1
EXHIBIT 10.31
U.S. $100,000,000
REVOLVING CREDIT AGREEMENT
Dated as of May 1, 1997
Among
SUNSTONE HOTEL INVESTORS, L.P.
as Borrower
and
BANK ONE, ARIZONA, NA
as Lender, Issuing Bank and Administrative Agent
and
CREDIT LYONNAIS NEW YORK BRANCH
as Lender and Documentation Agent
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION
as Lender and Compliance Agent
--------------------------------------------------------------------------------
2
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS...................................................1
1.1. Defined Terms.............................................................1
1.2. Computation of Time Periods..............................................32
1.3. Accounting Terms.........................................................32
1.4. Certain Terms............................................................33
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS....................................................33
2.1. The Loans....................................................................33
2.2. Intentionally Omitted........................................................33
2.3. Making the Loans.............................................................33
2.4. Fees.........................................................................35
2.5. Reduction and Termination of the Commitments.................................36
2.6. Repayment....................................................................36
2.7. Prepayment...................................................................36
2.8. Conversion/Continuation Option...............................................37
2.9. Interest.....................................................................37
2.10.Interest Rate Determination and Protection...................................38
2.11.Increased Costs..............................................................39
2.12.Illegality...................................................................39
0.00.Xxxxxxx Adequacy.............................................................40
2.14.Payments and Computations....................................................40
2.15.Taxes........................................................................42
2.16.Sharing of Payments, Etc.....................................................44
2.17.Extension of Final Maturity Date.............................................44
ARTICLE III
CONDITIONS OF LENDING, SECURING THE OBLIGATIONS...................................45
3.1. Conditions Precedent to Initial Loans........................................45
3.2. Additional Conditions Precedent to Initial Loans.............................47
3.3. Conditions Precedent to Each Loan............................................48
3.4. Securing the Obligations.....................................................49
ARTICLE IV
THE LETTER OF CREDIT FACILITY.....................................................56
4.1. Facility Letters of Credit...................................................56
4.2. Limitations..................................................................56
4.3. Conditions...................................................................57
4.4. Procedure for Issuance of Facility Letters of Credit.........................57
4.5. Duties of Issuing Bank.......................................................58
4.6. Participation................................................................59
4.7. Compensation for Facility Letters of Credit..................................61
4.8. Issuing Bank Reporting Requirements..........................................61
4.9. Indemnification; Nature of Issuing Bank's Duties.............................61
4.10.Resignation of Issuing Bank..................................................63
i
3
4.11.Obligations of Issuing Bank and Other Lenders..................................63
4.12.Issuing Bank's Rights..........................................................63
ARTICLE V
REPRESENTATIONS AND WARRANTIES......................................................63
5.1. Existence; Compliance with Law.................................................64
5.2. Power; Authorization; Enforceable Obligations..................................64
5.3. Taxes..........................................................................65
5.4. Full Disclosure................................................................66
5.5. Financial Matters..............................................................66
5.6. Litigation.....................................................................67
5.7. Margin Regulations.............................................................67
5.8. Ownership......................................................................67
5.9. ERISA..........................................................................68
5.10.Indebtedness...................................................................69
5.11.Dividends and Distributions....................................................69
0.00.Xx Burdensome Restrictions; No Defaults........................................69
0.00.Xxxxxxxxxxx....................................................................70
5.14.Government Regulation..........................................................70
0.00.Xxxxxxxxx......................................................................70
5.16.Labor Matters..................................................................71
5.17.Force Majeure..................................................................71
5.18.Use of Proceeds................................................................71
5.19.Environmental Protection.......................................................72
5.20.Contractual Obligations Concerning Assets......................................74
5.21.Intellectual Property..........................................................74
5.23.Status as REIT.................................................................76
5.24.Operator: Compliance with Law..................................................76
5.25.Operating Leases, Licenses and Management Agreement............................77
ARTICLE VI
FINANCIAL COVENANTS.................................................................77
6.1. Interest Coverage Ratio........................................................78
6.2. Debt Service Coverage Ratio....................................................78
6.3. Maintenance of Tangible Net Worth..............................................78
6.4. Limitations on Total Indebtedness..............................................78
6.5. Limitations on Total Secured Recourse Indebtedness.............................78
6.6. Limitations on Non-Recourse Indebtedness.......................................79
6.7. Dividends and Distributions....................................................79
ARTICLE VII
AFFIRMATIVE COVENANTS..............................................................80
7.1. Compliance with Laws, Etc......................................................80
7.2. Conduct of Business............................................................80
7.3. Payment of Taxes, Etc..........................................................80
7.4. Maintenance of Insurance.......................................................81
7.5. Preservation of Existence, Etc.................................................81
7.6. Access.........................................................................81
7.7. Keeping of Books...............................................................81
ii
4
7.8. Maintenance of Properties, Etc....................................................81
7.9. Performance and Compliance with Other Covenants...................................82
7.10.Application of Proceeds...........................................................82
0.00.Xxxxxxxxx Statements..............................................................82
7.12.Reporting Requirements............................................................84
7.13.Leases and Operating Leases; Management Agreements and
Licenses......................................................................87
7.14.Non-Recourse Indebtedness.........................................................88
7.15.Employee Plans....................................................................88
0.00.Xxxxxxx Improvement Work..........................................................88
7.17.Fiscal Year.......................................................................88
7.18.Environmental Matters.............................................................89
0.00.XXXX Requirements; Listing........................................................89
7.20.Intentionally Omitted.............................................................90
7.21.Hotel Ownership...................................................................90
7.22.Further Assurances................................................................90
7.23.Borrowing Base Determination/Requirements.........................................90
ARTICLE VIII
NEGATIVE COVENANTS.....................................................................93
8.1. Redemption........................................................................93
8.2. Indebtedness......................................................................93
8.3. Lease Obligations.................................................................94
8.4. Mergers, Stock Issuances, Asset Sales, Etc........................................94
8.5. Limitations on Development, Construction, Renovation and
Purchase of Hotels................................................................95
8.6. Change in Nature of Business or in Capital Structure..............................95
8.7. Modification of Material Agreements...............................................95
8.8. Accounting Changes................................................................96
8.9. Transactions with Affiliates......................................................96
8.10.Adverse or Speculative Transactions...............................................96
8.11.Environmental Matters.............................................................96
0.00.Xxxxxx............................................................................97
0.00.Xxxxxxxxxx Continuity.............................................................97
0.00.Xxxxxxxxxxx.......................................................................97
8.15.Liens.............................................................................99
8.16.Disposition of Eligible Hotels....................................................99
8.17.Operating Leases and Management Agreements.......................................100
8.18.ERISA Plan Assets................................................................100
ARTICLE IX
EVENTS OF DEFAULT.....................................................................100
9.1. Events of Default................................................................100
9.2. Remedies.........................................................................103
ARTICLE X
THE ADMINISTRATIVE AGENT..............................................................104
10.1. Authorization and Action........................................................104
iii
5
10.2. Administrative Agent's Reliance, Etc..........................................106
10.3. Bank One and Affiliates.......................................................107
10.4. Lender Credit Decision........................................................107
10.5. Decisions Following Event of Default; Enforcement.............................107
10.6. Acquisition of Collateral.....................................................109
10.7. Indemnification...............................................................112
10.8. Successor Agent...............................................................112
ARTICLE XI
MISCELLANEOUS.......................................................................113
11.1. Amendments, Etc...............................................................113
11.2. Notices, Etc..................................................................115
11.3. No Waiver; Remedies...........................................................115
11.4. Costs; Expenses; Indemnities..................................................116
11.5. Right of Set-off..............................................................118
11.6. Binding Effect................................................................118
11.7. Assignments and Participations................................................118
11.8. Governing Law; Severability...................................................123
11.9. Submission to Jurisdiction; Service of Process................................123
11.10.Section Titles................................................................124
11.11.Execution in Counterpart......................................................124
11.12.Entire Agreement..............................................................124
11.13.Confidentiality...............................................................124
11.14.WAIVER OF RIGHTS TO TRIAL BY JURY.............................................124
11.15.Binding Arbitration...........................................................125
iv
6
SCHEDULES
Schedule I - Borrower's Investment in Designated Hotels
Schedule II - Commitments
Schedule III - Applicable Lending Offices and
Addresses for Notices
Schedule 5.8 - Subsidiaries and Unconsolidated Entities
Schedule 5.10 - Existing Indebtedness
Schedule 5.13 - Existing Investments
Schedule 5.19 - Environmental Protection
Schedule 5.22(a) - Owned Real Estate
Schedule 5.22(b) - Leased Real Estate
Schedule 7.23 - Initial Eligible Hotels
v
7
EXHIBITS
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Deed of Trust
Exhibit D - Forms of Limited Guaranty
Exhibit E - Form of Note
Exhibit F - Form of Operating Lease (not included)
Exhibit G - Form of Sunstone Guaranty
Exhibit H - Form of Notice of Borrowing
Exhibit I - Form of Notice of Conversion or Continuation
Exhibit J - Form(s) of Opinion(s) of Counsel for the Loan Parties (not included)
Exhibit K - Form of Compliance Certificate
Exhibit L - Form of Agreement with Operating Lessee
Exhibit M - Form of Collateral Assignment of Management Agreement
Exhibit N - Form of Consent and Subordination by Manager
Exhibit O - Form of Environmental Indemnity Agreement
vi
8
REVOLVING CREDIT AGREEMENT, dated as of May 1, 1997, among
SUNSTONE HOTEL INVESTORS, L.P., a Delaware limited partnership (the "Borrower"),
and BANK ONE, ARIZONA, NA ("Bank One"), as a Lender and as administrative agent
for the Lenders (in such capacity, the "Administrative Agent"), CREDIT LYONNAIS
NEW YORK BRANCH ("Credit Lyonnais") as a lender and as documentation agent and
XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Xxxxx Fargo") as a Lender and as
compliance agent.
In consideration of the covenants and agreements contained
herein, the parties hereto hereby covenant and 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 aggregate FF&E Reserves for such period
in respect of each Hotel owned by such Person or its Subsidiaries (whether
located on land owned by or land leased to such owner of the Hotel).
"Adjusted Funds From Operations" means, for any Person, for
any period, Net Income (Loss) of such Person for such period plus (a) the sum 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 Borrower's
partnership units; less (b) the sum 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) 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.
1
9
"Adjusted NOI" means, with respect to any Hotel owned or
leased by the Borrower or any of its Subsidiaries, 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
ten percent (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.
"Aggregate Value" means, with respect to an Eligible Hotel, at
any date, the aggregate value thereof to be calculated as follows:
(a) For a Seasoned Property, (i) the Adjusted NOI for such
Seasoned Property for the preceding four (4) Fiscal Quarters divided by (ii)
eleven percent (11%); and
(b) For a New Property, the Borrower's Investment in such New
Property.
"Agreement" means this Agreement, together with all Exhibits
and Schedules hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Alter" means Xxxxxx X. Alter.
"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 Letter of Credit Rate" means, as at any date of
determination, a rate per annum equal to the Applicable Margin.
"Applicable Margin" means, (a) with respect to each Loan at
any date, the applicable percentage per annum set forth below based upon the
Status then in effect, it being understood that the Applicable Margin for (i)
Base Rate Loans shall be the percentage set forth under the column "Base Rate
Loans," and (ii) Eurodollar Rate Loans shall be the percentage set forth under
the column "Eurodollar Rate Loans" and (b) with respect to the Applicable Letter
of Credit Rate at any date, the applicable
2
10
percentage per annum set forth below under the column "Facility Letters of
Credit," based upon the Status then in effect.
Facility
Base Rate Eurodollar Letters of
Loans Rate Loans Credit
----- ---------- ------
Level I 0% 1.25% 1.50%
Status
Level II 0% 1.375% 1.50%
Status
Level III 0% 1.5% 1.50%
Status
Level IV 0.125% 1.625% 1.50%
Status
Level V 0.25% 1.75% 1.50%
Status
Level VI 0.375% 1.8% 1.50%
Status
"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 Sunstone, the
Borrower or any of their respective Subsidiaries to any Person (other than to
Sunstone, Borrower or any of their respective Subsidiaries) of any Stock of any
Subsidiaries of Sunstone (other than the Borrower) or of any Subsidiaries of the
Borrower, any Stock Equivalents of any such Subsidiaries of or any Hotel, but
excluding Operating Leases or the sale of Stock in Sunstone or partnership
interests in the Borrower.
"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 A.
"Available Credit" means, at any time, an amount equal to (a)
the lower of (i) the then effective Commitments of the Lenders or (ii) the
Borrowing Base at such time less the sum of any Indebtedness of the Borrower or
any of its Subsidiaries plus their respective Pro Rata Shares of Indebtedness of
their Unconsolidated Entities (excluding (A) Indebtedness evidenced by the Notes
and (B) Indebtedness secured by first priority
3
11
mortgages on Hotels (in compliance with the provisions hereof) minus (b) the sum
of (i) the Principal Balance at such time and (ii) the Facility Letter of Credit
Obligations at such time.
"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 Bank One at its
principal office, from time to time, as Bank One's "prime rate"; and
(b) the sum (adjusted to the nearest 1/8 of one percent or, if
there is no nearest 1/8 of one percent, to the next higher 1/8 of one percent)
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 its Subsidiaries' investment in such Hotel (including all
investments constituting an interest in property, whether tangible or intangible
and whether real, personal or mixed, that is used or intended for use in the
ownership or leasing of such Hotel, specifically including, without limitation,
investments in Subsidiaries and (to the extent permitted hereunder)
Unconsolidated Entities owning or leasing Hotels), at cost (including the
capital cost of renovations), on a consolidated basis, provided that (a) 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
Sunstone for purposes of such investment) of any other property transferred
therefor by the Borrower or its Subsidiaries, (ii) the amount of all
indebtedness and other obligations assumed or incurred by the Borrower or its
Subsidiaries or to which the Borrower or its Subsidiary takes subject, and (iii)
the value (as determined by the Board of Directors of Sunstone 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 Sunstone, the Borrower or it Subsidiary in connection with
such investment and (b) the Borrower's Investment, as of the date of this
Agreement, in the Hotels designated in Schedule I shall be the respective
amounts set forth in Schedule I. For purposes of this definition only,
"indebtedness" of the Borrower or its Subsidiaries shall mean the consolidated
liabilities of the Borrower and its Subsidiaries for
4
12
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.
"Borrowing" means a borrowing consisting of Loans made on the
same day by the Lenders ratably according to their respective Commitments.
"Borrowing Base" means, at any time, the lesser of (i) the
Borrowing Base Adjusted NOI for all Eligible Hotels, multiplied by five (5) and
(ii) the sum of 40% of the Aggregate Value of all Eligible Hotels.
"Borrowing Base Adjusted NOI" means, with respect to an
Eligible Hotel, at any date, the Adjusted NOI for such Eligible Hotel for the
preceding four (4) Fiscal Quarters.
"Borrowing Base Certificate" means a certificate of the
Borrower substantially in the form of Exhibit B.
"Borrowing Base Imbalance" means, as at any date, the amount
(if any) by which the sum of (a) the Principal Balance and (b) the Facility
Letter of Credit Obligations exceeds the lower of (i) the Borrowing Base or (ii)
the Commitments.
"Business Day" means a day of the year on which banks are not
required or authorized to close in Arizona, New York City or 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, 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 pro ceeds, as the case may be.
5
13
"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.
"Closing Date" means the date the initial Loans are
advanced hereunder.
"Co-Agents" means each of Bank One, Credit Lyonnais and Xxxxx
Fargo, in each case, only (i) for as long as such Lender and its Affiliates
retain, in the aggregate, Commitments hereunder of $20,000,000 or more and (ii)
at such time neither such Lender nor any of its Affiliates is a Non-Funding
Lender.
"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 Section
9.1(b).
"Commitment" means, as to each Lender, the commitment of such
Lender to make Loans to the Borrower pursuant to Section 2.1, and to participate
in the Facility Letters of Credit pursuant to Section 4.6(a), in the aggregate
principal amount outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule II under the caption "Commitment" or as assigned to
such Lender pursuant to an Assignment and Acceptance, as such amount may be
reduced or modified pursuant to this Agree ment, and "Commitments" means the
aggregate Commitments of all Lenders.
"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, including liability as
general partner of, another Person. 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 and (b) any liability of such Person for an obligation of
another Person through any agreement (contingent or otherwise) (i) to purchase
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
6
14
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). The amount of any Contingent Obligation shall be equal to the amount
of the Indebtedness or Contractual 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.
"Debt Service" 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
pre-payments 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.
"Debt Service Coverage Ratio" has the meaning specified
in Section 6.2.
"Deed of Trust" means, with respect to an Eligible Hotel, a
Deed of Trust (or Mortgage) executed and delivered to the Administrative Agent
(for the benefit of the Lenders) by the Eligible Hotel Owner of such Eligible
Hotel, securing the Obligations, substantially in the form of Exhibit C, with
such changes as the Administrative Agent or its counsel may determine to be
necessary or appropriate to conform to the laws and practices of the
jurisdiction in which such Eligible Hotel is located and otherwise satisfactory
to the Administrative Agent in form and substance.
"Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.
7
15
"Designee" has the meaning specified in Section
10.6(b).
"Disposition" means any sale, transfer, conveyance,
encumbrance or hypothecation of an Eligible Hotel or of any direct or indirect
interest in any wholly-owned Subsidiary of the Borrower that owns an Eligible
Hotel.
"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 III 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 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 the Borrower's partnership units; less (b) the sum 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 other
gains on Asset Sales not otherwise included in extraordinary gains determined on
a consolidated basis in conformity with GAAP) and (ii) the applicable share of
Net Income (Loss) of such Person's Unconsolidated Entities; plus (c) such
Person's Pro Rata Share of EBITDA of such Person's Unconsolidated Entities.
"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 $10,000,000,000; (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
$10,000,000,000, 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
8
16
Cayman Islands; (iii) a corporation organized under the laws of the United
States, or any State thereof, and having total assets in excess of
$10,000,000,000; (iv) an insurance company organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$10,000,000,000; (v) any Lender; (vi) any Affiliate of any Lender; and (vii) any
Person other than an Affiliate of a Loan Party, in each case 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 Hotels" means, collectively, such of the Hotels
owned by the Borrower or any of its direct or indirect wholly-owned Subsidiaries
as (i) shall each 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;
(C) such Hotel is (1) in compliance, in all material
respects, with all applicable Environmental Laws, and
(2) not subject to any material Environmental
Liabilities and Costs;
(D) such Hotel is fully operating without any guest
rooms out of service (whether due to casualty or
condemnation loss or as a consequence of repairs,
alterations or additions or otherwise) except as
provided in subparagraph (ii)(C) below, provided
--------
that (with respect to a casualty or condemnation)
not more than twenty percent (20%) of the total
guest rooms in such Hotel are out of service as a
result of such casualty or condemnation;
(E) such Hotel is (1) leased to the Operating Lessee
pursuant to an Operating Lease, (2) managed by a
Manager pursuant to a Management Agreement, and
(3) operated pursuant to and has the benefit of a
License (except in the case of a New Property to
which the requirements of this clause (3) shall
not apply until the first anniversary of the
acquisition thereof); and no material defaults
exist under such Operating Lease, Management
Agreement or License;
(F) such Hotel is located in the United States of America
and (1) owned (together with the land on which it is
located) in fee simple by the Borrower or its direct
or indirect wholly-owned Subsidiary
9
17
or (2) owned by the Borrower or its direct or
indirect wholly-owned Subsidiary and located on land
leased to the Borrower or such Subsidiary pursuant to
a Qualified Lease;
(G) the Borrower's Investment in such Hotel does not
exceed $25,000,000 unless otherwise approved by the
Requisite Lenders in their sole and absolute
discretion;
(H) for any Hotel located in the State of California,
or in any other location that, according to
determination by the appropriate agency of the
United States Government, has an above average
risk of seismic activity, such Hotel is covered by
earthquake insurance in an amount not less than
the maximum probable loss determined pursuant to a
written report by a seismic engineer, which report
and engineer are acceptable to the Requisite
Lenders, provided, however, that the aggregate
amount of such earthquake insurance coverage and
the deductibles thereunder may be modified at the
request of the Borrower based upon industry
standards, subject to approval of the Lenders; and
(I) if the Hotel is, in the judgment of the Requisite
Lenders, an "extended stay" Hotel, it is operated
pursuant to a Residence Inn, Hawthorn Suites or other
License that, in the judgment of the Requisite
Lenders, is "upscale;"
and (ii) shall, collectively, meet, at any time and from time to time, each of
the following criteria:
(A) not more than thirty percent (30%) of the aggregate
number of guest rooms, and not more than thirty
percent (30%) of the aggregate amount of the
Borrower's Investment, in all Eligible Hotels are in
Hotels located in any one state (except for the State
of California, where such limitations shall be sixty
percent (60%));
(B) not more than twenty percent (20%) of the
aggregate number of all guest rooms, and not more
than twenty percent (20%) of the aggregate amount
of the Borrower's Investment, in all Eligible
Hotels (excluding those operated under a Residence
Inn License) are in Hotels that, in the judgment
of the Requisite Lenders, are "extended stay"
Hotels;
10
18
(C) not more than fifteen percent (15%) of the aggregate
number of guest rooms in all Eligible Hotels are out
of service, for any reason, at any one time;
(D) not more than ten percent (10%) of the aggregate
number of guest rooms, and not more than ten percent
(10%) of the aggregate amount of the Borrower's
Investment, in all Eligible Hotels are in Hotels,
located, in whole or in part, on land leased pursuant
to a Qualified Lease; and
(E) not more than ten percent (10%) of the aggregate
number of guest rooms in all Eligible Hotels are in
Hotels located outside of the Western States;
and (iii) shall have been accepted by the Administrative Agent as Eligible
Hotels pursuant to the provisions of Section 7.23.
"Eligible Hotel Documents" means, with respect to any Eligible
Hotel, the documents described in Section 7.23(b) and shall also include, from
and after the Trigger Date, the documents described in Sections 3.4(b) and (c).
"Eligible Hotel Owner" means, with respect to an Eligible
Hotel, the Borrower (if it owns such Eligible Hotel) or its wholly-owned
Subsidiary that owns such Eligible Hotel.
"Enforcement Action" has the meaning specified in
Section 10.5(b)(i).
"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, without limitation, the air, soil, surface water or
groundwater) at, in, by, from or related to any property owned or leased by
Sunstone, the Borrower or any of their respective Subsidiaries 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
11
19
Sunstone, the Borrower or any of their respective Subsidiaries 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 Sunstone, the Borrower or any of their respective Subsidiaries.
"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. ss. 9601 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Clean Air Act, 42
U.S.C. ss. 7401 et seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq. (to the extent the
same relates to any Hazardous Materials), and the Oil Pollution Act of 1990, 33
U.S.C. ss. 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.
"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.
12
20
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time.
"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
term ination 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 III (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) the rate
of interest per annum determined by the Administrative Agent, based on Telerate
Page 3750 or such other sources as may be selected by the Administrative Agent,
to be the rate at which deposits in Dollars are offered by major banks in
London, England, to other major banks in the London interbank market at 11:00
a.m. (London, England, local time) on the first day of the Interest Period for
the period in the London interbank market equal to or next greater than the
Interest Period by (b) a
13
21
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.
"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
9.1.
"Facility Letter of Credit" means a Letter of Credit issued by
the Issuing Bank for the account of the Borrower in accordance with Article IV.
"Facility Letter of Credit Fee" means a fee, payable with
respect to each Facility Letter of Credit issued by the Issuing Bank, in an
amount per annum equal to the product of (i) the Applicable Letter of Credit
Rate (determined as of the date on which the quarterly installment of such fee
is due) and (ii) the face amount of such Facility Letter of Credit, which fee
shall be calculated in the manner provided in Section 4.7.
"Facility Letter of Credit Obligations" means, at any date,
the sum of (i) the aggregate undrawn face amount of all outstanding Facility
Letters of Credit, and (ii) the aggregate amount paid by an Issuing Bank on any
Facility Letters of Credit to the extent (if any) not reimbursed by the Borrower
or by the Lenders under Section 4.4.
14
22
"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.
"FF&E Reserve" means, for any Person (or with respect to any
Hotel) for any period, a reserve equal to four percent (4%) of Gross Revenues
from any Hotel owned by such Person (or from such Hotel), for such Period, 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.
"Final Maturity Date" means July 1, 1999.
"Financing Statement" means, with respect to an Eligible
Hotel, a UCC Financing Statement with respect to any and all tangible and
intangible personal property relating to such Eligible Hotel, executed and
delivered to the Administrative Agent (for the benefit of the Lenders) by the
Eligible Hotel Owner of such Eligible Hotel, securing the Obligations, and
satisfactory to the Administrative Agent in form and substance.
"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.
"Free Cash Flow" means, for any Person for any period, the
Adjusted Funds From Operations for such period less (a) the aggregate FF&E
Reserves 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
15
23
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 5.5.
"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.
"Gross Revenues" has the meaning ascribed to such term in the
form of Operating Lease attached as Exhibit F.
"Guarantor" means Sunstone or any of the Limited
Guarantors.
"Guaranty" means the Sunstone Guaranty or any of the
Limited Guaranties.
"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.
"Improvements" has the meaning specified in Section
5.22(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
16
24
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 may be 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 unfunded direct obligations of such Person (including
obligations, to the extent of such Person's recourse liability therefor, to
purchase assets from another Person), (viii) all Indebtedness referred to in
clause (i), (ii), (iii), (iv), (v), (vi) or (vii) 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 (ix)
all liabilities of such Person under Title IV of ERISA.
"Indemnitee" has the meaning specified in Section 11.4.
"Interest Coverage Ratio" has the meaning specified in
Section 6.1.
"Interest Period" means, (a) 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, two, three, six or twelve months thereafter, as
selected by the Borrower in its Notice of Borrowing or Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.3 or 2.8,
and (ii) thereafter, if such Loan is continued, in whole or in part, as a
Eurodollar Rate Loan pursuant to Section 2.8, a period commencing on the last
day of the immediately preceding Interest Period therefor and ending one, two,
three, six or twelve months thereafter, as selected by the Borrower in its
Notice of Conversion or Continuation given to the Administrative Agent pursuant
to Section 2.8; provided, however, that:
17
25
(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 Final Maturity Date;
(D) the Borrower may not select any Interest Period in
respect of Loans having an aggregate principal amount of
less than $2,500,000; and
(E) there shall be outstanding at any one time no more than
seven (7) 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) or all or substantially all of the
assets of any other Person, or (iii) all or substantially all of the assets
constituting the business of a division, branch or other unit operation of any
other Person, or (c) any joint venture or partnership with, or any capital
contribution to, or other investment in, any other Person or any real property.
"Issuance Date" means the date on which a Facility Letter of
Credit is issued, amended or extended.
"Issuing Bank" means any Lender that may from time to time be
designated as Issuing Bank in accordance with the provisions of Section 4.10. As
of the date of this Agreement, Bank One is the Issuing Bank.
"IRS" means the Internal Revenue Service, or any
successor thereto.
18
26
"Leases" means, with respect to the Borrower or any of its
Subsidiaries, all of those leasehold estates in real property owned by the
Borrower or such Subsidiary, 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.
"Lender" means, as of the date hereof, each financial
institution a signatory hereto as a Lender and, at any other given time, each
financial institution which is a party hereto as a Lender, whether as a
signatory hereto or pursuant to an Assignment and Acceptance.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued by a financial institution upon the
application of such Person or upon which such Person is an account party or for
which such Person is in any way liable.
"License" means an agreement in favor of the Borrower, its
Subsidiary or the Operating Lessee as licensee, permitting the use of the
following Hotel system trademarks, trade names and any related rights in
connection with the ownership or operation of any Hotel: (i) Hawthorn Suites,
Hampton Inn, Holiday Inn, Courtyard by Marriott, Club Hotels by Doubletree or
Residence Inn, (ii) full-service Doubletree, Marriott, Sheraton or Hilton, (iii)
such other national Hotel franchise trademark and trade name as may be approved
by the Requisite Lenders, in their sole and absolute discretion, and (iv) in the
case of the Hotel in South San Francisco, California, currently owned by the
Borrower, Comfort Suites.
"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.
"Limited Guarantor" means each of Alter, Xxxxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxx, C. Xxxxxx Xxxxxx
and Xxxxxxx, L.L.C., a California limited liability company, and
19
27
such other Person or Persons (if any) who shall hereafter execute and deliver a
Limited Guaranty.
"Limited Guaranty" means a guaranty, in substantially the form
of Exhibit D, executed by the applicable Limited Guarantor, as such guaranty may
be amended, supplemented or otherwise modified from time to time.
"Loan" or "Loans" means the revolving credit loan or loans
made or to be made by a Lender to the Borrower pursuant to Article II.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Guaranties, any Reimbursement Agreements and (if and when executed)
any Security Documents, 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 (i) the Borrower, (ii) each of the
Guarantors (except Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxx, C. Xxxxxx Xxxxxx and
Xxxxxxx, L.L.C.) and (iii) each of the Eligible Hotel Owners that shall at any
time execute and deliver to the Administrative Agent any Security Documents.
"Loan Title Insurance Policy" means, with respect to an
Eligible Hotel, an American Land Title Association (1970) loan policy, issued by
a title insurer satisfactory to the Administrative Agent, insuring the Deed of
Trust as a valid and subsisting first deed of trust or mortgage of such Eligible
Hotel, subject only to Permitted Liens and other exceptions approved by the
Administrative Agent, naming the Administrative Agent as the insured party, and
containing such endorsements as the Administrative Agent may require.
"Management Agreement" means an agreement relating to the
operation and/or management of any Hotel between the Operating Lessee and the
Manager.
"Manager" means Sunstone Hotel Management, Inc. or such other
hotel manager as may be approved by the Requisite Lenders or, in the case of an
Eligible Hotel, the Super Majority Lenders, in their sole and absolute
discretion.
"Material Adverse Change" means (i) any change in the
condition (financial or otherwise), business, performance, prospects, operations
or properties of the Borrower or Sunstone which materially and adversely affects
the ability of the Borrower or Sunstone to repay the Obligations or to perform
its obligations under any Loan Document or (ii) any change in the condition
(financial or otherwise), business, performance,
20
28
prospects, operations or properties of the Operating Lessee which materially and
adversely affect its ability to perform its obligations under the Operating
Leases.
"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.
"Minimum Tangible Net Worth" means, with respect to the
Borrower, at any time, the sum of $125,000,000 plus (a) 85% of the aggregate net
proceeds received by Sunstone or any of its Subsidiaries after January 31, 1997
in connection with any offering of Stock or Stock Equivalents of Sunstone or its
Subsidiaries taken as a whole and (b) 85% of the consideration for any
partnership interests in Borrower issued for the acquisition of a Hotel or any
interest in a Hotel permitted hereunder.
"Moody's" means Xxxxx'x Investor Service Inc.
"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-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.
21
29
"New Property" means, as at any date, any Hotel (including any
Renovating Property) that is not a Seasoned Property.
"Non-Funding Lender" has the meaning specified in
Section 2.14(f).
"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 stated principal amount equal to the amount of such
Lender's Commitment as originally in effect, in substantially the form of
Exhibit E, evidencing the aggregate Indebtedness of the Borrower to such Lender
resulting from the Loans made by such Lender, and "Notes" means, collectively,
the Notes.
"Notice of Borrowing" has the meaning specified in
Section 2.3(a).
"Obligations" means the Loans, the Facility Letter of Credit
Obligations and all other advances, debts, liabilities, obligations, covenants
and duties owing by the Borrower to the Administrative Agent, any Lender, the
Issuing Bank, 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'
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 relating to any Hotel,
between the Borrower or any of its Subsidiaries, as lessor, and
22
30
the Operating Lessee, as lessee, substantially in the form of the lease of
Exhibit F or such other form as shall be approved by the Requisite Lenders.
"Operating Lessee" means Sunstone Hotel Properties, Inc. or
such other lessee as may be approved by the Requisite Lenders or, in the case of
an Eligible Hotel, the Super Majority Lenders, in their sole and absolute
discretion.
"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
2.15(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 in the ordinary course of business which secure its obligations to
such Person; provided, however, that (i) the Borrower or such Subsidiary is not
in default with respect to such payment obligation to such Person, or (ii) the
Borrower or such Subsidiary 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 is in default in respect of any payment
obligation with respect thereto unless the Borrower or such Subsidiary is in
good faith and by appropriate proceedings diligently contesting such obligation
and adequate provision is made for the payment
23
31
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
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.
"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.
"Principal Balance" means, collectively, the outstanding
principal balances of the Notes from time to time.
"Projections" means those financial projections covering the
fiscal year 1997 delivered to the Lenders by the Borrower.
"Pro Rata Share" means, for any Person, with respect to such
Person's Unconsolidated Entities, the percentage ownership interest of such
Person in such Unconsolidated Entity, provided that, in the event that such
Person is the general partner of such Unconsolidated Entity, such Person's Pro
Rata Share with respect to such Unconsolidated Entity shall be the percentage of
the general partner interests owned by such Person in such Unconsolidated Entity
with respect to any Indebtedness for which recourse may be made against any
general partner of such Unconsolidated Entity.
"Protective Advance" means all sums expended as determined by
the Administrative Agent to be necessary to: (a) protect the priority, validity
and enforceability of the Liens on, and security interests in, any Collateral
and the instruments evidencing or securing the Obligations, or (b) prevent the
value of any Collateral from being materially diminished (assuming the lack of
such a payment within the necessary time frame could potentially cause such
Collateral to lose value), or (c) protect
24
32
any of the Collateral from being materially damaged, impaired, mismanaged or
taken, including, without limitation, any amounts expended in accordance with
Section 10.5 or 10.6.
"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 lease forty (40)
years, (d) under which no material default has occurred and is continuing, (e)
with respect to which a Lien may be granted without the consent of the lessor,
(f) under which at any time the rent payable by the lessee thereunder for the
preceding four (4) Fiscal Quarters does not exceed twenty percent (20%) of the
sum of (i) such rent and (ii) the Net Operating Income of the Hotel for such
four (4) Fiscal Quarters (or, if such Hotel has been owned by the Borrower or
its Subsidiary for less than four Fiscal Quarters, the Borrower's projection of
the Net Operating Income for the first four (4) Fiscal Quarters of its or its
Subsidiary's ownership of such Hotel, adjusted to reflect the actual Net
Operating Income for the Fiscal Quarters in which the Borrower or its Subsidiary
owns such Hotel, all as approved by the Administrative Agent) and (g) which
contains lender protection provisions acceptable to the Administrative Agent,
including, without limitation, provisions to the effect that (i) the lessor
shall notify any holder of a Lien in such Lease of the occurrence of any default
by the lessee under such Lease and shall afford such holder the option to cure
such default, and (ii) in the event that such Lease is terminated, such holder
shall have the option to enter into a new Lease having terms substantially
identical to those contained in the terminated Lease. Upon the submission to the
Administrative Agent of a written request for approval of the lender protection
provisions and other terms of a proposed Qualified Lease, the Administrative
Agent shall respond by accepting or rejecting such proposal within ten (10)
Business Days following receipt of such request.
"Ratable Portion" or "ratably" means, except as otherwise
specifically provided herein, with respect to any Lender, the quotient obtained
by dividing the Commitment of such Lender by the Commitments 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
25
33
or any of its Subsidiaries (the "Land"), including, without limitation, those
listed on Schedule 5.22(a), together with the right, title and interest of the
Borrower or such Subsidiary, 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.
"Register" has the meaning specified in Section 11.7.
"Reimbursement Agreement" means, with respect to a Facility
Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together) as
an Issuing Bank may employ in the ordinary course of business for its own
account, with such modifications thereto as may be agreed upon by such Issuing
Bank and the Borrower and as are not materially adverse (in the reasonable
judgment of such Issuing Bank and the Administrative Agent) to the interests of
the Lenders; provided, however, in the event of any conflict between the terms
of any Reimbursement Agreement and this Agreement, the terms of this Agreement
shall control.
"REIT" means an entity that qualifies as a real estate
investment trust under Section 856 et seq. of the Code.
"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 Sunstone, the Borrower
or any of their
26
34
respective Subsidiaries into compliance with all Environmental Laws and
Environmental Permits.
"Renovating Property" means a Hotel (i) that has been owned
for four or more, but less than six, consecutive full Fiscal Quarters by the
Borrower or by a Person that has been a Subsidiary of the Borrower during such
entire period and (ii) with respect to which renovation, consisting of
alterations, remodeling and other similar work having an aggregate cost
exceeding ten percent (10%) of the Borrower's Investment in such Hotel, was
commenced within 180 days of such acquisition and was completed, or is
reasonably expected to be completed, within eighteen (18) months of such
acquisition ; provided, however, that, in the event the Renovating Properties
shall have an aggregate value (determined in the manner provided in clause (b)
of the definition of "Aggregate Value") exceeding twenty-five percent (25%) of
the Aggregate Value of all Eligible Hotels, such Renovating Properties shall
cease to constitute Renovating Properties to the extent required to reduce the
aggregate value (as so determined) of all remaining Renovating Properties to an
amount not exceeding twenty-five percent (25%) of the Aggregate Value of all
Eligible Hotels.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such 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.
"Requisite Lenders" means, at any time, Lenders holding at
least sixty-seven percent (67%) (or such higher percentage as may be agreed upon
from time to time by the Super Majority Lenders) of the then aggregate unpaid
principal amount of Loans (excluding Loans held by Non-Funding Lenders) or, if
no such Loans are then outstanding, Lenders having at least sixty-seven percent
(67%) (or such higher percentage as may be agreed upon from time to time by the
Super Majority Lenders) of the Commitments of all Lenders (excluding Non-Funding
Lenders).
"Responsible Officer" means, with respect to any Person, any
of the principal executive officers or general partners of such Person.
27
35
"S&P" means Standard & Poor's Ratings Group and its
successors.
"Seasoned Property" means, as at any date, a Hotel (excluding
any Renovating Property) that has been owned, for a period of four (4)
consecutive full Fiscal Quarters (or more), by the Borrower or by a Person that
has been a Subsidiary of the Borrower during such entire period.
"Security Documents" means any Deeds of Trust, Financing
Statements or other documents (including without limitation documents referred
to in Section 3.4) hereafter executed by any Eligible Hotel Owner securing the
Obligations, as the same may be amended, supplemented or otherwise modified from
time to time.
"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.
"Status" means the existence of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status or Level VI Status, as
the case may be. As used in this definition:
"Level I Status" exists at any date if, at such date,
Sunstone has a long-term senior unsecured actual or implied
debt rating of A- or better by S&P and A3 or better by
Xxxxx'x;
"Level II Status" exists at any date if, at such
date, Sunstone has a long-term senior unsecured actual or
implied debt rating of BBB+ by S&P and Baal by Xxxxx'x;
"Level III Status" exists at any date if, at such
date, Sunstone has a long-term senior unsecured actual or
implied debt rating of BBB by S&P and Baa2 by Xxxxx'x;
"Level IV Status" exists at any date if, at such
date, Sunstone has a long-term senior unsecured actual
28
36
or implied debt rating of BBB- by S&P and Baa3 by
Xxxxx'x;
"Level V Status" exists at any date if, at such date,
Sunstone has a long-term senior unsecured actual or implied
debt rating of BB+ by S&P and Bal by Xxxxx'x; and
"Level VI Status" exists at any date if, at such
date, Sunstone has a long-term senior unsecured actual or
implied debt rating of BB (or less) by S&P and Ba2 (or less)
by Xxxxx'x or has no rating by S&P or Xxxxx'x.
provided that (i) if S&P and/or Xxxxx'x shall cease to issue ratings of debt
securities of REITs generally or (after issuing ratings with respect to
Sunstone) shall cease to issue ratings with respect to Sunstone, then the
Administrative Agent and the Borrower shall negotiate in good faith to agree
upon a substitute rating agency or agencies (and to correlate the system of
ratings of each substitute rating agency with that of the rating agency for
which it is substituting) and (a) until such substitute rating agency or
agencies are agreed upon, Status shall be determined on the basis of the rating
assigned by the other rating agency (or, if both S&P and Xxxxx'x shall have so
ceased to issue such ratings, on the basis of the Status in effect immediately
prior thereto) and (b) after such substitute rating agency or agencies are
agreed upon, Status shall be determined on the basis of the rating assigned by
the other rating agency and such substitute rating agency or the two substitute
rating agencies, as the case may be; (ii) if the long-term senior unsecured
actual or implied debt ratings of Sunstone by S&P and Xxxxx'x are not
equivalent, the lower rating will apply for the purposes of determining Status;
and (iii) if the long-term senior unsecured actual or implied debt ratings of
Sunstone by S&P and Xxxxx'x are two or more Levels apart, the rating one Level
above the lower rating will apply for the purposes of determining Status.
"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.
29
37
"Subsidiary" means, with respect to any Person, 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.
"Sunstone" means Sunstone Hotel Investors, Inc., a
Maryland corporation.
"Sunstone Guaranty" means a guaranty, in substantially the
form of Exhibit G, as the same may be amended, supplemented or otherwise
modified from time to time.
"Super Majority Lenders" means, at any time, Lenders holding
at least eighty percent (80%) (or such higher percentage as may be agreed upon
from time to time by all of the Lenders) of the then aggregate unpaid principal
amount of Loans (excluding Loans held by Non-Funding Lenders) or, if no such
Loans are then outstanding, Lenders having at least eighty percent (80%) (or
such higher percentage as may be agreed upon from time to time by all of the
Lenders) of the Commitments of all Lenders (excluding Non-Funding Lenders).
"Tangible Net Worth" means, with respect to the Borrower at
any date, (a) the sum of (i) the total shareholders' equity of Sunstone, and
(ii) the value of all partnership interests in the Borrower owned by Persons
other than Sunstone; minus (b) the sum of all intangible assets of Sunstone
(including without limitation all write-ups of assets (except those provided for
in the definition of "Borrower's Investment"), unamortized debt discount,
goodwill, patents, trademarks, service marks, trade names, copyrights and
organizational and development expenses), each as shown on the consolidated
balance sheet of Sunstone 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 5.3.
"Taxes" has the meaning specified in Section 2.15(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 Dollar deposits). Any Eurodollar
30
38
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.
"Termination Date" means the earlier of (i) the Final Maturity
Date, and (ii) the date of termination in whole of the Commitments pursuant to
Section 2.5 or 9.2.
"Total Assets" of any Person means, at any date, the total
assets of such Person and its Subsidiaries at such date determined on a
consolidated basis in conformity with GAAP.
"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 (including Non-Recourse
Indebtedness) of such Person's Unconsolidated Entities.
"Total Secured Recourse Indebtedness" of any Person means any
Total Indebtedness (excluding any Non-Resource Indebtedness) of such Person for
which the obligations thereunder are secured by a Lien on any assets of such
Person or its Subsidiaries or Unconsolidated Entities.
"Trigger Date" has the meaning specified in Section
3.4(a).
"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.
"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, but
excluding Permitted Liens and, in the case of any Qualified Lease (to the extent
31
39
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) which prohibits or limits
the ability of the Borrower or any of its Subsidiaries to create, incur, assume
or suffer to exist any Lien upon such Hotel, other than Permitted Liens
(excluding any agreement or organizational document which limits generally the
amount of Indebtedness which may be incurred by the Borrower or its
Subsidiaries); 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).
For the purposes of this Agreement, any Hotel owned by a Subsidiary 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 Subsidiary is
Unencumbered.
"Unused Commitment" means, at any date with respect to any
Lender, the amount (if any) by which such Lender's Commitment exceeds the sum of
(i) the outstanding principal balance of such Lender's Loans as of such date and
(ii) such Lender's Ratable Portion (determined in accordance with Section 4.6)
of the outstanding amount of the Facility Letters of Credit.
"Unused Commitment Fee" has the meaning specified in
Section 2.4(a).
"Western States" means the following states: Arizona,
California, Colorado, Idaho, Montana, Nebraska, Nevada, New Mexico, North
Dakota, Oregon, South Dakota, Utah, Washington or Wyoming.
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.
32
40
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," "Issuing Bank" 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 11.7.
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 loans (each a
"Loan") to the Borrower from time to time on any Business Day during the period
from the date hereof until the Termination Date in an aggregate amount not to
exceed at any time outstanding such Lender's Commitment; provided, however, that
at no time shall any Lender be obligated to make a Loan in excess of such
Lender's Ratable Portion of the Available Credit. Within the limits of each
Lender's Commitment, amounts prepaid pursuant to Section 2.7(b) or Section 7.16
may be reborrowed under this Section 2.1. The Loans of each Lender shall be
evidenced by the Note to the order of such Lender.
2.2. Intentionally Omitted.
2.3. Making the Loans. (a) Each Borrowing shall be made on
notice, given by the Borrower to the Administrative Agent not later than (i)
11:00 A.M. (Phoenix time) on the fourth (4th) Business Day prior to the date of
the proposed Borrowing in the case of Eurodollar Rate Loans, and (ii) 11:00 A.M.
