity of considering the same and shall be supplied
by the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
or consent effected pursuant to the provisions of this Agreement shall be
delivered by the Borrower to each Bank forthwith following the date on which the
same shall have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to all such Banks.
SECTION 11.06. Margin Stock Collateral. Each of the Banks represents to
the Agent and each of the other Banks that it in good faith is not, directly or
indirectly (by negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 11.07. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided that the Borrower may not assign or otherwise transfer any of
its rights under this Agreement.
(b) Any Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to such Bank, any Note
held by such Bank, any Commitment hereunder or any other interest of such Bank
hereunder. In the event of any such sale by a Bank of a participating interest
to a Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of principal of or interest on the related
Loan or Loans, (ii) the change of the amount of any principal, interest or fees
due on any date fixed for the payment thereof with respect to the related Loan
or Loans, (iii) the change of the principal of the related Loan or Loans, (iv)
any change in the rate at which either interest is payable thereon or (if the
Participant is entitled to any part thereof) commitment fee is payable hereunder
from the rate at which the Participant is entitled to receive interest or
commitment fee (as the case may be) in respect of such participation, (v) the
release or substitution of all or any substantial part of the collateral (if
any) held as security for the Loans, or (vi) the release of any guaranty given
to support payment of the Loans. Each Bank selling a participating interest in
any Loan, Note, Commitment or other interest under this Agreement shall, within
10 Domestic Business Days of such sale, provide the Borrower and the Agent with
written notification stating that such sale has occurred and identifying the
Participant and the interest purchased by such Participant. The Borrower agrees
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that each Participant shall be entitled to the benefits of Article X with
respect to its participation in Loans outstanding from time to time.
(c) Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance in the form attached hereto as Exhibit
G, executed by such Assignee, such transferor Bank and the Agent (and, in the
case of an Assignee that is not then a Bank or an Affiliate of a Bank, by the
Borrower); provided that (i) no interest may be sold by a Bank pursuant to this
paragraph (c) unless the Assignee shall agree to assume ratably equivalent
portions of the transferor Bank's Commitment, (ii) the amount of the Commitment
of the assigning Bank subject to such assignment (determined as of the effective
date of the assignment) shall be equal to $5,000,000 (or any larger multiple of
$1,000,000), (iii) no interest may be sold by a Bank pursuant to this paragraph
(c) to any Assignee that is not then a Bank or an Affiliate of a Bank without
the consent of the Borrower, which consent is within the sole and absolute
discretion of the Borrower, provided, however, that upon the occurrence and
continuation of an Event of Default, the consent of the Borrower shall not be
required as to such an assignment, and (iv) a Bank may not have more than two
Assignees that are not then Banks at any one time. Upon (A) execution of the
Assignment and Acceptance by such transferor Bank, such Assignee, the Agent and
(if applicable) the Borrower, (B) delivery of an executed copy of the Assignment
and Acceptance to the Borrower and the Agent, (C) payment by such Assignee to
such transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, and (D) payment of a processing and
recordation fee of $2,000 to the Agent, such Assignee shall for all purposes be
a Bank party to this Agreement and shall have all the rights and obligations of
a Bank under this Agreement (including, without limitation, the rights of a Bank
under Section 2.03) to the same extent as if it were an original party hereto
with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by the Borrower, the
Banks or the Agent shall be required. Upon the consummation of any transfer to
an Assignee pursuant to this paragraph (c), the transferor Bank, the Agent and
the Borrower shall make appropriate arrangements so that, if required, a new
Note is issued to each of such Assignee and such transferor Bank.
(d) Subject to the provisions of Section 11.08, the Borrower
authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial and other information in such Bank's possession concerning the
Borrower which has been delivered to such Bank by the Borrower pursuant to this
Agreement or which has been delivered to such Bank by the Borrower in connection
with such Bank's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater payment
under Section 10.03 than the transferor Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 10.02
or 10.03 requiring such Bank to designate a different Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
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(f) Anything in this Section 11.07 to the contrary
notwithstanding, any Bank may assign and pledge all or any portion of the Loans
and/or obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the assigning
and/or pledging Bank from its obligations hereunder.
