Exhibit 10.5
U.S. $75,000,000
REVOLVING CREDIT AGREEMENT
Dated as of August 3, 1998
between
MERISTAR H & R OPERATING COMPANY, L.P.,
as the Borrower,
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and
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.,
as the Lender
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms 1
Section 1.02 Computation of Time Periods 15
Section 1.03 Accounting Terms; Changes in GAAP 15
Section 1.04 Miscellaneous 16
ARTICLE II ADVANCES
Section 2.01 Advances 16
Section 2.02 Method of Borrowing 17
Section 2.03 Reduction of the Commitment 17
Section 2.04 Repayment of Advances 17
Section 2.05 Interest, Late Payment Fee 18
Section 2.06 Prepayments 19
Section 2.07 Payments and Computations 20
Section 2.08 Taxes 21
ARTICLE III CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to Initial Advance 22
Section 3.02 Conditions Precedent for Each Borrowing 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01 Existence; Qualification; Partners; Subsidiaries 23
Section 4.02 Partnership and Corporate Power 23
Section 4.03 Authorization and Approvals 24
Section 4.04 Enforceable Obligations 24
Section 4.05 Financial Statements and Registration Statement 24
Section 4.06 True and Complete Disclosure 24
Section 4.07 Litigation 25
Section 4.08 Use of Proceeds 25
Section 4.09 Investment Company Act 25
Section 4.10 Taxes 25
Section 4.11 Pension Plans 25
Section 4.12 No Burdensome Restrictions; No Defaults 26
Section 4.13 Environmental Condition 26
Section 4.14 Legal Requirements, Zoning, Utilities, Access 27
Section 4.15 Existing Indebtedness 28
Section 4.16 Leases and Management Agreements 28
ARTICLE V AFFIRMATIVE COVENANTS
Section 5.01 Compliance with Laws, Etc. 28
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Section 5.02 Preservation of Existence; Separateness, Etc. 29
Section 5.03 Payment of Taxes, Etc. 29
Section 5.04 Reporting Requirements 29
Section 5.05 Insurance 31
Section 5.06 Material Documents 31
ARTICLE VI NEGATIVE COVENANTS
Section 6.01 Liens, Etc. 32
Section 6.02 Indebtedness 32
Section 6.03 Agreements Restricting Distributions From Subsidiaries 33
Section 6.04 Fundamental Changes; Asset Dispositions 33
Section 6.05 Investments, Loans, Future Properties 33
Section 6.06 Affiliate Transactions 33
Section 6.07 Sale or Discount of Receivables 33
Section 6.08 Restricted Payments 33
ARTICLE VII FINANCIAL COVENANTS
Section 7.01 Senior Interest Coverage Ratio. 35
Section 7.02 Total Interest Coverage Ratio. 35
Section 7.03 Senior Fixed Charge Ratio. 35
Section 7.04 Total Fixed Charge Ratio. 35
Section 7.05 Senior Indebtedness Leverage Ratio 35
Section 7.06 Leverage Ratio. 35
ARTICLE VIII SUBORDINATION
Section 8.01 Agreement to Subordinate. 36
Section 8.02 Liquidation; Dissolution; Bankruptcy. 36
Section 8.03 Default on Financial Institution Senior Indebtedness. 36
Section 8.04 Acceleration of Notes. 38
Section 8.05 When Distribution Must Be Paid Over. 38
Section 8.06 Notice by Borrower. 38
Section 8.07 Subrogation. 38
Section 8.08 Relative Rights. 38
ARTICLE IX EVENTS OF DEFAULT; REMEDIES
Section 9.01 Events of Default 38
Section 9.02 Optional Acceleration of Maturity; Other Actions 40
Section 9.03 Automatic Acceleration of Maturity 41
ARTICLE X MISCELLANEOUS
Section 10.01 Amendments, Etc. 41
Section 10.02 Notices, Etc. 41
Section 10.03 No Waiver; Remedies 41
Section 10.04 Costs and Expenses 42
Section 10.05 Binding Effect 42
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Section 10.06 Indemnification 42
Section 10.07 Execution in Counterparts 43
Section 10.08 Survival of Representations, Indemnifications, etc 43
Section 10.09 Severability 43
Section 10.10 Usury Not Intended 44
Section 10.11 GOVERNING LAW 44
Section 10.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL 45
Section 10.13 Knowledge of Borrower 46
Section 10.14 Lender Not in Control 46
Section 10.15 Headings Descriptive 46
Section 10.16 Time is of the Essence 46
EXHIBITS:
Exhibit A - Form of Note
Exhibit B - Form of Guaranty
SCHEDULES:
Schedule 1.01 Guarantors
Schedule 4.07 Litigation
Schedule 4.14 Environmental Condition
Schedule 4.15 Legal Requirements; Zoning; Utilities; Access
Schedule 4.16 Existing Indebtedness
Schedule 4.17 Management Agreements
Schedule 9.02 Notice Information
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of August 3, 1998, (this Agreement),
between MERISTAR H & R OPERATING COMPANY, L.P., a Delaware limited partnership,
as the Borrower, and MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., as the
Lender.
PRELIMINARY STATEMENTS:
WHEREAS, the Borrower desires that the Lender extend a credit facility, the
proceeds of which will be used to provide financing for working capital and
general corporate purposes, including the acquisition of management contracts,
leases and entities owning such assets;
WHEREAS, the Borrower intends to obtain financing (the Financial Institution
Senior Indebtedness) from certain third party financial lending institutions
(the Financial Institution Lenders) and desires that borrowings under this
credit facility with Lender be subordinated to borrowings under the Financial
Institution Senior Indebtedness; and
WHEREAS, the Lender has agreed to extend such credit facility as more
specifically described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the provisions
contained in this Agreement, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (unless otherwise indicated, such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
Advance means any advance by the Lender to the Borrower pursuant to this
Agreement or a continuation of an existing Advance.
Affiliate means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term control (including the terms controlled by or under common control with)
means the
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possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
AGH OP means American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership.
AGH REIT means American General Hospitality Corporation, a Maryland corporation.
Agreement has the meaning given such term in the initial paragraph of this
agreement.
Applicable Margin means 3.5% per annum.
Asset Disposition means any conveyance, exchange, transfer, or assignment of any
Investment or Property by the Borrower or a Guarantor to a Person other than the
Borrower or a Guarantor which term shall not include the termination of any
Lease or Management Agreement.
Borrower means MeriStar H & R Operating Company, L.P., a Delaware limited
partnership.
Borrowing means a borrowing consisting of Advances made by the Lender pursuant
to Section 2.01.
Business Day means a day of the year on which banks are not required or
authorized to close in New York City and, if the applicable Business Day relates
to any Advances, any day other than a Saturday or Sunday or a day on which
banking institutions are generally authorized or obligated by law or executive
order to close in the City of London, England.
Capital Lease means, for any Person, any lease of any Property (whether real,
personal or mixed) by that Person as lessee which, in accordance with GAAP, is
or should be accounted for as a capital lease on the balance sheet of that
Person.
Capitalized Lease Obligations means, as to any Person, the capitalized amount of
all obligations of such Person or any of its Subsidiaries under Capitalized
Leases, as determined on a consolidated basis in conformity with GAAP.
CapStar means CapStar Hotel Company, a Delaware corporation.
CapStar Hotel I means CapStar Hotel Operating Company, LLC, a Delaware limited
liability company.
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CapStar Hotel II means CapStar Hotel Operating Company II, LLC, a Delaware
limited liability company.
CERCLA means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.
Change in Control means for any Person a change in ownership or control of such
Person effected through either of the following transactions:
(a) any Person or related group of Persons (other than such Person or an
Affiliate of such Person) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities possessing more than fifty percent (50%) of the total
combined voting power of such Person's outstanding securities; or
(b) there is a change in the composition of such Person's Board of Directors
over a period of thirty-six (36) consecutive months (or less) such that a
majority of Board members (rounded up to the nearest whole number) ceases to be
comprised of individuals who either (i) have been Board members continuously
since the beginning of such period or (ii) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (i) who were still in office at the time such
election who were elected in compliance with this clause (ii).
Closing Date means August 3, 1998.
Code means the Internal Revenue Code of 1986, as amended, and any successor
statute.
Commitment means $75,000,000.
Compliance Certificate means a certificate of the Borrower in the form
reasonably acceptable to the Lender.
Consolidated refers to the consolidation of the accounts of the Parent with the
Parent's Subsidiaries in accordance with GAAP, including principles of
consolidation consistent with those applied in the preparation of the
Registration Statement.
Controlled Group means all members of the controlled group of corporations and
all trades (whether or not incorporated) under common control which,
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together with the Borrower, are treated as a single employer under Section 414
of the Code.
Credit Documents means this Agreement, the Notes, the Guaranties, and each other
agreement, instrument or document executed by the Borrower or any of its
Subsidiaries at any time in connection with this Agreement.
Default means (a) an Event of Default or (b) any event or condition which with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
Dollars and $ means lawful money of the United States of America.
EBITDA means for any Person or Hotel Property, as applicable, for any period for
which such amount is being determined, an amount equal to (a) the Net Income for
such Person or Hotel Property, as applicable, for such period plus (b) to the
extent deducted in determining Net Income, Interest Expense, income taxes,
depreciation, amortization, and other non-cash items for such period, as
determined on a Consolidated basis in accordance with GAAP.
Effective Date means the date all of the conditions precedent set forth in
Section 3.01 have been satisfied.
Environment or Environmental shall have the meanings set forth in
42 U.S.C. (S) 9601(8), as amended.
Environmental Claim means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action
or proceeding, order, decree, consent agreement or notice of potential or
actual responsibility or violation (including claims or proceedings under
the Occupational Safety and Health Acts or similar laws or requirements
relating to health or safety of employees) which seeks to impose liability
under any Environmental Law.
Environmental Law means all Legal Requirements arising from, relating to, or in
connection with the Environment, health, or safety, including without limitation
CERCLA, relating to (a) pollution, contamination, injury, destruction, loss,
protection, cleanup, reclamation or restoration of the air, surface water,
groundwater, land surface or subsurface strata, or other natural resources; (b)
solid, gaseous or liquid waste generation, treatment, processing, recycling,
reclamation, cleanup, storage, disposal or transportation; (c) exposure to
pollutants, contaminants, hazardous, medical, infectious, or toxic substances,
materials or wastes; (d) the safety or health of employees; or (e) the
manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous, medical, infectious, or toxic substances,
materials or wastes.
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Environmental Permit means any permit, license, order, approval or other
authorization under Environmental Law.
ERISA means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
Event of Default has the meaning set forth in Section 9.01.
Exchange Act means the Securities Exchange Act of 1934, 15 U.S.C. (S)78a et.
seq.
Facility means the $75,000,000 revolving credit facility between Borrower and
the Lender.
Federal Reserve Board means the Board of Governors of the Federal Reserve System
or any of its successors.
Financial Institution Senior Indebtedness means up to $75,000,000 of Senior
Indebtedness obtained by the Borrower subsequent to the execution of this
Agreement from a Financial Institution Lender and designated by the Borrower as
Financial Institution Senior Indebtedness.
Financial Institution Lender means a third party financial lending institution
which provides the Borrower with Financial Institution Senior Indebtedness.
Fiscal Quarter means each of the three-month periods ending on March 31, June
30, September 30 and December 31.
Fiscal Year means the twelve-month period ending on December 31.
Fixed Charges means, for any Person for the period for which such amount is
being determined, the amount (without duplication) for such Person and its
Subsidiaries of all scheduled principal payments on Indebtedness (excluding
optional prepayments and scheduled principal payments in respect of any such
Indebtedness which is payable in a single installment at final maturity), Total
or Senior (as applicable) Interest Expense during such period, all payments
scheduled to be made in respect of Capital Leases on a Consolidated basis during
such period, and all preferred stock dividends paid during such period.