(Phoenix time) on the second (2nd) Business Day prior to the date of the
proposed Borrowing in the case of Base Rate Loans. Each such notice (a "Notice
of Borrowing") shall be in substantially the form of Exhibit H, specifying
therein (i) the date of such proposed Borrowing, (ii) the aggregate amount of
such proposed Borrowing, (iii) the amount thereof, if any, requested to be
Eurodollar Rate Loans, and (iv) the initial Interest Period or Periods for any
such Eurodollar Rate Loans. The Loans shall be made as Base Rate Loans unless
(subject to Section 2.12) the Notice of Borrowing specifies that all or a pro
rata portion thereof shall be Eurodollar Rate Loans; provided, however, that the
aggregate of the Eurodollar Rate Loans for each Interest
33
41
Period must be in an amount of not less than $2,500,000 or an integral multiple
of $100,000 in excess thereof.
(b) The Administrative Agent shall give to each Lender prompt
notice of the Administrative Agent's receipt of a Notice of Borrowing and, if
Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the
applicable interest rate under Section 2.9, and each Lender's Ratable Portion of
the proposed Borrowing. Each Lender shall, before 12:00 Noon (Phoenix time) on
the date of the proposed Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent at its address referred to
in Section 11.2, in immediately available funds, such Lender's Ratable Portion
of such proposed Borrowing. By 1:00 PM (Phoenix time) in the case of Eurodollar
Rate Loans and Base Rate Loans, on the date specified by the Borrower in the
Notice of Borrowing, 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 not have received from a Lender
such Lender's Ratable Portion of such Borrowing, the Administrative Agent shall
be under no obligation to fund such Lender's Ratable Portion of such Borrowing.
(c) Each Base Rate Loan shall be in an aggregate amount of not
less than $1,000,000 or an integral multiple of $100,000 in excess thereof.
(d) Intentionally omitted.
(e) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any proposed Borrowing which the related Notice
of Borrowing specifies is to be comprised of Eurodollar Rate Loans, 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 date specified in
such Notice of Borrowing for such proposed Borrowing 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 part
of such proposed Borrowing when such Eurodollar Rate Loan, as a result of such
failure, is not made on such date.
(f) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any proposed Borrowing that such Lender will
not make available to the Administrative Agent such Lender's Ratable Portion of
such
34
42
Borrowing, the Administrative Agent may assume that such Lender has made such
Ratable Portion available to the Administrative Agent on the date of such
Borrowing in accordance with this Section 2.3 and the Administrative Agent may,
in reliance upon such assumption, (but shall not be obligated to) make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such Ratable Portion available to the
Administrative Agent, the Borrower and such Lender severally agree to repay to
the Administrative Agent forthwith, (i) in the case of the Borrower, within
thirty (30) days of demand by the Administrative Agent and (ii) in the case of
such Lender, on demand by the Administrative Agent, 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 (x) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (y) 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 as part of such Borrowing 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.
(g) The failure of any Lender to make the Loan to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on the date of such Borrowing,
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 date of any Borrowing. If a
Lender fails to make a Loan to the Borrower as and when required hereunder, the
Borrower shall be entitled to any remedies available at law or in equity against
such Lender.
2.4. Fees. (a) The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender, a fee (the "Unused
Commitment Fee") equal to 0.25% times such Lender's average daily Unused
Commitment, from the date hereof until the Termination Date, payable in arrears
with respect to each calendar quarter on (i) the first day of the second
calendar month of each calendar quarter during the term of such Lender's
Commitment, commencing August 1, 1997 and (ii) the Termination Date.
(b) The Borrower has agreed to pay Bank One, Credit Lyonnais
and Xxxxx Fargo additional fees, the amounts and dates of payment of which are
embodied in a separate agreement among them and the Borrower.
35
43
2.5. Reduction and Termination of the Commitments. The
Borrower may, upon at least three Business Days' prior notice to the
Administrative Agent, terminate in whole or reduce ratably in part the Unused
Commitments of the Lenders; provided, however, that (i) each partial reduction
shall be in the aggregate amount of not less than $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and (ii) no such reduction shall result
in a Borrowing Base Imbalance.
2.6. Repayment. The Borrower shall repay the entire unpaid
principal amount of the Loans on the Termination Date.
2.7. Prepayment. (a) The Borrower shall have no right to
prepay the principal amount of any Loan other than as provided in this Section
2.7.
(b) The Borrower may, upon at least four (4) 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
$2,500,000 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 a Borrowing Base Imbalance exists, the
Borrower, within five (5) Business Days (or thirty (30) days if the Borrowing
Base Imbalance resulted from an event other than (i) the Disposition of, or with
respect to, an Eligible Hotel or Eligible Hotel Owner or (ii) a Hotel's ceasing
to be an Eligible Hotel for any other reason) shall prepay the Loans then
outstanding in an amount equal to such Borrowing Base Imbalance, together with
accrued interest thereon, provided, however, that, if within such five-Business
Day (or, if applicable, 30-day) period, one or more additional Eligible Hotels
shall be accepted by the Administrative Agent in accordance with the provisions
of Section 7.23, the Loans shall be required to be prepaid only to the extent,
if any, of any Borrowing Base Imbalance, as determined following the
Administrative Agent's acceptance of such additional Eligible Hotel or Eligible
Hotels.
36
44
2.8. Conversion/Continuation Option. The Borrower may elect
(i) at any time 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 Loans
for each Interest Period therefor must be in the amount of $2,500,000 or an
integral multiple of $100,000 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 I 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 2.8, 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.
2.9. 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 plus
the Applicable Margin, payable monthly on the first day of
each calendar month, on the Termination Date and on the date
any Base Rate Loan is converted or paid in full.
37
45
(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 in effect
on the first day of such Interest Period, payable monthly on
the first day of each calendar month and on the Termination
Date.
(b) If any payment required under the Loan Documents is not
paid within fifteen (15) days after the date such payment is due, then the
Borrower shall pay a "late charge" equal to four percent (4%) of the amount of
that payment to compensate the Lenders for administrative expenses and other
costs of delinquent payments. This late charge shall be immediately due and
payable and shall be in addition to all other rights and remedies available to
the Administrative Agent and the Lenders.
(c) Upon the occurrence of an Event of Default and the
continuation thereof, and after the Final Maturity Date or any earlier
acceleration of the Obligations, the Principal Balance, all accrued and unpaid
interest and all other Obligations shall bear interest at a rate that is four
percent (4%) above the rate that would otherwise be payable under the terms
thereof.
2.10. 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 2.9(a) or (b).
(c) If, with respect to Eurodollar Rate Loans, a Lender in
good faith notifies the Administrative Agent that the Eurodollar Rate for any
Interest Period therefor will not adequately reflect the cost to such Lender of
making such Loans or funding or maintaining its Eurodollar Rate Loans for such
Interest Period, the Administrative Agent shall forthwith so notify the Borrower
and the Lenders, whereupon
(i) each Eurodollar Loan will automatically, on
the last day of the then existing Interest Period
therefor, convert into a Base Rate Loan; and
(ii) the obligations of the Lenders to make
Eurodollar Rate Loans or to convert Base Rate Loans into
Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower that
38
46
such Lender has determined that the circumstances causing such
suspension no longer exist.
2.11. 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 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 2.11, the Borrower may either (A) prepay in full all Eurodollar Rate
Loans of such Lender then outstanding in accordance with Section 2.7(b) and,
additionally, reimburse such Lender for such increased cost in accordance with
this Section 2.11 or (B) convert all Eurodollar Rate Loans of all Lenders then
outstanding into Base Rate Loans in accordance with Section 2.8 and,
additionally, reimburse such Lender for such increased cost in accordance with
this Section 2.11.
2.12. 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 (5) Business Days of such notice and demand, converts all Eurodollar
Rate Loans of all Lenders then outstanding into Base Rate Loans.
39
47
2.13. 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 the Issuing Bank or any corporation
controlling any Lender or the Issuing Bank and such Lender or the Issuing Bank
(as applicable) reasonably determines that such amount is based upon the
existence of such Lender's Commitment and Loans and its other commitments and
loans of this type (or, in the case of the Issuing Bank, the issuance of the
Facility Letters of Credit), then, upon demand by such Lender or the Issuing
Bank (as applicable) (with a copy of such demand to the Administrative Agent),
the Borrower shall pay to the Administrative Agent for the account of such
Lender or the Issuing Bank (as applicable), from time to time as specified by
such Lender or the Issuing Bank (as applicable), additional amounts sufficient
to compensate such Lender or the Issuing Bank (as applicable) in the light of
such circumstances, to the extent that such Lender or the Issuing Bank (as
applicable) reasonably determines such increase in capital to be allocable to
the existence of such Lender's Commitment and Loans (or, in the case of the
Issuing Bank, the issuance of the Facility Letters of Credit). A certificate as
to such amounts submitted to the Borrower and the Administrative Agent by such
Lender or the Issuing Bank (as applicable) shall be conclusive and binding for
all purposes absent manifest error.
2.14. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Notes not later than 10:00 A.M. (Phoenix
time) on the day when due, in Dollars, to the Administrative Agent at its
address referred to in Section 11.2 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
2.11, 2.12, 2.13 or 2.15) 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
10:00 A.M. (Phoenix 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
40
48
after 10:00 A.M. (Phoenix 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, (but shall not be obligated to) 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 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.
(f) If any Lender (a "Non-Funding Lender") has (x) failed to
make a Loan required to be made by it hereunder, and the Administrative Agent
has determined that such Lender is not likely to make such Loan or (y) given
notice to the Borrower or the Administrative Agent that it will not make, or
that it has
41
49
disaffirmed or repudiated any obligation to make, Loans, in each case whether by
reason of the provisions of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 or otherwise, (i) such Non-Funding Lender shall lose any
and all voting rights hereunder, and (ii) any payment made on account of the
principal of the Loans outstanding shall be made as follows:
(A) in the case of any such payment made on any date
when and to the extent that, in the determination of the Administrative
Agent, the Borrower would be able, under the terms and conditions
hereof, to reborrow the amount of such payment under the Commitments
and to satisfy any applicable conditions precedent set forth in Article
III to such reborrowing, such payment shall be made on account of the
outstanding Loans held by the Lenders other than the Non-Funding Lender
pro rata according to the respective outstanding principal amounts of
the Loans of such Lenders;
(B) otherwise, such payment shall be made on account
of the outstanding Loans held by the Lenders pro rata according to the
respective outstanding principal amounts of such Loans; and
(C) any payment made on account of interest on the
Loans shall be made pro rata according to the respective amounts of
accrued and unpaid interest due and payable on the Loans with respect
to which such payment is being made.
2.15. 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, to deliver to the Administrative Agent or the Borrower, from
time to time as required by the Administrative Agent or the Borrower, such Form
42
50
1001 or 4224 (as applicable) or any successor or additional form, 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
2.15) 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, but excluding real estate and
personal property taxes, "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 2.15) 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 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 2.15 shall survive the payment in full of the
Obligations.
43
51
(f) Prior to the Closing 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, 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 2.15 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.
2.16. 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 2.11, 2.13 or 2.15) 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.
2.17. Extension of Final Maturity Date. (a) Provided no
Default or Event of Default has occurred that is continuing, the Borrower may
request a one-year extension of the Final Maturity Date by submitting a request
for an extension to the Administrative Agent (an "Extension Request") not more
than eighteen (18) months nor less than fifteen (15) months prior to the then
scheduled Final Maturity Date. Promptly upon (but not
44
52
later than three (3) Business Days after) receipt of the Extension Request, the
Administrative Agent shall notify each Lender of, and shall request each Lender,
at its election, to approve or disapprove, the Extension Request. Each Lender
approving the Extension Request shall deliver its written approval no later than
thirty (30) days after the date of the Extension Request. If the approval of
each of the Lenders is received by the Administrative Agent within thirty (30)
days of the date of the Extension Request, the Administrative Agent shall
promptly so notify the Borrower and each Lender and the Final Maturity Date
shall be extended by one year, and in such event the Borrower may thereafter
request a further extension of the then scheduled Final Maturity Date in
accordance with this Section 2.17. If any of the Lenders does not deliver to the
Administrative Agent such Lender's written approval to any Extension Request
within thirty (30) days of the date of such Extension Request, the Final
Maturity Date shall not be extended.
(b) If all of the Lenders approve an Extension Request
pursuant to Section 2.17(a), the Borrower shall pay to the Administrative Agent,
on or before July 1 of the year in which the Extension Request was delivered,
for the account of each Lender, an extension fee equal to 0.25% times such
Lender's Commitment.
ARTICLE III
CONDITIONS OF LENDING, SECURING THE OBLIGATIONS
3.1. Conditions Precedent to Initial Loans. The obligation of
each Lender to make its initial Loan and of the Issuing Bank to issue any
Facility Letter of Credit is subject to satisfaction of the conditions precedent
that the Administrative Agent shall have received, on the Closing Date, the
following, each dated the Closing Date unless otherwise indicated, in form and
substance satisfactory to the Administrative Agent and (except for the Notes) in
sufficient copies for each Lender:
(a) The Notes to the order of the Lenders, respectively.
(b) In the case of each Loan Party that is not an individual,
a certificate of the Secretary or an Assistant Secretary of each such Loan Party
(or, as applicable, of such Loan Party's partners or members) 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, limited liability company or corporate action, as
appropriate, and required governmental and third party approvals, licenses and
consents
45
53
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'
declaration of trust, certificates of incorporation, by-laws, formation or
operating agreements, partnership agreements and certificates of partnership as
appropriate, as of the Closing Date, and (iv) the names and true signatures of
each of its officers or members 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.
(c) In the case of each Loan Party that is not an individual,
a copy of the declaration of trust or articles or certificate of incorporation,
formation or operating agreement, partnership agreement or certificate of
partnership, as appropriate, of each such Loan Party and (if required by any
Lender) of each Subsidiary of each 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 and Subsidiary.
(d) Favorable opinion(s) of counsel to the Loan Parties, in
substantially the form(s) of Exhibit J, and as to such other matters as any
Lender through the Administrative Agent may reasonably request.
(e) A certificate of the chief financial officer of Sunstone,
stating that each of Sunstone and the Borrower is Solvent after giving effect to
the initial Loans, the application of the proceeds thereof in accordance with
Section 7.10 and the payment of all estimated legal, accounting and other fees
related hereto and thereto.
(f) Evidence that the insurance required by Section 7.4 is in
full force and effect.
(g) A certificate, signed by a Responsible Officer of the
Borrower, stating that the following statements are true and correct on the
Closing Date:
(i) The statements set forth in Section 3.3 are true
after giving effect to the Loans being made on the Closing
Date.
(ii) All costs and accrued and unpaid fees and
expenses (including, without limitation, legal fees and
expenses) required to be paid to the Lenders on or before the
Closing Date, including, without limitation, those referred to
in Sections 2.4 and 11.4, to the extent then due and payable,
have been paid.
46
54
(iii) 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.
(iv) There exists no judgment, order, injunction or
other restraint prohibiting or imposing materially adverse
conditions upon any of the transactions contemplated hereby.
(v) There exists no claim, action, suit,
investigation or proceeding (including, without limi tation,
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.
(vi) There has been no Material Adverse Change since
December 31, 1996 in the corporate, capital or legal structure
of Sunstone, the Borrower or any of their respective
Subsidiaries.
(vii) The Borrower's Tangible Net Worth is not less
than the Minimum Tangible Net Worth.
(i) A Borrowing Base Certificate, executed by a Responsible
Officer of the Borrower, satisfactory to the Administrative Agent, together with
copies of the Eligible Hotel Documents in respect of each of the Eligible Hotels
shown listed thereon (except as otherwise provided in Section 7.23(a)).
(j) A Compliance Certificate, executed by the chief financial
officer of the Borrower substantially in the form of Exhibit K.
(k) The Guaranties, duly executed by each Guarantor.
3.2. Additional Conditions Precedent to Initial Loans.
The obligation of each Lender to make its initial Loan is subject
to the further conditions precedent that:
(a) No Lender in its sole judgment shall have determined (i)
that there has been any Material Adverse Change since December 31, 1996 or (ii)
that there has occurred any
47
55
adverse change which such Lender deems material in the financial markets
generally, since December 31, 1996 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, 1996 which, in the judgment of any Lender, has had a Material
Adverse Effect.
(b) Each Lender shall be satisfied, in its sole judgment, with
the corporate, capital, legal and management structure of Sunstone, the Borrower
and their respective 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 Sunstone, the Borrower or
any of their respective Subsidiaries.
3.3. Conditions Precedent to Each Loan. The obligation of each
Lender to make any Loan (including the Loan being made by such Lender on the
Closing Date) and of the Issuing Bank to issue any Facility Letter of Credit
shall be subject to the further conditions precedent that:
(a) The following statements shall be true on the date of such
Loan or the Issuance Date (as applicable), before and after giving effect
thereto and to the application of the proceeds therefrom or the issuance of the
Facility Letter of Credit (as applicable) (and the acceptance by the Borrower of
the proceeds of such Loan or the issuance of Facility Letter of Credit (as
applicable) shall constitute a representation and warranty by the Borrower that
on the date of such Loan or the Issuance Date (as applicable) such statements
are true):
(i) The representations and warranties of the
Borrower contained in Article IV and of each Loan Party in the
other Loan Documents are correct on and as of such date or the
Issuance Date (as applicable) as though made on and as of such
date or the Issuance Date (as applicable) (it being understood
and agreed that any representation or warranty which by its
terms is made on a specified date shall be required to be true
and correct only as of such specified date); and
(ii) No Default or Event of Default exists or will
result from the Loans being made on such date or from the
issuance of the Facility Letter of Credit on such Issuance
Date (as applicable).
48
56
(b) The making of the Loans on such date or the issuance of
the Facility Letter of Credit on the Issuance Date (as applicable) does not
violate any Requirement of Law and is not enjoined, temporarily, preliminarily
or permanently.
(c) The Administrative Agent shall have received (i) to the
extent that, since the effective date of the Borrowing Base Certificate most
recently delivered by the Borrower, any Eligible Hotel identified thereon has
ceased to be an Eligible Hotel or the Administrative Agent has accepted, as an
Eligible Hotel, a Hotel not identified on such Borrowing Base Certificate, a new
Borrowing Base Certificate, executed by a Responsible Officer of the Borrower,
satisfactory to the Administrative Agent, and (ii) to the extent not previously
delivered, copies of the Eligible Hotel Documents in respect of each of the
Eligible Hotels (except as otherwise provided in Section 7.23(a)).
(d) The Administrative Agent shall have received such material
additional documents, information and materials as any Lender, through the
Administrative Agent, may reasonably request.
3.4. Securing the Obligations. (a) In the event that, at the
end of any Fiscal Quarter (the "Trigger Date") commencing with the Fiscal
Quarter ending on March 31, 1997, the Borrower shall fail to maintain an
Interest Coverage Ratio of 3.0 to 1.0 or a Debt Service Coverage Ratio of 2.5 to
1.0, such failure shall not constitute an Event of Default if and for as long as
(i) the Borrower shall maintain an Interest Coverage Ratio of not less than 2.5
to 1.0 and a Debt Service Coverage Ratio of not less than 2.0 to 1.0 and (ii)
the Borrower shall or shall cause Sunstone or the Eligible Hotel Owners (as
applicable) to execute and deliver to the Administrative Agent with respect to
each of the Eligible Hotels (A) within seventy-five (75) days of the Trigger
Date, the documents set forth in Section 3.4(b) and (B) within 135 days of the
Trigger Date, the documents set forth in Section 3.4(c).
(b) Within seventy-five (75) days of the Trigger Date, the
Borrower shall execute and deliver, or cause Sunstone or the Eligible Hotel
Owners (as applicable) to execute and deliver, to the Administrative Agent the
following documents with respect to each Eligible Hotel, all in form and
substance satisfactory to the Administrative Agent, recorded and filed (where
applicable) in the applicable recording and filing offices, together with
evidence that the Eligible Hotel Owner has paid all recording and filing fees,
documentary stamp, intangible, mortgage and other similar taxes and charges
required to be paid in connection therewith:
(i) the Deed of Trust;
49
57
(ii) the Financing Statements;
(iii) an assignment of rents and leases, assigning all
leases (including the Operating Lease) and all rents
(including rents under the Operating Lease) with
respect to such Eligible Hotel;
(iv) an agreement executed by the Operating Lessee
substantially in the form of Exhibit L;
(v) collateral assignment of the Management Agreement
substantially in the form of Exhibit M, and the
consent of the Manager to said collateral assignment
and the subordination agreement of the Manager,
substantially in the form of Exhibit N;
(vi) an environmental indemnity agreement executed by
the Borrower and Sunstone, substantially in the
form of Exhibit O;
(vii) collateral assignments of all agreements relating
to the ownership, leasing or operation of the
Eligible Hotel; and
(viii) A certificate of the chief financial officer of
Sunstone, stating that, after giving effect to the
execution and delivery of the Security Documents,
Sunstone, the Borrower and each Eligible Hotel
Owner is Solvent.
(c) Within 135 days of the Trigger Date, the Borrower shall
deliver or cause to be delivered to the Administrative Agent (except to the
extent that the Administrative Agent shall have waived such requirement as
hereinafter provided) the following documents with respect to each Eligible
Hotel, all such documents to be satisfactory in form and substance to the
Administrative Agent:
(i) a Loan Title Insurance Policy, dated on or after the
date of recording of the Deed of Trust of such
Eligible Hotel, an the amount not less than the
Aggregate Value attributed to such Eligible Hotel;
(ii) Uniform Commercial Code searches for the Persons
and in the jurisdictions required by the
Administrative Agent, dated on or after the filing
of the Financing Statements with respect to such
Eligible Hotel, evidencing no liens or security
interests with respect to the collateral
identified in such Financing Statements, except
50
58
for the security interests created by the
Financing Statements;
(iii) a plat of survey of the property on which such
Eligible Hotel is located, prepared in accordance
with the standards issued by the American Land Title
Association, by a licensed surveyor, bearing a proper
certificate by the surveyor in a form approved by the
Administrative Agent, which certificate shall be made
in favor of the Administrative Agent, the Lenders,
the issuer of the Loan Title Insurance Policy and
such other parties as the Administrative Agent may
direct, showing or stating (A) the legal description
of the property; (B) the square footage of the land;
(C) no encroachments by any improvements located on
adjoining property onto such property or of any
improvements comprising a portion of such property
onto adjoining property (except for encroachments
with respect to which the Loan Title Insurance Policy
includes endorsements or affirmative coverage
satisfactory to the Administrative Agent); (D) if any
utility facilities serving such property or any
rights of access to any such property are located
outside the boundary of such property (other than
land or easements dedicated to the public or to the
utility which is to furnish the service), the
easements benefitting such property, which easements
shall be in form and substance satisfactory to the
Administrative Agent, covered by the lien of the Deed
of Trust and insured under the Loan Title Insurance
Policy; and (E) such other matters as the
Administrative Agent may require;
(iv) with respect to any Eligible Hotel located in whole
or in part on land leased to the Eligible Hotel Owner
under a Qualified Lease, a copy of such Qualified
Lease certified by the Borrower to be a true, correct
and complete copy thereof and an estoppel
certificate, dated on or after the Trigger Date, by
the landlord under such Qualified Lease confirming
that the lessee is not in default in the payment of
rent or the performance of any other obligations
thereunder and such other matters as the
Administrative Agent may require;
(v) a written appraisal of such Eligible Hotel prepared
by an independent MAI appraiser selected and engaged
by the Administrative Agent, complying with the
provisions of the Financial Institutions
51
59
Reform, Recovery and Enforcement Act of 1989, as
amended, or any successor statute thereto, confirming
that the appraised value of such Eligible Hotel is
not less than the Aggregate Value thereof;
(vi) an environmental questionnaire and disclosure
statement completed and signed by the Borrower
covering the current and former condition and uses of
the real property of such Eligible Hotel and adjacent
property; current Phase I environmental assessment of
the real property and adjacent property, plus any
sampling and analysis (Phase II assessment) or
special limited assessment that the Administrative
Agent may reasonably require after review of the
Phase I assessment, together with any other
environmental investigations and reports that the
Administrative Agent may reasonably require, all of
which shall be by an environmental consulting firm
approved by the Administrative Agent and none of
which shall reveal any existing or potential
environmental condition adversely affecting the use
or value of the real property;
(vii) documentation deemed adequate by the Administrative
Agent demonstrating full compliance by the Borrower
with any applicable Requirement of Law that (for
environmental reasons) conditions, restricts,
prohibits or requires any notification or disclosure
triggered by the Deed of Trust of each such Eligible
Hotel;
(viii) policies or certificates of all-risk insurance
covering such Eligible Hotel, on a replacement- cost
basis, issued by insurance companies and in amounts
acceptable to the Administrative Agent, with standard
(without contribution) first mortgagee's endorsements
in favor of the Administrative Agent, together with
rental interruption and extra expense insurance in
amounts sufficient to cover any loss of income from
such Eligible Hotel and any anticipated expenses
associated with the same for a twelve (12) month
period;
(ix) such other insurance as the Administrative Agent may
require, including without limitation liability
insurance, insurance covering vandalism and malicious
mischief, and sprinkler leakage insurance, and
evidence of worker's compensation insurance coverage;
52
60
(x) evidence of whether such Eligible Hotel, or any part
thereof, lies within a "special flood hazard area" as
designated on maps prepared by the U.S. Department of
Housing and Urban Development pursuant to the Flood
Disaster Protection Act of 1973, as amended, and, if
so designated, a National Flood Insurance Association
standard flood insurance policy, plus insurance from
a private insurance carrier if required by the
Administrative Agent, through the Final Maturity Date
in the amount of the full insurable value of the
Improvements, naming the Administrative Agent as loss
payee;
(xi) to the extent required by the Administrative Agent,
evidence that all utilities and services to such
Eligible Hotel, including without limitation water,
sewer, gas, electric and telephone, are available in
amounts that are sufficient to service the Project of
its then current and intended use;
(xii) to the extent required by the Administrative Agent in
its reasonable discretion, copies of all material
agreements with Persons providing goods or services
related to the maintenance, repair, leasing,
management and operation of such Eligible Hotel,
together with written agreements by such Persons that
they will perform for the Administrative Agent or its
Designee or nominee the goods and services contracted
for, notwithstanding the occurrence of any Event of
Default and any trustee's sale or foreclosure of the
Deed of Trust (as long as such Person continues to
receive payments under its contract), and the consent
of such Persons to the collateral assignment to the
Administration Agent of their respective contracts;
(xiii) copies of any declaration of covenants, conditions
and restrictions and other recorded documents
pertaining to such Eligible Hotel;
(xiv) a copy of the certificate of occupancy for such
Eligible Hotel issued by the jurisdiction in which
such Eligible Hotel is located together with evidence
that such Eligible Hotel and its use are in
accordance with building and governmental codes and
zoning requirements;
53
61
(xv) evidence that the Eligible Hotel Owner has obtained
all Permits necessary or appropriate in connection
with the management and operation of such Eligible
Hotel;
(xvi) copies of the Operating Lease and Management
Agreement with respect to such Eligible Hotel and of
any guaranty of such Operating Lease or Management
Agreement or any security agreement, pledge agreement
or other collateral securing any obligations under
such Operating Lease, Management Agreement or
guaranty;
(xvii) copies of each other lease agreement affecting such
Eligible Hotel, together with subordination and
estoppel agreements for the benefit of the
Administrative Agent from each lessee;
(xviii) a copy of the License with respect to such Eligible
Hotel, together with a "comfort letter" from the
company that issued such License which provides,
among other things, that in the event the
Administrative Agent or its Designee or nominee
obtains control of such Eligible Hotel: (A) it may
make application for the transfer to it of the
License; (B) such License will not be terminated
during the application process; and (C) the company
that issued such License will not unreasonably
withhold its consent to the transfer of the License
to the Administrative Agent or its Designee or
nominee; provided, however, that, in the case of a
New Property that does not have, and that pursuant to
the provisions of subparagraph (i)(E)(3) of the
definition of "Eligible Hotel" is not yet required to
have, a License, the License and "comfort letter"
shall be delivered on or before the first anniversary
of the Eligible Hotel Owner's acquisition of such
Eligible Hotel (if such anniversary occurs more than
135 days after the Trigger Date);
(xix) reports on the structural and physical condition of
such Eligible Hotel from independent engineers or
consultants, which reports and engineers or
consultants are acceptable to the Administrative
Agent;
(xx) certified income statements for such Eligible Hotel,
for the prior Fiscal Year, if available, and
certified for the Fiscal Year to date, by the
Eligible Hotel Owner;
54
62
(xxi) a proposed monthly operating budget for such Eligible
Hotel for the next twelve months;
(xxii) opinions of counsel to the Borrower, including
counsel in the jurisdiction in which such Eligible
Hotel is located (which counsel and opinions shall be
satisfactory to the Administrative Agent), with
respect to the due authorization, execution and
delivery of the Security Documents, the validity and
enforceability of the Security Documents, the payment
of all taxes and charges referred to in Section
3.4(b), and such other matters as the Administrative
Agent may require;
(xxiii) certificates of good standing (stating, among other
things, that all applicable franchise taxes have been
paid by the Eligible Hotel Owner) issued by the
appropriate state agency for the state in which such
Eligible Hotel is located and evidence (such as a
secretary's certificate) of resolutions of the board
of directors of the Eligible Hotel Owner or its
general partner pertaining to authorization of the
Security Documents, incumbency of the Person or
Persons executing the Security Documents and such
other matters as the Administrative Agent may
require;
(xxiv) evidence that the Eligible Hotel Owner has paid the
premiums for the Loan Title Insurance Policy, the
charges of the surveyor, appraiser, and all engineers
or consultants issuing any reports in connection with
the Eligible Hotels, attorney's fees and expenses of
counsel to the Lenders, and other costs and expenses
incurred in connection with the foregoing; and
(xxv) such other documentation as the Administrative Agent
or any Lender may reasonably require.
If any of the documents set forth in this Section 3.4(c) shall have been
delivered to the Administrative Agent prior to the Trigger Date, the
Administrative Agent, in its reasonable discretion, may waive the requirement
for the delivery thereof under this Section 3.4(c).
55
63
ARTICLE IV
THE LETTER OF CREDIT FACILITY
4.1. Facility Letters of Credit. (a) The Issuing Bank agrees,
on the terms and conditions set forth in this Agreement, to issue from time to
time for the account of the Borrower, through such offices or branches as it and
the Borrower may jointly agree, one or more Facility Letters of Credit in
accordance with this Article IV, during the period commencing on the date hereof
and ending on the sixtieth (60th) day prior to the Termination Date.
(b) The Borrower shall not request, and the Issuing Bank shall
not issue, a Facility Letter of Credit for any purpose other than to secure the
obligations of the Borrower to acquire a Hotel constructed or to be constructed
for the Borrower and permitted to be acquired by the Borrower under the
provisions hereof.
4.2. Limitations. The Issuing Bank shall not issue,
amend or extend, at any time, any Facility Letter of Credit:
(i) if the aggregate maximum amount then available for drawing
under Letters of Credit issued by such Issuing Bank, after giving
effect to the Facility Letter of Credit or amendment or extension
thereof requested hereunder, shall exceed any limit imposed by law or
regulation upon such Issuing Bank;
(ii) if, after giving effect to the Facility Letter of Credit
or amendment or extension thereof requested hereunder, (A) the
aggregate principal amount of the Facility Letter of Credit Obligations
would exceed $15,000,000 or (B) the sum of (1) the aggregate principal
amount of the Facility Letter of Credit Obligations and (2) the amount
of the Principal Balance disbursed for purposes permitted under Section
5.18(c) would exceed $20,000,000;
(iii) that, in the case of the issuance of a Facility Letter
of Credit, is in, or in the case of an amendment of a Facility Letter
of Credit, increases the face amount thereof by, an amount in excess of
the Available Credit;
(iv) if such Issuing Bank receives written notice from the
Administrative Agent at or before 10:00 A.M. (Phoenix time) on the
proposed Issuance Date of such Facility Letter of Credit that one or
more of the conditions precedent contained in Sections 3.1 or 3.3, as
applicable, would not on such Issuance Date be satisfied, unless such
conditions are thereafter satisfied and written notice of such
56
64
satisfaction is given to such Issuing Bank by the
Administrative Agent;
(v) that has an expiration date (taking into account any
automatic renewal provisions thereof) later than thirty (30) days prior
to the scheduled Termination Date; or
(vi) that is in a currency other than U.S. Dollars.
4.3. Conditions. In addition to being subject to the
satisfaction of the conditions contained in Sections 3.1 and 3.3,
as applicable, the issuance of any Facility Letter of Credit is
subject to the satisfaction in full of the following conditions:
(i) the Borrower shall have delivered to the Issuing Bank at
such times and in such manner as the Issuing Bank may reasonably
prescribe a Reimbursement Agreement and such other documents and
materials as may be reasonably required pursuant to the terms thereof,
and the proposed Facility Letter of Credit shall be reasonably
satisfactory to such Issuing Bank in form and content; and
(ii) as of the Issuance Date no order, judgment or decree of
any court, arbitrator or governmental authority shall enjoin or
restrain such Issuing Bank from issuing the Facility Letter of Credit
and no law, rule or regulation applicable to such Issuing Bank and no
directive from and governmental authority with jurisdiction over the
Issuing Bank shall prohibit such Issuing Bank from issuing Letters of
Credit generally or from issuing that Facility Letter or Credit.
4.4. Procedure for Issuance of Facility Letters of Credit. (a)
The Borrower shall give the Issuing Bank and the Administrative Agent not less
than fifteen (15) days' prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement. Such notice shall specify (i)
the stated amount of the Facility Letter of Credit requested, which amount shall
be in compliance with the requirements of Section 4.2(ii), (ii) the requested
Issuance Date, which shall be a Business Day, (iii) the date on which such
requested Facility Letter of Credit is to expire, which date shall be in
compliance with the requirements of Section 4.2(v), (iv) the purpose for which
such Facility Letter of Credit is to be issued, which purpose shall be in
compliance with the requirements of Section 4.1(b), and (v) the Person for whose
benefit the requested Facility Letter of Credit is to be issued. At the time
such request is made, the Borrower shall also provide the Administrative Agent
with a copy of the form of the Facility Letter of Credit it is requesting be
issued.
57
65
(b) Within ten (10) days after receipt of a request for
issuance of a Facility Letter of Credit in accordance with Section 4.4(a), the
Issuing Bank shall approve or disapprove, in its reasonable discretion, the
issuance of such requested Facility Letter of Credit, but the issuance of such
approved Facility Letter of Credit shall continue to be subject to the
provisions of this Article IV.
(c) Not less than four (4) nor more than six (6) Business Days
prior to the issuance of a Facility Letter of Credit approved by the Issuing
Bank as provided in Section 4.4(b), the Borrower shall confirm in writing to the
Administrative Agent and to the Issuing Bank the intended Issuance Date and
amount of such Facility Letter of Credit. Provided the issuance of the requested
Facility Letter of Credit would be permitted under the provisions of Section
4.2(iii) and that the applicable conditions set forth in Sections 3.1 and 3.3
have been satisfied, then, subject to the terms and conditions of this Article
IV, the Issuing Bank shall, on the requested Issuance Date, issue the requested
Facility Letter of Credit in accordance with the Issuing Bank's usual and
customary business practices. The Issuing Bank shall give the Administrative
Agent written notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance of a Facility Letter of Credit.
(d) The Issuing Bank shall not extend or amend any Facility
Letter of Credit unless the requirements of this Section 4.4 are met as though a
new Facility Letter of Credit were being requested and issued.
(e) Any Lender may, but shall not be obligated to, issue to
Sunstone, the Borrower or any of their Subsidiaries Letters of Credit (that are
not Facility Letters of Credit) for its own account, and at its own risk. None
of the provisions of this Article IV shall apply to any Letter of Credit that is
not a Facility Letter of Credit.
4.5. Duties of Issuing Bank. Any action taken or omitted to be
taken by an Issuing Bank under or in connection with any Facility Letter of
Credit, if taken or omitted in the absence of willful misconduct or gross
negligence, shall not put such Issuing Bank under any resulting liability to any
Lender or, assuming that such Issuing Bank has complied with the procedures
specified in Section 4.4, relieve any Lender of its obligations hereunder to
such Issuing Bank. In determining whether to pay under any Facility Letter of
Credit, the Issuing Bank shall have no obligation relative to the Lenders other
than to confirm that any documents required to be delivered under such Facility
Letter of Credit appear to have been delivered in compliance and that
58
66
they appear to comply on their face with the requirements of such Facility
Letter of Credit.
4.6. Participation. (a) Immediately upon issuance by an
Issuing Bank of any Facility Letter of Credit in accordance with Section 4.4,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from such Issuing Bank, without recourse or warranty, an undivided
interest and participation ratably in such Facility Letter of Credit (including,
without limitation, all obligations of the Borrower with respect thereto other
than amounts owing to such Issuing Bank under Section 2.13).
(b) In the event that an Issuing Bank makes any payment under
any Facility Letter of Credit and the Borrower shall not have repaid such amount
to such Issuing Bank on or before the date of such payment by such Issuing Bank,
such Issuing Bank shall promptly so notify the Administrative Agent, which shall
promptly so notify each Lender. Upon receipt of such notice, each Lender shall
promptly and unconditionally pay to the Administrative Agent for the account of
such Issuing Bank the amount of such Lender's Ratable Share of such payment in
same day funds, and the Administrative Agent shall promptly pay such amount, and
any other amounts received by the Administrative Agent for such Issuing Bank's
account pursuant to this Section 4.6(b), to such Issuing Bank. If the
Administrative Agent so notifies such Lender prior to 10:00 A.M. (Phoenix time)
on any Business Day, such Lender shall make available to the Administrative
Agent for the account of such Issuing Bank such Lender's Ratable Share of the
amount of such payment on such Business Day in same day funds. If and to the
extent such Lender shall not have so made its Ratable Share of the amount of
such payment available to the Administrative Agent for the account of such
Issuing Bank, such Lender agrees to pay to the Administrative Agent for the
account of such Issuing Bank forthwith on demand such amount, together with
interest thereon, for each day from the date such payment was first due until
the date such amount is paid to the Administrative Agent for the account of such
Issuing Bank, at the Federal Funds Rate. The failure of any Lender to make
available to the Administrative Agent for the account of such Issuing Bank such
Lender's Ratable Share of any such payment shall not relieve any other Lender of
its obligation hereunder to make available to the Administrative Agent for the
account of such Issuing Bank its Ratable Share of any payment on the date such
payment is to be made.
(c) The payments made by the Lenders to an Issuing Bank in
reimbursement of amounts paid by it under a Facility Letter of Credit shall
constitute, and the Borrower hereby expressly acknowledges and agrees that such
payments shall constitute, Loans hereunder and such payments shall for all
59
67
purposes be treated as Advances (notwithstanding that the amounts thereof may
not comply with the provisions of Section 2.3). Such Loans shall be Base Rate
Loans, subject to the Borrower's rights under Article II hereof.
(d) Upon the request of the Administrative Agent or any
Lender, an Issuing Bank shall furnish to the requesting Administrative Agent or
Lender copies of any Facility Letter of Credit or Reimbursement Agreement to
which such Issuing Bank is party and such other documentation as may reasonably
be requested by the Administrative Agent or the Lender.
(e) The obligations of the Lenders to make payments to the
Administrative Agent for the account of an Issuing Bank with respect to a
Facility Letter of Credit shall be irrevocable, not subject to any qualification
or exception whatsoever and shall be made in accordance with, but not subject
to, the terms and conditions of this Agreement under all circumstances,
notwithstanding:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary
named in a Facility Letter of Credit or any transferee of any Facility
Letter of Credit (or any Person for whom any such transferee may be
acting), such Issuing Bank, the Administrative Agent, any Lender, or
any other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between
the Borrower or any Subsidiary and the beneficiary named in any
Facility Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect of any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) any failure by the Administrative Agent or the Issuing
Bank to make any reports required pursuant to Section 4.8; or
(vi) the occurrence of any Default or Event of Default.
60
68
4.7. Compensation for Facility Letters of Credit. (a) The
Borrower agrees to pay to the Administrative Agent, in the case of each
outstanding Facility Letter of Credit, the Facility Letter of Credit Fee
therefor, payable in quarterly installments in advance on the Issuance Date
(which installment shall be a pro rata portion of the annual Facility Letter of
Credit Fee for the period commencing on the Issuance Date and ending on the last
day of the calendar quarter in which the Issuance Date occurs) and on the first
day of each calendar quarter after the Issuance Date (which installment shall be
a pro rata portion of the annual Facility Lease of Credit Fee for the quarter in
which such payment is due). Facility Letter of Credit Fees shall be calculated,
on a pro rata basis for the period to which such payment applies, for actual
days that will elapse during such period, on the basis of a 360-day year. The
Administrative Agent shall promptly remit such Facility Letter of Credit Fees,
when paid, to the Lenders ratably. Each installment of the Facility Letter of
Credit Fee shall be fully earned on the date on which such installment is
payable and shall not be refundable if the Facility Letter of Credit is
thereafter returned to the Issuing Bank or otherwise canceled prior to its
expiration date.
(b) An Issuing Bank shall have the right to receive solely for
its own account such amounts as the Borrower may agree to pay to such Issuing
Bank with respect to issuance fees and for such Issuing Bank's out-of-pocket
costs of issuing and servicing Facility Letters of Credit.
4.8. Issuing Bank Reporting Requirements. The Issuing Bank
shall, no later than the tenth day following the last day of each month, provide
to the Administrative Agent a schedule of the Facility Letters of Credit issued
by it showing the Issuance Date, account party, original face amount, amount (if
any) paid thereunder, expiration date and the reference number of each Facility
Letter of Credit outstanding at any time during such month and the aggregate
amount (if any) payable by the Borrower to such Issuing Bank during the month
pursuant to Section 2.13. Copies of such reports shall be provided promptly to
each Lender by the Administrative Agent.
4.9. Indemnification; Nature of Issuing Bank's Duties. (a) In
addition to amounts payable as elsewhere provided in this Article IV, the
Borrower hereby agrees to protect, indemnify, pay and save the Administrative
Agent, the Issuing Bank and each Lender harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) arising from the claims of third parties
against the Administrative Agent, the Issuing Bank or any Lender as a
consequence, direct or indirect, of (i) the issuance of any Facility Letter of
Credit other than, in the case of the Issuing Bank, as a result of its willful
misconduct or
61
69
gross negligence, or (ii) the failure of an Issuing Bank issuing a Facility
Letter of Credit to honor a drawing under such Facility Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any Governmental
Authority.
(b) As among the Borrower, the Lenders, the Administrative
Agent and the Issuing Bank, the Borrower assumes all risks of the acts and
omissions of, or misuse of Facility Letters of Credit by, the respective
beneficiaries of such Facility Letters of Credit. In furtherance and not in
limitation of the foregoing, neither the Issuing Bank nor the Administrative
Agent nor any Lender shall be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of the Facility
Letters of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Facility Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of a
Facility Letter of Credit to comply fully with conditions required in order to
draw upon such Facility Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, facsimile transmission or otherwise; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Facility Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Facility Letter of Credit of the proceeds
of any drawing under such Facility Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of the Administrative Agent,
the Issuing Bank and the Lenders including, without limitation, any act or
omission, whether rightful or wrongful, of any Governmental Authority. None of
the above shall affect, impair, or prevent the vesting of any of the Issuing
Bank's rights or powers under this Section 4.9.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by an
Issuing Bank under or in connection with the Facility Letters of Credit or any
related certificates, if taken or omitted in good faith, shall not put such
Issuing Bank, the Administrative Agent or any Lender under any resulting
liability to the Borrower or relieve the Borrower of any of its obligations
hereunder to any such Person.
(d) Notwithstanding anything to the contrary contained
in this Section 4.9, the Borrower shall have no obligation to
62
70
indemnify an Issuing Bank under this Section 4.9 in respect of any liability
incurred by such Issuing Bank arising primarily out of the willful misconduct or
gross negligence of such Issuing Bank, as determined by a court of competent
jurisdiction, or out of the wrongful dishonor by such Issuing Bank of a proper
demand for payment made under the Facility Letters of Credit issued by such
Issuing Bank, unless such dishonor was made at the request of the Borrower.
4.10. Resignation of Issuing Bank. The Issuing Bank shall
continue to be the Issuing Bank unless and until (i) it shall have given the
Borrower and the Administrative Agent notice that it has elected to resign as
Issuing Bank and (ii) another Lender shall have agreed to be the replacement
Issuing Bank and shall have been approved in writing by the Administrative Agent
and the Borrower. The resigning Issuing Bank shall continue to have the rights
and obligations of an Issuing Bank hereunder solely with respect to Facility
Letters of Credit theretofore issued by it notwithstanding the designation of a
replacement Issuing Bank hereunder), but upon such designation of a replacement
Issuing Bank, the resigning Issuing Bank shall not thereafter issue any Facility
Letters of Credit (unless it shall again thereafter be designated as Issuing
Bank in accordance with the provisions of this Section 4.10).
4.11. Obligations of Issuing Bank and Other Lenders. Except to
the extent that a Lender shall have agreed to be designated as an Issuing Bank,
no Lender shall have any obligation to accept or approve any request for, or to
issue, amend or extend, any Letter of Credit, and the obligations of the Issuing
Bank to issue, amend or extend any Facility Letter of Credit are expressly
limited by and subject to the provisions of this Article IV.
