<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from __________ to __________
Commission File Number 0-27360
_____________
EXTENDED STAY AMERICA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 36-3996573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
450 EAST LAS OLAS BOULEVARD, FORT LAUDERDALE, FL 33301
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (954) 713-1600
_____________
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---------- --------
At May 8, 1998, the registrant had issued and outstanding an aggregate of
95,888,570 shares of Common Stock.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
EXTENDED STAY AMERICA, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
ASSETS
------
March 31, December 31,
1998 1997 (1)
----------- -------------
Current assets:
<S> <C> <C>
Cash and cash equivalents................................................................ $ 38,021 $ 3,213
Accounts receivable...................................................................... 4,505 3,651
Prepaid expenses......................................................................... 7,140 3,869
Deferred income taxes.................................................................... 8,377 6,895
Other current assets..................................................................... 667 1,430
---------- ----------
Total current assets................................................................. 58,710 19,058
Property and equipment, net................................................................. 1,167,307 1,042,177
Deferred loan costs......................................................................... 18,251 8,167
Other assets................................................................................ 1,466 1,489
---------- ----------
$1,245,734 $1,070,891
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable......................................................................... $ 39,444 $ 51,309
Accrued retainage........................................................................ 18,796 19,951
Accrued property taxes................................................................... 5,936 3,417
Accrued salaries and related expenses.................................................... 2,439 2,018
Other accrued expenses................................................................... 14,950 6,144
---------- ----------
Total current liabilities............................................................ 81,565 82,839
---------- ----------
Deferred income taxes....................................................................... 22,178 18,393
---------- ----------
Long-term debt.............................................................................. 300,000 135,000
---------- ----------
Commitments
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, no shares issued and
outstanding.............................................................................
Common stock, $.01 par value, 500,000,000 shares authorized, 95,824,271 and 95,604,208
shares issued and outstanding, respectively............................................. 958 956
Additional paid-in capital............................................................... 825,588 823,060
Retained earnings........................................................................ 15,445 10,643
---------- ----------
Total stockholders' equity........................................................... 841,991 834,659
---------- ----------
$1,245,734 $1,070,891
========== ==========
</TABLE>
(1) Derived from audited financial statements
See notes to the unaudited condensed consolidated financial statements
1
<PAGE>
EXTENDED STAY AMERICA, INC.
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
Revenue.............................................................................. $ 54,231 $ 19,763
Property operating expenses.......................................................... 26,282 10,180
Corporate operating and property
management expenses............................................................ 9,393 5,755
Depreciation and amortization........................................................ 9,430 3,712
Total costs and expenses 45,105 19,647
Income from operations.............................................................. 9,126 116
Interest expense (income), net....................................................... 1,122 (3,987)
Income before income taxes.......................................................... 8,004 4,103
Provision for income taxes........................................................... 3,202 1,633
Net income........................................................................... $ 4,802 $ 2,470
========= =========
Net income per common share--Basic and Diluted....................................... $ 0.05 $ 0.03
========= =========
Weighted average shares:
Basic......................................................................... 95,698 90,641
Effect of dilutive options.................................................... 1,390 2,259
Diluted....................................................................... 97,088 92,900
========= =========
</TABLE>
See notes to the unaudited condensed consolidated financial statements
2
<PAGE>
EXTENDED STAY AMERICA, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
1998 1997
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net income................................................................. $ 4,802 $ 2,470
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 9,430 3,712
Write-offs and reserve adjustments..................................... 955 704
Deferred income taxes.................................................. 2,903 949
Changes in operating assets and liabilities............................ (1,130) (901)
--------- ---------
Net cash provided by operating activities............................. 16,960 6,934
--------- ---------
Cash flows from investing activities:
Additions to property and equipment....................................... (139,464) (103,432)
Payments for merger costs................................................. (1,967)
Other assets.............................................................. (5) (86)
--------- ---------
Net cash used in investing activities................................. (139,469) (105,485)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt.............................................. 200,000
Repayments of revolving credit facility................................... (35,000)
Proceeds from issuance of common stock.................................... 2,262 199,729
Additions to deferred loan costs.......................................... (9,945) (1,147)
--------- ---------
Net cash provided by (used in) financing activities................... 157,317 198,582
--------- ---------
Increase in cash and cash equivalents....................................... 34,808 100,031
Cash and cash equivalents at beginning of period............................ 3,213 224,325
--------- ---------
Cash and cash equivalents at end of period.................................. $ 38,021 $ 324,356
========= =========
Noncash investing and financing transactions:
Capitalized or deferred items included in accounts payable and
accrued liabilities...................................................... $ 51,191 $ 15,344
========= =========
Conversion of amounts due under revolving credit facility to term loan.... $ 100,000 $
========= =========
Capitalization of amortized deferred loan costs........................... $ 511 $
========= =========
Supplemental cash flow disclosures:
Cash paid for:
Income taxes............................................................ $ 2,533 $ 625
========= =========
Interest expense, net of amounts capitalized............................ $ 1,457 $
========= =========
</TABLE>
See notes to the unaudited condensed consolidated financial statements
3
<PAGE>
EXTENDED STAY AMERICA, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
NOTE 1 -- BASIS OF PRESENTATION
Extended Stay America, Inc. ("ESA") was organized on January 9, 1995 as a
Delaware corporation to develop, own and manage extended stay lodging
facilities.
On April 11, 1997, ESA, ESA Merger Sub, Inc. ("Merger Sub"), a wholly-owned
subsidiary of ESA, and Studio Plus Hotels, Inc. ("SPH") consummated a merger
(the "Merger") pursuant to which SPH was merged with and into Merger Sub and the
12,557,786 shares of SPH common stock issued and outstanding on such date were
converted into 15,410,915 shares of common stock, par value $.01 per share, of
ESA ("Common Stock") and options to purchase 1,072,565 shares of SPH common
stock were converted into options to purchase 1,316,252 shares of Common Stock.
The Merger was accounted for using the pooling of interests method of
accounting. The accompanying unaudited condensed consolidated financial
statements of ESA and SPH (together, the "Company") give effect to the Merger as
if it had been consummated as of the beginning of the periods presented. All
significant intercompany accounts and transactions have been eliminated in
consolidation. These financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
the instructions of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
The condensed consolidated balance sheet data at December 31, 1997 was derived
from audited financial statements of the Company but does not include all
disclosures required by generally accepted accounting principles.