SECTION 11.08. Confidentiality. Each Bank agrees to exercise its best
efforts to keep any information delivered or made available by the Borrower to
it which is clearly indicated to be confidential information, confidential from
anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided, however, that nothing herein shall prevent
any Bank from disclosing such information (i) to any other Bank, (ii) upon the
order of any court or administrative agency, (iii) upon the request or demand of
any regulatory agency or authority having jurisdiction over such Bank, (iv)
which has been publicly disclosed, (v) to the extent reasonably required in
connection with any litigation to which the Agent, any Bank or their respective
Affiliates may be a party, (vi) to the extent reasonably required in connection
with the exercise of any remedy hereunder, (vii) to such Bank's legal counsel
and independent auditors and (viii) to any actual or proposed Participant,
Assignee or other Transferee of all or part of its rights hereunder which has
agreed in writing to be bound by the provisions of this Section 11.08.
SECTION 11.09. Swap Obligations. Any Bank being a party to this Credit
Agreement may engage in derivative transactions or interest rate swap
transactions with respect to the Notes (the "Swap Obligations") with the
Borrower or any Subsidiary. Any such Swap Obligations shall be secured by the
Collateral; provided, however, in the absence of any agreement by the Banks to
the contrary, such Swap Obligations may be satisfied from the Collateral only
after all other obligations secured thereby have been satisfied.
SECTION 11.10. Representation by Banks. Each Bank hereby represents
that it is a commercial lender or financial institution which makes loans in the
ordinary course of its business and that it will make its Loans hereunder for
its own account in the ordinary course of such business; provided, however,
that, subject to Section 11.07, the disposition of the Note held by that Bank
shall at all times be within its exclusive control.
SECTION 11.11. Obligations Several. The obligations of each Bank
hereunder are several, and no Bank shall be responsible for the obligations or
commitment of any other Bank hereunder. Nothing contained in this Agreement and
no action taken by the Banks pursuant hereto shall be deemed to constitute the
Banks to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan Document. It
shall not be necessary for any other Bank to be joined as an additional party in
any proceeding for such purpose.
SECTION 11.12. Survival of Certain Obligations. Sections 10.03(a),
10.03(b), 10.05 and 11.03, and the obligations of the Borrower thereunder, shall
survive, and shall continue to be
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enforceable notwithstanding, the termination of this Agreement and the
Commitments and the payment in full of the principal of and interest on all
Loans.
SECTION 11.13. North Carolina Law. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State of North
Carolina.
SECTION 11.14. Severability. In case any one or more of the provisions
contained in this Agreement, the Notes or any of the other Loan Documents should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby and shall be enforced to the
greatest extent permitted by law.
SECTION 11.15. Interest. In no event shall the amount of interest due
or payable hereunder or under the Notes exceed the maximum rate of interest
allowed by applicable law, and in the event any such payment is inadvertently
made to any Bank by the Borrower or inadvertently received by any Bank, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify such Bank in writing that it elects to have such excess sum
returned forthwith. It is the express intent hereof that the Borrower not pay
and the Banks not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the Borrower under
applicable law.
SECTION 11.16. Interpretation. No provision of this Agreement or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 11.17. Defaulting Bank. Each Bank understands and agrees that
if such Bank is a Defaulting Bank, then notwithstanding any provisions of this
Agreement to the contrary, it shall not be entitled to vote on any matter
requiring the consent of the Banks or to object to any matter requiring the
consent of the Banks; provided, however, that all other benefits and obligations
under the Loan Documents shall apply to such Defaulting Bank.