4.12. Issuing Bank's Rights. All of the representations,
warranties, covenants and agreements of the Borrower to the Lenders under this
Agreement and of the Borrower or any other Loan Party under any other Loan
Document shall inure to the benefit of the Issuing Bank (unless the context
otherwise indicates).
ARTICLE V
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:
63
71
5.1. Existence; Compliance with Law. In the case of each Loan
Party that is not an individual, such Loan Party and each of its Subsidiaries
(i) is 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 articles or certificate of
incorporation or formation, formation or operating agreement, 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
Permits 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 Permits
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.
5.2. 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) in the case of each Loan Party that is not an individual,
are within such Loan Party's corporate, partnership, limited liability
company or trust powers, as appropriate;
(ii) in the case of each Loan Party that is not an individual,
have been duly authorized by all necessary corporate, partnership,
limited liability company or trust action, as appropriate, of such Loan
Party, including, without limitation, the consent of stockholders,
general and/or limited partners and members where required;
(iii) do not and will not (A) in the case of each Loan Party
that is not an individual, contravene any Loan Party's or any of its
Subsidiaries' respective declaration of trust, articles or certificate
of incorporation or
64
72
formation or by-laws, regulations, partnership agreement, operating or
formation 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 (D) result in the creation or
imposition of any Lien upon any of the property of any Loan Party or
any of its Subsidiaries; 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 Closing Date will be in full force and effect.
(b) This Agreement has been, and each of the other Loan
Documents will have been upon delivery thereof pursuant to Section 3.1, duly
executed and delivered by each Loan Party party thereto. This Agreement is, and
the other Loan Documents will be, when delivered hereunder, the legal, valid and
binding obligation of each Loan Party 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.
5.3. Taxes. All federal, state, local and foreign tax returns,
reports and statements (collectively, the "Tax Returns") required to be filed by
Sunstone, the Borrower or any of their respective 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 Sunstone, 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 Sunstone, the Borrower and each of their
respective Tax Affiliates from their respective employees for all periods in
65
73
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 respective Governmental
Authorities. None of Sunstone, the Borrower or any of their respective 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.
5.4. 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.
5.5. Financial Matters. (a) The consolidated balance sheet of
Sunstone and its Subsidiaries as at December 31, 1996, and the related
consolidated statements of income, retained earnings and cash flows of Sunstone
and its Subsidiaries for the fiscal year then ended, certified by Coopers &
Xxxxxxx, LLP, copies of which have been furnished to each Lender, fairly present
the consolidated financial condition of Sunstone and its Subsidiaries as at such
dates and the consolidated results of the operations of Sunstone and its
Subsidiaries for the period ended on such dates, all in conformity with GAAP.
(b) Since December 31, 1996, 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 Sunstone nor any of its Subsidiaries had at
December 31, 1996 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.
66
74
(e) Sunstone is, the Borrower is, and on a consolidated basis
Sunstone and its Subsidiaries are, Solvent.
5.6. Litigation. There are no pending or, to the knowledge of
the Borrower, threatened actions, investigations or proceedings affecting
Sunstone, the Borrower, any of their respective Subsidiaries or (to the best
knowledge of the Borrower) the Operating Lessee or Manager 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.
5.7. 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 Borrowing 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.
5.8. Ownership. (a) As of the Closing Date, the authorized
capital stock of Sunstone consists of (i) 50,000,000 shares of common stock,
$.01 par value per share, of which 16,250,244 shares are issued and outstanding
as of the date hereof, and (ii) 10,000,000 shares of preferred stock, $.01 par
value per share, of which no shares are outstanding as of the date hereof. All
of the outstanding capital stock of Sunstone has been validly issued, is fully
paid and non-assessable. As of the Closing Date, 443,961 shares of Sunstone's
common stock, and/or units of limited partnership interests in the Borrower that
are redeemable for common stock of Sunstone are owned, in the aggregate,
beneficially by Alter, free and clear of all Liens.
(b) Sunstone is the sole general partner of Borrower and, as
of the Closing Date, owns beneficially and of record at least 85% of the
partnership interests of Borrower free and clear of all Liens.
(c) Set forth on Schedule 5.8 hereto is a complete and
accurate list showing, as of the date hereof, all Subsidiaries and
Unconsolidated Entities of Sunstone and of the Borrower and,
67
75
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 Borrower is subject to any outstanding option,
warrant, right of conversion or purchase or any similar right. All of the
outstanding capital Stock of each such Subsidiary and Unconsolidated Entity
owned by Sunstone or 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 Sunstone or
the Borrower is free and clear of all Liens. Neither Sunstone nor 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.
(d) As of the Closing Date, Alter owns (i) 100% of the issued
and outstanding common stock of the Manager and (ii) 80% of the issued and
outstanding common stock of the Operating Lessee.
5.9. 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 Sunstone, the Borrower, any of their respective
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
Sunstone, the Borrower, any of their respective Subsidiaries or any ERISA
Affiliate has caused a Pension Plan with any such liabilities to be transferred
outside
68
76
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.
(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.
5.10. Indebtedness. Except as disclosed on Schedule 5.10, as
of the date hereof, none of Sunstone, the Borrower or any of their respective
Subsidiaries or Unconsolidated Entities has any Indebtedness.
5.11. Dividends and Distributions. From and after the Closing
Date, Sunstone has not declared or made any dividends or distributions that are
not permitted pursuant to Section 6.7.
5.12. No Burdensome Restrictions; No Defaults. (a) No Loan
Party nor any of its Subsidiaries (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 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 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.
69
77
(e) As of the date hereof, no Subsidiary of Sunstone or the
Borrower (other than single-asset or bankruptcy remote entities) 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 Sunstone
or the Borrower (as applicable) 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.
5.13. Investments. Except as disclosed on Schedule 5.8 or
Schedule 5.13, Sunstone, the Borrower and their respective Subsidiaries
considered as a single enterprise, are not engaged in any joint venture or
partnership with any other Person and do not maintain any Investment, as of the
date hereof.
5.14. Government Regulation. Neither Sunstone, nor the
Borrower nor any of their respective Subsidiaries 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 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 Sunstone, the
Borrower or any of their respective Subsidiaries to violate any provision of any
of the foregoing or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder.
5.15. Insurance. All policies of insurance of any kind or
nature owned by or issued to or for the benefit of any Loan Party (other than
any individual) or any of its Subsidiaries, or issued in respect of any real
property owned or leased by the Borrower or any of its Subsidiaries 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 (other than any individual) or any of its Subsidiaries has been
refused insurance for which it applied or
70
78
had any policy of insurance terminated (other than at its request).
5.16. Labor Matters. (a) There are no strikes, work stoppages,
slowdowns or lockouts pending or threatened against or involving Sunstone, the
Borrower or their respective 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 Sunstone, the Borrower or their respective
Subsidiaries, other than those which, in the aggregate, if resolved adversely to
Sunstone, the Borrower or such Subsidiary, would have no Material Adverse
Effect.
(c) As of the Closing Date, neither Sunstone, the Borrower nor
any of their respective Subsidiaries is a party to, or has any obligations
under, any collective bargaining agreement.
(d) There is no organizing activity involving Sunstone, the
Borrower or any of their respective Subsidiaries 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 Sunstone, the Borrower or any of their respective Subsidiaries have
made a pending demand for recognition, other than those which in the aggregate
have no Material Adverse Effect.
5.17. Force Majeure. Neither the business nor the properties
of any Loan Party or any of their respective Subsidiaries 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.
5.18. Use of Proceeds. The proceeds of the Loans will be used
by the Borrower solely as follows: (a) in the case of the initial Loans, to pay
in full all amounts owing the lenders under the Loan Agreement dated June 21,
1996 between the Borrower and Bank One (and partially assigned by Bank One to
Credit Lyonnais) (upon which payment the rights and obligations of the parties
under such loan agreement shall terminate), (b) subject to the limitations set
forth herein, to fund any direct or indirect
71
79
investment in or renovation of existing Hotels, in Hotels and/or interests in
Hotels which are to be acquired by the Borrower or any of its Subsidiaries, and
for the payment of related transaction costs, fees and expenses (including
payment of reimbursement obligations with respect to Facility Letters of
Credit), and (c) for general corporate or working capital purposes or for the
development or construction of Hotels permitted hereunder, provided, hereunder,
that (i) the outstanding amount of the Principal Balance disbursed for purposes
permitted under this Section 5.18(c) shall not at any time exceed $15,000,000,
and (ii) the sum of (A) the outstanding amount of the Principal Balance
disbursed for purposes permitted under this Section 5.18(c) plus (B) the
Facility Letter of Credit Obligations shall not at any time exceed $20,000,000.
5.19. Environmental Protection. Except as disclosed on
Schedule 5.19 (and the Borrower represents and warrants to the Lenders and the
Administrative Agent that the matters disclosed in the reports identified on
Schedule 5.19 would not reasonably be expected to have a Material Adverse
Effect):
(a) to the best knowledge of Borrower, all real property
leased or owned by Sunstone, the Borrower or any of their respective
Subsidiaries 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 $1,000,000 or more;
(b) the operations of Sunstone, the Borrower and each of their
respective Subsidiaries, and the operations at any real property leased or owned
by Sunstone, the Borrower or any of their respective Subsidiaries are in
material compliance in all respects with all applicable Environmental Laws;
(c) neither Sunstone nor the Borrower nor any of their
respective Subsidiaries have liabilities with respect to Hazardous Materials
and, to the best knowledge of the Borrower, no facts or circumstances exist in,
on or under any real property leased or owned by Sunstone, the Borrower or any
of their respective Subsidiaries, which could give rise to liabilities with
respect to Hazardous Materials which could reasonably be expected to subject
Sunstone, the Borrower or any of their respective Subsidiaries to Environmental
Liabilities and Costs of $1,000,000 or more;
(d) (i) Sunstone, the Borrower and their Subsidiaries and all
real property owned or leased by Sunstone, the Borrower or their Subsidiaries
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
72
80
Borrower, threatened to revoke, or alleging the violation of, such Environmental
Permits, and (iii) neither Sunstone nor the Borrower nor any of their respective
Subsidiaries or, to the best knowledge of the Borrower, the Operators have
received any notice from any source to the effect that there is lacking any
Environmental Permit required in connection with the current use or operation of
any property leased or owned by Sunstone, the Borrower or any of their
respective Subsidiaries;
(e) neither Sunstone nor the Borrower's nor any of their
respective Subsidiaries' current facilities and operations, nor, to the best
knowledge of the Borrower, any Operator's, nor any of Sunstone's, the Borrower's
or their respective Subsidiaries' past facilities and operations, nor to the
best knowledge of the Borrower, any owner of premises leased or operated by
Sunstone, the Borrower or their respective Subsidiaries, are subject to any
outstanding written Order or Contract, 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 Sunstone, nor the Borrower nor any of their
respective Subsidiaries or, to the best knowledge of the Borrower, 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, are any such proceedings threatened;
(g) neither Sunstone, nor the Borrower nor any of their
respective Subsidiaries nor, to the best knowledge of the Borrower, any
Operator's, nor to the best knowledge of the Borrower, any owner of premises
leased by Sunstone, the Borrower or any of their respective Subsidiaries, 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 Sunstone, the Borrower or any of
their respective Subsidiaries or, to the best knowledge of the Borrower, of any
Operator's, or, to the best knowledge of the Borrower, of any owner of premises
leased by Sunstone, the Borrower or any of their respective Subsidiaries,
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, has there been in the past, on, in or under any real
73
81
property leased or owned by Sunstone, the Borrower or any of their respective
Subsidiaries, to the best knowledge of the Borrower, 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 biphenyls, or (iv) any
radioactive substances other than naturally-occurring radioactive material.
5.20. Contractual Obligations Concerning Assets. As of the
date hereof, neither Sunstone, nor the Borrower nor any of their respective
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.
5.21. Intellectual Property. The Borrower, its Subsidiaries 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 the Borrower or any of its
Subsidiaries. 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 Sunstone,
the Borrower or any of their respective Subsidiaries 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.
5.22. Title. (a) The Borrower or its applicable Subsidiary,
owns good and marketable fee simple absolute title to all of the Real Estate
purported to be owned by it, which Real Estate is at the date hereof described
in Schedule 5.22(a), and good and marketable title to, or valid leasehold
interests in, all other properties and assets purported to be leased by the
Borrower or any of its Subsidiaries, including, without limitation, valid
leasehold interests pursuant to the Leases and all property reflected in the
balance sheet referred to in Section 5.5(a). Each Loan Party and its respective
Subsidiaries received all deeds, assignments, waivers, consents, non-disturbance
and recognition or similar agreements, bills of sale
74
82
and other documents, and have duly effected all recordings, filings and other
actions necessary to establish, protect and perfect the Borrower's and its
Subsidiaries' 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 its Subsidiaries is listed on Schedule 5.22(b). Each of
such Leases is valid and enforceable against the Borrower or such Subsidiary (as
applicable) 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 which is 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 Subsidiaries 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) To the knowledge of the Borrower, all components of all
improvements included within the Hotels owned or leased, as lessee, by the
Borrower or any of its Subsidiaries (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 the Borrower or any of its
Subsidiaries are installed and operating and are sufficient to enable the real
property owned or leased by the Borrower and its Subsidiaries to continue to be
used and operated in the manner currently being used and operated, and the
Borrower has no 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 the Borrower or any of its Subsidiaries
other than for access provided
75
83
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 the Borrower or any of its
Subsidiaries 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) Neither the Borrower nor any of its Subsidiaries has
received any notice, or has any knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any real property owned or leased
by the Borrower or any of its Subsidiaries 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 the Borrower or any of its Subsidiaries or any part thereof in lieu of
condemnation, which in the aggregate, are reasonably likely to have a Material
Adverse Effect.
(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 the Borrower or any of its Subsidiaries 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 the Borrower or any of
its Subsidiaries is located in a special flood hazard area as designated by any
Federal Governmental Authorities.
5.23. Status as REIT. Sunstone (a) is organized in conformity
with the requirements for qualification as a REIT under the Code, (b) has met
all of the requirements for qualification as a REIT under the Code for its
Fiscal Year most recently ended and (c) is in a position to qualify for its
current Fiscal Year as a REIT under the Code and its proposed methods of
operation will enable it to so qualify.
5.24. Operator: Compliance with Law. Each Operator (i) has
full power and authority and the legal right to lease (or sublease), manage or
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, (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 requires such
qualification, and (iii)
76
84
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 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.
5.25. Operating Leases, Licenses and Management Agreement. (a)
Each of the Hotels owned by the Borrower or any of its Subsidiaries (whether
located on land owned by or leased to the Borrower or such Subsidiary) (i) is
leased by the Borrower or its Subsidiary to the Operating Lessee under an
Operating Lease, (ii) is the subject of a License (except as otherwise provided
in subparagraph (i)(E)(3) of the definition of "Eligible Hotel"), and (iii) is
managed and operated for the Operating Lessee by the Manager pursuant to a
Management Agreement.
(b) Each of the Operating Leases, Licenses and Management
Agreements in respect of the Hotels owned or leased (as lessee) by the Borrower
or any of its Subsidiaries (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 has
collected any rents becoming due under any Operating Lease more than thirty (30)
days in advance. All rent and other sums and charges payable by any Operating
Lessee under each Operating Lease to 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 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 has performed all of its repair and maintenance obligations
(if any) and 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.
ARTICLE VI
FINANCIAL COVENANTS
77
85
As long as any of the Obligations or Commitments remain
outstanding, unless the Lenders otherwise consent in writing, the Borrower
agrees with the Lenders and the Administrative Agent that:
6.1. Interest Coverage Ratio. Sunstone shall maintain at the
end of each Fiscal Quarter commencing with the Fiscal Quarter ending on March
31, 1997, a ratio ("Interest Coverage Ratio") of (a) Adjusted EBITDA to (b)
Gross 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 3.0 to
1.0, except as otherwise provided in Section 3.4(a).
6.2. Debt Service Coverage Ratio. Sunstone shall maintain at
the end of each Fiscal Quarter commencing with the Fiscal Quarter ending on
March 31, 1997, a ratio ("Debt Service Coverage Ratio") of (a) Adjusted EBITDA
to (b) Debt Service, 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, except
as otherwise provided in Section 3.4(a).
6.3. 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.
6.4. Limitations on Total Indebtedness. Sunstone shall not,
during any Fiscal Quarter on a consolidated basis, permit the Total Indebtedness
(including, without limitation, the Obligations and all Capitalized Lease
Obligations) of Sunstone to exceed the lesser of:
(i) the sum of (A) for Seasoned Properties, Adjusted NOI
(on a consolidated basis) of such Seasoned Properties
for the preceding four (4) Fiscal Quarters multiplied
by four (4), and (B) for New Properties (including
Hotels to be immediately acquired using the proceeds
from any Indebtedness), forty percent (40%) of the
Borrower's Investment in such New Properties; and
(ii) forty percent (40%) of the Borrower's Investment in
all Hotels (including Hotels to be immediately
acquired using the proceeds from any Indebtedness);
provided that, in no event shall the Borrower or Sunstone permit the Total
Indebtedness of Sunstone to exceed the amount permitted under the Articles of
Incorporation of Sunstone.
6.5. Limitations on Total Secured Recourse Indebtedness.
Sunstone shall not, during any Fiscal Quarter on a
78
86
consolidated basis, permit the Total Secured Recourse Indebtedness (excluding
the Obligations) of Sunstone, to exceed the lesser of:
(i) the sum of (A) for Seasoned Properties, Adjusted NOI
(on a consolidated basis) of such Seasoned Properties
for the preceding four (4) Fiscal Quarters multiplied
by one and one-half (1.5), and (B) for New Properties
(including Hotels to be immediately acquired using
the proceeds from any Indebtedness), fifteen percent
(15%) of the Borrower's Investment in such New
Properties; and
(ii) fifteen percent (15%) of the Borrower's Investment in
all Hotels (including Hotels to be immediately
acquired using the proceeds from any Indebtedness).
6.6. Limitations on Non-Recourse Indebtedness. Sunstone shall
not, during any Fiscal Quarter on a consolidated basis, permit the Non-Recourse
Indebtedness of Sunstone, to exceed the lesser of:
(i) the sum of (A) for Seasoned Properties, Adjusted NOI
(on a consolidated basis) of such Seasoned Properties
for the preceding four (4) Fiscal Quarters multiplied
by three (3), and (B) for New Properties (including
Hotels to be immediately acquired using the proceeds
from any Indebtedness), thirty percent (30%) of the
Borrower's Investment in such New Properties; and
(ii) thirty percent (30%) of the Borrower's Investment in
all Hotels (including Hotels to be immediately
acquired using the proceeds from any Indebtedness).
6.7. Dividends and Distributions. Sunstone 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 in any Fiscal Year which exceeds 85% of the Adjusted Funds
From Operations of Sunstone for such Fiscal Year or 100% of Free Cash Flow of
Sunstone for such Fiscal Year. Notwithstanding the foregoing, Sunstone may make
dividend payments or distributions in excess of the foregoing limitations to the
extent required to maintain its status as a REIT.
ARTICLE VII
79
87
AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, unless the Requisite Lenders otherwise consent in writing, the
Borrower agrees with the Lenders and the Administrative Agent that:
7.1. Compliance with Laws, Etc. Sunstone and the Borrower
shall comply, and shall cause each of their Subsidiaries to comply, in all
material respects with all Requirements of Law, Contractual Obligations,
commitments, instruments, licenses, permits and franchises, including, without
limitation, all Permits; provided, however, that it shall not be a default under
this Section 7.1 if all such non-compliances in the aggregate have no Material
Adverse Effect.
7.2. Conduct of Business. Sunstone and the Borrower shall (a)
conduct, and shall cause each of their respective Subsidiaries to conduct, its
business in the ordinary course and consistent with past practice; (b) use, and
cause each of their respective Subsidiaries 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 Sunstone, the Borrower or any of their
respective Subsidiaries and (ii) keep available the services and goodwill of its
present employees; (c) preserve, and cause each of their respective Subsidiaries
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 their respective Subsidiaries 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 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), it shall not be a default under this Section 7.2 if all such
failures in the aggregate have no Material Adverse Effect.
7.3. Payment of Taxes, Etc. Sunstone and the Borrower shall
pay and discharge, and shall cause each of their respective Subsidiaries, 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
in conformity with GAAP; provided, however, that it shall not be a default under
this Section 7.3 if
80
88
all such non-payments in the aggregate have no Material Adverse Effect.
7.4. Maintenance of Insurance. Sunstone and the Borrower shall
maintain, and shall cause each of their respective Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or associations
satisfactory to the Requisite Lenders 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
satisfactory to the Requisite Lenders. The Borrower will furnish to the Lenders
from time to time such information as may be requested as to such insurance.
7.5. Preservation of Existence, Etc. Sunstone and the Borrower
shall preserve and maintain, and shall cause each of their respective
Subsidiaries to preserve and maintain, its corporate or partnership existence,
rights (charter and statutory) and franchises, except as permitted under Section
8.6.
7.6. Access. Sunstone and 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 Default), to (a) examine and make copies of and
abstracts from the records and books of account of Sunstone, the Borrower and
each of their respective Subsidiaries, (b) visit the properties of Sunstone, the
Borrower and each of their respective Subsidiaries, (c) discuss the affairs,
finances and accounts of Sunstone, the Borrower and each of their respective
Subsidiaries with any of their respective officers or directors, and (d)
communicate directly with the Borrower's independent certified public
accountants.
7.7. Keeping of Books. Sunstone and the Borrower shall keep,
and shall cause each of their respective Subsidiaries 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 Sunstone, the Borrower and each such
Subsidiary.
7.8. Maintenance of Properties, Etc. Sunstone and the Borrower
shall maintain and preserve, and shall cause each of their respective
Subsidiaries to maintain and preserve, (i) all of their properties which are
used or useful or necessary in the conduct of their 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 their business; provided, however, that it shall
not be a default under this Section 7.8 if
81
89
all such failures in the aggregate have no Material Adverse Effect.
7.9. Performance and Compliance with Other Covenants. Sunstone
and the Borrower shall perform and comply with, and shall cause each of their
respective Subsidiaries to perform and comply with, each of the covenants and
agreements set forth in each Contractual Obligation to which Sunstone, the
Borrower or any of their respective Subsidiaries is a party; provided, however,
that it shall not be a default under this Section 7.9 if all such failures in
the aggregate have no Material Adverse Effect.
7.10. Application of Proceeds. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in Section 5.18.
7.11. Financial Statements. The Borrower shall furnish
to the Lenders:
(a) as soon as available and in any event within fifty (50)
days after the end of each of the first three Fiscal Quarters of each Fiscal
Year, consolidated balance sheets of (i) Sunstone and its Subsidiaries and (ii)
the Operating Lessee, as of the end of such quarter, and consolidated statements
of income, retained earnings and cash flow of (x) Sunstone and its Subsidiaries
and (y) the 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 officer of
Sunstone or the Operating Lessee, as appropriate, as fairly presenting the
financial condition and results of operations of Sunstone or the Operating
Lessee, at such date and for such period, together with (A) in the case of
Sunstone, 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 Sunstone or the Borrower proposes to take with respect thereto, (B)
in the case of Sunstone, a schedule in form satisfactory to the Administrative
Agent of the computations used by Sunstone and the Borrower in determining
compliance with all financial covenants contained herein, and (C) a written
discussion and analysis by the management of Sunstone or the 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 one hundred
(100) days after the end of each Fiscal Year, consolidated balance sheets of (i)
Sunstone and its Subsidiaries and (ii) the Operating Lessee, as of the end of
such year, and consolidated statements of income, retained earnings and cash
82
90
flow of (x) Sunstone and its Subsidiaries and (y) the Operating Lessee, 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
Coopers & Xxxxxxx, LLP, or other independent public accountants of recognized
national standing together with (i) in the case of Sunstone, a schedule in form
satisfactory to the Administrative Agent of the computations used by Sunstone
and the Borrower in determining, as of the end of such Fiscal Year, the
Borrower's and Sunstone's compliance with all financial covenants contained
herein, and (ii) a written discussion and analysis by the management of Sunstone
or the Operating Lessee, as appropriate, of the financial statements furnished
in respect of such Fiscal Year;
(c) promptly after the same are received by Sunstone or the
Borrower, a copy of each management letter provided to Sunstone or 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 Sunstone, the Borrower or any of
their respective Subsidiaries;
(d) within fifty (50) days after the end of each Fiscal
Quarter, (i) a Borrowing Base Certificate as of the end of such Fiscal Quarter,
executed by a Responsible Officer of the Borrower, together with (to the extent
not previously delivered) copies of the Eligible Hotel Documents in respect of
each of the Eligible Hotels shown listed thereon (except as otherwise provided
in Section 7.23(a)), and (ii) a Compliance Certificate as of the end of such
Fiscal Quarter, executed by the chief financial officer of the Borrower;
(e) Concurrently with the delivery of the financial statements
provided for in subparagraphs (a) and (b) above, (i) a report with respect to
the Eligible Hotels detailing the Adjusted NOI for each of the Eligible Hotels,
and in the aggregate for all Eligible Hotels, for each of the four most recent
Fiscal Quarters and for such period of four Fiscal Quarters taken as a whole and
(ii) from and after the Trigger Date, an operating statement, with respect to
each Eligible Hotel, detailing the Net Operating Income for the most recent
Fiscal Quarter and for the Fiscal Year to date certified by the chief financial
officer of Sunstone as fairly presenting the Net Operating Income of such
Eligible Hotel for such periods;
(f) Within fifty (50) days after the end of each Fiscal
Quarter, a listing of all Hotels owned by the Borrower or its Subsidiaries,
identifying both the Eligible Hotels and other
83
91
Hotels and the Borrower's Investment in each such Eligible Hotel or other Hotel;
(g) Within one hundred (100) days after the end of each Fiscal
Year, the financial statements of Alter and of Xxxxxxx Xxxxxxxxx, in reasonable
detail satisfactory to the Administrative Agent, and certified by such Person;
and
(h) Within thirty (30) days of the filing of federal income
tax returns by Alter or Xxxxxxx Xxxxxxxxx, copies of such returns (including all
schedules thereto).
7.12. Reporting Requirements. The Borrower shall furnish to
the Lenders:
(a) prior to any Asset Sale of or otherwise affecting an
Eligible Hotel or any Asset Sale generating proceeds in excess of ten percent
(10%) of the value of Total Assets of the Borrower, a notice (i) describing the
assets being sold, (ii) stating the estimated Asset Sale proceeds in respect of
such Asset Sale and (iii) accompanied by a Borrowing Base 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 not later than fifty
days (50) days after the third Fiscal Quarter of each Fiscal Year, an annual
budget of Sunstone, the Borrower and their Subsidiaries for the succeeding
Fiscal Year, displaying on a monthly and quarterly basis, anticipated balance
sheets, and forecasted Capital Expenditures, working capital requirements,
revenues, net income, cash flow and EBITDA, all on a consolidated basis, and,
concurrently with the delivery of subsequent quarterly and annual financial
statements pursuant to Sections 7.11(a) and (b), a summary of any material
changes in the operating budget for such Fiscal Year;
(c) promptly and in any event within thirty (30) days after
Sunstone, the Borrower, any of their respective 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
Sunstone or the Borrower describing such ERISA Event or waiver request and the
action, if any, which Sunstone, the Borrower, their respective 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;
84
92
(d) promptly and in any event within ten (10) days after
receipt thereof, a copy of any adverse notice, determination letter, ruling or
opinion of Sunstone, the Borrower, any of their respective 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 Sunstone, the Borrower or any of their
respective Subsidiaries, except those which in the aggregate, if adversely
determined, would have no Material Adverse Effect;
(f) promptly and in any event within four (4) Business Days
after Sunstone or the Borrower receives, from any source, written notice 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 Sunstone, the Borrower and their
respective 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, 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 Sunstone or the Borrower sends to its security holders
generally, and copies of all reports and registration statements which Sunstone,
the Borrower or any of their respective 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
Sunstone, the Borrower or any of their respective Subsidiaries in respect of
taxes measured by income (excluding sales, use and like taxes);
(i) promptly and in any event within ten days of Sunstone, the
Borrower or any of their respective Subsidiaries learning of any of the
following, written notice to the Administrative Agent of any of the following:
85
93
(i) the Release or threatened Release of any Hazardous
Material on or from any property owned or leased by Sunstone, the
Borrower of any of their respective Subsidiaries and any written order,
notice, permit, application or other written communication or report
received by Sunstone, the Borrower, any of their respective
Subsidiaries in connection with or relating to any such Release or
threatened Release, unless such Release or threatened Release is not
reasonably likely to subject Sunstone, the Borrower or any of their
respective Subsidiaries to Environmental Liabilities and Costs of
$500,000 or more;
(ii) any notice or claim to the effect that Sunstone, the
Borrower, or any of their respective Subsidiaries 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 Sunstone, the Borrower, any of their
respective Subsidiaries or any Operator of notification that any real
or personal property of Sunstone, the Borrower or any of their
respective Subsidiaries is subject to an Environmental Lien;
(iv) any Remedial Action taken by Sunstone, the Borrower or
any of their respective Subsidiaries or any other Person on their
behalf in response to any Hazardous Material on, under or about any
real property owned or leased by Sunstone, the Borrower or any of their
respective Subsidiaries, unless such Remedial Action is not reasonably
likely to subject Sunstone, the Borrower or any of their respective
Subsidiaries to Environmental Liabilities and Costs of $1,000,000 or
more;
(v) receipt by Sunstone, the Borrower or any of their
respective Subsidiaries of any notice of violation of, or knowledge by
Sunstone, the Borrower or any of their respective Subsidiaries that
there exists a condition which may result in a violation by Sunstone,
the Borrower or any of their respective Subsidiaries of, any
Environmental Law, unless such violation is not reasonably likely to
subject Sunstone, the Borrower or any of their respective Subsidiaries
to Environmental Liabilities and Costs of $1,000,000 or more;
(vi) any proposed Capital Expenditure by Sunstone, the
Borrower or any of their respective Subsidiaries intended or designed
to implement any existing or additional Remedial Action, unless such
expenditures are not reasonably likely to exceed $1,000,000;
86
94
(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 Sunstone, the
Borrower, or any of their respective Subsidiaries, unless such action
is not reasonably likely to subject Sunstone, the Borrower or their
respective Subsidiaries to Environmental Liabilities and Costs in
excess of $1,000,000;
(j) promptly, such additional financial and other information
respecting the financial or other condition of Sunstone, the Borrower or any of
their respective Subsidiaries or the Operating Lessee or the status or condition
of any real property owned or leased by Sunstone, the Borrower or their
respective Subsidiaries or the operation thereof which Sunstone or 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 7.12.
7.13. Leases and Operating Leases; Management Agreements and
Licenses. (a) The Borrower shall provide the Administrative Agent with a copy of
each Qualified Lease and each Operating Lease relating to an Eligible Hotel. The
Borrower shall, and shall cause each of its Subsidiaries 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 Estate, including, without limitation, the Leases set
forth in Schedule 5.22(b); (ii) 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 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 of the Borrower under any Lease or Operating Lease
simultaneously with its delivery of such notice under such Lease or Operating
Lease; (iii) direct the landlord under each Qualified Lease and the Operating
Lessee under each Operating Lease to furnish to the Administrative Agent a copy
of each notice of default sent to the Borrower or any Subsidiary; (iv) notify
the Administrative Agent, not later than thirty (30) days prior to the date of
the expiration of the term of any Qualified Lease, of the Borrower's or any of
its Subsidiaries'
87
95
intention either to renew or to not renew any such Qualified Lease, and, if the
Borrower or any Subsidiary of the Borrower intends to renew such Qualified
Lease, the terms and conditions of such renewal; and (v) 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 the 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.
7.14. Non-Recourse Indebtedness. Sunstone and the Borrower
shall each use all reasonable efforts to structure its Non-Recourse Indebtedness
with a bankruptcy remote, single purpose wholly-owned Subsidiary of the Borrower
as the sole obligor thereunder.
7.15. 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.
7.16. Capital Improvement Work. Sunstone and the Borrower
shall, and shall cause each of their respective Subsidiaries to, (a) diligently
perform or cause to be performed all construction, development, renovation,
alterations and remodeling work with respect to any Real Estate (i) in a good
and workmanlike manner, (ii) in compliance with all Requirements of Law and
(iii) in compliance with the terms and provisions of the Loan Documents, (b)
complete all of the foregoing work in a timely manner and free and clear of any
mechanic's Liens, materialmen's Liens and equitable Liens' and (c) pay when due
all of the costs associated with performing and completing said work.
7.17. Fiscal Year. Sunstone and the Borrower shall maintain as
their Fiscal Year the twelve-month period ending on December 31 of each year.
88
96
7.18. Environmental Matters. (a) Sunstone and the Borrower
shall comply and shall cause each of their respective Subsidiaries 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 the Administrative Agent or any of the Lenders at any
time has a reasonable basis to believe that there may be a material violation of
any Environmental Law by Sunstone, the Borrower or any of their respective
Subsidiaries or any Operator related to any real property owned or leased by
Sunstone, the Borrower or any of their respective Subsidiaries, 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 any of the Lenders may
reasonably require so as to reasonably satisfy the Administrative Agent and
Lenders that Sunstone, the Borrower or such Subsidiary or real property owned or
leased by any of 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
Sunstone, the Borrower or any of their respective Subsidiaries 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.
(c) Sunstone and the Borrower shall, and shall cause each of
their respective Subsidiaries and the 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.
7.19. REIT Requirements; Listing. (a) Sunstone shall operate
its business at all times so as to satisfy all requirements necessary to qualify
as a REIT. Sunstone will maintain adequate records so as to comply with all
record-keeping requirements relating to the qualification of Sunstone as a REIT
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. Sunstone will request from its
shareholders all shareholder information required by the Code and applicable
regulations of the Department of Treasury promulgated thereunder.
(b) Sunstone shall at all times be listed on either the New
York Stock Exchange, the American Stock Exchange or the
89
97
NASDAQ National Market System, and shall at all times comply with the
requirements necessary to maintain such listing.
7.20. Intentionally Omitted.
7.21. Hotel Ownership. Sunstone and the Borrower shall at all
times engage solely in the business of owning Hotels that meet the requirements
set forth herein, except for business activities that are incidental thereto and
otherwise permitted under the provisions of this Agreement. The business of
Sunstone shall consist solely of the ownership of general and limited
partnership interests in the Borrower.
7.22. 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
and, if applicable, to confirm the Liens granted in favor of the Administrative
Agent under the Security Documents.
7.23. Borrowing Base Determination/Requirements. (a) Subject
to compliance with the terms and conditions of Section 3.1, the Administrative
Agent and the Lenders have accepted the Hotels listed on Schedule 7.23 as
Eligible Hotels for the purposes of the Borrowing Base as of the Closing Date
and acknowledge that, to the extent that the Borrower has not heretofore
furnished to the Lenders the Eligible Hotel Documents with respect to the
Eligible Hotels listed on Schedule 7.23, such requirement is waived, provided,
however, that, if for any reason any Hotel listed on Schedule 7.23 shall cease
to be an Eligible Hotel but the Borrower shall thereafter desire to have the
Administrative Agent accept such Hotel as an Eligible Hotel, the provisions of
Section 7.23(f) shall apply and provided further that the provisions of this
Section 7.23(a) shall not limit or otherwise affect the obligations (if
applicable) of the Borrower under Section 3.4.
(b) If the Borrower desires that the Administrative Agent
accept a Hotel as an Eligible Hotel for the purposes of the Borrowing Base, the
Borrower shall so notify the Administrative Agent in writing, but not more than
one such notice may be delivered during any calendar month. The Administrative
Agent's acceptance of such Hotel as an Eligible Hotel shall not be unreasonably
withheld, provided such Hotel, and such Hotel, collectively with all other
Eligible Hotels shall meet the requirements for Eligible Hotels specified herein
and the Borrower shall have delivered to the Administrative Agent the following,
in form and substance reasonably satisfactory to the Administrative Agent:
90
98
(i) a description of such Hotel, such description to
include the age, location and number of rooms or suites of
such Hotel;
(ii) to the extent available, statistics with respect
to the occupancy of the Hotel, operating statements, and an
analysis of the revenue per available room, in each case for
the prior Fiscal Year and the completed Fiscal Quarters of the
current Fiscal Year;
(iii) details of the Borrower's Investment in such
Hotel and details of the Adjusted NOI of such Hotel for the
prior four (4) Fiscal Quarters;
(iv) a copy of the most recent ALTA Owner's Policy of
Title Insurance (or commitment to issue such a policy to the
Borrower or its Subsidiary 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;
(v) copies of each of the Operating Lease, Management
Agreement and License relating to such Hotel;
(vi) copies of all engineering, mechanical,
structural and maintenance studies performed by third party
consultants with respect to such Hotel;
(vii) 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;
(viii) if such Hotel is located on land leased
pursuant to a Qualified Lease, a copy of such Lease, including
any and all amendments thereto or modifications thereof and a
current estoppel certificate from the landlord under such
Qualified Lease confirming that the lessee is not in default
in the payment of rent or the performance of any other
obligations thereunder and such other matters as the
Administrative Agent may require;
(ix) a Borrowing Base Certificate setting forth on a
pro forma basis the Available Credit assuming that such Hotel
is accepted as an Eligible Hotel for the purposes of the
Borrowing Base;
91
99
(x) such other information as the Administrative
Agent may reasonably request in order to evaluate the Hotel;
and
(xi) from and after the Trigger Date, the Security
Documents and other documents required to be delivered under
the provisions of Section 3.4.
Provided such Hotel, and such Hotel, collectively with all
other Eligible Hotels, shall meet the requirements for Eligible Hotels specified
herein, such Hotel shall become an Eligible Hotel upon the first to occur of (1)
the Administrative Agent's delivery to the Borrower of a notice accepting such
Hotel as an Eligible Hotel or (2) the eleventh (11th) Business Day next
following the Administrative Agent's receipt of the Borrower's notice under this
Section 7.23(b) and of all of the items set forth in clauses (i) through (x)
above, unless prior thereto the Administrative Agent shall have advised the
Borrower that the Administrative Agent has not accepted such Hotel as an
Eligible Hotel, provided, however, that, from and after the Trigger Date, a
Hotel shall not become an Eligible Hotel unless and until the Administrative
Agent has delivered to the Borrower a notice accepting such Hotel as an Eligible
Hotel. The failure of the Administrative Agent to advise the Borrower of
non-acceptance of a Hotel as an Eligible Hotel shall not preclude a subsequent
determination or notice that such Hotel, or that such Hotel, collectively with
all other Eligible Hotels, does not satisfy the requirements for Eligible Hotels
set forth herein.
(c) The Borrower shall promptly notify the Admin istrative
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 a prior Borrowing Base Certificate as an Eligible Hotel ceases, for any
reason whatsoever, to be an Eligible Hotel, or (ii) the Eligible Hotels included
in a prior Borrowing Base Certificate, collectively, cease to meet any of the
requirements set forth in subparagraph (ii) of the definition of "Eligible
Hotel," or (iii) the Aggregate Value of any Eligible Hotel is less than 90% of
the Aggregate Value reflected in the most recent Borrowing Base Certificate
delivered pursuant hereto, or (iv) there is a Borrowing Base Imbalance, and the
amount thereof.
(d) The Administrative Agent, at the expense of the Borrower,
may make physical and other verifications of any Hotels included as Eligible
Hotels 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.
92
100
(e) Notwithstanding anything to the contrary set forth herein,
a Hotel shall cease to be an Eligible Hotel if at any time it, or it,
collectively, with the other Eligible Hotels, shall fail to comply with the
requirements for an Eligible Hotel set forth herein.
(f) If a Hotel shall cease to be an Eligible Hotel but the
Borrower thereafter desires that the Administrative Agent accept such Hotel as
an Eligible Hotel, the Borrower may so notify the Administrative Agent in
accordance with the provisions of Section 7.23(b), which provisions shall apply
as the Administrative Agent may determine in its sole discretion.
ARTICLE VIII
NEGATIVE COVENANTS
As long as any of the Obligations or Commitments remain
outstanding, without the written consent of the Requisite Lenders (or such
higher percentage of the Lenders as may be required hereunder), the Borrower
agrees with the Lenders and the Administrative Agent that:
8.1. Redemption. Neither Sunstone nor the Borrower shall
purchase or redeem any of its Stock or Stock Equivalents heretofore or hereafter
issued except to the extent that the consideration for such redemption or
purchase is limited to Stock or Stock Equivalents in Sunstone or the Borrower.
8.2. Indebtedness. Neither Sunstone nor the Borrower shall, or
shall permit their respective Subsidiaries, to create, incur or suffer to exist
any Indebtedness, except:
(i) the Obligations;
(ii) Indebtedness existing on the date hereof and
described in Schedule 5.10 hereto;
(iii) Indebtedness secured by a Lien on such Person's
assets to the extent permitted hereunder;
(iv) trade accounts payable in the ordinary course of
business;
(v) Indebtedness of Sunstone or the Borrower to a
Subsidiary that has executed and delivered to the
Administrative Agent a subordination agreement
subordinating to the Obligations any and all
Indebtedness of Sunstone or the Borrower to such
Subsidiary.
93
101
(vi) Indebtedness under Interest Rate Contracts not
secured by a Lien and approved by the Requisite
Lenders; and
(vii) other Indebtedness not secured by a Lien and in an
aggregate amount not at any time exceeding
$5,000,000.
8.3. Lease Obligations. (a) Neither Sunstone nor the Borrower
shall create or suffer to exist, or permit any of their respective Subsidiaries
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) Neither Sunstone nor the Borrower shall, or shall permit
any of their respective Subsidiaries 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) Sunstone or the Borrower or
any of their respective Subsidiaries has sold or transferred or is to sell or
transfer to any other Person, or (ii) Sunstone or the Borrower or any of their
respective Subsidiaries 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.
8.4. Mergers, Stock Issuances, Asset Sales, Etc. (a) Except
with the written consent of all Lenders, neither the Borrower nor Sunstone shall
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of its assets or properties, or shall, or shall permit any of its Subsidiaries
to, (i) merge with any Person, or (ii) consolidate with any Person, unless (A)
Sunstone or the Borrower is the surviving or resulting entity and, (B) after
giving effect to such merger or consolidation, (1) no Default or Event of
Default shall have occurred and (2), without limitation of clause (l), (x)
Sunstone and the Borrower are in compliance with the provisions of Article V,
(y) there is no change in the management or control of Sunstone or the Borrower,
and (z) the Borrower and Sunstone are in compliance with the provisions of
Section 8.14(xiii).
(b) The Borrower shall not and shall not permit any of its
Subsidiaries to effect, enter into, consummate or suffer to exist any Asset
Sale(s) of any Hotel(s) generating proceeds aggregating more than twenty-five
percent (25%) of the value of the Hotels owned by the Borrower, its Subsidiaries
as at the Closing Date and shown listed on Schedule 5.22(a) and Schedule
5.22(b).
94
102
(c) Neither the Borrower nor Sunstone shall sell or otherwise
dispose of, or factor at maturity or collection, or permit any of its
Subsidiaries to sell or otherwise dispose of, or factor at maturity or
collection, any accounts receivable.
8.5. Limitations on Development, Construction, Renovation and
Purchase of Hotels. Neither Sunstone nor the Borrower shall or shall permit any
of their respective Sub sidiaries to (a) engage in the development, construction
or renovation of any Hotels with respect to which the cost to complete the same
shall at any time exceed $25,000,000 for all such development, construction and
renovation in the aggregate, or (b) engage in the development or construction of
Hotels (without regard to whether the same is permitted under clause (a) above)
or enter into any agreements to purchase Hotels or other assets, unless
Sunstone, the Borrower or such Subsidiary (as applicable) at all times has
available sources of capital equal to the total cost to complete such
development or construction and to pay in full the cost of the purchase of such
Hotels or other assets (to the extent that the payment of such cost of purchase
constitutes a recourse obligation of Sunstone, the Borrower or its Subsidiary),
which available sources of capital may include the Available Credit to the
extent that the Borrower may borrow the same for the purposes required.
8.6. Change in Nature of Business or in Capital Structure. (a)
Neither Sunstone nor the Borrower shall make, or shall permit any of its
respective Subsidiaries to make, any material change in the nature or conduct of
its business as carried on at the date hereof.
(b) Neither Sunstone nor the Borrower shall make, or shall
permit any of its Subsidiaries 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, formation or
operating agreement, partnership agreement or other equivalent documents other
than for changes or amendments which in the aggregate have no Material Adverse
Effect.
8.7. Modification of Material Agreements. Neither Sunstone nor
the Borrower shall, or shall permit any of its respective Subsidiaries to,
alter, amend, modify, rescind, terminate, supplement or waive any of its
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, it shall not be a default under this Section
8.7 if all such failures in the aggregate would have no Material Adverse
95
103
Effect; and provided, further, that in the event of any breach or event of
default by a Person other than Sunstone, the Borrower or any of their respective
Subsidiaries, the Borrower shall promptly notify the Administrative Agent of any
such breach or event of default and take or cause to be taken 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.
8.8. Accounting Changes. Neither Sunstone nor the Borrower
shall make, nor permit any of their respective 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.