Fund, Trust Fund, or Superfund means the Hazardous Substance Response Trust
Fund, established pursuant to 42 U.S.C. (S) 9631 (1988) and the Post-closure
Liability Trust Fund, established pursuant to 42 U.S.C. (S) 9641 (1988), which
statutory provisions have been amended or repealed by the Superfund Amendments
and Reauthorization Act of 1986, and the Fund, Trust Fund, or Superfund that are
now maintained pursuant to 42 U.S.C. (S) 9507.
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GAAP means United States generally accepted accounting principles as in effect
from time to time, applied on a basis consistent with the requirements of
Section 1.03.
Governmental Authority means any foreign governmental authority, the United
States of America, any state of the United States of America and any subdivision
of any of the foregoing, and any agency, department, commission, board,
authority or instrumentality, bureau or court having jurisdiction over the
Lender, the Parent, the Borrower, any Subsidiaries of the Borrower or the
Parent, an Approved Participating Lessee, a property manager or any of their
respective Properties.
Guarantor means each of the Parent and each Subsidiary of the Borrower and
Guarantors means all of such Persons. The Guarantors on the Effective Date are
identified on Schedule 1.01.
Guaranty means one or more Guaranty in substantially the form of the attached
Exhibit B executed by the Borrower, the Parent and all of the Subsidiaries of
the Borrower, evidencing the joint and several guaranty by the signatories
thereto of the obligations of Borrower in respect of the Credit Documents, and
any future guaranty and contribution agreement executed to secure Advances, as
any of such agreements may be amended hereafter in accordance with the terms of
such agreements.
Hazardous Substance means the substances identified as such pursuant to CERCLA
and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products, radio
nuclides, radioactive materials, and medical and infectious waste.
Hazardous Waste means the substances regulated as such pursuant to any
Environmental Law.
Hospitality/Leisure Management Business shall mean the leasing, management or
operation of a full-service and limited-service hotel or resort, executive
conference center, condominium rental pool, time share program, an extended stay
lodging, or a convention center, and other businesses incidental to, or in
support of, such business, including without limitation, (a) leasing, managing
or operating lodging facilities, restaurants and other food-service facilities,
golf facilities or other entertainment facilities or club, convention or meeting
facilities and marketing services or reservation systems related thereto, and
(b) leasing, managing or operating real estate ancillary or connected to any
lodging facilities, restaurants and other food-service facilities, golf
facilities or other entertainment facilities or club, convention or meeting
facilities and marketing services or reservation system leased, managed or
operated (or proposed to be leased, managed or operated) by the Borrowers, the
Guarantors or any of
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their Subsidiaries at any time (and debt or equity investments in any of the
foregoing, which are leased, managed or operated by the Borrower or a
Subsidiary).
Hotel Property for any hotel operated or managed by Borrower or its Subsidiaries
means the real property and the personal property for such hotel.
Improvements for any hotel means all buildings, structures, fixtures, tenant
improvements and other improvements of every kind and description now or
hereafter located in or on or attached to the Land for such hotel; and all
additions and betterments thereto and all renewals, substitutions and
replacements thereof.
Indebtedness means (without duplication), at any time and with respect to any
Person, (a) indebtedness of such Person for borrowed money (whether by loan or
the issuance and sale of debt securities) or for the deferred purchase price of
property or services purchased (other than amounts constituting trade payables,
accruals or bank drafts arising in the ordinary course of business); (b)
indebtedness of others in the amount which such Person has directly or
indirectly assumed or guaranteed or otherwise provided credit support therefor
or for which such Person is liable as a partner of such Person; (c) indebtedness
of others in the amount secured by a Lien on assets of such Person, whether or
not such Person shall have assumed such indebtedness; (d) obligations of such
Person in respect of letters of credit, acceptance facilities, or drafts or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person (other than trade payables or bank drafts arising
in the ordinary course); (e) obligations of such Person under Capital Leases;
and (f) to the extent required by GAAP, obligations under interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements or
other similar agreements or arrangements designed to protect against
fluctuations in interest rates.
Intercompany Agreement means the Intercompany Agreement, dated as of August 3,
1998, by and among the Parent, the Borrower, MeriStar, and MeriStar Hospitality
Operating Partnership, L.P., a Delaware limited partnership.
Interest Period means, for each Advance comprising part of the same Borrowing,
the period commencing on the date of such Advance and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and Section
2.02 and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and Section 2.02. The
duration of each such Interest Period shall be one, two, three or six months, in
each case as the Borrower may select, upon notice received by the Lender not
later than 11:00 a.m. (New York, New York time) on the second Business Day prior
to the first day of such Interest Period, pro vided, however, that:
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(a) whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;
(b) any Interest Period which begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month;
(c) each successive Interest Period shall commence on the day on which the next
preceding Interest Period expires; and
(d) no Interest Period with respect to any portion of any Advance shall extend
beyond the Maturity Date.
Interest Rate Agreements means any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect the Borrower, the Parent or any of their
respective Subsidiaries against fluctuations in interest rates.
Investment means, with respect to any Person, (a) any loan or advance to any
other Person, (b) the ownership, purchase or other acquisition of, (i) any
Stock, Stock Equivalents, other equity interest, obligations or other securities
of, any other Person, (ii) or all or substantially all of the assets of any
other Person, or (iii) all or substantially all of the assets constituting the
business of a division, branch or other unit operation of any other Person, or
(c) any joint venture or partnership with, or any capital contribution to, or
other investment in, any other Person or any real property.
Investment Amount means for any Investment, the aggregate purchase price paid by
the Borrower or its Subsidiary for such Investment (giving effect to any
securities used to purchase such Investment at the fair market value of the
securities at the time of purchase based upon the price at which such securities
could be exchanged into the Parent's common stock assuming such exchange
occurred on the date of acquiring such Investment).
Land for any hotel means the real property upon which the hotel is located,
together with all rights, title and interests appurtenant to such real property,
including without limitation all rights, title and interests to (a) all strips
and gores within or adjoining such property, (b) the streets, roads, sidewalks,
alleys, and ways adjacent thereto, (c) all of the tenements, hereditaments,
easements, reciprocal easement agreements, rights-of-way and other rights,
privileges and appurtenances thereunto
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belonging or in any way pertaining thereto, (d) all reversions and remainders,
(e) all air space rights, and all water, sewer and wastewater rights, (e) all
mineral, oil, gas, hydrocarbon substances and other rights to produce or share
in the production of anything related to such property, and (f) all other
appurtenances appurtenant to such property, including without limitation, any
now or hereafter belonging or in any way appertaining thereto.
Lease means a participating lease by and between a lessor and Borrower or its
Subsidiary pursuant to which the lessee operates a Hotel Property.
Legal Requirement means any law, statute, ordinance, decree, requirement, order,
judgment, rule, regulation (or official interpretation of any of the foregoing)
of, and the terms of any license or permit issued by, any Governmental
Authority.
Lender means MeriStar Hospitality Operating Partnership, L.P., a Delaware
limited partnership.
Leverage Ratio means the ratio on any date of (a) the Parent's Total
Indebtedness on such date to (b) the EBITDA of the Parent and the Parent's
Subsidiaries on a Consolidated basis for the Rolling Period immediately
preceding such date; provided that if the Borrower or one of its Subsidiary's
enters into a Lease or Management Agreement with projected revenue in excess of
$100,000, or an Investment with an Investment Amount in excess of $250,000, on
or prior to such date, the EBITDA arising from such Lease, Management Agreement
or Investment, as applicable, for the applicable Rolling Period, shall be
included in the calculation of EBITDA solely for calculation of EBITDA of the
Leverage Ratio (adjusted upward or downward to provide for a deemed lease or
management fee equal to a two and one-half percent (2.5%) of gross revenues from
such Lease, Management Agreement or Investment incurred before the date of
acquisition of such Lease, Management Agreement or Investment regardless of the
actual lease management fees paid in connection with such Lease, Management
Agreement or Investment incurred before the date of acquisition of such Lease,
Management Agreement or Investment); and provided further that if such a Lease
or Management Agreement with projected revenue in excess of $100,000, or an
Investment with an Investment Amount in excess of $250,000, is assigned or sold
on or prior to such date, the EBITDA arising from such Lease, Management
Agreement or Investment, as applicable, for the applicable Rolling Period, shall
be included in the calculation of EBITDA solely for calculation of EBITDA of the
Leverage Ratio.
LIBOR means, for the Interest Period for each Advance comprising part of the
same Borrowing, an interest rate per annum (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum) equal to (A) the rate per annum at which
deposits in Dollars are offered to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days before the first day of such Interest
Period as shown on the
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display designated British Banker's Association Interest Settlement Rates on the
Telerate System (Telerate) at Page 3750 or Page 3740, or such other page or
pages as may replace such pages on Telerate for purposes of displaying such
rate, in an amount substantially equal to the Advance comprising part of such
Borrowing and for a period equal to such Interest Period divided by (B) one
minus the LIBOR Reserve Requirement; provided, however, that if such rate is not
available on Telerate then such offered rate shall be otherwise independently
determined by the Lender from an alternate, substantially similar source
available to the Lender or shall be calculated by the Lender by a substantially
similar methodology as that theretofore used to determine such offered rate in
Telerate. It is agreed that for purposes of this definition, Advance made
hereunder shall be deemed to constitute Eurocurrency liabilities as defined in
Regulation D and to be subject to the reserve requirements of Regulation D.
LIBOR Reserve Requirement shall mean, on any day, that percentage (expressed as
a decimal fraction) which is in effect on such date, as provided by the Federal
Reserve System for determining the maximum reserve requirements generally
applicable to financial institutions regulated by the Federal Reserve Board
(including, without limitation, basic, supplemental, marginal and emergency
reserves) under Regulation D with respect to Eurocurrency liabilities as
currently defined as Regulation D, or under any similar or successor regulation
with respect to Eurocurrency liabilities or Eurocurrency funding (or other
category of liabilities which includes deposits by reference to which the
interest rate on an Advance is determined). Each determination by the Lender of
the LIBOR Reserve Requirement, shall, in the absence of manifest error, be
conclusive and binding upon the Borrower.
Lien means any mortgage, lien, pledge, charge, deed of trust, security interest,
encumbrance or other type of preferential arrangement to secure or provide for
the payment of any obligation of any Person, whether arising by contract,
operation of law or otherwise (including, without limitation, the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement).
Management Agreements means, collectively, all Hotel Property management
agreements under which the Borrower or one of its Subsidiaries is named or acts
as manager, as any such hotel management agreement may be amended, restated,
supplemented or otherwise modified in accordance with the terms thereof.
Material Adverse Change means a material adverse change in the business,
financial condition, or results of operations of the Borrower, the Parent or any
Guarantor taken as a whole, in each case since the date of the most recent
financial statements of the Borrower or the Parent delivered to the Lender.
Material Subsidiary means any Subsidiary of the Parent having assets or annual
revenues in excess of $5,000,000, and Material Subsidiaries means all such
Subsidiaries, collectively.
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Maturity Date means three years from the Closing Date.
Maximum Rate means the maximum nonusurious interest rate under applicable law.
Merger means the merger of CapStar with and into AGH REIT and the merger of
CapStar Hotel I and CapStar Hotel II with and into AGH OP pursuant to the Merger
Agreement, and the other related transactions contemplated by the Merger
Agreement.
Merger Agreement means the Agreement and Plan of Merger among CapStar, AGH REIT,
AGH OP and the other parties specified therein, dated March 15, 1998, as
amended.