SECTION 11.18. Consent to Jurisdiction. The Borrower (a) submits to
personal jurisdiction in the State of North Carolina, the courts thereof and the
United States District Courts sitting therein, for the enforcement of this
Agreement, the Notes and the other Loan Documents, (b) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or venue
within the State of North Carolina for the purpose of litigation to enforce this
Agreement, the Notes or the other Loan Documents, and (c) agrees that service of
process may be made upon it in the manner prescribed in Section 11.01 for the
giving of notice to the Borrower. Nothing herein contained, however, shall
prevent the Agent from bringing any action or exercising any rights against any
security and against the Borrower personally, and against any assets of the
Borrower, within any other state or jurisdiction.
SECTION 11.19. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
79
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, under seal, by their respective authorized officers as of the day
and year first above written.
WINSTON HOTELS, INC., a North Carolina
corporation
[CORPORATE SEAL] By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Vice President
Attest:
/s/ Xxxxxx X. Xxxxx
----------------------
Assistant Secretary
Address:
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx III
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
XXXX LIMITED PARTNERSHIP, a North
Carolina limited partnership (SEAL)
By: WINSTON HOTELS, INC., a North
Carolina corporation, its general partner
[CORPORATE SEAL] By: /s/ Xxxxx X. Xxxx
---------------------------------------
Vice President
Attest:
/s/ Xxxxxx X. Xxxxx
---------------------
Assistant Secretary
Address:
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx III
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
80
WACHOVIA BANK, N.A., as Agent
By: /s/ Xxxxxx X. Xxxx
-------------------------------------------
Title: Senior Vice President
[CORPORATE SEAL]
For Routine Loan Transactions
Wachovia Bank, N.A.
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Syndicate Services
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
For All Other Matters
Wachovia Bank, N.A.
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Senior Vice President
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
81
$48,000,000.00 WACHOVIA BANK, N.A.
By: /s/ Xxxxxx X. Xxxx
--------------------------------------------
Title: Senior Vice President
[CORPORATE SEAL]
Lending Office
Wachovia Bank, N.A.
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Senior Vice President
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
$40,000,000.00 BRANCH BANKING AND TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Title: Senior Vice President
[CORPORATE SEAL]
Lending Office
Branch Banking and Trust Company
000 Xxxxxxxxxxxx Xxxxxx Xxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
82
$22,000,000.00 SOUTHTRUST BANK
By: /s/ R. Xxxxx Xxxxx
--------------------------------
Title: Vice President
[CORPORATE SEAL]
Lending Office
SouthTrust Bank
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: R. Xxxxx Xxxxx
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
83
$15,000,000.00 RBC CENTURA BANK
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
--------------------------------
Title: Bank Officer
[CORPORATE SEAL]
Lending Office
--------------
RBC Centura Bank
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Xx.
Corporate Banking Officer
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
------------
TOTAL COMMITMENTS:
$125,000,000.00
84
SCHEDULE 4.04
SCHEDULE OF EVENTS HAVING A MATERIAL ADVERSE EFFECT
Since September 30, 2001, there have been no events having a "Material
Adverse Effect" other than the adverse trends in room revenue due to events of
September 11, 2001, and the correspondence decline in economic activity and
travel.
SCHEDULE 4.05
LITIGATION PENDING OR THREATENED
SCHEDULE 4.08
EXISTING SUBSIDIARIES
Name of Subsidiary Jurisdiction of Formation
------------------ -------------------------
Winston Manager Corporation Xxxxxxxx
Xxxxxxx SPE, LLC Xxxxxxxx
Xxxxxxx Hospitality Services, Inc. North Carolina
SCHEDULE 4.11
LIENS
None.