8.9. Transactions with Affiliates. Neither Sunstone nor the
Borrower shall, or shall permit any of their respective Subsidiaries, 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 Sunstone, the Borrower and their respective 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 Sunstone's,
the Borrower's or such Subsidiary's business, and (ii) upon fair and reasonable
terms no less favorable to Sunstone, the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.
8.10. Adverse or Speculative Transactions. Neither Sunstone
nor the Borrower shall, or shall permit any of their respective Subsidiaries to,
engage in any transaction involving contracts for commodity options or futures
contracts other than Interest Rate Contracts.
8.11. Environmental Matters. (a) Neither Sunstone nor the
Borrower shall, or shall permit any of their respective Subsidiaries 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 Sunstone, the Borrower or any of their
respective Subsidiaries.
(b) Neither Sunstone nor the Borrower shall, or shall permit
any of their respective Subsidiaries, or, to the extent practicable, authorize
any other Person to, dispose or arrange for the disposal of any Hazardous
Material on behalf of Sunstone, the Borrower or any of their respective
Subsidiaries except in material compliance with all applicable Environmental
Laws currently and hereinafter in effect.
96
104
8.12. Hotels. Neither Sunstone nor the Borrower shall, or
shall permit their respective Subsidiaries to, acquire or own a Hotel or any
interest therein except for Hotels owned or leased by the Borrower or any of its
direct or indirect wholly-owned Subsidiaries as (i) shall each meet the criteria
set forth in clauses (C), (E), (F), (G), (H) and (I) of subparagraph (i) of the
definition of "Eligible Hotel" and (ii) shall, collectively, meet each of the
following criteria:
(A) not more than ten percent (10%) of the aggregate
number of guest rooms, and not more than ten percent
(10%) of the aggregate amount of the Borrower's
Investment, in all Hotels are in Hotels located in
whole or in part on land leased to the Borrower or
its Subsidiary; and
(B) not more than twenty-five percent (25%) of the
aggregate number of all guest rooms in all such
Hotels shall be located outside of the Western
States.
8.13. Management Continuity. The Borrower acknowledges that
the Lenders have made their determination to enter into this Agreement and the
transactions contemplated herein on the basis of reliance upon the experience,
expertise and reputation of Alter as an expert in the ownership and asset
management of Hotels, and, except with the written consent of the Super Majority
Lenders, the Borrower will not cause, suffer or permit any material change in
the management responsibilities, functions or activities of Alter with respect
to Sunstone, the Borrower, the Operating Lessee or the Manager, provided, that,
in the event of death or incapacitation of Alter, a replacement management team
or teams shall be appointed for Sunstone, the Borrower, the Operating Lessee and
the Manager, such team or teams to be (i) proposed by Sunstone, the Borrower,
the Operating Lessee and the Manager (as applicable) within 120 days of the
death or incapacity of Alter, and (ii) approved by the Super Majority Lenders in
their sole and absolute discretion.
8.14. Investments. Neither Sunstone nor the Borrower shall, or
shall permit any of their respective Subsidiaries to, make or suffer to exist
any Investments (including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or Unconsolidated Entity or to become or remain a partner in any
partnership or joint venture or Unconsolidated Entity, or to make any
Acquisition of any Person, except:
(i) obligations of, or fully guaranteed by, the United
States of America or any agency thereof;
97
105
(ii) commercial paper rated A-1 or better by S&P or P-1 or
better by Moody's;
(iii) demand deposit accounts maintained in the ordinary
course of business;
(iv) certificates of deposit issued by and time deposits
with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000;
(v) Investments in Hotels permitted hereunder;
(vi) Investments in a Person that is, or upon the making
of such Investment becomes, a Subsidiary of the
Borrower (but all Investments by such Person are
subject to the limitations contained in this
Agreement);
(vii) Investments in unimproved land that is under
development for operation of a Hotel or with respect
to which such Hotel development is planned to
commence within twelve months of the acquisition of
such land;
(viii) other Investments in unimproved land not to exceed at
any time, in the aggregate, $5,000,000;
(ix) Stock or Stock Equivalents received in settlement of
liabilities created in the ordinary course of
business;
(x) Stock or Stock Equivalents in REITs received in
exchange for Hotels;
(xi) Indebtedness of a Person to the Borrower or to a
Subsidiary of the Borrower that is secured by a Lien
on one or more Hotels owned by such Person, which
Hotels (A) were previously owned by the Borrower or a
Subsidiary of the Borrower or (B) the Borrower
reasonably expects to acquire (through trustee's
sale, foreclosure, deed in lieu of foreclosure or
otherwise), provided, however, that the aggregate
amount of all Investments permitted under this clause
(xi) shall not at any time exceed an amount equal to
five percent (5%) of the Borrower's Investment in all
Hotels;
(xii) Investments in Unconsolidated Entities approved by
the Requisite Lenders; and
98
106
(xiii) Investments in Real Estate other than Hotels,
provided that (A) such Investments do not, in the
aggregate, exceed ten percent (10%) of the Total
Assets of Sunstone or (B) the Borrower intends to
convert such Real Estate into Hotels, provided the
Borrower (1) so notifies the Administrative Agent
within ninety (90) days after the date of such
acquisition and (2) commences construction of such
conversion within twenty-four (24) months after the
date of such acquisition.
8.15. Liens. Neither Sunstone nor the Borrower shall, or shall
permit any of their respective Subsidiaries to, create, incur or suffer to exist
any Lien on any of their assets or property, except:
(i) Permitted Liens; and
(ii) Liens encumbering Hotels securing Indebtedness
otherwise permitted under this Agreement, provided
that such Indebtedness, plus any other Indebtedness
secured by a Lien on such Hotel or Hotels), is in an
amount not exceeding seventy percent (70%) (or
seventy-five percent (75%) in the case of
Non-Recourse Indebtedness) of the value of the Hotel
or Hotels that secure such Indebtedness.
8.16. Disposition of Eligible Hotels. (a) From and after the
Trigger Date, neither Sunstone nor the Borrower shall cause, suffer or permit a
Disposition of or with respect to, an Eligible Hotel or Eligible Hotel Owner,
except in accordance with the provisions of this Section 8.16.
(b) Not less than thirty (30) days prior to any Disposition,
the Borrower shall deliver to the Administrative Agent notice of such proposed
Disposition, together with a description thereof and copies of any contract,
letter of intent, or other documents entered into with respect to such
Disposition. If any such contract, letter of intent or other document is entered
into with respect to such Disposition subsequent to the delivery of such notice,
the Borrower shall promptly furnish copies thereof to the Administrative Agent.
(c) Provided no Event of Default has occurred that is
continuing, the Disposition set forth in the Borrower's notice may be
consummated upon payment to the Administrative Agent of a principal prepayment
of the Loans in an amount sufficient to reduce the sum of (i) the Principal
Balance and (ii) the Facility Letter of Credit Obligations to the lesser of (A)
the Commitments or (B) the Borrowing Base (determined without including in the
99
107
Eligible Hotels the Hotel or Hotels that are the subject of such Disposition).
8.17. Operating Leases and Management Agreements. Neither
Sunstone nor the Borrower nor any of their respective Subsidiaries shall cause,
permit or suffer (i) the modification, amendment, cancellation, termination,
extension or assignment of any Operating Lease or Management Agreement, any
guaranty of any Operating Lease or Management Agreement, or any security
agreement, pledge agreement or other collateral securing any obligations under
any Operating Agreement, Management Agreement or any such guaranty or (ii) any
release of the obligations of any Person under any of the foregoing.
8.18. ERISA Plan Assets. Neither Sunstone nor the Borrower
shall, or shall permit any of their respective 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 Sunstone, the Borrower or any Subsidiary.
ARTICLE IX
EVENTS OF DEFAULT
9.1. 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 and (except to the extent that the provisions of this
Section 9.1 or the provisions of any other Loan Document provide no
grace or cure period, or a xxxxxxx xxxxx or cure period, therefor) such
failure shall remain unremedied for thirty (30) days after the earlier
of the date on which (A) a Responsible Officer of the Borrower becomes
aware of such failure or (B)
100
108
written notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender, unless an additional period of time
is necessary to cure such failure, in which event such 30-day period
shall be extended (but not longer than an additional 30 days) for as
long as the Borrower is diligently pursuing such cure; or
(d) (i) There shall occur any acceleration of the maturity
date of any Indebtedness (other than Non-Recourse Indebtedness) of
Sunstone, the Borrower or any of their respective Subsidiaries; or (ii)
there shall occur any acceleration of the maturity date of any
Non-Recourse Indebtedness of Sunstone, the Borrower or any of their
respective Subsidiaries in excess of $20,000,000 in the aggregate; or
(iii) there shall occur any default or event of default, after
expiration of any applicable notice and cure period, under any document
or instrument executed or delivered in connection with any Indebtedness
(other than Non-Recourse Indebtedness) of Sunstone, the Borrower or any
of their respective Subsidiaries, in excess of $1,000,000 in the
aggregate; or (iv) there shall occur any default or event of default,
after expiration of any applicable notice and cure period, under any
document or instrument executed or delivered in connection with any
Non-Recourse Indebtedness of Sunstone, the Borrower or any of their
respective Subsidiaries in excess of $20,000,000 in the aggregate.
(e) Sunstone, the Borrower or any of their respective
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
Sunstone, the Borrower or any of their respective 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 Sunstone, the Borrower or any of their respective Subsidiaries
(but not instituted by it), either such proceedings shall remain
undismissed or unstayed for a period of sixty (60) days or any of the
actions sought in such proceedings shall occur; or Sunstone, the
Borrower or any of their respective Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in
this subsection (e); or
101
109
(f) Any judgment or order for the payment of money exceeding,
either individually or in the aggregate with all such other judgments
or orders, $5,000,000 (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 ten (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 Requisite Lenders, has a reasonable possibility of
a liability, deficiency or waiver request of Sunstone, the Borrower or
any ERISA Affiliate, whether or not assessed, exceeding, either
individually or in the aggregate with all such other ERISA Events that
shall have occurred, $5,000,000; or
(h) Sunstone, the Borrower or any of their respective
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 Sunstone, the Borrower or any of their respective 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, Sunstone, the Borrower or any of
their respective Subsidiaries are likely to incur Environmental
Liabilities and Costs in excess of, exceeding, either individually or
in the aggregate with all such other Environmental Liabilities and
Costs likely to be so incurred, $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
(j) Sunstone shall cease, for any reason, to maintain
its status as a REIT; or
(k) Sunstone shall cease at any time to be the sole
general partner of the Borrower; or
(l) Other than by reason of his death, Alter shall cease to
own any one or more of the following interests, free and clear of all
Liens: (A) a 51% controlling and voting interest in the Operating
Lessee, (B) a 51% controlling and voting interest in the Manager, or
(C) 51%
102
110
of the ownership interests in Sunstone and/or the Borrower
specified in the last sentence of Section 5.8;
(m) There shall be any material change in the management
responsibilities, functions or activities of Alter with respect to
Sunstone, the Borrower, the Operating Lessee or the Manager or, in the
event of his death or incapacitation, either (i) Sunstone, the
Borrower, the Operating Lessee or the Manager shall fail to propose a
replacement senior management team or teams, or (ii) the Super Majority
Lenders shall not approve any proposed replacement senior management
team, in each case pursuant to and in accordance with Section 8.13
hereof; or
(n) Any provision of any Guaranty delivered by Sunstone, Alter
or Xxxxxxx Xxxxxxxxx shall for any reason cease to be valid and binding
on the Guarantor party thereto, or such Guarantor shall so state in
writing; or
(o) The Borrower shall fail to satisfy any of the requirements
set forth in Section 3.4(b) within seventy-five (75) days of the
Trigger Date or any of the requirements set forth in Section 3.4(c)
within 135 days of the Trigger Date; or
(p) Any default shall occur under the provisions of
Section 8.17; or
(q) Any "Event of Default" (as defined in any other
Loan Document) shall occur.
9.2. Remedies. (a) If there shall occur and be continuing any
Event of Default, the Administrative Agent (i) shall at the request, or may with
the consent, of the Requisite Lenders by notice to the Borrower, declare the
obligation of each Lender to make Loans and of the Issuing Bank to issue
Facility Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Requisite 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 Section 9.1(e) above, (A) the
obligation of each Lender to make Loans and of the Issuing Bank to issue
Facility Letters of Credit shall automatically be terminated and (B) the Loans,
all such interest and all such amounts and Obligations shall automatically
become and be due and
103
111
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 under any of
the Loan Documents or otherwise provided by applicable law.
(b) If the Administrative Agent exercises any rights or
remedies pursuant to Section 9.2(a), the Administrative Agent shall not, without
the consent of the Requisite Lenders, rescind the exercise of said rights or
remedies.
ARTICLE X
THE ADMINISTRATIVE AGENT
In performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as agent for the Lenders and does not
assume and shall not be deemed to have assumed any obligation or relationship of
agency, trustee or fiduciary with or for the Borrower. The provisions of this
Article X are solely for the benefit of the Administrative Agent and the
Lenders, and the Borrower shall have no obligations to the Administrative Agent
or the Lenders under this Article X, nor shall the Borrower have any right to
rely on or enforce any of the provisions of this Article X. The provisions of
this Article X may be amended without the consent or approval of the Borrower.
In the event any right or obligation of the Borrower under the terms of this
Article X conflicts with the rights and obligations of the Borrower under the
terms of any other Article of this Agreement, the rights and obligations of the
Borrower under such other Article shall govern.
10.1. Authorization and Action. (a) Each Lender hereby
appoints and authorizes the Administrative Agent to take such action as agent
(including, if applicable, collateral 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.
(b) Without limiting the generality of the foregoing, the
Administrative Agent shall have the sole and exclusive right and authority (i)
to act as the disbursing and collecting agent for the Lenders with respect to
all payments and collections
104
112
arising in connection with this Agreement and the other Loan Documents or with
respect to any collateral or security hereafter given with respect to the
Obligations ("Collateral"), (ii) to execute and deliver each Security Document
relating to the Collateral and accept delivery of each such Security Document
delivered by the Borrower or any Eligible Hotel Owner, (iii) to act as
collateral agent for the Lenders for purposes of the perfection of all Liens
created by the Security Documents and all other purposes stated therein; (iv) to
manage, supervise and otherwise deal with the Collateral; (v) to take such
action as is necessary or desirable to maintain the perfection and priority of
the Liens created or purported to be created by the Security Documents; and (vi)
except as may be otherwise specifically restricted by the terms of this
Agreement or any other Loan Document, to exercise all remedies given to the
Administrative Agent or the Lenders with respect to the Collateral under the
Loan Documents relating thereto, applicable law or otherwise.
(c) The Administrative Agent is hereby authorized on behalf of
all Lenders, without the necessity of any notice to or further consent from any
Lender, from time to time prior to an Event of Default, to take any action with
respect to any Collateral or Loan Document which may be necessary to perfect and
maintain perfected the Administrative Agent's Liens upon Collateral granted
pursuant to the Loan Documents. The Administrative Agent may make, and shall be
reimbursed by the Lenders (in accordance with their Ratable Portions), to the
extent not reimbursed by the Borrower, for, Protective Advance(s) during any one
calendar year with respect to each Eligible Hotel up to the sum of (i) amounts
expended to pay real estate taxes, assessments and governmental charges or
levies imposed upon such Eligible Hotel, (ii) amounts expended to pay insurance
premiums for policies of insurance related to such Eligible Hotel, and (iii) One
Hundred Thousand Dollars ($100,000). Protective Advances in excess of said sum
during any calendar year for any Eligible Hotel shall require the consent of the
Requisite Lenders.
(d) Each Lender hereby authorizes the Administrative Agent to
execute and deliver the release of any Lien held by the Administrative Agent for
the benefit of the Lenders against:
(i) any Eligible Hotel, upon any Disposition thereof in
accordance with the provisions of Section 8.16; and
(ii) all of the Collateral, upon final and indefeasible
payment in full of the Obligations and termination of
this Agreement.
105
113
(e) 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 Requisite 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 (i) each
notice and (ii) to the extent the Administrative Agent grants any consents,
approvals, disapprovals or waivers to the Borrower pursuant to the directions of
the Requisite 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.
10.2. 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 wilful
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 11.7; (ii) may rely
on the Register to the extent set forth in Section 11.7(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
106
114
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.
10.3. Bank One and Affiliates. With respect to its Commitment,
the Loans made by it and each Note issued to it, Bank One 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 expressly indicated, include Bank One in its
individual capacity. Bank One 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 Bank One were not the Administrative Agent and without
any duty to account therefor to the Lenders.
10.4. 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 V 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.
10.5. Decisions Following Event of Default; Enforcement. After
the occurrence of an Event of Default, the following agreements among the
Lenders shall apply and shall control over any contrary agreements among the
Lenders provided in any other Article of this Agreement:
(a) The Administrative Agent shall, in consultation with the
Co-Agents, determine in its sole discretion whether and in what manner and to
what extent any and all rights and remedies under the Loan Documents, at law or
in equity shall be exercised in respect of an Event of Default and shall be
authorized to take any actions in connection therewith and shall keep the
Lenders reasonably informed as to such actions, provided, however, that the
Administrative Agent shall not without the consent of the
107
115
Requisite Lenders, and will, upon direction from the Requisite Lenders, take any
of the actions described in subparagraph (b).
(b) The Administrative Agent may, upon authorization from, and
shall upon direction from, the Requisite Lenders, take one or more of the
following actions:
(i) commence any one or more of the following (each, an
"Enforcement Action") on behalf of the Lenders: (A)
the filing of any complaint to foreclose against any
of the Collateral; (B) the giving or publication of
any legal notice required to exercise any power of
sale, UCC sale, or non- judicial process authorized
by law to realize on the Collateral or any portion
thereof; (C) the filing of any complaint for
collection of the Notes; (D) the filing of any
complaint for enforcement or collection under any
indemnity agreement, Guaranty, or similar
undertaking, if any, given by a Guarantor or an
indemnitor in connection with the Loan Documents or
the Obligations; (E) the filing of any complaint or
the taking of any other action by which a receiver
for any of the Collateral or for the rents, income,
profits, or proceeds thereof is to be appointed or by
which the Administrative Agent or the Lenders would
become mortgagee in possession, (F) the making of any
written demand that the Collateral or any material
portion thereof be conveyed and/or delivered to the
Lenders in lieu of foreclosure thereon, or the
acceptance by the Administrative Agent of any
conveyance or delivery thereof on account of any
default under the Loan Documents, (G) the filing, or
the joining in any filing, of a petition for
involuntary bankruptcy of the Borrower, any Guarantor
or any Eligible Hotel Owner, under the Bankruptcy
Code or any similar proceeding under federal or state
law; or (H) the commencement of any adversary
proceeding (within the meaning of the Bankruptcy
Code) in any bankruptcy case commenced by or against
the Borrower, any Guarantor or any Eligible Hotel
Owner;
(ii) acquire the Borrower's or any Eligible Hotel Owner's
rights, title, and interests in any Collateral at a
foreclosure sale (whether pursuant to judicial or
non-judicial foreclosure or power of sale) by bidding
up to the amount of the Obligations (as determined in
the judgment of foreclosure where applicable and
otherwise as
108
116
determined by the records of the Administrative
Agent);
(iii) accept a conveyance and assignment of all or
substantially all of the Borrower's or any Eligible
Hotel Owner's rights, title and interests in any
Collateral in lieu of foreclosure;
(iv) in consideration of a conveyance and assignment of
the nature described in (iii) immediately above,
discontinue any and all Enforcement Actions and
release from, or otherwise agree not to pursue, the
Borrower, any Guarantor or any Eligible Hotel Owner
with respect to, all or any part of their respective
obligations under any of the Loan Documents; and/or
(v) engage in any other modification of the Obligations
or Loan Documents or any other judicial or
non-judicial arrangement relating to the Loan
Documents which is the substantial equivalent of any
one or more of the foregoing actions.
(c) In the event that the Administrative Agent or its Designee
shall be appointed as a receiver or a mortgagee in possession of any Collateral
as a result of any action taken pursuant to this Section 10.5, any decisions,
actions or inactions by the Administrative Agent with respect to the management,
leasing, operation, or administration of such Collateral shall be subject to the
provisions of Section 10.6.
10.6. Acquisition of Collateral. (a) In the event that, as a
result of any Event of Default and the pursuit of any Enforcement Action, any of
the Collateral is acquired or to be acquired on behalf of the Lenders, the
provisions of this Section 10.6 shall govern the manner in which the Lenders
shall acquire, own, operate, manage, administer, lease, and dispose of such
Collateral.
(b) The Administrative Agent may, in its sole discretion,
elect to hold title to the Collateral in an Affiliate of the Administrative
Agent (the "Designee") which shall at all times following such acquisition be
the designee of the Administrative Agent for the benefit of the Lenders with
respect to the ownership, operation, management, administration, leasing, and
disposition of the Collateral.
(c) As soon as reasonably practicable after the Requisite
Lenders have approved the acquisition of any Collateral pursuant to Section
10.5, the Administrative Agent shall, in
109
117
consultation with the Co-Agents, prepare a "Post-Foreclosure Plan" which shall,
among other things, contain (i) provisions by which operating budgets and
capital improvement budgets are developed by the Administrative Agent and
approved by the Requisite Lenders, (ii) provisions by which a Hotel management
company or companies will be selected for the Collateral, subject to the
approval of the Requisite Lenders and (iii) provisions for establishing and
revising from time to time, upon approval of the Requisite Lenders, a plan for
the marketing and disposition of the Collateral. Upon approval of the
Post-Foreclosure Plan by the Requisite Lenders, the Administrative Agent shall
be authorized to take (or elect not to take) any and all actions which the
Administrative Agent would take (or not take) if it were the sole owner of the
Collateral (provided, such actions are consistent with the Post-Foreclosure
Plan), using the same diligence and care as customarily used by the
Administrative Agent and/or its affiliates with respect to similar property held
for its own account, subject only to the limitations, consents, approvals, and
directions expressly provided for in the Post- Foreclosure Plan. Except as
otherwise provided in a Post- Foreclosure Plan approved by the Requisite
Lenders, the Administrative Agent shall not sell or otherwise dispose of any
Collateral acquired by it or make any purchase money loan in connection with any
sale of such Collateral, except with the prior approval of the Requisite
Lenders.
(d) From time to time, but not less frequently than quarterly,
the Administrative Agent shall (to the extent funds are available for such
purpose) make distributions out of Gross Revenues to the Lenders, after payment
of the following, in the following order of priority:
(i) all actual, out-of-pocket costs and expenses,
including attorneys' and paralegals' fees and
expenses, filing fees, court costs, title charges,
appraisal fees, environmental evaluation costs, and
other inspection fees, in each case payable to third
parties, incurred by the Administrative Agent on
behalf of the Lenders in connection with any actual
or contemplated Enforcement Action, or on account of
any actual or potential default by any Loan Party
under any of the Loan Documents or in connection with
any of the Collateral, to the extent not previously
reimbursed by the Borrower or otherwise;
(ii) any Protective Advances made by the Administrative
Agent;
(iii) amounts previously advanced by one or more Lenders on
account of any default by any other Lender in
110
118
making any payment or contributions of funds required
under this Agreement, the Loan Documents or any
agreement hereafter entered into among the Lenders
with respect to the Collateral;
(iv) fees payable to the Administrative Agent; and
(v) amounts of any reserves to be maintained in
accordance with the Post-Foreclosure Plan.
In no event shall the Administrative Agent be required to make any distributions
prior to approval of a Post-Foreclosure Plan by the Requisite Lenders; provided,
that any funds which would otherwise be available for distribution shall be
maintained in a separate, interest-bearing account for the benefit of the
Lenders and shall be distributed promptly upon such approval of a Post-
Foreclosure Plan. In addition, promptly after the closing of any sale or
disposition of any Collateral, the Administrative Agent shall distribute any net
proceeds to the Lenders after payment in full of all amounts described above, to
the extent remaining unpaid through the time of such closing. If any sale shall
involve any purchase money financing, any purchase money deed of trust or
mortgage taken in connection with the disposition of the Collateral shall name
the Administrative Agent, as the agent for the Lenders, as the beneficiary or
mortgagee. In such case, the Administrative Agent and the Lenders shall be bound
by the provisions of this Agreement with respect to such purchase money deed of
trust or mortgage defining the rights of the Administrative Agent and the
Lenders in the same Ratable Portions as provided herein, insofar as this
Agreement is appropriate or applicable, and upon request of the Administrative
Agent, the Lenders shall execute and deliver to the Administrative Agent such
agreements as the Administrative Agent reasonably may require to confirm or
conform this Agreement to the terms and circumstances applicable to such
purchase money financings.
(e) No Lender shall be entitled to sell, assign, convey,
pledge, hypothecate, encumber, or otherwise transfer all or any portion of its
ownership interest in the Collateral, except as provided in Section 11.7.
(f) The Administrative Agent, in such capacity, shall have no
duty or obligation to advance any of its own funds to pay any expense or
discharge any obligation of the Lenders or attendant to the Collateral, and the
Administrative Agent's duties to discharge its responsibilities under this
Section 10.6 shall be limited by the availability of funds received from the
Collateral or the Lenders. In the event (i) the Administrative Agent shall at
any time have insufficient funds from the Collateral to pay any expense or
obligation in connection with the Collateral, or (ii) the necessary funds are
not provided by
111
119
the Lenders after a request therefor by the Administrative Agent, then the
Administrative Agent shall take such actions as it deems appropriate to protect
and preserve the Collateral to the extent available funds allow, but the
Administrative Agent shall not be responsible for any loss or damage to the
Collateral or the Lenders, as a result of such unavailability of funds or the
Administrative Agent's inability to act as a result thereof.
10.7. Indemnification. The Lenders agree to indemnify the
Administrative Agent and its 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 (or if no Notes are at the time
outstanding, ratably according to the respective amounts of the aggregate of
their Commitments, determined at the time indemnification is sought hereunder),
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
Admini strative 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 wilful 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
(including without limitation amounts incurred under Section 10.6), to the
extent that the Administrative Agent is not reimbursed for such expenses by the
Borrower or another Loan Party.
10.8. 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 Requisite Lenders either (a) for good cause or (b) at any
time that the aggregate amount of the Commitments held by the Administrative
Agent and its Affiliates is less than $20,000,000. Furthermore, in the event
that at any time the Administrative Agent assigns its entire interest as a
Lender hereunder to an Eligible Assignee
112
120
as permitted by Section 11.7 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
Requisite Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Requisite Lenders, and shall
have accepted such appointment, within 30 days after the retiring Administrative
Agent's giving of notice of resignation or the Requisite 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 X 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 XI
MISCELLANEOUS
11.1. 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 Requisite 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, subject to Sections 11.1(b), (c) and (d) 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, in which are, in each case, purely administrative in nature. The
parties hereto agree that any non-material 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.
(b) Notwithstanding anything set forth in subparagraph
(a) above, no amendment, waiver or consent shall, unless in
113
121
writing and signed by all the Lenders do any of the following: (i) waive any of
the conditions specified in Article III except as otherwise provided therein;
(ii) increase the Commitments of the Lenders or subject the Lenders to any
additional obligations; (iii) reduce the principal of, or interest on, the Loans
or any fees or other amounts payable hereunder; (iv) 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 or waive any Default or Event of Default under
Section 8.1(a); (v) change the percentage of the Commitments or the aggregate
unpaid principal amount of the Loans; (vi) waive any of the financial covenants
specified in Article VI; (vii) waive any of the covenants in Section 8.4; (viii)
change the definitions of Available Credit, Borrowing Base, Borrowing Base
Adjusted NOI, Eligible Hotels, Qualified Lease, Ratable Portion or Super
Majority Lenders (provided that the foregoing shall not include changes in any
defined terms used in such definitions); (ix) release any Loan Party from its
obligations under any Note or any Guaranty, (x) waive payment of any default
rate interest pursuant to Section 2.9(c); (xi) release any Collateral (except as
permitted under Section 10.1(c)); or (xii) amend this Section 10.1; and
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required
herein to take such action, affect the rights or duties of the Administrative
Agent under this Agreement or the other Loan Documents; and provided, further,
that no amendment, waiver or consent shall, unless in writing and signed by the
Issuing Bank in addition to the Lenders required herein to take such action,
affect the rights or duties of the Issuing Bank under this Agreement or the
other Loan Documents.
(c) Notwithstanding anything set forth in subparagraph (a)
above, no amendment, waiver or consent shall, unless in writing signed by the
Super Majority Lenders do any of the following: (i) change the definitions of
License, Manager, Operating Lessee or Required Lenders (provided that the
foregoing shall not include changes in any defined terms used in such
definitions); (ii) waive any of the covenants set forth in Section 9.13; or
(iii) waive any Default or Event of Default under Section 9.1(l) or (m).
(d) All communications from the Administrative Agent to the
Lenders requesting the Lenders' determination, consent, approval or disapproval
(i) shall be given in the form of a written notice to each Lender, (ii) shall be
accompanied by a description of the matter or thing as to which such
determination, approval, consent or disapproval is requested, or shall advise
each Lender where such matter or thing may be inspected, or shall otherwise
describe the matter or issue to be resolved, (iii) shall include, if reasonably
requested by a
114
122
Lender and to the extent not previously provided to such Lender, written
materials and a summary of all oral information provided to the Administrative
Agent by the Borrower in respect of the matter or issue to be resolved, and (iv)
shall include the Administrative Agent's recommended course of action or
determination in respect thereof. Each Lender shall reply promptly, but in any
event within ten (10) Business Days of receipt by such Lender of a 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.
11.2. Notices, Etc. All notices and other com munications
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 Xxxxx xx Xxxxxxxxxx, Xxxxx 000, Xxx Xxxxxxxx, Xxxxxxxxxx 00000,
Attention: Chief Financial Officer (Telecopy: (000) 000-0000); if to Xxxxx
Fargo, at its address at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx X. Xxxxxxx (Telecopy: (000) 000-0000); if to any other Lender,
at its Domestic Lending Office specified opposite its name on Schedule III; and
if to the Administrative Agent or the Issuing Bank, at its address at 000 Xxxxx
Xxxxxxx Xxxxxx, 00xx Xxxxx, XX0-0000, Xxxxxxx, XX 00000, Attention: Xxxxxxxx
Xxxxxxxxx (Telecopy: (000) 000-0000); 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 X shall not be effective until received by the Administrative Agent.
11.3. No Waiver; Remedies. No failure on the part of any
Lender or the Administrative Agent or the Issuing Bank 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
115
123
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.
11.4. Costs; Expenses; Indemnities. (a) The Borrower agrees to
pay on demand (i) all costs and expenses of the Administrative Agent, the
Lenders, the Issuing Bank and their respective Affiliates in connection with the
preparation, execution, delivery, administration, syndication, modification and
amendment of this Agreement, each of the other Loan Documents (including, if
applicable, Security Documents) and each of the other documents (including
documents delivered pursuant to Section 3.4 or Section 7.23) to be delivered
hereunder and thereunder, 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 of the Lenders with
respect thereto and with respect to advising as to their rights and
responsibilities under this Agreement and the other Loan Documents, (ii) all
costs and expenses of the Administrative Agent, the Issuing Bank 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, the Issuing Bank 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 and (iii) with respect
to each Limited Guaranty (if any) hereafter executed and delivered to the
Administrative Agent and accepted by the Lenders, an administrative fee (for the
account of the Lenders) in the amount of $5,000.00. In the event of any court
proceedings, court costs and attorneys' fees shall be set by the court and not
by jury and shall be included in any judgment obtained by the Administrative
Agent, the Issuing Bank or any Lender. Notwithstanding the foregoing, the
Borrower's liability to pay the fees and out-of-pocket expenses of counsel to
the Lenders in connection with the preparation, execution and delivery of the
Loan Documents shall be limited to payment of a sum not to exceed $42,500.00,
but such limitation shall not apply to any Loan Documents prepared, executed or
delivered after the Closing Date or to the fees and expenses of Xxxxxxx & Xxxxx.
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, the Issuing Bank and each Lender and their respective
Affiliates, and the directors, officers, employ ees, 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
116
124
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 in 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 5.18 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 11.4(b) to an Indemnitee with 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 9.2 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, the
Issuing Bank 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, the Issuing
Bank and the Lenders for any broker, finder or consultant with
117
125
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 11.4) 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.
11.5. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each Lender and the Issuing Bank is hereby
authorized by the Borrower 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 or the Issuing Bank 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 or the Issuing Bank shall have
made any demand under this Agreement or any Note or any other Loan Document and
although such Obligations may be unmatured, provided, however, that the Lenders
and the Issuing Bank agree (for their sole benefit and not with the Borrower)
that, at any time that the Obligations are secured, no such right of set off
(including, without limitation, any rights under Section 2.14(b)) shall be
exercised without the consent of all Lenders and the Issuing Bank. Each Lender
and the Issuing Bank agree 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 and the Issuing Bank under this Section
are in addition to the other rights and remedies (including, without limitation,
other rights of set-off) which such Lender and the Issuing Bank may have.
11.6. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Lender that
such Lender has executed it and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Administrative Agent, the Issuing Bank and 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.
11.7. Assignments and Participations. (a) Subject to
the provisions of Section 11.7(i), each Lender may sell,
118
126
transfer, negotiate or assign to one or more other Lenders or Eligible Assignees
all or a portion of its Commitments, 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 Commitment and Loans being assigned pursuant to each such assignment shall
in no event be less than $10,000,000, (ii) the Administrative Agent shall have
approved such assignment, which approval shall not be unreasonably withheld,
(iii) only at such times as (A) the aggregate amount of the Commitments held by
Bank One, Credit Lyonnais, Xxxxx Fargo and their respective Affiliates is less
than $67,000,000 and (B) no Default or Event of Default has occurred that is
continuing, the Borrower shall have approved such assignment, which approval
shall not be unreasonably withheld, and (iv) each assignee hereunder shall also
be an Eligible Assignee; and provided further that any Lender may assign any
interest in the Commitment and the Loans to an Affiliate of the assigning Lender
without approval by the Administrative Agent or the Borrower. 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
119
127
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 pursu ant hereto or
thereto; (iii) such 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 7.11 (or if no such statements have been delivered, the
financial statements referred to in Section 5.5 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 Agree ment; (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 Administrative Agent shall maintain at its address
referred to in Section 11.2 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 Commitments of and 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
120
128
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. 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 Commitments assumed by
it pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained Commitments hereunder, new Notes to the order of the assigning Lender
in an amount equal to the Commitments 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 E hereto.
(e) In addition to the other assignment rights provided in
this Section 11.7, each Lender may 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
without notice to or consent of the Borrower or the Administrative Agent;
provided, however, that no such assignment shall release the assigning 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 its
Commitment, the Loans owing to it and the Note 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 (including, without limitation, its
Commitment) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of
121
129
such obligations, (iii) such Lender shall remain the holder of such Note 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 2.11, 2.13 and 2.15 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 2.11, 2.13 or 2.15, 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.
(h) An assignment of all or any portion of its Commitment,
Loans or Note by a Lender which is the Issuing Bank shall not constitute an
assignment of any of its rights or obligations as the Issuing Bank.
(i) Each of Bank One, Credit Lyonnais and Xxxxx Fargo agrees
that, prior to the first anniversary of the Closing Date, it (the "Selling
Lender") shall not sell, assign, transfer or grant a participation interest in
(any of the foregoing being hereinafter referred to as a "Sale Transaction") all
or any portion of the Selling Lender's interest in its Commitment, Loans or Note
(the interest to be sold in a Sale Transaction being herein referred to as the
"Sale Interest") to any Person (the "Purchaser") unless each of such other two
Lenders (the "Non- selling Lenders") is also given the right (but without any
obligation to do so) to participate in such Sale Transaction and to sell to such
Purchaser a portion of the Non-selling Lender's interest in its Commitment,
Loans and Note, equal to one-third (1/3) of the Sale Interest, for consideration
equal to one-third (1/3) of the consideration to be paid by such Purchaser to
the Selling Lender, and otherwise on all of the terms, provisions and conditions
of the Sale Transaction between the Selling Lender and such Purchaser. Prior to
any Sale Transaction, the Selling Lender shall give each of the Non-selling
Lenders not less than seven (7) days' prior written notice (the "Sale Notice")
of such Sale Transaction, including a description of the Sale Interest, the
consideration to be paid therefor and all of the other terms and conditions
thereof. If a Non-selling Lender, within seven (7) days of its receipt of the
Sale Notice, gives to the Selling Lender written notice that the Non-selling
Lender elects to participate in such Sale Transaction, then, provided such Sale
Transaction is consummated within thirty (30) days of the Sale Notice, the
Non-selling Lender shall, at the same time at which
122
130
the Selling Lender consummates its Sale Transaction with the Purchaser, likewise
consummate a Sale Transaction with the Purchaser on the same terms and
conditions, and the Sale Interest to be sold by the Selling Lender shall be
reduced by the one-third (1/3) interest sold by the Non-selling Lender, such
that the total interest in the Commitments, Loans and Notes being acquired by
such Purchaser equals but does not exceed the Sale Interest. If a Non-selling
Lender does not, within such seven (7) day period, give notice of its election
to participate in the Sale Transaction, the Selling Lender may proceed to sell
the Sale Interest as set forth in its Sale Notice (except to the extent that the
other Non-selling Lender may have exercised its right to participate in the Sale
Transaction). The failure of a Non- selling Lender to elect to participate in
the Sale Transaction shall not give the other Non-selling Lender the right to
sell an additional one-third (1/3) interest, and each Non-selling Lender's right
shall be limited to a sale of an interest equal to one-third (1/3) of the total
Sale Interest. If the Sale Transaction with the Purchaser is not consummated
within thirty (30) days of the Sale Notice, the Sale Transaction may not be
consummated unless the Selling Lender gives the Non-selling Lenders another Sale
Notice as provided above.
11.8. 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 Arizona. 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.
11.9. 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, Arizona State or United States
District Court sitting in Phoenix, Arizona, 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
123
131
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 11.9 shall affect the
right of the Administrative Agent, the Issuing Bank, 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.
11.10. 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.
11.11. Execution in Counterpart. 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.
11.12. Entire Agreement. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder, and the agreements referred to in Section 2.4(b) embody the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof.
11.13. Confidentiality. Each of the Lenders and the
Administrative Agent agrees 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, 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.
11.14. WAIVER OF RIGHTS TO TRIAL BY JURY. EACH PARTY
TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
124
132
UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
11.15. Binding Arbitration. (a) All controversies and claims
of any nature arising directly or indirectly out of this Agreement or any other
Loan Documents, including, without limitation, the Guaranties, shall at the
written request of any party be arbitrated pursuant to the applicable rules of
the American Arbitration Association. The arbitration proceeding shall be
conducted in the State of Arizona. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. Notwithstanding
any choice of law provision in this Agreement or in any other Loan Document, the
Federal Arbitration Act shall apply to the construction and interpretation of
this arbitration provision.
(b) A single arbitrator shall have the power to render an
award not to exceed $100,000. When any party files a claim in excess of this
amount, the arbitration decision shall be made by the majority vote of three
arbitrators. No arbitrator shall have the power to restrain any act of any
party.
(c) No provision of this Section 11.15 shall limit the right
of any party to exercise self-help remedies, to foreclose against any
Collateral, or to obtain any provisional or ancillary remedies (including but
not limited to injunctive relief or the appointment of a receiver) from a court
of competent jurisdiction. Without limitation of the foregoing, the
Administrative Agent may enforce its rights under a Deed of Trust by exercise of
the power of sale, judicial foreclosure or otherwise as permitted under
applicable law. The institution and maintenance of any such remedy shall not
constitute a waiver of the right to submit any controversy or claim to
arbitration. The statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding.
125
133
126
134
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.
SUNSTONE HOTEL INVESTORS, L.P.
By: Sunstone Hotel Investors, Inc.
its general partner
By: /s/ XXXXXX X. ALTER
-----------------------
Name: Xxxxxx X. Alter
Title:
BANK ONE, ARIZONA, NA
as Administrative Agent, Issuing
Bank and Lender
By: /s/ XXXXXXXX XXXXXXXXX
-----------------------
Name: Xxxxxxxx Xxxxxxxxx
Title:
CREDIT LYONNAIS NEW YORK BRANCH
as documentation agent and Lender
By: /s/ XXXXXX X. XXXXXXXX
-----------------------
Name: Xxxxxx X. Xxxxxxxx
Title:
XXXXX FARGO BANK, NATIONAL
ASSOCIATION
as compliance agent and Lender
By: /s/ XXXXX XXXXXXX
-----------------------
Name: Xxxxx Xxxxxxx
Title:
127
135
SCHEDULE II
COMMITMENTS
Lender Commitment
------ ----------
Bank One $ 33,333,333.34
Credit Lyonnais $ 33,333,333.33
Xxxxx Fargo $ 33,333,333.33
---------------
TOTAL: $100,000,000.00
===============
128
136
SCHEDULE III
APPLICABLE LENDING OFFICES AND
ADDRESSES FOR NOTICES
---------------------
Domestic Lending
Office and Address Eurodollar
Lender for Notices Lending Office
------ ----------- --------------
Bank One 000 Xxxxx Xxxxxxx Xxx. 000 Xxxxx Xxxxxxx Xxx.
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx Attn: Xxxxx Xxxxxx
AZ1-1328 AZ1-1328
Telecopy: (000)000-0000 Telecopy: (000)000-0000
Xxxxx Fargo 0000 Xxxx Xxxx Xxxxx 0000 Xxxx Xxxx Xxxxx
Xxxxx 000 Xxxxx 000
Xx Xxxxxxx, XX 00000 Xx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx Attn: Xxxxx Xxxxxxx
Telecopy: (000)000-0000 Telecopy: (000)000-0000
Credit 1301 Avenue of the 1301 Avenue of the
Xxxxxxxx Xxxxxxxx Xxxxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx Attn: Xxxxxx Xxxxxxxx
Telecopy: (000)000-0000 Telecopy: (000)000-0000
129
137
EXHIBIT A
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
___________________ ___, 19__
Reference is made to the Revolving Credit Agreement, dated as
of May 1, 1997, among Sunstone Hotel Investors, L.P., a Delaware limited
partnership (the "Borrower"), the financial institutions party thereto and Bank
One, Arizona, NA, as Administrative Agent for the financial institutions party
thereto (said Agreement, as it may be amended or otherwise modified from time
to time, being the "Credit Agreement", and capitalized terms not defined herein
but defined therein being used herein as therein defined).
______________________________ (the "Assignor") and
______________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the date hereof which represents the percentage interest specified on
Schedule I of all outstanding rights and obligations under the Credit Agreement
(including, without limitation, such interest in each of the Assignor's
outstanding Commitments, if any, the Obligations owing to it and the Notes held
by it). After giving effect to such sale and assignment, the Assignee's
Commitments (and the Commitments retained by the Assignor, if any) and the
amount of the Loans owing to the Assignee (and the Assignor, if any) will be as
set forth in Section 2 of Schedule I and will otherwise comply with the
requirements of Section 11.7(a).
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto or the execution, legality, validity,
enforceability, genuineness,
A-1
138
sufficiency or value of the Credit Agreement or any other Loan Document or any
other instrument or document furnished pursuant thereto; (iii) 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 the Credit Agreement or any other
Loan Document or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Notes referred to above and requests that the
Administrative Agent exchange such Notes for new Notes as follows: [specify
date of Notes, amounts, Assignee].
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 5.5 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor 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 the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; (v) represents and warrants that it
is an Eligible Assignee; and (vi) specifies as its Domestic Lending Office (and
address for notices) and Eurodollar Lending Office the offices set forth
beneath its name on the signature pages hereof[; and* (vii) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as
to the Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the
Assignee under the Credit Agreement and the Notes or such other documents as
are necessary to indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty].
4. Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered
_____________________________
* If Assignee is organized under the laws of a jurisdiction outside of the
United States.
A-2
139
to the Administrative Agent, together with an assignment processing fee in the
sum of $2,500 payable to and for the benefit of the Administrative Agent, for
acceptance and recording by the Administrative Agent. The effective date of
this Assignment and Acceptance shall be the date of acceptance thereof by the
Administrative Agent and, provided no Default or Event of Default exists, the
Borrower, unless otherwise specified on Schedule I hereto (the "Effective
Date").
5. Upon such acceptance by the Administrative Agent and, if
applicable, the Borrower and recording by the Administrative Agent, as of the
Effective Date (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations under the Credit Agreement of a Lender thereunder and (ii) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
6. Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and fees with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
be construed and interpreted in accordance with, the law of the State of
Arizona.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule I hereto.
A-3
140
Schedule I
to
Assignment and Acceptance
Dated _______________ __, 19__
Section 1.
Percentage Interest: _______________%
Section 2.
Assignee's Commitment: $_______________
Aggregate Outstanding Principal of
Loans Owing to Assignee: $_______________
Section 3.
Effective Date: _______________ __, 19__
[ASSIGNOR]
By:___________________________
Name:
Title:
[ASSIGNOR]
By:___________________________
Name:
Title:
A-4
141
Domestic Lending Office (and address
for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this ____ day
of ____________, 19__
BANK ONE, ARIZONA, NA, as
Administrative Agent
By:___________________________
Name:
Title:
[ONLY REQUIRED IF NO DEFAULT OR EVENT OF DEFAULT)
Accepted this ____ day
of ____________, 19__
SUNSTONE HOTEL INVESTORS, L.P.
