1
EXHIBIT 10.22.1
U.S. $375,000,000
LOAN AGREEMENT
Dated as of April 1, 1999
Among
FELCOR LODGING TRUST INCORPORATED
and FELCOR LODGING LIMITED PARTNERSHIP
as Borrower
and
THE LENDERS PARTY HERETO
and
THE CHASE MANHATTAN BANK
as Administrative Agent
& Collateral Agent
==================================================
CHASE SECURITIES INC.
as Lead Arranger
& Book Manager
2
TABLE OF CONTENTS
PAGE
Article I DEFINITIONS AND ACCOUNTING TERMS..................................................1
1.1. Defined Terms.........................................................................1
1.2. Computation of Time Periods..........................................................26
1.3. Accounting Terms.....................................................................26
1.4. Certain Terms........................................................................27
Article II AMOUNTS AND TERMS OF THE LOANS...................................................27
2.1. The Loans............................................................................27
2.2. Making the Loans.....................................................................27
2.3. Fees.................................................................................28
2.4. Collateral...........................................................................28
2.5. Repayment............................................................................29
2.6. Prepayments..........................................................................29
2.7. Conversion/Continuation Option.......................................................30
2.8. Interest.............................................................................30
2.9. Interest Rate Determination and Protection...........................................31
2.10. Increased Costs......................................................................31
2.11. Illegality...........................................................................32
2.12. Capital Adequacy.....................................................................32
2.13. Payments and Computations............................................................33
2.14. Taxes................................................................................34
2.15. Sharing of Payments, Etc.............................................................35
Article III CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT AND OF LENDING....................36
3.1. Conditions Precedent to Effectiveness of this Agreement and to the Loans.............36
3.2. Additional Conditions Precedent to Effectiveness of this Agreement and to the Loans..38
Article IV REPRESENTATIONS AND WARRANTIES...................................................39
4.1. Existence; Compliance with Law.......................................................39
4.2. Power; Authorization; Enforceable Obligations........................................39
4.3. Taxes................................................................................40
4.4. Full Disclosure......................................................................41
i
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.5. Financial Matters....................................................................41
4.6. Litigation...........................................................................42
4.7. Margin Regulations...................................................................42
4.8. Ownership of Borrower and DJONT; Subsidiaries........................................42
4.9. ERISA................................................................................43
4.10. Indebtedness.........................................................................44
4.11. Restricted Payments..................................................................44
4.12. No Burdensome Restrictions; No Defaults..............................................44
4.13. Investments..........................................................................44
4.14. Government Regulation................................................................44
4.15. Insurance............................................................................45
4.16. Labor Matters........................................................................45
4.17. Force Majeure........................................................................46
4.18. Use of Proceeds......................................................................46
4.19. Environmental Protection.............................................................46
4.20. Contractual Obligations Concerning Assets............................................48
4.21. Intellectual Property................................................................48
4.22. Title................................................................................48
4.23. Status as REIT.......................................................................50
4.24. Operator: Compliance with Law........................................................50
4.25. Operating Leases, Licenses and Management Agreement..................................50
4.26. FF&E Reserves........................................................................51
4.27. Year 2000 Compliance.................................................................51
Article V FINANCIAL COVENANTS..............................................................51
5.1. Unsecured Interest Expense Coverage..................................................51
5.2. Fixed Charge Coverage Ratio..........................................................52
5.3. Maintenance of Tangible Net Worth....................................................52
5.4. Limitations on Total Indebtedness....................................................52
5.5. Limitations on Total Secured Indebtedness............................................52
5.6. Adjusted NOI and Hotels..............................................................52
5.7. Limitations on Recourse Secured Indebtedness.........................................52
ii
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
Article VI AFFIRMATIVE COVENANTS............................................................52
6.1. Compliance with Laws, Etc............................................................52
6.2. Conduct of Business..................................................................53
6.3. Payment of Taxes, Etc................................................................53
6.4. Maintenance of Insurance.............................................................53
6.5. Preservation of Existence, Etc.......................................................53
6.6. Access...............................................................................54
6.7. Keeping of Books.....................................................................54
6.8. Maintenance of Properties, Etc.......................................................54
6.9. Performance and Compliance with Other Covenants......................................54
6.10. Application of Proceeds..............................................................54
6.11. Financial Statements.................................................................54
6.12. Reporting Requirements...............................................................56
6.13. Leases and Operating Leases; Management Agreements and Licenses......................58
6.14. Employee Plans.......................................................................59
6.15. Fiscal Year..........................................................................59
6.16. Environmental Matters................................................................59
6.17. REIT Requirements....................................................................60
6.18. Maintenance of FF&E Reserves.........................................................60
6.19. Further Assurances...................................................................60
6.20. Unencumbered Hotel Properties/Financial Covenant Imbalance...........................60
6.21. Hotel Documents......................................................................60
Article VII NEGATIVE COVENANTS...............................................................61
7.1. Restrictions on Wholly-Owned Subsidiaries............................................61
7.2. Operation/Ownership of Hotels........................................................62
7.3. Lease Obligations....................................................................62
7.4. Restricted Payments..................................................................62
7.5. Mergers, Stock Issuances, Asset Sales, Etc...........................................63
7.6. Restrictions on Construction/Budget Hotels...........................................63
7.7. Change in Nature of Business or in Capital Structure.................................63
iii
5
TABLE OF CONTENTS
(CONTINUED)
PAGE
7.8. Modification of Material Agreements..................................................64
7.9. Accounting Changes...................................................................64
7.10. Transactions with Affiliates.........................................................64
7.11. Adverse or Speculative Transactions..................................................64
7.12. Environmental Matters................................................................64
7.13. Joint Enterprises....................................................................65
7.14. ERISA Plan Assets....................................................................65
Article VIII EVENTS OF DEFAULT................................................................65
8.1. Events of Default....................................................................65
8.2. Remedies.............................................................................67
Article IX THE ADMINISTRATIVE AGENT.........................................................67
9.1. Authorization and Action.............................................................67
9.2. Administrative Agent's Reliance, Etc.................................................68
9.3. Chase and Affiliates.................................................................68
9.4. Lender Credit Decision...............................................................69
9.5. Indemnification......................................................................69
9.6. Successor Agent......................................................................70
Article X MISCELLANEOUS....................................................................70
10.1. Amendments, Etc......................................................................70
10.2. Notices, Etc.........................................................................71
10.3. No Waiver; Remedies..................................................................72
10.4. Costs; Expenses; Indemnities.........................................................72
10.5. Right of Set-off.....................................................................73
10.6. Binding Effect.......................................................................73
10.7. Assignments and Participations.......................................................74
10.8. Governing Law; Severability..........................................................76
10.9. Submission to Jurisdiction; Service of Process.......................................77
10.10. Section Titles.......................................................................77
10.11. Execution in Counterparts............................................................77
10.12. Entire Agreement.....................................................................77
10.13. Confidentiality......................................................................77
iv
6
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.14. WAIVER OF JURY TRIAL.................................................................78
10.15. Joint and Several Obligations........................................................78
v
7
SCHEDULES
Schedule I - Loan Commitments
Schedule II - Applicable Lending Offices and Addresses for Notices
Schedule III - Operating Lessees
Schedule IV - Permitted Transferees
Schedule 4.8 - Subsidiaries and Unconsolidated Entities
Schedule 4.10 - Existing Indebtedness
Schedule 4.13 - Existing Investments
Schedule 4.19 - Environmental Protection
Schedule 4.22(a) - Owned Real Estate
Schedule 4.22(b) - Leased Real Estate
vi
8
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Conversion or Continuation
Exhibit C - Form(s) of Opinion(s) of Counsel for the Loan
Parties
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Operating Lease
Exhibit G - Form of Guaranty
Exhibit H - Form of Pledge and Security Agreement
vii
9
LOAN AGREEMENT ("Agreement"), dated as of April 1, 1999 among
FELCOR LODGING TRUST INCORPORATED, a Maryland corporation ("FelCor") and FELCOR
LODGING LIMITED PARTNERSHIP, a Delaware limited partnership ("FelCor LP" and
collectively with FelCor, the "Borrower"), the financial institutions listed on
the signature pages hereof (each individually a "Lender" and collectively the
"Lenders") and THE CHASE MANHATTAN BANK ("Chase"), as administrative agent for
the Lenders (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Borrower desires to obtain the Loans (hereafter
defined) from the Lenders; and
WHEREAS, subject to and upon the terms and conditions set
forth herein, the Lenders are willing to make Loans to the Borrower as provided
for herein;
NOW, THEREFORE, in consideration of the promises and the
covenants and agreements contained herein, the parties hereto hereby agree that
the aforementioned recitals are true and correct and hereby incorporated herein
and that the parties hereto hereby agree as follows:
Article I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. As used in this Agreement, the following terms have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Adjusted EBITDA" means, for any Person for any period, EBITDA
of such Person for such period less the FF&E Reserve for such Person.
"Adjusted Funds From Operations" means, for any Person, for
any period, Net Income (Loss) of such Person for such period plus (a) the sum
(without duplication) of the following amounts of such Person and its
Subsidiaries for such period determined on a consolidated basis in conformity
with GAAP to the extent included in the determination of such Net Income (Loss):
(i) depreciation expense, (ii) amortization expense and other non-cash charges
of such Person and its Subsidiaries with respect to their real estate assets for
such period, (iii) losses from Asset Sales of such Person and its Subsidiaries,
losses resulting from restructuring of Indebtedness of such Person and its
Subsidiaries and other extraordinary losses, and (iv) minority interests
attributable to FelCor LP's partnership units; less (b) the sum (without
duplication) of the following amounts of such Person and its Subsidiaries for
such period determined on a consolidated
10
basis in conformity with GAAP to the extent included in the determination of
such Net Income (Loss): (i) gains from Asset Sales of such Person and its
Subsidiaries, gains resulting from restructuring of Indebtedness of such Person
and its Subsidiaries and other extraordinary gains, and (ii) the applicable
share of Net Income (Loss) of such Person's Unconsolidated Entities; plus (c)
such Person's Pro Rata Share of Adjusted Funds From Operations of such Person's
Unconsolidated Entities.
"Adjusted NOI" means, with respect to any Hotel owned or
leased by the Borrower or any of its Subsidiaries, Eligible Joint Ventures or
Unconsolidated Entities, for any period, the Net Operating Income for such Hotel
for such period less the FF&E Reserve for such Hotel for such period.
"Affiliate" means, to any Person, any Subsidiary of such
Person and any other Person which, directly or indirectly, controls, is
controlled by or is under common control with such Person and includes each
executive officer, director, trustee, limited liability company manager or
general partner of such Person, and each Person who is the beneficial owner of
10% or more of any class of voting Stock of such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Allerton Hotel" shall mean that certain Hotel located in
Chicago Illinois and commonly known as the Allerton Hotel.
"Alternative Currency Contract" means a currency swap
agreement, currency cap agreement, currency collar agreement or forward currency
agreement entered into to provide protection against fluctuations in an
Alternative Currency.
"Alternative Currency" means any lawful currency of a country
where a Hotel is located, other than Dollars, which is freely transferable and
convertible into Dollars.
"Applicable Lending Office" means, with respect to each
Lender, its Domestic Lending Office in the case of a Base Rate Loan and its
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
"Applicable Margin" means 2.5% per annum.
"Asset Sale" means any sale, conveyance, transfer, assignment,
lease or other disposition (including, without limitation, by merger or
consolidation, and by condemnation, eminent domain, loss, damage, or
destruction, and whether by operation of law or otherwise) by the Borrower or
any of its Subsidiaries to any Person (other than to Borrower or any of its
Subsidiaries) of any Stock of any of its Subsidiaries, any Stock Equivalents of
any of its Subsidiaries or any Hotel, but excluding Operating Leases.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit D.
2
11
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the higher of:
(a) the rate of interest announced publicly by Chase at its
principal office, from time to time, as Chase's base rate; and
(b) the sum of (i) 1/2 of one percent per annum plus (ii) the
Federal Funds Rate.
"Base Rate Loan" means any outstanding principal amount of the
Loans of any Lender that bears interest with reference to the Base Rate.
"Borrower's Investment" means, with respect to any Hotel, the
Borrower's or any of its Subsidiaries' investment in such Hotel (including all
investments constituting, evidencing or secured by an interest in property,
whether tangible or intangible and whether real, personal or mixed, that is used
or intended for use in, or in any manner connected with or relating to, the
ownership or leasing of such Hotel, specifically including, without limitation,
investments in Subsidiaries and Unconsolidated Entities owning or leasing
Hotels), at cost, on a consolidated basis, provided that in determining the cost
of such investments, there shall be included (i) the amount of all cash paid and
the value (as determined by the Board of Directors of FelCor for purposes of
such investment) of any other property transferred therefor by the Borrower or
its Subsidiary, (ii) the amount of all indebtedness and other obligations
assumed or incurred by the Borrower or its Subsidiary or to which the Borrower
or its Subsidiary takes subject, and (iii) the value (as determined by the Board
of Directors of FelCor for the purposes of such investment) of all equity
securities of which the issuer is an entity that is, or upon such investment
will be, included within the Borrower or its Subsidiary and which are issued
(otherwise than for cash) to, or retained by, any person other than the Borrower
or its Subsidiary in connection with such investment. For purposes of this
definition only "indebtedness" of the Borrower or its Subsidiary shall mean the
consolidated liabilities of the Borrower and its Subsidiaries for borrowed money
(including all notes payable and drafts accepted representing extensions of
credit) and all obligations evidenced by bonds, debentures, notes or other
similar instruments on which interest charges are customarily paid, including
obligations under Capitalized Leases.
"Bristol" shall mean Bristol Hotels & Resorts and any Person
controlled by Bristol Hotels & Resorts that is a Manager.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and California and, if the
applicable Business Day relates to a Eurodollar Rate Loan, a day on which
dealings are also carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period,
the aggregate of all expenditures by such Person and its Subsidiaries, except
interest capitalized during construction, during such period for property, plant
or equipment,
3
12
including, without limitation, renewals, improvements, replacements and
capitalized repairs, that would be reflected as additions to property, plant or
equipment on a consolidated balance sheet of such Person and its Subsidiaries
prepared in conformity with GAAP. For the purpose of this definition, the
purchase price of equipment which is acquired simultaneously with the trade-in
of existing equipment owned by such Person or any of its Subsidiaries or with
insurance proceeds shall be included in Capital Expenditures only to the extent
of the gross amount of such purchase price less the credit granted by the seller
of such equipment being traded in at such time or the amount of such proceeds,
as the case may be.
"Capitalized Lease" means, as to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in conformity with GAAP.
"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.
"Cash" shall mean coin or currency of the United States of
America or immediately available federal funds.
"Cash Equivalents" means (i) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or insured
by the United States government or any agency thereof, (ii) certificates of
deposit, eurodollar time deposits, overnight bank deposits and bankers'
acceptances of any commercial bank organized under the laws of the United
States, or any State thereof, and having total assets in excess of
$5,000,000,000 having maturities of one year or less from the date of
acquisition, and (iii) commercial paper of an issuer rated at least "A-1" by S&P
or "P-1" by Xxxxx'x, or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing ratings
of investments.
"Closing Date" means April 1, 1999.
"Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.
"Collateral" has the meaning specified in the Pledge
Agreement.
"Collateral Agent" means Chase.
"Commitment" has the meaning specified in Section 2.1.
"Compliance Certificate" shall have the meaning specified in
Section 3.1(l).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness or Contractual Obligation of another Person, if the
purpose or intent of such
4
13
Person in incurring the Contingent Obligation is to provide assurance to the
obligee of such Indebtedness or Contractual Obligation that such Indebtedness or
Contractual Obligation will be paid or discharged, or that any agreement
relating thereto will be complied with, or that any holder of such Indebtedness
or Contractual Obligation will be protected (in whole or in part) against loss
in respect thereof. Contingent Obligations of a Person include, without
limitation, (a) the direct or indirect guarantee, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of an obligation
of another Person (including, in the case of any Guarantor, its obligations
under the Guaranty), and (b) any liability of such Person for an obligation of
another Person through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of a loan, advance, stock purchase, capital contribution or otherwise),
(ii) to maintain the solvency or any balance sheet item, level of income or
financial condition of another Person, (iii) to make take-or-pay or similar
payments, if required, regardless of non-performance by any other party or
parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such obligation or to assure the holder of such
obligation against loss, or (v) to supply funds to or in any other manner invest
in such other Person (including, without limitation, to pay for property or
services irrespective of whether such property is received or such services are
rendered), if in the case of any agreement described under subclause (i), (ii),
(iii), (iv) or (v) of this sentence the primary purpose or intent thereof is as
described in the preceding sentence. Anything herein to the contrary
notwithstanding, no agreement entered into by the Borrower or any of its
Subsidiaries or Unconsolidated Entities with respect to its acquisition of any
direct or indirect interest in any Hotel shall, prior to the satisfaction in
full of all conditions precedent to the obligations of such Person pursuant to
the agreement, be deemed or construed to constitute a "Contingent Obligation" or
"Indebtedness" of such Person hereunder, provided that pursuant to any such
agreement, the Borrower or its Subsidiary or Unconsolidated Entity is not liable
or responsible for, and does not assume any, development or construction risks.
The amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
"Contractual Obligation" of any Person means any obligation,
agreement, undertaking or similar provision of any security issued by such
Person or of any agreement (including, without limitation, any management or
franchise agreement), undertaking, contract, lease, indenture, mortgage, deed of
trust or other instrument (excluding a Loan Document) to which such Person is a
party or by which it or any of its property is bound or to which any of its
properties is subject.
"Credit Agreement" means that certain Fourth Amended and
Restated Credit Agreement, dated as of July 1, 1998, as may be amended, modified
or supplemented from time to time, among FelCor Suite Hotels, Inc. and FelCor
Suites Limited Partnership (as predecessors in interest to Borrower), those
certain lending institutions included as signatories thereto, and Chase as
administrative agent, for indebtedness of up to $1.1 billion.
5
14
"Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.
"DJONT" means DJONT Operations, L.L.C., a Delaware limited
liability company.
"DOL" means the United States Department of Labor, or any
successor thereto.
"Dollars" and the sign "$" each mean the lawful money of the
United States of America.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule II or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Administrative Agent.
"EBITDA" means, for any Person for any period, the Net Income
(Loss) of such Person for such period taken as a single accounting period, plus
(a) the sum (without duplication) of the following amounts of such Person and
its Subsidiaries for such period determined on a consolidated basis in
conformity with GAAP to the extent included in the determination of such Net
Income (Loss): (i) depreciation expense, (ii) amortization expense and other
non-cash charges, (iii) interest expense, (iv) income tax expense, (v)
extraordinary losses (and other losses on Asset Sales not otherwise included in
extraordinary losses determined on a consolidated basis in conformity with
GAAP), and (vi) minority interests attributable to FelCor LP's partnership
units, less (b) the sum (without duplication) of the following amounts of such
Person and its Subsidiaries determined on a consolidated basis in conformity
with GAAP to the extent included in the determination of such Net Income (Loss):
(i) extraordinary gains (and in the case of the Borrower, other gains on Asset
Sales not otherwise included in extraordinary gains determined on a consolidated
basis in conformity with GAAP), (ii) the applicable share of Net Income (Loss)
of such Person's Unconsolidated Entities, (iii) cash payments made with respect
to any non-cash charge which was added back to Net Operating Income to determine
EBITDA for any prior period; plus (c) such Person's Pro Rata Share of EBITDA of
such Person's Unconsolidated Entities.
"Effective Date" has the meaning specified in Section 3.1.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $5,000,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the OECD, or a political
subdivision of any such country, and having total assets in excess of
$5,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD or the Cayman Islands; (iii) the central bank of any
country which is a member of the OECD; corporation organized under the laws of
the United States, or any State thereof, and having total assets in excess of
$3,000,000,000;
6
15
(iv) a mutual fund or an insurance company organized under the laws of the
United States, or any State thereof, in each case having total assets in excess
of $5,000,000,000; (v) any Lender; (vi) any Affiliate of any Lender; (vii) any
Person other than an Affiliate of a Loan Party; and (viii) only with respect to
any Lender that is a fund that invests in bank loans, any other fund or trust
entity that invests in bank loans and is advised by or managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor,
in each case ((i) through (vii) above) acceptable (a) to the Administrative
Agent, and (b) provided no Default or Event of Default exists, to the Borrower,
which acceptance will not be unreasonably withheld, conditioned or delayed.
"Eligible Entity" shall mean any Eligible Joint Venture in
which the Borrower owns, directly or indirectly, at least a 90% equity interest
and the remainder of such equity interest is owned by either (i) Promus, (ii)
Starwood or (iii) Bristol, provided, however, such Eligible Joint Venture shall
only be an Eligible Entity if (i) Borrower (x) is the sole general partner (or
equivalent) in such Eligible Joint Venture or (y) owns directly or indirectly at
least 90% of the Stock of the sole general partner (or equivalent) in such
Eligible Joint Venture and all other Stock of such sole general partner (or
equivalent) which is not owned by Borrower is owned by either Promus, Starwood
or Bristol, (ii) such sole general partner (or equivalent) is the only Person
who can unilaterally authorize the sale or encumbrance of the assets of such
Eligible Joint Venture (iii) Borrower alone controls the sole general partner
(or equivalent) and (iv) such Eligible Joint Venture has no debt other than
unsecured trade debt incurred in the ordinary course of business. For the
purposes of this definition, "control" means the possession of the power to
direct or cause the direction of management and policies of such Person
(including without limitation the power to authorize the sale or encumbrance of
the assets of such Person), whether through the ownership of voting securities,
by contract or otherwise.
"Eligible Joint Venture" means any joint venture, corporation,
partnership or other business entity in which the Borrower (i) owns directly or
indirectly a JV% of at least 50% and (ii) is (or owns directly or indirectly a
majority of the voting Stock of and controls) the managing general partner or
equivalent thereof for such entity and (iii) Borrower alone controls such
managing general partner or equivalent. For the purposes of this definition,
"control" means the possession of the power to direct or cause the direction of
management and policies of such Person (including without limitation the power
to authorize the sale or encumbrance of the assets of such Person), whether
through the ownership of voting securities, by contract or otherwise.
"Environmental Claim" means any accusation, allegation, notice
of violation, action, claim, Environmental Lien, demand, abatement or other
Order or direction (conditional or otherwise) by any Governmental Authority or
any other Person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restriction, resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material or other nuisance (to the extent the same
relates to any Hazardous Materials), or other Release in, into or onto the
environment (including,
7
16
without limitation, the air, soil, surface water or groundwater) at, in, by,
from or related to any property owned or leased by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or any activities or operations thereof;
(ii) the environmental aspects of the transportation, storage, treatment or
disposal of Hazardous Materials in connection with any property owned or leased
by the Borrower or any of its Subsidiaries or Eligible Joint Ventures or their
operations or facilities; or (iii) the violation, or alleged violation, of any
Environmental Laws, Orders or Environmental Permits of or from any Governmental
Authority relating to environmental matters connected with any property owned or
leased by the Borrower or any of its Subsidiaries or Eligible Joint Ventures.