EXHIBIT A-1
FORM OF BANK NOTE
AMENDED AND RESTATED NOTE
$__________ [SPECIFY AMOUNT] Raleigh, North Carolina
as of December 19, 2001
For value received, the undersigned, WINSTON HOTELS, INC., a North
Carolina corporation (the "Company"), and XXXX LIMITED PARTNERSHIP, a North
Carolina limited partnership (the "Partnership") (the Company and the
Partnership shall hereinafter be referred to, jointly and severally, as the
"Borrower"), jointly and severally promise to pay to the order of
____________________________ [SPECIFY NAME OF BANK], A ___________________
[SPECIFY WHETHER A STATE BANK OR NATIONAL BANKING ASSOCIATION] (the "Bank"), for
the account of its Lending Office, the principal sum of
_________________________________ DOLLARS ($__________ ) [SPECIFY AMOUNT], or
such lesser amount as shall equal the unpaid principal amount of each Loan made
by the Bank to the Borrower pursuant to the Credit Agreement referred to below,
on the dates and in the amounts provided in the Credit Agreement. The Borrower
promises to pay interest on the unpaid principal amount of this Note on the
dates and at the rate or rates provided for in the Credit Agreement. Interest on
any overdue principal and, to the extent permitted by law, overdue interest on
the principal amount hereof shall bear interest at the Default Rate, as provided
for in the Credit Agreement. All such payments of principal and interest shall
be made in lawful money of the United States in Federal or other immediately
available funds at the office of Wachovia Bank, N.A., 000 Xxxxxxxxx Xxxxxx,
X.X., Xxxxxxx, Xxxxxxx 00000, or such other address as may be specified from
time to time pursuant to the Credit Agreement.
All Loans made by the Bank, the respective maturities thereof, the
interest rates from time to time applicable thereto and all repayments of the
principal thereof shall be recorded by the Bank and, prior to any transfer
hereof, endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; provided that
the failure of the Bank to make, or any error of the Bank in making, any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Bank Notes referred to in the Second Amended
and Restated Syndicated Credit Agreement dated as of December 19, 2001, among
the Borrower, the banks listed on the signature pages thereof and their
successors and assigns, and Wachovia Bank, N.A., as Agent (as the same may be
amended or modified from time to time, the "Credit Agreement"). Terms defined in
the Credit Agreement are used herein with the same meanings. Reference is made
to the Credit Agreement for provisions for the prepayment and the repayment
hereof and the acceleration of the maturity hereof. This Note amends and
restates in its entirety that certain note dated January 15, 1999, executed by
the Borrower and payable to the Bank.
Time is of the essence of this Note. In the event all or any part of
any installment due under the terms of this Note is delinquent for more than
fifteen (15) days (excluding the final payment of principal and interest due on
the Maturity Date), there shall be due to the Bank, in addition to the
delinquent installment or part thereof and in order to compensate the Bank for
1
extra costs and expenses caused by such late payment, a sum equal to four
percent (4%) of the amount so delinquent.
THIS NOTE MAY NOT BE CHANGED ORALLY AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in the
Credit Agreement.
The Borrower agrees, in the event that this Note or any portion hereof
is collected by law or through an attorney at law, to pay all reasonable costs
of collection, including, without limitation, reasonable attorneys' fees.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed under seal, by its duly authorized officers as of the day and year
first above written.
BORROWER:
WINSTON HOTELS, INC., a North Carolina
corporation
By:
------------------------------------
Vice President
ATTEST:
------------------------------
Assistant Secretary
[CORPORATE SEAL]
2
XXXX LIMITED PARTNERSHIP, a North Carolina
limited partnership (SEAL)
By: WINSTON HOTELS, INC., its sole general
partner
By:
-------------------------------
Vice President
ATTEST:
------------------------------
Assistant Secretary
[CORPORATE SEAL]
3
Note
LOANS AND PAYMENTS OF PRINCIPAL
-----------------------------------------------------------------------------
Type Interest Rate Amount Amount Amount of
of of Principal Principal Maturity Notation
Date Loan(1) Loan Borrowed Repaid Date Made By
---- ------- ------------- --------- --------- --------- --------
-------------
(1) I.e., a Base Rate or Euro-Dollar Loan
EXHIBIT A-2
FORM OF TERM NOTE
AMENDED AND RESTATED TERM PROMISSORY NOTE
$__________ [SPECIFY AMOUNT] Raleigh, North Carolina
as of December 19, 2001
For value received, the undersigned, WINSTON HOTELS, INC., a North
Carolina corporation (the "Company"), and XXXX LIMITED PARTNERSHIP, a North
Carolina limited partnership (the "Partnership") (the Company and the
Partnership shall hereinafter be referred to, jointly and severally, as the
"Borrower"), jointly and severally promise to pay to the order of WACHOVIA BANK,
N.A., as Agent for the Banks being parties to the Credit Agreement (hereinafter
defined) (the "Agent"), for the account and pro rata benefit of the Banks being
parties to the Credit Agreement, the principal sum of
_________________________________ DOLLARS ($__________ ) [SPECIFY AMOUNT], on
the dates provided in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of this Note on the dates and at the
rate or rates provided for in the Credit Agreement. Interest on any overdue
principal and, to the extent permitted by law, overdue interest on the principal
amount hereof shall bear interest at the Default Rate, as provided for in the
Credit Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Wachovia Bank, N.A., 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx,
Xxxxxxx 00000, or such other address as may be specified from time to time
pursuant to the Credit Agreement.