Operating results for the three-month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
In April, 1998, the Accounting Standards Executive Committee released
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities"
("SOP 98-5"). SOP 98-5 requires that start-up costs, including pre-opening and
organizational costs be expensed as incurred and is effective for financial
statements issued for periods beginning after December 15, 1998. At March 31,
1998, the Company had unamortized pre-opening and organization costs of
approximately $1.1 million. Under SOP 98-5, the Company would have reported a
reduction of expenses of approximately $206,000 for the three months ended March
31, 1998.
For the three months ended March 31, 1998 and 1997, the computation of diluted
earnings per share does not include approximately 5,803,000 and 247,000 weighted
average shares, respectively, of Common Stock represented by outstanding options
because the exercise price of the options was greater than the average market
price of Common Stock during the period.
Certain previously reported amounts have been reclassified to conform with the
current period's presentation.
4
<PAGE>
NOTE 2 -- INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amount of
existing assets and liabilities and their respective tax bases and for operating
loss and tax carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Income tax expense for the three-month periods ended March 31, 1998 and 1997
differed from the amounts computed by applying the U.S. Federal income tax rate
of 35 percent primarily as a result of the impact of state and local income
taxes and, in 1997, tax exempt interest income.
NOTE 3 -- LONG-TERM DEBT
Effective March 10, 1998, the Company issued $200 million Senior Subordinated
Notes (the "Notes"). The Notes contain certain redemption features, bear
interest at an annual rate of 9.15%, and mature on March 15, 2008. The Notes
are uncollateralized and are subordinated to all senior indebtedness of the
Company and contain certain covenants for the benefit of the holders of the
Notes. These covenants, among other things, restrict in certain circumstances
the Company's ability to incur additional indebtedness, pay dividends and make
investments and other restricted payments, enter into transactions with 5%
stockholders or affiliates, create liens, and sell assets.
Effective March 10, 1998, the Company amended its existing credit facility
(the "Amended Credit Facility"). The Amended Credit Facility provides for up to
$350 million in term loans (the "Term Loans") and $350 million in a revolving
loan facility (the "Revolving Facility"). The Revolving Facility and up to $150
million of the Term Loans mature December 31, 2002 and bear interest, at the
Company's option, at either the Base Rate (as defined) or the Eurodollar rate,
plus an applicable margin which will be between .875% and 0% for Base Rate loans
and 1.875% and 1% for Eurodollar loans. Up to $200 million of the Term Loans
mature December 31, 2003, subject to maximum principal amortization of 1% in
each of the years 1999 through 2002 and payment of the balance in four equal
quarterly payments in 2003. They will bear interest, at the Company's option, at
either the Base Rate plus 1.75% or the Eurodollar plus Rate plus 2.75%. At March
31, 1998, $100 million was borrowed and $600 million remained available and
committed under the Amended Credit Facility.
5
<PAGE>
Availability under the Amended Credit Facility is dependent upon the Company
satisfying certain financial ratios of debt and interest compared to property-
level EBITDA for qualifying properties, less corporate operating expenses. In no
event, however, is availability under the Amended Credit Facility less than $200
million at any time.
The Amended Credit Facility contains a number of covenants, including, among
others, covenants limiting in certain circumstances the ability of the Company
and its subsidiaries to incur debt, make investments, pay dividends, prepay
other indebtedness, engage in transactions with affiliates, enter into sale-
leaseback transactions, create liens, make capital expenditures, acquire or
dispose of assets, or engage in mergers or acquisitions. In addition, the
Amended Credit Facility contains affirmative covenants, including, among others,
covenants requiring maintenance of corporate existence, compliance with laws,
maintenance of properties and insurance, and the delivery of financial and other
information. The Amended Credit Facility also specifies events of default,
including a change of control, and requires the Company to comply with certain
financial tests and to maintain certain financial ratios on a consolidated
basis. The Company's obligations under the Amended Credit Facility are
guaranteed by each of the Company's subsidiaries and are collateralized by a
first priority lien on all stock of such subsidiaries owned by the Company and
all other current and future assets of the Company and its subsidiaries (other
than mortgages on the Company's and its subsidiaries' real property).
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
Extended Stay America, Inc. ("ESA"), was organized on January 9, 1995, as a
Delaware corporation to develop, own, and manage extended stay lodging
facilities. Studio Plus Hotels, Inc. ("SPH") was formed in December 1994 and
acquired (through merger and exchange of SPH common stock for partnership
interests immediately prior to completion of the SPH initial public offering in
June 1995) all of the assets of Studio Plus, Inc. and the SPH predecessor
entities, which owned and operated StudioPLUS(TM) extended stay facilities since
1986. The acquisition of the interests of the controlling shareholder or
partner and affiliates of the predecessor entities was accounted for as a
pooling of interests.
On April 11, 1997, ESA, ESA Merger Sub, Inc. ("Merger Sub"), a wholly-owned
subsidiary of ESA, and SPH consummated a merger pursuant to which SPH was merged
with and into Merger Sub (the "Merger") and the 12,557,786 shares of SPH common
stock that were outstanding on the closing date were converted into 15,410,915
shares of common stock, par value $.01 per share, of ESA ("Common Stock") and
options to purchase 1,072,565 shares of SPH common stock were converted into
options to purchase 1,316,252 shares of Common Stock. As a result of the
Merger, SPH became a wholly-owned subsidiary of ESA. The accompanying unaudited
condensed consolidated financial statements of ESA and SPH (together, the
"Company") give effect to the Merger, which has been accounted for as a pooling
of interests.
The Company owns and operates three brands in the extended stay lodging
market--StudioPLUS(TM) Deluxe Studios ("StudioPLUS"), EXTENDED STAYAMERICA
Efficiency Studios ("EXTENDED STAY"), and Crossland Economy Studios(SM)
("Crossland"), each designed to appeal to different price points below $500
per week. All three brands offer the same core components: a living/sleeping
area; a fully-equipped kitchen or kitchenette; and a bathroom. EXTENDED STAY
rooms are designed to compete in the economy category. Crossland guestrooms are
typically smaller than EXTENDED STAY rooms and are targeted for the budget
category, while StudioPLUS facilities serve the mid-price category and generally
feature larger guestrooms, an exercise facility, and a swimming pool.