"Environmental Laws" means any applicable federal, state,
local or foreign law (including common law), statute, code, ordinance, rule,
regulation or other requirement having the force or effect of law relating to
the environment, natural resources, or public or employee health and safety and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et
seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
6901 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.,
the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq. (to the extent the same relates to any Hazardous Materials),
and the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq., as such laws
have been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous state and local statutes.
"Environmental Liabilities and Costs" means, as to any Person,
all liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim or demand by any other Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
including, without limitation, any thereof arising under any Environmental Law,
Environmental Permit, order or agreement with any Governmental Authority or
other Person, and which relate to any environmental, health or safety condition,
or a Release or threatened Release, and result from the past, present or future
operations of, or ownership of property by, such Person or any of its
Subsidiaries or Eligible Joint Ventures.
"Environmental Lien" means any Lien in favor of any
Governmental Authority arising under any Environmental Law.
"Environmental Permit" means any Permit required under any
applicable Environmental Laws or Order and all supporting documents associated
therewith.
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time.
8
17
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with any Loan
Party within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"ERISA Event" means (i) an event described in Sections
4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a Pension
Plan; (ii) the withdrawal of any Loan Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer, as defined in Section 4001(a)(2) of ERISA; (iii) the
complete or partial withdrawal of any Loan Party or any ERISA Affiliate from any
Multiemployer Plan or the insolvency of any Multiemployer Plan; (iv) the filing
of a notice of intent to terminate a Pension Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA; (v) the institution of
proceedings by the PBGC to terminate or appoint a trustee to administer a
Pension Plan or Multiemployer Plan; (vi) the failure to make any required
contribution to a Pension Plan; (vii) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; (viii) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA; (ix) a prohibited transaction (as described in Code Section 4975 or ERISA
Section 406) shall occur with respect to any Plan; or (x) any Loan Party or
ERISA Affiliate shall request a minimum funding waiver from the IRS with respect
to any Pension Plan.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" below its
name on Schedule II (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period, an interest
rate per annum equal to the rate per annum obtained by multiplying (a) a rate
per annum equal to the rate for U.S. dollar deposits with maturities comparable
to such Interest Period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, two (2) Business Days prior to the commencement of such Interest
Period, provided, however, that if such rate does not appear on Telerate Page
3750, the "Eurodollar Rate" applicable to a particular Interest Period shall
mean a rate per annum equal to the rate at which U.S. dollar deposits in an
amount approximately equal to the Principal Balance (or the portion thereof
which will bear interest at a rate determined by reference to the Eurodollar
Rate during the Interest Period to which such Eurodollar Rate is applicable in
accordance with the provisions hereof), and with maturities comparable to the
last day of the Interest Period with respect to which such Eurodollar Rate is
applicable, are offered in immediately available funds in the London Interbank
Market to the London office of Chase by leading banks in the Eurodollar market
at 11:00 a.m., London time, two (2) Business Days prior to the commencement of
the Interest Period to which such Eurodollar Rate is applicable, by (b) a
fraction (expressed as a decimal) the numerator of which shall be the number one
and the denominator of which shall be the number one minus the Eurodollar Rate
Reserve Percentage for such Interest Period.
9
18
"Eurodollar Rate Loan" means any outstanding principal amount
of the Loans of any Lender that, for an Interest Period, bears interest at a
rate determined with reference to the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" for any Interest Period
means the aggregate reserve percentages (expressed as a decimal) from time to
time established by the Board of Governors of the Federal Reserve System of the
United States and any other banking authority to which any of the Lenders are
now or hereafter subject, including, but not limited to any reserve on
Eurocurrency Liabilities as defined in Regulation D of the Board of Governors of
the Federal Reserve System of the United States at the ratios provided in such
Regulation from time to time, it being agreed that any portion of the Principal
Balance bearing interest at a rate determined by reference to the Eurodollar
Rate shall be deemed to constitute Eurocurrency Liabilities, as defined by such
Regulation, and it being further agreed that such Eurocurrency Liabilities shall
be deemed to be subject to such reserve requirements without benefit of or
credit for prorations, exceptions or offsets that may be available to any of the
Lenders from time to time under such Regulation and irrespective of whether such
Lender actually maintains all or any portion of such reserve.
"Event of Default" has the meaning specified in Section 8.1.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"FelCor Bonds" means the debt securities issued under the
Indenture.
"FF&E Reserve" means, for any Person and its Subsidiaries
determined on a consolidated basis in accordance with GAAP (or with respect to
any Hotel) for any period, a reserve equal to four percent (4%) of Room Revenues
from any Hotel owned by such Person or its Subsidiary (or from such Hotel), for
such period (unless such Person is contractually obligated to reserve a greater
percentage of Room Revenues, in which case such Person shall be required to
reserve such greater amount with respect to such Hotel), plus, for any Person,
such Person's Pro Rata Share of any FF&E Reserve for any Hotel owned by such
Person's Unconsolidated Entities.
"Financial Covenant Imbalance" shall have the meaning
specified in Section 2.6(c).
"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.
10
19
"Fixed Charges" means, for any Person for any period, (a)
Gross Interest Expense for such period plus (b) the aggregate amount of
scheduled principal payments on the Total Indebtedness of such Person (excluding
optional prepayments and scheduled principal payments in respect of any such
Total Indebtedness which is payable in a single installment at final maturity)
required to be made during such period plus (c) dividends required to be paid by
such Person (and its Subsidiaries determined on a consolidated basis in
conformity with GAAP) in connection with preferred Stock issued by such Person
(including such Person's Pro Rata Share of such dividends required to be paid by
such Person's Unconsolidated Entities.)
"Free Cash Flow" means, for any Person for any period, the
Adjusted Funds From Operations for such period less (a) the aggregate FF&E
Reserve for such Person and its Subsidiaries for such period, and (b) the
aggregate amount of scheduled principal payments on the Total Indebtedness of
such Person (excluding optional prepayments and scheduled principal payments in
respect of any such Indebtedness which is payable in a single installment at
final maturity) required to be made during such period.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination except that, for purposes of Articles V and VII, GAAP shall be
determined on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the audited financial
statements referred to in Section 4.5.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity duly exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Interest Expense" means, for any Person for any period,
the sum of (a) the total interest expense in respect of all Indebtedness
(excluding all Contingent Obligations) of such Person and its Subsidiaries for
such period determined on a consolidated basis in conformity with GAAP, plus
capitalized interest of such Person and its Subsidiaries, plus (b) such Person's
Pro Rata Share of Gross Interest Expense of such Person's Unconsolidated
Entities.
"Guarantor" means the Initial Guarantors and each direct and
indirect wholly owned Subsidiary of the Borrower formed or acquired after the
date hereof, provided however, a wholly owned Subsidiary of the Borrower which
is formed or acquired after the date hereof shall only be required to be a
Guarantor if such Subsidiary is a Required Guarantor.
11
20
"Guaranty" means that certain guaranty entered into in
connection herewith, in substantially the form of Exhibit G, executed by each
Guarantor, as such guaranty may be amended, supplemented or otherwise modified
from time to time.
"Hazardous Material" means any substance, material or waste
which is regulated by any Governmental Authority of the United States as a
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste,"
"toxic substance" or words of similar meaning or import under any provision of
Environmental Law, which includes, but is not limited to, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"Hotel" means any Real Estate or Lease comprising an operating
facility offering hotel or other lodging services.
"Hotel Documents" means, with respect to any Hotel, the
following documents:
(i) A description of such Hotel, such description to
include the age, location and number of rooms or suites of such Hotel;
(ii) Details of the Borrower's Investment in such Hotel
and, if available (or able to be reasonably obtained), details of the
Adjusted NOI of such Hotel for the prior four (4) Fiscal Quarters;
(iii) A copy of the most recent ALTA Owner's Policy of
Title Insurance (or commitment to issue such a policy to the Person
owning or to own such Hotel) relating to such Hotel showing the
identity of the fee titleholder thereto and all matters of record as of
its date;
(iv) Copies of each of the Operating Lease, Management
Agreement and License relating to such Hotel;
(v) Copies of all engineering, mechanical, structural and
maintenance studies performed by third party consultants with respect
to such Hotel;
(vi) A "Phase I" environmental assessment of such Hotel
prepared by an environmental engineering firm acceptable to the
Administrative Agent, and any additional environmental studies or
assessments available to the Borrower performed with respect to such
Hotel;
(vii) If such Hotel is owned pursuant to a Qualified Lease,
a copy of such Lease together with all and any amendments thereto or
modifications thereof; and
(viii) Such other information as the Administrative Agent
may reasonably request in order to evaluate the Hotel.
12
21
"Improvements" has the meaning specified in Section 4.22(c).
"Indebtedness" of any Person means, without duplication, the
principal amount of (i) all indebtedness of such Person for borrowed money
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers' acceptances, whether or
not matured) or for the deferred purchase price of property or services, (ii)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments (including, in the case of the Borrower, the Loans outstanding),
(iii) all indebtedness of such Person created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), (iv) all Capitalized Lease Obligations of such Person, (v) all
Contingent Obligations of such Person, (vi) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value (other than for
other equity securities) any Stock or Stock Equivalents of such Person, valued,
in the case of mandatorily redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (vii) all Indebtedness referred to in clause (i), (ii), (iii), (iv),
(v) or (vi) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including, without limitation, accounts and general intangibles)
owned by such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness, and (viii) all liabilities of such Person
under Title IV of ERISA.
"Indemnitees" has the meaning specified in Section 10.4.
"Indenture" means that certain Indenture dated as of October
1, 1997, as amended to date and as may be amended, modified, or supplemented
from time to time, among FelCor Suites Limited Partnership (predecessor in
interest to FelCor LP) as issuer, various Borrower affiliates as guarantors, and
SunTrust Bank, Atlanta, as trustee providing for the initial issuance of up to
$175,000,000 aggregate principal amount of 7-3/8% senior notes due 2004 and
$125,000,000 aggregate principal amount of 7-5/8% senior notes due 2007.
"Initial Guarantors" means (i) FelCor/CSS Hotels, L.L.C., a
Delaware limited liability company, (ii) FelCor/LAX Hotels, L.L.C., a Delaware
limited liability company, (iii) FelCor/CSS Holdings, L.P., a Delaware limited
partnership, (iv) FelCor/St. Xxxx Holdings, L.P., a Delaware limited
partnership, (v) FelCor/LAX Holdings, L.P., a Delaware limited partnership, (vi)
FelCor Eight Hotels L.L.C., a Delaware limited liability company, (vii) FelCor
Hotel Asset Company, L.L.C., a limited liability company, (viii) FelCor Nevada
Holdings, L.L.C., a Nevada limited liability company, (ix) FHAC Nevada Holdings,
L.L.C., a Nevada limited liability company, and (x) FHAC Texas Holdings L.P., a
Texas limited partnership.
"Interest Period" means, in the case of any Eurodollar Rate
Loan, (i) initially, the period commencing on the date such Eurodollar Rate Loan
is made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate
Loan and ending one,
13
22
two, three, six, nine (upon consent of each Lender) or twelve (upon consent of
each Lender) months thereafter, as selected by the Borrower pursuant to Section
2.2, and (ii) thereafter, if such Loan is continued in whole or in part, as a
Eurodollar Rate Loan pursuant to Section 2.7, a period commencing on the last
day of the immediately preceding Interest Period therefor and ending one, two,
three, six, nine (upon consent of each Lender) or twelve (upon consent of each
Lender) months thereafter, as selected by the Borrower in its Notice of
Conversion or Continuation given to the Administrative Agent pursuant to Section
2.7; provided, however, that:
(A) if any Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless the
result of such extension would be to extend such Interest
Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding
Business Day;
(B) any Interest Period that 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 a calendar month;
(C) the Borrower may not select any Interest Period
which ends after the Maturity Date;
(D) the Borrower may not select any Interest Period
in respect of Loans having an aggregate principal amount of
less than $5,000,000; and
(E) there shall be outstanding at any one time no
more than fifteen (15) Interest Periods in the aggregate.
"Interest Rate Contracts" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
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, any Stock, Stock Equivalents, other equity interest, obligations or other
securities of, (i) any other Person, (ii) 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 Grade" means a rating by both S&P and Xxxxx'x,
each such rating being in one of such agency's four highest generic rating
categories that signifies investment grade (i.e. BBB- (or the equivalent) or
higher by S&P and Baa3 (or the equivalent) or higher by Xxxxx'x); provided, in
each case, such ratings are publicly available; provided further, that in the
event Xxxxx'x or S&P is no longer in existence for purposes of determining
Investment Grade, such organization may be replaced by a
14
23
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act of 1933, as amended) designated by FelCor LP and
FelCor.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"Joint Enterprise" shall mean with respect to any Person, any
joint venture, corporation, partnership or other business entity which is not
(directly or indirectly) owned 100% by such Person.
"Joint Venture Hotel" means any Hotel owned by an Eligible
Joint Venture.
"JV%" means, with respect to any Eligible Joint Venture, the
percentage ownership interest of Borrower in such Eligible Joint Venture.
"Leases" means, with respect to the Borrower or any of its
Subsidiaries or Eligible Joint Ventures, all of those leasehold estates in real
property owned by the Borrower or such Subsidiary or Eligible Joint Venture, as
lessee, as such may be amended, supplemented or otherwise modified from time to
time to the extent permitted by this Agreement.
"Legal Proceedings" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private) or governmental
proceedings.
"Leverage Ratio" shall mean, at any date, a fraction
(expressed as a percentage) the numerator of which is Total Indebtedness, on
such date, and the denominator of which is Total Value, on such date.
"License" means either (x) an agreement in favor of either the
Borrower or the Operating Lessee as licensee, permitting the use of hotel system
trademarks, trade names and any related rights in connection with the ownership
or operation of any Hotel or (y) a Management Agreement, provided the Manager
under such Management Agreement owns the rights to hotel system trademarks,
trade names and any related rights in connection with the ownership or operation
of any Hotel.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the Uniform Commercial Code or comparable law of any jurisdiction, of any
financing statement naming the owner of the asset to which such Lien relates as
debtor.
"Loan" means a loan made by a Lender to the Borrower pursuant
to Article II and "Loans" means the aggregate Loans.
15
24
"Loan Documents" means, collectively, this Agreement, the
Notes, the Pledge Agreement, the Guaranties and each certificate, agreement or
document executed by a Loan Party and delivered to the Administrative Agent or
any Lender in connection with or pursuant to any of the foregoing.
"Loan Party" means each of the Borrower and each Guarantor.
"Majority Lenders" means, at any time, Lenders holding at
least 51% of the then aggregate unpaid principal amount of the Loans.
"Management Agreement" means an agreement relating to the
operation and/or management of any Hotel on behalf of the Operating Lessee.
"Manager" means Promus, Starwood, MeriStar Hotels & Resorts,
Inc., Coastal Hotel Group, Inc., Bristol or such other manager as shall be
reasonably approved by the Borrower and the Administrative Agent (such consent
not to be unreasonably withheld or delayed) and engaged by the Operating Lessee,
as manager under the Management Agreement.
"Material Adverse Change" means a material adverse change in
any of (i) the condition (financial or otherwise), business, performance,
prospects, operations or properties of (A) either entity which comprises the
Borrower or (B) the Borrower and its Subsidiaries taken as one enterprise, (ii)
the legality, validity or enforceability of any Loan Document, or any material
Operating Lease or the Operating Leases taken as a whole, (iii) the ability of
the Borrower or its Significant Subsidiaries to repay the Obligations or to
perform its obligations under any Loan Document, (iv) the ability of (x) any
Operating Lessee to perform its obligations under any material Operating Lease
or (y) DJONT or Bristol to perform its obligations under their respective
Operating Leases taken as a whole, or (v) the rights and remedies of the Lenders
or the Administrative Agent under the Loan Documents.
"Material Adverse Effect" means an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing, a Material
Adverse Change.
"Maturity Date" shall mean March 31, 2004.
"Minimum Tangible Net Worth" means, with respect to the
Borrower, at any time, the sum of (a) $858,000,000; plus (b) 50% of the
aggregate net proceeds received by the Borrower or any of its Subsidiaries after
March 31, 1998 in connection with any offering of Stock or Stock Equivalents of
the Borrower and its Subsidiaries taken as a whole.
"Moody's" means Xxxxx'x Investors Service.
"Multiemployer Plan" means, as of any applicable date, a
multiemployer plan, as defined in Section 4001(a)(3) of ERISA, and to which any
Loan Party, any of its Subsidiaries or any ERISA Affiliate is making, is
obligated to make, or within the six-
16
25
year period ending at such date, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Income (Loss)" means, for any Person for any period, the
aggregate of net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP.
"Net Operating Income" means, with respect to any Hotel, for
any period, the sum of the following (without duplication) (a) all gross income,
revenues, receipts and all other consideration received by the lessor under the
Operating Lease for such Hotel, including, without limitation, base rent,
percentage and similar rentals, late charges and interest payments, but
excluding extraordinary income and, until earned, security deposits, prepaid
rents and other refundable receipts, minus (b) all expenses incurred by the
owner of such Hotel during such period pursuant to its obligations as lessor
under the Operating Lease for such Hotel, including, without limitation, real
estate taxes, personal property taxes, maintenance and repair costs of a
non-capital nature for the structural portions of such Hotel and premiums
payable for insurance required to be carried by the lessor on or with respect to
such Hotels pursuant to the Operating Lease therefor, but excluding
extraordinary expenses.
"Non-Recourse Indebtedness" of any Person means all
Indebtedness of such Person with respect to which recourse for payment is
limited to specific assets encumbered by a Lien securing such Indebtedness;
provided, however, that personal recourse of a holder of Indebtedness against
any obligor with respect thereto for fraud, misrepresentation, misapplication of
cash, waste and other circumstances customarily excluded from non-recourse
provisions in non-recourse financing of real estate shall not, by itself,
prevent any Indebtedness from being characterized as Non-Recourse Indebtedness,
provided further that if a personal recourse claim is made in connection
therewith, such claim shall not constitute Non-Recourse Indebtedness for the
purposes of this Agreement).
"Note" means a promissory note of the Borrower payable to the
order of any Lender in a principal amount equal to the amount of such Lender's
Loan as originally in effect, in substantially the form of Exhibit A, evidencing
the Indebtedness of the Borrower to such Lender resulting from the Loan made by
such Lender and "Notes" means the aggregate Notes.
"Notice of Conversion or Continuation" shall have the meaning
specified in Section 2.7.
"Obligations" means the Loans, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Administrative
Agent, any Lender, any Affiliate of any of them or any Indemnitee, of every type
and description, present or future, arising under this Agreement or under any
other Loan Document, whether direct or indirect (including, without limitation,
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term "Obligations"
includes, without limitation, all interest, charges, expenses, fees, attorneys'
17
26
fees and disbursements and any other sum then payable by the Borrower under this
Agreement or any other Loan Document.
"OECD" means the Organization for Economic Cooperation and
Development.
"Operating Lease" means a lease or sublease relating to any
Hotel, between the Borrower or any of its Subsidiaries or Eligible Joint
Ventures or Unconsolidated Entities, as lessor, and an Operating Lessee, as
lessee, substantially in a form as approved by Administrative Agent.
"Operating Lessee" means either (x) DJONT or its Subsidiary
(provided DJONT owns at least 50% of the voting Stock in such Subsidiary and
maintains voting control over such Subsidiary), or (y) any entity listed on
Schedule III attached hereto, each as lessee under an Operating Lease.
"Operator" means the Operating Lessee and/or the Manager or
both (as the case may be) responsible for the operation and management of any
Hotel.
"Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award.
"Other Taxes" has the meaning specified in Section 2.14(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" means a plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA or Code Section 412 and which any Loan
Party, any of its Subsidiaries or any ERISA Affiliate maintains, contributes to
or has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Permit" means any permit, approval, authorization, license,
variance, registration, permission or consent required from a Governmental
Authority under an applicable Requirement of Law.
"Permitted Liens" means, collectively, (a) Liens arising by
operation of law in favor of materialmen, mechanics, warehousemen, carriers,
lessors or other similar Persons incurred by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures in the ordinary course of business which
secure its obligations to such Person; provided, however, that (i) the Borrower
or such Subsidiary or Eligible Joint Venture is not in default with respect to
such payment obligation to such Person, or (ii) the Borrower or such Subsidiary
or Eligible Joint Venture is in good faith and by appropriate proceedings
diligently contesting such obligation and adequate provision is made for the
payment thereof; (b) Liens (excluding Environmental Liens) securing taxes,
assessments or governmental charges or levies; provided, however, that neither
the Borrower nor any of its Subsidiaries or Eligible Joint Ventures is in
default in respect of any payment obligation with respect thereto unless the
Borrower or such Subsidiary or Eligible Joint
18
27
Venture is in good faith and by appropriate proceedings diligently contesting
such obligation and adequate provision is made for the payment thereof; and (c)
Zoning restrictions, subleases, licenses or concessions for restaurants, bars,
gift shops, antennas, communications equipment and similar agreements entered
into in the ordinary course of such Person's business in connection with the
ownership and operation of a hotel; and easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or use
of the property or assets of the Borrower or any of its Subsidiaries or Eligible
Joint Venture or impair, in any material manner, the use of such property for
the purposes for which such property is held by the Borrower or any such
Subsidiary or Eligible Joint Venture.
"Permitted Transferee" shall be those entities named on
Schedule IV.
"Person" means an individual, partnership, corporation
(including, without limitation, a business trust), limited liability company,
joint stock company, trust, unincorporated association, joint venture or other
entity, or a Governmental Authority.
"Plan" means an employee benefit plan, as defined in Section
3(3) of ERISA, which any Loan Party or any of its Subsidiaries maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Pledge Agreement" means that certain Pledge and Security
Agreement entered into in connection herewith in substantially the same form of
Exhibit H, under which ownership interests in certain entities of or affiliated
with the Borrower (as set forth in the Pledge Agreement) are pledged under
certain circumstances as collateral for, inter alia, the Loans, as such Pledge
Agreement may be amended, modified, or supplemented from time to time.
"Principal Balance" means, collectively, the outstanding
principal balances of the Notes from time to time.
"Projections" means those financial projections covering the
fiscal years ending in 1999 through 2001, inclusive, delivered to the Lenders by
the Borrower.
"Promus" means Promus Hotels, Inc., a Delaware corporation or
any Person controlled by Promus Hotel Corporation, that is a Manager.