MeriStar means MeriStar Hospitality Corporation, a Maryland corporation.
Multiemployer Plan means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Parent, the Borrower or any member of
the Controlled Group is making or accruing an obligation to make contributions.
Net Cash Proceeds means (a) the aggregate cash proceeds received by the Parent,
the Borrower or any of their respective Subsidiaries (as applicable) in
connection with any Asset Disposition or incurrence of Indebtedness, minus (b)
the reasonable expenses (including, without limitation, taxes) of such Person in
connection with such Asset Disposition or such incurrence of Indebtedness and
(c) any amounts required to be repaid under existing Leases or Indebtedness.
Net Income means, for any Person or Hotel Property, as applicable, for any
period for which such amount is being determined, the net income of such Person
or Hotel Property, as applicable (on a Consolidated basis), after taxes, as
determined in accordance with GAAP, excluding, however, extraordinary items,
including but not limited to (i) any net gain or loss during such period arising
from the sale, exchange, or other disposition of capital assets (such term to
include all fixed assets and all securities) other than in the ordinary course
of business and (ii) any write-up or write-down of assets.
Note means a promissory note of the Borrower payable to the order of the Lender,
in substantially the form of the attached Exhibit A, evidencing indebtedness of
the Borrower to the Lender resulting from Advances from the Lender, and Notes
means all of such promissory notes.
Notice of Borrowing means a notice of borrowing signed by a Responsible Officer
of the Borrower.
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Obligations means all Advances and other amounts payable by the Borrower to the
Lender under the Credit Documents.
Parent means MeriStar Hotels & Resorts, Inc., a Delaware corporation.
PBGC means the Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA.
Permitted Hazardous Substances means (a) Hazardous Substances, petroleum and
petroleum products which are (i) used in the ordinary course of business and in
typical quantities for a property operated or managed by the Borrower and its
Subsidiaries and (ii) generated, used and disposed of in accordance with all
Legal Requirements and good industry practice and (b) non- friable asbestos to
the extent (i) that no applicable Legal Requirements require removal of such
asbestos from the property on which it is located and (ii) such asbestos is
encapsulated in accordance with all applicable Legal Requirements.
Permitted Asset Disposition means an Asset Disposition which occurs at a time in
which no Default has occurred and is continuing and which would not cause a
Default to occur upon the consummation of such Asset Disposition.
Person means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity, or a government or any
political subdivision or agency thereof or any trustee, receiver, custodian or
similar official.
Plan means an employee benefit plan (other than a Multiemployer Plan) maintained
for employees of the Parent, the Borrower or any member of the Controlled Group
and covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code.
Property of any Person means any property or assets (whether real, personal, or
mixed, tangible or intangible) of such Person.
Registration Statement means the Registration Statement on Form S-4
(Registration No. 333-49611) filed with the Securities and Exchange Commission
on April 7, 1998, as amended.
Release shall have the meaning set forth in CERCLA or under any other
Environmental Law.
Repayment Event means the occurrence of any of the following:
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(a) the incurrence by the Parent, the Borrower or any of their respective
Subsidiaries of any Indebtedness after the date of this Agreement except:
(i) the Obligations; and
(ii) Indebtedness permitted pursuant to the provisions of Section 6.02.
(b) the occurrence of an Asset Disposition after the date of this Agreement
except Asset Dispositions for which the aggregate Net Cash Proceeds do not
exceed $5,000,000; except for any Asset Disposition included in such calculation
the Net Cash Proceeds which have been used to make an Investment in the
Hospitality/Leisure Management Business within one year of the date of such
Asset Disposition.
Reportable Event means any of the events set forth in Section 4043(b) of ERISA.
Response shall have the meaning set forth in CERCLA or under any other
Environmental Law.
Responsible Officer means the Chief Executive Officer, Chief Operating Officer,
President, Executive Vice President or Chief Financial Officer of any Person.
Restricted Payment means (a) any direct or indirect payment, prepayment,
redemption, purchase, or deposit of funds or Property for the payment (including
any sinking fund or defeasance), prepayment, redemption or purchase of
Indebtedness not permitted by this Agreement, and (b) the making by any Person
of any dividends or other distributions (in cash, property, or otherwise) on, or
payment for the purchase, redemption or other acquisition of, any shares of any
capital stock, any limited liability company interests or any partnership
interests of such Person, other than dividends or distributions payable in such
Person's stock, limited liability company interests or any partnership
interests.
Rolling Period means, as of any date, the four Fiscal Quarters ending
immediately preceding such date.
Senior Fixed Charge Ratio means, as of the end of any Rolling Period, a ratio of
(a) the Parent's EBITDA for such Rolling Period to (b) Parent's Fixed Charges
(which shall include Parent's Senior Interest Expense) for such Rolling Period.
Senior Indebtedness means Total Indebtedness minus Subordinate Indebtedness.
13
Senior Indebtedness Leverage Ratio means the ratio on any date of (a) the
Parent's Senior Indebtedness on such date to (b) the Parent's EBITDA on a
Consolidated basis for the Rolling Period immediately preceding such date.
Senior Interest Coverage Ratio means, as of the end of any Rolling Period, a
ratio of (a) Parent's EBITDA for the Rolling Period to (b) Parent's Senior
Interest Expense for such Rolling Period.
Senior Interest Expense means for any Person for any period for which such
amount is being determined Total Interest Expense minus interest expense on any
Subordinate Indebtedness.
Stock means shares of capital stock, beneficial or partnership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or non-voting, and includes,
without limitation, common stock and preferred stock.
Stock Equivalents means all securities (other than Stock) convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any stock, whether or not presently convertible, exchangeable or
exercisable.
Subordinate Indebtedness means Indebtedness of the Borrower, the Parent and
their respective Subsidiaries which (a) shall not mature, become payable or
require the payment of any principal amount thereof (or any amount in lieu
thereof) or be mandatorily redeemable, pursuant to a sinking fund or otherwise
redeemable at the option of the holder thereof, in any case in whole or in part,
before the date that is 91 days after the Maturity Date and (b) shall be junior
and subordinate to the Obligations and subject to an intercreditor agreement or
subordination provisions which are in accordance with the then prevailing
customary market terms and conditions.
Subsidiary of a Person means any corporation, association, partnership or other
business entity of which more than 50% of the outstanding shares of capital
stock (or other equivalent interests) having by the terms thereof ordinary
voting power under ordinary circumstances to elect a majority of the board of
directors or Persons performing similar functions (or, if there are no such
directors or Persons, having general voting power) of such entity (irrespective
of whether at the time capital stock (or other equivalent interests) of any
other class or classes of such entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more Subsidiaries of such
Person or by one or more Subsidiaries of such Person.
Termination Event means (a) the occurrence of a Reportable Event with respect to
a Plan, as described in Section 4043 of ERISA and the regulations issued
14
thereunder (other than a Reportable Event not subject to the provision for 30-
day notice to the PBGC under such regulations), (b) the withdrawal of the
Borrower or any of the Controlled Group from a Plan during a plan year in which
it was a substantial employer as defined in Section 4001(a)(2) of ERISA, (c) the
giving of a notice of intent to terminate a Plan under Section 4041(c) of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any
other event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
Total Fixed Charge Ratio means, as of the end of any Rolling Period, a ratio of
(a) the Parent's EBITDA for such Rolling Period to (b) Parent's Fixed Charges
(which shall include Parent's Total Interest Expense) for such Rolling Period.
Total Indebtedness of any Person means the sum of the following (without
duplication): (a) all Indebtedness of such Person and its Subsidiaries, plus (b)
the pro rata share of the Indebtedness of such Person's non- Consolidated
Subsidiaries (including non-recourse Indebtedness), plus (c) to the extent not
already included in the calculation of either of the preceding clauses (a) or
(b), the aggregate amount of letters of credit for which such Person or any of
its Subsidiaries would have a direct or contingent obligation to reimburse the
issuers of such letters of credit upon a drawing under such letters of credit.
Total Interest Coverage Ratio means, as of the end of any Rolling Period, a
ratio of (a) the Parent's EBITDA for such Rolling Period to (b) Parent's Total
Interest Expense for such Rolling Period.
Total Interest Expense means, for any Person for any period for which such
amount is being determined, the total interest expense (including that properly
attributable to Capital Leases in accordance with GAAP) and all charges incurred
with respect to letters of credit determined on a Consolidated basis in
conformity with GAAP, plus (without duplication) capitalized interest of such
Person and its Subsidiaries.
Section 1.02 Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
from means from and including and the words to and until each means to but
excluding.
Section 1.03 Accounting Terms; Changes in GAAP.
1. All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP applied on a consistent basis.
2. Unless otherwise indicated, all financial statements, all calculations for
compliance with covenants in this Agreement, and all calculations of any amounts
to
15
be calculated under the definitions in Section 1.01 shall be based upon the
Consolidated accounts of Parent and its Subsidiaries (as applicable) in
accordance with GAAP.
3. If any changes in accounting principles after June 30, 1998 required by GAAP
or the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or similar agencies results in a change in the
method of calculation of, or affects the results of such calculation of, any of
the financial covenants, standards or terms found in this Agreement, then the
parties shall enter into and diligently pursue negotiations in order to amend
such financial covenants, standards or terms so as to equitably reflect such
change, with the desired result that the criteria for evaluating the financial
condition of the Parent and its Subsidiaries (determined on a Consolidated
basis) shall be the same after such change as if such change had not been made.
Section 1.04 Miscellaneous. Article, Section, Schedule and Exhibit references
are to Articles and Sections of and Schedules and Exhibits to this Agreement,
unless otherwise specified.
ARTICLE II.
ADVANCES
Section 2.01 Advances. The Lender agrees, on the terms and conditions set forth
in this Agreement, to make Advances to the Borrower from time to time on any
Business Day up to 15 days prior to the Maturity Date in an aggregate amount not
to exceed at any time outstanding an amount equal to the Commitment. Within the
limits of the Commitment, the Borrower may from time to time prepay pursuant to
Section 2.06 and reborrow under this Section 2.01.
Advances are permitted under the facility; provided that:
a. No Default which has not been cured or waived in writing by the Lender as set
forth in Section 9.01 shall have occurred; and
b. All representations and warranties are true, both before and after each
advance under the Facility.
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Section 2.02 Method of Borrowing.
1. Notice. Each Borrowing shall be made pursuant to a Notice of Borrowing, given
not later than 11:00 a.m. (New York, New York time) on the third Business Day
before the date of the proposed Borrowing by the Borrower to the Lender, which
shall give the Lender prompt notice on the day of receipt of such timely Notice
of Borrowing of such proposed Borrowing by telecopier. Each Notice of Borrowing
shall be in writing or by telecopier specifying the requested (i) date of such
Borrowing, (ii) aggregate amount of such Borrowing (which, in any case, shall
not be less than $1,000,000 or an integral multiple thereof), and (iii) the
Interest Period for each such Advance. Upon fulfillment of the applicable
conditions set forth in Article III, the Lender will make such funds available
to the Borrower.
2. Certain Limitations. Except for Borrowings for the acquisition of new Leases
or Management Agreements by the Borrower or its Subsidiary, the Borrower may not
request Borrowings on more than four days in any calender month.
3. Notes. The indebtedness of the Borrower to the Lender resulting from Advances
owing to the Lender shall be evidenced by a Note of the Borrower payable to the
order of the Lender in substantially the form of Exhibit A.
Section 2.03 Reduction of the Commitment.
1. Upon the occurrence of a Change in Control, then, in such event the Lender
may, at its sole option upon written notice to the Borrower (a Termination
Notice), declare the obligation of the Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate and the Commitment shall reduce to
zero.