By: Sunstone Hotel Investors, Inc.,
its general partner
By:___________________________
Name:
Title:
A-5
142
EXHIBIT B
[FORM OF]
BORROWING BASE CERTIFICATE
TO: Bank One, Arizona, NA, as Administrative Agent
FROM: Sunstone Hotel Investors, L.P.
DATE: ____________ __, 19__
Pursuant to the provisions of the Revolving Credit Agreement dated as of May 1,
1997, among Sunstone Hotel Investors, L.P. (the "Borrower"), the financial
institutions party thereto and Bank One, Arizona, NA, as Administrative Agent
for said financial institutions (said Agreement, as it may be amended or
otherwise modified from time to time, the "Credit Agreement"; and the terms
defined therein being used herein as therein defined), the undersigned hereby
certifies that the following information is true, complete and accurate as of
the close of business on _______________ __, 19__:
1. Schedule 1 attached hereto accurately and completely
sets forth, as of the date hereof (i) all Hotels owned or leased by the
Borrower and its Subsidiaries, (ii) the Borrowing Base Adjusted NOI for each
Eligible Hotel (and a total amount for all Eligible Hotels multiplied by five
(5)), (iii) with respect to each Seasoned Property that is an Eligible Hotel,
the Adjusted NOI for such Seasoned Property for the preceding four (4) Fiscal
Quarters divided by eleven percent (11%), (iv) with respect to each New
Property that is an Eligible Hotel, the Borrower's Investment in such New
Property, (v) the sum of the Aggregate Value of all Eligible Hotels (and 40% of
said amount), (vi) the Borrowing Base, (vii) those Hotels that do not meet the
requirements for Eligible Hotels (the remaining Hotels being Eligible Hotels)
and (viii) the Available Credit.
2. Each of the Eligible Hotels in Unencumbered and
otherwise meets the requirements for Eligible Hotels set forth in the Credit
Agreement. Submitted herewith, with respect to each such Eligible Hotel (to
the extent not previously delivered) are copies of the following:
(i) A description of such Hotel, including the age,
location and number of rooms or suites of such Hotel;
(ii) To the extent available, statistics with respect to
the occupancy of the Hotel, operating statements, and
an analysis of the revenue per
B-1
143
available room, in each case for the prior Fiscal
Year and the completed Fiscal Quarters of the current
Fiscal Year;
(iii) A copy of the most recent ALTA Owner's Policy of
Title Insurance (or commitment to issue such a policy
to the Borrower or its Subsidiary owning or to own
such Hotel) relating to such Hotel showing the
identity of the fee titleholder thereto and all
matters of record;
(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 with respect to such
Hotel;
(vi) A "Phase I" environmental assessment of such Hotel
[not more than 12 months old] 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 located on land leased pursuant to a
Qualified Lease, a copy of such Lease, including any
and all amendments thereto or modifications thereof;
and
(viii) From and after the Trigger Date, the Security
Documents and other documents required to be
delivered under the provisions of Section 3.4 of the
Credit Agreement.
3. Each of the Hotels individually (and all of the
Hotels collectively) that has been designated as an Eligible Hotel in this
Certificate satisfies the requirements and criteria set forth in the definition
of "Eligible Hotels" that is contained in the Credit Agreement.
4. The representations and warranties contained in
Article V of the Credit Agreement and in each of the other Loan Documents are
true and correct as though made on and as of the date hereof (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct only as of
such specified date).
5. No Default or Event of Default has occurred and is
continuing.
B-2
144
SUNSTONE HOTEL INVESTORS, L.P.
By: Sunstone Hotel Investors,
Inc., its sole general partner
By:______________________________
Name:_________________________
Title: Chief Financial Officer
B-3
145
EXHIBIT C
When recorded, return to:
BANK ONE, ARIZONA, XX
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, Xxxxxxx 00000
Attention: Western Region Real
Estate Finance, Dept. A-392
[FORM OF]
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(___________________)
This Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing (hereinafter called "Deed of Trust") is made as of the _____ day
of _____________, 19__, by and among SUNSTONE HOTEL INVESTORS, L.P., a
Delaware limited partnership, whose mailing address is 000 Xxxxx xx Xxxxxxxxxx,
Xxxxx 000, Xxx Xxxxxxxx, Xxxxxxxxxx 00000, and whose chief executive office is
located at 000 Xxxxx xx Xxxxxxxxxx, Xxxxx 000, Xxx Xxxxxxxx, Xxxxxxxxxx 00000,
hereinafter called "Trustor," ___________________________________________,
whose mailing address is
_________________________________________________________, hereinafter called
"Trustee," and BANK ONE, ARIZONA, NA, a national banking association, as
Administrative Agent under the Loan Agreement (as defined in Section 2.3),
whose mailing address is Xxxx Xxxxxx Xxx 00000, Xxxxxxx, Xxxxxxx 00000,
Attention: Western Region Real Estate Finance, Dept. A-392, hereinafter
called "Beneficiary."
WITNESSETH:
SECTION 1. GRANTING CLAUSE; WARRANTY OF TITLE
1.1 Trustor hereby irrevocably grants, transfers, and assigns to
Trustee, in trust, with power of sale, all of Trustor's present and future
estate, right, title and interest in and to that real property and all
buildings and other improvements now thereon or hereafter constructed thereon
(the "Premises"), in the County of ___________________, State of ____________,
described on Schedule "A" attached hereto and by this reference made a part
hereof, together with all of the following which, with the Premises (except
where the context otherwise requires), are hereinafter collectively called the
"Trust Property":
(a) All appurtenances in and to the Premises;
146
(b) All water and water rights, ditches and ditch rights,
reservoir and reservoir rights, stock or interests in irrigation or ditch
companies, minerals, oil and gas rights, royalties, lease or leasehold
interests owned by Trustor, now or hereafter used or useful in connection with,
appurtenant to or related to the Premises;
(c) All right, title and interest of Trustor now owned or
hereafter acquired in and to all streets, roads, alleys and public places, and
all easements and rights of way, public or private, now or hereafter used in
connection with the Premises;
(d) All machinery, equipment, fixtures and materials now
or at any time attached to the Premises together with all processing,
manufacturing and service equipment and other personal property now or at any
time hereafter located on or appurtenant to the Premises and used in connection
with the management and operation thereof;
(e) Any licenses, contracts, permits and agreements
required or used in connection with the ownership, operation or maintenance of
the Premises, and the right to the use of any tradename, trademark, or service
xxxx now or hereafter associated with the operation of any business conducted
on the Premises;
(f) Any and all insurance proceeds, and any and all
awards, including interest, previously and hereafter made to Trustor for taking
by eminent domain of the whole or any part of the Premises or any easements
therein;
(g) Subject to the rights of Beneficiary under Section 3
hereof, all existing and future leases, subleases, licenses and other
agreements for the use and occupancy of all or any portion of the Premises and
all income, receipts, revenues, issues, rents, accounts or other payments for
the use or occupancy of rooms and other public facilities, and profits arising
from the use or enjoyment of all or any portion of the Premises.
1.2 Trustor warrants that it is well and truly seized of a good
and marketable title in fee simple to the Premises, that it is the lawful owner
of the rest of the Trust Property, that it does not hold the Premises in trust,
and that, except for those matters specifically described on Schedule "B" Part
I attached to the title insurance policy delivered to Beneficiary with respect
to the Trust Property dated as of the date of the recording of the Deed of
Trust (hereinafter called the "Permitted Exceptions"), the title to all the
Trust Property is clear, free and unencumbered; Trustor shall forever warrant
and defend the same unto Beneficiary, its successors and assigns, against all
claims whatsoever.
TRUSTOR FURTHER REPRESENTS, WARRANTS, COVENANTS AND AGREES AS FOLLOWS:
SECTION 2. OBLIGATION SECURED
-2-
147
This Deed of Trust is given for the purpose of securing, in such order
of priority as Beneficiary may elect:
2.1 Payment of all sums at any time owing under those certain
Promissory Notes, dated as of May 1, 1997, in the aggregate principal amount of
One Hundred Million and No/100 Dollars ($100,000,000), executed by Trustor and
payable to the order of each Lender (as defined in Section 2.3), evidencing a
revolving line of credit, all or any part of which may be advanced to Trustor,
repaid by Trustor and readvanced to Trustor, from time to time, subject to the
terms and conditions thereof, provided that the principal balance outstanding
at any time shall not exceed the sum set forth above in this Paragraph 2.1,
with interest thereon, extension and other fees, late charges, prepayment
premiums and attorneys' fees, according to the terms thereof, and all
extensions, modifications, renewals or replacements thereof (hereinafter called
the "Notes"). The Notes shall accrue interest at a rate per annum as such rate
shall change from time to time;
2.2 Payment, performance and observance by Trustor of each
covenant, condition, provision and agreement contained herein and of all monies
expended or advanced by Beneficiary or the Lenders pursuant to the terms
hereof, or to preserve any right of Beneficiary or the Lenders hereunder, or to
protect or preserve the Trust Property or any part thereof;
2.3 Payment, performance and observance by Trustor of each
covenant, condition, provision and agreement contained in that certain
Revolving Credit Agreement, dated of even date with the Notes, by and among
Bank One, Arizona, NA, Credit Lyonnais New York Branch, Xxxxx Fargo Bank,
National Association (collectively, the Lenders) and Trustor (as amended and
restated, hereinafter called the "Loan Agreement") and in any other document or
instrument related to the indebtedness hereby secured and of all monies
expended or advanced by Beneficiary or the Lenders pursuant to the terms
thereof or to preserve any right of Beneficiary or the Lenders thereunder;
2.4 Payment of any and all additional loans and future advances
made by Beneficiary or the Lenders to Trustor and/or to the then record owner
or owners of the Trust Property (excluding, however, any such loan to an
individual for personal, family or household purposes) with interest thereon,
late charges, extension and other fees, prepayment premiums and attorneys'
fees, according to the terms of the promissory note(s) and/or credit
agreement(s) evidencing such loans and advances, and all extensions,
modifications, renewals or replacements thereof.
All of the indebtedness and obligations secured by this Deed of Trust are
hereinafter collectively called the "Obligation."
SECTION 3. LEASES; ASSIGNMENT OF RENTS AND LEASES
3.1 To facilitate payment and performance of the Obligation,
Trustor hereby absolutely transfers and assigns to Beneficiary (for the benefit
of the Lenders) all right, title and interest of Trustor in and to (i) all
existing and future leases, subleases, licenses and other agreements for the
-3-
148
use and occupancy of all or any part of the Trust Property, whether written or
oral and whether for a definite term or month to month, together with all
guarantees of the lessee's obligations thereunder and together with all
extensions, modifications and renewals thereof (hereinafter called the
"Leases"), and (ii) all income, receipts, revenues, rents, issues and profits
now or hereafter arising from or out of the Leases or from or out of the Trust
Property or any part thereof, including without limitation room rents, minimum
rents, additional rents, percentage rents, parking and maintenance charges and
fees, tax and insurance contributions, proceeds of the sale of utilities and
services, cancellation premiums, claims for damages arising from any breach of
the Leases, proceeds from any sale or other disposition of all or any portion
of the Trust Property, and all other benefits arising from the use or enjoyment
of, or the lease, sale or other disposition of, all or any portion of the Trust
Property, together with the immediate and continuing right to receive all of
the foregoing (hereinafter called the "Rents"). In furtherance of this
Assignment, and not in lieu hereof, Beneficiary may require a separate
assignment of rents and leases and/or separate specific assignments of rents
and leases covering one or more of the Leases; the terms of all such
assignments are incorporated herein by reference.
3.2 Trustor hereby authorizes and directs the lessees and tenants
under the Leases that, upon written notice from Beneficiary, all Rents shall be
paid directly to Beneficiary as they become due. Trustor hereby relieves the
lessees and tenants from any liability to Trustor by reason of the payment of
the Rents to Beneficiary. Nevertheless, Trustor shall be entitled to collect
the Rents until Beneficiary notifies the lessees and tenants in writing to pay
the Rents to Beneficiary. Beneficiary is hereby authorized to give such
notification upon the occurrence of an Event of Default and at any time
thereafter while such Event of Default is continuing. Receipt and application
of the Rents by Beneficiary shall not constitute a waiver of any right of
Beneficiary under this Deed of Trust or applicable law, shall not cure any
Event of Default hereunder, and shall not invalidate or affect any act done in
connection with such Event of Default, including, without limitation, any
trustee's sale or foreclosure proceeding.
3.3 All Rents collected by Trustor shall be applied in the
following manner:
First, to the payment of all taxes and lien assessments levied
against the Trust Property, where provision for paying such is not otherwise
made;
Second, to the payment of ground rents (if any) payable with
respect to the Trust Property;
Third, to the payment of any amounts due and owing under the
Obligation;
Fourth, to the payment of current operating costs and expenses
(including repairs, maintenance and necessary acquisitions of property and
expenditures for capital improvements) arising in connection with the Trust
Property;
Fifth, to Trustor or its designee.
-4-
149
All Rents collected by Beneficiary may be applied to the items above listed in
any manner that Beneficiary deems advisable and without regard to the
aforestated priorities.
3.4 Trustor represents and warrants that: (i) the Leases are in
full force and effect and have not been modified or amended; (ii) the Rents
have not been waived, discounted, compromised, setoff or paid more than one
month in advance; (iii) there are no other assignments, transfers, pledges or
encumbrances of any Leases or Rents; and (iv) to the best of Trustor's
knowledge neither Trustor nor the lessees and tenants are in default under the
Leases.
3.5 Trustor shall (i) fulfill or perform each and every term,
covenant and provision of the Leases to be fulfilled or performed by the lessor
thereunder; (ii) give prompt notice to Beneficiary of any notice received by
Trustor of default thereunder or of any alleged default or failure of
performance that could become a default thereunder, together with a complete
copy of any such notice; and (iii) enforce, short of termination thereof, the
performance or observance of each and every term, covenant and provision of
each Lease to be performed or observed by the lessees and tenants thereunder.
3.6 Trustor, without the prior written consent of Beneficiary,
shall not: (i) cancel, modify or alter, or accept the surrender of, any Lease;
(ii) assign, transfer, pledge or encumber, the whole or any part of the Leases
and Rents to anyone other than Beneficiary; (iii) accept any Rents more than
one month in advance of the accrual thereof; (iv) do or permit anything to be
done, the doing of which, or omit or refrain from doing anything, the omission
of which, could be a breach or default under the terms of any Lease or a basis
for termination thereof; or (v) enter in to any new tenant leases.
3.7 Neither Beneficiary nor the Lenders assumes and shall not be
liable for any obligation of the lessor under any of the Leases and all such
obligations shall continue to rest upon Trustor as though this assignment had
not been made. Neither Beneficiary nor the Lenders shall be liable for the
failure or inability to collect any Rents.
3.8 Neither the Assignment of Rents and Leases contained herein or
in any separate assignment nor the exercise by Beneficiary of any of its rights
or remedies thereunder or in connection therewith, prior to Beneficiary
obtaining actual possession of the Trust Property as provided in Paragraph 8.2
hereof, shall constitute Beneficiary (or the Lenders) a "mortgagee in
possession" or otherwise make Beneficiary or the Lenders responsible or liable
in any manner with respect to the Trust Property or the occupancy, operation or
use thereof. In the event Beneficiary obtains actual possession of the Trust
Property as provided in Paragraph 8.2 hereof, Beneficiary shall have the
rights, and Beneficiary's liability shall be limited, as provided in that
Paragraph.
SECTION 4. SECURITY AGREEMENT
-5-
150
4.1 This Deed of Trust shall cover, and the Trust Property shall
include, all property now or hereafter affixed or attached to or incorporated
upon the Premises, which, to the fullest extent permitted by law, shall be
deemed fixtures and a part of the Premises. To the extent any of the Trust
Property consists of rights in action or personal property covered by the
Uniform Commercial Code, this Deed of Trust shall also constitute a security
agreement, and Trustor hereby grants to Beneficiary (for the benefit of the
Lenders), as secured party, a security interest in such property, including all
proceeds thereof, for the purpose of securing the Obligation. In addition, for
the purpose of securing the Obligation, Trustor hereby grants to Beneficiary
(for the benefit of the Lenders), as secured party, a security interest in all
of the property described below in, to, or under which Trustor now has or
hereafter acquires any right, title or interest, whether present, future, or
contingent: all equipment, inventory, accounts, general intangibles,
instruments, documents, and chattel paper, as those terms are defined in the
Uniform Commercial Code, and all other personal property of any kind (including
without limitation money and rights to the payment of money), whether now
existing or hereafter created, that are now or at any time hereafter (i) in the
possession or control of Beneficiary in any capacity; (ii) erected upon,
attached to, or appurtenant to, the Premises; (iii) located or used on the
Premises or identified for use on the Premises (whether stored on the Premises
or elsewhere); or (iv) used in connection with, arising from, related to, or
associated with the Premises or any of the personal property described herein,
the construction of any improvements on the Premises, the ownership,
development, maintenance, leasing, management, or operation of the Premises,
the use or enjoyment of the Premises, or the operation of any business
conducted on the Premises; including without limitation all such property more
particularly described as follows:
(a) Buildings, structures and improvements, and building
materials, fixtures and equipment to be incorporated into any buildings,
structures or improvements;
(b) Goods, materials, supplies, fixtures, equipment,
machinery, furniture and furnishings, including without limitation, all such
items used for (i) generation, storage or transmission of air, water, heat,
steam, electricity, light, fuel, refrigeration or sound; (ii) ventilation,
air-conditioning, heating, refrigeration, fire prevention and protection,
sanitation, drainage, cleaning, transportation, communications, maintenance or
recreation; (iii) removal of dust, refuse, garbage or snow; (iv) transmission,
storage, processing or retrieval of information; and (v) floor, wall, ceiling
and window coverings and decorations;
(c) Income, receipts, revenues, issues, rents, accounts
or other payments for the use or occupancy of rooms and other public
facilities, and profits, including without limitation, room rents, minimum
rents, additional rents, percentage rents, parking and maintenance charges and
fees, tax and insurance contributions, proceeds of the sale of utilities and
services, cancellation premiums, and claims for damages arising from the breach
of any leases;
(d) Water and water rights, ditches and ditch rights,
reservoirs and reservoir rights, stock or interest in irrigation or ditch
companies, minerals, oil and gas rights, royalties, and lease or leasehold
interests;
-6-
151
(e) Plans and specifications prepared for the
construction of any improvements, including without limitation, all studies,
estimates, data, and drawings;
(f) Documents, instruments and agreements relating to, or
in any way connected with, the operation, control or development of the
Premises, including without limitation, any declaration of covenants,
conditions and restrictions and any articles of incorporation, bylaws and other
membership documents of any property owners association or similar group;
(g) Claims and causes of action, legal and equitable, in
any form whether arising in contract or in tort, and awards, payments and
proceeds due or to become due, including without limitation those arising on
account of any loss of, damage to, taking of, or diminution in value of, all or
any part of the Premises or any personal property described herein;
(h) Sales agreements, escrow agreements, deposit
receipts, and other documents and agreements for the sale or other disposition
of all or any part of the Premises or any of the personal property described
herein, and deposits, proceeds and benefits arising from the sale or other
disposition of all or any part of the Premises or any of the personal property
described herein;
(i) Policies or certificates of insurance, contracts,
agreements or rights of indemnification, guaranty or surety, and awards, loss
payments, proceeds, and premium refunds that may be payable with respect to
such policies, certificates, contracts, agreements or rights;
(j) Contracts, agreements, permits, licenses,
authorizations and certificates, including without limitation all architectural
contracts, construction contracts, management contracts, service contracts,
maintenance contracts, franchise agreements, license agreements, building
permits and operating licenses;
(k) Trade names, trademarks, and service marks (subject
to any franchise or license agreements relating thereto);
(l) Refunds and deposits due or to become due from any
utility companies or governmental agencies;
(m) Replacements and substitutions for, modifications of,
and supplements, accessions, addenda and additions to, all of the personal
property described herein;
(n) Books, records, correspondence, files and electronic
media, and all information stored therein;
-7-
152
together with all products and proceeds of all of the foregoing, in any form,
including all proceeds received, due or to become due from any sale, exchange
or other disposition thereof, whether such proceeds are cash or non-cash in
nature, and whether represented by checks, drafts, notes or other instruments
for the payment of money. The personal property described or referred to in
this Paragraph 4.1 is hereinafter called the "Personal Property." The security
interests granted in this Paragraph 4.1 are hereinafter severally and
collectively called the "Security Interest."
4.2 The Security Interest shall be self-operative with respect to
the Personal Property, but Trustor shall execute and deliver on demand such
additional security agreements, financing statements and other instruments as
may be requested in order to impose the Security Interest more specifically
upon the Personal Property. The Security Interest, at all times, shall be
prior to any other interests in the Personal Property except any lien or
security interest granted in connection with any Permitted Exception. Trustor
shall act and perform as necessary and shall execute and file all security
agreements, financing statements, continuation statements and other documents
requested by Beneficiary to establish, maintain and continue the perfected
Security Interest. Trustor, on demand, shall promptly pay all costs and
expenses of filing and recording, including the costs of any searches, deemed
necessary by Beneficiary from time to time to establish and determine the
validity and the continuing priority of the Security Interest.
4.3 Trustor shall not sell, transfer, assign or otherwise dispose
of any Personal Property or any interest therein without obtaining the prior
written consent of Beneficiary, except Personal Property that Trustor is
obliged to replace pursuant to the terms hereof. Unless Beneficiary then
agrees otherwise in writing, all proceeds from any permitted sale or
disposition in excess of that required for replacements shall be paid to
Beneficiary to be applied to the Obligation, whether or not then due. Trustor
shall keep the Personal Property free of all security interests or other
encumbrances, except the Security Interest and any security interests and
encumbrances granted in connection with any Permitted Exception. Although
proceeds of Personal Property are covered hereby, this shall not be construed
to mean that Beneficiary consents to any sale of the Personal Property.
4.4 Trustor shall keep and maintain the Personal Property in good
condition and repair, and shall promptly replace any part thereof that from
time to time may become obsolete, badly worn or in a state of disrepair. All
such replacements shall be free of any other security interest or encumbrance,
except any security interest or encumbrance granted in connection with any
Permitted Exception.
4.5 Except for purposes of replacement and repair, Trustor,
without the prior written consent of Beneficiary, shall not remove, or permit
the removal of, any Personal Property from the Premises.
4.6 Trustor hereby warrants, covenants and agrees that: (i) the
Personal Property is or will be used primarily for business (other than farm)
purposes; (ii) the Personal Property will be
-8-
153
kept at the Premises; and (iii) Trustor's records concerning the Personal
Property will be kept at Trustor's address as set forth in the beginning of
this Deed of Trust.
4.7 Trustor represents and warrants that (i) the name specified
above for Trustor is the true and correct legal name of Trustor, and (ii) the
address specified above is the address of Trustor's chief executive office (or
residence if Trustor is an individual without an office). Trustor shall give
Beneficiary immediate written notice of any change in the location of: (i)
Trustor's chief executive office (or residence if Trustor is an individual
without an office), as set forth in the beginning of this Deed of Trust; (ii)
the Personal Property or any part thereof; or (iii) Trustor's records
concerning the Personal Property. Trustor shall give Beneficiary immediate
written notice of any change in the name, identity or structure of Trustor.
4.8 All covenants and warranties of Trustor contained in this Deed
of Trust shall apply to the Personal Property whether or not expressly referred
to in this Section 4. The covenants and warranties of Trustor contained in
this Section 4 are in addition to, and not in limitation of, those contained in
the other provisions of this Deed of Trust.
4.9 Upon its recording in the real property records, this Deed of
Trust shall be effective as a financing statement filed as a fixture filing.
In addition, a carbon, photographic or other reproduced copy of this Deed of
Trust and/or any financing statement relating hereto shall be sufficient for
filing and/or recording as a financing statement. The filing of any other
financing statement relating to any personal property, rights or interests
described herein shall not be construed to diminish any right or priority
hereunder.
SECTION 5. PROTECTION AND PRESERVATION OF THE TRUST PROPERTY
5.1 Trustor shall neither commit nor permit to occur any waste
upon the Trust Property but shall at all times make or cause to be made all
repairs, maintenance, renewals and replacements as may be necessary to maintain
the Trust Property in good condition and repair. Trustor shall keep the Trust
Property free of termites, dry rot, fungus, beetles and all other harmful or
destructive insects and shall keep all plants, trees and shrubs included in the
Trust Property neatly pruned and in good condition. Trustor shall keep the
Trust Property free of rubbish and other unsightly or unhealthful conditions.
Trustor shall neither use nor permit the use of the Trust Property in violation
of any applicable statute, ordinance or regulation, including without
limitation, the Americans With Disabilities Act of 1990 and corresponding rules
and regulations (the "ADA"), or any policy of insurance insuring the Trust
Property.
5.2 Trustor shall promptly complete any improvements that may be
commenced, in good and workmanlike manner and in conformity with the ADA and
with plans and specifications approved by Beneficiary. Trustor shall repair
and restore, in conformity with the ADA, any portions of the Trust Property
that may be damaged or destroyed. Trustor shall pay when due all claims for
work performed and materials furnished on or in connection with the Trust
Property or any part thereof and shall pay, discharge, or cause to be removed,
all mechanic's, artisan's,
-9-
154
laborer's or materialman's charges, liens, claims of liens or encumbrances upon
the Trust Property. Trustor shall comply with all laws, ordinances and
regulations now or hereafter enacted, including, without limitation, the ADA,
affecting the Trust Property or requiring any alterations or improvements to be
made. Except as required by law, Trustor shall not remove, substantially
alter, or demolish any building or improvement included in the Trust Property
without Beneficiary's prior written consent.
5.3 (a) Trustor shall provide and maintain policies of
insurance on the Trust Property in accordance with the Loan Agreement.
(b) In the event of loss, Trustor shall give immediate
notice to Beneficiary, and Beneficiary may make proof of loss if not made
promptly by Trustor. Each insurance company is hereby authorized and directed
to make payment for loss directly to Beneficiary, instead of to Trustor or to
Trustor and Beneficiary jointly; Beneficiary may apply all or any part of such
insurance proceeds to the payment of the Obligation, whether or not then due,
or the restoration or repair of the Trust Property. Beneficiary shall not be
responsible for any insurance, for the collection of any insurance proceeds, or
for the insolvency of any insurer. Application of insurance proceeds by
Beneficiary shall not cure nor waive any Event of Default nor invalidate any
act done hereunder because of any such Event of Default. In the event of the
sale of the Trust Property under the power of sale herein granted to Trustee,
or upon foreclosure of this Deed of Trust as a mortgage, or in the event
Beneficiary or a receiver appointed by the court shall take possession of the
Trust Property without sale, then all right, title and interest of Trustor in
and to all insurance policies then in force shall inure to the benefit of and
pass to the beneficiary in possession, receiver or purchaser at such sale, as
the case may be. Beneficiary is hereby appointed attorney in fact for Trustor
to assign and transfer such policies.
(c) If the insurance proceeds are to be used for the
restoration and repair of the Trust Property, they shall be held by Beneficiary
in a non-interest bearing account selected by Beneficiary in its sole and
absolute discretion (the "Restoration Account"). Trustor, at its expense,
shall promptly prepare and submit to Beneficiary all plans and specifications
necessary for the restoration and repair of the damaged Trust Property,
together with evidence acceptable to Beneficiary setting forth the total
expenditure needed for the restoration and repair based upon a fixed price
contract with a reputable builder and covered by performance and labor and
material payment bonds. The plans and specifications and all other aspects of
the proposed restoration and repair shall be subject to Beneficiary's approval.
In the event the insurance proceeds held in the Restoration Account are
insufficient to complete the restoration and repair, Trustor shall deposit in
the Restoration Account an amount equal to the difference between the amount
then held in the Restoration Account and the total contract price for the
restoration and repair. Trustor may commence restoration and repair of the
damaged Trust Property only when authorized in writing by Beneficiary to do so
and thereafter shall proceed diligently with the restoration and repair until
completed. Disbursements shall be made from the Restoration Account for the
restoration and repair in accordance with a disbursement schedule, and subject
to other terms and conditions, acceptable to Beneficiary. Disbursements from
the Restoration Account shall be charged first
-10-
155
against funds deposited by Trustor and, after such funds are exhausted, against
the insurance proceeds deposited therein. In the event the amounts held in the
Restoration Account exceed the cost of the restoration and repair of the
damaged Trust Property, the excess funds shall be disbursed to Trustor to the
extent of any amounts deposited therein by Trustor. Any funds remaining after
such disbursement, at Beneficiary's option, may be applied by Beneficiary to
the payment of the Obligation, whether or not then due, or may be disbursed to
Trustor. All funds held in the Restoration Account are hereby assigned to
Beneficiary as further security for the Obligation. Beneficiary, at any time,
may apply all or any part of the funds held in the Restoration Account to the
curing of any Event of Default.
5.4 Trustor shall pay or cause to be paid all taxes and
assessments of every kind, nature and description levied or assessed on or
against the Trust Property and shall deliver to Beneficiary, at least ten (10)
days before they become delinquent, receipts showing payment of all such taxes
and assessments and shall pay when due all dues and charges for water and water
delivery, electricity, gas, sewers, waste removal, bills for repairs, and any
and all other claims, encumbrances and expenses incident to the ownership of
the Trust Property.
5.5 Trustor, or upon the occurrence of an Event of Default and the
continuation thereof, Beneficiary may contest, by appropriate legal
proceedings, the validity of any valuation for real or personal property tax
purposes or of any levy or assessment of any real or personal property taxes
against the Trust Property either in the name of Beneficiary or the name of
Trustor or both. Trustor, upon notice and request by Beneficiary, shall join
in any such proceedings. Trustor shall cooperate with Beneficiary in any such
proceeding and execute any documents or pleadings required for such purposes.
Trustor shall provide Beneficiary with a copy of the Notice of Valuation within
ten (10) days after receipt (five (5) days in the case of personal property).
Trustor shall reimburse Beneficiary for all costs and legal expenses incurred
by Beneficiary in connection with any such proceedings, but in no event shall
such reimbursement exceed the tax savings achieved for the period covered by
the Notice of Valuation. To facilitate the right of Beneficiary to contest any
real or personal property tax valuation, levy, or assessment as described
above, Trustor does hereby make, constitute and appoint Beneficiary, and its
successors and assigns, Trustor's true and lawful attorney-in-fact, in
Trustor's name, place and stead, or otherwise, to file any claim or proceeding
or to take any action, either in its own name, in that of its nominee, in the
name of Trustor, or otherwise, to contest any real or personal property tax
valuation, levy, or assessment. The power of attorney given herein is a power
coupled with an interest and shall be irrevocable so long as any part of the
Obligation remains unpaid or unperformed. Beneficiary shall have no obligation
to exercise any of the foregoing rights and powers in any event.
5.6 In order to insure the payment of taxes and assessments that
are now, or hereafter may be, a lien upon the Trust Property, and to insure the
payment of all premiums on policies of insurance required herein, Trustor, if
required by Beneficiary after the occurrence of any Event of Default and only
during the continuation thereof, shall pay to Beneficiary each month, in
addition to any other payments required hereunder, an amount equal to the taxes
and special assessments levied or to be levied against the Trust Property and
the premium or premiums that will become
-11-
156
due and payable to maintain the insurance on the Trust Property, all as
reasonably estimated by Beneficiary (giving due consideration to the previous
year's taxes, assessments and premiums) less all deposits therefore already
made, divided by the number of months remaining before one month prior to the
date when the taxes, assessments and premiums become delinquent. If amounts
paid to Beneficiary under the term of this paragraph are insufficient to pay
all taxes, assessments and premiums as they become due, Trustor shall pay to
Beneficiary upon demand all additional sums necessary to fully pay and
discharge these items. All moneys paid to Beneficiary under the terms of this
paragraph may be either held by Beneficiary to pay the taxes, assessments and
premiums before the same become delinquent or applied to the Obligation upon
payment by Beneficiary from its own funds of the taxes, assessments and
premiums. To the extent provision is not made for payment pursuant to this
paragraph, Trustor shall remain obligated to pay all taxes, assessments and
premiums as they become due and payable. Deposits made under this paragraph
may be commingled with Beneficiary's general funds; Beneficiary shall have no
liability to Trustor for interest on any deposits.
5.7 Trustor hereby assigns, transfers and conveys to Beneficiary
all compensation and each and every award of damages in connection with any
condemnation for public or private use of, or injury to, the Trust Property or
any part thereof, to the extent of the Obligation then remaining unpaid, and
all such compensation and awards shall be paid directly to Beneficiary.
Beneficiary may apply all or any part of such compensation and awards to the
payment of the Obligation, whether or not then due, or to the restoration or
repair of the Trust Property.
SECTION 6. PROTECTION AND PRESERVATION OF BENEFICIARY'S INTEREST
6.1 Trustor, by the payment of any such tax or taxes, shall
protect Beneficiary and the Lenders against any and all loss from any taxation
of indebtedness or deeds of trust, direct or indirect, that may be imposed upon
this Deed of Trust, the lien of this Deed of Trust on the Trust Property, or
upon the Obligation, by any law, rule, regulation or levy of the federal
government, any state government, or any political subdivision thereof. In the
event the burden of such taxation cannot lawfully be shifted from Beneficiary
(or the Lenders, as the case may be) to Trustor, Beneficiary may declare the
entire Obligation due and payable sixty (60) days after notice to Trustor.
6.2 If Trustor shall fail to pay any taxes, assessments, expenses
or charges, to keep all of the Trust Property free from liens and claims of
liens, to maintain and repair the Trust Property, or to procure and maintain
insurance thereon, or otherwise fail to perform as required herein, Beneficiary
and the Lenders may advance the monies necessary to pay the same, to accomplish
such maintenance and repairs, to procure and maintain such insurance or to so
perform; Beneficiary and the Lenders are hereby authorized to enter upon the
Trust Property for such purposes.
6.3 Upon written request by Beneficiary, Trustor shall appear in
and prosecute or defend any action or proceeding that may affect the lien or
the priority of the lien of this Deed of
-12-
157
Trust or the rights of Beneficiary or the Lenders hereunder and shall pay all
costs, expenses (including the cost of searching title) and attorneys' fees
incurred in such action or proceeding. Beneficiary and the Lenders may appear
in and defend any action or proceeding purporting to affect the lien or the
priority of the lien of this Deed of Trust or the rights of Beneficiary or the
Lenders. Beneficiary may pay, purchase, contest or compromise any adverse
claim, encumbrance, charge or lien that in the judgment of Beneficiary appears
to be prior or superior to the lien of this Deed of Trust, other than any
Permitted Exceptions.
6.4 Without obtaining the prior written consent of Trustor shall
not sell, transfer, convey, assign or otherwise dispose of, or further
encumber, all or any part of the Trust Property or any interest therein,
voluntarily or involuntarily, by operation of law or otherwise. If Trustor is
a corporation, partnership, joint venture or trust, any material change in the
ownership or management of, or interest in, Trustor, or any pledge or
encumbrance of any interest in Trustor, shall be deemed to be a transfer of the
Trust Property. Upon the occurrence of any such transaction with Beneficiary's
consent, or without Beneficiary's consent if the Lenders elect not to exercise
their rights and remedies for an Event of Default, the Lenders (i) may increase
the interest rate on all or any part of the Obligation to its then current
market rate for similar indebtedness; (ii) may charge a loan fee and a
processing fee in connection with the change; and (iii) shall not be obligated
to release Trustor from any liability hereunder or for the Obligation except to
the extent required by law. Consent to any such transaction shall not be
deemed to be consent or a waiver of the requirement of consent to any other
such transaction.
6.5 Without obtaining the prior written consent of Beneficiary,
Trustor shall not consent to, or vote in favor of, the inclusion of all or any
part of the Trust Property in any special district. Trustor shall immediately
give notice to Beneficiary of any notification or advice that Trustor may
receive from any municipality or other third party of any intent or proposal to
include all or any part of the Trust Property in a special district.
Beneficiary shall have the right to file a written objection to the inclusion
of all or any part of the Trust Property in a special district, either in its
own name or in the name of Trustor, and to appear at, and participate in, any
hearing with respect to the formation of any such district.
6.6 All rights, powers and remedies granted Beneficiary and the
Lenders herein, or otherwise available to Beneficiary and the Lenders, are for
the sole benefit and protection of Beneficiary and the Lenders, and Beneficiary
and the Lenders may exercise any such right, power or remedy at their option
and in their sole and absolute discretion without any obligation to do so. In
addition, if, under the terms hereof, Beneficiary or the Lenders are given two
or more alternative courses of action, Beneficiary (or the Lenders, as the case
may be) may elect any alternative or combination of alternatives, at their
option and in their sole and absolute discretion. All monies advanced by
Beneficiary or the Lenders under the terms hereof and all amounts paid,
suffered or incurred by Beneficiary or the Lenders in exercising any authority
granted herein, including reasonable attorneys' fees, shall be added to the
Obligation, shall be secured by this Deed of Trust, shall bear interest at the
highest rate payable on any of the Obligation until paid,
-13-
158
and shall be due and payable by Trustor to Beneficiary (or the Lenders, as the
case may be) immediately without demand.
6.7 Trustor, upon request of Beneficiary, shall promptly correct
any defect, error or omission that may be discovered in the content of this
Deed of Trust or in the execution or acknowledgment hereof. In addition,
Trustor shall do such further acts as may be necessary or that Beneficiary may
reasonably request to carry out more effectively the purposes of this Deed of
Trust, to subject any property intended to be encumbered hereby to the lien and
security interest hereof, and to perfect and maintain the lien and security
interest hereof.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 Trustor (i) is duly organized, validly existing and in good
standing under the laws of the state in which it is organized; (ii) is
qualified to do business and is in good standing under the laws of the state in
which the Trust Property is located and in each state in which it is doing
business; (iii) has full power and authority to own its properties and assets
and to carry on its business as now conducted; and (iv) is fully authorized and
permitted to execute and deliver this Deed of Trust. To the best of Trustor's
knowledge, the execution, delivery and performance by Trustor of this Deed of
Trust and all other documents and instruments relating to the Obligation will
not result in any breach of the terms or conditions or constitute a default
under any agreement or instrument under which Trustor is a party or is
obligated. To the best of Trustor's knowledge, Trustor is not in default in
the performance or observance of any covenants, conditions or provisions of any
such agreement or instrument.
7.2 The liens, security interests and assignments created hereby
will be valid, effective, properly perfected and enforceable liens, security
interests and assignments.
7.3 All financial statements, profit and loss statements,
statements as to ownership and other statements or reports previously or
hereafter given to Beneficiary or the Lenders by or on behalf of Trustor are
and shall be true, complete and correct as of the date thereof. There has been
no material adverse change in the financial condition or the results of the
operation of Trustor since the latest financial statement of Trustor given to
Beneficiary or the Lenders.
7.4 Trustor has filed all federal, state and local tax returns and
has paid all of its current obligations before delinquent, including all
federal, state and local taxes and all other payments required under federal,
state or local law.
7.5 To the best of Trustor's knowledge, the Trust Property is not
in violation of the ADA and is not subject to any existing, pending or
threatened investigation in connection with the ADA.
-14-
159
7.6 All representations and warranties made herein shall survive
the execution hereof, the execution and delivery of all other documents and
instruments in connection with the Obligation, and until the Obligation has
been fully paid and performed.
SECTION 8. DEFAULTS; REMEDIES
8.1 The occurrence of any of the following events or conditions
shall constitute an "Event of Default" under this Deed of Trust:
(a) The abandonment by Trustor of all or any part of the
Trust Property.
(b) The existence of any material encroachment upon the
Trust Property that has occurred without the approval of Beneficiary that is
not removed or corrected within thirty (30) days after its creation.
(c) The occurrence of any event of default under the
Notes, the Loan Agreement, or any other document or instrument executed or
delivered in connection with the Obligation.
8.2 Upon the occurrence of any Event of Default, and at any time
while such Event of Default is continuing, Beneficiary may do one or more of
the following:
(a) Declare the entire Obligation to be immediately due
and payable, and the same, with all costs and charges, shall be collectible
thereupon by action at law.
(b) Give such notice of default and of election to cause
the Trust Property to be sold as may be required by law or as may be necessary
to cause Trustee to exercise the power of sale granted herein. Trustee shall
then record and give such notice of trustee's sale as then required by law and,
after the expiration of such time as may be required by law, may sell the Trust
Property at the time and place specified in the notice of sale, as a whole or
in separate parcels as directed by Beneficiary, or by Trustor to the extent
required by law, at public auction to the highest bidder for cash in lawful
money of the United States, payable at time of sale, all in accordance with
applicable law. Trustee, from time to time, may postpone or continue the sale
of all or any portion of the Trust Property by public declaration at the time
and place last appointed for the sale. No other notice of the postponed sale
shall be required. Upon any sale, Trustee shall deliver its deed conveying the
property sold, without any covenant or warranty, express or implied, to the
purchaser or purchasers at the sale. The recitals in such deed of any matters
or facts shall be conclusive as to the accuracy thereof. Any person, including
Trustor, Trustee, Beneficiary or the Lenders, may purchase at the sale.
(c) Commence proceedings for foreclosure of this Deed of
Trust in any other manner provided by law for the foreclosure of a real
property mortgage.
-15-
160
(d) Exercise any or all of the remedies of a secured
party under the Uniform Commercial Code with respect to the Personal Property.
If Beneficiary should proceed to dispose of any of the Personal Property in
accordance with the provisions of the Uniform Commercial Code, five (5) days'
notice by Beneficiary to Trustor shall be deemed to be commercially reasonable
notice under any provision of the Uniform Commercial Code requiring notice.
Trustor, however, agrees that all property of every nature and description,
whether real or personal, covered by this Deed of Trust, together with all
personal property used on or in connection with the Premises or any business
conducted thereon by the Trustor and covered by separate security agreements,
is encumbered as one unit, that this Deed of Trust and such security interests,
at Beneficiary's option, may be foreclosed or sold in the same proceeding, and
that all property encumbered (both realty and personalty), at Beneficiary's
option, may be sold as such in one unit as a going business, subject to the
provisions of applicable law.
(e) Without regard to the adequacy of any security for
the Obligation or the solvency of Trustor or any other person or entity, send
notifications to any and all lessees and tenants under the Leases that all
Rents shall be paid to Beneficiary. Thereafter, Beneficiary shall be entitled
to collect the Rents until Trustor cures all Events of Default and may apply
the Rents collected at its sole discretion to the maintenance of the Trust
Property and/or the payment of the Obligation.
(f) Apply any funds in the possession or control of
Beneficiary under the provisions of Paragraph 5.6 hereof to the payment of the
Obligation, in lieu of the purposes specified in that paragraph.
(g) Apply for and obtain, without regard to the adequacy
of any security for the Obligation or the solvency of the Trustor or any other
person or entity, a receiver by any court of competent jurisdiction to take
charge of all the Trust Property, to manage, operate and carry on any business
then being conducted or that could be conducted on the Premises, to carry on,
protect, preserve, replace and repair the Trust Property, and receive and
collect all Rents and to apply the same to pay the receiver's expenses for the
operation of the Trust Property and then in the manner provided in Paragraph
3.3 herein. Upon appointment of said receiver, Trustor shall immediately
deliver possession of all of the Trust Property to such receiver. Neither the
appointment of a receiver for the Trust Property by any court at the request of
Beneficiary or by agreement with Trustor nor the entering into possession of
all or any part of the Trust Property by such receiver shall constitute
Beneficiary a "mortgagee in possession" or otherwise make Beneficiary
responsible or liable in any manner with respect to the Trust Property or the
occupancy, operation or use thereof. Trustor agrees that Beneficiary shall
have the absolute and unconditional right to the appointment of a receiver in
any independent and/or separate action brought by Beneficiary regardless of
whether Beneficiary seeks any relief in such action other than the appointment
of a receiver.
(h) Without regard to the adequacy of any security for
the Obligation or the solvency of Trustor or any other person or entity, enter
upon and take possession of all or any part of the Trust Property, either in
person or by agent or employee, or by a receiver appointed by
-16-
161
a court of competent jurisdiction; Trustor shall on demand peaceably surrender
possession of the Trust Property to Beneficiary. Beneficiary, in its own name
or in the name of Trustor, may operate and maintain all or any part of the
Trust Property to such extent as Beneficiary deems advisable, may rent and
lease the same to such persons, for such periods of time, and on such terms and
conditions as Beneficiary in its sole discretion may determine, and may xxx for
or otherwise collect any and all Rents, including those past due and unpaid.
Notwithstanding anything Beneficiary or the Lenders do, they will not be a
mortgagee or beneficiary in possession, and neither Beneficiary nor the Lenders
shall be subject to any liability, charge, or obligation therefor to Trustor,
other than for willful misconduct, and shall be entitled to operate any
business then being conducted or which could be conducted thereon or therewith
at the expense of and for the account of Trustor (and all net losses, costs and
expenses thereby incurred shall be advances governed by Paragraph 6.6 hereof),
to the same extent as the owner thereof could do, and to apply the Rents to pay
the receiver's expenses, if any, for the operation of the Trust Property and
then in the manner provided in Paragraph 3.3 herein.