"Pro Rata Share" means, for any Person, with respect to such
Person's Unconsolidated Entities (or Subsidiaries), the percentage ownership
interest of such Person in such Unconsolidated Entity (or Subsidiary), provided
that, in the event that such Person is the general partner of such
Unconsolidated Entity (or Subsidiary), such Person's Pro Rata Share with respect
to such Unconsolidated Entity (or Subsidiary) shall be the percentage of the
general partner interests owned by such Person in such Unconsolidated Entity (or
Subsidiary) with respect to any Indebtedness for which recourse may be made
against any general partner of such Unconsolidated Entity (or Subsidiary).
19
28
"Qualified Lease" means any Lease (a) which is a direct ground
lease granted by the fee owner of real property, (b) which may be transferred
and/or assigned without the consent of the lessor (or as to which the Lease
expressly provides that (i) such Lease may be transferred and/or assigned with
the consent of the lessor and (ii) such consent shall not be unreasonably
withheld or delayed), (c) which has a remaining term (including any renewal
terms exercisable at the sole option of the lessee) of at least 35 years, (d)
under which no material default has occurred and is continuing, (e) with respect
to which a security interest may be granted without the consent of the lessor
(or as to which the Lease expressly provides that (i) a security interest in
such lease may be granted with the consent of the lessor and (ii) such consent
shall not be unreasonably withheld or delayed), and (f) which contains lender
protection provisions reasonably acceptable to the Administrative Agent.
"Ratable Portion" or "ratably" means, except as otherwise
specifically provided herein, with respect to any Lender, the quotient obtained
by dividing the amount of the Loan of such Lender by the amount of the Loans of
all Lenders and that payments of principal of the Loans and interest thereon
shall be made pro rata in accordance with the respective unpaid principal
amounts of the Loans held by the Lenders.
"Real Estate" means all of those plots, pieces or parcels of
land now owned or hereafter acquired by the Borrower or any of its Subsidiaries
or Eligible Joint Ventures (the "Land"), including, without limitation, those
listed on Schedule 4.22(a), together with the right, title and interest of the
Borrower or such Subsidiary or Eligible Joint Venture, if any, in and to the
streets, the land lying in the bed of any streets, roads or avenues, opened or
proposed, in front of, adjoining or abutting the Land to the center line
thereof, the air space and development rights pertaining to the Land and the
right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including, without limitation, all alley, vault,
drainage, mineral, water, oil and gas rights, together with all of the buildings
and other improvements now or hereafter erected on the Land, and any fixtures
appurtenant thereto.
"Recourse Secured Indebtedness" of any Person means the sum of
the following: (A) all Indebtedness of such Person and its Subsidiaries
determined on a consolidated basis in conformity with GAAP which (x) is secured
by a Lien (other than in connection with the Pledge Agreement) and (y) recourse
for payment is not limited to the specific assets encumbered by such Lien,
provided, however, that personal recourse of a holder of Indebtedness against
(i) any Subsidiary (or Unconsolidated Entity) of Borrower formed specifically
for the limited purpose of owning specific assets which secure Indebtedness
which does not exceed 65% of the value of the assets owned by such Subsidiary
(or Unconsolidated Entity) or (ii) any obligor with respect thereto for fraud,
misrepresentation, misapplication of cash, waste and other circumstances
customarily excluded from non-recourse provisions in non-recourse financing of
real estate, shall not, by itself, cause any Indebtedness to be characterized as
Recourse Secured Indebtedness, provided further that if a personal recourse
claim is made in connection therewith, such
20
29
claim shall constitute Recourse Secured Indebtedness for the purposes of this
Agreement; plus (B) such Person's Pro Rata Share of Recourse Secured
Indebtedness of such Person's Unconsolidated Entities.
"Refurbishment Hotel" shall mean Hotels, designated by
Borrower, which (i) will experience or are experiencing a disruption in hotel
operations due to refurbishment and (ii) are continuously operating with at
least 65% of its rooms in service at all times. Any given Hotel may only be
characterized as a Refurbishment Hotel for a maximum of six consecutive Fiscal
Quarters provided, however, that the requirement of continuous operation shall
not apply with respect to the Allerton Hotel or the Tampa Hotel.
"Register" has the meaning specified in Section 10.7.
"Release" means any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration on or into the indoor or outdoor environment or
into or out of any property.
"Remedial Action" means all actions, including without
limitation any Capital Expenditures, required or necessary to (i) clean up,
remove, treat or in any other way address any Hazardous Material or other
substance in the indoor or outdoor environment, (ii) prevent the Release or
threat of Release, or minimize the further Release, of any Hazardous Material or
other substance so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (iii) perform
pre-remedial studies and investigations or post-remedial monitoring and care, or
(iv) bring facilities on any property owned or leased by the Borrower or any of
its Subsidiaries into compliance with all Environmental Laws and Environmental
Permits.
"Reporting Operating Lessee" shall mean any Operating Lessee
which is a party to Operating Leases which in the aggregate provide at least 25%
of Borrower's consolidated Operating Lease revenue.
"Requested Operating Lessee" shall mean each Operating Lessee
which is a party to Operating Leases which in the aggregate provide at least 10%
of Borrower's consolidated Operating Lease revenue provided such Operating
Lessee has been designated by the Administrative Agent as a Requested Operating
Lessee.
"Required Guarantor" shall mean any direct or indirect
wholly-owned Subsidiary of Borrower which is formed after the date hereof,
provided, the value of the assets of such Subsidiary plus the value of the
assets of such Person's Subsidiaries' exceed 10% of Total Value, provided,
further, that in the event the aggregate value of the assets of all wholly-owned
Subsidiaries which are not Guarantors exceed 20% of Total Value then each direct
or indirect wholly-owned Subsidiary formed thereafter shall be deemed a Required
Guarantor if the value of the assets of such Subsidiary plus the value of the
assets of such Person's Subsidiaries' exceed 1% of Total Value.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such
21
30
Person, and all federal, state and local laws, rules and regulations, including,
without limitation, federal, state or local securities, antitrust and licensing
laws, all food, health and safety laws, and all applicable trade laws and
requirements, including, without limitation, all disclosure requirements of
Environmental Laws, ERISA and all orders, judgments, decrees or other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Responsible Officer" means, with respect to any Person, any
of the principal executive officers or general partners of such Person.
"Restricted Payments" has the meaning specified in Section
7.4.
"Room Revenues" has the meaning ascribed to such term in the
form of Operating Lease attached as Exhibit F hereto.
"S&P" means Standard & Poor's Ratings Services and its
successors.
"Significant Subsidiary" means, at any date of determination,
(i) any Subsidiary of the Borrower which, or (ii) any group of Subsidiaries of
the Borrower which when aggregated, at such date, directly or indirectly own(s)
or lease(s) one or more Hotels having an aggregate value (calculated on the
basis of the Borrower's Investment therein) in excess of $75,000,000.
"Solvent" means, with respect to any Person, that the value of
the assets of such Person (at fair value) is, on the date of determination,
greater than the total amount of liabilities (including, without limitation,
contingent and unliquidated liabilities) of such Person as of such date and
that, as of such date, such Person is able to pay all liabilities of such Person
as such liabilities mature and does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Starwood" shall mean Starwood Hotels and Resorts and any
Person controlled by Starwood Hotels & Resorts Worldwide, Inc. (or its
successors or assigns) that is a Manager.
"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.
22
31
"Subsidiary" means, with respect to any Person (other than
FelCor LP with respect to FelCor), at any date, any corporation, partnership or
other business entity the accounts of which would be consolidated with those of
such Person in its consolidated financial statements in accordance with GAAP, if
such statements were prepared as of such date.
"Tampa Hotel" shall mean that certain Holiday Inn Hotel
located in Tampa (Xxxxx Gardens), Florida.
"Tangible Net Worth" means, with respect to the Borrower at
any date, (a) the sum of (i) the total shareholders' equity of FelCor, and (ii)
the book value of all partnership interests in FelCor LP owned by Persons other
than FelCor; minus (b) the sum of all intangible assets of FelCor, each as shown
on the consolidated balance sheet of FelCor as of such date.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary of
such Person, and (ii) any Affiliate of such Person with which such Person files
or is eligible to file consolidated, combined or unitary tax returns.
"Tax Return" has the meaning specified in Section 4.3.
"Taxes" has the meaning specified in Section 2.14(a).
"Telerate Page 3750" means the display designated as "Page
3750" on the Associated Press-Dow Xxxxx Telerate Service (or such other page as
may replace Page 3750 on the Associated Press-Dow Xxxxx Telerate Service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
interest settlement rates for U.S. Dollar deposits). Any Eurodollar Rate
determined on the basis of the rate displayed on Telerate Page 3750 in
accordance with the provisions hereof shall be subject to corrections, if any,
made in such rate and displayed by the Associated Press-Dow Xxxxx Telerate
Service within one hour of the time when such rate is first displayed by such
Service.
"Total Indebtedness" of any Person means the sum of the
following (without duplication): (a) all Indebtedness of such Person and its
Subsidiaries determined on a consolidated basis in conformity with GAAP, plus
(b) such Person's Pro Rata Share of Indebtedness of such Person's Unconsolidated
Entities, provided, however, Indebtedness of a Person's Subsidiary shall only be
included in the calculation of Total Indebtedness to the extent of the greater
of (x) such Person's Pro-Rata Share of such Indebtedness and (y) the amount of
such Indebtedness guaranteed by such Person.
"Total Secured Indebtedness" of any Person means any Total
Indebtedness of such Person for which the obligations thereunder are secured by
a pledge of or other encumbrance (other than in connection with the Pledge
Agreement) on any assets of such Person or its Subsidiaries or Unconsolidated
Entities.
"Total Value" means the sum of:
23
32
(A) for Hotels owned or leased pursuant to a Qualified Lease
(including newly acquired Hotels and Hotels to be immediately acquired using the
proceeds of any Loans), other than Hotels described in clause (B) below,
Adjusted NOI on a consolidated basis from such Hotels for the preceding four (4)
Fiscal Quarters divided by ten percent (10%); plus
(B) for Hotels owned or leased pursuant to a Qualified Lease
by Borrower (or any Subsidiary or Unconsolidated Entity of Borrower) for less
than four (4) fiscal Quarters and (x) for which the Borrower (or any Subsidiary
or Unconsolidated Entity of Borrower) does not have, or is not able to
reasonably obtain, trailing four quarter audited financial information or (y)
which the Borrower has designated as a Refurbishment Hotel, in each such case
95% of the Borrower's Investment in such Hotels (provided that if the Allerton
Hotel is designated as a Refurbishment Hotel, then such Hotel shall be valued at
85% of the Borrower's Investment in such Hotel); plus
(C) the sum of $15,000,000, being the agreed aggregate sum of
the Borrower's investment at cost in (x) certain vacant land at the Kingston
Plantation Hotel in Myrtle Beach, South Carolina, and (y) the Myrtle Beach Condo
Management Company; plus
(D) unencumbered Cash or Cash Equivalents held by the Borrower
and its Subsidiaries (determined on a consolidated basis in accordance with
GAAP) plus the Borrower's Pro Rata Share of unencumbered Cash or Cash
Equivalents held by the Borrower's Unconsolidated Entities;
provided, however, that in the case of (A) above, Adjusted NOI with respect to a
Hotel shall only be included in the calculation of Total Value if such Hotel is,
as at the date of such calculation, owned or leased by Borrower, its Subsidiary
or its Unconsolidated Entity but only to the extent (i) in the case of Adjusted
NOI attributable to the Borrower's Subsidiaries, financial statements prepared
in accordance with GAAP would consolidate such Subsidiary with the Borrower and
(ii) in the case of Adjusted NOI attributable to the Borrower's Unconsolidated
Entities, of the Borrower's Pro Rata Share of such Adjusted NOI, and provided,
further, in the case of (B) above, the Borrower's Investment with respect to a
Hotel shall only be included in the calculation of Total Value if such Hotel is,
as of the date of such calculation, owned by Borrower, its Subsidiary or
Unconsolidated Entity. Notwithstanding the foregoing, in no event shall more
than 20% of Total Value be attributable to Refurbishment Hotels which are valued
at 95% (or 85% in the case of the Allerton Hotel) of Borrower's Investment.
"Unconsolidated Entity" means, with respect to any Person, at
any date, any other Person in whom such Person holds an Investment, which
Investment is accounted for in the financial statements of such Person on an
equity basis of accounting and whose financial results would not be consolidated
under GAAP with the financial results of such Person on the consolidated
financial statements of such Person, if such statements were prepared as of such
date.
24
33
"Unencumbered" means, with respect to any Hotel, at any date
of determination, the circumstance that such Hotel on such date:
(a) is not subject to any Liens (including restrictions on
transferability or assignability) of any kind (including any such Lien or
restriction imposed by (i) any agreement governing Indebtedness, and (ii) the
organizational documents of the Borrower or any of its Subsidiaries or Eligible
Joint Ventures, but excluding Permitted Liens and, in the case of any Qualified
Lease (to the extent permitted by the definition thereof), restrictions on
transferability or assignability in respect of such Lease);
(b) is not subject to any agreement (including (i) any
agreement governing Indebtedness, and (ii) if applicable, the organizational
documents of the Borrower or any of its Subsidiaries or Eligible Joint Ventures)
which prohibits or limits the ability of the Borrower or any of its Subsidiaries
or Eligible Joint Ventures to create, incur, assume or suffer to exist any Lien
upon such Hotel, other than Permitted Liens (excluding any agreement or
organizational document (x) which limits generally the amount of Indebtedness
which may be incurred by the Borrower or its Subsidiaries or Eligible Joint
Ventures or (y) in the case of an Eligible Joint Venture which is not an
Eligible Entity, which requires the consent of partners (or the equivalent) in
such Eligible Joint Venture (other than the Borrower or its wholly owned
Subsidiaries) to create, incur, assume or suffer to exist any Lien upon such
Hotel); and
(c) is not subject to any agreement (including any agreement
governing Indebtedness) which entitles any Person to the benefit of any Lien
(other than Permitted Liens) on such Hotel, or would entitle any Person to the
benefit of any such Lien upon the occurrence of any contingency (including,
without limitation, pursuant to an "equal and ratable" clause, other than those
certain equal and ratable clauses contained in the Indenture).
For the purposes of this Agreement, any Joint Venture Hotel or Hotel owned by a
Subsidiary or Eligible Joint Venture of the Borrower shall not be deemed to be
Unencumbered unless both (i) such Hotel and (ii) all Stock owned directly or
indirectly by Borrower in such Eligible Joint Venture or Subsidiary, is
Unencumbered.
"Unencumbered Hotel Property" means, collectively, (a) such of
the Hotels owned or leased by the Borrower or any of its direct or indirect
wholly-owned Subsidiaries, and (b) such of the Joint Venture Hotels, as in each
case shall meet at any time and from time to time, each of the following minimum
criteria:
(a) such Hotel is Unencumbered;
(b) such Hotel is free of all material structural and title
defects and other material adverse matters;
(c) such Hotel is, as of the date upon which such Hotel is
included as an Unencumbered Hotel Property and as of the end of each succeeding
Fiscal Quarter, (i) in compliance, in all material respects, with all applicable
Environmental Laws, and (ii) not subject to any material Environmental
Liabilities and Costs, in each case as initially
25
34
verified by a written report of an environmental consultant reasonably
acceptable to the Administrative Agent;
(d) such Hotel is (i) owned in fee simple by, or (ii) leased
pursuant to a Qualified Lease in favor of, the Borrower or its direct or
indirect wholly-owned Subsidiary or an Eligible Joint Venture;
provided that, if a Joint Venture Hotel is owned by an Eligible Joint Venture
which owns more than a single Hotel, such Joint Venture Hotel shall only be an
Unencumbered Hotel Property if it satisfies all of the requirements set forth in
subparagraphs (a) through (d) above and all other Hotels owned by such Eligible
Joint Venture satisfy the conditions set forth in subparagraphs (a) and (c)
above, provided further that the parties acknowledge and agree that the Embassy
Suites Hotel located at Los Angeles Airport, CA is subject to a mortgage in
favor of FelCor LP but the Administrative Agent has agreed, as a one time waiver
only, to accept such Hotel as Unencumbered (for purposes of clause (a) above)
provided that such Hotel shall cease to be Unencumbered (for purposes of clause
(a) above), inter alia, in the event that FelCor LP assigns its mortgage to any
other Person.
"Unencumbered NOI" shall mean Adjusted NOI from each
Unencumbered Hotel Property, provided, that (i) only Borrower's JV% of Adjusted
NOI generated by any Joint Venture Hotel shall be included in Unencumbered NOI
and (ii) in no event shall more than 25% of Unencumbered NOI be attributable to
Unencumbered Hotel Properties leased pursuant to Qualified Leases.
"Unsecured Interest Expense" means, for any Person for any
period, the greater of (I) the sum of (a) the total interest expense in respect
of all unsecured Indebtedness of such Person (excluding, on an annual basis, up
to $3,000,000 of non-cash expense which is attributable to the amortization of
costs and expenses incurred in connection with the incurrence of such
Indebtedness) and its Subsidiaries for such period determined on a consolidated
basis in conformity with GAAP, plus capitalized interest of such Person and its
Subsidiaries in respect of unsecured Indebtedness, plus (b) such Person's Pro
Rata Share of Unsecured Interest Expense of such Person's Unconsolidated
Entities and (II) 7.5% of the sum of (a) the average outstanding balance of all
unsecured Indebtedness of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP plus (b) such
Person's Pro Rata Share of unsecured Indebtedness of such Person's
Unconsolidated Entities for such period.
1.2. 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
mean "to but excluding" and the word "through" means "to and including".
1.3. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
26
35
1.4. Certain Terms. (a) The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, and not to any particular Article, Section, subsection or clause in this
Agreement. References herein to an Exhibit, Schedule, Article, Section,
subsection or clause refer to the appropriate Exhibit or Schedule to, or
Article, Section, subsection or clause in this Agreement.
(b) The terms "Lender" and "Administrative Agent" include their respective
successors and the term "Lender" includes each assignee of such Lender who
becomes a party hereto pursuant to Section 10.7.
Article II
AMOUNTS AND TERMS OF THE LOANS
2.1. The Loans. On the terms and subject to the conditions
contained in this Agreement, each Lender severally agrees to make a loan (each a
"Loan", and in the aggregate, the "Loans") to Borrower and Borrower agrees to
borrow the Loans on the Closing Date, in an amount equal to the amount set
opposite such Lender's name on Schedule I as its Loan Commitment (such Lender's
"Commitment", and in the aggregate, "Commitments"). Any amounts prepaid may not
be reborrowed. The Loan of each Lender shall be evidenced by the Note to the
order of such Lender.
2.2. Making the Loans. (a) The Loans shall be made on the
Closing Date. Not later than 11:00 A.M. (New York City time) on the third (3rd)
Business Day prior to the Closing Date, Borrower shall give to the
Administrative Agent notice of the initial Interest Period or Periods, which
notice shall specify each Interest Period and the respective pro rata portion of
the aggregate Loan amount to which such Interest Period shall apply; provided,
however, that the aggregate of the Eurodollar Rate Loans for each Interest
Period must be in an amount of not less than $5,000,000 or an integral multiple
of $500,000 in excess thereof. If the Administrative Agent does not receive such
notice of the initial Interest Period as provided above, the initial Interest
Period shall equal one month and shall apply to the aggregate principal balance
of the Loans.
(b) Each Lender shall, before 12:00 Noon (New York City time)
on the Closing Date, make available for the account of its Applicable Lending
Office to the Administrative Agent at its address referred to in Section 10.2,
in immediately available funds, such Lender's Loan. By 12:00 Noon (New York City
time) on the Closing Date, subject to fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower at the Administrative Agent's aforesaid address;
provided that in the event that the Administrative Agent shall have received
notice from a Lender prior to the Closing Date that such Lender will not make
available to the Administrative Agent such Lender's Loan, the Administrative
Agent shall be under no obligation to fund such Lender's Loan.
27
36
(c) Unless the Administrative Agent shall have received notice
from a Lender prior to the Closing Date that such Lender will not make available
to the Administrative Agent such Lender's Loan, the Administrative Agent may
assume that such Lender has made such Loan available to the Administrative Agent
on the Closing Date in accordance with this Section 2.2 and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower on
the Closing Date a corresponding amount. If and to the extent that such Lender
shall not have so made such Loan available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at (i) in the case
of the Borrower, the interest rate applicable to the Loan and (ii) in the case
of such Lender, the Federal Funds Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan for purposes of this Agreement. If the Borrower
shall repay to the Administrative Agent such corresponding amount, such payment
shall not relieve such Lender of any obligation it may have to the Borrower
hereunder.
(d) The failure of any Lender to make the Loan to be made by
it hereunder shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the Closing Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the Closing Date.
2.3. Fees. The Borrower has agreed to pay to Chase additional
fees, the amount and dates of payment of which are embodied in a separate
agreement between the Borrower and Chase.
2.4. Collateral. (a) During such time that, and only for so
long as, the FelCor Bonds are rated below Investment Grade, the Loans shall be
secured by ownership interests in certain entities of, or affiliated with, the
Borrower as set forth in the Pledge Agreement. In the event that the FelCor
Bonds attain a rating of Investment Grade, upon written request from the
Borrower, the Administrative Agent shall direct the Collateral Agent to release
the Collateral. Should the FelCor Bonds thereafter become rated below Investment
Grade, the Collateral shall be re-pledged pursuant to a new pledge and security
agreement in substantially the same form as Exhibit H hereto and any other
instruments and documents reasonably required by the Administrative Agent in
order to effect such new pledge, including but not limited to a new guaranty in
substantially the same for as Exhibit G hereto. During any period in which the
Collateral secures the Loans, the Collateral may also secure, equally and
ratably, (i) the FelCor Bonds and (ii) the Indebtedness under the Credit
Agreement.
(b) Upon consent from or at the request of the Majority
Lenders, the Administrative Agent may direct the Collateral Agent to take any
action with respect to the Collateral other than such action requiring consent
of all the Lenders under Section 10.1 hereof. Notwithstanding the preceding
sentence, the Administrative Agent shall have the sole and absolute discretion
to direct the Collateral Agent to release (i) any
28
37
portion of the Collateral representing, in the aggregate, no more than 10% of
Total Value, or (ii) all or any portion of the Collateral as contemplated by
Section 2.4(a).
2.5. Repayment. (a) The Borrower shall make a one million
dollar ($1,000,000.00) payment in reduction of the principal balance of the Loan
on each anniversary of the Closing Date during the term of the Loan, with the
first such payment being due on April 1, 2000.
(b) The Borrower shall repay the entire unpaid principal
amount of the Loans on the Maturity Date.