2. The Borrower may, upon at least two Business Days' prior notice to the
Lender, permanently terminate in whole or permanently reduce ratably in part the
Commitment of the Lender; provided, however, that (i) each partial reduction
shall be in the aggregate amount of not less than $1,000,000 or an integral
multiple of $100,000 in excess thereof, and (ii) no such reduction shall result
in an overdraft status as provided in Section 2.06(c)(ii).
3. If the Borrower receives a commitment from a Financial Institution Lender for
Financial Institution Senior Indebtedness, then, upon the funding of the first
advance under such Financial Institution Senior Indebtedness, the Lender may, at
its sole discretion, reduce the amount of its Commitment pro rata in an amount
equal to the amount of the commitment for Financial Institution Senior
Indebtedness received by the Borrower.
Section 2.04 Repayment of Advances. The Borrower shall repay the outstanding
principal amount of each Advance on the Maturity Date.
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Section 2.05 Interest, Late Payment Fee. The Borrower shall pay interest on the
unpaid principal amount of each Advance made by the Lender from the date of such
Advance until such principal amount shall be paid in full, at a rate per annum
(computed on the actual number of days elapsed, including the first day and
excluding the last, based on a 360 day year) equal at all times during the
Interest Period for such Advance to the lesser of (i) the LIBOR for such
Interest Period plus the Applicable Margin and (ii) the Maximum Rate, payable in
arrears on the last day of such Interest Period, and on the date such Advance
shall be paid in full, and, with respect to an Advance having an Interest Period
in excess of 30 days, the last day of each calendar month during such Interest
Period excluding the month in which such Advance shall be paid in full; provided
that during the continuance of an Event of Default, Advances shall bear interest
at a rate per annum equal at all times to the lesser of (i) the rate required to
be paid on such Advance immediately prior to
the date on which such amount became due plus three percent (3%) and (ii) the
Maximum Rate.
1. Usury Recapture. In the event the rate of interest chargeable under this
Agreement or the Notes at any time is greater than the Maximum Rate, the unpaid
principal amount of the Notes shall bear interest at the Maximum Rate until the
total amount of interest paid or accrued on the Notes equals the amount of
interest which would have been paid or accrued on the Notes if the stated rates
of interest set forth in this Agreement had at all times been in effect. In the
event, upon payment in full of the Notes, the total amount of interest paid or
accrued under the terms of this Agreement and the Notes is less than the total
amount of interest which would have been paid or accrued if the rates of
interest set forth in this Agreement had, at all times, been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay the Lender for
the account of the Lender an amount equal to the difference between (i) the
lesser of (A) the amount of interest which would have been charged on the Notes
if the Maximum Rate had, at all times, been in effect and (B) the amount of
interest which would have accrued on the Notes if the rates of interest set
forth in this Agreement had at all times been in effect and (ii) the amount of
interest actually paid or accrued under this Agreement on the Notes. In the
event the Lender ever receives, collects or applies as interest any sum in
excess of the Maximum Rate, such excess amount shall, to the extent permitted by
law, be applied to the reduction of the principal balance of the Notes, and if
no such principal is then outstanding, such excess or part thereof remaining
shall be paid to the Borrower.
2. Other Amounts Overdue. If any amount payable under this Agreement other than
the Advances is not paid when due and payable, including without limitation,
accrued interest, then such overdue amount shall accrue interest hereon due and
payable on demand at a rate per annum equal to the LIBOR Rate plus three percent
(3%), from the date such amount became due until the date such amount is paid in
full.
3. Late Payment Fee. Subject to the provisions of Section 10.10, if any interest
payable under this Agreement is not paid when due and payable (after taking into
account any applicable grace period), then the Borrower will pay to the Lender
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contemporaneously with the payment of such past due interest a late payment fee
equal to an amount equal to the product of (i) such overdue interest times (ii)
three percent (3%).
Section 2.06 Prepayments.
1. Right to Prepay. The Borrower shall have no right to prepay any principal
amount of any Advance except as provided in this Section 2.06.
2. Optional Prepayments. The Borrower may elect to prepay any of the Advances,
after giving by 11:00 a.m. (New York, New York time) at least one Business Days'
prior written notice to the Lender stating the proposed date and aggregate
principal amount of such prepayment, and if applicable, the relevant Interest
Period for the Advances to be prepaid. If any such notice is given, the Borrower
shall prepay Advances comprising part of the same Borrowing in whole or ratably
in part in an aggregate principal amount equal to the amount specified in such
notice, and shall also pay accrued interest to the date of such prepayment on
the principal amount prepaid and amounts, if any, required to be paid pursuant
to Section 2.07 as a result of such prepayment being made on such date;
provided, however, that each partial prepayment shall be in an aggregate
principal amount not less than $500,000.
3. Mandatory Prepayments.
a. Change of Control. On the fifth Business Day following the Borrower's receipt
of a Termination Notice pursuant to Section 2.03(a) hereof, the Borrower shall
be required to prepay all outstanding Advances in full.
b. Overdraft. On any date on which the outstanding principal amount of the
Advances exceeds the aggregate Commitment, the Borrower agrees to make a
prepayment of the Advances in the amount of such excess.
c. Repayment Event. Upon the occurrence of any Repayment Event, the Borrower
shall prepay Advances on the Business Day the Net Cash Proceeds from such
Repayment Event are received by the Borrower or the Parent, as applicable, in an
amount equal to the lesser of (A) the amount of the outstanding Advances on such
Business Day and (B) 100% of the Net Cash Proceeds of such Repayment Event. If,
in connection with an Asset Disposition which qualifies as a Repayment Event for
which the Borrower has not used the Net Cash Proceeds to repay the Obligations,
the Borrower has failed to make an Investment or Investments in the
Hospitality/Leisure Management Business with such Net Cash Proceeds within one
year from the date of such Asset Disposition, then the Borrower shall prepay
Advances on the first anniversary of the Business Day such Net Cash Proceeds are
received by the Borrower or the Parent, as applicable, in the amount equal to
the lesser of (A) the amount of the outstanding Advances on such first
anniversary and (B) 100% of the Net Cash Proceeds of such
19
Repayment Event which have not been used to make an Investment or investments in
the Hospitality/Leisure Management Business.
d. Accrued Interest. Each prepayment pursuant to this Section 2.06(c) shall be
accompanied by accrued interest on the amount prepaid to the date of such
prepayment and amounts, if any, required to be paid pursuant to Section 2.07 as
a result of such prepayment being made on such date.
4. Ratable Payments. Each payment of any Advance pursuant to this
Section 2.06 or any other provision of this Agreement shall be made in a manner
such that all Advances comprising part of the same Borrowing are paid in whole
or ratably in part.
5. Effect of Notice. All notices given pursuant to this Section 2.06 shall be
irrevocable and binding upon the Borrower.
Section 2.07 Payments and Computations.
1. Payment Procedures. Except if otherwise set forth herein, the Borrower shall
make each payment under this Agreement and under the Notes not later than 11:00
a.m. (New York, New York time) on the day when due in Dollars to the Lender at
the location referred to in the Notes (or such other location as the Lender
shall designate in writing to the Borrower) in same day funds.
2. Computations. All computations of interest based on the LIBOR shall be made
by the Lender on the basis of a year of 360 days, in each case for the actual
number of days (including the first day, but excluding the last day) occurring
in the period for which such interest or fees are payable. Each determination by
the Lender of an interest rate shall be conclusive and binding for all purposes,
absent manifest error.
3. Non-Business Day Payments. Whenever any payment shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of Advances to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.
4. Application of Payments. Unless otherwise specified in Section 2.06 hereof,
whenever any payment received by the Lender under this Agreement is insufficient
to pay in full all amounts then due and payable under this Agreement and the
Notes, such payment shall be distributed and applied by the Lender in the
following order: first, to the payment of expenses due and payable under Section
2.09(c), to the Lender in accordance with the aggregate amount of such payments
owed to the Lender;
20
and third, to the payment of all other amounts due and payable under this
Agreement and the Notes.
Section 2.08 Taxes.
1. No Deduction for Certain Taxes. Any and all payments by the Borrower shall be
made, in accordance with Section 2.07, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of the Lender, taxes imposed on it, by the jurisdiction under the laws of which
the Lender is organized or any political subdivision of the jurisdiction (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as Taxes). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable to the
Lender, (i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.08), the Lender receives an amount
equal to the sum it would have received had no such deductions been made; (ii)
the Borrower shall make such deductions; and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable Legal Requirements.
2. Other Taxes. In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made or from the execution, delivery
or registration of, or otherwise with respect to, this Agreement, the Notes, or
the other Credit Documents (hereinafter referred to as Other Taxes).
3. Indemnification. The Borrower indemnifies the Lender for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any Governmental Authority on amounts payable under this Section
2.08) paid by the Lender and any liability (including interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted.
4. Evidence of Tax Payments. The Borrower will pay prior to delinquency all
Taxes and Other Taxes payable in respect of any payment. Within 30 days after
the date of any payment of Taxes, the Borrower will furnish to the Lender, at
its address referred to in Section 9.02, the original or a certified copy of a
receipt evidencing payment of such Taxes or Other Taxes.
21
ARTICLE III.
CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to Initial Advance. The effectiveness of this
Agreement and the obligation of the Lender to make any Advance hereunder are
subject to the following conditions precedent being satisfied on or prior to
August 3, 1998:
1. Documentation. The Lender shall have received counterparts of this Agreement
executed by the Borrower, and the following duly executed by all the parties
thereto, in form and substance satisfactory to the Lender:
a. the Notes and the Guaranties;
b. evidence reasonably satisfactory to the Lender that the Merger and the other
transactions contemplated by the Merger Agreement and the Registration Statement
(including the Lessee-Manager Purchase Agreement described therein) have been
consummated in accordance with the terms of the Merger Agreement, all Legal
Requirements and all corporate and partnership governance requirements; and
c. such other documents, governmental certificates, agreements and lien searches
as the Lender may reasonably request.
2. Representations and Warranties. The representations and warranties contained
in Article IV hereof and the Guaranties shall be true and correct in all
material respects.
Section 3.02 Conditions Precedent for Each Borrowing. The obligation of the
Lender to fund an Advance on the occasion of each Borrowing shall be subject to
the further conditions precedent that on the date of such Borrowing:
1. the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing such statements are true):
2. the representations and warranties contained in Article IV hereof and the
Guaranties, as such representations and warranties may change based upon events
or activities permitted by this Agreement, are true and correct in all material
respects on and as of the date of such Borrowing, before and after giving effect
to such Borrowing and to the application of the proceeds from such Borrowing, as
though made on and as of such date; and
22
b. no Default has occurred and is continuing or would result from such Borrowing
or from the application of the proceeds therefrom.
2. the Lender shall have received such other approvals, opinions or documents
deemed necessary or desirable by the Lender.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.01 Existence; Qualification; Partners; Subsidiaries.
1. The Borrower is a limited partnership duly organized, validly existing, and
in good standing under the laws of Delaware and in good standing and qualified
to do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Borrower.
2. Parent is a corporation duly organized, validly existing, and in good
standing under the laws of Delaware and in good standing and qualified to do
business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Borrower.
3. Each Subsidiary of the Borrower is a corporation, limited partnership,
general partnership or limited liability company duly organized, validly
existing, and in good standing under the laws of its jurisdiction of formation
and in good standing and qualified to do business in each jurisdiction where
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on such Subsidiary.