8.3 Trustor shall pay all costs and expenses, including without
limitation costs of title searches and title policy commitments, Uniform
Commercial Code searches, court costs, reasonable attorneys' fees, appraisals,
environmental studies and site assessments, incurred by Beneficiary and the
Lenders in enforcing payment and performance of the Obligation or in exercising
the rights and remedies of Beneficiary and the Lenders hereunder. All such
costs and expenses shall be secured by this Deed of Trust and by all other lien
and security documents securing the Obligation. In the event of any court
proceedings, court costs and attorneys' fees shall be set by the court and not
by jury and shall be included in any judgment obtained by Beneficiary or the
Lenders.
8.4 In addition to any remedies provided herein for an Event of
Default, Beneficiary and the Lenders shall have all other legal or equitable
remedies allowed under applicable law (including specifically that of
foreclosure of this instrument as though it were a mortgage). No failure on
the part of Beneficiary or the Lenders to exercise any of their rights
hereunder arising upon any Event of Default shall be construed to prejudice
their rights upon the occurrence of any other or subsequent Event of Default.
No delay on the part of Beneficiary or the Lenders in exercising any such
rights shall be construed to preclude them from the exercise thereof at any
time while that Event of Default is continuing. Beneficiary may enforce any
one or more remedies or rights hereunder successively or concurrently. By
accepting payment or performance of any of the Obligation after its due date,
neither Beneficiary nor the Lenders shall thereby waive the agreement contained
herein that time is of the essence, nor shall Beneficiary or the Lenders waive
either their right to require prompt payment or performance when due of the
remainder of the Obligation or their right to consider the failure to so pay or
perform an Event of Default. In any action by Beneficiary or the Lenders to
recover a deficiency judgment for any balance due under the Notes upon the
foreclosure of this Deed of Trust or in any action to recover the Obligation or
Obligations secured hereby, and as a material inducement to making the loan
evidenced by the Notes, Trustor acknowledges and agrees that the successful bid
amount made at any judicial or non-judicial foreclosure sale, if any, shall be
conclusively deemed to constitute the fair market
-17-
162
value of the Premises, that such bid amount shall be binding against Trustor in
any proceeding seeking to determine or contest the fair market value of the
Premises and that such bid amount shall be the preferred alternative means of
determining and establishing the fair market value of the Premises. Trustor
hereby waives and relinquishes any right to have the fair market value of the
Premises determined by a judge or jury in any action seeking a deficiency
judgment or any action on the Obligation or Obligations secured hereby,
including, without limitation, a hearing to determine fair market value
pursuant to A.R.S. '12-1566, '33-814, '33-725 or '33-727.
SECTION 9. GENERAL PROVISIONS
9.1 Trustor shall defend, indemnify and hold harmless Beneficiary
and the Lenders, any successors to Beneficiary's and the Lenders' interest in
the Trust Property, any purchaser of the Trust Property upon foreclosure, and
all shareholders, directors, officers, employees and agents of all of the
foregoing and their heirs, personal representatives, successors and assigns
from and against all claims, costs, expenses, actions, suits, proceedings,
losses, damages and liabilities of any kind whatsoever, including but not
limited to all amounts paid in settlement of, and all costs and expenses
(including attorneys' fees) incurred in defending or settling, any actual or
threatened claim, action, suit or proceeding, directly or indirectly arising
out of or relating to the Obligation, this Deed of Trust, or the Trust
Property, including but not limited to (i) any violation of or claim of
violation of the ADA with respect to the Trust Property; or (ii) any breach of
any of the warranties, representations and covenants contained herein. This
indemnity provision shall continue in full force and effect and shall survive
the payment and performance of the Obligation, the release of record of the
lien of this Deed of Trust, any foreclosure (or action in lieu of foreclosure)
of this Deed of Trust, the exercise by Beneficiary or the Lenders of any other
remedy under this Deed of Trust or any other document or instrument evidencing
or securing the Obligation, and any suit, proceeding or judgment against
Trustor by Beneficiary or the Lenders hereon.
9.2 The acceptance of this Deed of Trust by Beneficiary and the
Lenders shall not be considered a waiver of or in any way to affect or impair
any other security that Beneficiary or the Lenders may have, acquire
simultaneously herewith, or hereafter acquire for the payment or performance of
the Obligation, nor shall the taking by Beneficiary or the Lenders at any time
of any such additional security be construed as a waiver of or in any way to
affect or impair the security of this Deed of Trust; Beneficiary and the
Lenders may resort, for the payment or performance of the Obligation, to their
several securities therefor in such order and manner as they may determine.
9.3 Without notice or demand, without affecting the obligations of
Trustor hereunder or the personal liability of any person for payment or
performance of the Obligation, and without affecting the lien or the priority
of the lien of this Deed of Trust, Beneficiary, from time to time, may: (i)
extend the time for payment of all or any part of the Obligation, accept a
renewal note therefor, reduce the payments thereon, release any person liable
for all or any part thereof, or otherwise change the terms of all or any part
of the Obligation; (ii) take and hold other security
-18-
163
for the payment or performance of the Obligation and enforce, exchange,
substitute, subordinate, waive or release any such security; (iii) consent to
the making of any map or plat of the Trust Property; (iv) join in granting any
easement on or in creating any covenants, conditions or restrictions affecting
the use or occupancy of the Trust Property; (v) join in any extension or
subordination agreement; or (vi) release or direct Trustee to release any part
of the Trust Property from this Deed of Trust. Any such action by Beneficiary,
or Trustee at Beneficiary's direction, may be taken without the consent of any
junior lienholder and shall not affect the priority of this Deed of Trust over
any junior lien.
9.4 Trustor waives and agrees not to assert: (i) any right to
require Beneficiary and the Lenders to proceed against any guarantor, to
proceed against or exhaust any other security for the Obligation, to pursue any
other remedy available to Beneficiary and the Lenders, or to pursue any remedy
in any particular order or manner; (ii) the benefits of any legal or equitable
doctrine or principle of marshalling; (iii) the benefits of any statute of
limitations affecting the enforcement hereof; (iv) demand, diligence,
presentment for payment, protest and demand, and notice of extension, dishonor,
protest, demand and nonpayment, relating to the Obligation; and (v) any benefit
of, and any right to participate in, any other security now or hereafter held
by Beneficiary or the Lenders.
9.5 Upon written request of Beneficiary and upon surrender of this
Deed of Trust and the Notes to Trustee for cancellation and retention or, if
requested, delivery, then Trustee (and Beneficiary if necessary to clear
title), upon payment of Trustee's fees, shall release, without warranty, the
Trust Property. The recitals in such release of any matters or facts shall be
conclusive as to the accuracy thereof. The grantee in such release may be
described as "the person or persons legally entitled thereto." Five years
after issuance of such full release, Trustee may destroy the Notes and this
Deed of Trust (unless directed in such request to retain them), unless prior
thereto Trustee has been directed to deliver them to the person or persons to
whom the property was released.
9.6 Beneficiary, the Lenders and Trustee shall have the right to
inspect the Trust Property at all reasonable times.
9.7 Time is of the essence hereof. All liability hereunder shall
be joint and several. This Deed of Trust shall be binding upon, and shall
inure to the benefit of, the parties hereto and their heirs, personal
representatives, successors and assigns. The provisions hereof shall apply to
the parties according to the context thereof and without regard to the number
or gender of words or expressions used.
9.8 The acceptance by Trustee of this trust shall be evidenced
when this Deed of Trust, duly executed and acknowledged, is made a public
record as provided by law. The trust created hereby is irrevocable by Trustor.
-19-
164
9.9 This Deed of Trust cannot be changed except by agreement, in
writing, signed by Trustor and Beneficiary.
9.10 No setoff or claim that Trustor now has or may in the future
have against Beneficiary or the Lenders shall relieve Trustor from paying or
performing the Obligation.
9.11 Each term, condition and provision of this Deed of Trust shall
be interpreted in such manner as to be effective and valid under applicable law
but if any term, condition or provision of this Deed of Trust shall be held to
be void or invalid, the same shall not affect the remainder hereof which shall
be effective as though the void or invalid term, condition or provision had not
been contained herein. In addition, should this instrument be or become
ineffective as a deed of trust, then these presents shall be construed and
enforced as a realty mortgage with the Trustor being the Mortgagor and
Beneficiary being the Mortgagee.
9.12 This Deed of Trust, the Obligation and the agreements of any
person or entity to pay or perform the Obligation shall be governed by and
construed according to the laws of the State of Arizona, except to the extent
that the state in which the Trust Property is located may require that its laws
be applied to the creation and priority of liens, to the perfection of security
interests and to any foreclosure, trustee's sale, appointment of receiver or
other remedy with respect to the Trust Property. Any procedures provided
herein for such remedies shall be modified by and replaced with, where
inconsistent with or required by, any procedures or requirements of the laws of
the state in which the Trust Property is located.
9.13 All notices required or permitted to be given hereunder shall
be in writing and may be given in person or by United States mail, by delivery
service or by electronic transmission. Any notice directed to a party to this
Deed of Trust shall become effective upon the earliest of the following: (i)
actual receipt by that party; (ii) delivery to the designated address of that
party, addressed to that party; or (iii) if given by certified or registered
United States mail, twenty-four (24) hours after deposit with the United States
Postal Service, postage prepaid, addressed to that party at its designated
address. The designated address of a party shall be the address of that party
shown at the beginning of this Deed of Trust or such other address as that
party, from time to time, may specify by notice to the other parties.
-20-
165
IN WITNESS WHEREOF, these presents are executed as of the date
indicated above.
SUNSTONE HOTEL INVESTORS, L.P., a
Delaware limited partnership
BY: SUNSTONE HOTEL INVESTORS, INC.,
a Maryland corporation, its
General Partner
By_____________________________
Name___________________________
Title__________________________
TRUSTOR
-21-
166
STATE OF _______ )
) ss.
County of ________ )
On _________________, 19__, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared
________________________, personally known to me or proved to me on the basis
of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies) and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
________________________________________
Notary Public in and for
said County and State
-22-
167
SCHEDULE "A"
Legal Description:
All that real property situate in the County of _______________, State
of ____________, more particularly described as follows:
168
EXHIBIT D
FORMS OF LIMITED GUARANTY
UNCONDITIONAL GUARANTEE OF PAYMENT
(XXXXXX X. ALTER)
TO: BANK ONE, ARIZONA, NA
CREDIT LYONNAIS NEW YORK BRANCH
XXXXX FARGO BANK, NATIONAL ASSOCIATION
1. FOR VALUAB1LE CONSIDERATION, the undersigned (hereinafter called
"Guarantor"), whose address is set forth after Guarantor's signature below,
unconditionally guarantees and promises to pay to the Lenders (under and as
defined in that certain Revolving Credit Agreement (as modified, amended or
restated from time to time, the "Loan Agreement"), dated of even date herewith,
by and among Bank One, Arizona, NA, Credit Lyonnais New York Branch and Xxxxx
Fargo Bank, National Association (each a "Lender" and collectively, the
"Lenders") and Sunstone Hotel Investors, L.P., a Delaware limited partnership
(the "Borrower"); capitalized terms used herein but not defined herein shall
have the meaning provided for such terms in the Loan Agreement), or order, upon
demand, in lawful money of the United States, the full and prompt payment when
due, whether at maturity or earlier, by reason of acceleration or otherwise,
and at all times thereafter (i) the principal of and interest on the Loans and
(ii) all other Obligations arising under any Loan Document (all such guaranteed
amounts are hereinafter collectively called the "Indebtedness").
2. (a) The obligations of Guarantor hereunder, are separate and
independent of the obligations of Borrower and of any other guarantor
(including, but not limited to, Xxxxxxx X. Xxxxxxxxx), and a separate
action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or any other guarantor or
whether Borrower or any other guarantor is joined in any action or
actions. The obligations of Guarantor hereunder shall survive and
continue in full force and effect until payment in full of the
Indebtedness is actually received by the Lenders and the period of
time has expired during which any payment made by Borrower, Guarantor
or any other guarantor to the Lenders may be determined to be a
Preferential Payment (defined below), notwithstanding any release or
termination of Borrower's, Guarantor's or any other guarantor's
liability by express or implied agreement with the Lenders or by
operation of law and notwithstanding that the Indebtedness or any part
thereof is deemed to have been paid or discharged by operation of law
or by some act or agreement of the Lenders. For purposes of this
Guarantee, the
169
Indebtedness shall be deemed to be paid only to the extent that the
Lenders actually receive immediately available funds and to the extent
of any credit bid by the Lenders at any foreclosure or trustee's sale
of any security for the Indebtedness.
(b) Notwithstanding anything contained herein to the
contrary, the recovery under this Guarantee with respect to the
Indebtedness (which does not include any amounts recovered under
Paragraph 11) shall be limited to the difference between (i) Eight
Million Four Hundred Thousand and No/100 Dollars ($8,400,000) and (ii)
any amounts that are unconditionally paid to and received by the
Lenders under that certain Unconditional Guarantee of Payment, dated
of even date herewith, executed by Xxxxxxx X. Xxxxxxxxx in favor of
the Lenders.
3. Guarantor agrees that to the extent Borrower or Guarantor makes any
payment to the Administrative Agent or the Lenders in connection with the
Indebtedness, and all or any part of such payment is subsequently invalidated,
declared to be fraudulent or preferential , set aside or required to be repaid
by the Administrative Agent or the Lenders or paid over to a trustee, receiver
or any other entity, whether under any bankruptcy act or otherwise (any such
payment is hereinafter referred to as a "Preferential Payment"), then this
Guarantee shall continue to be effective or shall be reinstated, as the case
may be, and, to the extent of such payment or repayment by the Lenders (or the
Administrative Agent, as the case may be), the Indebtedness or part thereof
intended to be satisfied by such Preferential Payment shall be revived and
continued in full force and effect as if said Preferential Payment had not been
made.
4. Guarantor is providing this Guarantee at the instance and request
of Borrower to induce the Lenders to extend or continue financial
accommodations to Borrower. Guarantor hereby represents and warrants that
Guarantor is and will continue to be fully informed about all aspects of the
financial condition and business affairs of Borrower that Guarantor deems
relevant to the obligations of Guarantor hereunder and hereby waives and fully
discharges the Lenders from any and all obligations to communicate to Guarantor
any information whatsoever regarding Borrower or Borrower's financial condition
or business affairs.
5. Guarantor authorizes the Lenders, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, to: (a)
renew, modify, compromise, extend,
-2-
170
accelerate or otherwise change the time for payment of, or otherwise change the
terms of the Indebtedness or any part thereof, including increasing or
decreasing the rate of interest thereon; (b) release, substitute or add any one
or more endorsers or other guarantors; (c) take and hold security for the
payment of this Guarantee or the Indebtedness, and enforce, exchange,
substitute, subordinate, waive or release any such security; (d) proceed
against such security and direct the order or manner of sale of such security
as the Lenders in their discretion may determine; and (e) apply any and all
payments from Borrower, Guarantor or any other guarantor, or recoveries from
such security, in such order or manner as the Lenders in their discretion may
determine.
6. Guarantor waives and agrees not to assert: (a) any right to require
the Lenders to proceed against Borrower or any other guarantor (including, but
not limited to, Xxxxxxx X. Xxxxxxxxx), to proceed against or exhaust any
security for the Indebtedness, to pursue any other remedy available to the
Lenders, or to pursue any remedy in any particular order or manner; (b) the
benefit of any statute of limitations affecting Guarantor's liability hereunder
or the enforcement hereof; (c) demand, diligence, presentment for payment,
protest and demand, and notice of extension, dishonor, protest, demand,
nonpayment and acceptance of this Guarantee; (d) notice of the existence,
creation or incurring of new or additional indebtedness of Borrower to the
Lenders; (e) the benefits of any statutory provision limiting the liability of
a surety, including without limitation the provisions of A.R.S. Sections
12-1641, et seq. and Rule 17(f) of the Arizona Rules of Civil Procedure; (f)
any defense arising by reason of any disability or other defense of Borrower or
by reason of the cessation from any cause whatsoever (other than payment in
full) of the liability of Borrower for the Indebtedness; and (g) the benefits
of any statutory provision limiting the right of the Lenders to recover a
deficiency judgment, or to otherwise proceed against any person or entity
obligated for payment of the Indebtedness, after any foreclosure or trustee's
sale of any security for the Indebtedness, including without limitation the
benefits, if any, to Guarantor of A.R.S. Section 33-814 and Section 12-1566.
Guarantor hereby expressly consents to any impairment of collateral, including,
but not limited to, failure to perfect a security interest and release
collateral and any such impairment or release shall not affect Guarantor's
obligations hereunder. Until payment in full of the Indebtedness, Guarantor
shall have no right of subrogation and hereby waives any right to enforce any
remedy which the Lenders now have, or may hereafter have, against Borrower, and
waives any benefit of, and any right to participate in, any security held by
-3-
171
the Lenders.
7. All existing and future indebtedness of Borrower to Guarantor is
hereby subordinated to the Indebtedness and such indebtedness of Borrower to
Guarantor, if the Lenders so request, shall be collected, enforced and received
by Guarantor as trustee for the Lenders and shall be paid over to the Lenders
on account of the Indebtedness, but without reducing or affecting in any manner
the liability of Guarantor under the other provisions of this Guarantee.
8. In addition to all liens upon, and rights of setoff against, the
monies, securities or other property of Guarantor given to the Lenders by law,
the Lenders shall have a lien and a right of setoff against, and Guarantor
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in, all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with any of the Lenders,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to have
been waived by any act or conduct on the part of the Administrative Agent or
the Lenders, by any neglect to exercise such right of setoff or to enforce such
lien, or by any delay in so doing.
9. It is not necessary for the Lenders to inquire into the powers of
Borrower or the officers, directors, partners or agents acting or purporting to
act on its behalf, and any of the Indebtedness made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.
10. Within one hundred twenty (120) days after the close of each
fiscal year of Guarantor, while this Guarantee remains in effect, Guarantor
shall deliver to the Lenders financial statements of Guarantor, all in
reasonable detail satisfactory to the Lenders. Such financial statements shall
be certified by Guarantor. While this Guarantee remains in effect, Guarantor
shall deliver to the Lenders copies of Guarantor's federal income tax returns
within thirty (30) days of each filing of such returns. When requested by the
Administrative Agent, from time to time, Guarantor shall promptly deliver, in
writing, such further information as the Administrative Agent may reasonably
request relating to any such financial statements or returns.
11. Guarantor agrees to pay all attorneys' fees and all other costs
and expenses which may be incurred by the
-4-
172
Administrative Agent or the Lenders in enforcing this Guarantee or in
collecting all or any part of the Indebtedness. In the event of any court
proceedings, court costs and attorneys' fees shall be set by the court and not
by the jury and shall be included in any judgment obtained by the
Administrative Agent or the Lenders.
12. This Guarantee sets forth the entire agreement of Guarantor and
the Lenders with respect to the subject matter hereof and supersedes all prior
oral and written agreements and representations by the Lenders to Guarantor. No
modification or waiver of any provision of this Guarantee or any right of the
Lenders hereunder and no release of Guarantor from any obligation hereunder
shall be effective unless in a writing executed by an authorized officer of
each of the Lenders. There are no conditions, oral or otherwise, on the
effectiveness of this Guarantee.
13. This Guarantee shall inure to the benefit of the Lenders and
their successors and assigns and shall be binding upon Guarantor and its heirs,
personal representatives, successors and assigns. The Lenders may assign this
Guarantee in whole or in part without notice.
14. This Guarantee shall be governed by and construed according to the
laws of the State of Arizona except that the laws of the state of Guarantor's
domicile shall govern the power of Guarantor to bind the marital community and
the community assets of Guarantor and Guarantor's spouse, or if the state of
Guarantor's domicile is not a community property state, the power of Guarantor
to bind the property of Guarantor's spouse, for the payment and performance of
the obligations under this Guarantee. Guarantor represents and warrants that
the common domicile of Guarantor and Guarantor's spouse is in the State of
California.
15. Guarantor covenants and agrees to be bound by the arbitration
provisions contained in Section 11.15 of the Loan Agreement.
16. Any legal action or proceeding with respect to this Guarantee or
any document related hereto may be brought in Arizona State or United States
District Court sitting in Phoenix, Arizona, and, by execution and delivery of
this Guarantee, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens,
-5-
173
which Guarantor may now or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions. Guarantor 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 Guarantor at its address provided herein. Nothing
contained in this paragraph shall affect the right of the Administrative 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
Guarantor in any other jurisdiction.
17. EACH PARTY TO THIS GUARANTEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER
THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALING OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTEE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
-6-
174
IN WITNESS WHEREOF these presents are executed as of May 1, 1997.
GUARANTOR:
_____________________________________
XXXXXX X. ALTER
Address: ____________________________
____________________________
-7-
175
State of )
) ss.
County of )
On , 1997, before me, the undersigned, a Notary Public in and for said County
and State, personally appeared Xxxxxx X. Alter, personally known to me or
proved to me on the basis of satisfactory evidence to be the person whose name
is subscribed to the Unconditional Guarantee of Payment and acknowledged to me
that he executed the same in his authorized capacity and that by his signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
___________________________________
Notary Public in and for said County
and State
176
UNCONDITIONAL GUARANTEE OF PAYMENT
(XXXXXXX X. XXXXXXXXX)
TO: BANK ONE, ARIZONA, NA
CREDIT LYONN1AIS NEW YORK BRANCH
XXXXX FARGO BANK, NATIONAL ASSOCIATION
1. FOR VALUABLE CONSIDERATION, the undersigned (hereinafter called
"Guarantor"), whose address is set forth after Guarantor's signature below,
unconditionally guarantees and promises to pay to the Lenders (under and as
defined in that certain Revolving Credit Agreement (as modified, amended or
restated from time to time, the "Loan Agreement"), dated of even date herewith,
by and among Bank One, Arizona, NA, Credit Lyonnais New York Branch and Xxxxx
Fargo Bank, National Association (each a "Lender" and collectively, the
"Lenders") and Sunstone Hotel Investors, L.P., a Delaware limited partnership
(the "Borrower"); capitalized terms used herein but not defined herein shall
have the meaning provided for such terms in the Loan Agreement), or order, upon
demand, in lawful money of the United States, the full and prompt payment when
due, whether at maturity or earlier, by reason of acceleration or otherwise,
and at all times thereafter (i) the principal of and interest on the Loans and
(ii) all other Obligations arising under any Loan Document (all such guaranteed
amounts are hereinafter collectively called the "Indebtedness").
2. (a) The obligations of Guarantor hereunder, are separate and
independent of the obligations of Borrower and of any other guarantor
(including, but not limited to, Xxxxxx X. Alter), and a separate
action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or any other guarantor or
whether Borrower or any other guarantor is joined in any action or
actions. The obligations of Guarantor hereunder shall survive and
continue in full force and effect until payment in full of the
Indebtedness is actually received by the Lenders and the period of
time has expired during which any payment made by Borrower, Guarantor
or any other guarantor to the Lenders may be determined to be a
Preferential Payment (defined below), notwithstanding any release or
termination of Borrower's, Guarantor's or any other guarantor's
liability by express or implied agreement with the Lenders or by
operation of law and notwithstanding that the Indebtedness or any part
thereof is deemed to have been paid or discharged by operation of law
or by some act or agreement of the Lenders. For purposes of this
Guarantee, the
177
Indebtedness shall be deemed to be paid only to the extent that the
Lenders actually receive immediately available funds and to the extent
of any credit bid by the Lenders at any foreclosure or trustee's sale
of any security for the Indebtedness.
(b) Notwithstanding anything contained herein to the
contrary, the recovery under this Guarantee with respect to the
Indebtedness (which does not include any amounts recovered under
Paragraph 11) shall be limited to the difference between (i) Eight
Million Four Hundred Thousand and No/100 Dollars ($8,400,000) and (ii)
any amounts that are unconditionally paid to and received by the
Lenders under that certain Unconditional Guarantee of Payment, dated
of even date herewith, executed by Xxxxxx X. Alter in favor of the
Lenders.
3. Guarantor agrees that to the extent Borrower or Guarantor makes any
payment to the Administrative Agent or the Lenders in connection with the
Indebtedness, and all or any part of such payment is subsequently invalidated,
declared to be fraudulent or preferential , set aside or required to be repaid
by the Administrative Agent or the Lenders or paid over to a trustee, receiver
or any other entity, whether under any bankruptcy act or otherwise (any such
payment is hereinafter referred to as a "Preferential Payment"), then this
Guarantee shall continue to be effective or shall be reinstated, as the case
may be, and, to the extent of such payment or repayment by the Lenders (or the
Administrative Agent, as the case may be), the Indebtedness or part thereof
intended to be satisfied by such Preferential Payment shall be revived and
continued in full force and effect as if said Preferential Payment had not been
made.
4. Guarantor is providing this Guarantee at the instance and request
of Borrower to induce the Lenders to extend or continue financial
accommodations to Borrower. Guarantor hereby represents and warrants that
Guarantor is and will continue to be fully informed about all aspects of the
financial condition and business affairs of Borrower that Guarantor deems
relevant to the obligations of Guarantor hereunder and hereby waives and fully
discharges the Lenders from any and all obligations to communicate to Guarantor
any information whatsoever regarding Borrower or Borrower's financial condition
or business affairs.
5. Guarantor authorizes the Lenders, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, to: (a)
renew, modify, compromise, extend,
-2-
178
accelerate or otherwise change the time for payment of, or otherwise change the
terms of the Indebtedness or any part thereof, including increasing or
decreasing the rate of interest thereon; (b) release, substitute or add any one
or more endorsers or other guarantors; (c) take and hold security for the
payment of this Guarantee or the Indebtedness, and enforce, exchange,
substitute, subordinate, waive or release any such security; (d) proceed
against such security and direct the order or manner of sale of such security
as the Lenders in their discretion may determine; and (e) apply any and all
payments from Borrower, Guarantor or any other guarantor, or recoveries from
such security, in such order or manner as the Lenders in their discretion may
determine.
6. Guarantor waives and agrees not to assert: (a) any right to require
the Lenders to proceed against Borrower or any other guarantor (including, but
not limited to, Xxxxxx X. Alter), to proceed against or exhaust any security
for the Indebtedness, to pursue any other remedy available to the Lenders, or
to pursue any remedy in any particular order or manner; (b) the benefit of any
statute of limitations affecting Guarantor's liability hereunder or the
enforcement hereof; (c) demand, diligence, presentment for payment, protest and
demand, and notice of extension, dishonor, protest, demand, nonpayment and
acceptance of this Guarantee; (d) notice of the existence, creation or
incurring of new or additional indebtedness of Borrower to the Lenders; (e) the
benefits of any statutory provision limiting the liability of a surety,
including without limitation the provisions of A.R.S. Sections 12-1641, et seq.
and Rule 17(f) of the Arizona Rules of Civil Procedure; (f) any defense arising
by reason of any disability or other defense of Borrower or by reason of the
cessation from any cause whatsoever (other than payment in full) of the
liability of Borrower for the Indebtedness; and (g) the benefits of any
statutory provision limiting the right of the Lenders to recover a deficiency
judgment, or to otherwise proceed against any person or entity obligated for
payment of the Indebtedness, after any foreclosure or trustee's sale of any
security for the Indebtedness, including without limitation the benefits, if
any, to Guarantor of A.R.S. Section 33-814 and Section 12-1566. Guarantor
hereby expressly consents to any impairment of collateral, including, but not
limited to, failure to perfect a security interest and release collateral and
any such impairment or release shall not affect Guarantor's obligations
hereunder. Until payment in full of the Indebtedness, Guarantor shall have no
right of subrogation and hereby waives any right to enforce any remedy which
the Lenders now have, or may hereafter have, against Borrower, and waives any
benefit of, and any right to participate in, any security held by
-3-
179
the Lenders.
7. All existing and future indebtedness of Borrower to Guarantor is
hereby subordinated to the Indebtedness and such indebtedness of Borrower to
Guarantor, if the Lenders so request, shall be collected, enforced and received
by Guarantor as trustee for the Lenders and shall be paid over to the Lenders
on account of the Indebtedness, but without reducing or affecting in any manner
the liability of Guarantor under the other provisions of this Guarantee.
8. In addition to all liens upon, and rights of setoff against, the
monies, securities or other property of Guarantor given to the Lenders by law,
the Lenders shall have a lien and a right of setoff against, and Guarantor
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in, all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with any of the Lenders,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to have
been waived by any act or conduct on the part of the Administrative Agent or
the Lenders, by any neglect to exercise such right of setoff or to enforce such
lien, or by any delay in so doing.
9. It is not necessary for the Lenders to inquire into the powers of
Borrower or the officers, directors, partners or agents acting or purporting to
act on its behalf, and any of the Indebtedness made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.
10. Within one hundred twenty (120) days after the close of each
fiscal year of Guarantor, while this Guarantee remains in effect, Guarantor
shall deliver to the Lenders financial statements of Guarantor, all in
reasonable detail satisfactory to the Lenders. Such financial statements shall
be certified by Guarantor. While this Guarantee remains in effect, Guarantor
shall deliver to the Lenders copies of Guarantor's federal income tax returns
within thirty (30) days of each filing of such returns. When requested by the
Administrative Agent, from time to time, Guarantor shall promptly deliver, in
writing, such further information as the Administrative Agent may reasonably
request relating to any such financial statements or returns.
11. Guarantor agrees to pay all attorneys' fees and all other costs
and expenses which may be incurred by the
-4-
180
Administrative Agent or the Lenders in enforcing this Guarantee or in
collecting all or any part of the Indebtedness. In the event of any court
proceedings, court costs and attorneys' fees shall be set by the court and not
by the jury and shall be included in any judgment obtained by the
Administrative Agent or the Lenders.
12. This Guarantee sets forth the entire agreement of Guarantor and
the Lenders with respect to the subject matter hereof and supersedes all prior
oral and written agreements and representations by the Lenders to Guarantor. No
modification or waiver of any provision of this Guarantee or any right of the
Lenders hereunder and no release of Guarantor from any obligation hereunder
shall be effective unless in a writing executed by an authorized officer of
each of the Lenders. There are no conditions, oral or otherwise, on the
effectiveness of this Guarantee.
13. This Guarantee shall inure to the benefit of the Lenders and
their successors and assigns and shall be binding upon Guarantor and its heirs,
personal representatives, successors and assigns. The Lenders may assign this
Guarantee in whole or in part without notice.
14. This Guarantee shall be governed by and construed according to the
laws of the State of Arizona except that the laws of the state of Guarantor's
domicile shall govern the power of Guarantor to bind the marital community and
the community assets of Guarantor and Guarantor's spouse, or if the state of
Guarantor's domicile is not a community property state, the power of Guarantor
to bind the property of Guarantor's spouse, for the payment and performance of
the obligations under this Guarantee. Guarantor represents and warrants that
the common domicile of Guarantor and Guarantor's spouse is in the State of
Colorado.
15. Guarantor covenants and agrees to be bound by the arbitration
provisions contained in Section 11.15 of the Loan Agreement.
16 Any legal action or proceeding with respect to this Guarantee or
any document related hereto may be brought in Arizona State or United States
District Court sitting in Phoenix, Arizona, and, by execution and delivery of
this Guarantee, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens,
-5-
181
which Guarantor may now or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions. Guarantor 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 Guarantor at its address provided herein. Nothing
contained in this paragraph shall affect the right of the Administrative 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
Guarantor in any other jurisdiction.
17. EACH PARTY TO THIS GUARANTEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER
THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALING OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTEE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
-6-
182
IN WITNESS WHEREOF these presents are executed as of May 1, 1997.
GUARANTOR:
_____________________________________
XXXXXXX X. XXXXXXXXX
Address:_____________________________
_____________________________
-7-
183
State of )
) ss.
County of )
On , 1997, before me, the undersigned, a Notary Public in and for said County
and State, personally appeared Xxxxxxx X. Xxxxxxxxx, personally known to me or
proved to me on the basis of satisfactory evidence to be the person whose name
is subscribed to the Unconditional Guarantee of Payment and acknowledged to me
that he executed the same in his authorized capacity and that by his signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
and State
184
UNCONDITIONAL GUARANTEE OF PAYMENT
(XXXXXX X. XXXXXXXX)
TO: BANK ONE, ARIZONA, NA
CREDIT LYONNAIS NEW YORK BRANCH
XXXXX FARGO BANK, NATIONAL ASSOCIATION
1. FOR VALUABLE CONSIDERATION, the undersigned (hereinafter
called "Guarantor"), whose address is set forth after Guarantor's signature
below, unconditionally guarantees and promises to pay to the Lenders (under and
as defined in that certain Revolving Credit Agreement (as modified, amended or
restated from time to time, the "Loan Agreement"), dated of even date herewith,
by and among Bank One, Arizona, NA, Credit Lyonnais New York Branch and Xxxxx
Fargo Bank, National Association (each a "Lender" and collectively, the
"Lenders") and Sunstone Hotel Investors, L.P., a Delaware limited partnership
(the "Borrower"); capitalized terms used herein but not defined herein shall
have the meaning provided for such terms in the Loan Agreement), or order, upon
demand, in lawful money of the United States, the full and prompt payment when
due, whether at maturity or earlier, by reason of acceleration or otherwise,
and at all times thereafter (i) the principal of and interest on the Loans and
(ii) all other Obligations arising under any Loan Document (all such guaranteed
amounts are hereinafter collectively called the "Indebtedness").
2. (a) The obligations of Guarantor hereunder, are separate and
independent of the obligations of Borrower and of any other guarantor,
and a separate action or actions may be brought and prosecuted against
Guarantor whether action is brought against Borrower or any other
guarantor or whether Borrower or any other guarantor is joined in any
action or actions. The obligations of Guarantor hereunder shall
survive and continue in full force and effect until payment in full of
the Indebtedness is actually received by the Lenders and the period of
time has expired during which any payment made by Borrower, Guarantor
or any other guarantor to the Lenders may be determined to be a
Preferential Payment (defined below), notwithstanding any release or
termination of Borrower's, Guarantor's or any other guarantor's
liability by express or implied agreement with the Lenders or by
operation of law and notwithstanding that the Indebtedness or any part
thereof is deemed to have been paid or discharged by operation of law
or by some act or agreement of the Lenders. For purposes of this
Guarantee, the Indebtedness shall be deemed to be paid only to the
185
extent that the Lenders actually receive immediately available funds
and to the extent of any credit bid by the Lenders at any foreclosure
or trustee's sale of any security for the Indebtedness.
(b) Notwithstanding anything contained herein to the
contrary, the recovery under this Guarantee with respect to the
Indebtedness (which does not include any amounts recovered under
Paragraph 11) shall be limited to One Hundred Fifty Thousand and
No/100 Dollars ($150,000).
3. Guarantor agrees that to the extent Borrower or Guarantor
makes any payment to the Administrative Agent or the Lenders in connection with
the Indebtedness, and all or any part of such payment is subsequently
invalidated, declared to be fraudulent or preferential , set aside or required
to be repaid by the Administrative Agent or the Lenders or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, and, to the extent of such payment or repayment
by the Lenders (or the Administrative Agent, as the case may be), the
Indebtedness or part thereof intended to be satisfied by such Preferential
Payment shall be revived and continued in full force and effect as if said
Preferential Payment had not been made.
4. Guarantor is providing this Guarantee at the instance and
request of Borrower to induce the Lenders to extend or continue financial
accommodations to Borrower. Guarantor hereby represents and warrants that
Guarantor is and will continue to be fully informed about all aspects of the
financial condition and business affairs of Borrower that Guarantor deems
relevant to the obligations of Guarantor hereunder and hereby waives and fully
discharges the Lenders from any and all obligations to communicate to Guarantor
any information whatsoever regarding Borrower or Borrower's financial condition
or business affairs.
5. Guarantor authorizes the Lenders, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, to: (a)
renew, modify, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Indebtedness or any part
thereof, including increasing or decreasing the rate of interest thereon; (b)
release, substitute or add any one or more endorsers or other guarantors; (c)
take and hold security for the payment of this Guarantee or the Indebtedness,
and enforce, exchange,
-2-
186
substitute, subordinate, waive or release any such security; (d) proceed
against such security and direct the order or manner of sale of such security
as the Lenders in their discretion may determine; and (e) apply any and all
payments from Borrower, Guarantor or any other guarantor, or recoveries from
such security, in such order or manner as the Lenders in their discretion may
determine.
6. Guarantor waives and agrees not to assert: (a) any right to
require the Lenders to proceed against Borrower or any other guarantor, to
proceed against or exhaust any security for the Indebtedness, to pursue any
other remedy available to the Lenders, or to pursue any remedy in any
particular order or manner; (b) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement hereof; (c)
demand, diligence, presentment for payment, protest and demand, and notice of
extension, dishonor, protest, demand, nonpayment and acceptance of this
Guarantee; (d) notice of the existence, creation or incurring of new or
additional indebtedness of Borrower to the Lenders; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of A.R.S. Sections 12-1641, et seq. and Rule 17(f) of
the Arizona Rules of Civil Procedure; (f) any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever (other than payment in full) of the liability of Borrower for
the Indebtedness; and (g) the benefits of any statutory provision limiting the
right of the Lenders to recover a deficiency judgment, or to otherwise proceed
against any person or entity obligated for payment of the Indebtedness, after
any foreclosure or trustee's sale of any security for the Indebtedness,
including without limitation the benefits, if any, to Guarantor of A.R.S.
Section 33-814 and Section 12-1566. Guarantor hereby expressly consents to any
impairment of collateral, including, but not limited to, failure to perfect a
security interest and release collateral and any such impairment or release
shall not affect Guarantor's obligations hereunder. Until payment in full of
the Indebtedness, Guarantor shall have no right of subrogation and hereby
waives any right to enforce any remedy which the Lenders now have, or may
hereafter have, against Borrower, and waives any benefit of, and any right to
participate in, any security held by the Lenders.
7. All existing and future indebtedness of Borrower to Guarantor
is hereby subordinated to the Indebtedness and such indebtedness of Borrower to
Guarantor, if the Lenders so request, shall be collected, enforced and received
by Guarantor as trustee for the Lenders and shall be paid over to the Lenders
on account
-3-
187
of the Indebtedness, but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guarantee.
8. In addition to all liens upon, and rights of setoff against,
the monies, securities or other property of Guarantor given to the Lenders by
law, the Lenders shall have a lien and a right of setoff against, and Guarantor
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in, all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with any of the Lenders,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to
have been waived by any act or conduct on the part of the Administrative Agent
or the Lenders, by any neglect to exercise such right of setoff or to enforce
such lien, or by any delay in so doing.
9. It is not necessary for the Lenders to inquire into the powers
of Borrower or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any of the Indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
10. Within one hundred twenty (120) days after the close of each
fiscal year of Guarantor, while this Guarantee remains in effect, Guarantor
shall deliver to the Lenders financial statements of Guarantor, all in
reasonable detail satisfactory to the Lenders. Such financial statements shall
be certified by Guarantor. When requested by the Administrative Agent, from
time to time, Guarantor shall promptly deliver, in writing, such further
information as the Administrative Agent may reasonably request relating to any
such financial statements.
11. Guarantor agrees to pay all attorneys' fees and all other
costs and expenses which may be incurred by the Administrative Agent or the
Lenders in enforcing this Guarantee or in collecting all or any part of the
Indebtedness. In the event of any court proceedings, court costs and
attorneys' fees shall be set by the court and not by the jury and shall be
included in any judgment obtained by the Administrative Agent or the Lenders.
12. This Guarantee sets forth the entire agreement of Guarantor
and the Lenders with respect to the subject matter hereof and supersedes all
prior oral and written agreements and
-4-
188
representations by the Lenders to Guarantor. No modification or waiver of any
provision of this Guarantee or any right of the Lenders hereunder and no
release of Guarantor from any obligation hereunder shall be effective unless in
a writing executed by an authorized officer of each of the Lenders. There are
no conditions, oral or otherwise, on the effectiveness of this Guarantee.
13. This Guarantee shall inure to the benefit of the Lenders and
their successors and assigns and shall be binding upon Guarantor and its heirs,
personal representatives, successors and assigns. The Lenders may assign this
Guarantee in whole or in part without notice.
14. This Guarantee shall be governed by and construed according to
the laws of the State of Arizona except that the laws of the state of
Guarantor's domicile shall govern the power of Guarantor to bind the marital
community and the community assets of Guarantor and Guarantor's spouse, or if
the state of Guarantor's domicile is not a community property state, the power
of Guarantor to bind the property of Guarantor's spouse, for the payment and
performance of the obligations under this Guarantee. Guarantor represents and
warrants that the common domicile of Guarantor and Guarantor's spouse is in the
State of Minnesota.
15. Guarantor covenants and agrees to be bound by the arbitration
provisions contained in Section 11.15 of the Loan Agreement.
16. Any legal action or proceeding with respect to this Guarantee
or any document related hereto may be brought in Arizona State or United States
District Court sitting in Phoenix, Arizona, and, by execution and delivery of
this Guarantee, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which Guarantor may now or hereafter have to the bringing
of any such action or proceeding in such respective jurisdictions. Guarantor
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 Guarantor at its address provided herein.
Nothing contained in this paragraph shall affect the right of the Administrative
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
Guarantor in any other
-5-
189
jurisdiction.
17. EACH PARTY TO THIS GUARANTEE HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALING OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTEE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
-6-
190
IN WITNESS WHEREOF these presents are executed as of May 1, 1997.
GUARANTOR:
______________________________________
XXXXXX X. XXXXXXXX
Address: _____________________________
______________________________________
-7-
191
State of ___________ )
) ss.
County of __________ )
On ________________, 1997, before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxxxx X. Xxxxxxxx, personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the Unconditional Guarantee of Payment and
acknowledged to me that he executed the same in his authorized capacity and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
______________________________________
Notary Public in and for said County
and State
192
UNCONDITIONAL GUARANTEE OF PAYMENT
(XXXXXX X. XXXXX)
TO: BANK ONE, ARIZONA, NA
CREDIT LYONNAIS NEW YORK BRANCH
XXXXX FARGO BANK, NATIONAL ASSOCIATION
1. FOR VALUABLE CONSIDERATION, the undersigned (hereinafter
called "Guarantor"), whose address is set forth after Guarantor's signature
below, unconditionally guarantees and promises to pay to the Lenders (under and
as defined in that certain Revolving Credit Agreement (as modified, amended or
restated from time to time, the "Loan Agreement"), dated of even date herewith,
by and among Bank One, Arizona, NA, Credit Lyonnais New York Branch and Xxxxx
Fargo Bank, National Association (each a "Lender" and collectively, the
"Lenders") and Sunstone Hotel Investors, L.P., a Delaware limited partnership
(the "Borrower"); capitalized terms used herein but not defined herein shall
have the meaning provided for such terms in the Loan Agreement), or order, upon
demand, in lawful money of the United States, the full and prompt payment when
due, whether at maturity or earlier, by reason of acceleration or otherwise,
and at all times thereafter (i) the principal of and interest on the Loans and
(ii) all other Obligations arising under any Loan Document (all such guaranteed
amounts are hereinafter collectively called the "Indebtedness").
2. (a) The obligations of Guarantor hereunder, are separate and
independent of the obligations of Borrower and of any other guarantor,
and a separate action or actions may be brought and prosecuted against
Guarantor whether action is brought against Borrower or any other
guarantor or whether Borrower or any other guarantor is joined in any
action or actions. The obligations of Guarantor hereunder shall
survive and continue in full force and effect until payment in full of
the Indebtedness is actually received by the Lenders and the period of
time has expired during which any payment made by Borrower, Guarantor
or any other guarantor to the Lenders may be determined to be a
Preferential Payment (defined below), notwithstanding any release or
termination of Borrower's, Guarantor's or any other guarantor's
liability by express or implied agreement with the Lenders or by
operation of law and notwithstanding that the Indebtedness or any part
thereof is deemed to have been paid or discharged by operation of law
or by some act or agreement of the Lenders. For purposes of this
Guarantee, the Indebtedness shall be deemed to be paid only to the
193
extent that the Lenders actually receive immediately available funds
and to the extent of any credit bid by the Lenders at any foreclosure
or trustee's sale of any security for the Indebtedness.
(b) Notwithstanding anything contained herein to the
contrary, the recovery under this Guarantee with respect to the
Indebtedness (which does not include any amounts recovered under
Paragraph 11) shall be limited to Sixty Thousand and No/100 Dollars
($60,000).
3. Guarantor agrees that to the extent Borrower or Guarantor
makes any payment to the Administrative Agent or the Lenders in connection with
the Indebtedness, and all or any part of such payment is subsequently
invalidated, declared to be fraudulent or preferential , set aside or required
to be repaid by the Administrative Agent or the Lenders or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, and, to the extent of such payment or repayment
by the Lenders (or the Administrative Agent, as the case may be), the
Indebtedness or part thereof intended to be satisfied by such Preferential
Payment shall be revived and continued in full force and effect as if said
Preferential Payment had not been made.