The following is a summary of the Company's selected development and
operational results for the three months ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1998 1997
---- ----
<S> <C> <C>
Total Facilities Open (at Period End)......................... 218 93
Total Facilities Developed.................................... 33 18
Average Occupancy Rate........................................ 68% 65%
Average Weekly Room Rate...................................... $278 $256
</TABLE>
Average occupancy rates are determined by dividing the guestrooms occupied on
a daily basis by the total number of guestrooms. Due to the Company's rapid
expansion, its overall average occupancy rate has been negatively impacted by
the lower occupancy typically experienced during the pre-stabilization period
for newly opened facilities. This negative impact on occupancy is expected to
diminish as the ratio of new property openings during a period to total
properties in operation at the end of the period decreases. Average weekly room
rates are determined by dividing room revenue by the number of rooms occupied on
a daily basis for the applicable period and multiplying by seven. The average
weekly room rates vary from standard room rates due primarily to (i) stays of
less than one week, which are charged at a higher nightly rate, (ii) higher
weekly rates for rooms which are larger than the standard rooms, and (iii)
additional charges for more than one person per room. Future occupancy and room
rates may be impacted by a number of factors including the number and geographic
location of new facilities
7
<PAGE>
as well as the season in which such facilities commence operations.
There can be no assurance that the foregoing occupancy and room rates can be
maintained.
The following is a summary of the Company's development status as of March 31,
1998, by brand. The Company expects to complete the construction of the
facilities currently under construction generally within the next twelve months
and to commence construction on the majority of the sites under option at
various dates in the future. There can be no assurance, however, that the
Company will complete the acquisition of the sites under option or, if acquired,
commence and complete construction within time periods historically experienced
by the Company. The Company's ability to complete development of sites under
construction and under option may be materially impacted by various factors
including zoning, permitting and environmental issues as well as weather-induced
construction delays.
<TABLE>
<CAPTION>
EXTENDED
Crossland STAY StudioPLUS Total
--------- -------- ---------- -----
<S> <C> <C> <C> <C>
Operating Facilities................... 7 138 73 218
Facilities Under Construction.......... 21 37 17 75
Sites Under Option..................... 25 79 58 162
</TABLE>
Results of Operations
Property Operations
The following is a summary of the properties operated during the specified
periods and the related average occupancy and weekly room rates:
<TABLE>
<CAPTION>
For the Three Months Ended
----------------------------------------------------------------------
March 31, 1998 March 31, 1997
---------------------------------- ----------------------------------
Average Average Average Average
Facilities Occupancy Weekly Room Facilities Occupancy Weekly Room
Open Rate Rate Open Rate Rate
---------- --------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Crossland...... 7 59% $190 1 73% $171
EXTENDED STAY.. 138 70 271 54 60 241
StudioPLUS..... 73 62 317 38 76 290
--- -- ---- -- -- ----
Total........ 218 68% $278 93 65% $256
=== == ==== == == ====
</TABLE>
Because newly opened properties typically experience lower occupancies during
their pre-stabilization period, average occupancy rates are impacted by the
ratio of newly opened properties to total properties. A total of 33 properties
commenced operations in the first quarter of 1998 compared to 18 which were
opened in the first quarter of 1997. The average occupancy rate in the first
quarter of 1998 for the 75 properties that were owned and operated by the
Company as of December 31, 1996 was 75%. For the EXTENDED STAY brand,
occupancy rates increased for the first quarter of 1998 as compared to the first
quarter of 1997 primarily due to a decrease in the ratio of newly opened
properties to total properties for that brand. Occupancy rates decreased for
the StudioPLUS and Crossland brands primarily due to an increase in the number
of newly opened properties for each of these brands.
The increase in overall average weekly room rates for the first quarter of
1998 compared to the first quarter of 1997 reflects the geographic dispersion of
properties opened since March 31, 1997 and the higher standard weekly room rates
in certain of those markets, in addition to increases in rates charged in
previously opened properties. These increases were partially offset by an
increase in the percentage of total facilities (as of the end of the quarter)
represented by lower priced EXTENDED STAY and Crossland facilities from 59% for
1997 to 67% for 1998. The Company expects that its average weekly room rate
will continue to be impacted as EXTENDED STAY and Crossland facilities increase
as a percentage of the Company's total facilities. The average weekly room rate
for the 75 properties that were owned and operated throughout both periods
increased by 1% in the first quarter of 1998.
The Company recognized total revenues for the first quarter of 1998 and 1997
of $54.2 million and $19.8 million, respectively, an increase of $34.4 million.
Approximately $32.3 million of the increased revenue was
8
<PAGE>
attributable to properties opened subsequent to December 31, 1996 and
approximately $2.1 million was attributable to an increase in revenue for the 75
properties that were owned and operated throughout both periods.
Property operating expenses, consisting of all expenses directly allocable to
the operation of the facilities but excluding any allocation of corporate
operating and property management expenses and depreciation, were $26.3 million
(48% of total revenue) for the first quarter of 1998, compared to $10.2 million
(52% of total revenue) for the first quarter of 1997. The decrease in property
operating expenses as a percentage of total revenue for the first quarter of
1998 as compared to the first quarter of 1997 was primarily a result of a
decrease in the ratio of newly opened properties to total properties. As a
result of the foregoing, the Company realized property operating margins of 52%
and 48% for the first quarter of 1998 and 1997, respectively.
The provision for depreciation and amortization for the lodging facilities of
$9.0 million and $3.5 million for the first quarter of 1998 and 1997,
respectively, was provided using the straight-line method over the estimated
useful lives of the assets. These provisions reflect a pro rata allocation of
the annual depreciation and amortization charge for the periods for which the
facilities were in operation. The increase in depreciation and amortization for
the first quarter of 1998 as compared to the first quarter of 1997 is due to the
operation of 125 additional facilities in 1998.