Section 4.02 Partnership and Corporate Power. The execution, delivery, and
performance by the Borrower and each Guarantor of the Credit Documents to which
it is a party and the consummation of the transactions contemplated hereby and
thereby (a) are within such Persons' partnership, limited liability company and
corporate powers, as applicable, (b) have been duly authorized by all necessary
corporate, limited liability company and partnership action, as applicable, (c)
do not contravene (i) such Person's certificate or articles, as the case may be,
of incorporation or by-laws, operating agreement or partnership agreement, as
applicable, or (ii) any law or any contractual restriction binding on or
affecting any such Person, the contravention of which could reasonably be
expected to cause a Material Adverse Change, and (d) will not result in or
23
require the creation or imposition of any Lien prohibited by this Agreement. At
the time of each Borrowing, such Borrowing and the use of the proceeds of such
Borrowing will be within the Borrower's partnership xxxxxx, xxxx have been duly
authorized by all necessary partnership action, (a) will not contravene (i) the
Borrower's partnership agreement or (ii) any law or any contractual restriction
binding on or affecting the Borrower, the contravention of which could
reasonably be expected to cause a Material Adverse Change, and (b) will not
result in or require the creation or imposition of any Lien prohibited by this
Agreement.
Section 4.03 Authorization and Approvals. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the Borrower or any
Guarantor of the Credit Documents to which it is a party or the consummation of
the transactions contemplated thereby.
Section 4.04 Enforceable Obligations. This Agreement, the Notes, and the other
Credit Documents to which the Borrower is a party have been duly executed and
delivered by the Borrower; each Guaranty and the other Credit Documents to which
each Guarantor is a party have been duly executed and delivered by such
Guarantor. Each Credit Document is the legal, valid, and binding obligation of
the Borrower and each Guarantor which is a party to it enforceable against the
Borrower and each such Guarantor in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditors' rights generally
and by general principles of equity (whether considered in proceeding at law or
in equity).
Section 4.05 Financial Statements and Registration Statement. The respective
Consolidated balance sheets of the Parent and the respective related
Consolidated statements of operations, shareholders' equity and cash flows, of
the Parent contained in the Registration Statement, and the corresponding pro
forma financial statements for the Borrower, fairly present the financial
condition and results of operation in all material respects for the periods
indicated, and such balance sheets and statements were prepared in accordance
with GAAP, subject to year-end adjustments. Since the date of such statements,
no Material Adverse Change has occurred.
Section 4.06 True and Complete Disclosure. No representation, warranty, or other
statement made by the Borrower (or on behalf of the Borrower) in this Agreement
or any other Credit Document contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they were made as
of the date of this Agreement.
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Section 4.07 Litigation. Except as set forth in Schedule 4.07, there is no
pending or, to the best knowledge of the Borrower, threatened action or
proceeding affecting the Borrower or the Parent or any of their respective
Subsidiaries before any court, Governmental Authority or arbitrator in which the
amount of the dispute is over $500,000 or, in the Borrower's good faith
judgment, the anticipated loss is over $500,000 (provided that with respect to
the giving of this representation after the date of this Agreement, the
representation shall only be deemed to apply to those matters for which Lender
would have been entitled to notice under Section 5.04(f)).
Section 4.08 Use of Proceeds.
1. Advances. The proceeds of the Advances shall be used by the Borrower to (i)
to make Investments permitted pursuant to the provisions of Section 6.05 and
(ii) for general corporate purposes of the Borrower and its Subsidiaries.
2. Regulations. No proceeds of Advances will be used to purchase or carry any
margin stock in violation of Regulations G, T, U or X of the Federal Reserve
Board, as the same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Federal Reserve Board).
Section 4.09 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an investment company or a company controlled by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 4.10 Taxes. All federal, state, local and foreign tax returns, reports
and statements required to be filed (after giving effect to any extension
granted in the time for filing) by the Parent, the Borrower or its Subsidiaries,
or any member of a Controlled Group have been filed with the appropriate
governmental agencies in all jurisdictions in which such returns, reports and
statements are required to be filed, and where the failure to file could
reasonably be expected to cause a Material Adverse Change, except where
contested in good faith and by appropriate proceedings; and all taxes and other
impositions due and payable (which are material in amount) have been timely paid
prior to the date on which any fine, penalty, interest, late charge or loss
(which are material in amount) may be added thereto for non-payment thereof
except where contested in good faith and by appropriate proceedings. Proper and
accurate amounts have been withheld by the Parent, the Borrower and all members
of each Controlled Group from their employees for all periods to comply in all
material respects with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law. Timely payment
of all material sales and use taxes required by applicable law have been made by
the Borrower and all other members of the Controlled Group, the failure to
timely pay of which could reasonably be expected to cause a Material Adverse
Change. The amounts shown on all tax returns to be due and payable have been
paid in full or adequate provision therefor is included on the books of the
appropriate member of the applicable Controlled Group.
Section 4.11 Pension Plans. All Plans are in compliance in all material respects
with all applicable provisions of ERISA. No Termination Event has occurred with
respect to any Plan which could reasonably be expected to cause a Material
Adverse Change, and each Plan has complied with and been administered in all
material respects in accordance with applicable provisions of ERISA and the
Code. No accumulated funding deficiency (as defined in Section 302 of ERISA) has
occurred and there has
25
been no excise tax imposed under Section 4971 of the Code. No Reportable Event
has occurred with respect to any Multiemployer Plan, and each Multiemployer Plan
has complied with and been administered in all material respects with applicable
provisions of ERISA and the Code. Neither the Borrower, nor any member of a
Controlled Group has had a complete or partial withdrawal from any Multiemployer
Plan for which there is any material withdrawal liability. As of the most recent
valuation date applicable thereto, neither the Borrower nor any member of a
Controlled Group has received notice that any Multiemployer Plan is insolvent or
in reorganization.
Section 4.12 No Burdensome Restrictions; No Defaults.
1. Except in connection with Indebtedness which is (i) either permitted pursuant
to the provisions of Section 6.02, or (ii) being repaid with the proceeds of the
initial Borrowing, neither the Borrower nor any of its Subsidiaries is a party
to any indenture, loan or credit agreement. Neither the Borrower, the Parent nor
any of their respective Subsidiaries is a party to any agreement or instrument
or subject to any charter or corporate restriction or provision of applicable
law or governmental regulation which could reasonably be expected to cause a
Material Adverse Change. Neither the Borrower, the Parent nor any of their
Subsidiaries is in default under or with respect to (i) any contract, agreement,
lease or other instrument which could reasonably be expected to cause a Material
Adverse Change or (ii) any ground lease, participating lease, franchise
agreement, license agreement or management agreement which could reasonably be
expected to cause a Material Adverse Change, except as disclosed to the Lender
in writing prior to the date such representation is deemed given. Neither the
Borrower, the Parent nor any of their Subsidiaries has received any notice of
default under any material contract, agreement, lease or other instrument which
is continuing and which, if not cured, could reasonably be expected to cause a
Material Adverse Change.
2. No Default has occurred and is continuing (or with respect to the giving of
this representation after the date of this Agreement, as otherwise disclosed to
the Lender in writing after the date of this Agreement and prior to the date
such representation is deemed given).
Section 4.13 Environmental Condition.
1. Except as disclosed in Schedule 4.14, to the knowledge of the Borrower, the
Borrower and its Subsidiaries (or with respect to the giving of this
representation after the date of this Agreement, as otherwise disclosed to the
Lender in writing after the date of this Agreement and prior to the date such
representation is deemed given)(i) have obtained all Environmental Permits
material for the operation of their respective Properties and the conduct of
their respective businesses; (ii) have been and are in material compliance with
all terms and conditions of such Environmental Permits and with all other
requirements of applicable Environmental Laws; (iii) have not received notice of
any violation or alleged violation of any Environmental Law or
26
Environmental Permit; and (iv) are not subject to any actual or contingent
Environmental Claim. To the knowledge of the Borrower (or with respect to the
giving of this representation after the date of this Agreement, as otherwise
disclosed to the Lender in writing after the date of this Agreement and prior to
the date such representation is deemed given), the Borrower and its Subsidiaries
are not subject to any actual or contingent Environmental Claim which the
Borrower believes in good faith will involve cost or expense to the Borrower or
its Subsidiaries in excess of $1,000,000 for any single Environmental Claim, or
in excess of $10,000,000 for all such Environmental Claims in the aggregate.
2. Except as disclosed in Schedule 4.14, to the knowledge of Borrower, none of
the present or previously owned or operated Property of the Borrower or of any
of its present or former Subsidiaries, wherever located, (i) has been placed on
or proposed to be placed on the National Priorities List, the Comprehensive
Environmental Response Compensation Liability Information System list, or their
state or local analogs, or have been otherwise investigated, designated, listed,
or identified as a potential site for removal, remediation, cleanup, closure,
restoration, reclamation, or other response activity under any Environmental
Laws which could reasonably be expected to cause a Material Adverse Change; (ii)
is subject to a Lien, arising under or in connection with any Environmental
Laws, that attaches to any revenues or to any Property operated by the Borrower
or any of its Subsidiaries, wherever located; (iii) has been the site of any
Release, use or storage of Hazardous Substances or Hazardous Wastes from present
or past operations except for Permitted Hazardous Substances, which Permitted
Hazardous Substances have not caused at the site or at any third-party site any
condition that has resulted in or could reasonably be expected to result in the
need for Response or (iv) none of the Improvements are constructed on land
designated by any Governmental Authority having land use jurisdiction as
wetlands.
Section 4.14 Legal Requirements, Zoning, Utilities, Access. Except as set forth
on Schedule 4.15, the use and operation of each Hotel Property as a commercial
hotel with related uses constitutes a legal use under applicable zoning
regulations (as the same may be modified by special use permits or the granting
of variances) and complies in all material respects with all Legal Requirements,
and does not violate in any material respect any material approvals, material
restrictions of record or any material agreement affecting any Hotel Property
(or any portion thereof). The Borrower and its Subsidiaries possess all
certificates of public convenience, authorizations, permits, licenses, patents,
patent rights or licenses, trademarks, trademark rights, trade names rights and
copyrights (collectively Permits) required by Governmental Authority to operate
the Hotel Properties, except for those Permits which if not obtained would not
cause a Material Adverse Change. The Borrower and its Subsidiaries own and
operate their business in material compliance with all applicable Legal
Requirements. To the extent necessary for the full utilization of each Hotel
Property in accordance with its current use, telephone services, gas, steam,
electric power, storm sewers, sanitary sewers and water facilities and all other
utility services are available to each Hotel Property, are adequate to serve
each
27
such Hotel Property, exist at the boundaries of the Land and are not subject to
any conditions, other than normal charges to the utility supplier, which would
limit the use of such utilities. All streets and easements necessary for the
occupancy and operation of each Hotel Property are available to the boundaries
of the Land.
Section 4.15 Existing Indebtedness. Except for the Obligations or as reflected
in the financial statements contained in the Registration Statement, there is no
Indebtedness of the Borrower or any of its Subsidiaries existing as of the
Effective Date. No default or event of default, however defined, has occurred
and is continuing under any such Indebtedness (or with respect to the giving of
this representation after the date of this Agreement, as otherwise disclosed to
the Lender in writing after the date of this Agreement and prior to the date
such representation is deemed given).
Section 4.16 Leases and Management Agreements. To the knowledge of the Borrower,
the Leases and the Management Agreements are in full force and effect and no
material defaults exist thereunder (or with respect to the giving of this
representation after the date of this Agreement, as otherwise disclosed to the
Lender in writing after the date of this Agreement and prior to the date such
representation is deemed given). Copies of all material Leases and Management
Agreements of the Borrower and its Subsidiaries have been delivered by the
Borrower to the Lender.
ARTICLE V.
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain unpaid,
or the Lender shall have any Commitment hereunder, unless the Lender shall
otherwise consent in writing, the Borrower agrees to comply with the following
covenants.
Section 5.01 Compliance with Laws, Etc. The Borrower will comply, and cause the
Parent and each of its Subsidiaries to comply, in all material respects with all
Legal Requirements.