2.6. Prepayments. (a) The Borrower shall have no right to
prepay the principal amount of any Loan other than as provided in this Section
2.6.
(b) The Borrower may, upon at least two (2) Business Days'
prior notice to the Administrative Agent, stating the proposed date and
aggregate principal amount of the prepayment, prepay the outstanding principal
amount of the Loans in whole or ratably in part, together with accrued interest
to the date of such prepayment on the principal amount prepaid; provided,
however, that any prepayment of any Eurodollar Rate Loan made other than on the
last day of an Interest Period for such Loan shall be subject to payment by the
Borrower to the Administrative Agent of any costs, fees or expenses incurred by
any Lender in connection with such prepayment including without limitation any
costs to unwind any Eurodollar Rate contracts; and, provided, further, that each
partial prepayment shall be in an aggregate principal amount not less than
$3,000,000 or integral multiples of $100,000 in excess thereof. Upon the giving
of such notice of prepayment, the principal amount of the Loans specified to be
prepaid shall become due and payable on the date specified for such prepayment.
(c) If at any time the Borrower shall not be in compliance
with the covenant contained in Section 5.1 hereof, (a "Financial Covenant
Imbalance"), the Borrower shall prepay the Loans then outstanding in an amount
necessary to cure such Financial Covenant Imbalance, together with accrued
interest as follows:
(i) in the event that the Financial Covenant Imbalance is
due to (A) any sale, conveyance, transfer, assignment or other
disposition of an Unencumbered Hotel Property, (B) a financing secured
by a Hotel or (C) any drawing on the revolving credit line under the
Credit Agreement, the prepayment shall be made within one (1) Business
Day of such event occurring;
(ii) in the event that the Financial Covenant Imbalance is
due to any (A) condemnation or taking by eminent domain of an
Unencumbered Hotel Property, or (B) loss, damage or destruction by
casualty to any Hotel, the prepayment shall be made within one (1)
Business Day after receipt by the Borrower or its Subsidiary or
Eligible Joint Venture of the condemnation award or insurance proceeds
relating to such event; or
(iii) in the event that the Financial Covenant Imbalance is
due to a determination by the Administrative Agent, after review of the
applicable Hotel
29
38
Documents, that an Unencumbered Hotel Property, represented by Borrower
in a Compliance Certificate to be an Unencumbered Hotel Property, fails
to meet (and never actually met) the requirements for Unencumbered
Hotel Properties set forth herein, the prepayment shall be made within
5 Business Days of the Administrative Agent notifying Borrower of such
Hotel's failure to meet the Unencumbered Hotel Property requirements.
2.7. Conversion/Continuation Option. The Borrower may elect
(i) at any time after the date hereof to convert Base Rate Loans or any portion
thereof to Eurodollar Rate Loans, or (ii) at the end of any Interest Period with
respect thereto, to convert Eurodollar Rate Loans or any portion thereof into
Base Rate Loans, or to continue such Eurodollar Rate Loans or any portion
thereof for an additional Interest Period; provided, however, that the aggregate
of the Eurodollar Rate Loans for each Interest Period therefor must be in the
amount of $5,000,000 or an integral multiple of $500,000 in excess thereof. Each
conversion or continuation shall be allocated among the Loans of all Lenders in
accordance with their Ratable Portion. Each such election shall be in
substantially the form of Exhibit B hereto (a "Notice of Conversion or
Continuation") and shall be made by giving the Administrative Agent at least
three (3) Business Days' prior written notice thereof specifying (A) the amount
and type of conversion or continuation, (B) in the case of a conversion to or a
continuation of Eurodollar Rate Loans, the Interest Period therefor, and (C) in
the case of a conversion, the date of conversion (which date shall be a Business
Day and, if a conversion from Eurodollar Rate Loans, shall also be the last day
of the Interest Period therefor). The Administrative Agent shall promptly notify
each Lender of its receipt of a Notice of Conversion or Continuation and of the
contents thereof and such Lender's Ratable Portion of the Loans to be converted.
Notwithstanding the foregoing, no conversion in whole or in part of Base Rate
Loans to Eurodollar Rate Loans, and no continuation in whole or in part of
Eurodollar Rate Loans upon the expiration of any Interest Period therefor, shall
be permitted at any time at which a Default or an Event of Default shall have
occurred and be continuing. If, within the time period required under the terms
of this Section 2.7, the Administrative Agent does not receive a Notice of
Conversion or Continuation from the Borrower containing a permitted election to
continue any Eurodollar Rate Loans for an additional Interest Period or to
convert any such Loans, then, upon the expiration of the Interest Period
therefor, such Loans will be automatically converted to Base Rate Loans. Each
Notice of Conversion or Continuation shall be irrevocable.
2.8. Interest. (a) The Borrower shall pay interest on the
unpaid principal amount of each Loan from the date thereof until the principal
amount thereof shall be paid in full, at the following rates per annum:
(i) For Base Rate Loans, at a rate per annum equal at all
times to the Base Rate in effect from time to time, payable monthly on
the first day of each month, on the Maturity Date and on the date any
Base Rate Loan is converted or paid in full.
30
39
(ii) For Eurodollar Rate Loans, at a rate per annum equal
at all times during the applicable Interest Period for each Eurodollar
Rate Loan to the sum of the Eurodollar Rate for such Interest Period
plus the Applicable Margin, payable on the last day of such Interest
Period, on the Maturity Date and, if such Interest Period has a
duration of more than three months, on the last day of each calendar
quarter during such Interest Period commencing on March 31, 1999.
(b) If the principal indebtedness of the Loans is declared
immediately due and payable by the Administrative Agent pursuant to the
provisions of this Agreement or any other Loan Document, or if the Loans are not
paid in full on the Maturity Date, the Borrower shall thereafter, unless and
until such date, if any, as the Majority Lenders may elect, in their sole and
absolute discretion, to waive, in writing, all or any portion of such default
rate interest, pay interest on the principal sum then remaining unpaid from the
date of such declaration or the Maturity Date, as the case may be, until the
date on which the principal sum then outstanding is paid in full (whether before
or after judgment), at a rate per annum (calculated for the actual number of
days elapsed on the basis of a 360-day year) equal to the greater, on a daily
basis, of (x) 13% or (y) 4% plus the Base Rate, provided, however, that such
interest rate shall in no event exceed the maximum interest rate which the
Borrower may by law pay.
2.9. Interest Rate Determination and Protection. (a) The
Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be
determined by the Administrative Agent two (2) Business Days before the first
day of such Interest Period.
(b) The Administrative Agent shall give prompt notice to the
Borrower and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.8.
(c) If the Majority Lenders in good faith notify the
Administrative Agent that the Eurodollar Rate for any Interest Period therefor
will not adequately reflect the cost to such Majority Lenders of making such
Loans or funding or maintaining their respective Eurodollar Rate Loans for such
Interest Period, the Administrative Agent shall forthwith so notify the Borrower
and the Lenders, whereupon
(i) each Eurodollar Rate Loan will automatically, on the
last day of the then existing Interest Period therefor, convert into a
Base Rate Loan; and
(ii) The Base Rate Loan shall continue in effect until the
Administrative Agent shall notify the Borrower that such Lenders have
determined that the circumstances that required the Base Rate no longer
exist, after which time Borrower may convert the Loans to Eurodollar
Rate Loans by submitting a Notice of Conversion or Continuation in
accordance with the terms set forth herein.
2.10. Increased Costs. If, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation (other
than any change by way of imposition or increase of reserve requirements
included in determining the Eurodollar
31
40
Rate Reserve Percentage) or (ii) compliance with any guideline or request from
any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to any Lender of agreeing
to make or making, funding or maintaining any Eurodollar Rate Loans, then the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost. A certificate as to the amount of such increased
cost, submitted to the Borrower and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error. If the
Borrower so notifies the Administrative Agent within five Business Days after
any Lender notifies the Borrower of any increased cost pursuant to the foregoing
provisions of this Section 2.10, the Borrower may either (A) prepay in full all
Eurodollar Rate Loans of such Lender then outstanding in accordance with Section
2.6(b) and, additionally, reimburse such Lender for such increased cost in
accordance with this Section 2.10 or (B) convert all Eurodollar Rate Loans of
all Lenders then outstanding into Base Rate Loans in accordance with Section 2.7
and, additionally, reimburse such Lender for such increased cost in accordance
with this Section 2.10.
2.11. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund
or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor
by such Lender to the Borrower through the Administrative Agent, (i) the
obligation of such Lender to make or to continue Eurodollar Rate Loans and to
convert Base Rate Loans into Eurodollar Rate Loans shall terminate and (ii) the
Borrower shall forthwith prepay in full all Eurodollar Rate Loans of such Lender
then outstanding, together with interest accrued thereon, unless the Borrower,
within five Business Days of such notice and demand, converts all Eurodollar
Rate Loans of all Lenders then outstanding into Base Rate Loans.
2.12. Capital Adequacy. If (i) the introduction of or any
change in or in the interpretation of any law or regulation, (ii) compliance
with any law or regulation, or (iii) compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by any Lender or any corporation controlling any Lender and
such Lender reasonably determines that such amount is based upon the existence
of such Lender's Loans and its other commitments, letters of credit or loans of
this type, then, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to the Administrative Agent for
the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's Loans. A
certificate as to such amounts submitted to the Borrower and the Administrative
Agent by such Lender shall be conclusive and binding for all purposes absent
manifest error.
32
41
2.13. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Notes not later than 11:00 A.M. (New York
City time) on the day when due, in Dollars, to the Administrative Agent at its
address referred to in Section 10.2 in immediately available funds without
set-off or counterclaim. The Administrative Agent will promptly thereafter cause
to be distributed immediately available funds relating to the payment of
principal or interest or fees (other than amounts payable pursuant to Section
2.10, 2.11, 2.12, or 2.14) to the Lenders, in accordance with their respective
Ratable Portions, for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. To the
extent the foregoing payments are received by the Administrative Agent prior to
11:00 A.M. (New York City time) and are not distributed to the Lenders on the
same day, the Administrative Agent shall pay to each Lender in addition to the
amount distributed to such Lender, interest thereon, for each day from the date
such amount is received by the Administrative Agent until the date such amount
is distributed to such Lender, at the Federal Funds Rate. Payment received by
the Administrative Agent after 11:00 A.M. (New York City time) shall be deemed
to be received on the next Business Day.
(b) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder or under any
Loan held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate, the
Eurodollar Rate or the Federal Funds Rate and of fees shall be made by the
Administrative Agent 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 and fees are payable. Each
determination by the Administrative Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes 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 fee, as the case
may be; provided, however, that if such extension would cause payment of
interest on or principal of any Eurodollar Rate Loan to be made in the next
calendar month, such payment shall be made on the next preceding Business Day.
(e) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due hereunder to the
Lenders that the Borrower will not make such payment in full, the Administrative
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption, cause to be distributed to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower shall not have so made such payment in full to the Administrative
Agent, each Lender shall repay to the Administrative Agent forthwith
33
42
on demand such amount distributed to such Lender together with interest thereon,
for each day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Administrative Agent, at the Federal
Funds Rate.
2.14. Taxes. (a) Any and all payments by the Borrower under
each Loan Document shall be made 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 each Lender and the Administrative Agent, taxes measured by its net income,
and franchise taxes imposed on it, by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes measured by
its net income, and franchise taxes imposed on it, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities (excluding, in the case of such Lender or the Administrative Agent,
taxes imposed by reason of any failure of such Lender or the Administrative
Agent, if such Lender or the Administrative Agent is entitled at such time to a
total or partial exemption from withholding that is required to be evidenced by
a United States Internal Revenue Service Form 1001 or 4224 or any successor or
additional form (including but not limited to Form W8), to deliver to the
Administrative Agent or the Borrower, from time to time as required by the
Administrative Agent or the Borrower, such Form 1001 or 4224 (as applicable) or
any successor or additional form (including but not limited to Form W8),
completed in a manner reasonably satisfactory to the Administrative Agent or the
Borrower) 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
hereunder to any Lender or the Administrative Agent (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including, without limitation, deductions applicable to additional sums payable
under this Section 2.14) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with applicable law, and (iv) the Borrower shall
deliver to the Administrative Agent evidence of such payment to the relevant
taxation or other authority.
(b) 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 of the United States or any political subdivision thereof or
any applicable foreign jurisdiction which arise from any payment made under any
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, any Loan Document (collectively, "Other Taxes").
(c) The Borrower will indemnify each Lender and the
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.14) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including, without
limitation, for penalties, interest and expenses) arising
34
43
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes, the Borrower will furnish to the Administrative Agent, at its
address referred to in Section 10.2, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.14 shall survive the payment in full of the
Obligations.
(f) Prior to the Effective Date in the case of each Lender
that is a signatory hereto, and on the date of the Assignment and Acceptance
pursuant to which it becomes a Lender in the case of each other Lender and from
time to time thereafter if requested by the Borrower or the Administrative
Agent, each Lender organized under the laws of a jurisdiction outside the United
States that is entitled to an exemption from United States withholding tax, or
that is subject to such tax at a reduced rate under an applicable tax treaty,
shall provide the Administrative Agent and the Borrower with an IRS Form 4224 or
Form 1001 or other applicable form (including but not limited to Form W8),
certificate or document prescribed by the IRS certifying as to such Lender's
entitlement to such exemption or reduced rate with respect to all payments to be
made to such Lender hereunder and under the Notes. Unless the Borrower and the
Administrative Agent have received forms or other documents satisfactory to them
indicating that payments hereunder or under any Note are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Administrative Agent shall withhold
taxes from such payments at the applicable statutory rate in the case of
payments to or for any Lender organized under the laws of a jurisdiction outside
the United States.
(g) Any Lender claiming any additional amounts payable
pursuant to this Section 2.14 shall use its best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
which may thereafter accrue and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
2.15. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Loans made by it (other than pursuant
to Sections 2.12 or 2.14) in excess of its Ratable Portion of payments on
account of the Loans obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in their Loans as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them.
35
44
Article III
CONDITIONS TO EFFECTIVENESS
OF THIS AGREEMENT AND OF LENDING
3.1. Conditions Precedent to Effectiveness of this Agreement
and to the Loans. The effectiveness of this Agreement and the obligation of each
Lender to make its Loan hereunder is subject to satisfaction of the conditions
precedent that the Administrative Agent shall have received counterparts of this
Agreement duly executed by each Borrower, each Lender and the Administrative
Agent, together with the following, each dated the Effective Date (hereinafter
defined) unless otherwise indicated, in form and substance satisfactory to the
Administrative Agent and (except for the Notes) in sufficient copies for each
Lender (the date of satisfaction of the conditions precedent set forth in this
Section 3.1 and in Section 3.2 being the "Effective Date"):
(a) The Notes to the order of the Lenders, respectively.
(b) The Guaranty, duly executed by the Guarantor parties
thereto.
(c) The Pledge Agreement, duly executed by the pledgors
thereto covering the present and future rights and interests in the collateral
as set forth in the Pledge Agreement, together with:
(i) proper Financing Statements (Form UCC-1) fully executed
for filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be
created by the Pledge Agreement;
(ii) copies of Requests for Information (Form UCC-11), or
equivalent reports, listing all effective financing statements that
name as debtor any entity whose ownership interests are pledged as
collateral under the Pledge Agreement and that are filed in the
jurisdictions referred to in preceding clause (i), together with copies
of such financing statements (none of which shall cover the Pledge
Agreement Collateral except to the extent evidencing Permitted Liens);
(iii) evidence of the completion of all other recordings
and filings of, or with respect to, such Pledge Agreement as may be
necessary or, in the reasonable opinion of the Collateral Agent,
desirable to perfect the security interests intended to be created by
the Pledge Agreement; and
(iv) evidence that all other actions necessary or, in the
opinion of the Collateral Agent, desirable to perfect the security
interests purported to be created by the Pledge Agreement have been
taken.
In addition to the foregoing requirements, pursuant to the
Pledge Agreement, each pledgor thereunder shall have delivered to the Collateral
Agent, as pledgee, all pledged collateral referred to therein (to the extent
evidenced by any certificate, note or other written instrument), together with
executed and undated
36
45
irrevocable stock powers in the case of pledged stock and together with
irrevocable assignments in the case of pledged partnership interests and pledged
limited liability company interests in each case which are evidenced by
certificates, instruments, documents or other writings.
(d) A certificate of the Secretary or an Assistant Secretary
of each Loan Party (or, as applicable, of such Loan Party's partners) certifying
(i) the resolutions of its Board of Trustees or Directors, as appropriate,
approving each Loan Document to which it is a party, (ii) all documents
evidencing other necessary trust, partnership or corporate action, as
appropriate, and required governmental and third party approvals, licenses and
consents with respect to each Loan Document to which it is a party and the
transactions contemplated thereby, (iii) a copy of its and each of its
Subsidiaries' and Eligible Joint Ventures' declaration of trust, certificates of
incorporation, by-laws, partnership agreements and certificates of partnership
as appropriate, as of the Effective Date, and (iv) the names and true signatures
of each of its officers who has been authorized to execute and deliver any Loan
Document or other document required hereunder to be executed and delivered by or
on behalf of such Person.
(e) A copy of the declaration of trust or articles or
certificate of incorporation or partnership agreement or certificate of
partnership, as appropriate, of each Loan Party and of each of its Subsidiaries
and Eligible Joint Ventures which is not a Loan Party certified as of a recent
date by the Secretary of State of the state of formation of such Loan Party or
Subsidiary, together with certificates of such official attesting to the good
standing of each such Loan Party, Subsidiary and Eligible Joint Ventures.
(f) Favorable opinion(s) of counsel to the Loan Parties, in
substantially the form(s) of Exhibit C, and as to such other matters as any
Lender through the Administrative Agent may reasonably request.
(g) A certificate of the chief financial officer of the
Borrower, stating that the Borrower is Solvent after giving effect to the Loans,
the application of the proceeds thereof in accordance with Section 6.10 and the
payment of all estimated legal, accounting and other fees related hereto and
thereto.
(h) Evidence that the insurance required by Section 6.4 is in
full force and effect.
(i) Such additional documents, information and materials as
any Lender, through the Administrative Agent, may reasonably request.
(j) A certificate, signed by a Responsible Officer of the
Borrower, stating that the following statements are true and correct on the
Effective Date:
(i) All costs and accrued and unpaid fees and expenses
(including, without limitation, legal fees and expenses) required to be
paid to the Administrative Agent and the Lenders on or before the
Effective Date, including, without limitation, those referred to in
Sections 2.3 and 10.4, to the extent then due and payable, have been
paid.
37
46
(ii) All necessary governmental and third party approvals
required to be obtained by any Loan Party in connection with the
transactions contemplated hereby have been obtained and remain in
effect, and all applicable waiting periods have expired without any
action being taken by any competent authority which restrains,
prevents, impedes, delays or imposes materially adverse conditions upon
any of the transactions contemplated hereby.
(iii) There exists no judgment, order, injunction or other
restraint prohibiting or imposing materially adverse conditions upon
any of the transactions contemplated hereby.
(iv) There exists no claim, action, suit, investigation or
proceeding (including, without limitation, shareholder or derivative
litigation) pending or, to the knowledge of the Borrower, threatened in
any court or before any arbitrator or Governmental Authority which
relates to the Loan Documents or the financing hereunder or which, if
adversely determined, would have a Material Adverse Effect.
(v) There has been no Material Adverse Change since
December 31, 1998 in the corporate, capital or legal structure of the
Borrower or any of its Subsidiaries without the consent of the
Administrative Agent.
(vi) The Borrower's Tangible Net Worth is not less than the
Minimum Tangible Net Worth.
(k) Administrative Agent's reasonable satisfaction with the
form and substance of each Operating Lease.
(l) A Compliance Certificate, executed by the Chief Financial
Officer of the Borrower substantially in the form attached as Exhibit E hereto
(a "Compliance Certificate"), and if requested by the Administrative Agent,
together with copies (to the extent not already delivered) of the Hotel
Documents in respect of each Hotel indicated by Administrative Agent.
3.2. Additional Conditions Precedent to Effectiveness of this
Agreement and to the Loans. The effectiveness of this Agreement and the
obligation of each Lender to make its Loan hereunder is subject to the further
conditions precedent that:
(a) No Lender in its sole judgment exercised reasonably shall
have determined (i) that there has been any Material Adverse Change since
December 31, 1998 or (ii) that there has occurred any adverse change which such
Lender deems material in the financial markets generally, since December 31,
1998 or (iii) that there is any claim, action, suit, investigation, litigation
or proceeding (including, without limitation, shareholder or derivative
litigation) pending or threatened in any court or before any arbitrator or
Governmental Authority which, if adversely determined, would have a Material
Adverse Effect; and nothing shall have occurred since December 31, 1998 which,
in the judgment of any Lender, has had a Material Adverse Effect.
38
47
(b) Each Lender shall be satisfied, in its sole judgment,
exercised reasonably, with the corporate, capital, legal and management
structure of the Borrower and its Subsidiaries, and shall be satisfied, in its
sole judgment exercised reasonably, with the nature and status of all
Contractual Obligations, securities, labor, tax, ERISA, employee benefit,
environmental, health and safety matters, in each case, involving or affecting
the Borrower or any of its Subsidiaries.
Article IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Administrative Agent to enter
into this Agreement, the Borrower represents and warrants to the Lenders and the
Administrative Agent that on and after the Effective Date:
4.1. Existence; Compliance with Law. Each Loan Party and each
of its Subsidiaries and Eligible Joint Ventures (i) is a real estate investment
trust or a corporation, limited liability company or limited partnership, as
specified herein, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation; (ii) is duly qualified as a
foreign corporation, limited liability company or limited partnership and in
good standing under the laws of each jurisdiction where such qualification is
necessary, except for failures which in the aggregate have no Material Adverse
Effect; (iii) has all requisite corporate, limited liability company or
partnership power and authority and the legal right to own, pledge and mortgage
its properties, to lease (as lessee) the properties that it leases as lessee, to
lease or sublease (as lessor) the properties it owns and/or leases (as lessee)
and to conduct its business as now or currently proposed to be conducted; (iv)
is in compliance with its declaration of trust or certificate of or formation
and by-laws, regulations or partnership agreement, as appropriate; (v) is in
compliance with all other applicable Requirements of Law except for such
non-compliances as in the aggregate have no Material Adverse Effect; and (vi)
has all necessary licenses, permits, consents or approvals from or by, has made
all necessary filings with, and has given all necessary notices to, each
Governmental Authority having jurisdiction, to the extent required for such
ownership, leasing and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to secure
the grant or transfer thereof or failures which in the aggregate have no
Material Adverse Effect.