Corporate Operations
Corporate operating and property management expenses include all expenses not
directly related to the development or operation of lodging facilities. These
expenses consist primarily of personnel expenses, professional and consulting
fees, and related travel expenses including costs that are not directly related
to a site that will be developed by the Company. The Company incurred corporate
operating and property management expenses of $9.4 million (17% of total
revenue) and $5.8 million (29% of total revenue) in the first quarter of 1998
and 1997, respectively. The increase in the amount of these expenses for the
first quarter of 1998 as compared to 1997 reflects the impact of additional
personnel and related expenses in connection with the Company's increased level
of operating facilities and site development. Management expects these expenses
to increase in total amount but to continue to decline as a percentage of
revenue with the development of additional facilities in the future.
Depreciation and amortization in the amount of $403,000 for the quarter ended
March 31, 1998 and $204,000 for the comparable period in 1997 were provided
using the straight-line method over the estimated useful lives of the assets for
assets not directly related to the operation of the facilities, including
primarily office furniture and equipment.
The Company realized $4.0 million of interest income during the first quarter
of 1997, which was primarily attributable to the investment of funds received
from offerings of Common Stock. Approximately $300,000 of interest income was
realized in the first quarter of 1998 primarily resulting from the temporary
investment of funds drawn under the Company's credit facilities. The Company
incurred interest charges of $5.2 million during the first quarter of 1998, $3.8
million of which was capitalized and included in the cost of buildings and
improvements.
The Company recognized income tax expense at estimated annual effective rates
of 40% and 39.8% for the first quarter of 1998 and 1997, respectively. Income
tax expense differs from the federal income tax rate of 35% primarily due to
state and local income taxes and, in 1997, tax exempt interest income.
Liquidity and Capital Resources
The Company had cash and cash equivalents of $38.0 million and $3.2 million as
of March 31, 1998 and December 31, 1997, respectively. At March 31, 1998,
substantially all of the cash balances were invested, utilizing domestic
commercial banks and other financial institutions, in short-term commercial
paper and other securities having credit ratings of A1/P1 or equivalent. The
market value of the securities held approximates the carrying amount. In
addition, at March 31, 1998 and December 31, 1997, the Company invested excess
funds in an overnight sweep account with a commercial bank which invested in
short-term, interest-bearing reverse repurchase agreements. Due to the short-
term nature of these investments, the Company did not take possession of the
9
<PAGE>
securities, which were instead held by the financial institution. The market
value of the securities held pursuant to the agreements approximates the
carrying amount. Deposits in excess of $100,000 are not insured by the Federal
Deposit Insurance Corporation.
During the three months ended March 31, 1998, and 1997 the Company generated
cash from operating activities of $17.0 million and $6.9 million, respectively.
The Company used $139.5 million and $103.4 million to acquire land and
develop and furnish a total of 108 and 96 sites, respectively, in the three
months ended March 31, 1998 and 1997.
During the three months ended March 31, 1997, the Company made payments of
$2.0 million for costs associated with the Merger.
On February 6, 1997, the Company completed a private placement of 11.5 million
shares of its Common Stock at a purchase price of $17.625 per share, for an
aggregate amount of approximately $203 million. Net proceeds received by the
Company from that private placement were approximately $198 million. The
Company received net proceeds from the exercise of Company stock options
totaling $2.3 million and $1.5 million in the three months ended March 31,
1998 and 1997, respectively.
Effective September 26, 1997, the Company executed an agreement with various
banks establishing a revolving credit facility (the "Credit Facility") for $500
million to be used for general corporate purposes, including the construction
and acquisition of extended stay hotel properties. The Credit Facility had a
maturity of December 31, 2002. Upon execution of the agreement establishing the
Credit Facility, the Company terminated two mortgage loan facilities, which
provided for an aggregate of $400 million in available mortgage loans.
On March 10, 1998 (the "Effective Date"), the Company amended the Credit
Facility (the "Amended Credit Facility"). The Amended Credit Facility converted
$150 million of the amounts available under the Credit Facility into a term loan
facility (the "Converted Term Loans"), with the $350 million balance of the
amounts available under the Credit Facility remaining as a revolving loan
facility (the "Revolving Facility" and, together with the Converted Term Loans,
the "Converted Facilities"). With respect to the Converted Term Loans, $100
million was drawn on the Effective Date and the balance may be drawn no later
than July 31, 1998.
The Amended Credit Facility also provides for up to $300 million in additional
term loans (the "Additional Term Loans"), $200 million of which were committed
as of the Effective Date. The amount of that commitment may be reduced on each
monthly anniversary of the Effective Date if certain amounts are not drawn. The
loans drawn pursuant to the commitment must be borrowed prior to July 10, 1998
(as drawn, the "Committed Loans"). Additional Term Loans in excess of Committed
Loans may be borrowed at any time after the Effective Date, provided that the
total Additional Term Loans cannot exceed $200 million before January 1, 1999.
Further, to the extent that the Additional Term Loans exceed $200 million, at
least $275 million must be outstanding under the Revolving Facility on the date
the Additional Term Loans are incurred.
The Company is required to repay indebtedness outstanding under the Amended
Credit Facility with the net cash proceeds from certain sales of assets, from
issuances of debt or equity by the Company, and from insurance recovery events
(subject to certain reinvestment rights). The Company is also required to repay
indebtedness outstanding under the Amended Credit Facility annually in an amount
equal to 50% of the Company's excess cash flow (as defined).
Amounts drawn under the Converted Facilities bear interest, at the Company's
option, at either the Base Rate (as defined) or the Eurodollar rate, plus an
applicable margin. The applicable margin is an annual rate which fluctuates
based on the Company's ratio of consolidated debt to consolidated EBITDA and
which will be between .875% and 0% for Base Rate loans and 1.875% and 1% for
Eurodollar loans.
10
<PAGE>
Committed Loans will bear interest, at the Company's option, at either the
Base Rate plus 1.75% or the Eurodollar Plus Rate plus 2.75%. Additional Term
Loans that are not Committed Loans will bear interest at rates to be agreed
upon.
The Converted Facilities mature on December 31, 2002. Additional Term Loans
will mature no earlier than December 31, 2003, subject to maximum principal
amortization of 1% of the initially funded amounts in each of the years 1999
through 2002 and payment of the balance due in four equal quarterly payments in
2003.
Availability under the Amended Credit Facility is dependent upon the Company
satisfying certain financial ratios of debt and interest compared to property-
level EBITDA for qualifying properties, less corporate operating expenses. In
no event, however, is availability under the Amended Credit Facility less than
$200 million at any time.