4. Guarantor is providing this Guarantee at the instance and
request of Borrower to induce the Lenders to extend or continue financial
accommodations to Borrower. Guarantor hereby represents and warrants that
Guarantor is and will continue to be fully informed about all aspects of the
financial condition and business affairs of Borrower that Guarantor deems
relevant to the obligations of Guarantor hereunder and hereby waives and fully
discharges the Lenders from any and all obligations to communicate to Guarantor
any information whatsoever regarding Borrower or Borrower's financial condition
or business affairs.
5. Guarantor authorizes the Lenders, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, to: (a)
renew, modify, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Indebtedness or any part
thereof, including increasing or decreasing the rate of interest thereon; (b)
release, substitute or add any one or more endorsers or other guarantors; (c)
take and hold security for the payment of this Guarantee or the Indebtedness,
and enforce, exchange, substitute, subordinate, waive or release any such
security; (d)
-2-
194
proceed against such security and direct the order or manner of sale of such
security as the Lenders in their discretion may determine; and (e) apply any
and all payments from Borrower, Guarantor or any other guarantor, or recoveries
from such security, in such order or manner as the Lenders in their discretion
may determine.
6. Guarantor waives and agrees not to assert: (a) any right to
require the Lenders to proceed against Borrower or any other guarantor, to
proceed against or exhaust any security for the Indebtedness, to pursue any
other remedy available to the Lenders, or to pursue any remedy in any
particular order or manner; (b) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement hereof; (c)
demand, diligence, presentment for payment, protest and demand, and notice of
extension, dishonor, protest, demand, nonpayment and acceptance of this
Guarantee; (d) notice of the existence, creation or incurring of new or
additional indebtedness of Borrower to the Lenders; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of A.R.S. Sections 12-1641, et seq. and Rule 17(f) of
the Arizona Rules of Civil Procedure; (f) any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever (other than payment in full) of the liability of Borrower for
the Indebtedness; and (g) the benefits of any statutory provision limiting the
right of the Lenders to recover a deficiency judgment, or to otherwise proceed
against any person or entity obligated for payment of the Indebtedness, after
any foreclosure or trustee's sale of any security for the Indebtedness,
including without limitation the benefits, if any, to Guarantor of A.R.S.
Section 33-814 and Section 12-1566. Guarantor hereby expressly consents to any
impairment of collateral, including, but not limited to, failure to perfect a
security interest and release collateral and any such impairment or release
shall not affect Guarantor's obligations hereunder. Until payment in full of
the Indebtedness, Guarantor shall have no right of subrogation and hereby
waives any right to enforce any remedy which the Lenders now have, or may
hereafter have, against Borrower, and waives any benefit of, and any right to
participate in, any security held by the Lenders.
7. All existing and future indebtedness of Borrower to Guarantor
is hereby subordinated to the Indebtedness and such indebtedness of Borrower to
Guarantor, if the Lenders so request, shall be collected, enforced and received
by Guarantor as trustee for the Lenders and shall be paid over to the Lenders
on account of the Indebtedness, but without reducing or affecting in any
-3-
195
manner the liability of Guarantor under the other provisions of this Guarantee.
8. In addition to all liens upon, and rights of setoff against,
the monies, securities or other property of Guarantor given to the Lenders by
law, the Lenders shall have a lien and a right of setoff against, and Guarantor
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in, all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with any of the Lenders,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to
have been waived by any act or conduct on the part of the Administrative Agent
or the Lenders, by any neglect to exercise such right of setoff or to enforce
such lien, or by any delay in so doing.
9. It is not necessary for the Lenders to inquire into the powers
of Borrower or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any of the Indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
10. Within one hundred twenty (120) days after the close of each
fiscal year of Guarantor, while this Guarantee remains in effect, Guarantor
shall deliver to the Lenders financial statements of Guarantor, all in
reasonable detail satisfactory to the Lenders. Such financial statements shall
be certified by Guarantor. When requested by the Administrative Agent, from
time to time, Guarantor shall promptly deliver, in writing, such further
information as the Administrative Agent may reasonably request relating to any
such financial statements.
11. Guarantor agrees to pay all attorneys' fees and all other
costs and expenses which may be incurred by the Administrative Agent or the
Lenders in enforcing this Guarantee or in collecting all or any part of the
Indebtedness. In the event of any court proceedings, court costs and
attorneys' fees shall be set by the court and not by the jury and shall be
included in any judgment obtained by the Administrative Agent or the Lenders.
12. This Guarantee sets forth the entire agreement of Guarantor
and the Lenders with respect to the subject matter hereof and supersedes all
prior oral and written agreements and representations by the Lenders to
Guarantor. No modification or waiver of any provision of this Guarantee or any
right of the
-4-
196
Lenders hereunder and no release of Guarantor from any obligation hereunder
shall be effective unless in a writing executed by an authorized officer of
each of the Lenders. There are no conditions, oral or otherwise, on the
effectiveness of this Guarantee.
13. This Guarantee shall inure to the benefit of the Lenders and
their successors and assigns and shall be binding upon Guarantor and its heirs,
personal representatives, successors and assigns. The Lenders may assign this
Guarantee in whole or in part without notice.
14. This Guarantee shall be governed by and construed according to
the laws of the State of Arizona except that the laws of the state of
Guarantor's domicile shall govern the power of Guarantor to bind the marital
community and the community assets of Guarantor and Guarantor's spouse, or if
the state of Guarantor's domicile is not a community property state, the power
of Guarantor to bind the property of Guarantor's spouse, for the payment and
performance of the obligations under this Guarantee. Guarantor represents and
warrants that the common domicile of Guarantor and Guarantor's spouse is in the
State of Illinois.
15. Guarantor covenants and agrees to be bound by the arbitration
provisions contained in Section 11.15 of the Loan Agreement.
16. Any legal action or proceeding with respect to this Guarantee
or any document related hereto may be brought in Arizona State or United States
District Court sitting in Phoenix, Arizona, and, by execution and delivery of
this Guarantee, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which Guarantor may now or hereafter have to the bringing
of any such action or proceeding in such respective jurisdictions. Guarantor
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 Guarantor at its address provided
herein. Nothing contained in this paragraph shall affect the right of the
Administrative 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 Guarantor in any other jurisdiction.
-5-
197
17. EACH PARTY TO THIS GUARANTEE HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALING OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTEE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
-6-
198
IN WITNESS WHEREOF these presents are executed as of May 1, 1997.
GUARANTOR:
______________________________________
XXXXXX X. XXXXX
Address: _____________________________
______________________________________
-7-
199
State of ___________ )
) ss.
County of __________ )
On ________________, 1997, before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxxxx X. Xxxxx, personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the Unconditional Guarantee of Payment and
acknowledged to me that he executed the same in his authorized capacity and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
______________________________________
Notary Public in and for said County
and State
200
UNCONDITIONAL GUARANTEE OF PAYMENT
(C. XXXXXX XXXXXX)
TO: BANK ONE, ARIZONA, NA
CREDIT LYONNAIS NEW YORK BRANCH
XXXXX FARGO BANK, NATIONAL ASSOCIATION
1. FOR VALUABLE CONSIDERATION, the undersigned (hereinafter
called "Guarantor"), whose address is set forth after Guarantor's signature
below, unconditionally guarantees and promises to pay to the Lenders (under and
as defined in that certain Revolving Credit Agreement (as modified, amended or
restated from time to time, the "Loan Agreement"), dated of even date herewith,
by and among Bank One, Arizona, NA, Credit Lyonnais New York Branch and Xxxxx
Fargo Bank, National Association (each a "Lender" and collectively, the
"Lenders") and Sunstone Hotel Investors, L.P., a Delaware limited partnership
(the "Borrower"); capitalized terms used herein but not defined herein shall
have the meaning provided for such terms in the Loan Agreement), or order, upon
demand, in lawful money of the United States, the full and prompt payment when
due, whether at maturity or earlier, by reason of acceleration or otherwise,
and at all times thereafter (i) the principal of and interest on the Loans and
(ii) all other Obligations arising under any Loan Document (all such guaranteed
amounts are hereinafter collectively called the "Indebtedness").
2. (a) The obligations of Guarantor hereunder, are separate and
independent of the obligations of Borrower and of any other guarantor,
and a separate action or actions may be brought and prosecuted against
Guarantor whether action is brought against Borrower or any other
guarantor or whether Borrower or any other guarantor is joined in any
action or actions. The obligations of Guarantor hereunder shall
survive and continue in full force and effect until payment in full of
the Indebtedness is actually received by the Lenders and the period of
time has expired during which any payment made by Borrower, Guarantor
or any other guarantor to the Lenders may be determined to be a
Preferential Payment (defined below), notwithstanding any release or
termination of Borrower's, Guarantor's or any other guarantor's
liability by express or implied agreement with the Lenders or by
operation of law and notwithstanding that the Indebtedness or any part
thereof is deemed to have been paid or discharged by operation of law
or by some act or agreement of the Lenders. For purposes of this
Guarantee, the Indebtedness shall be deemed to be paid only to the
201
extent that the Lenders actually receive immediately available funds
and to the extent of any credit bid by the Lenders at any foreclosure
or trustee's sale of any security for the Indebtedness.
(b) Notwithstanding anything contained herein to the
contrary, the recovery under this Guarantee with respect to the
Indebtedness (which does not include any amounts recovered under
Paragraph 11) shall be limited to Five Hundred Thousand and No/100
Dollars ($500,000).
3. Guarantor agrees that to the extent Borrower or Guarantor
makes any payment to the Administrative Agent or the Lenders in connection with
the Indebtedness, and all or any part of such payment is subsequently
invalidated, declared to be fraudulent or preferential , set aside or required
to be repaid by the Administrative Agent or the Lenders or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, and, to the extent of such payment or repayment
by the Lenders (or the Administrative Agent, as the case may be), the
Indebtedness or part thereof intended to be satisfied by such Preferential
Payment shall be revived and continued in full force and effect as if said
Preferential Payment had not been made.
4. Guarantor is providing this Guarantee at the instance and
request of Borrower to induce the Lenders to extend or continue financial
accommodations to Borrower. Guarantor hereby represents and warrants that
Guarantor is and will continue to be fully informed about all aspects of the
financial condition and business affairs of Borrower that Guarantor deems
relevant to the obligations of Guarantor hereunder and hereby waives and fully
discharges the Lenders from any and all obligations to communicate to Guarantor
any information whatsoever regarding Borrower or Borrower's financial condition
or business affairs.
5. Guarantor authorizes the Lenders, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, to: (a)
renew, modify, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Indebtedness or any part
thereof, including increasing or decreasing the rate of interest thereon; (b)
release, substitute or add any one or more endorsers or other guarantors; (c)
take and hold security for the payment of this Guarantee or the Indebtedness,
and enforce, exchange, substitute, subordinate, waive or release any such
security; (d)
-2-
202
proceed against such security and direct the order or manner of sale of such
security as the Lenders in their discretion may determine; and (e) apply any
and all payments from Borrower, Guarantor or any other guarantor, or recoveries
from such security, in such order or manner as the Lenders in their discretion
may determine.
6. Guarantor waives and agrees not to assert: (a) any right to
require the Lenders to proceed against Borrower or any other guarantor, to
proceed against or exhaust any security for the Indebtedness, to pursue any
other remedy available to the Lenders, or to pursue any remedy in any
particular order or manner; (b) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement hereof; (c)
demand, diligence, presentment for payment, protest and demand, and notice of
extension, dishonor, protest, demand, nonpayment and acceptance of this
Guarantee; (d) notice of the existence, creation or incurring of new or
additional indebtedness of Borrower to the Lenders; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of A.R.S. Sections 12-1641, et seq. and Rule 17(f) of
the Arizona Rules of Civil Procedure; (f) any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever (other than payment in full) of the liability of Borrower for
the Indebtedness; and (g) the benefits of any statutory provision limiting the
right of the Lenders to recover a deficiency judgment, or to otherwise proceed
against any person or entity obligated for payment of the Indebtedness, after
any foreclosure or trustee's sale of any security for the Indebtedness,
including without limitation the benefits, if any, to Guarantor of A.R.S.
Section 33-814 and Section 12-1566. Guarantor hereby expressly consents to any
impairment of collateral, including, but not limited to, failure to perfect a
security interest and release collateral and any such impairment or release
shall not affect Guarantor's obligations hereunder. Until payment in full of
the Indebtedness, Guarantor shall have no right of subrogation and hereby
waives any right to enforce any remedy which the Lenders now have, or may
hereafter have, against Borrower, and waives any benefit of, and any right to
participate in, any security held by the Lenders.
7. All existing and future indebtedness of Borrower to Guarantor
is hereby subordinated to the Indebtedness and such indebtedness of Borrower to
Guarantor, if the Lenders so request, shall be collected, enforced and received
by Guarantor as trustee for the Lenders and shall be paid over to the Lenders
on account of the Indebtedness, but without reducing or affecting in any
-3-
203
manner the liability of Guarantor under the other provisions of this Guarantee.
8. In addition to all liens upon, and rights of setoff against,
the monies, securities or other property of Guarantor given to the Lenders by
law, the Lenders shall have a lien and a right of setoff against, and Guarantor
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in, all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with any of the Lenders,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to
have been waived by any act or conduct on the part of the Administrative Agent
or the Lenders, by any neglect to exercise such right of setoff or to enforce
such lien, or by any delay in so doing.
9. It is not necessary for the Lenders to inquire into the powers
of Borrower or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any of the Indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
10. Within one hundred twenty (120) days after the close of each
fiscal year of Guarantor, while this Guarantee remains in effect, Guarantor
shall deliver to the Lenders financial statements of Guarantor, all in
reasonable detail satisfactory to the Lenders. Such financial statements shall
be certified by Guarantor. When requested by the Administrative Agent, from
time to time, Guarantor shall promptly deliver, in writing, such further
information as the Administrative Agent may reasonably request relating to any
such financial statements.
11. Guarantor agrees to pay all attorneys' fees and all other
costs and expenses which may be incurred by the Administrative Agent or the
Lenders in enforcing this Guarantee or in collecting all or any part of the
Indebtedness. In the event of any court proceedings, court costs and
attorneys' fees shall be set by the court and not by the jury and shall be
included in any judgment obtained by the Administrative Agent or the Lenders.
12. This Guarantee sets forth the entire agreement of Guarantor
and the Lenders with respect to the subject matter hereof and supersedes all
prior oral and written agreements and representations by the Lenders to
Guarantor. No modification or waiver of any provision of this Guarantee or any
right of the
-4-
204
Lenders hereunder and no release of Guarantor from any obligation hereunder
shall be effective unless in a writing executed by an authorized officer of
each of the Lenders. There are no conditions, oral or otherwise, on the
effectiveness of this Guarantee.
13. This Guarantee shall inure to the benefit of the Lenders and
their successors and assigns and shall be binding upon Guarantor and its heirs,
personal representatives, successors and assigns. The Lenders may assign this
Guarantee in whole or in part without notice.
14. This Guarantee shall be governed by and construed according to
the laws of the State of Arizona except that the laws of the state of
Guarantor's domicile shall govern the power of Guarantor to bind the marital
community and the community assets of Guarantor and Guarantor's spouse, or if
the state of Guarantor's domicile is not a community property state, the power
of Guarantor to bind the property of Guarantor's spouse, for the payment and
performance of the obligations under this Guarantee. Guarantor represents and
warrants that the common domicile of Guarantor and Guarantor's spouse is in the
State of Colorado.
15. Guarantor covenants and agrees to be bound by the arbitration
provisions contained in Section 11.15 of the Loan Agreement.
16. Any legal action or proceeding with respect to this Guarantee
or any document related hereto may be brought in Arizona State or United States
District Court sitting in Phoenix, Arizona, and, by execution and delivery of
this Guarantee, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which Guarantor may now or hereafter have to the bringing
of any such action or proceeding in such respective jurisdictions. Guarantor
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 Guarantor at its address provided
herein. Nothing contained in this paragraph shall affect the right of the
Administrative 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 Guarantor in any other jurisdiction.
-5-
205
17. EACH PARTY TO THIS GUARANTEE HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALING OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTEE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
-6-
206
IN WITNESS WHEREOF these presents are executed as of May 1, 1997.
GUARANTOR:
___________________________________
C. XXXXXX XXXXXX
Address: __________________________
___________________________________
-7-
207
State of ___________ )
) ss.
County of __________ )
On ________________, 1997, before me, the undersigned, a Notary Public in and
for said County and State, personally appeared C. Xxxxxx Xxxxxx, personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the Unconditional Guarantee of Payment and
acknowledged to me that he executed the same in his authorized capacity and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
Notary Public in and for said County
and State
208
UNCONDITIONAL GUARANTEE OF PAYMENT
(XXXXXXX, L.L.C.)
TO: BANK ONE, ARIZONA, NA
CREDIT LYONNAIS NEW YORK BRANCH
XXXXX FARGO BANK, NATIONAL ASSOCIATION
1. FOR VALUABLE CONSIDERATION, the undersigned (hereinafter
called "Guarantor"), whose principal office is set forth after Guarantor's
signature below, unconditionally guarantees and promises to pay to the Lenders
(under and as defined in that certain Revolving Credit Agreement (as modified,
amended or restated from time to time, the "Loan Agreement"), dated of even
date herewith, by and among Bank One, Arizona, NA, Credit Lyonnais New York
Branch and Xxxxx Fargo Bank, National Association (each a "Lender" and
collectively, the "Lenders") and Sunstone Hotel Investors, L.P., a Delaware
limited partnership (the "Borrower"); capitalized terms used herein but not
defined herein shall have the meaning provided for such terms in the Loan
Agreement), or order, upon demand, in lawful money of the United States, the
full and prompt payment when due, whether at maturity or earlier, by reason of
acceleration or otherwise, and at all times thereafter (i) the principal of and
interest on the Loans and (ii) all other Obligations arising under any Loan
Document (all such guaranteed amounts are hereinafter collectively called the
"Indebtedness").
2. (a) The obligations of Guarantor hereunder, are separate and
independent of the obligations of Borrower and of any other guarantor,
and a separate action or actions may be brought and prosecuted against
Guarantor whether action is brought against Borrower or any other
guarantor or whether Borrower or any other guarantor is joined in any
action or actions. The obligations of Guarantor hereunder shall
survive and continue in full force and effect until payment in full of
the Indebtedness is actually received by the Lenders and the period of
time has expired during which any payment made by Borrower, Guarantor
or any other guarantor to the Lenders may be determined to be a
Preferential Payment (defined below), notwithstanding any release or
termination of Borrower's, Guarantor's or any other guarantor's
liability by express or implied agreement with the Lenders or by
operation of law and notwithstanding that the Indebtedness or any part
thereof is deemed to have been paid or discharged by operation of law
or by some act or agreement of the Lenders. For purposes of this
Guarantee, the Indebtedness shall be deemed to be paid only to the
209
extent that the Lenders actually receive immediately available funds
and to the extent of any credit bid by the Lenders at any foreclosure
or trustee's sale of any security for the Indebtedness.
(b) Notwithstanding anything contained herein to the
contrary, the recovery under this Guarantee with respect to the
Indebtedness (which does not include any amounts recovered under
Paragraph 11) shall be limited to Five Million Eight Hundred Thousand
and No/100 Dollars (5,800,000).
3. Guarantor agrees that to the extent Borrower or Guarantor
makes any payment to the Administrative Agent or the Lenders in connection with
the Indebtedness, and all or any part of such payment is subsequently
invalidated, declared to be fraudulent or preferential , set aside or required
to be repaid by the Administrative Agent or the Lenders or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, and, to the extent of such payment or repayment
by the Lenders (or the Administrative Agent, as the case may be), the
Indebtedness or part thereof intended to be satisfied by such Preferential
Payment shall be revived and continued in full force and effect as if said
Preferential Payment had not been made.
4. Guarantor is providing this Guarantee at the instance and
request of Borrower to induce the Lenders to extend or continue financial
accommodations to Borrower. Guarantor hereby represents and warrants that
Guarantor is and will continue to be fully informed about all aspects of the
financial condition and business affairs of Borrower that Guarantor deems
relevant to the obligations of Guarantor hereunder and hereby waives and fully
discharges the Lenders from any and all obligations to communicate to Guarantor
any information whatsoever regarding Borrower or Borrower's financial condition
or business affairs.
5. Guarantor authorizes the Lenders, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, to: (a)
renew, modify, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Indebtedness or any part
thereof, including increasing or decreasing the rate of interest thereon; (b)
release, substitute or add any one or more endorsers or other guarantors; (c)
take and hold security for the payment of this Guarantee or the Indebtedness,
and enforce, exchange,
-2-
210
substitute, subordinate, waive or release any such security; (d) proceed
against such security and direct the order or manner of sale of such security
as the Lenders in their discretion may determine; and (e) apply any and all
payments from Borrower, Guarantor or any other guarantor, or recoveries from
such security, in such order or manner as the Lenders in their discretion may
determine.
6. Guarantor waives and agrees not to assert: (a) any right to
require the Lenders to proceed against Borrower or any other guarantor, to
proceed against or exhaust any security for the Indebtedness, to pursue any
other remedy available to the Lenders, or to pursue any remedy in any
particular order or manner; (b) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement hereof; (c)
demand, diligence, presentment for payment, protest and demand, and notice of
extension, dishonor, protest, demand, nonpayment and acceptance of this
Guarantee; (d) notice of the existence, creation or incurring of new or
additional indebtedness of Borrower to the Lenders; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of A.R.S. Sections 12-1641, et seq. and Rule 17(f) of
the Arizona Rules of Civil Procedure; (f) any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever (other than payment in full) of the liability of Borrower for
the Indebtedness; and (g) the benefits of any statutory provision limiting the
right of the Lenders to recover a deficiency judgment, or to otherwise proceed
against any person or entity obligated for payment of the Indebtedness, after
any foreclosure or trustee's sale of any security for the Indebtedness,
including without limitation the benefits, if any, to Guarantor of A.R.S.
Section 33-814 and Section 12-1566. Guarantor hereby expressly consents to any
impairment of collateral, including, but not limited to, failure to perfect a
security interest and release collateral and any such impairment or release
shall not affect Guarantor's obligations hereunder. Until payment in full of
the Indebtedness, Guarantor shall have no right of subrogation and hereby
waives any right to enforce any remedy which the Lenders now have, or may
hereafter have, against Borrower, and waives any benefit of, and any right to
participate in, any security held by the Lenders.
7. All existing and future indebtedness of Borrower to Guarantor
is hereby subordinated to the Indebtedness and such indebtedness of Borrower to
Guarantor, if the Lenders so request, shall be collected, enforced and received
by Guarantor as trustee for the Lenders and shall be paid over to the Lenders
on account
-3-
211
of the Indebtedness, but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guarantee.
8. In addition to all liens upon, and rights of setoff against,
the monies, securities or other property of Guarantor given to the Lenders by
law, the Lenders shall have a lien and a right of setoff against, and Guarantor
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in, all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with any of the Lenders,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to
have been waived by any act or conduct on the part of the Administrative Agent
or the Lenders, by any neglect to exercise such right of setoff or to enforce
such lien, or by any delay in so doing.
9. It is not necessary for the Lenders to inquire into the powers
of Borrower or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any of the Indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
10. Within one hundred twenty (120) days after the close of each
fiscal year of Guarantor, while this Guarantee remains in effect, Guarantor
shall deliver to the Lenders financial statements of Guarantor, all in
reasonable detail satisfactory to the Lenders. Such financial statements shall
be certified by Guarantor. While this Guarantee remains in effect, Guarantor
shall deliver to the Lenders copies of Guarantor's federal income tax returns
within thirty (30) days of each filing of such returns. When requested by the
Administrative Agent, from time to time, Guarantor shall promptly deliver, in
writing, such further information as the Administrative Agent may reasonably
request relating to any such financial statements or returns.
11. Guarantor agrees to pay all attorneys' fees and all other
costs and expenses which may be incurred by the Administrative Agent or the
Lenders in enforcing this Guarantee or in collecting all or any part of the
Indebtedness. In the event of any court proceedings, court costs and
attorneys' fees shall be set by the court and not by the jury and shall be
included in any judgment obtained by the Administrative Agent or the Lenders.
-4-
212
12. This Guarantee sets forth the entire agreement of Guarantor
and the Lenders with respect to the subject matter hereof and supersedes all
prior oral and written agreements and representations by the Lenders to
Guarantor. No modification or waiver of any provision of this Guarantee or any
right of the Lenders hereunder and no release of Guarantor from any obligation
hereunder shall be effective unless in a writing executed by an authorized
officer of each of the Lenders. There are no conditions, oral or otherwise, on
the effectiveness of this Guarantee.
13. This Guarantee shall inure to the benefit of the Lenders and
their successors and assigns and shall be binding upon Guarantor and its
successors and assigns. The Lenders may assign this Guarantee in whole or in
part without notice.
14. This Guarantee shall be governed by and construed according to
the laws of the State of Arizona.
15. Guarantor covenants and agrees to be bound by the arbitration
provisions contained in Section 11.15 of the Loan Agreement.
16. Any legal action or proceeding with respect to this Guarantee
or any document related hereto may be brought in Arizona State or United States
District Court sitting in Phoenix, Arizona, and, by execution and delivery of
this Guarantee, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which Guarantor may now or hereafter have to the bringing
of any such action or proceeding in such respective jurisdictions. Guarantor
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 Guarantor at its address provided
herein. Nothing contained in this paragraph shall affect the right of the
Administrative 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 Guarantor in any other jurisdiction.
. 17. EACH PARTY TO THIS GUARANTEE HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR
-5-
213
(B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALING OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR
HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY PARTY TO THIS GUARANTEE MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
-6-
214
IN WITNESS WHEREOF these presents are executed as of May 1, 1997.
GUARANTOR:
XXXXXXX, L.L.C., a California limited
liability company
By:__________________________________
Its:______________________________
-7-
215
State of ___________ )
) ss.
County of __________ )
On ________________, 1997, before me, the undersigned, a Notary Public in and
for said County and State, personally appeared _______________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the Unconditional Guarantee of Payment and
acknowledged to me that he/she executed the same in his/her authorized capacity
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
____________________________________
Notary Public in and for said County
and State
216
EXHIBIT E
NOTE
Phoenix, Arizona
$33,333,333.34 May 1, 1997
FOR VALUE RECEIVED, the undersigned, SUNSTONE HOTEL INVESTORS,
L.P., a Delaware limited partnership (the "Borrower"), HEREBY PROMISES TO PAY
to the order of BANK ONE, ARIZONA, NA ("Lender"), on the date or dates
designated in the Credit Agreement (as hereinafter defined), and, if not sooner
paid, on the Final Maturity Date, the principal amount of Thirty-Three Million
Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three and 34/100
Dollars ($33,333,333.34), or so much thereof as the Lender may advance,
pursuant to the terms and provisions of that certain Revolving Credit Agreement
dated as of May 1, 1997 by and among the Borrower, the Lender, the other
institutions from time to time parties thereto as Lenders, and Bank One,
Arizona, NA, as Administrative Agent for the Lenders (as the same may be
amended, restated, supplemented, or otherwise modified from time to time, the
"Credit Agreement"). Capitalized terms used herein, and not otherwise defined
herein, shall have the meanings ascribed to such terms in the Credit Agreement.
The Borrower further promises to pay interest on the unpaid
principal amount of each Loan from the date advanced until such principal
amount is paid in full, at such interest rates (which shall not exceed the
maximum rate permitted by applicable law), and at such times, as are specified
in the Credit Agreement. The Borrower agrees to an effective rate of interest
that is the applicable rate specified in the Credit Agreement plus any
additional rate of interest resulting from any other charges in the nature of
interest paid or to be paid by or on behalf of the Borrower, or any benefit
received or to be received by the Lender, in connection with the Loans
evidenced by this Note.
All payments of principal and interest in respect of this Note
shall be made to the Administrative Agent in lawful money of the United States
of America in same day funds for the account of the Lender in accordance with
the terms of the Credit Agreement.
The Borrower may from time to time during the term of this
Note borrow, partially or wholly repay its outstanding borrowing, and reborrow,
subject to all of the limitations, terms and conditions of this Note and of the
Credit Agreement, provided that the outstanding principal balance of this Note
shall at no time exceed the principal amount stated above. The unpaid
217
principal balance of this Note at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made
hereon by the Borrower, which principal balance may be endorsed hereon from
time to time by the holder.
This Note is one of the Notes referred to in, is executed and
delivered pursuant to, and is entitled to the benefits of, the Credit
Agreement, to which Credit Agreement reference is hereby made for a statement
of the terms and conditions under which this Note may be prepaid or the
Obligations accelerated or extended. The terms and conditions of the Credit
Agreement are hereby incorporated in their entirety herein by reference as
though fully set forth herein. Upon the occurrence of certain Events of
Default as more particularly described in the Credit Agreement, the unpaid
principal amount evidenced by this Note shall become, and upon the occurrence
of certain other Events of Default, such unpaid principal amount may be
declared to be, due and payable in the manner, upon the conditions and with the
effect provided in the Credit Agreement.
Pursuant to the terms of the Credit Agreement, this Note may
also from time to time be secured by certain Deeds of Trust and other Security
Documents, and reference is made to such Security Documents for certain terms
and conditions upon which the unpaid principal balance of this Note may become
or declared to be due and payable and for other terms and conditions with
respect to any collateral securing this Note and the other Obligations.
The Borrower and all sureties, Guarantors and/or endorsers
hereof (or of any obligation hereunder) and accommodation parties hereon (each
hereinafter called a "Surety") each: (a) severally waive any exemption laws
and rights thereunder affecting the full collection of this Note; (b) severally
waive any and all formalities in connection with this Note to the maximum
extent allowed by law, including (but not limited to) demand, diligence,
presentment for payment, protest and demand, and notice of extension, dishonor,
protest, demand and nonpayment of this Note; and (c) consent that the Lender
may extend the time of payment or otherwise modify the terms of payment of any
part or the whole of the debt evidenced by this Note, at the request of any
other Person liable hereon, and such consent shall not alter or diminish the
liability of any Person hereon.
In addition, the Borrower and each Surety waive and agree not
to assert: (a) any right to require the Lender or the Administrative Agent to
proceed against the Borrower or any other
2
218
Surety, to proceed against or exhaust any security for the Note, to pursue any
other remedy available to the Lender, or to pursue any remedy in any particular
order or manner; (b) the benefit of any statute of limitations affecting their
liability hereunder or the enforcement hereof; (c) the benefits of any legal or
equitable doctrine or principle of marshalling; (d) notice of the existence,
creation or incurring of new or additional indebtedness of the Borrower to the
Lender; (e) the benefits of any statutory provision limiting the liability of a
Surety, including without limitation the provisions of Sections 12-1641, et
seq., of the Arizona Revised Statutes and Rule 17(f) of the Arizona Rules of
Civil Procedure; (f) any defense arising by reason of any disability or other
defense of the Borrower or by reason of the cessation from any cause whatsoever
(other than payment in full) of the liability of the Borrower for payment of
the Note; and (g) the benefits of any statutory provision limiting the right of
the Lender to recover a deficiency judgment, or otherwise to proceed against
any Person obligated for payment of the Note, after any foreclosure or
trustee's sale of any security for the Note, including without limitation the
benefits, if any, to a Surety of Arizona Revised Statutes Section 33-814 and
Section 12-1566. No Surety shall have any right of subrogation and each hereby
waives any right to enforce any remedy which the Lender now has, or may
hereafter have, against the Borrower or any other Surety, and waives any
benefit of, and any right to participate in, any security now or hereafter held
by the Lender.
The Borrower and each Surety agree that, to the extent the
Borrower or any Surety makes any payment to the Administrative Agent or the
Lender with respect to the indebtedness evidenced by this Note, and all or any
part of such payment is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid by the Administrative Agent or
the Lender or paid over to a trustee, receiver or any other entity, whether
under any bankruptcy act or otherwise (any such payment is hereinafter referred
to as a "Preferential Payment"), then the indebtedness of the Borrower and each
Surety with respect to this Note shall continue or shall be reinstated, as the
case may be, and, to the extent of such payment or repayment by the
Administrative Agent or the Lender, the indebtedness evidenced by this Note or
part thereof intended to be satisfied by such Preferential Payment shall be
revived and continued in full force and effect as if said Preferential Payment
had not been made.
Any legal action or proceeding with respect to this Note may
be brought in any Arizona State or United States District Court sitting in
Phoenix, Arizona, and, by execution and
3
219
delivery of this Note, the Borrower hereby accepts for itself and in respect of
its property and each Surety and its property, generally and unconditionally,
the jurisdiction of the aforesaid courts. The Borrower and each Surety 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.
This Note shall be binding upon the Borrower and its
successors and assigns and shall inure to the benefit of the Lender, and any
subsequent holders of this Note, and their successors and assigns.
All notices required or permitted in connection with this Note
shall be given at the place and in the manner provided in the Credit Agreement
for the giving of notices.
This Note shall be governed by and construed according to the
laws of the State of Arizona.
IN WITNESS WHEREOF, this Note is executed as of the date first written
above.
SUNSTONE HOTEL INVESTORS, L.P., a
Delaware limited partnership
By: SUNSTONE HOTEL INVESTORS, INC., a
Maryland corporation, its General
Partner
By: _____________________________
Name: ___________________________
Title: __________________________
4
220
EXHIBIT G
UNCONDITIONAL GUARANTEE OF PAYMENT AND COMPLETION
(GENERAL PARTNER)
TO: BANK ONE, ARIZONA, NA
CREDIT LYONNAIS NEW YORK BRANCH
XXXXX FARGO BANK, NATIONAL ASSOCIATION
1. FOR VALUABLE CONSIDERATION, the undersigned (hereinafter
called "Guarantor"), whose principal office is set forth after Guarantor's
signature below:
(a) Unconditionally guarantees and promises to pay to the Lenders
(under and as defined in that certain Revolving Credit Agreement (as modified,
amended or restated from time to time, the "Loan Agreement"), dated of even
date herewith, by and among Bank One, Arizona, NA, Credit Lyonnais New York
Branch and Xxxxx Fargo Bank, National Association (each a "Co-Lender" and
collectively, the "Lenders") and Sunstone Hotel Investors, L.P., a Delaware
limited partnership (the "Borrower"); capitalized terms used herein but not
defined herein shall have the meaning provided for such terms in the Loan
Agreement), or order, upon demand, in lawful money of the United States, the
full and prompt payment when due, whether at maturity or earlier, by reason of
acceleration or otherwise, and at all times thereafter (i) the principal of and
interest on the Loans and (ii) all other Obligations arising under any Loan
Document.
(b) Unconditionally guarantees to the Lenders the performance by
Borrower of all of the terms and provisions of the Loan Documents pertaining to
Borrower's obligations with respect to all construction, development,
renovation, alterations and remodeling work relating to any Real Estate
(including, but not limited to, the obligations arising under Section 7.16 of
the Loan Agreement).
All such guaranteed amounts and obligations referred to this Paragraph 1 are
hereinafter collectively called the "Guaranteed Obligations".
2. (a) The obligations of Guarantor hereunder, are separate and
independent of the obligations of Borrower and of any other guarantor, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or any other guarantor or whether
Borrower or any other guarantor is joined in any action or actions. The
obligations of Guarantor hereunder shall survive and continue in full force and
effect until payment in full of
221
the Guaranteed Obligations referred to in Paragraph 1(a) is actually received
by the Lenders and the period of time has expired during which any payment made
by Borrower, Guarantor or any other guarantor to the Lenders may be determined
to be a Preferential Payment (defined below), notwithstanding any release or
termination of Borrower's, Guarantor's or any other guarantor's liability by
express or implied agreement with the Lenders or by operation of law and
notwithstanding that said Guaranteed Obligations or any part thereof is deemed
to have been paid or discharged by operation of law or by some act or agreement
of the Lenders. For purposes of this Guarantee, the Guaranteed Obligations
arising under Paragraph 1(a) shall be deemed to be paid only to the extent
that the Lenders actually receive immediately available funds and to the extent
of any credit bid by the Lenders at any foreclosure or trustee's sale of any
security for the Guaranteed Obligations.
(b) If Guarantor fails to promptly perform its obligations under this
Guarantee arising under Paragraph 1(b), the Lenders shall have the following
remedies:
(i) At the Lender's option, and without any obligation to
do so, to proceed to perform on behalf of Guarantor any or all of
Guarantor's obligations hereunder and Guarantor shall, upon demand and
whether or not the construction, development, renovation, alterations
and remodeling work is actually completed by the Lenders, pay to the
Lenders all sums expended by the Lenders in performing Guarantor's
obligations hereunder (all such sums shall constitute Obligations
under the Loan Documents).
(ii) From time to time and without first requiring
performance by Borrower or exhausting any or all security for the
Loan, to bring any action at law or in equity or both to compel
Guarantor to perform its obligations hereunder, and to collect in any
such action compensation for all loss, cost, damage, injury and
expense sustained or incurred by the Lenders as a direct or indirect
consequence of the failure of Guarantor to perform its obligations
(all such sums shall constitute Obligations under the Loan Documents).
3. Guarantor agrees that to the extent Borrower or Guarantor
makes any payment to the Administrative Agent or the Lenders in connection with
the Guaranteed Obligations, and all or any part of such payment is subsequently
invalidated, declared to be fraudulent or preferential , set aside or required
to be repaid by the Administrative Agent or the Lenders or paid over to
-2-
222
a trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, and, to the extent of such payment or repayment
by the Lenders (or the Administrative Agent, as the case may be), the
Guaranteed Obligations or part thereof intended to be satisfied by such
Preferential Payment shall be revived and continued in full force and effect as
if said Preferential Payment had not been made.
4. Guarantor is providing this Guarantee at the instance and
request of Borrower to induce the Lenders to extend or continue financial
accommodations to Borrower. Guarantor hereby represents and warrants that
Guarantor is and will continue to be fully informed about all aspects of the
financial condition and business affairs of Borrower that Guarantor deems
relevant to the obligations of Guarantor hereunder and hereby waives and fully
discharges the Lenders from any and all obligations to communicate to Guarantor
any information whatsoever regarding Borrower or Borrower's financial condition
or business affairs.
5. Guarantor authorizes the Lenders, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, to: (a)
renew, modify, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Guaranteed Obligations or any
part thereof, including increasing or decreasing the rate of interest thereon;
(b) release, substitute or add any one or more endorsers or other guarantors;
(c) take and hold security for the payment and performance of this Guarantee or
the Guaranteed Obligations, and enforce, exchange, substitute, subordinate,
waive or release any such security; (d) proceed against such security and
direct the order or manner of sale of such security as the Lenders in their
discretion may determine; and (e) apply any and all payments from Borrower,
Guarantor or any other guarantor, or recoveries from such security, in such
order or manner as the Lenders in their discretion may determine.
6. Guarantor waives and agrees not to assert: (a) any right to
require the Lenders to proceed against Borrower or any other guarantor, to
proceed against or exhaust any security for the Guaranteed Obligations, to
pursue any other remedy available to the Lenders, or to pursue any remedy in
any particular order or manner; (b) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement hereof; (c)
demand, diligence, presentment for payment, protest and demand, and notice of
extension, dishonor, protest, demand,
-3-
223
nonpayment and acceptance of this Guarantee; (d) notice of the existence,
creation or incurring of new or additional indebtedness of Borrower to the
Lenders; (e) the benefits of any statutory provision limiting the liability of
a surety, including without limitation the provisions of A.R.S. Sections
12-1641, et seq. and Rule 17(f) of the Arizona Rules of Civil Procedure; (f)
any defense arising by reason of any disability or other defense of Borrower or
by reason of the cessation from any cause whatsoever (other than payment in
full) of the liability of Borrower for the Guaranteed Obligations; and (g) the
benefits of any statutory provision limiting the right of the Lenders to
recover a deficiency judgment, or to otherwise proceed against any person or
entity obligated for payment of the Guaranteed Obligations, after any
foreclosure or trustee's sale of any security for the Guaranteed Obligations,
including without limitation the benefits, if any, to Guarantor of A.R.S.
Section 33-814 and Section 12-1566. Guarantor hereby expressly consents to any
impairment of collateral, including, but not limited to, failure to perfect a
security interest and release collateral and any such impairment or release
shall not affect Guarantor's obligations hereunder. Until payment in full of
the Guaranteed Obligations, Guarantor shall have no right of subrogation and
hereby waives any right to enforce any remedy which the Lenders now have, or
may hereafter have, against Borrower, and waives any benefit of, and any right
to participate in, any security held by the Lenders.
7. All existing and future indebtedness of Borrower to Guarantor
is hereby subordinated to the Guaranteed Obligations and such indebtedness of
Borrower to Guarantor, if the Lenders so request, shall be collected, enforced
and received by Guarantor as trustee for the Lenders and shall be paid over to
the Lenders on account of the Guaranteed Obligations, but without reducing or
affecting in any manner the liability of Guarantor under the other provisions
of this Guarantee.
8. In addition to all liens upon, and rights of setoff against,
the monies, securities or other property of Guarantor given to the Lenders by
law, the Lenders shall have a lien and a right of setoff against, and Guarantor
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in, all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with any of the Lenders,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to
have been waived by any act or conduct on the part of the
-4-
224
Administrative Agent or the Lenders, by any neglect to exercise such right of
setoff or to enforce such lien, or by any delay in so doing.
9. It is not necessary for the Lenders to inquire into the powers
of Borrower or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any of the Guaranteed Obligations made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
10. While this Guarantee remains in effect, Guarantor shall
deliver to the Lenders copies of Guarantor's federal income tax returns upon
filing of such returns. When requested by the Administrative Agent, from time
to time, Guarantor shall promptly deliver, in writing, such further information
as the Administrative Agent may reasonably request relating to any such
returns.
11. Guarantor agrees to pay all attorneys' fees and all other
costs and expenses which may be incurred by the Administrative Agent or the
Lenders in enforcing this Guarantee or in collecting all or any part of the
Guaranteed Obligations. In the event of any court proceedings, court costs and
attorneys' fees shall be set by the court and not by the jury and shall be
included in any judgment obtained by the Administrative Agent or the Lenders.
12. This Guarantee sets forth the entire agreement of Guarantor
and the Lenders with respect to the subject matter hereof and supersedes all
prior oral and written agreements and representations by the Lenders to
Guarantor. No modification or waiver of any provision of this Guarantee or any
right of the Lenders hereunder and no release of Guarantor from any obligation
hereunder shall be effective unless in a writing executed by an authorized
officer of each of the Lenders. There are no conditions, oral or otherwise, on
the effectiveness of this Guarantee.
13. This Guarantee shall inure to the benefit of the Lenders and
their successors and assigns and shall be binding upon Guarantor and its
successors and assigns. The Lenders may assign this Guarantee in whole or in
part without notice.
14. This Guarantee shall be governed by and construed according to
the laws of the State of Arizona.
15. Guarantor covenants and agrees to be bound by the arbitration
provisions contained in Section 11.15 of the Loan Agreement.
-5-
225
16. Any legal action or proceeding with respect to this Guarantee
or any document related hereto may be brought in Arizona State or United States
District Court sitting in Phoenix, Arizona, and, by execution and delivery of
this Guarantee, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which Guarantor may now or hereafter have to the bringing
of any such action or proceeding in such respective jurisdictions. Guarantor
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 Guarantor at its address provided
herein. Nothing contained in this paragraph shall affect the right of the
Administrative 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 Guarantor in any other jurisdiction.
17. EACH PARTY TO THIS GUARANTEE HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING
UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALING OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTEE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
-6-
226
IN WITNESS WHEREOF these presents are executed as of May 1, 1997.
GUARANTOR:
SUNSTONE HOTEL INVESTORS, INC., a
Maryland corporation
By:_____________________________
Its:____________________________
Address:________________________
________________________
-7-
227
State of ___________________ )
) ss.
County of ________________ )
On ________________, 1997, before me, the undersigned, a Notary Public in and
for said County and State, personally appeared ______________, personally known
to me or proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the Unconditional Guarantee of Payment and
Completion and acknowledged to me that he/she executed the same in his/her
authorized capacity and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
____________________________________
Notary Public in and for said County
and State
228
EXHIBIT H
[FORM OF]
NOTICE OF BORROWING
Bank One, Arizona, NA
as Administrative Agent for the financial
institutions party to the Credit Agreement
referred to below
000 Xxxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
____________, 199_
Attention: ___________________
Re: Sunstone Hotel Investors, L.P.
Ladies and Gentlemen:
The undersigned, Sunstone Hotel Investors, L.P., refers to the
Revolving Credit Agreement, dated as of May 1, 1997, among the undersigned, the
financial institutions party thereto and Bank One, Arizona, NA, as
Administrative Agent for said financial institutions (said Agreement, as it may
be amended or otherwise modified from time to time, being the "Credit
Agreement" and capitalized terms not defined herein but defined therein being
used herein as therein defined), and hereby gives you notice, irrevocably,
pursuant to Section 2.3 of the Credit Agreement that the undersigned hereby
requests a Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.3 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is
_______________, 199_.
(ii) The aggregate amount of the Loans constituting
the Proposed Borrowing is $____________, [of which amount
$____________ consists of Base Rate Loans] [and]
[$____________ consists of Eurodollar Rate Loans having an
initial Interest Period of ________ months.]