4.2. Power; Authorization; Enforceable Obligations. (a) The
execution, delivery and performance by each Loan Party of the Loan Documents to
which it is a party and the consummation of the transactions related to the
financing contemplated hereby:
(i) are within such Loan Party's corporate, partnership or
trust powers, as appropriate;
39
48
(ii) have been duly authorized by all necessary corporate,
partnership or trust action, as appropriate, including, without
limitation, the consent of stockholders and general and/or limited
partners where required;
(iii) do not and will not (A) contravene any Loan Party's
or any of its Subsidiaries' or Eligible Joint Ventures' respective
declaration of trust, certificate of incorporation or formation or
by-laws, regulations, partnership agreement or other comparable
governing documents, (B) violate any other applicable Requirement of
Law (including, without limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System), or any order or
decree of any Governmental Authority or arbitrator, (C) conflict with
or result in the breach of, or constitute a default under, or result in
or permit the termination or acceleration of, any material Contractual
Obligation of any Loan Party or any of its Subsidiaries or Eligible
Joint Ventures, or (D) result in the creation or imposition of any Lien
upon any of the property of any Loan Party or any of its Subsidiaries
or Eligible Joint Ventures other than as contemplated under the Loan
Documents; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than those which have
been obtained or made and copies of which have been or will be
delivered to the Administrative Agent pursuant to Section 3.1, and each
of which on the Effective Date will be in full force and effect.
(b) This Agreement has been, and each of the other Loan
Documents has been, or will have been upon delivery thereof pursuant to Section
3.1, duly executed and delivered by each Loan Party thereto. This Agreement is,
and the other Loan Documents are or will be, when delivered hereunder, the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against it in accordance with its terms except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting the enforcement of
creditor's rights and remedies generally.
4.3. Taxes. All federal, state, local and foreign tax returns,
reports and statements (collectively, the "Tax Returns") required to be filed by
the Borrower or any of its Tax Affiliates have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns, are
required to be filed, all such Tax Returns are true and correct in all material
respects, and all taxes, charges and other impositions due and payable have been
timely paid prior to the date on which any fine, penalty, interest, late charge
or loss may be added thereto for non-payment thereof, except where contested in
good faith and by appropriate proceedings if (i) adequate reserves therefor have
been established on the books of the Borrower or such Tax Affiliate in
conformity with GAAP and (ii) all such non-payments in the aggregate have no
Material Adverse Effect. Proper and accurate amounts have been withheld by the
Borrower and each of its respective Tax Affiliates from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
40
49
respective Governmental Authorities. None of the Borrower or any of its Tax
Affiliates has (i) executed or filed with the IRS any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any charges; (ii) agreed or been requested to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise; or (iii) any obligation under any written tax sharing
agreement.
4.4. Full Disclosure. No written statement prepared or
furnished by or on behalf of any Loan Party or any of its Affiliates in
connection with any of the Loan Documents or the consummation of the
transactions contemplated thereby, and no financial statement delivered pursuant
hereto or thereto, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading.
4.5. Financial Matters. (a) The consolidated balance sheet of
the Borrower and its Subsidiaries as at December 31, 1998, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, audited by
PricewaterhouseCoopers LLP, and the consolidated balance sheets of the Borrower
and its Subsidiaries as at December 31, 1998, and the related consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the twelve months then ended, certified by the chief financial
officer of the Borrower, copies of which have been furnished to each Lender,
fairly present, subject, in the case of said balance sheets as at December 31,
1998, and said statements of income, retained earnings and cash flows for the
twelve months then ended, to year-end audit adjustments, the consolidated
financial condition of the Borrower and its Subsidiaries as at such dates and
the consolidated results of the operations of the Borrower and its Subsidiaries
for the period ended on such dates, all in conformity with GAAP.
(b) Since December 31, 1998, there has been no Material
Adverse Change and there have been no events or developments that in the
aggregate have had a Material Adverse Effect. (c) Neither the Borrower nor any
of its Subsidiaries had at December 31, 1998 any material obligation, contingent
liability or liability for taxes, long-term leases or unusual forward or
long-term commitment which is not reflected in the balance sheet at such date
referred to in subsection (a) above or in the notes thereto.
(d) The Projections that have been delivered to each Lender,
were prepared on the basis of the assumptions expressed therein, which
assumptions the Borrower believed to be reasonable based on the information
available to the Borrower at the time so furnished and on the Closing Date.
(e) The Borrower is, and on a consolidated basis the Borrower
and its Subsidiaries are, Solvent.
41
50
4.6. Litigation. There are no pending or, to the knowledge of
the Borrower, threatened actions, investigations or proceedings affecting the
Borrower, any of its Subsidiaries or Eligible Joint Ventures, or (to the best
knowledge of the Borrower) any Operating Lessee or any of their respective
properties or revenues before any court, Governmental Authority or arbitrator,
other than those that in the aggregate, if adversely determined, would have no
Material Adverse Effect. The performance of any action by (a) any Loan Party
required or contemplated by any of the Loan Documents or (b) any Operator
required or contemplated by any Operating Lease or Management Agreement is not,
to the best knowledge of the Borrower, restrained or enjoined (either
temporarily, preliminarily or permanently), and, to the best knowledge of the
Borrower, no material adverse condition has been imposed by any Governmental
Authority or arbitrator upon any of the foregoing transactions contemplated by
the aforementioned documents.
4.7. Margin Regulations. 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 issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
4.8. Ownership of Borrower and DJONT; Subsidiaries. (a) The
authorized capital stock of FelCor consists of (i) as of the date hereof
200,000,000 shares of common stock, $.01 par value per share, of which
68,062,887 shares are issued and outstanding as of the date hereof, and (ii) as
of the date hereof 20,000,000 shares of preferred stock, $.01 par value per
share, of which 6,050,000 shares, designated as $1.95 Series A Cumulative
Convertible Preferred Stock, $25.00 per share liquidation preference, and 57,500
shares designated as 9% Series B Cumulative Redeemable Preferred Stock,
$2,500.00 per share liquidation preference (and represented by 5,750,000
Depository Shares, each representing a 1/100 interest in such preferred stock)
are outstanding as of the date hereof. All of the outstanding capital stock of
FelCor has been validly issued, is fully paid and non-assessable.
(b) FelCor is the sole general partner of FelCor LP and, as of
the date hereof, owns beneficially and of record 1% of the partnership interests
of FelCor LP free and clear of all Liens. FelCor is the sole member and sole
equity owner of FelCor Nevada Holdings, L.L.C., which owns beneficially and of
record 94.8% of the partnership interests of FelCor LP.
(c) There are no outstanding classes of voting membership
interests of DJONT other than the Class A membership interests. As of the date
hereof Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxx, Xx. own, beneficially, all of
the voting Class A membership interests in DJONT, free and clear of all Liens.
(d) Set forth on Schedule 4.8 hereto is a complete and
accurate list showing, as of the Effective Date, all Subsidiaries and
Unconsolidated Entities of the Borrower and, as to each such Subsidiary and
Unconsolidated Entity, the jurisdiction of its formation and the percentage of
the outstanding Stock of each class owned (directly or indirectly) by the
Borrower. No Stock of any Subsidiary or Unconsolidated Entity of the
42
51
Borrower is subject to any outstanding option, warrant, right of conversion or
purchase or any similar right other than certain rights of first refusal
contained in partnership agreements to which the Borrower or a Subsidiary is a
party. All of the outstanding capital Stock of each such Subsidiary and
Unconsolidated Entity owned by the Borrower has been validly issued, is fully
paid and (except for partnership interests) non-assessable, and all outstanding
capital Stock of its Subsidiaries and Unconsolidated Entities owned by the
Borrower is free and clear of all Liens. Neither the Borrower nor any such
Subsidiary or Unconsolidated Entity is a party to, or has knowledge of, any
agreement restricting the transfer or hypothecation of any shares of Stock of
any such Subsidiary or Unconsolidated Entity, other than those imposed by
Requirements of Law, or the Loan Documents; provided that mortgage loan
agreements executed by certain single purpose entities which do not constitute
Collateral under the Pledge Agreement may contain such restrictions.
4.9. ERISA. (a) There are no Multiemployer Plans.
(b) Each Plan and any related trust intended to qualify under
Code Section 401 or 501 has been determined by the IRS to be so qualified and to
the best knowledge of the Borrower nothing has occurred which would cause the
loss of such qualification.
(c) None of the Borrower, any of its Subsidiaries or any ERISA
Affiliate, with respect to any Pension Plan, has failed to make any contribution
or pay any amount due as required by Section 412 of the Code or Section 302 of
ERISA or the terms of any such plan, and all required contributions and benefits
have been paid in accordance with the provisions of each such plan.
(d) There are no pending or, to the knowledge of the Borrower,
threatened claims, actions or proceedings (other than claims for benefits in the
normal course), relating to any Plan other than those that in the aggregate, if
adversely determined, would have no Material Adverse Effect.
(e) No Pension Plan has any unfunded accrued benefit
liabilities, as determined by using reasonable actuarial assumptions utilized by
such plan's actuary for funding purposes. Within the last five years none of the
Borrower, any of its Subsidiaries or any ERISA Affiliate has caused a Pension
Plan with any such liabilities to be transferred outside of its "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA).
(f) No Plan provides for continuing health, disability,
accident or death benefits or coverage for any participant or his or her
beneficiary after such participant's termination of employment (except as may be
required by Section 4980B of the Code and at the sole expense of the participant
or the beneficiary) which would result in the aggregate under all Plans in a
liability in an amount which would have a Material Adverse Effect.
43
52
(g) None of the assets of any of the Loan Parties are subject
to Title I of ERISA because they consist of "plan assets" within the meaning of
DOL Regulation Section 2510.3-101 by reason of an equity investment in any of
the Loan Parties.
4.10. Indebtedness. Except as disclosed on Schedule 4.10, as
of the date hereof, none of the Borrower or any of its Subsidiaries or
Unconsolidated Entities has any Indebtedness.
4.11. Restricted Payments. From and after the Closing Date,
the Borrower has not declared or made any Restricted Payments (other than those
permitted pursuant to Section 7.4).
4.12. No Burdensome Restrictions; No Defaults. (a) No Loan
Party nor any of its Subsidiaries or Eligible Joint Ventures (i) is a party to
any Contractual Obligation the compliance with which would have a Material
Adverse Effect or the performance of which by any thereof, either
unconditionally or upon the happening of an event, will result in the creation
of a Lien on the property or assets of any such Loan Party or its Subsidiaries,
or (ii) is subject to any charter or corporate restriction which has a Material
Adverse Effect.
(b) No Loan Party or Subsidiary or Eligible Joint Venture of
any Loan Party is in default under or with respect to any Contractual Obligation
owed by it and, to the knowledge of the Borrower, no other party is in default
under or with respect to any Contractual Obligation owed to any Loan Party or to
any Subsidiary or Eligible Joint Venture of a Loan Party, other than those
defaults which in the aggregate have no Material Adverse Effect.
(c) No Event of Default or Default has occurred and is
continuing.
(d) There is no Requirement of Law the compliance with which
by any Loan Party would have a Material Adverse Effect.
(e) As of the date hereof, no Subsidiary or Eligible Joint
Venture of the Borrower is subject to any Contractual Obligation (other than as
set forth in the governing documents thereof) restricting or limiting its
ability to transfer its assets to the Borrower or to declare or make any
dividend payment or other distribution on account of any shares of any class of
its Stock or its ability to purchase, redeem, or otherwise acquire for value or
make any payment in respect of any such shares or any shareholder rights.
4.13. Investments. Except as disclosed on Schedule 4.8 or
4.13, the Borrower and its Subsidiaries, considered as a single enterprise, is
not engaged in any joint venture or partnership with any other Person nor does
it maintain any Investment, as of the date hereof.
4.14. Government Regulation. Neither the Borrower nor any of
its Subsidiaries or Eligible Joint Ventures is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended, or subject
44
53
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or any other federal or state statute or
regulation such that its ability to incur Indebtedness is limited, or its
ability to consummate the transactions contemplated hereby or by any other Loan
Document, or the exercise by the Administrative Agent or any Lender of rights
and remedies hereunder or thereunder, is impaired. The making of the Loans by
the Lenders, the application of the proceeds and repayment thereof by the
Borrower and the consummation of the transactions contemplated by the Loan
Documents will not cause the Borrower or any of its Subsidiaries or Eligible
Joint Ventures to violate any provision of any of the foregoing or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
4.15. Insurance. All policies of insurance of any kind or
nature owned by or issued to or for the benefit of any Loan Party or any of its
Subsidiaries or Eligible Joint Ventures, or issued in respect of any real
property owned or leased by the Borrower or any of its Subsidiaries or Eligible
Joint Ventures including, without limitation, policies of life, fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers' compensation and employee health and welfare insurance, are
in full force and effect and are of a nature and provide such coverage as is
sufficient and as is customarily carried by companies of the size and character
of such Person. No Loan Party or any of its Subsidiaries or Eligible Joint
Ventures has been refused insurance for which it applied or had any policy of
insurance terminated (other than at its request).
4.16. Labor Matters. (a) There are no strikes, work stoppages,
slowdowns or lockouts pending or threatened against or involving the Borrower or
its Subsidiaries or their respective Hotels, other than those which in the
aggregate have no Material Adverse Effect.
(b) There are no unfair labor practice charges, arbitrations
or grievances pending against or involving, or to the knowledge of the Borrower
threatened against or involving the Borrower or its Subsidiaries or Eligible
Joint Ventures, other than those which, in the aggregate, if resolved adversely
to the Borrower or such Subsidiary or Eligible Joint Venture, would have no
Material Adverse Effect.
(c) As of the Effective Date, neither the Borrower nor any of
its Subsidiaries or Eligible Joint Ventures are parties to, or have any
obligations under, any collective bargaining agreement.
(d) There is no organizing activity involving the Borrower or
any of its Subsidiaries or Eligible Joint Ventures pending or, to the Borrower's
knowledge, threatened by any labor union or group of employees, other than those
which in the aggregate have no Material Adverse Effect. There are no
representation proceedings pending or, to the Borrower's knowledge, threatened
with the National Labor Relations Board, and no labor organization or group of
employees of the Borrower or any of its Subsidiaries or Eligible Joint Ventures
have made a pending demand for recognition, other than those which in the
aggregate have no Material Adverse Effect.
45
54
4.17. Force Majeure. Neither the business nor the properties
of any Loan Party or any of their respective Subsidiaries or Eligible Joint
Ventures are currently suffering from the effects of any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), other than those which in the aggregate
have no Material Adverse Effect.
4.18. Use of Proceeds. The entire proceeds of the Loans will
be applied by the Borrower solely to the indebtedness incurred under the Credit
Agreement as follows: (a) first, to repay in whole the aggregate Term Loans (as
defined in the Credit Agreement), (b) second, to reduce the aggregate
outstanding principal amount of the Revolving Credit Loans (as defined in the
Credit Agreement), and (c) third, to the extent any proceeds are remaining, to
pay any unpaid fees and expenses owed to the Administrative Agent or the
Lenders.
4.19. Environmental Protection. Except as disclosed on
Schedule 4.19 (and the Borrower represents and warrants to the Lenders and the
Administrative Agent that the matters disclosed in the reports identified on
Schedule 4.19 would not reasonably be expected to have a Material Adverse
Effect):
(a) to the best knowledge of Borrower and its Subsidiaries,
all real property leased or owned by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures is free from contamination by any Hazardous Material
which could reasonably be expected to subject the Borrower or any of its
Subsidiaries to Environmental Liabilities and Costs of $5,000,000 or more;
(b) the operations of the Borrower and each of its
Subsidiaries or Eligible Joint Ventures, and the operations at any real property
leased or owned by the Borrower or any of its Subsidiaries or Eligible Joint
Ventures are in material compliance in all respects with all applicable
Environmental Laws;
(c) neither the Borrower nor any of its Subsidiaries or
Eligible Joint Ventures have liabilities with respect to Hazardous Materials
and, to the best knowledge of the Borrower and its Subsidiaries, no facts or
circumstances exist which could give rise to liabilities with respect to
Hazardous Materials which could reasonably be expected to subject the Borrower
or any of its Subsidiaries to Environmental Liabilities and Costs of $5,000,000
or more;
(d) (i) the Borrower and its Subsidiaries and Eligible Joint
Ventures and all real property owned or leased by the Borrower or its
Subsidiaries and Eligible Joint Ventures have all Environmental Permits
necessary for the operations at such real property and are in material
compliance with such Environmental Permits, (ii) there are no Legal Proceedings
pending nor, to the best knowledge of the Borrower and its Subsidiaries,
threatened to revoke, or alleging the violation of, such Environmental Permits,
and (iii) neither the Borrower nor any of its Subsidiaries or Eligible Joint
Ventures or to the best knowledge of the Borrower and its Subsidiaries the
Operators have received any notice from any source to the effect that there is
lacking any
46
55
Environmental Permit required in connection with the current use or operation of
any property leased or owned by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures;
(e) neither the Borrower's nor any of its Subsidiaries' or
Eligible Joint Ventures' current facilities and operations, nor, to the best
knowledge of the Borrower and its Subsidiaries, any Operator, any predecessor of
the Borrower or any of its Subsidiaries or Eligible Joint Ventures, nor any of
the Borrower's or its Subsidiaries' or Eligible Joint Ventures' past facilities
and operations, nor to the best knowledge of the Borrower and its Subsidiaries,
any owner of premises leased or operated by the Borrower and its Subsidiaries
and Eligible Joint Ventures, are subject to any outstanding written Order or
Contractual Obligation, including Environmental Liens, with any Governmental
Authority or other Person, or to any federal, state, local, foreign or
territorial investigation respecting (i) Environmental Laws, (ii) Remedial
Action, (iii) any Environmental Claim, or (iv) the Release or threatened Release
of any Hazardous Material;
(f) neither the Borrower nor any of its Subsidiaries or
Eligible Joint Ventures or, to the best knowledge of the Borrower and its
Subsidiaries, Operators are subject to any pending Legal Proceeding alleging the
violation of any Environmental Law with respect to a Hotel nor, to the best
knowledge of the Borrower and its Subsidiaries, are any such proceedings
threatened;
(g) neither the Borrower nor any of its Subsidiaries or
Eligible Joint Ventures nor, to the best knowledge of the Borrower and its
Subsidiaries, any Operators or predecessor of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures, nor to the best knowledge of the
Borrower and its Subsidiaries any owner of premises leased by the Borrower or
any of its Subsidiaries or Eligible Joint Ventures, have filed any notice under
federal, state or local, territorial or foreign law indicating past or present
treatment, storage, or disposal of or reporting a Release of Hazardous Material
into the environment;
(h) none of the operations of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or, to the best knowledge of the
Borrower and its Subsidiaries, of any Operators or predecessor of the Borrower
or any of its Subsidiaries or Eligible Joint Ventures, or, to the best knowledge
of the Borrower and its Subsidiaries, of any owner of premises leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures, involve or
previously involved the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Part 261.3 (in effect as
of the date of this Agreement) or any state, local, territorial or foreign
equivalent; and
(i) there is not now, nor to the best knowledge of the
Borrower and its Subsidiaries, has there been in the past, on, in or under any
real property leased or owned by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures, to the best knowledge of the Borrower and its
Subsidiaries or any of their predecessors (i) any underground storage tanks or
surface tanks, dikes or impoundments (other than for surface water), (ii) any
friable asbestos-containing materials, (iii) any polychlorinated
47
56
biphenyls, or (iv) any radioactive substances other than naturally-occurring
radioactive material.
4.20. Contractual Obligations Concerning Assets. As of the
date hereof, neither the Borrower nor any of its Subsidiaries owns or holds, or
is obligated under or a party to, any option, right of first refusal, or other
contractual right to purchase or acquire, or any Contractual Obligation to
effect an Asset Sale of, any Hotel owned or leased by the Borrower or any of its
Subsidiaries, except those that in the aggregate would not have a Material
Adverse Effect whether or not exercised.
4.21. Intellectual Property. The Loan Parties and their
Subsidiaries and Eligible Joint Ventures or the Operating Lessee own or license
or otherwise have the right to use all material licenses, permits, patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, copyright applications, franchises, authorizations and other
intellectual property rights that are necessary for the operations of their
respective businesses, without infringement upon or conflict with the rights of
any other Person with respect thereto, including, without limitation, the
Licenses and all trade names associated with any private label brands of any
Loan Party or any of its Subsidiaries or Eligible Joint Ventures. To the best
knowledge of the Borrower, no material slogan or other advertising device,
product, process, method, substance, part or component, or other material now
employed, or now contemplated to be employed, by any Loan Party or any of their
respective Subsidiaries or Eligible Joint Ventures or the Operating Lessee
infringes upon or conflicts with any rights owned by any other Person, and no
claim or litigation regarding any of the foregoing is pending or threatened.
4.22. Title. (a) Each Loan Party and their respective
Subsidiaries and Eligible Joint Ventures own good and marketable fee simple
absolute title to all of the Real Estate purported to be owned by them, which
Real Estate is at the date hereof described in Schedule 4.22(a), and good and
marketable title to, or valid leasehold interests in, all other properties and
assets purported to be leased by any Loan Party or any of their respective
Subsidiaries or Eligible Joint Ventures, including, without limitation, valid
leasehold interests pursuant to the Leases and all property reflected in the
balance sheet referred to in Section 4.5(a). Each Loan Party and its respective
Subsidiaries or Eligible Joint Ventures received all deeds, assignments,
waivers, consents, non-disturbance and recognition or similar agreements, bills
of sale and other documents, and have duly effected all recordings, filings and
other actions necessary to establish, protect and perfect such Loan Party's and
their respective Subsidiaries' or Eligible Joint Ventures' right, title and
interest in and to all such property except for such documents or actions the
failure to obtain or accomplish which would not have a Material Adverse Effect.
(b) All material real property leased at the date hereof by
the Borrower or any of their respective Subsidiaries or Eligible Joint Ventures
is listed on Schedule 4.22(b). Each of such leases is valid and enforceable in
accordance with its terms and is in full force and effect. The Borrower has
delivered to the Administrative Agent true and complete copies of each of such
leases and all documents affecting the rights or obligations of the Borrower or
any of its Subsidiaries or Eligible Joint Ventures which is
48
57
a party thereto, including, without limitation, any non-disturbance and
recognition agreements, subordination agreements, attornment agreements and
agreements regarding the term or rental of any of the leases. None of the
Borrower or any of its respective Subsidiaries or Eligible Joint Ventures nor,
to the knowledge of the Borrower, any other party to any such lease is in
default of its obligations thereunder or has delivered or received any notice of
default under any such lease, nor has any event occurred which, with the giving
of notice, the passage of time or both, would constitute a default under any
such lease, except for defaults which in the aggregate have no Material Adverse
Effect.