The Company's obligations under the Converted Facilities are guaranteed by
each of the Company's subsidiaries (the "Guarantors") and are collateralized by
a first priority lien on all stock owned by the Company and the Guarantors and
all other current and future assets of the Company and the Guarantors (other
than mortgages on the Company's and the Guarantors' real property). The
obligations of the Company and the Guarantors under the Additional Term Loans
are collateralized on a pari passu basis by way of perfected first priority
security interest in the assets securing the Converted Facilities.
The Amended Credit Facility contains a number of covenants, including, among
others, covenants limiting in certain circumstances the ability of the Company
and its subsidiaries to incur debt, make investments, pay dividends, prepay
other indebtedness, engage in transactions with affiliates, enter into sale-
leaseback transactions, create liens, make capital expenditures, acquire or
dispose of assets, or engage in mergers or acquisitions. In addition, the
Amended Credit Facility contains affirmative covenants, including, among others,
covenants requiring maintenance of corporate existence, compliance with laws,
maintenance of properties and insurance, and the delivery of financial and other
information. The Amended Credit Facility also specifies events of default,
including a change of control, and requires the Company to comply with certain
financial tests and to maintain certain financial ratios on a consolidated
basis.
As of March 31, 1998, $100 million was borrowed and $600 million remained
available and committed under the Amended Credit Facility.
In addition, effective March 10, 1998, the Company issued $200 million Senior
Subordinated Notes, (the "Notes"). The Notes bear interest at an annual rate of
9.15%, payable semiannually on March 15 and September 15 of each year,
commencing September 15, 1998, and mature on March 15, 2008. The Notes are
redeemable, in whole or in part, any time on or after March 15, 2003, initially
at 104.575% of their principal amount, plus accrued interest, declining ratably
to 100% of their principal amount, plus accrued interest, on or after March 15,
2006. Additionally, at any time prior to March 15, 2001, the Company may redeem
up to 35% of the principal amount of the Notes with the proceeds of one or more
public equity offerings by the Company of its Common Stock, at a redemption
price of 109.15% of their principal amount, plus accrued interest, provided that
at least $130 million aggregate principal amount of Notes remains outstanding
after each such redemption.
The Notes are uncollateralized and are subordinated to all senior indebtedness
of the Company and contain certain covenants for the benefit of the holders of
the Notes. These covenants, among other things, restrict in certain
circumstances the Company's ability to incur additional indebtedness, pay
dividends and make investments and other restricted payments, enter into
transactions with 5% stockholders or affiliates, create liens, and sell assets.
In connection with the Amended Credit Facility and the Notes, the Company
incurred additions to deferred loan costs of $9.9 million during the three
months ended March 31, 1998.
The Company expects to continue to rapidly expand its operations. The Company
had commitments to complete construction of additional extended stay properties
with a total cost of approximately $392 million at March 31, 1998. The Company
believes that the remaining availability under the Amended Credit Facility,
together
11
<PAGE>
with cash on hand and cash flows from operations, will provide sufficient funds
for the Company to develop the properties currently planned to open in 1998 and
to fund its operating expenses through 1998. The Company expects it will require
additional funding to continue its expansion beyond the planned openings. The
timing and amount of financing needed will depend on a number of factors,
including the number of properties the Company constructs or acquires, the
timing of such development, and the cash flow generated by its properties. In
the event that the capital markets provide favorable opportunities, the
Company's plans or assumptions change or prove to be inaccurate, or the
foregoing sources of funds prove to be insufficient to fund the Company's growth
and operations, or if the Company consummates acquisitions, the Company may seek
additional capital sooner than currently anticipated. Sources of financing may
include public or private debt or equity financing. There can be no assurance
that such additional financing will be available to the Company or, if
available, that it can be obtained on acceptable terms or within the limitations
contained in the Company's financing arrangements. Failure to obtain such
financing could result in the delay or abandonment of some or all of the
Company's development and expansion plans and expenditures and could have a
material adverse effect on the Company.
Impact of the Year 2000 Issue and Accounting Releases
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Based on its recent
assessment, management of the Company does not anticipate that any significant
modification or replacement of the Company's software will be necessary for its
computer systems to properly utilize dates beyond December 31, 1999 or that the
Company will incur significant operating expenses to make any such computer
system improvements. The Company is not able to determine, however, whether any
of its suppliers, lenders, or service providers will need to make any such
software modifications or replacements or whether the failure to make such
software corrections will have an effect on the Company's operations or
financial condition.
In April 1998, the Accounting Standards Executive Committee released Statement
of Position 98-5, "Reporting on the Costs of Start-up Activities" ("SOP 98-5").
SOP 98-5 requires that start-up costs, including pre-opening and organizational
costs be expensed as incurred and is effective for financial statements issued
for periods beginning after December 15, 1998. At March 31, 1998, the Company
had unamortized pre-opening and organization costs of approximately $1.1
million. Under SOP 98-5, the Company would have reported a reduction of expenses
of approximately $206,000 for the three months ended March 31, 1998.
Seasonality and Inflation
Based upon the operating history of the Company's facilities, management
believes that extended stay lodging facilities are not as seasonal in nature as
the overall lodging industry. Management does expect, however, that occupancy
and revenues may be lower than average during the first and fourth quarters of
each calendar year. Because many of the Company's expenses do not fluctuate
with occupancy, such declines in occupancy may cause fluctuations or decreases
in the Company's quarterly earnings.
The rate of inflation as measured by changes in the average consumer price
index has not had a material effect on the revenue or operating results of the
Company during any of the periods presented. There can be no assurance,
however, that inflation will not affect future operating or construction costs.
Special Note on Forward-Looking Statements
Certain statements in this Form 10-Q constitute "forward-looking statements."
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance, or
achievements of the Company to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, the Company's limited
operating history and uncertainty as to the Company's future profitability; the
ability to meet construction and development schedules and budgets; the ability
to develop and implement operational and financial systems to manage rapidly
growing operations; the uncertainty as to the consumer demand for extended stay
lodging; increasing competition in the extended stay lodging market; the ability
to integrate and successfully operate acquired properties and the risks
associated with such properties; the ability to obtain financing on acceptable
terms to finance the Company's growth strategy; the ability of the Company to
operate within the limitations imposed by financing arrangements; and general
economic conditions as they may impact the overall lodging industry. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of their dates. The Company undertakes no obligations to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise.