Section 5.02 Preservation of Existence; Separateness, Etc.
1. The Borrower will preserve and maintain, and cause the Parent and each of its
Subsidiaries to preserve and maintain, its partnership, limited liability
company or corporate (as applicable) existence, rights, franchises and
privileges in the jurisdiction of its formation, and qualify and remain
qualified, and cause the Parent and each such Subsidiary to qualify and remain
qualified, as a foreign partnership or corporation as applicable in each
jurisdiction in which qualification is necessary or desirable in view of its
business and operations or the ownership of its properties, and, in
28
each case, where failure to qualify or preserve and maintain its rights and
franchises could reasonably be expected to cause a Material Adverse Change.
2. The Parent Common Stock shall at all times be duly listed on the New York
Stock Exchange, Inc. and (ii) the Parent shall timely file all reports required
to be filed by it with the New York Stock Exchange, Inc. and the Securities and
Exchange Commission.
3. The Borrower shall hold itself out, and shall continue to hold itself out, to
the public and to its creditors as a legal entity, separate and distinct from
all other entities, and shall continue to take all steps reasonably necessary to
avoid misleading any other Person as to the identity of the entity with which
such Person is transacting business.
Section 5.03 Payment of Taxes, Etc. The Borrower will pay and discharge, and
cause the Parent and each of its Subsidiaries to pay and discharge, before the
same shall become delinquent (a) all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or Property that are
material in amount, prior to the date on which penalties attach thereto and (b)
all lawful claims that are material in amount which, if unpaid, might by Legal
Requirement become a Lien upon its Property; provided, however, that neither the
Borrower, the Parent nor any such Subsidiary shall be required to pay or
discharge any such tax, assessment, charge, levy, or claim (a) which is being
contested in good faith and by appropriate proceedings, (b) with respect to
which reserves in conformity with GAAP have been provided, (c) if such charge or
claim does not constitute and is not secured by any xxxxxx Xxxx on any portion
of any Hotel Property and no portion of any Hotel Property is in jeopardy of
being sold, forfeited or lost during or as a result of such contest, (d) if the
Lender could not become subject to any civil fine or penalty or criminal fine or
penalty, in each case as a result of non-payment of such charge or claim and (e)
if such contest does not, and could not reasonably be expected to, result in a
Material Adverse Change.
Section 5.04 Reporting Requirements. The Borrower will furnish to the Lender:
1. Quarterly Financials. As soon as available and in any event not later than 50
days after the end of each Fiscal Quarter of the Parent, the unaudited
Consolidated balance sheets of the Parent and its Subsidiaries as of the end of
such quarter and the related unaudited statements of income, shareholders'
equity and cash flows of the Parent and its Subsidiaries for such Fiscal quarter
and the period commenc ing at the end of the previous year and ending with the
end of such Fiscal Quarter, and the corresponding figures as at the end of, and
for, the corresponding periods in the preceding Fiscal Year, all duly certified
with respect to such statements (subject to year-end audit adjustments) by a
Responsible Officer of the Parent as having been prepared in
29
accordance with GAAP, together with a Compliance Certificate duly executed by a
Responsible Officer of the Parent.
2. Annual Financials. As soon as available and in any event not later than 95
days after the end of each Fiscal Year of the Parent, a copy of the Consolidated
balance sheets of the Parent and its Subsidiaries as of the end of such Fiscal
Year and the related Consolidated statements of income, shareholders' equity and
cash flows of the Parent and its Subsidiaries for such Fiscal Year, and the
corresponding figures as at the end of, and for, the preceding Fiscal Year, and
certified by the Company's independent certified public accountants of
nationally recognized standing in an opinion, without qualification as to the
scope, and including any management letters delivered by such accountants to the
Parent in connection with such audit, together with a Compliance Certificate
duly executed by a Responsible Officer of the Parent.
3. Securities Law Filings. Promptly and in any event within 15 days after the
sending or filing thereof, copies of all proxy material, reports and other
information which the Borrower, the Parent or any of their respective
Subsidiaries sends to or files with the United States Securities and Exchange
Commission or sends to all of the shareholders of the Parent or partners of the
Borrower.
4. Defaults. As soon as possible and in any event within five days after the
occurrence of each Default known to a Responsible Officer of the Parent, the
Borrower or any of their respective Subsidiaries, a statement of an authorized
financial officer or Responsible Officer of the Borrower setting forth the
details of such Default and the actions which the Borrower has taken and
proposes to take with respect thereto.
5. ERISA Notices. As soon as possible and in any event (i) within 30 days after
the Parent, the Borrower or any member of a Controlled Group knows to know that
any Termination Event described in clause (a) of the definition of Termination
Event with respect to any Plan has occurred, (ii) within 10 days after the
Parent, the Borrower or any member of a Controlled Group knows that any other
Termination Event with respect to any Plan has occurred, a statement of the
Chief Financial Officer of the Parent describing such Termination Event and the
action, if any, which the Parent, the Borrower or such member of such Controlled
Group proposes to take with respect thereto; (iii) within 10 days after receipt
thereof by the Parent, the Borrower or any member of a Controlled Group from the
PBGC, copies of each notice received by the Parent, the Borrower or any such
member of such Controlled Group of the PBGC's intention to terminate any Plan or
to have a trustee appointed to administer any Plan; and (iv) within 10 days
after receipt thereof by the Parent, the Borrower or any member of a Controlled
Group from a Multiemployer Plan sponsor, a copy of each notice received by the
Parent, the Borrower or any member of such Controlled Group concerning the
imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA.
6. Environmental Notices. Promptly upon the knowledge of any Responsible Officer
of the Borrower of receipt thereof by the Borrower or any of its
30
Subsidiaries, a copy of any form of notice, summons or citation received from
the United States Environmental Protection Agency, or any other Governmental
Authority concerning (i) violations or alleged violations of Environmental Laws,
which seeks to impose liability therefor, (ii) any action or omission on the
part of the Parent or the Borrower or any of their present or former
Subsidiaries in connection with Hazardous Waste or Hazardous Substances which,
based upon information reasonably available to the Borrower, could reasonably be
expected to cause a Material Adverse Change or an Environmental Claim in excess
of $10,000,000, (iii) any notice of potential responsibility under CERCLA, or
(iv) concerning the filing of a Lien upon, against or in connection with the
Parent, Borrower, their present or former Subsidiaries, or any of their leased
or owned Property, wherever located.
7. Other Governmental Notices or Actions. Promptly and in any event within five
Business Days after receipt thereof by the Parent, Borrower or any of their
respective Subsidiaries, (i) a copy of any notice, summons, citation, or
proceeding seeking to adversely modify in any material respect, revoke, or
suspend any license, permit, or other authorization from any Governmental
Authority, which action could reasonably be expected to cause a Material Adverse
Change, and (ii) any revocation or involuntary termination of any license,
permit or other authorization from any Governmental Authority, which revocation
or termination could reasonably be expected to cause a Material Adverse Change.
8. Material Litigation. As soon as possible and in any event within five days of
any Responsible Officer of the Borrower, the Parent or any of their respective
Subsidiaries having knowledge thereof, notice of any litigation, claim or any
other event which could reasonably be expected to cause a Material Adverse
Change.
9. Other Information. Such other information respecting the business or
Properties, or the condition or operations, financial or otherwise, of the
Borrower, the Parent or any of their respective Subsidiaries, as the Lender may
from time to time reasonably request.
Section 5.05 Insurance. The Borrower will maintain, and cause each of its
Subsidiaries to maintain, adequate insurance consistent with commercial
practices in the industry.
Section 5.06 Material Documents. The Borrower will not, nor will it permit any
of its Subsidiaries to (a) amend the Borrower's partnership agreement in any
material respect, (b) admit a new general partner to the Borrower, or (c) enter
into any termination, material modification or amendment of the Intercompany
Agreement and any other material agreement. Any termination, modification or
amendment prohibited under this Section 5.06 without the Lender's written
consent shall, to the extent permitted by applicable law, be void and of no
force and effect.
31
ARTICLE VI.
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain unpaid
or the Lender shall have any Commitment, the Borrower agrees, unless the Lender
shall otherwise consent in writing, to comply with the following covenants:
Section 6.01 Liens, Etc. The Borrower, the Parent and their respective
Subsidiaries will not create, assume, incur or suffer to exist, any Lien on or
in respect of any of its Property whether now owned or hereafter acquired, or
assign any right to receive income, except that the Borrower and its
Subsidiaries may create, incur, assume or suffer to exist Liens:
1. securing the Obligations;
2. securing the Financial Institution Senior Indebtedness;
3. for taxes, assessments or governmental charges or levies on Property of the
Borrower or any Guarantor to the extent not required to be paid pursuant to
Sections 5.03;
4. imposed by law (such as landlords', carriers', warehousemen's and mechanics'
liens or otherwise arising from litigation) (i) which are being contested in
good faith and by appropriate proceedings, (ii) with respect to which reserves
in conformity with GAAP have been provided, (iii) which have not resulted in any
Hotel Property being in jeopardy of being sold, forfeited or lost during or as a
result of such contest, (iv) neither the Lender nor the Borrower could become
subject to any civil fine or penalty or criminal fine or penalty, in each case
as a result of non-payment of such charge or claim and (v) such contest does
not, and could not reasonably be expected to, result in a Material Adverse
Change;
5. on leased personal property to secure solely the lease obligations associated
with such property;
Section 6.02 Indebtedness. The Borrower, the Parent and their respective
Subsidiaries will not incur or permit to exist any Indebtedness other than the
Obligations, the Financial Institution Senior Indebtedness and the following:
1. Indebtedness in an amount that does not cause a breach at any time of the
covenants contained in Article VII;
2. Capital Leases in an amount in excess of $10,000,000;
32
3. Interest Rate Agreements; provided that (i) such agreements shall be
unsecured, (ii) the dollar amount of indebtedness subject to such agreements and
the indebtedness subject to Interest Rate Agreements in the aggregate shall not
exceed the sum of the amount of the Commitment and the amount of the other
Indebtedness of the Borrower or its Affiliates which bears interest at a
variable rate, and (iii) the agreements shall be at such interest rates and
otherwise in form and substance reasonably acceptable to the Lender.
4. Any of the following Indebtedness incurred by the Parent:
a. indemnities for certain acts of malfeasance, misappropriation and misconduct
and an environmental indemnity for the lender under Indebtedness permitted under
to this Agreement; and
b. guaranties of any obligations of the Borrower or its Subsidiaries permitted
by this Agreement, including without limitation guaranties of Leases and
Management Agreements.
5. extensions, renewals and refinancing of any of the Indebtedness specified in
paragraphs (b) - (d) above so long as the principal amount of such Indebtedness
is not thereby increased.
Section 6.03 Agreements Restricting Distributions From Subsidiaries. Except as
required by the Leases, the Borrower will not, nor will it permit any of its
Subsidiaries to, enter into any agreement (other than a Credit Document) which
limits distributions to or any advance by any of the Borrower's Subsidiaries to
the Borrower.