(c) All components of all improvements included within the
Hotels owned or leased, as lessee, by any Loan Party or Eligible Joint Venture
(collectively, "Improvements"), including, without limitation, the roofs and
structural elements thereof and the heating, ventilation, air conditioning,
plumbing, electrical, mechanical, sewer, waste water, storm water, paving and
parking equipment, systems and facilities included therein, are in good working
order and repair, subject to such exceptions which are not reasonably likely to
have, in the aggregate, a Material Adverse Effect. All water, gas, electrical,
steam, compressed air, telecommunication, sanitary and storm sewage lines and
systems and other similar systems serving the Hotels owned or leased by any Loan
Party or any of their respective Subsidiaries or Eligible Joint Ventures are
installed and operating and are sufficient to enable the real property owned or
leased by any Loan Party and their respective Subsidiaries or Eligible Joint
Ventures to continue to be used and operated in the manner currently being used
and operated, and no Loan Party or any of its Subsidiaries or Eligible Joint
Ventures has any knowledge of any factor or condition that reasonably could be
expected to result in the termination or material impairment of the furnishing
thereof. No Improvement or portion thereof is dependent for its access,
operation or utility on any land, building or other Improvement not included in
the real property owned or leased by any Loan Party or any of its Subsidiaries
or Eligible Joint Ventures other than for access provided pursuant to a recorded
easement or other right of way establishing the right of such access.
(d) All Permits required to have been issued or appropriate to
enable all real property owned or leased by any Loan Party or any of its
Subsidiaries or Eligible Joint Ventures to be lawfully occupied and used for all
of the purposes for which they are currently occupied and used have been
lawfully issued and are in full force and effect, other than those which in the
aggregate have no Material Adverse Effect.
(e) No Loan Party or any of its Subsidiaries or Eligible Joint
Ventures has received any notice, or has any knowledge, of any pending,
threatened or contemplated condemnation proceeding affecting any real property
owned or leased by any Loan Party or any of its Subsidiaries or Eligible Joint
Ventures or any part thereof, or any proposed termination or impairment of any
parking at any such owned or leased real property or of any sale or other
disposition of any real property owned or leased by any Loan Party or any of its
Subsidiaries or Eligible Joint Ventures or any part thereof in lieu of
condemnation, which in the aggregate, are reasonably likely to have a Material
Adverse Effect.
49
58
(f) Except for events or conditions not reasonably likely to
have, in the aggregate, a Material Adverse Effect, (i) no portion of any real
property owned or leased by any Loan Party or any of its Subsidiaries or
Eligible Joint Ventures has suffered any material damage by fire or other
casualty loss which has not heretofore been completely repaired and restored to
its condition prior to such casualty, and (ii) no portion of any real property
owned or leased by any Loan Party or any of its Subsidiaries or Eligible Joint
Ventures is located in a special flood hazard area as designated by any Federal
Governmental Authorities.
4.23. Status as REIT. The Borrower is organized in conformity
with the requirements for qualification as an equity-oriented real estate
investment trust under the Code. Borrower has met all of the requirements for
qualification as an equity-oriented real estate investment trust under the Code
for its Fiscal Year ended December 31, 1998. The Borrower is in a position to
qualify for its current Fiscal Year as a real estate investment trust under the
Code and its proposed methods of operation will enable it to so qualify.
4.24. Operator: Compliance with Law. To the best knowledge of
the Borrower and its Subsidiaries, each Operator (i) has full power and
authority and the legal right to own, lease (or sublease), manage and operate
(as applicable) the properties it operates and to conduct the business in which
it is currently engaged with respect to any real property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures, (ii) is duly
qualified or licensed and is in good standing under the laws of each
jurisdiction where its ownership, lease (or sublease), management or operation
of any real property owned or leased by the Borrower or any of its Subsidiaries
or Eligible Joint Ventures requires such qualification, and (iii) is in
compliance with all Requirements of Law applicable to the real property owned or
leased by the Borrower or any of its Subsidiaries or Eligible Joint Ventures, or
applicable to the operation or management thereof except to the extent that the
failure to comply therewith is not reasonably likely to have, in the aggregate,
a Material Adverse Effect.
4.25. Operating Leases, Licenses and Management Agreement. (a)
Each of the Hotels (i) is leased to an Operating Lessee under an Operating Lease
(ii) is the subject of a License, and (iii) is managed and operated for the
Operating Lessee pursuant to a Management Agreement except to the extent that
the aggregate value of any Hotels owned or leased by the Borrower (directly or
indirectly) which are not leased to an Operating Lessee, managed by a Manager,
and operated pursuant to and with the benefit of a License does not exceed 10%
of Total Value.
(b) Each of the Operating Leases, Licenses and Management
Agreements in respect of the Hotels (i) is in full force and effect, (ii) is a
legally valid and binding obligation of each of the parties thereto, subject to
such exceptions which are not reasonably likely to have, in the aggregate, a
Material Adverse Effect, and (iii) has not been modified, amended or
supplemented in any material or adverse way. Neither the Borrower nor any of its
Subsidiaries or Eligible Joint Ventures has collected any rents becoming due
under any Operating Lease more than 30 days in advance. All rent and other sums
and charges payable by any Operating Lessee under each Operating Lease to
50
59
which it is a party are current, no notice of default or termination under any
such Operating Lease is outstanding, no termination event or condition or
uncured default on the part of the Operating Lessee exists under any Operating
Lease, and no event of default has occurred which, with the giving of notice or
the lapse of time or both, would constitute such a default or termination event
or condition or uncured default on the part of the Borrower or its Subsidiaries
or Eligible Joint Ventures or the Operators (as the case may be), subject to
such exceptions which are not reasonably likely to have, in the aggregate, a
Material Adverse Effect. As to all of the Leases, Borrower and each of its
Subsidiaries or Eligible Joint Ventures has performed all of its repair and
maintenance obligations (if any) and, to the best knowledge and belief of
Borrower, each Operating Lessee under each Operating Lease to which it is a
party has performed all of its repair and maintenance obligations, subject to
such exceptions which are not reasonably likely to have, in the aggregate, a
Material Adverse Effect.
4.26. FF&E Reserves. An FF&E Reserve has been established in
respect of each of the Hotels and the Borrower or its Subsidiaries or Eligible
Joint Ventures have made contributions to such FF&E Reserve as required by the
terms of the Operating Lease and/or the Management Agreement relating thereto.
4.27. Year 2000 Compliance. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of (i) the
Borrower's computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Borrower's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, has been completed. The cost to the Borrower of such reprogramming
and testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or a Material Adverse
Effect. Except for such of the reprogramming referred to in the preceding
sentence as may be necessary, the computer and management information systems of
the Borrower and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit the Borrower to conduct its business without the occurrence of a Material
Adverse Effect.
Article V
FINANCIAL COVENANTS
As long as any of the Obligations remain outstanding, unless
the requisite Lenders specified in Section 10.1 otherwise consent in writing,
the Borrower agrees with the Lenders and the Administrative Agent that:
5.1. Unsecured Interest Expense Coverage. The Borrower shall
maintain at the end of each Fiscal Quarter, commencing with the Fiscal Quarter
ending on March 31, 1999, a ratio of (a) Unencumbered NOI to (b) Unsecured
Interest Expense, in each case determined on the basis of the four (4) Fiscal
Quarters ending on the date of determination, of not less than 2.5:1.0.
51
60
5.2. Fixed Charge Coverage Ratio. The Borrower shall maintain
at the end of each Fiscal Quarter commencing with the Fiscal Quarter ending on
March 31, 1999, a ratio of (a) Adjusted EBITDA to (b) Fixed Charges, in each
case determined on the basis of the four (4) Fiscal Quarters ending on the date
of determination, of not less than 2.0:1.0.
5.3. Maintenance of Tangible Net Worth. The Borrower shall
maintain during each Fiscal Quarter a Tangible Net Worth of not less than the
Minimum Tangible Net Worth.
5.4. Limitations on Total Indebtedness. The Borrower shall
not, during each Fiscal Quarter on a consolidated basis, permit the Total
Indebtedness (including, without limitation, the Obligations and all Capitalized
Lease Obligations) of the Borrower for borrowed money to exceed 50% of Total
Value.
5.5. Limitations on Total Secured Indebtedness. The Borrower
shall not, during each Fiscal Quarter on a consolidated basis, permit the Total
Secured Indebtedness (including, without limitation, Capitalized Lease
Obligations) of the Borrower, to exceed (x) prior to and including June 30,
1999, 30% of Total Value and (y) after June 30, 1999, 25% of Total Value.
5.6. Adjusted NOI and Hotels. The Borrower shall ensure that
at the end of each Fiscal Quarter commencing with the Fiscal Quarter ending on
March 31, 1999 at least 50% of the aggregate Adjusted NOI generated by all
Hotels during the preceding four (4) Fiscal Quarters shall be generated by
Hotels wholly owned or leased by the Borrower or its wholly-owned Subsidiaries,
provided that, for Hotels owned or leased for less than four (4) Fiscal Quarters
only the Adjusted NOI generated by such Hotels since the date of acquisition of
such Hotel shall be included in calculating such aggregate Adjusted NOI.
5.7. Limitations on Recourse Secured Indebtedness. The
Borrower shall not, during each Fiscal Quarter on a consolidated basis, permit
the Recourse Secured Indebtedness (including, without limitation, Capitalized
Lease Obligations) of the Borrower, to exceed the lesser of (x) 7.5% of Total
Value and (y) $200,000,000.00.
Article VI
AFFIRMATIVE COVENANTS
As long as any of the Obligations remain outstanding, unless
the Majority Lenders otherwise consent in writing, the Borrower agrees with the
Lenders and the Administrative Agent that:
6.1. Compliance with Laws, Etc. The Borrower shall comply, and
shall cause each of its Subsidiaries and Eligible Joint Ventures to comply, in
all material respects with all Requirements of Law, Contractual Obligations,
commitments,
52
61
instruments, licenses, permits and franchises, including, without limitation,
all Permits; provided, however, that the Borrower shall not be deemed in default
of this Section 6.1 if all such non-compliances in the aggregate have no
Material Adverse Effect.
6.2. Conduct of Business. The Borrower shall (a) conduct, and
shall cause each of its Subsidiaries and Eligible Joint Ventures to conduct, its
business in the ordinary course and consistent with past practice; (b) use, and
cause each of its Subsidiaries and Eligible Joint Ventures to use, its
reasonable efforts, in the ordinary course and consistent with past practice, to
(i) preserve its business and the goodwill and business of the customers,
advertisers, suppliers and others having business relations with the Borrower or
any of its Subsidiaries or Eligible Joint Ventures, and (ii) keep available the
services and goodwill of its present employees; (c) preserve, and cause each of
its Subsidiaries and Eligible Joint Ventures to preserve, all registered
patents, trademarks, trade names, copyrights and service marks with respect to
its business; and (d) perform and observe, and cause each of its Subsidiaries
and Eligible Joint Ventures to perform and observe, all the terms, covenants and
conditions required to be performed and observed by it under its Contractual
Obligations (including, without limitation, to pay all rent and other charges
payable under any lease and all debts and other obligations as the same become
due), and do, and cause its Subsidiaries and Eligible Joint Ventures to do, all
things necessary to preserve and to keep unimpaired its rights under such
Contractual Obligations; provided, however, that, in the case of each of clauses
(a) through (d), the Borrower shall not be deemed in default of this Section 6.2
if all such failures in the aggregate have no Material Adverse Effect.
6.3. Payment of Taxes, Etc. The Borrower shall pay and
discharge, and shall cause each of its Subsidiaries and Eligible Joint Ventures,
as appropriate, to pay and discharge, before the same shall become delinquent,
all lawful governmental claims, taxes, assessments, charges and levies, except
where contested in good faith, by proper proceedings, if adequate reserves
therefor have been established on the books of the Borrower or the appropriate
Subsidiary or Eligible Joint Venture in conformity with GAAP; provided, however,
that the Borrower shall not be deemed in default of this Section 6.3 if all such
non-payments in the aggregate have no Material Adverse Effect.
6.4. Maintenance of Insurance. The Borrower shall maintain,
and shall cause each of its Subsidiaries and Eligible Joint Ventures to
maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks (including, without
limitation, fire, extended coverage, vandalism, malicious mischief, public
liability, product liability, and business interruption) as is usually carried
by companies engaged in similar businesses and owning similar properties in the
same general areas in which the Borrower or such Subsidiary or Eligible Joint
Venture. The Borrower will furnish to the Lenders from time to time such
information as may be requested as to such insurance.
6.5. Preservation of Existence, Etc. The Borrower shall
preserve and maintain, and shall cause each of its Subsidiaries and Eligible
Joint Ventures to preserve and maintain, its corporate or partnership existence,
rights (charter and statutory) and franchises, except as permitted under Section
7.5.
53
62
6.6. Access. The Borrower shall, at any reasonable time and
from time to time, permit the Administrative Agent or any of the Lenders, or any
agents or representatives thereof, at the expense of the Lenders (but such
expense to be reimbursed by the Borrower in the event that any of the following
reveal a material Default by the Borrower), to (a) examine and make copies of
and abstracts from the records and books of account of the Borrower and each of
its Subsidiaries and Eligible Joint Ventures, (b) visit the properties of the
Borrower and each of its Subsidiaries and Eligible Joint Ventures, (c) discuss
the affairs, finances and accounts of the Borrower and each of its Subsidiaries
and Eligible Joint Ventures with any of their respective officers or directors,
and (d) communicate directly with the Borrower's independent certified public
accountants.
6.7. Keeping of Books. The Borrower shall keep, and shall
cause each of its Subsidiaries and Eligible Joint Ventures to keep, proper books
of record and account, in which proper entries shall be made of all financial
transactions and the assets and business of the Borrower and each such
Subsidiary or Eligible Joint Venture.
6.8. Maintenance of Properties, Etc. The Borrower shall
maintain and preserve, and shall cause each of its Subsidiaries and Eligible
Joint Ventures to maintain and preserve, (i) all of its properties which are
used or useful or necessary in the conduct of its business in good working order
and condition, and (ii) all rights, permits, licenses, approvals and privileges
(including, without limitation, all Permits) which are used or useful or
necessary in the conduct of its business; provided, however, that the Borrower
shall not be deemed in default of this Section 6.8 if all such failures in the
aggregate have no Material Adverse Effect.
6.9. Performance and Compliance with Other Covenants. The
Borrower shall perform and comply with, and shall cause each of its Subsidiaries
and Eligible Joint Ventures to perform and comply with, each of the covenants
and agreements set forth in each Contractual Obligation to which it or any of
its Subsidiaries or Eligible Joint Ventures is a party; provided, however, that
the Borrower shall not be deemed in default of this Section 6.9 if all such
failures in the aggregate have no Material Adverse Effect.
6.10. Application of Proceeds. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in Section 4.18.
6.11. Financial Statements. The Borrower shall furnish to the
Lenders:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year,
consolidated balance sheets of the Borrower and its Subsidiaries and the
Reporting Operating Lessees and any Requested Operating Lessee as of the end of
such quarter and consolidated statements of income, retained earnings and cash
flow of the Borrower and its Subsidiaries and the Reporting Operating Lessees
and any Requested Operating Lessee for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter, all
prepared in conformity with GAAP and certified by the chief financial
54
63
officer of the Borrower or the chief financial officer of the Reporting
Operating Lessees or a Requested Operating Lessee, as appropriate, as fairly
presenting the financial condition and results of operations of the Borrower and
its Subsidiaries and the Reporting Operating Lessees and any Requested Operating
Lessee at such date and for such period, together with (i) a certificate of said
officer stating that no Default or Event of Default has occurred and is
continuing or, if a Default or an Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which the
Borrower, any Reporting Operating Lessees or any Requested Operating Lessee, as
appropriate, proposes to take with respect thereto, (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by the
Borrower or any Reporting Operating Lessee or any Requested Operating Lessee, as
appropriate, in determining compliance with all financial covenants contained
herein, and (iii) a written discussion and analysis by the management of the
Borrower or any Reporting Operating Lessee or any Requested Operating Lessee, as
appropriate, of the financial statements furnished in respect of such Fiscal
Quarter;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year, consolidated balance sheets of the Borrower and its
Subsidiaries and the Reporting Operating Lessees as of the end of such year and
consolidated statements of income, retained earnings and cash flow of the
Borrower and its Subsidiaries and the Reporting Operating Lessees for such
Fiscal Year, all prepared in conformity with GAAP and certified, in the case of
such consolidated financial statements, in a manner reasonably acceptable to the
Administrative Agent without qualification as to the scope of the audit by
PricewaterhouseCoopers LLP, or other independent public accountants of
recognized national standing together with (i) a schedule in form satisfactory
to the Administrative Agent of the computations used by the Borrower in
determining, as of the end of such Fiscal Year, the Borrower's or a Reporting
Operating Lessee's, as appropriate, compliance with all financial covenants
contained herein, and (ii) a written discussion and analysis by the management
of the Borrower or any Reporting Operating Lessee, as appropriate, of the
financial statements furnished in respect of such Fiscal Year; provided,
however, that for purposes of this subparagraph (b) of this paragraph 6.11 only,
"Reporting Operating Lessees" shall not include Bristol.
(c) promptly after the same are received by the Borrower, a
copy of each management letter provided to the Borrower by its independent
certified public accountants which refers in whole or in part to any inadequacy,
defect, problem, qualification or other lack of fully satisfactory accounting
controls utilized by the Borrower or any of its Subsidiaries; and
(d) within 45 days after the end of each Fiscal Quarter, a
Compliance Certificate as of the end of such Fiscal Quarter, executed by the
Chief Financial Officer of the Borrower and if requested by the Administrative
Agent, together with copies (to the extent not already delivered) of the Hotel
Documents in respect of each Hotel indicated by Administrative Agent.
55
64
6.12. Reporting Requirements. The Borrower shall furnish to
the Lenders:
(a) prior to any Asset Sale generating proceeds in excess of
10% of the Total Value of the Borrower, a notice (i) describing the assets being
sold, (ii) stating the estimated Asset Sales proceeds in respect of such Asset
Sale and (iii) accompanied by a Compliance Certificate and a certificate of the
Chief Financial Officer of the Borrower stating that before and after giving
effect to such Asset Sale, the Borrower shall be in compliance with all of its
covenants set forth in the Loan Documents and that no Default or Event of
Default will result from such Asset Sale.
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year (or earlier if approved earlier by the Board of
Directors of the Borrower), an annual budget of the Borrower and its
Subsidiaries for the succeeding Fiscal Year, displaying on a quarterly basis
anticipated balance sheets, forecasted Capital Expenditures, working capital
requirements, revenues, net income, cash flow, EBITDA, all on a consolidated
basis;
(c) promptly and in any event within 30 days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, a written statement of the Chief
Financial Officer or other appropriate officer of the Borrower describing such
ERISA Event or waiver request and the action, if any, which the Borrower, its
Subsidiaries and ERISA Affiliates propose to take with respect thereto and a
copy of any notice filed by or with the PBGC or the IRS pertaining thereto;
(d) promptly and in any event within 10 days after receipt
thereof, a copy of any adverse notice, determination letter, ruling or opinion
the Borrower, any of its Subsidiaries or any ERISA Affiliate receives from the
PBGC, DOL or IRS with respect to any Plan, other than those which, in the
aggregate, do not have any reasonable likelihood of resulting in a Material
Adverse Change;
(e) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any domestic or foreign Governmental
Authority or arbitrator, affecting the Borrower or any of its Subsidiaries,
except those which in the aggregate, if adversely determined, would have no
Material Adverse Effect;
(f) promptly and in any event within two Business Days after
the Borrower becomes aware of the existence of (i) any Default or Event of
Default, (ii) any breach or non-performance of, or any default under, any
Operating Lease, Management Agreement or any Contractual Obligation which is
material to the business, prospects, operations or financial condition of the
Borrower and its Subsidiaries taken as one enterprise, or (iii) any Material
Adverse Change or any event, development or other circumstance which has any
reasonable likelihood of causing or resulting in a Material Adverse Change,
telephonic or telecopied notice in reasonable detail specifying the nature of
the Default, Event of Default, breach, non-performance, default, event,
56
65
development or circumstance, including, without limitation, the anticipated
effect thereof, which notice shall be promptly confirmed in writing within five
days;
(g) promptly after the sending or filing thereof, copies of
all reports which the Borrower sends to its security holders generally, and
copies of all reports and registration statements which the Borrower or any of
its Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange or the National Association of Securities Dealers,
Inc.;
(h) promptly upon the request of any Lender, through the
Administrative Agent, copies of all federal tax returns and reports filed by the
Borrower or any of its Subsidiaries in respect of taxes measured by income
(excluding sales, use and like taxes);
(i) promptly and in any event within ten days of the Borrower
or any Subsidiary learning of any of the following, written notice to the
Administrative Agent of any of the following:
(i) the Release or threatened Release of any Hazardous
Material on or from any property owned or leased by the Borrower of any
of its Subsidiaries or Eligible Joint Ventures and any written order,
notice, permit, application or other written communication or report
received by the Borrower, any of its Subsidiaries or Eligible Joint
Ventures in connection with or relating to any such Release or
threatened Release, unless such Release or threatened Release is not
reasonably likely to subject the Borrower or any of its Subsidiaries to
Environmental Liabilities and Costs of $5,000,000 or more;
(ii) any notice or claim to the effect that the Borrower,
any of its Subsidiaries or any Eligible Joint Ventures is or may be
liable to any Person as a result of the Release or threatened Release
of any Hazardous Material into the environment;
(iii) receipt by the Borrower, any of its Subsidiaries or
Eligible Joint Ventures or any Operator of notification that any real
or personal property of the Borrower or any of its Subsidiaries is
subject to an Environmental Lien;
(iv) any Remedial Action taken by the Borrower or any of
its Subsidiaries or Eligible Joint Ventures or any other Person on
their behalf in response to any Hazardous Material on, under or about
any real property owned or leased by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures, unless such Remedial Action is
not reasonably likely to subject the Borrower or any of its
Subsidiaries or Eligible Joint Ventures to Environmental Liabilities
and Costs of $5,000,000 or more;
(v) receipt by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures of any notice of violation of, or knowledge by
the Borrower or any of its Subsidiaries or any Eligible Joint Ventures
that there exists a condition which may result in a violation by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures of, any
Environmental Law, unless such violation is not
57
66
reasonably likely to subject the Borrower or any of its Subsidiaries to
Environmental Liabilities and Costs of $5,000,000 or more;
(vi) any proposed Capital Expenditure by the Borrower or
any of its Subsidiaries or Eligible Joint Ventures intended or designed
to implement any existing or additional Remedial Action, unless such
expenditures are not reasonably likely to exceed $5,000,000;
(vii) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of any Environmental
Law; or
(viii) any proposed acquisition of stock, assets or real
property, or any proposed leasing of property by the Borrower, or any
of its Subsidiaries or Eligible Joint Ventures, unless such action is
not reasonably likely to subject the Borrower and its Subsidiaries to
Environmental Liabilities and Costs to the Borrower in excess of
$5,000,000;
(j) promptly, such additional financial and other information
respecting the financial or other condition of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or the Operating Lessee or the status or
condition of any real property owned or leased by the Borrower or its
Subsidiaries or Eligible Joint Ventures, or the operation thereof which the
Borrower is entitled to or can otherwise reasonably obtain, as the
Administrative Agent from time to time reasonably requests; and
(k) upon written request by any Lender through the
Administrative Agent, a report providing an update of the status of any
Environmental Claim, Remedial Action or any other issue identified in any notice
or report required pursuant to this Section 6.12.