12
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
10.1 Credit Agreement, dated as of September 26, 1997 and Amended and
Restated as of March 10, 1998, by and among the Company and Morgan
Stanley Senior Funding, Inc., as Syndication Agent and Arranger,
The Industrial Bank of Japan, Limited, as Administrative Agent,
and various banks
27.1 Financial Data Schedule (for EDGAR filings only)
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated February 20, 1998, relating to
the intent to commence an offering of $200 million of Senior Subordinated Notes.
The Company filed a report on Form 8-K dated March 10, 1998, announcing the
completion of the private placement of $200 million of 9.15% Senior Subordinated
Notes Due 2008.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on May 13, 1998.
EXTENDED STAY AMERICA, INC.
/s/ Robert A. Brannon
---------------------------------
Robert A. Brannon
Senior Vice President,
Chief Financial Officer,
Secretary, and Treasurer
(Principal Financial Officer)
/s/ Gregory R. Moxley
---------------------------------
Gregory R. Moxley
Vice President Finance
(Principal Accounting Officer)
14
<PAGE>
EXTENDED STAY AMERICA, INC.
---------------------------
Exhibit Index
-------------
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.1 Credit Agreement, dated as of September 26, 1997 and Amended and
Restated as of March 10, 1998, by and among the Company and Morgan
Stanley Senior Funding, Inc., as Syndication Agent and Arranger, The
Industrial Bank of Japan, Limited, as Administrative Agent, and
various banks
27.1 Financial Data Schedule (for EDGAR filings only)
15
<PAGE>
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
among
EXTENDED STAY AMERICA, INC.,
VARIOUS BANKS,
MORGAN STANLEY SENIOR FUNDING, INC.,
as SYNDICATION AGENT and ARRANGER
and
THE INDUSTRIAL BANK OF JAPAN, LIMITED
as ADMINISTRATIVE AGENT
__________________________________
Dated as of September 26, 1997
and
Amended and Restated as of March 10, 1998
__________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Amount and Terms of Credit..................................... 1
1.01 The Commitments................................................ 1
1.02 Minimum Amount of Each Borrowing............................... 5
1.03 Notice of Borrowing............................................ 6
1.04 Disbursement of Funds.......................................... 7
1.05 Notes.......................................................... 7
1.06 Conversions.................................................... 10
1.07 Pro Rata Borrowings............................................ 10
1.08 Interest....................................................... 11
1.09 Interest Periods............................................... 11
1.10 Increased Costs, Illegality, etc............................... 13
1.11 Compensation................................................... 15
1.12 Change of Lending Office....................................... 16
1.13 Replacement of Banks........................................... 16
1.14 Special Provisions Relating to the Tranche C Term Loan
Sub-Facility................................................... 17
SECTION 2. Letters of Credit.............................................. 18
2.01 Letters of Credit.............................................. 18
2.02 Maximum Letter of Credit Outstandings; Final Maturities........ 19
2.03 Letter of Credit Requests; Minimum Stated Amount............... 20
2.05 Agreement to Repay Letter of Credit Drawings................... 22
2.06 Increased Costs................................................ 23
SECTION 3. Fees; Reductions of Commitment................................. 24
3.01 Fees........................................................... 24
3.02 Voluntary Termination of Unutilized Commitments................ 26
3.03 Mandatory Reduction of Commitments............................. 27
SECTION 4. Prepayments; Payments; Taxes................................... 29
4.01 Voluntary Prepayments.......................................... 29
4.02 Mandatory Repayments........................................... 30
4.03 Method and Place of Payment.................................... 34
4.04 Net Payments; Taxes............................................ 35
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 5. Conditions Precedent to Restatement Effective Date............. 37
5.01 Execution of Agreement; Notes.................................. 37
5.02 Fees, etc...................................................... 38
5.03 Opinion of Counsel............................................. 38
5.04 Corporate Documents; Proceedings; etc.......................... 38
5.05 Employee Benefit Plans; Shareholders' Agreements; Management
Agreements; Collective Bargaining Agreements; Existing
Indebtedness Agreements; Tax Sharing Agreements; Material
Leases....................................................... 39
5.06 Pledge Agreement............................................... 41
5.07 Security Agreement............................................. 41
5.08 Subsidiary Credit Parties; etc................................. 41
5.09 Adverse Change, etc............................................ 42
5.10 Litigation..................................................... 42
5.11 Solvency Certificate; Environmental Assessments; Insurance
Certificates................................................. 42
5.12 Projections.................................................... 43
5.13 Payment of Amounts Under Original Credit Agreement; etc........ 43
SECTION 6. Conditions Precedent to All Credit Events...................... 43
6.01 No Default; Representations and Warranties..................... 44
6.02 Notice of Borrowing; Letter of Credit Request.................. 44
6.03 Specific Borrowing Conditions.................................. 44
6.04 Special Borrowing Condition Applicable to Tranche C Term Loans. 44
SECTION 7. Representations and Warranties................................. 45
7.01 Corporate and Other Status..................................... 45
7.02 Corporate or Partnership Power and Authority................... 45
7.03 No Violation................................................... 46
7.04 Governmental Approvals......................................... 46
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc................................ 46
7.06 Litigation..................................................... 48
7.07 True and Complete Disclosure................................... 48
7.08 Use of Proceeds; Margin Regulations............................ 48
7.09 Tax Returns and Payments....................................... 48
7.10 Compliance with ERISA.......................................... 49
7.11 The Security Documents......................................... 50
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.12 Manager Subordination Agreements............................... 51
7.13 Properties..................................................... 51
7.14 Capitalization................................................. 51
7.15 Subsidiaries................................................... 51
7.16 Compliance with Statutes, etc.................................. 52
7.17 Investment Company Act......................................... 52
7.18 Public Utility Holding Company Act............................. 52
7.19 Environmental Matters.......................................... 52
7.20 Labor Relations................................................ 53
7.21 Patents, Licenses, Franchises and Formulas..................... 53
7.22 Indebtedness................................................... 53
7.23 Hotel Properties............................................... 54
7.24 Updated Security Agreement and Pledge Agreement Schedules...... 54
SECTION 8. Affirmative Covenants.......................................... 54
8.01 Information Covenants.......................................... 54