H-1
229
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the representations and warranties contained
in Article V of the Credit Agreement and in each of the other
Loan Documents are true and correct as though made on and as
of the date hereof (it being understood and agreed that any
representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct only
as of such specified date); and
(B) no Default or Event of Default has occurred
and is continuing or will result from the Proposed Borrowing.
Very truly yours,
SUNSTONE HOTEL INVESTORS, L.P.
By: Sunstone Hotel Investors,
Inc., its general partner
By:___________________________
Name:
Title:
H-2
230
EXHIBIT I
[FORM OF] NOTICE OF CONVERSION OR CONTINUATION
Bank One, Arizona, NA
as Administrative Agent for the financial
institutions party to the Credit Agreement
referred to below
000 Xxxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
____________, 199_
Attention: ___________________
Re: Sunstone Hotel Investors, L.P.
Ladies and Gentlemen:
The undersigned, Sunstone Hotel Investors, L.P. (the
"Borrower"), refers to the Revolving Credit Agreement, dated as of May 1, 1997,
among the Borrower, the financial institutions party thereto and Bank One,
Arizona, NA, as Administrative Agent for the financial institutions party
thereto (said Agreement, as it may be amended or otherwise modified from time
to time, being the "Credit Agreement" and capitalized terms not defined herein
but defined therein being used herein as defined therein), and hereby gives you
notice pursuant to Section 2.8 of the Credit Agreement that the undersigned
hereby requests a [conversion] [continuation] on _______________ __, 19__ of
$____________ in principal amount of presently outstanding Loans that are [Base
Rate Loans] [Eurodollar Rate Loans having an Interest Period ending on
____________ __, 19__] [to] [as] [Base Rate] [Eurodollar Rate] Loans. [The
Interest Period for such amount requested to be converted to or continued as
Eurodollar Rate Loans is [[1] [2] [3] [6] [12] months].]
I-1
231
In connection herewith, the undersigned hereby certifies that
no Default or Event of Default is continuing.
Very truly yours,
SUNSTONE HOTEL INVESTORS, L.P.
By: Sunstone Hotel Investors,
Inc., its general partner
By:_______________________________
Name:
Title:
I-2
232
EXHIBIT K
[FORM OF] COMPLIANCE CERTIFICATE
This COMPLIANCE CERTIFICATE is delivered pursuant to that
certain Revolving Credit Agreement, dated as of May 1, 1997 (the "Credit
Agreement") among Sunstone Hotel Investors, L.P. (the "Borrower"), the
financial institutions party thereto (collectively, the "Lenders") and Bank
One, Arizona, NA, as Administrative Agent for said financial institutions (the
"Administrative Agent"). Capitalized terms not defined herein shall have the
same meanings ascribed thereto in the Credit Agreement.
1. Sunstone is the sole general partner of the Borrower.
2. The individual executing this Certificate is the duly
qualified Chief Financial Officer of Sunstone and is executing this Certificate
on behalf of Sunstone, as the sole general partner of the Borrower.
3. The undersigned has reviewed the terms of the Credit
Agreement and has made a review of the transactions, financial condition and
other affairs of the Borrower and each of its Subsidiaries and Unconsolidated
Entities as of, and during the Fiscal Quarter ending ____________, 199__, and
the undersigned has no knowledge of the existence, as of the date hereof, of
any condition or event which (i) renders untrue or incorrect as of the date
hereof, any of the representations and warranties contained in Article V of the
Credit Agreement (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct only as of such specified date), or (ii) constitutes a
Default or Event of Default.
4. Schedule I attached hereto accurately and completely
sets forth the financial data, computations and other matters required to
establish compliance with the following Sections of the Credit Agreement:
a. Section 6.1 - Interest Coverage Ratio;
b. Section 6.2 - Debt Service Coverage Ratio;
c. Section 6.3 - Maintenance of Tangible Net Worth;
d. Section 6.4 - Limitations on Total Indebtedness;
K-1
233
e. Section 6.5 - Limitations on Total Secured
Recourse Indebtedness;
f. Section 6.6 - Limitations on Non-Recourse
Indebtedness;
g. Section 6.7 - Restricted Payments; and
h. Section 7.21 - Hotel Ownership.
5. The aggregate outstanding principal amount of the
Loans as of the date hereof is equal to or less than the Available Credit.
6. The representations and warranties contained in
Article V of the Credit Agreement and in each of the other Loan Documents are
true and correct as of the date hereof (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct only as of such specified date).
7. No Default or Event of Default has occurred and is
continuing.
The Lenders and the Administrative Agent and their respective
successors and assigns may rely on the truth and accuracy of the foregoing in
connection with the extensions of credit to the Borrower pursuant to the Credit
Agreement.
K-2
234
IN WITNESS WHEREOF, the Borrower has caused this Compliance
Certificate to be duly executed this ____ day of ____________, 199_.
SUNSTONE HOTEL INVESTORS, L.P.
By: Sunstone Hotel Investors, Inc.,
its sole general partner
By: _______________________________
[Name], Chief
Financial Officer
K-3
235
EXHIBIT L
When recorded, return to:
BANK ONE, ARIZONA, XX
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, Xxxxxxx 00000
Attention: Western Region
Real Estate Finance, Dept. A-392
[FORM OF]
SUBORDINATION AND ESTOPPEL AGREEMENT
(______________________)
The undersigned, SUNSTONE HOTEL PROPERTIES, INC., a Colorado
corporation (hereinafter called "Lessee"), whose address is 000 Xxxxx xx
Xxxxxxxxxx, Xxxxx 000, Xxx Xxxxxxxx, Xxxxxxxxxx 00000, and SUNSTONE HOTEL
INVESTORS, L.P., a Delaware limited partnership (hereinafter called
"Borrower"), whose address is 000 Xxxxx xx Xxxxxxxxxx, Xxxxx 000, Xxx Xxxxxxxx,
Xxxxxxxxxx 00000, in consideration of One Dollar ($1.00) and other good and
valuable consideration, the receipt of which is hereby acknowledged, hereby
certify to (a) BANK ONE, ARIZONA, NA (hereinafter called "Beneficiary"), as
Administrative Agent under that certain Revolving Credit Agreement, dated as of
May 1, 1997, by and among BANK ONE ARIZONA, NA, CREDIT LYONNAIS NEW YORK
BRANCH, XXXXX FARGO BANK, NATIONAL ASSOCIATION (collectively, the "Lenders")
and Borrower (Beneficiary's address being Xxxx Xxxxxx Xxx 00000, Xxxxxxx,
Xxxxxxx 00000, Attention: Western Region Real Estate Finance, Dept. A-392),
and (b) the CO- LENDERS, and covenant and agree as follows:
1. Lessee, as lessee/tenant, hereby subordinates the lien and
every term, condition and provision of that Lease Agreement (hereinafter called
the "Lease") dated ________________, wherein Borrower is landlord/lessor
(together with its successors and assigns, hereinafter called "Lessor"),
covering a portion of the real property described on Schedule "A" attached
hereto and by this reference incorporated herein (hereinafter called the "Leased
Premises"), to the lien and every term, condition and provision of that Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing executed by
Borrower, in favor of Beneficiary, dated _______________ and recorded in the
records of ________________ County, _______________, and to all extensions,
modifications, renewals, replacements, substitutions, and/or consolidations
thereof (hereinafter called the "Deed of Trust"), it being the intention of
Lessee that by reason hereof, all of its right, title and interest arising under
the Lease shall be and is hereby declared to be inferior, subsequent and
subordinate to the Deed of Trust with respect only to the real property covered
by the Lease.
236
2. Lessor and Lessee certify to the Lenders as follows: (a) a
true and correct copy of the Lease has been delivered to Beneficiary, and the
Lease is presently in full force and effect and unmodified or unchanged; (b)
the term shall commence or did commence on ___________, and full rental will
then accrue or is now accruing thereunder; (c) all conditions required under
the Lease to have been satisfied as of the date hereof have been satisfied; (d)
no rent under the Lease has been paid more than thirty (30) days in advance of
its due date; (e) the amount of lease deposit paid or to be paid under the
terms of the Lease is $______________; (f) neither Beneficiary nor the Lenders
shall have any liability or responsibility for the application or return of any
security deposit of Lessee; (g) no default exists under the Lease; (h) Lessee,
as of the date hereof, has no charge, lien or claim of offset under the Lease
or otherwise, against rents or other charges due or to become due thereunder;
(i) Lessee has not received notice of any assignment, mortgage or pledge of
Lessor's interest in the Lease or any rents or other amounts payable
thereunder; (j) the Lease constitutes the entire rental agreement between the
parties; (k) the only persons, or corporations in possession of the Leased
Premises or having any right to the possession or use of the Leased Premises
(other than the record owner or holders of recorded easements) are those
holding under the Lease; (l) Lessee has no right or interest in or under any
contract, option or agreement involving the sale or transfer of the Leased
Premises; and (m) as of the date hereof, Lessee has not assigned the Lease or
sublet the Leased Premises.
3. Lessee shall give written notice to Beneficiary of any failure
by Lessor to perform or observe any of the covenants, conditions or provisions
of the Lease, and Beneficiary and the Lenders shall have the right, but not the
obligation, to cure such failure. In the event of any such failure by Lessor,
Lessee shall not take any action with respect to such failure, including
without limitation any action to terminate, rescind or avoid the Lease or to
withhold any rent thereunder, for a period of thirty (30) days after notice
thereof to Beneficiary; provided, however, that if such failure cannot
reasonably be remedied within that the (30) day period, Lessee shall not take
any action with respect to such failure, including without limitation any
action to terminate, rescind or avoid the Lease or to withhold any rent
thereunder, so long as the Lenders or the Beneficiary shall commence to remedy
the failure within the thirty (30) day period and thereafter shall diligently
prosecute the remedy to completion.
4. All notices required or permitted to be given hereunder shall
be in writing and may be given in person or by United States mail, by delivery
service or by electronic transmission. Any notice directed to a party to this
Agreement shall become effective upon the earliest of the following: (i)
actual receipt by that party; (ii) delivery to the designated address of that
party, addressed to that party; or (iii) if given by certified or registered
United States mail, twenty-four (24) hours after deposit with the United States
Postal Service, postage prepaid, addressed to that party at its designated
address. The designated address of a party shall be the address of that party
shown at the beginning of this Agreement or such other address as that party,
from time to time, may specify by notice to the other parties.
-2-
237
5. Nothing herein contained shall be deemed or construed as
limiting or restricting the enforcement by Beneficiary of any of the terms,
covenants, provisions or remedies of the Deed of Trust, whether or not
consistent with the Lease.
6. This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their successors and assigns.
7. This Agreement shall be governed by and construed according to
the laws of the State of Arizona.
-3-
238
IN WITNESS WHEREOF, these presents are executed as of the ____ day of
___________, 19__.
SUNSTONE HOTEL INVESTORS, L.P., a
Delaware limited partnership
BY: SUNSTONE HOTEL INVESTORS, INC.,
a Maryland corporation, its General Partner
By ________________________________
Name_______________________________
Title______________________________
LESSOR
SUNSTONE HOTEL PROPERTIES, INC., a
Colorado corporation
By ________________________________
Name_______________________________
Title______________________________
LESSEE
-4-
239
STATE OF ___________ )
) ss..
County of ____________ )
The foregoing instrument was acknowledged before me this ______ day of
_______________, 19__, by ________________________,. the ______________ of
SUNSTONE HOTEL PROPERTIES, INC., a Colorado corporation, on behalf of that
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
____________________________________
Notary Public
My commission expires:
______________________
STATE OF ___________ )
) ss..
County of ____________ )
The foregoing instrument was acknowledged before me this ____ day of
___________, 19__, by________________________, the _______________________ of
SUNSTONE HOTEL INVESTORS, INC., a Maryland corporation, General Partner of
SUNSTONE HOTEL INVESTORS, L.P., a Delaware limited partnership, on behalf of
that partnership.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
____________________________________
Notary Public
My commission expires:
______________________
-5-
240
SCHEDULE "A"
All that real property situate in the County of ______________, State of
___________ more particularly described as follows:
-6-
241
EXHIBIT M
[FORM OF]
ASSIGNMENT OF RIGHTS UNDER MANAGEMENT AGREEMENT
(_______________)
KNOW ALL MEN BY THESE PRESENTS:
BY THIS ASSIGNMENT, the undersigned SUNSTONE HOTEL PROPERTIES, INC., a
Colorado corporation (hereinafter called "Assignor"), whose address is 000
Xxxxx xx Xxxxxxxxxx, Xxxxx 000, Xxx Xxxxxxxx, Xxxxxxxxxx 00000, for valuable
consideration, the receipt of which is hereby acknowledged, does hereby assign,
transfer, convey and set over to BANK ONE, ARIZONA, NA (hereinafter called
"Assignee"), as Administrative Agent under that certain Revolving Credit
Agreement, dated as of May 1, 1997, by and among BANK ONE, ARIZONA, NA, CREDIT
LYONNAIS NEW YORK BRANCH, XXXXX FARGO BANK, NATIONAL ASSOCIATION (collectively,
the "Lenders") and SUNSTONE HOTEL INVESTORS, L.P. ("Borrower") (as amended,
modified or restated, the "Loan Agreement") (Assignee's address being Xxxx
Xxxxxx Xxx 00000, Xxxxxxx, Xxxxxxx 00000, Attention: Western Region Real
Estate Finance, Dept. A-392), and does hereby grant to Assignee (for the
benefit of the Lenders) a security interest in, all of Assignor's right, title
and interest in and to the following document or instrument: Management
Agreement dated ______________, together with all obligations of Sunstone Hotel
Management, Inc. (hereinafter called "Management Company") due or to be
performed thereunder or with respect thereto (all hereinafter called the
"Management Agreement").
TO HAVE AND TO HOLD the same from this day forward so long as any part
of the obligations of Borrower hereinafter described remains unpaid and
unperformed.
This Assignment is made as and shall constitute collateral security
for any and all indebtedness and liabilities of any kind and nature of Borrower
to the Lenders, direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, pursuant to the Loan Agreement (all of
the foregoing hereinafter called the "Obligation").
1. Assignor represents, warrants and covenants that:
(a) The Management Agreement, as of the date hereof, is
valid and in good and current standing, not having been altered,
amended, changed, terminated or cancelled in any way, and no breach or
default exists therein or thereunder.
(b) Assignor had full power, right and authority to
execute and deliver the Management Agreement and has full power, right
and authority to execute and deliver this Assignment.
(c) Assignor has not conveyed, transferred, or assigned
the Management Agreement or any right or interest therein and has not
executed any
242
other document or instrument that might prevent or limit Assignee from
operating under the terms, conditions and provisions of this
Assignment.
(d) Assignor shall make no other assignment of the
Management Agreement or of any right or interest therein.
(e) Assignor shall perform and observe, in timely
fashion, all of the covenants, conditions, obligations and agreements
of Assignor under the Management Agreement in strict accordance with
the terms, conditions and provisions thereof.
(f) Assignor shall not waive, execute any agreement that
could be interpreted as waiving, or in any manner release or discharge
Management Company from, any covenants, conditions, obligations or
agreements under or related to the Management Agreement to be
performed or observed by Management Company, or condone any
nonperformance thereof, but shall, at its sole cost and expense,
enforce and secure the performance of all such covenants, conditions,
obligations and agreements under or related to the Management
Agreement to be performed or observed by Management Company.
2. Assignor hereby authorizes Assignee, upon the occurrence of
any Event of Default, as that term is defined in the Loan Agreement or any
document or instrument securing the Obligation, and at any time while such
Event of Default is continuing, or upon any default by Assignor under the
Management Agreement that remains uncured after the expiration of any grace
period provided therein, and upon the election by Assignee to exercise its
rights under this Assignment, to enforce Assignor's rights under the Management
Agreement and to receive any performance of Management Company thereunder.
Assignor hereby authorizes Management Company to accept this Assignment and
authorizes and directs Management Company, upon such default and election by
Assignee, to make and render all acts and performances required of Management
Company under the terms of the Management Agreement directly to Assignee or its
nominee as Assignee may direct. Assignor hereby relieves Management Company
from any liabilities to Assignor that Assignor might otherwise have or assert
by reason of the making or rendering of any performance by Management Company
under the Management Agreement to Assignee or its nominee.
3. Assignor does hereby make, constitute and appoint Assignee,
and its successors and assigns, Assignor's true and lawful attorney in fact, in
Assignor's name, place and stead, or otherwise, upon the occurrence of any
Event of Default, and at any time while such Event of Default is continuing, or
upon any default by Assignor under the Management Agreement that remains
uncured after the expiration of any grace period provided therein:
(a) To do all acts and to execute, acknowledge, obtain
and deliver any and all instruments, documents, items or things
necessary, proper or required as a term, condition or provision of the
Management Agreement or in order to exercise any rights of Assignor
under the Management Agreement or to receive and enforce any
performance due Assignor under the Management Agreement;
-2-
243
(b) To give any notices, instructions, or other
communications to Management Company or to any other person or entity
in connection with the Management Agreement;
(c) To demand and receive all performances due under or
with respect to the Management Agreement and to take all lawful ways
and means for the enforcement thereof and to compromise and settle any
claim or cause of action in Assignor arising from or related to the
Management Agreement and give acquittance and other sufficient
discharges relating thereto; and
(d) To file any claim or proceeding or to take any other
action, either in its own name, in that of its nominee, in the name of
Assignor, or otherwise, to enforce performance due under or related to
the Management Agreement or protect and preserve the right and
interest of Assignee hereunder.
The power of attorney given herein is a power coupled with an interest and
shall be irrevocable so long as any part of the Obligation remains unpaid or
unperformed. Assignee shall have no obligation to exercise any of the
foregoing rights and powers in any event.
4. Except as otherwise permitted in the Loan Agreement, no
change, amendment or modification shall be made to the Management Agreement or
to the instructions of Assignor contained herein without the prior written
approval of Assignee.
5. Assignor shall promptly notify Assignee of any default or
breach under the Management Agreement or of any failure of performance or other
condition that, after notice or lapse of time, or both, could become a default
or breach by Management Company of or under the Management Agreement.
6. Assignor, immediately upon receipt, shall deliver to Assignee
at the address set forth above a true and complete copy of any notice of
default or breach and all other communications respecting a default or breach,
alleged default or breach, failure of performance, or other condition that with
lapse of time or after additional notice, or both, could become a default or
breach by Assignor of or under the Management Agreement, or otherwise relating
to Assignor's good standing with respect to the Management Agreement.
7. Neither Assignee nor the Lenders, by accepting this
Assignment, shall be subject to any obligation or liability under the
Management Agreement, including, without limitation, any duty to perform any of
the covenants, conditions, provisions or agreements made by Assignor, but all
such obligations and liabilities shall continue to rest upon Assignor as though
this Assignment had not been made. Upon the occurrence of an Event of Default
or a default under the Management Agreement and the election of Assignee as
described in Paragraph 2 hereof, however, the performance by Assignee of the
covenants, conditions, obligations and agreements of Assignor under the
Management Agreement shall be a condition of the continued performance of
Management Company to Assignee.
-3-
244
8. Assignee and the Lenders shall have the right at any time to
appear in and defend and be represented by counsel of their own choice in any
action or proceeding purporting to affect Assignor's rights under the
Management Agreement.
9. Assignor shall indemnity and hold Assignee and the Lenders
harmless from any and all damages and losses arising as a result of or related
to the Management Agreement, this Assignment or the exercise by Assignee and
the Lenders of any of their rights under this Assignment, including, without
limitation, any judgment, amounts paid in settlement, and all costs and
expenses, including reasonable attorneys' fees, incurred in defending or
settling any action, suit or proceeding in connection with the foregoing.
10. All sums advanced or paid by Assignee or the Lenders under the
terms hereof, all amounts paid, suffered or incurred by Assignee or the Lenders
in exercising any authority granted herein, including reasonable attorneys'
fees, and all other amounts due Assignee or the Lenders from Assignor in
connection with this Assignment shall be added to the Obligation, shall be
secured by all deeds of trust and other lien and security documents securing
the Obligation, shall bear interest at the highest rate payable on any of the
Obligation until paid, and shall be due and payable by Assignor to Assignee (or
the Lenders, as the case may be) immediately without demand.
11. Neither the execution and delivery of this Assignment nor any
failure on the part of Management Company to comply with, honor and perform in
accordance with the Management Agreement shall affect the liability of any
party to pay and perform the Obligation.
12. The taking of this Assignment by Assignee shall not effect the
release of any other collateral now or hereafter held by Assignee as security
for the Obligation, nor shall the taking of additional security for the
Obligation hereafter effect a release or termination of this Assignment or any
terms, conditions or provisions hereof.
13. Assignor, upon request of Assignee, shall execute and deliver
such additional documents, including but not limited to financing statements,
and do such other acts as may be reasonably necessary to fully implement the
intent of this Assignment and to perfect and preserve the lights and interests
of Assignee hereunder and the priority thereof.
14. Time is of the essence hereof. This Assignment shall be
binding upon Assignor and its successors and assigns and shall inure to the
benefit of Assignee and the Lenders and their successors and assigns; this
Assignment, however, is not intended to confer any right or remedies upon any
person other than the parties hereto and their successors and assigns.
15. Assignor shall pay all costs and expenses, including without
limitation costs of Uniform Commercial Code searches, court costs and
reasonable attorneys' fees, incurred by Assignee and the Lenders in exercising
the rights and remedies of Assignee and the Lenders hereunder. In the event of
any court proceedings, court costs and attorneys' fees shall be set by the
court and not by jury and shall be included in any judgment obtained by
Assignee and the Lenders.
-4-
245
16. No failure or delay on the part of Assignee or the Lenders in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The rights, powers and remedies hereunder
are cumulative and may be exercised by Assignee and the Lenders either
independently of or concurrently with any other right, power or remedy
contained herein or in any document or instrument executed in connection with
the Obligation.
17. By executing this Assignment, Assignor acknowledges receipt of
a copy hereof. A carbon, photographic or other reproduced copy of this
Assignment and/or any financing statement relating hereto shall be sufficient
for filing and/or recording as a financing statement. This Assignment shall be
governed by and construed according to the laws of the State of Arizona.
-5-
246
IN WITNESS WHEREOF, these presents are executed as of the _____ day of
__________________, 19___.
SUNSTONE HOTEL PROPERTIES, INC., a
Colorado corporation
By______________________________________
Its___________________________________
ASSIGNOR
-6-
247
ACKNOWLEDGMENT AND CONSENT
The undersigned is referred to in the foregoing Assignment of Rights
under Management Agreement (the "Assignment") as Management Company. The
undersigned acknowledges and consents to the Assignment and agrees that at the
election of Assignee to exercise its rights under the Assignment (and in
accordance with the terms contained in the Assignment), it will render all acts
and performances required of it under the terms of the Management Agreement
directly to Assignee (for the benefit of the Lenders) or its nominee as
Assignee may direct.
This Acknowledgment and Consent and the agreement of the undersigned
contained herein is conditioned upon the following: (i) neither the Assignment
nor this Acknowledgment and Consent shall give Assignee any greater rights
under the Management Agreement than those of Assignor, and (ii) upon the
occurrence of an Event of Default and the election of Assignee to exercise its
rights under the Assignment, Assignee will perform all of the covenants,
conditions, obligations and agreements of Assignor under the Management
Agreement; the undersigned acknowledges, however, that unless and until such
Event of Default and election by Assignee, Assignee has absolutely no
obligation to perform the covenants, conditions, obligations and agreements of
Assignor under the Management Agreement.
The undersigned hereby certifies to Assignee and agrees that:
1. The Management Agreement is in full force and effect
and no breach or default exists under the Management Agreement and no
event has occurred and no condition exists that, after notice or lapse
of time, or both, would constitute a breach or default under the
Management Agreement.
2. All conditions precedent to the obligation of the
undersigned to perform pursuant to the Management Agreement have been
fully satisfied.
3. The undersigned will notify Assignee in writing in
the event of any breach or default by Assignor under the Management
Agreement.
SUNSTONE HOTEL MANAGEMENT, INC., a
Colorado corporation
By____________________________________
Its_________________________________
MANAGEMENT COMPANY
248
EXHIBIT N
[FORM OF]
MANAGEMENT SUBORDINATION AGREEMENT
(_______________)
THIS MANAGEMENT SUBORDINATION AGREEMENT (the "Subordination
Agreement") is made and entered into this ______ day of _____________, 199_, by
and between SUNSTONE HOTEL MANAGEMENT, INC., a Colorado corporation (the
"Management Company"), SUNSTONE HOTEL PROPERTIES, INC., a Colorado corporation
("Obligor"), and BANK ONE, ARIZONA, NA (with its successors and assigns, the
"Administrative Agent"), as Administrative Agent under that certain Revolving
Credit Agreement, dated as of May 1, 1997, by and among BANK ONE, ARIZONA, NA,
CREDIT LYONNAIS NEW YORK BRANCH, XXXXX FARGO BANK, NATIONAL ASSOCIATION
(collectively, the "Lenders") and SUNSTONE HOTEL INVESTORS, L.P. ("Borrower")
(as amended, modified or restated, the "Loan Agreement").
WITNESSETH:
WHEREAS, the Management Company has entered into that Management
Agreement dated as of ______________________ (the "Management Agreement") with
Obligor under which Obligor has agreed to make certain payments ("Payments") to
the Management Company; and
WHEREAS, pursuant to the terms and provisions contained in the Loan
Agreement, the Lenders have agreed to make certain financial accommodations
(the "Loan") to Borrower. All undefined capitalized terms used herein shall
have the meaning given them in the Loan Agreement; and
WHEREAS, it is a condition precedent to obtain and continue the Loan
from the Lenders that Management Company agree that, upon the occurrence of an
Event of Default, all Payments by Obligor to Management Company shall cease and
be subordinate to Borrower's obligations to the Lenders under the Loan
Agreement and be subject to the agreements in this Subordination Agreement; and
WHEREAS, it is to the mutual benefit of the parties hereto that
Borrower obtain and continue the Loan from the Lenders and Management Company
is willing to in fact subordinate the obligations of Obligor to it under the
Management Agreement to the obligations of Borrower to the Lenders under the
Loan Agreement in accordance with the agreements in this Subordination
Agreement.
NOW, THEREFORE, in consideration of the mutual benefits accruing to
the parties hereto and other valuable consideration, the receipt and
sufficiency of which consideration is
249
hereby acknowledged, and in order to induce the Lenders to make the Loan
available to Borrower, it is hereby declared, understood and agreed as follows:
1. That the Lenders would not make the Loan available to Borrower
without this Subordination Agreement.
2. That upon the occurrence of an Event of Default and the
continuation thereof, until satisfaction of Borrower's obligations to the
Lenders under the Loan Agreement:
(a) All payments due and payable to Management Company
from Obligor with respect to the Management Agreement shall be
suspended; and
(b) Should any funds or property of any kind be received
by Management Company with respect to the Management Agreement,
Management Company will deliver the same to the Administrative Agent
in the form received and, until so delivered, the same shall be held
in trust by Management Company as property of the Lenders.
3. That Management Company declares, agrees and acknowledges
that:
3.1 It consents to and approves all provisions of the
Loan Agreement.
3.2 The Lenders in making any advance pursuant to the
Loan Agreement are under no obligation or duty to, nor have the Lenders
represented that they will, see to the application of such advance. Any
application or use of such advance for purposes other than those provided for
in the Loan Agreement shall not defeat the subordination herein made in whole
or in part.
3.3 It intentionally and unconditionally waives,
relinquishes and subordinates any lien or charge held by Management Company
with respect to the Management Agreement or any other obligation of Obligor to
Management Company in favor of Borrower's obligations to the Lenders under the
Loan Agreement and understands that in reliance upon, and in consideration of,
this waiver, relinquishment and subordination, specific loans and advances are
being and will be made and letters of credit issued and, as part and parcel
thereof, specific monetary and other obligations are being and will be entered
into which would not be made or entered into but for said reliance upon this
waiver, relinquishment and subordination.
3.4 The priorities specified herein are applicable
irrespective of the time or order of attachment or perfection of any security
interest or the time or order of filing financing statements or the giving or
failing to give notice of the acquisition or expected acquisition of security
interests.
3.5 In the event of any bankruptcy, insolvency or other
proceeding leading to the distribution, division or application, partial or
complete, voluntary or involuntary, by operation
-2-
250
of law or otherwise, of all or any part of the assets of Obligor or the
proceeds thereof, the Lenders shall have the right to prove and vote Management
Company's claim based on any security interest in Obligor's property held by
Management Company and to receive all distributions therefrom until the
Lenders' claim is paid in full.
3.6 It shall not assign or transfer to others any claim
it has or may have against Obligor while any obligation of Borrower to the
Lenders remains outstanding under the Loan Agreement, unless such assignment or
transfer is made expressly subject to this Subordination Agreement.
3.7 This Subordination Agreement is a continuing
agreement of subordination, and the Lenders may continue, without notice to
Management Company, to extend future credit and make other accommodations to or
for the account of Obligor under the Loan Agreement in reliance on this
Subordination Agreement.
3.8 The Lenders may, at any time, enter into such
agreement or agreements with Borrower as the Lenders may deem proper, altering
the terms of all or any of the obligations of Borrower to the Lenders under the
Loan Agreement or affecting any security underlying any or all of such
obligations, without notice to Management Company and without in any way
impairing or affecting this Subordination Agreement.
3.9 All fees paid to the Management Company by Obligor
shall be payable no more frequently than once every month in arrears and no
fees shall be paid in advance.
3.10 The Lenders shall, upon the occurrence and
continuation of an Event of Default have the right to apply for the appointment
of a receiver ("Receiver") through a court of competent jurisdiction to manage
the Properties (as defined in the Management Agreement).
3.11 Upon the occurrence and continuation of an Event of
Default, it shall cooperate with the Lenders in obtaining the appointment of
the Receiver and turning over management and control of the Properties to the
Receiver, including, without limitation, the assignment to the Receiver of any
and all licenses and/or permits used and/or necessary for the operation and/or
management of the Properties.
3.12 It waives any and all defenses to the appointment of
the Receiver.
3.13 It shall not change, amend or modify the Management
Agreement without the prior written approval of the Administrative Agent except
as otherwise permitted in the Loan Agreement.
3.14 Upon the occurrence and continuation of an Event of
Default, it shall deposit all Net Operating Income (as defined in the Loan
Agreement) into a pledged account to
-3-
251
be maintained with and administered by the Administrative Agent as the
Administrative Agent may determine.
4. That Subordination Agreement shall be governed by the laws of
the State of Arizona, as the same from time to time may be in effect.
-4-
252
WHEREFORE, this Subordination Agreement is executed by the parties on
the date first above set forth.
SUNSTONE HOTEL MANAGEMENT, INC., a
Colorado corporation
By:_______________________________________
Name:_____________________________________
Title:____________________________________
MANAGEMENT COMPANY
SUNSTONE HOTEL PROPERTIES, INC., a
Colorado corporation
By:_______________________________________
Name:_____________________________________
Title:____________________________________
OBLIGOR
BANK ONE, ARIZONA, NA, a national banking
association, as Administrative Agent
By:_______________________________________
Name:_____________________________________
Title:____________________________________
ADMINISTRATIVE AGENT
-5-
253
EXHIBIT O
[FORM OF]
ENVIRONMENTAL INDEMNITY AGREEMENT
(________________)
Items to be Attached:
Schedule "A": Description of the Property
Environmental Questionnaire and Disclosure Statement
In connection with and as partial consideration for the loan
by BANK ONE, ARIZONA, NA, CREDIT LYONNAIS NEW YORK BRANCH and XXXXX FARGO BANK,
NATIONAL ASSOCIATION (collectively, the "LENDERS"), to SUNSTONE HOTEL
INVESTORS, L.P., a Delaware limited partnership ("BORROWER"), and for the
benefit of SUNSTONE HOTEL INVESTORS, INC., a Maryland corporation ("GUARANTOR")
(Borrower and Guarantor are referenced to herein collectively as "INDEMNITOR"),
and other entities in the amount of ONE HUNDRED MILLION AND NO/100 DOLLARS
($100,000,000.00) (the "LOAN") secured or to be secured in part by a lien and
encumbrance on the property described on Schedule "A" attached hereto and by
this reference made a part hereof (the "PROPERTY"), Indemnitor hereby
certifies, represents and warrants to the Lenders, and agrees as follows:
1. Terms contained herein, but not defined herein, shall
have the meaning set forth in the loan agreement delivered in
connection with the Loan. As used herein, the following terms
shall have the meanings specified below:
The term "ENVIRONMENTAL LAWS" shall mean any federal,
state or local law, whether by common law, statute, ordinance,
or regulation, pertaining to health, industrial hygiene, or
environmental conditions, including without limitation, the
Comprehensive Environmental Response Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601, et seq.
("CERCLA"); the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901, et seq. ("RCRA"); the Toxic
Substances Control Act of 1976, 15 U.S.C. Section 2501, et
seq. ("TSCA"); the Superfund Amendments and Reauthorization
Act of 1986, Title III, 42 U.S.C. Section 11001, et seq.
("XXXX"); the Clean Air Act, 42 U.S.C. Section 7401, et seq.;
the Federal Water Pollution Control Act, 33 U.S.C. Section
1251, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section
300f, et seq.; the Solid Waste Disposal Act, 42 U.S.C. Section
3251, et seq.; and any other federal, state or local law,
common law, statute, ordinance, or regulation now in effect or
hereinafter enacted which pertains to health, industrial
hygiene, or the regulation or protection of the environment.
254
The term "HAZARDOUS SUBSTANCE" shall include:
(a) Those substances included within the
definitions of "HAZARDOUS MATERIALS," "TOXIC
SUBSTANCES," or "SOLID WASTE" in CERCLA, RCRA, TSCA,
XXXX, and the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., and in the
regulations promulgated pursuant thereto;
(b) Those substances defined as
"HAZARDOUS SUBSTANCES" in applicable state law and in
rules adopted or guidelines promulgated pursuant
thereto;
(c) Those substances listed in the
United States Department of Transportation Table (49
C.F.R. 172.1010 and amendments thereto) or by the
Environmental Protection Agency as hazardous
substances (40 C.F.R. Part 302 and amendments
thereto); and
(d) All other substances, materials and
wastes that are, or that become, regulated under, or
that are classified as hazardous or toxic under any
Environmental Law.
The term "RELEASE" shall mean any releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping.
2. Except as stated in the responses contained in the
"ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE STATEMENT," a copy of which is
attached hereto and incorporated herein by this reference, to the best
knowledge of Indemnitor, neither the Property nor Indemnitor are in violation
of any Environmental Law and neither the Property nor Indemnitor are subject to
any existing, pending or threatened investigation by any federal, state or
local governmental authority or are subject to any remedial obligation or lien
under or in connection with any Environmental Law.
3. Except as stated in the responses contained in the
"ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE STATEMENT," to the best knowledge
of Indemnitor, Indemnitor has not obtained, and is not required by any
Environmental Law to obtain, any permit or license to construct or use any
improvements, fixtures or equipment that are part of, or are located on, the
Property or to operate any business that is being conducted or intended to be
conducted on the Property.
4. Indemnitor has made a diligent investigation of the
present and former uses of the Property and after such investigation declares
that to the best of its knowledge the
-2-
255
information disclosed in the "ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE
STATEMENT" is true, complete and correct.
5. Indemnitor shall not knowingly permit any third party
to use, generate, manufacture, produce, store, or Release, on, under or about
the Property, or transfer to or from the Property, any Hazardous Substance
except in compliance with all applicable Environmental Laws and Indemnitor
shall not knowingly permit any environmental liens to be placed on any portion
of the Property.
6. Except as stated in the responses contained in the
"ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE STATEMENT," Indemnitor has not
caused or knowingly permitted the Release of, and has no knowledge of the
Release or presence of, any Hazardous Substance on the Property in excess of
the reportable quantities prescribed by CERCLA or applicable state law, or the
migration of any Hazardous Substance from or to any other property adjacent to
or in the vicinity of the Property. Borrower's intended future use of the
Property will not result in the Release of any Hazardous Substance on the
Property.
7. Indemnitor shall give prompt written notice to the
Administrative Agent under, and at the address set forth in, the loan agreement
executed in connection with the Loan of:
(a) Any proceeding, including lawsuit,
investigation or settlement by or with any federal, state or
local governmental authority (including, without limitation,
any applicable state agency or the U.S. Environmental
Protection Agency) with respect to the presence of any
Hazardous Substance on the Property or the migration thereof
from or to any other property adjacent to, or in the vicinity
of, the Property;
(b) All claims made or threatened by any third
party against Indemnitor or the Property relating to any loss
or injury resulting from any Hazardous Substance;
(c) Indemnitor's discovery of any occurrence or
condition on any property adjoining or in the vicinity of the
Property that could cause the Property or any part thereof to
be subject to any restrictions on its ownership, occupancy,
transferability or use under any Environmental Laws; and
(d) Indemnitor's discovery of a violation of
Environmental Laws that Indemnitor is legally required to
report to any federal, state or local governmental authority
or the discovery of a Release of a Hazardous Substance in
sufficient quantities to be reportable under CERCLA or
applicable state law to any federal, state or local
governmental authority.
-3-
256
8. Indemnitor shall conduct and complete all
investigations, studies, sampling, testing and all remedial, removal, and other
actions necessary to clean up and remove all Hazardous Substances in, from or
affecting the Property:
(a) In accordance with all applicable
Environmental Laws;
(b) To the satisfaction of the Lenders; and
(c) In accordance with the orders and directives
of all governmental authorities.
9. Indemnitor shall, within thirty (30) days after
demand by Administrative Agent, provide Administrative Agent with a bond,
letter of credit, or similar financial assurance evidencing to Administrative
Agent's satisfaction that sufficient funds are available to pay the cost of
complying with the requirements of Paragraph 8 above.
10. If Administrative Agent shall ever have reason to
believe that there are Hazardous Substances (other than those described in the
"ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE STATEMENT") affecting any of the
Property, Administrative Agent (by its officers, employees, and agents) at any
time and from time to time may contract for the services of persons (the "SITE
REVIEWERS") to perform environmental site assessments ("SITE ASSESSMENTS") on
the Property for the purpose of determining whether there exists on the
Property any environmental condition that could result in any liability, cost,
or expense to the owner, occupier, or operator of such Property arising under
any Environmental Laws. The Site Assessments may be performed at any time or
times, upon reasonable notice, and under reasonable conditions established by
Indemnitor that do not impede the performance of the Site Assessments. The
Site Reviewers are hereby authorized to enter upon the Property for such
purposes. The Site Reviewers are further authorized to perform both above and
below the ground testing for environmental damage or the presence of Hazardous
Substances on the Property and such other tests on the Property as may be
necessary to conduct the Site Assessments in the reasonable opinion of the Site
Reviewers. Indemnitor will supply to the Site Reviewers such historical and
operational information regarding the Property as may be reasonably requested
by the Site Reviewers to facilitate the Site Assessments and will make
available for meetings with the Site Reviewers appropriate personnel having
knowledge of such matters. On request, Administrative Agent shall make the
results of such Site Assessments fully available to Indemnitor, which (prior to
an Event of Default under the Loan documents) may, at its election, participate
under reasonable procedures in the direction of such Site Assessments and the
description of tasks of the Site Reviewers. The cost of performing such Site
Assessments shall be paid by Indemnitor upon demand of Administrative Agent.
11. Administrative Agent shall have the right, but not
the obligation, without in any way limiting Administrative Agent's other rights
and remedies under the Loan documents, to enter onto the Property or to take
such other actions as it deems necessary or advisable to clean up, remove,
resolve, or minimize the impact of, or otherwise deal with, any Hazardous
Substances
-4-
257
on or affecting the Property following receipt of any notice from any person or
entity asserting the existence of any Hazardous Substances pertaining to the
Property or any part thereof that, if true, could result in an order, notice,
suit, imposition of a lien on the Property, or other action and/or that, in
Administrative Agent's sole opinion, could jeopardize Administrative Agent's or
the Lenders' security under the Loan documents. All reasonable costs and
expenses paid or incurred by Administrative Agent in the exercise of any such
rights shall be secured by the Loan documents and shall be payable by
Indemnitor upon demand.
12. Administrative Agent and the Lenders shall have the
right at any time to appear in and to participate in, as parties if they so
elect, and be represented by counsel of their own choice in, any action or
proceeding initiated in connection with any Environmental Law that affects the
Property.
13. Indemnitor shall indemnify and hold harmless the
Lenders and Administrative Agent, the initial successor to their interest in
the Property, the initial purchaser of the Property upon foreclosure of the
Lenders' interest in the Property, and all directors, officers, employees and
agents of all of the foregoing, from and against all claims, costs, expenses,
actions, suits, proceedings, losses, damages and liabilities of any kind
whatsoever, including but not limited to attorney's fees and expenses, directly
or indirectly arising out of or attributable to (i) the use, generation,
manufacture, production, storage, Release, threatened Release, or presence of a
Hazardous Substance on, under or about the Property; (ii) any violation or
claim of violation of any Environmental Law with respect to the Property; or
(iii) any breach of any of the warranties, representations and covenants
contained herein.
14. This Environmental Indemnity Agreement shall be
binding upon Indemnitor and its successors and assigns and shall inure to the
benefit of the Lenders and Administrative Agent and their successors and
assigns. The indemnity contained herein shall continue in full force and
effect and shall survive the payment and performance of the Loan, the release
of any lien or encumbrance securing the Loan, any foreclosure (or action in
lieu of foreclosure) of any lien or encumbrance securing the Loan, the exercise
by the Lenders and Administrative Agent of any other remedy under any documents
securing the Loan, and any suit, proceeding or judgment against Indemnitor by
Administrative Agent or the Lenders hereon; provided that the Lenders and
Administrative Agent agree that Indemnitor shall not be liable for any claims,
costs, expenses, losses, damages and liabilities (i) that arise after the
transfer (the "Transfer") of the Property to the Administrative Agent or the
Lenders or to the initial purchaser of the Property upon foreclosure of the
Lenders' interest in the Property, and (ii) that were caused solely by the
actions of the Administrative Agent or the Lenders, any successor to their
interest in the Property or said initial purchaser after the Transfer; and
provided further that the Lenders and Administrative Agent agree that
Indemnitor's indemnity obligation contained herein shall expire on the second
anniversary after the Loan shall have been paid in full; satisfaction of the
Loan in connection with a foreclosure sale shall not constitute a repayment of
the Loan for the purpose of terminating Indemnitor's indemnity obligation
hereunder.
-5-
258
15. The indemnity contained herein shall not be subject
to any nonrecourse or other limitation of liability provisions contained in any
document or instrument executed and delivered in connection with the Loan and
the liability of Indemnitor hereunder shall not be limited by any such
nonrecourse or similar limitation of liability provisions.
16. If any material warranty, representation or statement
contained herein shall be or shall prove to have been false when made or if
Indemnitor shall fail or neglect to perform or observe any of the terms,
provisions or covenants contained herein, the same shall constitute an Event of
Default under the Loan and under all documents and instruments executed and
delivered in connection therewith that shall entitle Administrative Agent and
the Lenders to pursue any and all remedies provided for such default.
17. Any notice required or permitted in connection
herewith shall be given in the manner provided in any loan agreement or other
documents executed and delivered in connection with the Loan.
18. Indemnitor acknowledges that the Lenders and
Administrative Agent have and will rely upon the representations, warranties
and agreements herein set forth in closing and funding (or modifying as the
case may be) the Loan and that the execution and delivery of this Environmental
Indemnity Agreement is an essential condition but for which the Lenders and
Administrative Agent would not close or fund (or modify) the Loan.
19. Indemnitor waives any right or claim of right to
cause a marshalling of the assets of Indemnitor or to cause the Lenders and
Administrative Agent to proceed against any of the security for the Loan before
proceeding under this Environmental Indemnity Agreement against Indemnitor;
Indemnitor agrees that any payments required to be made hereunder shall become
due on demand; Indemnitor expressly waives and relinquishes all rights and
remedies accorded by applicable law to indemnitors or guarantors (including,
without limitation, A.R.S. Sections 12-1641, et seq.), except any rights of
subrogation that Indemnitor may have, provided that the Indemnity provided for
hereunder shall neither be contingent upon the existence of any such rights of
subrogation nor subject to any claims or defenses whatsoever that may be
asserted in connection with the enforcement or attempted enforcement of such
subrogation rights, including, without limitation, any claim that such
subrogation rights were abrogated by any acts or omissions of the Lenders or
Administrative Agent.
20. This Environmental Indemnity Agreement shall be
governed by and construed according to the laws of the State of Arizona except
as otherwise provided herein.
-6-
259
IN WITNESS WHEREOF, Indemnitor has executed this Environmental
Indemnity Agreement as of the date set forth herein.
Date: ________________.
INDEMNITOR: SUNSTONE HOTEL INVESTORS, L.P., a
Delaware limited partnership
BY: SUNSTONE HOTEL INVESTORS, INC.,
a Maryland corporation, its
General Partner
By_____________________________________
Its_________________________________
(Borrower)
SUNSTONE HOTEL INVESTORS, INC.,
a Maryland corporation
By_____________________________________
Its_________________________________
(Guarantor)
-7-
260
SCHEDULE "A"
LEGAL DESCRIPTION
261
ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE STATEMENT