Section 6.04 Fundamental Changes; Asset Dispositions. Neither the Parent, the
Borrower, nor any of their respective Subsidiaries will, (a) merge or
consolidate with or into any other Person, unless (i) a Guarantor is merged into
the Borrower and the Borrower is the surviving Person or a Subsidiary is merged
into any Subsidiary, and (ii) immediately after giving effect to any such
proposed transaction no Default would exist; (b) sell, transfer, or otherwise
dispose of all or any of the such Person's material property except for a
Permitted Asset Disposition, or dispositions or replacements of personal
property in the ordinary course of business; (c) sell or otherwise dispose of
any material shares of capital stock, membership interests or partnership
interests of any Subsidiary; (d) except for sales of ownership interests
permitted under this Agreement and the issuance of limited partnership interests
in the Borrower in exchange for ownership interests in Subsidiaries and non-
Consolidated Subsidiaries to the extent permitted pursuant to the provisions of
Section 6.03, materially alter the corporate, capital or legal structure of any
such Person; (e) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution) provided that nothing herein shall prohibit the
Borrower from dissolving any Subsidiary which has no assets on the date of
dissolution or (f) materially alter the character of their respective businesses
from that
33
conducted as of the date of this Agreement or otherwise engage in any material
business activity outside of the Hospitality/Leisure Management Business.
Section 6.05 Investments, Loans, Future Properties. Neither the Parent nor the
Borrower shall, or shall permit any of their respective Subsidiaries to, acquire
by purchase or otherwise any business, property or fixed assets of any Person or
any Hotel Property, make or permit to exist any loans, advances or capital
contributions to, or make any Investments in (including without limitation,
loans and advances to, and other Investments in, Subsidiaries) or purchase or
commit to purchase any evidences of indebtedness of, stock or other securities,
partnership interests, member interests or other interests in any Person, except
(provided that after giving effect thereto there shall exist no Default)
Investments in the Hospitality/Leisure Management Business; provided, however,
that the Borrower shall be required to obtain the consent of the Lender prior to
making an Investment in the Hospitality/Leisure Management Business in an amount
that exceeds $50,000,000. Notwithstanding the foregoing, neither the Borrower,
nor the Parent, nor their respective Subsidiaries shall make an Investment which
would (a) cause a Default, or (b) cause or result in the Borrower or the Parent
failing to comply with any of the financial covenants contained herein.
Section 6.06 Affiliate Transactions. Except for the Intercompany Agreement,
certain liquor license agreements and the transactions described in Section
6.04(i), the Borrower will not, and will not permit any of its Subsidiaries to,
make, directly or indirectly: (a) any transfer, sale, lease, assignment or other
disposal of any assets to any Affiliate of the Borrower which is not a Guarantor
or any purchase or acquisition of assets from any such Affiliate except for
sales of new personal property (i) which in any calendar year do not exceed
$10,000,000 in the aggregate and (ii) for which the sales price is the actual
cost to the party selling; or (b) any arrangement or other transaction directly
or indirectly with or for the benefit of any such Affiliate (including without
limitation, guaranties and assumptions of obligations of an Affiliate), other
than in the ordinary course of business and at market rates.
Section 6.07 Sale or Discount of Receivables. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than the face value thereof,
any of its notes or accounts receivable.
Section 6.08 Restricted Payments. Neither the Parent, nor the Borrower, nor any
of their respective Subsidiaries, will make any Restricted Payment;
34
ARTICLE VII.
FINANCIAL COVENANTS
So long as any Note or any amount under any Credit Document shall remain unpaid,
or the Lender shall have any Commitment hereunder, unless the Lender shall
otherwise consent in writing, the Borrower agrees to cause the Parent to comply
with the following covenants:
Section 7.01 Senior Interest Coverage Ratio. The Parent shall maintain at the
end of each Rolling Period (a) for the Rolling Periods ending on September 30,
1998 through September 30, 1999 a Senior Interest Coverage Ratio of not less
than 2.5 to 1.0, and (b) for any Rolling Period thereafter, a Senior Interest
Coverage Ratio of not less than 2.75 to 1.0.
Section 7.02 Total Interest Coverage Ratio. The Parent shall maintain at the end
of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998
through December 31, 1999, a Total Interest Coverage Ratio of not less than 2.0
to 1.0 and (b) for any Rolling Period thereafter, a Total Interest Coverage
Ratio of not less than 2.5 to 1.0.
Section 7.03 Senior Fixed Charge Ratio. The Parent shall maintain at the end of
each Rolling Period (a) for the Rolling Periods ending on September 30, 1998
through September 30, 1999 a Senior Fixed Charge Ratio of not less than 2.0 to
1.0, (b) for the Rolling Periods ending on December 31, 1999 through September
30, 2000 a Senior Fixed Charge Ratio of not less than 2.5 to 1.0, and (c) for
any Rolling Period thereafter, a Senior Fixed Charge Ratio of not less than 2.25
to 1.0.
Section 7.04 Total Fixed Charge Ratio. The Parent shall maintain at the end of
each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 to
September 30, 1999, a Total Fixed Charge Ratio of not less than 1.75 to 1.0, (b)
for the Rolling Periods ending on December 31, 1999 to September 30, 2000, a
Total Fixed Charge Ratio of not less than 2.0 to 1.0, and (c) for any Rolling
Period thereafter, a Total Fixed Charge Ratio of not less than 2.25 to 1.0.
Section 7.05 Senior Indebtedness Leverage Ratio. The Parent shall not on any
date permit the Senior Indebtedness Leverage Ratio to exceed (a) for the Rolling
Periods ending on September 30, 1998 through September 30, 1999, 4.0 to 1.0, (b)
for any Rolling Period thereafter, 3.5 to 1.0.
Section 7.06 Leverage Ratio. The Parent shall not on any date permit the
Leverage Ratio to exceed (a) prior to December 31, 1998 5.5 to 1, (b) from
December 31, 1998 to June 30, 1999, 5.0 to 1.0, (c) from July 1, 1999 to June
30, 2000 4.5 to 1.0, and (d) after June 30, 2000 4.0 to 1.0.
35
ARTICLE VIII.
SUBORDINATION
Section 8.01 Agreement to Subordinate. The Lender agrees that Indebtedness for
Borrowings under this Agreement represented by the Notes shall be subordinated
in right of payment, to the extent and in the manner provided in this Article,
to the prior payment in full of all Financial Institution Senior Indebtedness
and that the subordination is for the benefit of the Financial Institution
Lenders.
Section 8.02 Liquidation; Dissolution; Bankruptcy. Upon any distribution to
creditors of the Borrower in a liquidation or dissolution of the Borrower or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Borrower or its Property:
(a) the holders of Financial Institution Senior Indebtedness shall be entitled
to receive payment in full in cash of the principal of and interest (including
interest accruing after the commencement of any such proceeding) to the date of
payment on the Financial Institution Senior Indebtedness before the Lender shall
be entitled to receive any payment of principal of or interest on the Notes; and
(b) until the Financial Institution Senior Indebtedness is paid in full in cash,
any distribution to which the Lender would be entitled but for this Article
shall be made to the holders of Financial Institution Senior Indebtedness as
their interests may appear, except that the Lender may receive securities that
are subordinated to Financial Institution Senior Indebtedness to at least the
same extent as the Notes.
Section 8.03 Default on Financial Institution Senior Indebtedness. The Borrower
may not pay principal of or interest on the Notes and may not acquire any
securities for cash or property other than capital stock of the Borrower if:
(a) a default on Financial Institution Senior Indebtedness occurs and is
continuing that permits holders of such Financial Institution Senior
Indebtedness to accelerate its maturity; and
(b) the default is the subject of judicial proceedings or the Borrower receives
a notice of the default. If the Borrower receives any such notice, a similar
notice received within nine months thereafter relating to the same default on
the same issue of Financial Institution Senior Indebtedness shall not be
effective for purposes of this Section.
The Borrower may resume payments on the Notes and may acquire them when (1) the
default is cured or waived, or (2) 20 days pass after the notice is given if the
default is not the subject of judicial proceedings, if this Article otherwise
permits the payment or acquisition at that time.
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Section 8.04 Acceleration of Notes. If payment of the Notes is accelerated
because of an Event of Default, the Borrower shall promptly notify holders of
Financial Institution Senior Indebtedness of the acceleration. The Borrower may
pay the Notes when 120 days pass after the acceleration occurs if this Article
permits the payment at that time.
Section 8.05 When Distribution Must Be Paid Over. If a distribution is made to
the Lender that because of this Article should not have been made to it, the
Lender shall hold it in trust for holders of Financial Institution Senior
Indebtedness and pay it over to them as their interests may appear.
Section 8.06 Notice by Borrower. The Borrower shall promptly notify the Lender
of any facts known to the Borrower that would cause a payment of principal of or
interest on Notes to violate this Article.
Section 8.07 Subrogation. After all Financial Institution Senior Indebtedness is
paid in full and until the Notes are paid in full, the Lender shall be
subrogated to the rights of holders of Financial Institution Senior Indebtedness
to receive distributions applicable to Financial Institution Senior Indebtedness
to the extent that distributions otherwise payable to the Lender have been
applied to the payment of Financial Institution Senior Indebtedness. A
distribution made under this Article to holders of Financial Institution Senior
Indebtedness which otherwise would have been made to the Lender is not, as
between the Borrower and the Lender, a payment by the Borrower on Financial
Institution Senior Indebtedness.
Section 8.08 Relative Rights. This Article defines the relative rights of the
Lender and holders of Financial Institution Senior Indebtedness. Nothing in this
Indenture shall:
(a) impair, as between the Borrower and the Lender, the obligation of the
Borrower, which is absolute and unconditional, to pay principal of and interest
on the Notes in accordance with their terms;
(b) affect the relative rights of the Lender and creditors of the Borrower other
than holders of Financial Institution Senior Indebtedness; or
(c) prevent the Lender from exercising its available remedies upon an Event of
Default, subject to the rights of holders of Financial Institution Senior
Indebtedness to receive distributions otherwise payable to the Lender.
If the Borrower fails because of this Article to pay principal of or interest on
a Note on the due date, the failure is still an Event of Default as provided
elsewhere herein.
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ARTICLE IX.
EVENTS OF DEFAULT; REMEDIES
Section 9.01 Events of Default. The occurrence of any of the following events
shall constitute an Event of Default under any Credit Document:
1. Principal Payment. The Borrower or any Guarantor shall fail to pay any
principal of any Note when the same becomes due and payable as set forth in this
Agreement;
2. Interest or Other Obligation Payment. The Borrower or any Guarantor shall
fail to pay any interest on any Note or any other amount payable hereunder or
under any other Credit Document when the same becomes due and payable as set
forth in this Agreement; provided, however, that the Borrower and the Guarantors
will have a grace period of ten days after the payments covered by this Section
9.01(b) becomes due and payable for the first two defaults of such Persons
collectively under this Section 9.01(b) in every calendar year;
3. Representation and Warranties. Any representation or warranty made or deemed
to be made (i) by the Borrower in this Agreement or in any other Credit
Document, (ii) by the Borrower (or any of its officers) in connection with this
Agreement or any other Credit Document, or (iii) by the Parent or any Subsidiary
in any Credit Document shall prove to have been incorrect in any material
respect when made or deemed to be made;
4. Covenant Breaches. (i) The Borrower shall fail to perform or observe any
covenant contained in Section 5.02, Article VI or Article VII of this Agree ment
or the Borrower shall fail to perform or observe, or shall fail to cause any
Guarantor to perform or observe any covenant in any Credit Document beyond any
notice and/or cure period for such default expressly provided in such Credit
Document or (ii) the Borrower or any Guarantor shall fail to perform or observe
any term or covenant set forth in any Credit Document which is not covered by
clause (i) above or any other provision of this Section 9.01, in each case if
such failure shall remain unremedied for 30 days after the earlier of the date
written notice of such default shall have been given to the Borrower or such
Guarantor by the Lender or the date a Responsible Officer of the Borrower or any
Guarantor has actual knowledge of such default, unless such default in this
clause (ii) cannot be cured in such 30 day period and the Borrower is diligently
proceeding to cure such default, in which event the cure period shall be
extended to 90 days;
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5. Cross-Defaults.