8.02 Books, Records and Inspections................................. 57
8.03 Maintenance of Property; Insurance............................. 58
8.04 Corporate Franchises........................................... 59
8.05 Compliance with Statutes, etc.................................. 59
8.06 Compliance with Environmental Laws............................. 59
8.07 ERISA.......................................................... 60
8.08 End of Fiscal Years; Fiscal Quarters........................... 61
8.09 Performance of Obligations..................................... 62
8.10 Payment of Taxes............................................... 62
8.11 Certain Requirements with Respect to Acquisitions/Construction
of Qualified Hotel Properties................................ 62
8.12 Additional Security; Further Assurances........................ 63
8.13 Foreign Subsidiaries Security.................................. 64
8.14 Hotel Property Management...................................... 65
8.15 Maintenance of Corporate Separateness.......................... 65
SECTION 9. Negative Covenants............................................. 66
9.01 Liens.......................................................... 66
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc......... 69
9.03 Dividends...................................................... 71
9.04 Indebtedness................................................... 71
9.05 Advances, Investments and Loans................................ 72
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.06 Transactions with Affiliates................................... 74
9.07 Capital Expenditures........................................... 74
9.08 Consolidated Interest Coverage Ratio........................... 75
9.09 Maximum Run Rate Leverage Ratio................................ 75
9.10 Maximum Senior Debt Leverage Ratio............................. 76
9.11 Maximum Debt to Capitalization Ratio........................... 77
9.12 Limitation on Payments of Certain Indebtedness; Modifications
of Certain Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Agreements; etc........... 77
9.13 imitation on Certain Restrictions on Subsidiaries.............. 78
9.14 Limitation on Issuance of Capital Stock........................ 78
9.15 Business....................................................... 78
9.16 Limitation on Creation of Subsidiaries......................... 78
9.17 Designated Senior Indebtedness................................. 79
SECTION 10. Events of Default.............................................. 79
10.01 Payments....................................................... 79
10.02 Representations, etc........................................... 79
10.03 Covenants...................................................... 80
10.04 Default Under Other Agreements................................. 80
10.05 Bankruptcy, etc................................................ 80
10.06 ERISA.......................................................... 81
10.07 Security Documents............................................. 82
10.08 Subsidiaries Guaranty.......................................... 82
10.09 Judgments...................................................... 82
10.10 Manager Subordination Agreements............................... 82
10.11 Change of Control.............................................. 83
SECTION 11. Definitions and Accounting Terms............................... 83
11.01 Defined Terms.................................................. 83
SECTION 12. The Agents..................................................... 119
12.01 Appointment.................................................... 119
12.02 Nature of Duties............................................... 119
12.03 Lack of Reliance on the Agents................................. 120
12.04 Certain Rights of the Agents................................... 120
12.05 Reliance....................................................... 120
12.06 Indemnification................................................ 121
12.07 Each Agent in Its Individual Capacity.......................... 121
</TABLE>
(iv)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
12.08 Holders........................................................ 121
12.09 Resignation by the Administrative Agent and the Syndication
Agent........................................................ 121
SECTION 13. Miscellaneous.................................................. 122
13.01 Payment of Expenses, etc....................................... 122
13.02 Right of Setoff................................................ 123
13.03 Notices........................................................ 124
13.04 Benefit of Agreement........................................... 124
13.05 No Waiver; Remedies Cumulative................................. 126
13.06 Payments Pro Rata.............................................. 127
13.07 Calculations; Computations..................................... 127
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL................................................... 128
13.09 Counterparts................................................... 129
13.10 Effectiveness.................................................. 129
13.11 Headings Descriptive........................................... 130
13.12 Amendment or Waiver; etc....................................... 130
13.13 Survival....................................................... 131
13.14 Domicile of Loans.............................................. 131
13.15 Confidentiality................................................ 131
13.16 Register....................................................... 132
13.17 Limitation on Increased Costs.................................. 133
13.18 Addition of New Banks; Obligation to Pay Certain Amounts Owing
Pursuant to the Original Credit Agreement; Conversion of
Commitments Under Original Credit Agreement; etc............. 133
13.19 Acknowledgement and Agreement of Credit Parties................ 134
</TABLE>
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Initial Hotel Properties
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Insurance
SCHEDULE VII Existing Liens
SCHEDULE VIII ERISA Matters
SCHEDULE IX Original Letters of Credit
(v)
<PAGE>
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Tranche A Term Note
EXHIBIT B-2 Tranche B Term Note
EXHIBIT B-3 Tranche C Term Note
EXHIBIT B-4 Revolving Note
EXHIBIT B-5 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E Opinion of Bell, Boyd & Lloyd
EXHIBIT F Officers' Certificate
EXHIBIT G Officer's Solvency Certificate
EXHIBIT H Acquisition/Construction Certificate
EXHIBIT I Assignment and Assumption Agreement
EXHIBIT J Tranche C Supplement
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of September 26, 1997 and amended and
restated as of March 10, 1998, among EXTENDED STAY AMERICA, INC., a Delaware
corporation, (the "Borrower"), the Banks party hereto from time to time, MORGAN
STANLEY SENIOR FUNDING, INC., as Syndication Agent and Arranger, and THE
INDUSTRIAL BANK OF JAPAN, LIMITED, as Administrative Agent (all capitalized
terms used herein and defined in Section 11 are used herein as therein defined).
W I T N E S S E T H :
-------------------
WHEREAS, the Borrower, the Original Banks, Morgan Stanley Senior
Funding, Inc., as Syndication Agent and Arranger, and The Industrial Bank of
Japan, Limited, as Administrative Agent, are parties to a Credit Agreement,
dated as of September 26, 1997 (as the same has been amended, modified or
supplemented to, but not including, the Restatement Effective Date, the
"Original Credit Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Original
Credit Agreement in the form of this Agreement to make available to the Borrower
the respective facilities provided for herein;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and is hereby amended and restated in its entirety as
follows:
SECTION 1. Amount and Terms of Credit.