This note is one of the Term Notes referred to in the Second Amended
and Restated Syndicated Credit Agreement dated as of December 19, 2001, among
the Borrower, the banks listed on the signature pages thereof and their
successors and assigns, Wachovia Bank, N.A., as Agent (as the same may be
amended or modified from time to time, the "Credit Agreement"). This Term Note
evidences indebtedness also evidenced by those certain Bank Notes described in
the Credit Agreement. Terms defined in the Credit Agreement are used herein with
the same meanings. Reference is made to the Credit Agreement for provisions for
the prepayment and the repayment hereof and the acceleration of the maturity
hereof. This Note amends and restates in its entirety that certain note dated
January 15, 1999, executed by the Borrower and payable to the Bank.
Time is of the essence of this Note. In the event all or any part of
any installment due under the terms of this Note is delinquent for more than
fifteen (15) days (excluding the final payment of principal and interest due on
the Maturity Date), there shall be due to the Agent, for the pro rata benefit of
the Banks, in addition to the delinquent installment or part thereof and in
order to compensate the Agent for extra costs and expenses caused by such late
payment, a sum equal to four percent (4%) of the amount so delinquent.
THIS NOTE MAY NOT BE CHANGED ORALLY AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
1
The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in the
Credit Agreement.
The Borrower agrees, in the event that this Note or any portion hereof
is collected by law or through an attorney at law, to pay all reasonable costs
of collection, including, without limitation, reasonable attorneys' fees.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed under seal, by its duly authorized officers as of the day and year
first above written.
BORROWER:
WINSTON HOTELS, INC., a North Carolina
corporation
By:
-------------------------------------
Vice President
ATTEST:
------------------------------
Assistant Secretary
[CORPORATE SEAL]
2
XXXX LIMITED PARTNERSHIP, a North
Carolina limited partnership (SEAL)
By: WINSTON HOTELS, INC., its sole
general partner
By:
-----------------------------
Vice President
ATTEST:
------------------------------
Assistant Secretary
[CORPORATE SEAL]
3
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
1
EXHIBIT C
OPINION OF
XXXXXX XXXXXXX XXXXXXXXX & XXXX, PLLC, SPECIAL COUNSEL
FOR THE AGENT
[Date as provided in Section 3.04 of the Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Wachovia Bank, N.A., as Agent
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Dear Ladies/Gentlemen:
We have participated in the preparation of the Second Amended and
Restated Syndicated Credit Agreement (the "Credit Agreement") dated as of
December 19, 2001, among Winston Hotels, Inc., a North Carolina corporation (the
"Company"), and XXXX Limited Partnership, a North Carolina limited partnership
(the "Partnership"), the banks listed on the signature pages thereof (the
"Banks") and Wachovia Bank, N.A., as Agent (the "Agent"), and have acted as
special counsel for the Agent for the purpose of rendering this opinion pursuant
to Section 3.04(d) of the Credit Agreement. Terms defined in the Credit
Agreement are used herein as therein defined.