(i) with respect to Indebtedness of the Borrower in excess of $5,000,000 or any
amount of Financial Institution Senior Indebtedness (but excluding Indebtedness
evidenced by the Notes) which is outstanding:
(1) any such Indebtedness shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof;
(2) the Borrower, the Parent or any of their respective Subsidiaries shall fail
to pay any principal of or premium or interest of any of such Indebtedness
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Indebtedness;
or
(3) any other event shall occur or condition shall exist under any agreement or
instrument relating to such Indebtedness, and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to permit the holders of such
Indebtedness to accelerate the maturity of such Indebtedness;
6. Insolvency. The Borrower, the Parent or any of their respective material
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, the Parent or any of their respective
material Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against the Borrower, the Parent or any
of their respective material Subsidiaries, either such proceeding shall remain
undismissed for a period of 60 days or any of the actions sought in such
proceeding shall occur; or the Borrower, the Parent or any of their respective
material Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this paragraph (e);
7. ERISA. (i) Any Person shall engage in any prohibited transaction (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii)
any accumulated funding deficiency (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is likely
39
to result in the termination of such Plan for purposes of Title IV of ERISA,
unless such Reportable Event, proceedings or appointment are being contested by
the Borrower in good faith and by appropriate proceedings, (iv) any Plan shall
terminate for purposes of Title IV of ERISA, (v)the Borrower or any member of a
Controlled Group shall incur any liability in connection with a withdrawal from
a Multiemployer Plan or the insolvency (within the meaning of Section 4245 of
ERISA) or reorganization (within the meaning of Section 4241 of ERISA) of a
Multiemployer Plan, unless such liability is being contested by the Borrower in
good faith and by appropriate proceedings, or (vi) any other event or condition
shall occur or exist, with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could subject the Borrower or any Guarantor to any tax,
penalty or other liabilities in the aggregate exceeding $10,000,000;
8. Guaranty. Any material provision of any Guaranty shall for any reason cease
to be valid and binding on any Guarantor or any Guarantor shall so state in
writing;
9. Environmental Condition. The terms and conditions of Section 4.14 of this
Agreement shall for any reason cease to be valid and binding on any Person party
thereto or any such Person shall so state in writing; or
10. Change in Management. Any of the following occur without the written consent
of the Required Lenders: (a) a Change of Control occurs for either the Parent or
the Borrower; (b) the Parent, and any wholly-owned Subsidiary of the Parent
collectively owns less than 70% of the legal or beneficial interest in the
Borrower; or (c) the Parent shall cease to employ either Xxxx X. Xxxxxxxx or
Xxxxxx X. Xxxxx as chairman and chief executive officer of the Parent and,
within 180 days following such occurrence for any reason, another person
acceptable to the Lenders in their sole discretion is not employed as the
Chairman and Chief Executive Officer of the Parent.
Section 9.02 Optional Acceleration of Maturity; Other Actions. If any Event of
Default (other than an Event of Default pursuant to paragraph (f) of Section
9.01) shall have occurred and be continuing, then, and in any such event:
1. the Lender (i) may, by notice to the Borrower, declare the obligation to make
Advances to be terminated, whereupon the same shall forthwith terminate, and
(ii) may, by notice to the Borrower, declare the Notes, all interest thereon,
and all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable in full, without presentment, demand,
protest or further notice of any kind (including, without limitation, any notice
of intent to accelerate or notice of acceleration), all of which are hereby
expressly waived by the Borrower; and
40
2. the Lender may proceed to enforce its rights and remedies under the Credit
Documents by appropriate proceedings.
Section 9.03 Automatic Acceleration of Maturity. If any Event of Default
pursuant to paragraph (f) of Section 9.01 shall occur, the obligation of the
Lender to make Advances shall immediately and automatically be terminated and
the Notes, all interest on the Notes, and all other amounts payable under this
Agreement shall immediately and automatically become and be due and payable in
full, without presentment, demand, protest or any notice of any kind (including,
without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by the Borrower.
ARTICLE X.
MISCELLANEOUS
Section 10.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, the Notes, or any other Credit Document, nor consent to any departure
by the Borrower or any Guarantor therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Lender, as specified in
the particular provisions of the Credit Documents, and the Borrower, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given
Section 10.02 Notices, Etc. All notices and other communications shall be in
writing (including telecopy or telex) and mailed, telecopied, telexed, hand
delivered or delivered by a nationally recognized overnight courier, if to the
Borrower, at its address at 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx,
X.X. 00000, Attn: Xx. Xxxxx X. Xxxxxx; if to the Lender, at its address at 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, Attn: Mr. Xxxx Xxxxx;
or, as to each party, at such other address or teletransmission number as shall
be designated by such party in a written notice to the other parties. All such
notices and communications shall, when mailed, telecopied, telexed or hand
delivered or delivered by overnight courier, be effective three days after
deposited in the mails, when telecopy transmission is completed, when confirmed
by telex answer-back or when delivered, respectively, except that notices and
communications to the Lender pursuant to Article II or Article VIII shall not be
effective until received by the Lender.
Section 10.03 No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under any Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies provided in this Agreement and the other Credit
Documents are cumulative and not exclusive of any remedies provided by law.
41
Section 10.4 Costs and Expenses. The Borrower agrees to pay on demand all
out-of-pocket costs and expenses of the Lender in connection with the
preparation, execution, delivery, due diligence, administration, modification
and amendment of this Agreement, the Notes and the other Credit Documents of the
Obligations including, without limitation, all reasonable out-of-pocket costs
and expenses, if any, of the Lender in connection with the enforcement (whether
through negotiations, legal proceedings or otherwise) of this Agreement and the
other Credit Documents.
Section 10.05 Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Lender, and when the Lender
shall have, as to the Lender, either received a counterpart hereof executed by
the Lender or been notified by the Lender that the Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Lender and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights or delegate its duties under this
Agreement or any interest in this Agreement without the prior written consent of
the Lender.
Section 10.06 Indemnification. The Borrower shall indemnify the Lender and each
of its affiliates, directors, officers, employees and agents from, and
discharge, release, 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 (i)
any actual or proposed use by the Borrower or any Affiliate of the Borrower of
the proceeds of any Advance, (ii) any breach by the Borrower or any Guarantor of
any provision of this Agreement or any other Credit Document, (iii) any
investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing, or (iv) any
Environmental Claim or requirement of Environmental Laws concerning or relating
to the present or previously-owned or operated properties, or the operations or
business, of the Parent, the Borrower or any of its Subsidiaries, and the
Borrower shall reimburse the Lender, each affiliate and their respective
directors, officers, employees and agents, upon demand for any reasonable
out-of-pocket expenses (including legal fees) incurred in connection with any
such investigation, litigation or other proceeding; and expressly including any
such losses, liabilities, claims, damages, or expense incurred by reason of the
Person being indemnified's own negligence, 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.
THE BORROWER ACKNOWLEDGES AND AGREES THAT CERTAIN OF ITS OBLIGATIONS AND
INDEMNITIES UNDER THIS AGREEMENT INCLUDE ANY CLAIMS RESULTING FROM THE
NEGLIGENCE OR ALLEGED NEGLIGENCE OF THE LENDER, OR ANY OTHER PERSON BEING
INDEMNIFIED.
42
Section 10.07 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
Section 10.08 Survival of Representations, Indemnifications, etc. All
representations, warranties contained in this Agreement or made in writing by or
on behalf of the Borrower in connection herewith shall survive the execution and
delivery of this Agreement and the Credit Documents, the making of the Advances
and any investigation made by or on behalf of the Lender, none of which
investigations shall diminish the Lender's right to rely on such representations
and warranties. All obligations of the Borrower provided for in Sections 2.07,
2.10(c) and 9.06 shall survive any termination of this Agreement and repayment
in full of the Obligations.
Section 10.09 Severability. In case one or more provisions of this Agreement or
the other Credit Documents shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and enforceability of
the remaining provisions contained herein or therein shall not be affected or
impaired thereby.
43
Section 10.10 Usury Not Intended. It is the intent of the Borrower and the
Lender in the execution and performance of this Agreement and the other Credit
Documents to contract in strict compliance with applicable usury laws, including
conflicts of law concepts, governing the Advances of the Lender including such
applicable laws of the State of New York and the United States of America from
time to time in effect. In furtherance thereof, the Lender and the Borrower
stipulate and agree that none of the terms and provisions contained in this
Agreement or the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes
hereof interest shall include the aggregate of all charges which constitute
interest under such laws that are contracted for, charged or received under this
Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Advances, include amounts which by applicable law are deemed interest
which would exceed the Maximum Rate, then such excess shall be deemed to be a
mistake and the Lender shall credit the same on the principal of its Notes (or
if such Notes shall have been paid in full, refund said excess to the Borrower).
In the event that the maturity of the Notes is accelerated by reason of any
election of the holder thereof resulting from any Event of Default under this
Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest may never include more than
the Maximum Rate and excess interest, if any, provided for in this Agreement or
otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the applicable Notes
(or, if the applicable Notes shall have been paid in full, refunded to the
Borrower). In determining whether or not the interest paid or payable under any
specific contingencies exceeds the Maximum Rate, the Borrower and the Lender
shall to the maximum extent permitted under applicable law amortize, prorate,
allocate and spread in equal parts during the period of the full stated term of
the Notes all amounts considered to be interest under applicable law at any time
contracted for, charged, received or reserved in connection with the
Obligations. The provisions of this Section shall control over all other
provisions of this Agreement or the other Credit Documents which may be in
apparent conflict herewith.
Section 10.11 GOVERNING LAW. ANY DISPUTE BETWEEN THE BORROWER, THE LENDER, OR
ANY INDEMNITEE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY
OF THE OTHER CREDIT DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW, BUT OTHERWISE
WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
44
Section 10.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE
PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS WHETHER
ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY
BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT THE PARTIES HERETO
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK, NEW YORK. EACH OF THE PARTIES HERETO WAIVES IN ALL
DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE LENDER OR ANY INDEMNITEE
SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT
IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER
THE BORROWER OR (2) ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PERSON. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF SUCH PERSON. THE BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED
A PROCEEDING DESCRIBED IN THIS SUBSECTION (B).
(C) SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY PROCESS UPON
IT AND IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY WRITS, PROCESS OR
SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING BY THE MAILING THEREOF BY THE LENDER
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER ADDRESSED AS
PROVIDED HEREIN. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY
OF THE LENDER TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR
45
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET
FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 10.13 Knowledge of Borrower. For purposes of this Agreement, knowledge
of the Borrower means the actual knowledge of any of the executive officers and
all other Responsible Officers of the Parent.
Section 10.14 Lender Not in Control. None of the covenants or other provisions
contained in the Credit Documents shall or shall be deemed to, give the Lender
the rights or power to exercise control over the affairs and/or management of
the Borrower, any of its Subsidiaries or any Guarantor, the power of the Lender
being limited to the right to exercise the remedies provided in the Credit
Documents; provided, however, that if the Lender becomes the owner of any stock,
or other equity interest in, any Person whether through foreclosure or
otherwise, the Lender shall be entitled (subject to requirements of law) to
exercise such legal rights as it may have by being owner of such stock, or other
equity interest in, such Person.
Section 10.15 Headings Descriptive. The headings of the several Sections and
paragraphs of the Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Section 10.16 Time is of the Essence. Time is of the essence under the Credit
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Documents.
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EXECUTED as of the date first referenced above.
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BORROWER:
---------
MERISTAR H & R OPERATING COMPANY, L.P.
--------------------------------------
By: MeriStar Hotels & Resorts, Inc., its general
------------------------------------------------
partner
-------
By:
---
Name:
Title:
LENDER:
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.
By: MeriStar Hospitality Corporation, its general
partner
End of Filing