6.13. Leases and Operating Leases; Management Agreements and
Licenses. (a) If requested by Administrative Agent, the Borrower shall provide
the Administrative Agent, within 30 days of such request, with a copy of each
Qualified Lease and each Operating Lease (to the extent not already delivered).
The Borrower shall, and shall cause each of its Subsidiaries and Eligible Joint
Ventures to, (i) comply in all material respects with all of their respective
obligations under all of their respective Leases and Operating Leases now or
hereafter held respectively by them with respect to real property, including,
without limitation, the Leases set forth in Schedule 4.22(b); (ii) not modify,
amend, cancel, extend or otherwise change in any materially adverse manner any
of the terms, covenants or conditions of any such Leases or Operating Leases;
(iii) not assign any Leases or sublet any portion of the premises if such
assignment or sublet would have a Material Adverse Effect; (iv) provide the
Administrative Agent with a copy of each notice of default under any Lease or
Operating Lease received by the Borrower or any Subsidiary or Eligible Joint
Venture of the Borrower immediately upon receipt thereof and deliver to the
Administrative Agent a copy of each notice of default sent by the Borrower or
any Subsidiary or Eligible Joint Venture of the Borrower under any Lease or
Operating Lease simultaneously with its delivery of such notice under such Lease
or Operating Lease except to the extent that such defaults, in the aggregate,
would not have a Material Adverse Effect; (v) notify the
58
67
Administrative Agent, not later than 30 days prior to the date of the expiration
of the term of any Qualified Lease, of the Borrower's or any Subsidiary or
Eligible Joint Venture of the Borrower's intention either to renew or to not
renew any such Qualified Lease, and, if the Borrower or any Subsidiary or
Eligible Joint Venture of the Borrower intends to renew such Qualified Lease,
the terms and conditions of such renewal; and (vi) maintain each Operating Lease
in full force and effect and enforce the obligations of the Operating Lessee
thereunder, in a timely manner except to the extent that the failure to do so,
in the aggregate, would not have a Material Adverse Effect.
(b) The Borrower shall take all actions and do all things
within its power or control necessary or required to cause each Operating Lessee
to (i) keep, observe, comply with and perform all of the terms, provisions,
covenants and undertakings on its part required by each Operating Lease, each
License, each sublease and Management Agreement relating to any Hotel, and (ii)
to enforce the provisions of each License and each Management Agreement, if the
failure to comply or enforce such agreements would be reasonably likely, in the
aggregate, to have a Material Adverse Effect.
6.14. Employee Plans. For each Plan and any related trust
hereafter adopted or maintained by a Loan Party or any of its ERISA Affiliates
intended to qualify under Code Section 125, 401 or 501, the Borrower shall (i)
seek, and cause such of its ERISA Affiliates to seek, and receive determination
letters from the IRS to the effect that such plan is so qualified; and (ii)
cause such plan to be so qualified.
6.15. Fiscal Year. The Borrower shall maintain as its Fiscal
Year the twelve month period ending on December 31 of each year.
6.16. Environmental Matters. (a) The Borrower shall comply and
shall cause each of its Subsidiaries and Eligible Joint Ventures and each
property owned or leased by such parties to comply in all material respects with
all applicable Environmental Laws currently or hereafter in effect.
(b) If Administrative Agent or Lenders at any time have a
reasonable basis to believe that there may be a material violation of any
Environmental Law by the Borrower or any of its Subsidiaries and Eligible Joint
Ventures or any Operator related to any real property owned or leased by the
Borrower or any of its Subsidiaries and Eligible Joint Ventures, or real
property adjacent to such real property, then the Borrower agrees, upon request
from the Administrative Agent, to provide the Administrative Agent, at the
Borrower's expense, with such reports, certificates, engineering studies or
other written material or data as the Administrative Agent or Lenders may
reasonably require so as to reasonably satisfy the Administrative Agent and
Lenders that the Borrower or such Subsidiary, Eligible Joint Venture or real
property owned or leased by them is in material compliance with all applicable
Environmental Laws. Furthermore, Administrative Agent shall have the right to
inspect during normal business hours any real property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures if at any time
Administrative Agent or Lenders have a reasonable basis to believe that there
may be such a material violation of Environmental Law.
59
68
(c) The Borrower shall, and shall cause each of its
Subsidiaries and Eligible Joint Ventures and each Operating Lessee to, take such
Remedial Action or other action as required by Environmental Laws, as any
Governmental Authority requires, except to the extent contested in good faith
and by proper proceedings, or as is appropriate and consistent with good
business practice.
6.17. REIT Requirements. The Borrower shall operate its
business at all times so as to satisfy all requirements necessary to qualify as
an equity-oriented real estate investment trust under Sections 856 through 860
of the Code. The Borrower will maintain adequate records so as to comply with
all record-keeping requirements relating to the qualification of the Borrower as
an equity-oriented real estate investment trust as required by the Code and
applicable regulations of the Department of the Treasury promulgated thereunder
and will properly prepare and timely file with the IRS all returns and reports
required thereby. The Borrower will request from its shareholders all
shareholder information required by the Code and applicable regulations of the
Department of Treasury promulgated thereunder.
6.18. Maintenance of FF&E Reserves. The Borrower shall cause
to be maintained the FF&E Reserves pursuant to the terms of the Operating
Leases.
6.19. Further Assurances. At any time upon the request of the
Administrative Agent, the Borrower will, promptly and at its expense, execute,
acknowledge and deliver such further documents and do such other acts and things
as the Administrative Agent may reasonably request to evidence the Loans made
hereunder and interest thereon in accordance with the terms of this Agreement;
6.20. Unencumbered Hotel Properties/Financial Covenant
Imbalance. (a) The Borrower shall promptly notify the Administrative Agent in
writing in the event that at any time the Borrower or any of its Subsidiaries
receives or otherwise gains knowledge that (i) any Hotel included in the
calculation of a prior Compliance Certificate as an Unencumbered Hotel Property,
ceases, for any reason whatsoever, to be an Unencumbered Hotel Property or (ii)
a Financial Covenant Imbalance exists, and the amount of the Loans which must be
repaid to cure such Financial Covenant Imbalance.
(b) The Administrative Agent, at the expense of the Lenders,
which expense shall not exceed $10,000 without the consent of the Majority
Lenders (but such expense to be reimbursed by the Borrower in the event that a
Hotel fails to meet requirements for an Unencumbered Hotel Property in any
material respect) may make physical and other verifications of any Hotels
included as Unencumbered Hotel Properties in any reasonable manner and through
any medium that the Administrative Agent considers advisable, and the Borrower
shall furnish all such assistance and information as the Administrative Agent
may require in connection therewith.
6.21. Hotel Documents. Within 30 days of Administrative
Agent's request, Borrower shall deliver to Administrative Agent Hotel Documents
(to the extent not already delivered) for any Hotel indicated by Administrative
Agent.
60
69
Article VII
NEGATIVE COVENANTS
As long as any of the Obligations remain outstanding, without
the written consent of the Administrative Agent, the Borrower agrees with the
Lenders and the Administrative Agent that:
7.1. Restrictions on Wholly-Owned Subsidiaries. (a) The
Borrower shall not create or acquire any direct or indirect wholly-owned
Subsidiary after the Closing Date unless (i) if such Subsidiary is a Required
Guarantor, concurrently with the creation or acquisition thereof, (x) such
Subsidiary executes and delivers to the Administrative Agent counterparts of the
Guaranty, at which time such Subsidiary shall become a Guarantor hereunder, and
(y) if the Administrative Agent, in its sole discretion, so requires, the holder
of such Subsidiary's ownership interests executes and delivers to the
Administrative Agent counterparts to the Pledge Agreement; or (ii) if such
Subsidiary is not a Required Guarantor the organizational documents and
agreement of limited partnership (or equivalent) of such Subsidiary provide that
such Subsidiary shall not incur any Indebtedness (other than (A) intercompany
Indebtedness owed to Borrower and (B) Indebtedness which is either (x)
Non-Recourse Indebtedness or (y) recourse to such Subsidiary provided such
Indebtedness (I) does not exceed 65% of the value of such Subsidiary's assets
which secures such Indebtedness and (II) is secured by all of the Hotels owned
by such Subsidiary).
(b) No wholly-owned Subsidiary which is acquired or created
after the Closing Date may (i) incur any Indebtedness (other than (A)
intercompany Indebtedness owed to Borrower and (B) Indebtedness which is either
(x) Non-Recourse Indebtedness or (y) recourse to such Subsidiary provided such
Indebtedness (I) does not exceed 65% of the value of such Subsidiary's assets
which secures such Indebtedness and (II) is secured by all of the Hotels owned
by such Subsidiary) or (ii) be subject to any contractual restriction on such
Subsidiary's ability to declare or pay dividends or distribute cash or other
assets to Borrower or any of its Subsidiaries.
(c) Borrower shall not permit any direct or indirect
wholly-owned Subsidiary to own assets (including the assets of such Person's
Subsidiaries) the value of which exceed 10% of Total Value unless (i) such
Subsidiary executes and delivers to the Administrative Agent counterparts of the
Guaranty, at which time such Subsidiary shall become a Guarantor hereunder, and
(ii) if the Administrative Agent, in its sole discretion, so requires, the
holder of such Subsidiary's ownership interests executes and delivers to the
Administrative Agent counterparts to the Pledge Agreement; provided, that in the
event the aggregate value of the assets of all wholly-owned Subsidiaries which
are not Guarantors exceed 20% of Total Value then Borrower shall not permit any
direct or indirect wholly-owned Subsidiary formed thereafter to own assets
(including the assets of such Person's Subsidiaries) the value of which exceed
1% of Total Value unless (x) such Subsidiary executes and delivers to the
Administrative Agent counterparts of the Guaranty, at which time such Subsidiary
shall become a Guarantor hereunder, and (y) if the Administrative Agent, in its
sole discretion, so requires, the holder of such
61
70
Subsidiary's ownership interests executes and delivers to the Administrative
Agent counterparts to the Pledge Agreement.
(d) Any Subsidiary required to take action pursuant to this
Section 7.1 shall execute and deliver, or cause to be executed and delivered,
all other relevant documentation of the type described in Article III (including
without limitation opinions of counsel) as such Subsidiary would have had to
deliver if such Subsidiary were a Loan Party on the Closing Date, with all
actions to be taken pursuant to this Section 7.1 to be taken to the reasonable
satisfaction of the Administrative Agent and the Collateral Agent.
7.2. Operation/Ownership of Hotels. (a) Borrower shall not own
or lease (directly or indirectly) any Hotels which are not (i) leased to an
Operating Lessee pursuant to an Operating Lease within 90 days of Borrower's (or
a Subsidiary's) acquisition of such Hotel, (ii) managed pursuant to a Management
Agreement and (iii) operated pursuant to and with the benefit of a License,
except to the extent that the aggregate value of any Hotels owned or leased by
the Borrower (directly or indirectly) which are not leased to an Operating
Lessee, managed by a Manager, and operated pursuant to and with the benefit of a
License does not exceed 10% of Total Value.
(b) The aggregate value of any Hotels owned or leased by the
Borrower (directly or indirectly) which are not operated under a nationally
recognized brand may not exceed 10% of Total Value.
7.3. Lease Obligations. (a) The Borrower shall not create or
suffer to exist, or permit any of its Subsidiaries or Eligible Joint Ventures to
create or suffer to exist, any obligations as lessee for the rental or hire of
real or personal property of any kind under other leases or agreements to lease
entered into otherwise than in the ordinary course of business.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures to, become or remain liable as lessee or
guarantor or other surety with respect to any lease, whether an operating lease
or a Capitalized Lease, of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, which (i) the Borrower or any of its
Subsidiaries or Eligible Joint Ventures has sold or transferred or is to sell or
transfer to any other Person, or (ii) the Borrower or any of its Subsidiaries or
Eligible Joint Ventures intends to use for substantially the same purposes as
any other property which has been or is to be sold or transferred by that entity
to any other Person in connection with such lease.
7.4. Restricted Payments. The Borrower, unless otherwise
required in order to maintain FelCor's status as a real estate investment trust
in accordance with the written advice of independent counsel to the Borrower,
shall not declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account or in respect of
any of its Stock or Stock Equivalents (collectively, "Restricted Payments");
provided, that, notwithstanding the foregoing, during any period of four
consecutive Fiscal Quarters, (i) the Borrower may make Restricted Payments in an
aggregate amount not to exceed 85% of the consolidated Adjusted Funds From
62
71
Operations of the Borrower for such period and (ii) the aggregate amount of
Restricted Payments made shall not exceed 100% of Free Cash Flow of the Borrower
for such period.
7.5. Mergers, Stock Issuances, Asset Sales, Etc. (a) The
Borrower shall not sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets or properties, and shall not, and shall not
permit any of its Subsidiaries or Eligible Joint Ventures to, (i) merge with any
Person, or (ii) consolidate with any Person, unless the Borrower or its
Subsidiary or Eligible Joint Venture is the surviving or resulting entity and,
following such merger or consolidation, no Default or Event of Default shall
have occurred.
(b) The Borrower shall not and shall not permit any of its
Subsidiaries or Eligible Joint Ventures to effect, enter into, consummate or
suffer to exist any Asset Sale(s) of any Hotel(s) generating proceeds
aggregating more than 25% of the value of the Hotels owned by the Borrower, its
Subsidiaries and Eligible Joint Ventures at the time of such transaction.
(c) The Borrower shall not sell or otherwise dispose of, or
factor at maturity or collection, or permit any of its Subsidiaries or Eligible
Joint Ventures to sell or otherwise dispose of, or factor at maturity or
collection, any accounts receivables.
7.6. Restrictions on Construction/Budget Hotels. (a) The
Borrower shall not, and shall not permit any of its Subsidiaries or Eligible
Joint Ventures to (i) engage in the construction of new hotels (provided that
nothing herein shall prohibit expansions to existing Hotels) or (ii) enter into
any commitments or agreements to purchase any Hotels under, or to be under,
original construction (provided that nothing herein shall limit commitments or
agreements for expansions to existing Hotels), pursuant to which (A) such
Persons' obligations, in the aggregate at the time of the transaction, exceed
the lesser of (x) 15% of the Total Value of the Borrower as of the end of the
Fiscal Quarter immediately preceding the date of any such commitment or
agreement and (y) $400,000,000, or (B) any such Person is or may be liable for,
or otherwise assumes, any risks relating to the development or construction (but
not operation) of such Hotel, whether by way of providing any guaranties of
completion, payment of any construction loans, payment of construction cost
overruns, or otherwise.
(b) Other than Borrower's (or its Subsidiary's or
Unconsolidated Entity's) investments in budget hotels, limited service hotels or
extended stay hotels which are in existence as of the Effective Date, the
Borrower's investments (direct or indirect) in any budget hotels, limited
service hotels or extended stay hotels, shall not exceed, in the aggregate, 10%
of Total Value.
7.7. Change in Nature of Business or in Capital Structure. (a)
The Borrower shall not make, and shall not permit any of its Subsidiaries or
Eligible Joint Ventures to make, any material change in the nature or conduct of
its business as carried on at the Closing Date.
63
72
(b) The Borrower shall not make, and shall not permit any of
its Subsidiaries or Eligible Joint Ventures to make, any change in its capital
structure (including, without limitation, in the terms of its outstanding Stock)
or amend its declaration of trust, certificate of incorporation or by-laws or
other equivalent documents other than for changes or amendments which in the
aggregate have no Material Adverse Effect.
7.8. Modification of Material Agreements. The Borrower shall
not, and shall not permit any of its Subsidiaries or Eligible Joint Ventures to,
alter, amend, modify, rescind, terminate, supplement or waive any of their
respective rights under, or fail to comply in all material respects with, any of
its material Contractual Obligations unless approved by the Administrative
Agent, which approval shall not be unreasonably withheld, conditioned or
delayed; provided, however, that, with respect to any such failure to comply
with any Contractual Obligation, the Borrower shall not be deemed in default of
this Section 7.8 if all such failures in the aggregate would have no Material
Adverse Effect; and provided, further, that in the event of any breach or event
of default by a Person other than the Borrower or any of its Subsidiaries or
Eligible Joint Ventures, the Borrower shall promptly notify the Administrative
Agent of any such breach or event of default and take all such action as may be
reasonably necessary in order to endeavor to avoid having such breach or event
of default have a Material Adverse Effect.
7.9. Accounting Changes. The Borrower shall not make, nor
permit any of its Subsidiaries to make, any change in accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP or
law and disclosed to the Lenders and the Administrative Agent.
7.10. Transactions with Affiliates. The Borrower shall not,
and shall not permit any of its Subsidiaries or Eligible Joint Ventures, to
enter into any transaction or series of related transactions, including, without
limitation, any Asset Sale or the rendering of any service, with any Affiliate
(other than among the Borrower and its wholly owned Subsidiaries) unless (a) no
Default or Event of Default would occur as a result thereof, and (b) such
transaction is (i) in the ordinary course of the Borrower's or such Subsidiary's
or Eligible Joint Venture's business, and (ii) upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary or Eligible Joint Venture, as
the case may be, than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate.
7.11. Adverse or Speculative Transactions. The Borrower shall
not and shall not permit any of its Subsidiaries or Eligible Joint Ventures to
engage in any transaction involving contracts for commodity options or futures
contracts other than Interest Rate Contracts and Alternative Currency Contracts.
7.12. Environmental Matters. (a) The Borrower shall not, and
shall not permit any of its Subsidiaries or Eligible Joint Ventures or any
Operating Lessee, or, to the extent reasonably practicable, any other Person to
dispose of any Hazardous Material by placing it in or on the ground or waters of
any property owned or leased by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures.
64
73
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures, or, to the extent practicable,
authorize any other Person to, dispose or to arrange for the disposal of any
Hazardous Material on behalf of the Borrower or any of its Subsidiaries or
Eligible Joint Ventures except in material compliance with all applicable
Environmental Laws currently and hereinafter in effect.
7.13. Joint Enterprises. Other than investments in (x) Joint
Enterprises in existence as of the Effective Date and (y) Eligible Entities, the
Borrower's investments (direct or indirect) in Joint Enterprises shall not
exceed, in the aggregate, 15% of Total Value.
7.14. ERISA Plan Assets. The Borrower shall not and shall not permit any of its
Subsidiaries to have any of their assets become subject to Title I of ERISA
because they constitute "plan assets" within the meaning of the DOL Regulation
Section 2510.3-101 and by reason of an investment in the Borrower or any
Subsidiary.
Article VIII
EVENTS OF DEFAULT
8.1. Events of Default. Each of the following events shall be
an Event of Default:
(a) The Borrower shall fail to pay any principal (including,
without limitation, mandatory prepayments of principal) of, or interest on, any
Loan, any fee, any other amount due hereunder or under the other Loan Documents
or other of the Obligations when the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by any
Loan Party in any Loan Document or by any Loan Party (or any of its officers) in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or
(c) Any Loan Party shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement or in any other Loan
Document if such failure shall remain unremedied for thirty days after the
earlier of the date on which (A) a Responsible Officer of the Borrower becomes
aware of such failure or (B) written notice thereof shall have been given to the
Borrower by the Administrative Agent or any Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Recourse Indebtedness of such
Loan Party or Subsidiary having a principal amount of $10,000,000 or more
(excluding Indebtedness evidenced by the Notes and any Non-Recourse
Indebtedness), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or any
other event shall occur or condition shall exist under any
65
74
agreement or instrument relating to any such Indebtedness, if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness; or any such Indebtedness shall become or be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), or any Loan Party or any of its
Subsidiaries shall be required to repurchase or offer to repurchase such
Indebtedness, prior to the stated maturity thereof; or
(e) The Borrower or any of its Significant 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 or any of its Significant Subsidiaries seeking to adjudicate it
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
custodian, receiver, trustee or other similar official for it or for any
substantial part of its property and, in the case of any such proceedings
instituted against the Borrower or any of its Significant Subsidiaries (but not
instituted by it), either such proceedings shall remain undismissed or unstayed
for a period of 60 days or any of the actions sought in such proceedings shall
occur; or the Borrower or any of its Significant Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order for the payment of money in excess
of $10,000,000 to the extent not fully covered by insurance shall be rendered
against any Loan Party or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order, or (ii) there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g) An ERISA Event shall occur which, in the reasonable
determination of the Majority Lenders, has a reasonable possibility of a
liability, deficiency or waiver request of the Borrower or any ERISA Affiliate,
whether or not assessed, exceeding $5,000,000; or
(h) The Borrower or any of its Subsidiaries shall have entered
into any consent or settlement decree or agreement or similar arrangement with
an Governmental Authority or any judgment, order, decree or similar action shall
have been entered against the Borrower or any of its Subsidiaries, in each case
based on or arising from the violation of or pursuant to any Environmental Law,
or the generation, storage, transportation, treatment, disposal or Release of
any Hazardous Material and, in connection with all the foregoing, the Borrower
and its Subsidiaries are likely to incur Environmental Liabilities and Costs in
excess of $5,000,000; or
(i) There shall occur a Material Adverse Change or an event
which is reasonably likely to have a Material Adverse Effect; or
66
75
(j) FelCor shall cease, for any reason, to maintain its status
as an equity-oriented real estate investment trust under Sections 856 through
860 of the Code; or
(k) FelCor shall cease at any time to be the sole general
partner of FelCor LP; or
(l) Xxxxxx X. Xxxxxxx or Xxxxxx X. Xxxxxxxx, Xx. shall sell,
transfer or encumber (otherwise than to (i) members of their respective
families, (ii) entities controlled by them, (iii) trusts for the benefit of any
of the foregoing or (iv) a Permitted Transferee) their voting Class A membership
interest in DJONT; or
(m) Any provision of the Guaranty after delivery thereof under
this Agreement shall for any reason cease to be valid and binding on any
Significant Subsidiary party thereto, or any Significant Subsidiary Party shall
so state in writing.