This opinion letter is limited by, and is in accordance with, the
January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions, which Interpretive
Standards are incorporated herein by this reference.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, and assuming the due authorization,
execution and delivery of the Credit Agreement and each of the Notes by or on
behalf of the Borrower, we are of the opinion that the Credit Agreement
constitutes a valid and binding agreement of the Borrower and each Note
constitutes valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms except as: (i) the enforceability
thereof may be affected by bankruptcy, insolvency, reorganization, fraudulent
conveyance, voidable preference, moratorium or similar laws applicable to
creditors' rights or the collection of debtors' obligations generally; (ii)
rights of acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability; and (iii) the enforceability
of certain of the remedial, waiver and other provisions of the Credit Agreement
and the Notes may be further limited by the laws of the State of North Carolina;
provided, however, such additional laws do not, in our opinion, substantially
interfere with the practical realization of the benefits expressed in the
1
Credit Agreement and the Notes, except for the economic consequences of any
procedural delay which may result from such laws.
In giving the foregoing opinion, we express no opinion as to the effect
(if any) of any law of any jurisdiction except the State of North Carolina. We
express no opinion as to the effect of the compliance or noncompliance of the
Agent or any of the Banks with any state or federal laws or regulations
applicable to the Agent or any of the Banks by reason of the legal or regulatory
status or the nature of the business of the Agent or any of the Banks.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you and any Assignee,
Participant or other Transferee under the Credit Agreement without our prior
written consent.
Very truly yours,
XXXXXX XXXXXXX XXXXXXXXX & XXXX, PLLC
By:
------------------------------------
Member
2
EXHIBIT D
CLOSING CERTIFICATE
OF
XXXX LIMITED PARTNERSHIP AND
WINSTON HOTELS, INC.
Reference is made to the Second Amended and Restated Syndicated Credit
Agreement (the "Credit Agreement") dated as of December 19, 2001, among XXXX
Limited Partnership, a North Carolina limited partnership (the "Partnership"),
Winston Hotels, Inc., a North Carolina corporation (the "Company") (the Company
and the Partnership being collectively referred to as the "Borrower"), Wachovia
Bank, N.A., as Agent and as a Bank, and the other Banks listed on the signature
pages thereof. Capitalized terms used herein have the meanings ascribed thereto
in the Credit Agreement.
Pursuant to Section 3.03(e) of the Credit Agreement, Xxxxx Xxxx, the
duly authorized Vice President of the Company, on its own behalf and as the
general partner of the Partnership, hereby certifies to the Agent and the Banks
that: (i) no Default has occurred and is continuing on the date hereof; (ii) the
representations and warranties of the Borrower contained in Article IV of the
Credit Agreement are true on and as of the date hereof; and (iii) that the
Exhibits attached hereto are true and correct and fully represent the condition
of the Borrower and the matters described therein.
Certified as of the ___ day of December, 2001.
XXXX LIMITED PARTNERSHIP, a North Carolina
limited partnership (SEAL)
By: WINSTON HOTELS, INC., a North Carolina
corporation, its general partner
By:
------------------------------------
Vice President
WINSTON HOTELS, INC., a North Carolina
corporation
By:
---------------------------------------------
Vice President
1
Exhibits to Closing Certificate
D-1. Borrowing Base Values Certificate as of Second Amended and
Restated Agreement Closing Date
D-2. Certificate of Compliance; Calculation of Pricing Level;
Determination of Leverage Ratio as of September 30, 2001.
2
EXHIBIT E
WINSTON HOTELS, INC.
ASSISTANT SECRETARY'S CERTIFICATE
The undersigned, Xxxxxx X. Xxxxx, Assistant Secretary of Winston
Hotels, Inc., a North Carolina corporation (the "Company"), on behalf of the
Company and on behalf of XXXX Limited Partnership, a North Carolina limited
partnership in which the Company is the general partner (the "Partnership"),
(the Company and the Partnership being collectively referred to as the
"Borrower") hereby certifies that she has been duly elected, qualified and is
acting in such capacity as Assistant Secretary of the Company and that, as such,
she is familiar with the facts herein certified and is duly authorized to
certify the same, and hereby further certifies, in connection with the Second
Amended and Restated Syndicated Credit Agreement dated as of December 19, 2001,
among the Borrower, Wachovia Bank, N.A., as Agent, as Agent, and the Banks
listed on the signature pages thereof that:
1. Attached hereto as Exhibit E-1 is a complete and correct copy
of the Articles of Incorporation of the Company as in full force and effect on
the date hereof as certified by the Secretary of State of the State of North
Carolina, the Company's state of incorporation.
2. Attached hereto as Exhibit E-2 is a complete and correct
copy of the Bylaws of the Company as in full force and effect on the date
hereof.
3. Attached hereto as Exhibit E-3 is a complete and correct copy
of the limited partnership agreement of the Partnership as in full force and
effect on the date hereof.
4. Attached hereto as Exhibit E-4 is a complete and correct copy
of the resolutions duly adopted by the Board of Directors of the Company on
December __, 2001, approving, and authorizing, on behalf of the Company and the
Partnership, the execution and delivery of the Credit Agreement, the Notes (as
such term is defined in the Credit Agreement) and the other Loan Documents (as
such term is defined in the Credit Agreement) to which the Borrower is a party.
Such resolutions have not been repealed or amended and are in full force and
effect, and no other resolutions or consents have been adopted by the Board of
Directors of the Company in connection therewith.
5. Xxxxx Xxxx, who as Vice President of the Company signed the
Credit Agreement, the Notes and the other Loan Documents to which the Borrower
is a party, was duly elected, qualified and acting as such at the time he signed
the Credit Agreement, the Notes and other Loan Documents to which the Borrower
is a party, and his signature appearing on the Credit Agreement, the Notes and
the other Loan Documents to which the Borrower is a party is his genuine
signature.
1
IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of the
____ day of December, 2001.
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Assistant Secretary,
Winston Hotels, Inc.
2
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
1
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE
Dated ________________ __, 200_
Reference is made to the Second Amended and Restated Syndicated Credit
Agreement dated as of December 19, 2001 (together with all amendments and
modifications thereto, the "Credit Agreement") among Winston Hotels, Inc., a
North Carolina corporation (the "Company") and XXXX Limited Partnership, a North
Carolina limited partnership (the "Partnership") (the Company and the
Partnership being collectively referred to as the "Borrower"), the Banks (as
defined in the Credit Agreement), Wachovia Bank, N.A., as Agent (the "Agent").
Terms defined in the Credit Agreement are used herein with the same meaning.
________________________________________________ (the "Assignor") and
____________________________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse to the Assignor, and the Assignee hereby purchases and assumes from the
Assignor, a ______% interest in and to all of the Assignor's rights and
obligations under the Credit Agreement as of the Effective Date (as defined
below) (including, without limitation, a ______% interest (which on the
Effective Date hereof is $_______________) in the Assignor's Commitment and a
______% interest (which on the Effective Date hereof is $_______________) in the
Loans owing to the Assignor a ______% interest in the Note held by the Assignor
(which on the Effective Date hereof is $__________________).
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement, any other
instrument or document furnished pursuant thereto or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any other Loan Document or any other instrument or document furnished
pursuant thereto, other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder, that such interest is free and clear of
any adverse claim and that as of the date hereof its Commitment (without giving
effect to assignments thereof which have not yet become effective) is
$_________________ and the aggregate outstanding principal amount of Loans owing
to it (without giving effect to assignments thereof which have not yet become
effective) is $_________________; (ii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement, any other Loan Document or any other
instrument or document furnished pursuant thereto; and (iii) attaches the
Note[s] referred to in paragraph 1 above and requests that the Agent exchange
such Note[s] as follows: [a new Note dated _______________, ____ in the
principal amount of _________________ payable to the order of the Assignee in
the principal amount of $_______________ payable to the order of the Assignor
and a Note dated ______________, ____ in the principal amount of $______________
payable to the order of the Assignee].
4. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.04(a) thereof (or any
1
more recent financial statements of the Borrower delivered pursuant to Section
5.01 thereof) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Bank 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 the Credit
Agreement; (iii) confirms that it is a bank or financial institution; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Credit Agreement as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; (vi) specifies as its Lending Office (and address for
notices) the office set forth beneath its name on the signature pages hereof,
(vii) represents and warrants that the execution, delivery and performance of
this Assignment and Acceptance are within its corporate powers and have been
duly authorized by all necessary corporate action[, and (viii) attaches the
forms prescribed by the Internal Revenue Service of the United States certifying
as to the Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement and the Notes or such other documents as are
necessary to indicate that all such payments are subject to such taxes at a rate
reduced by an applicable tax treaty].(2)
5. The Effective Date for this Assignment and Acceptance shall be
_______________ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for execution and
acceptance by the Agent [and to the Borrower for execution by the Borrower](3).
6. Upon such execution and acceptance by the Agent [and execution
by the Borrower](2), from and after the Effective Date, (i) the Assignee shall
be a party to the Credit Agreement and, to the extent rights and obligations
have been transferred to it by this Assignment and Acceptance, have the rights
and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
its rights and obligations have been transferred to the Assignee by this
Assignment and Acceptance, relinquish its rights (other than under Section 10.03
and Section 11.03 of the Credit Agreement) and be released from its obligations
under the Credit Agreement.
7. Upon such execution and acceptance by the Agent [and execution
by the Borrower], from and after the Effective Date, the Agent shall make all
payments in respect of the interest assigned hereby to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments for
periods prior to such acceptance by the Agent directly between themselves.
8. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of North Carolina.
-------------------
(2) If the Assignee is organized under the laws of a jurisdiction outside
the United States.
(3) If the Assignee is not a Bank or an Affiliate of a Bank prior to the
Effective Date.
2
[NAME OF ASSIGNOR]
By:
-------------------------------------
Title:
[NAME OF ASSIGNEE]
By:
-------------------------------------
Title:
Lending Office:
----------------------------------------
----------------------------------------
----------------------------------------
Telecopy number:
------------------------
Telephone number:
-----------------------
WACHOVIA BANK, N.A., as Agent
By:
-------------------------------------
Title:
3
BORROWER:(*)
WINSTON HOTELS, INC., a North Carolina
corporation
By:
------------------------------------
Vice President
XXXX LIMITED PARTNERSHIP, a North
Carolina limited partnership (SEAL)
By: WINSTON HOTELS, INC., its sole
general partner
By:
---------------------------
Vice President
-----------------
(*) If the Assignee is not a Bank or an Affiliate of a Bank prior to the
Effective Date.
4
EXHIBIT H
NOTICE OF BORROWING
WINSTON HOTELS, INC.
1
EXHIBIT I
FORM OF BORROWING BASE VALUE CERTIFICATE
1
EXHIBIT J
TO CREDIT AGREEMENT
CONDUIT DEBT HOTELS
1. Comfort Suites, Orlando, Florida
2. Comfort Inn, Charleston, South Carolina
3. Courtyard by Marriott, Ann Arbor, Michigan
4. Courtyard by Marriott, Wilmington, North Carolina
5. Hampton Inn, Elmsford, New York
6. Hampton Inn, Raleigh, North Carolina
7. Hampton Inn, Perimeter, Georgia
8. Hampton Inn, West Springfield, Massachusetts
9. Hampton Inn, Charlotte, North Carolina
10. Xxxxxxx Xxx & Xxxxxx, Xxxxxx, Xxxxxxx (Gwinnett)
11. Homewood Suites, Cary, North Carolina
12. Homewood Suites, Clearlake, Texas
13. Quality Suites, North Charleston, South Carolina
14. Residence Inn, Phoenix, Arizona
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