8.2. Remedies. (a) If there shall occur and be continuing any
Event of Default, the Administrative Agent shall at the request, or may with the
consent, of the Majority Lenders by notice to the Borrower, declare the Loans,
all interest thereon and all other amounts and Obligations payable under this
Agreement to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts and Obligations shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, however,
that upon the occurrence of the Event of Default specified in subparagraph
8.1(e) above, the Loans, all such interest and all such amounts and Obligations
shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower. In addition to the remedies set forth above, the Administrative
Agent may exercise any remedies provided by applicable law.
(b) If the Administrative Agent exercises any rights or
remedies pursuant to subparagraph 8.2(a), the Administrative Agent shall not,
without the consent of the Majority Lenders, rescind the exercise of said rights
or remedies.
Article IX
THE ADMINISTRATIVE AGENT
9.1. Authorization and Action. (a) Each Lender hereby appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. Without
limitation of the foregoing, each Lender hereby authorizes the Administrative
Agent to execute and deliver, and to perform its obligations under, each of the
Loan Documents to which the Administrative Agent is a party, and to exercise all
rights, powers and remedies that the Administrative Agent may have under such
Loan Documents.
67
76
(b) As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action which the Administrative Agent in good faith believes exposes it to
personal liability or is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender prompt notice of (a) each
notice and, (b) to the extent the Administrative Agent grants any consents,
approvals, disapprovals or waivers to the Borrower pursuant to the directions of
the Majority Lenders or all of the Lenders as required hereunder, notice of such
consent, approval, disapproval or waiver, given to it by, or by it to, any Loan
Party pursuant to the terms of this Agreement or the other Loan Documents.
9.2. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent, nor any of its Affiliates or any of the respective
directors, officers, agents or employees of the Administrative Agent or any such
Affiliate shall be liable for any action taken or omitted to be taken by it,
him, her or them under or in connection with this Agreement or the other Loan
Documents, except for its, his, her or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent (i) may treat the payee of any Note as the holder thereof
until such note has been assigned in accordance with Section 10.7; (ii) may rely
on the Register to the extent set forth in Section 10.7(c); (iii) may consult
with legal counsel (including, without limitation, counsel to the Borrower or
any other Loan Party), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (iv) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement or any of the other Loan Documents; (v)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any
of the other Loan Documents on the part of the Borrower or any other Loan Party
or to inspect the property (including, without limitation, the books and
records) of the Borrower or any other Loan Party; (vi) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; and (vii) shall incur no liability under or in respect of this
Agreement or any of the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable,
telex or facsimile transmission) believed by it to be genuine and signed or sent
by the proper party or parties.
9.3. Chase and Affiliates. With respect to any Commitment or
Loan made by Chase, and any Note issued to it, Chase shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though it were not the Administrative Agent; and the term "Lender" or "Lenders"
shall, unless otherwise
68
77
expressly indicated, include Chase in its individual capacity. Chase and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower
or any other Loan Party or any of their respective Subsidiaries and any Person
who may do business with or own securities of the Borrower or any other Loan
Party or any of their respective Subsidiaries, all as if Chase were not the
Administrative Agent and without any duty to account therefor to the Lenders.
9.4. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Article IV and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and other
Loan Documents.
9.5. Indemnification. (a) The Lenders agree to indemnify the
Administrative Agent and their Affiliates, and their respective directors,
officers, employees, agents and advisors (to the extent not reimbursed by the
Borrower or other Loan Parties), ratably according to the respective principal
amounts of the Notes then held by each of them, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements (including, without limitation, fees and
disbursements of legal counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against, the Administrative Agent in any
way relating to or arising out of this Agreement or the other Loan Documents or
any action taken or omitted by the Administrative Agent under this Agreement or
the other Loan Documents; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or such Affiliate's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including, without limitation, fees and disbursements of
legal counsel) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of its rights or responsibilities under, this
Agreement or the other Loan Documents, to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrower or another Loan Party.
(b) The Borrower shall indemnify each Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to fulfill on
or before the Closing Date the applicable conditions set forth in Article III,
including, without limitation, any loss (including, without limitation, loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund any
Eurodollar Rate Loan to be made by such Lender as
69
78
part of such proposed Borrowing when such Eurodollar Rate Loan, as a result of
such failure, is not made on such date.
9.6. Successor Agent. The Administrative Agent may resign at
any time by giving written notice thereof to the Lenders and the Borrower and
may be removed by the Majority Lenders in the event that the Administrative
Agent commits a willful breach of, or is grossly negligent in the performance
of, its material obligations hereunder. Furthermore, in the event that at any
time the Administrative Agent assigns its entire interest as a Lender hereunder
to an Eligible Assignee as permitted by Section 10.7 hereof, which Eligible
Assignee is not an Affiliate of the Administrative Agent, then the
Administrative Agent shall resign as Administrative Agent. Upon any such
resignation or removal (which shall be effective upon such date as a successor
Agent accepts its appointment), the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Majority Lenders, and shall have accepted such appointment, within 30 days
after the retiring Administrative Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof, having a combined capital and surplus
of at least $50,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
Article X
MISCELLANEOUS
10.1. Amendments, Etc. (a) No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Majority Lenders, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that, (x) the Administrative Agent shall have the right to waive
or depart from any of the requirements or criteria contained in the definition
of Qualified Lease and (y) subject to Section 10.1(b) below, the Administrative
Agent shall have the right to make non-material waivers of non-economic
provisions of this Agreement or consent to non-material departures therefrom.
The parties hereto agree that any waiver of any provision of this Agreement or
any other Loan Document shall be effective upon the execution by the party so
charged of a written agreement to such effect.
70
79
(b) Notwithstanding anything set forth in subparagraph (a)
above, no amendment, waiver or consent shall, unless in writing and signed by
all the Lenders do any of the following: (i) increase the amount of any Loan or
subject the Lenders to any additional obligations; (ii) reduce the principal of,
or interest on, the Loans or any fees or other amounts payable hereunder; (iii)
waive or postpone any date fixed for any payment of principal of, or interest
on, the Loans or any fees or other amounts payable hereunder; (iv) change the
aggregate unpaid principal amount of the Loans; (v) release all or substantially
all of the Collateral, except as provided in Section 2.4(a); (vi) permit other
debt to be secured by the Collateral; (vii) change the definition of Majority
Lenders; (viii) change the number of Lenders which shall be required for the
Lenders or any of them to take any action hereunder; (ix) release any Loan Party
from its obligations under any Note or material Guaranty; or (x) amend this
Section 10.1; provided that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or the other Loan Documents.
(c) Each Lender shall reply promptly, but in any event within
ten (10) Business Days of receipt by such Lender of a written request for
consent, approval, disapproval or waiver, from the Administrative Agent (the
"Lender Reply Period"). Unless a Lender shall give written notice to the
Administrative Agent that it objects to consenting, approving, disapproving or
waiving any matter as requested by the Administrative Agent within the Lender
Reply Period, such Lender shall be deemed to have consented, approved,
disapproved or waived such matters as specified in the Administrative Agent's
request.
10.2. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including, without limitation,
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered by hand, if to the Borrower, at its
address at 000 Xxxx Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000
(telecopy number: 000-000-0000) (telephone number: 000-000-0000), Attention:
Chief Financial Officer, with a copy to Attention: General Counsel; if to any
Lender, at its Domestic Lending Office specified opposite its name on Schedule
II; and if to the Administrative Agent, at its address at 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (telecopy number: 000-000-0000) (telephone
number: 000-000-0000), Attention Xxxx Xxxxxxxx with a copy to One Chase
Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (telecopy number:
000-000-0000) (telephone number: 000-000-0000), Attention Thierry LeJouam; or,
as to the Borrower or the Administrative Agent, at such other address as shall
be designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Administrative Agent. All such notices
and communications shall, when mailed, telegraphed, telexed, telecopied, cabled
or delivered, be effective when deposited in the mails, delivered to the
telegraph company, confirmed by telex answerback, telecopied with confirmation
of receipt, delivered to the cable company or delivered by hand to the addressee
or its agent, respectively, except that notices and communications to the
Administrative Agent pursuant to Article II or IX shall not be effective until
received by the Administrative Agent.
71
80
10.3. No Waiver; Remedies. No failure on the part of any
Lender or the Administrative Agent 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 herein
provided are cumulative and not exclusive of any remedies provided by law.
10.4. Costs; Expenses; Indemnities. (a) The Borrower agrees to
pay on demand (i) all costs and expenses of the Administrative Agent and its
respective Affiliates in connection with the preparation, execution, delivery,
administration, syndication, modification and amendment of this Agreement, each
of the other Loan Documents, each document prepared in connection with any
re-pledge of the Collateral pursuant to Section 2.4(a), and each of the other
documents to be delivered hereunder and thereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel,
accountants, appraisers, consultants or industry experts retained by the
Administrative Agent with respect thereto and, as to the Administrative Agent,
with respect to advising it as to its rights and responsibilities under this
Agreement and the other Loan Documents, and (ii) all costs and expenses of the
Administrative Agent or any of the Lenders (including, without limitation, the
fees and out-of-pocket expenses of counsel, accountants, appraisers, consultants
or industry experts retained by the Administrative Agent or any Lender) in
connection with the restructuring or enforcement (whether through negotiation,
legal proceedings or otherwise) of this Agreement and the other Loan Documents.
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, each Lender and their respective Affiliates, and the
directors, officers, employees, agents, attorneys, consultants and advisors of
or to any of the foregoing (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article III) (each of the foregoing being an
"Indemnitee") from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, fees and
disbursements of counsel to any such Indemnitee and experts, engineers and
consultants and the costs of investigation and feasibility studies) which may be
imposed on, incurred by or asserted against any such Indemnitee in connection
with or arising out of any investigation, litigation or proceeding, whether or
not any such Indemnitee is a party thereto, whether direct, indirect, or
consequential and whether based on any federal, state or local law or other
statutory regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any manner
relating to or arising out of or based upon or attributable to this Agreement,
any other Loan Document, any document delivered hereunder or thereunder, any
Obligation, or any act, event or transaction related or attendant to any
thereof, including, without limitation, (i) arising from any misrepresentation
or breach of warranty under Section 4.18 or any Environmental Claim or any
Environmental Lien or any Remedial Action arising out of or based upon anything
relating to real property owned or leased by the Borrower or any of its
Subsidiaries (collectively, the "Indemnified Matters"); provided, however, that
the Borrower shall not have any obligation under this Section 10.4(b) to an
Indemnitee with
72
81
respect to any Indemnified Matter caused by or resulting from the gross
negligence or willful misconduct of that Indemnitee, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order.
(c) If any Lender receives any payment of principal of, or is
subject to a conversion of, any Eurodollar Rate Loan other than on the last day
of an Interest Period relating to such Loan, as a result of any payment or
conversion made by the Borrower or acceleration of the maturity of the Notes
pursuant to Section 8.2 or for any other reason, the Borrower shall, upon demand
by such Lender (with a copy of such demand to the Administrative Agent), to the
extent not previously paid to such Lender pursuant to any other provision
hereof, pay to the Administrative Agent for the account of such Lender all
amounts required to compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment or
conversion, including, without limitation, any loss (including, without
limitation, loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain such Loan.
(d) The Borrower shall indemnify the Administrative Agent and
the Lenders for, and hold the Administrative Agent and the Lenders harmless from
and against, any and all claims for brokerage commissions, fees and other
compensation made against the Administrative Agent and the Lenders for any
broker, finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of any Loan Party or any of its Subsidiaries
in connection with the transactions contemplated by this Agreement.
(e) The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including,
without limitation, pursuant to this Section 10.4) or any other Loan Document
shall (i) survive payment of the Obligations and (ii) inure to the benefit of
any Person who was at any time an Indemnitee under this Agreement or any other
Loan Document.
10.5. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Borrower against any and all of the
Obligations now or hereafter existing whether or not such Lender shall have made
any demand under this Agreement or any Note or any other Loan Document and
although such Obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
10.6. Binding Effect. This Agreement shall become effective as
of the Effective Date and thereafter shall be binding upon and inure to the
benefit of the
73
82
Borrower, the Administrative Agent, each Lender and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lenders.
10.7. Assignments and Participations. (a) Each Lender may
sell, transfer, negotiate or assign to one or more other Lenders or Eligible
Assignees all or a portion of the Loans owing to it and the Notes held by it and
a commensurate portion of its rights and obligations hereunder and under the
other Loan Documents; provided, however, that (i) the aggregate amount of the
Loans being assigned pursuant to each such assignment (determined as of the date
of the Assignment and Acceptance with respect to such assignment) shall in no
event be less than the assignor's entire interest, except (x) with the consent
of the Borrower and the Administrative Agent (which consent shall not be
unreasonably withheld or delayed), or (y) during the continuance of an Event of
Default, or (z) a Lender may assign a portion of its Loans to another existing
Lender or Lenders or a fund or trust entity that invests in bank loans and is
advised by or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor only, provided that the aggregate amount of
the Loans retained by the assignor shall in no event be less than $5,000,000,
and (ii) each assignee hereunder shall also be an Eligible Assignee. The parties
to each assignment shall execute and deliver to the Administrative Agent, for
its acceptance and recording, an Assignment and Acceptance, together with the
Notes (or an Affidavit of Loss and Indemnity with respect to such Notes
satisfactory to the Administrative Agent) subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, (A) the assignee thereunder shall
become a party hereto and, to the extent that rights and obligations under the
Loan Documents have been assigned to such assignee pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender hereunder and
thereunder, and (B) the assignor thereunder shall, to the extent that rights and
obligations under this Agreement have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except those which survive the
payment in full of the Obligations) and be released from its obligations under
the Loan Documents (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under the Loan Documents, such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any of
the statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document furnished pursuant thereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under this Agreement or any other Loan
Document or of any other instrument or document furnished pursuant hereto or
thereto; (iii) such
74
83
assigning Lender confirms that it has delivered to the assignee and the assignee
confirms that it has received a copy of this Agreement and each of the Loan
Documents together with a copy of the most recent financial statements delivered
by the Borrower to the Lenders pursuant to each of the clauses of Section 6.11
(or if no such statements have been delivered, the financial statements referred
to in Section 4.5 of this Agreement) and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(c) The Borrower hereby instructs the Administrative Agent for
the benefit of the Borrower to maintain at its address referred to in Section
10.2 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the principal amount of the Loans owing to each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Loan Parties, the Administrative Agent,
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Administrative Agent, or any Lender at any
reasonable time and from time to time upon reasonable prior notice. The
Administrative Agent shall supply to the Borrower promptly after any amendment
thereto, a copy of the amended Register.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the Notes subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower. No assignment
shall be effective unless it has been recorded in the Register as provided in
this paragraph (d). Within five Business Days after its receipt of such notice,
the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for such surrendered Notes, new Notes to the
order of such Eligible Assignee in an amount equal to the outstanding principal
balance of the Loan assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained any portion of such Loan hereunder,
new Notes to the order of the assigning Lender in an amount equal to the
outstanding principal balance of the Loan retained by it hereunder. Such new
Notes shall be dated the same date as the surrendered Notes and be in
substantially the form of Exhibit A hereto.
75
84
(e) In addition to the other assignment rights provided in
this Section 10.7, each Lender may, without prior notice to or consent of the
Borrower or the Administrative Agent: (i) assign, as collateral or otherwise,
any of its rights under this Agreement (including, without limitation, rights to
payments of principal or interest on the Loans) to any Federal Reserve Bank, or
(ii) subject, nevertheless, to the restrictions on assignment set forth in this
Section 10.7, pledge its rights under this Agreement to any Person to secure
such Lender's obligations to such Person; provided, however, that such Person
shall have no rights under this Agreement unless such Person is an Eligible
Assignee and unless and until such rights have been assigned to such Person in
accordance with the terms of this Agreement; provided further, however, that no
such assignment or pledge shall release the assigning or pledging Lender from
any of its obligations hereunder. The terms and conditions of any such
assignment and the documentation evidencing such assignment shall be in form and
substance satisfactory to the assigning Lender and the assignee Federal Reserve
Bank.
(f) Each Lender may sell participations to one or more banks
or other Persons in or to all or a portion of its rights and obligations under
the Loan Documents (including, without limitation, all or a portion of the Loans
owing to it and the Notes held by it). The terms of such participation shall
not, in any event, require the participant's consent to any amendments, waivers
or other modifications of any provision of any Loan Documents, the consent to
any departure by any Loan Party therefrom, or to the exercising or refraining
from exercising any powers or rights which such Lender may have under or in
respect of the Loan Documents (including, without limitation, the right to
enforce the obligations of the Loan Parties), except if any such amendment,
waiver or other modification or consent would reduce the amount, or postpone any
date fixed for, any amount (whether of principal, interest or fees) payable to
such participant under the Loan Documents, to which such participant would
otherwise be entitled under such participation. In the event of the sale of any
participation by any Lender, (i) such Lender's obligations under the Loan
Documents shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of such Notes and Obligations for all
purposes of this Agreement, and (iv) the Borrower, the Administrative Agent and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.
(g) Each participant shall be entitled to the benefits of
Sections 2.10, 2.12, 2.14 and 10.4 as if it were a Lender; provided, however,
that anything herein to the contrary notwithstanding, the Borrower shall not, at
any time, be obligated to pay to any assignee or participant of any interest of
any Lender, under Section 2.10, 2.12, 2.14 or 10.4, any sum in excess of the sum
which if the Borrower would not at the time of such assignment have been
obligated to pay to such assignor Lender any such amount in respect of such
interest had such assignment not been effected or had such participation not
been sold.
10.8. Governing Law; Severability. This Agreement and the
Notes and the rights and obligations of the parties hereto and thereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York.
76
85
Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
10.9. Submission to Jurisdiction; Service of Process. (a) Any
legal action or proceeding with respect to this Agreement or the Notes or any
document related thereto may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, and,
by execution and delivery of this Agreement, the Borrower hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably
waive any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which any of them may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(b) The Borrower irrevocably consents to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower at its address provided herein.
(c) Nothing contained in this Section 10.9 shall affect the
right of the agent, any Lender or any holder of a Note to serve process in any
other manner permitted by law or commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
10.10. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
10.11. 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.
10.12. Entire Agreement. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder, and the agreement referred to in Section 2.3 embody the entire
agreement of the parties and supersedes all prior agreements and understandings
relating to the subject matter hereof.
10.13. Confidentiality. Each Lender and the Administrative
Agent agree to keep information obtained by it pursuant hereto and the other
Loan Documents confidential and agrees that it will only use such information in
connection with the transactions contemplated by this Agreement and not disclose
any of such information other than (i) to such Lender's or the Administrative
Agent's, as the case may be,
77
86
Affiliates, employees, representatives and agents who are or are expected to be
involved in the evaluation of such information in connection with the
transactions contemplated by this Agreement and who are advised of the
confidential nature of such information, (ii) to the extent such information
presently is or hereafter becomes available to such Lender or the Administrative
Agent, as the case may be, on a non-confidential basis from a source other than
the Borrower, (iii) to the extent disclosure is required by law, regulation or
judicial order or requested or required by bank regulators or auditors, or (iv)
to assignees or participants or potential assignees or participants who agree to
be bound by the provisions of this sentence.
10.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES
ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN
STATEMENT OR ACTION OF ANY PARTY HERETO.
10.15. Joint and Several Obligations. Unless the context
clearly indicates otherwise each covenant, agreement, undertaking, condition or
other matter stated herein as a covenant, agreement, undertaking or matter
involving the Borrower shall be jointly and severally binding upon each of the
parties comprising Borrower.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
78
87
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
FELCOR LODGING TRUST INCORPORATED, a
Maryland corporation
By: /s/ XXXXXXXX X. XXXXXXXX
----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Senior Vice President
FELCOR LODGING LIMITED PARTNERSHIP, a
Delaware limited partnership
By: FELCOR LODGING TRUST INCORPORATED, a
Maryland corporation, its sole
general partner
By: /s/ XXXXXXXX X. XXXXXXXX
----------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
88
THE CHASE MANHATTAN BANK, as Administrative
Agent, Book Manager, and Collateral Agent
By: /s/ XXXXXX X. KOZLAN
---------------------------------------
Name: Xxxxxx X. Kozlan
Title: VP
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
89
Lenders
THE CHASE MANHATTAN BANK
By: /s/ XXXXXX X. KOZLAN
--------------------------------------
Name: Xxxxxx X. Kozlan
Title: VP
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
90
CHASE SECURITIES INC., as agent for
THE CHASE MANHATTAN BANK
By: /s/ XXXX X. XXXXX
------------------------------------
Name: Xxxx X. Xxxxx
Title: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
91
USTRUST
By: /s/ XXXXX X. XXXX
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
92
KZH APPALOOSA LLC
By: /s/ XXXXXXXX XXXXXX
--------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
93
XXX XXXXXX PRIME RATE INCOME TRUST
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: XXXXXXX X. XXXXXXX
Title: Senior Vice President & Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
94
KZH IV LLC
By: /S/ XXXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
95
OCTAGON LOAN TRUST
By: OCTAGON CREDIT INVESTORS, as Manager
By: /s/ XXXXX X. XXXXXXXX
--------------------------------------
Name: XXXXX X. XXXXXXXX
Title: MANAGING DIRECTOR
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
96
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/ XXXX XXXXXX
-------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
97
KZH BDC LLC
By: /s/ XXXXXXXX XXXXXX
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
98
FRANKLIN FLOATING RATE TRUST
By: /s/ XXXXXXXX XXXXXX
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
99
KZH RIVERSIDE LLC
By: /s/ XXXXXXXX XXXXXX
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
100
XXXXXX XXXXXXX XXXX XXXXXX PRIME INCOME
TRUST
By: /s/ XXXXX XXXXXXX
----------------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
101
KZH-CNC LLC
By: /s/ XXXXXXXX XXXXXX
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
102
XXXXX XXX XXXXXXX, INCORPORATED, as Agent
for KEYPORT LIFE INSURANCE COMPANY, as a
Lender
By: /s/ XXXXX X. GOOD
-------------------------------------
Name: Xxxxx X. Good
Title: Vice President and Portfolio
Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
103
SRF TRADING, INC.
By: /s/ XXXXX X. XXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
104
'
FLOATING RATE PORTFOLIO
By: INVESCO, Senior Secured Management,
Inc., as Attorney-in-fact
By: /s/ XXXX X. XxXXXXXX
--------------------------------------
Name: Xxxx X. XxXxxxxx
Title: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
105
KZH WATERSIDE LLC
By: /s/ XXXXXXXX XXXXXX
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
106
KZH CYPRESSTREE-1 LLC
By: /s/ XXXXXXXX XXXXXX
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
107
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company,
Inc., as Portfolio Manager
By: /s/ XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
108
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company,
Inc., as Portfolio Manager
By: /s/ XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