---------------------------
1.01 The Commitments. (a) Subject to and upon the terms and
----------------
conditions set forth herein, each Bank with a Tranche A Term Loan
Commitment severally agrees (A) in the case of each Original Bank, to convert
into Tranche A Term Loans (as hereinafter defined), on the Restatement Effective
Date, Original Revolving Loans made by such Original Bank pursuant to the
Original Credit Agreement and outstanding on the Restatement Effective Date in
an aggregate principal amount equal to the lesser of (x) the aggregate principal
amount of such Original Revolving Loans made by such Original Bank and so
outstanding and (y) such Original Bank's Tranche A Term Loan Commitment as in
effect on the Restatement Effective Date (before giving effect to any reductions
thereto on such date pursuant to Section 3.03(b)(i)(x)), provided that in no
--------
event shall the aggregate principal amount of Original Revolving Loans converted
pursuant to this clause (A) exceed $150,000,000 or, unless so elected by the
Borrower in a written notice delivered to the Administrative Agent at least
three Business days prior to the Restatement Effective Date, $100,000,000,
and/or (B) to make, from time to time on and after the Restatement Effective
<PAGE>
Date but no later than the Final A Draw Date, a term loan or term loans (each a
"Tranche A Term Loan" and collectively the "Tranche A Term Loans") to the
Borrower, which Tranche A Term Loans (i) shall, at the option of the Borrower,
be Base Rate Loans or Eurodollar Loans, provided that, except as otherwise
--------
specifically provided in Section 1.10(b), all Tranche A Term Loans made as part
of the same Borrowing shall consist of Tranche A Term Loans of the same Type and
(ii) shall not exceed for any Bank, in initial aggregate principal amount for
all Tranche A Term Loans being made by such Bank on any Tranche A Term Loan
Borrowing Date, that amount which equals the Tranche A Term Loan Commitment of
such Bank on such date (before giving effect to any reductions thereto on such
date pursuant to Section 3.03(b)(i)(x) but after giving effect to any reductions
thereto prior to such date pursuant to Section 3.03(b)(i)(y)). Once repaid,
Tranche A Term Loans incurred hereunder may not be reborrowed. Notwithstanding
the foregoing, on the Restatement Effective Date (and immediately after giving
effect thereto) the aggregate principal amount of all outstanding Tranche A Term
Loans shall not be less than $100,000,000.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a Tranche B Term Loan Commitment severally agrees to make, from
time to time on and after the Restatement Effective Date but no later than the
Final B Draw Date, a term loan or term loans (each, a "Tranche B Term Loan" and,
collectively, the "Tranche B Term Loans") to the Borrower, which Tranche B Term
Loans (i) shall, at the option of the Borrower, be Base Rate Loans or Eurodollar
Loans, provided that, (A) except as otherwise specifically provided in Section
--------
1.10(b), all Tranche B Term Loans comprising the same Borrowing shall at all
times be of the same Type and (B) no more than three Borrowings of Tranche B
Term Loans maintained as Eurodollar Loans may be incurred prior to the earlier
of (1) the 90th day after the Restatement Effective Date or, if an Interest
Period relating to any then outstanding Revolving Loans beginning before such
90th day extends thereafter, the last day of such Interest Period, and (2) the
date (the "Syndication Date") upon which the Agents shall have determined in
their sole discretion (and shall have notified the Borrower) that the primary
syndication of the Tranche B Term Loan Facility (and resultant addition of
institutions as Banks pursuant to Section 13.04(b)) has been completed (each of
which Borrowings of Eurodollar Loans may only have an Interest Period of one
month, and the first of which Borrowings may only be made on the same day as the
first day of the first Interest Period of the Tranche B Term Loans that are
maintained as Eurodollar Loans, and the second and third of which Borrowings may
only be made on the last day of the immediately preceding Interest Period), and
(ii) shall not exceed for any Bank, in initial aggregate principal amount for
all Tranche B Term Loans being made by such Bank on any Tranche B Term Loan
Borrowing Date, that amount which equals the Tranche B Term Loan Commitment of
such Bank on such date (before giving effect to any reductions thereto on such
date pursuant to Section 3.03(b)(ii)(x) but after giving effect to any
reductions thereto prior to such date pursuant to Section 3.03(b)(ii)(y)). No
more than
-2-
<PAGE>
four Tranche B Term Loan Borrowing Dates shall be permitted to occur. Once
repaid, Tranche B Term Loans incurred hereunder may not be reborrowed.
(c) Subject to the terms and conditions set forth herein (including,
without limitation, the relevant Tranche C Supplement), in the event that a
Tranche C Supplement has become effective in respect of a Tranche C Term Loan
Sub-Facility, each Bank having a Tranche C Term Loan Commitment under such Sub-
Facility severally agrees to make on such date or dates occurring on and after
the Supplement Effective Date for such Tranche C Supplement as are set forth in
such Tranche C Supplement a term loan or term loans (each, a "Tranche C Term
Loan" and, collectively, the "Tranche C Terms Loans") to the Borrower, which
Tranche C Term Loans (i) shall be Base Rate Loans or Eurodollar Loans, (ii)
shall not exceed for any Bank in initial aggregate principal amount for all
Tranche C Term Loans being made by such Bank under the relevant Tranche C Term
Loan Sub-Facility that amount which equals the Tranche C Term Loan Commitment of
such Bank under such Tranche C Term Loan Sub-Facility on such date (before
giving effect to any reductions thereto on such date pursuant to Section
3.03(b)(iii)(x) but after giving effect to any reductions thereto on or prior to
such date pursuant to Section 3.03(b)(iii)(y)) and (iii) shall not exceed in
initial aggregate principal amount the amount permitted in Section 1.14(a).
Once repaid, Tranche C Term Loans incurred hereunder may not be reborrowed.
(d) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment sever ally agrees, at any time and
from time to time on and after the Restatement Effective Date and prior to the
A/RF Maturity Date, to make a revolving loan or revolving loans (each, a
"Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower,
which Revolving Loans (i) shall, at the option of the Borrower, be Base Rate
Loans or Eurodollar Loans, pro vided that, except as otherwise specifically
---------
provided in Section 1.10(b), all Revolving Loans comprising the same Borrowing
shall at all times be of the same Type, (ii) may be repaid and reborrowed at any
time in accordance with the provisions hereof, (iii) shall not exceed for any
such Bank at any time outstanding that aggregate principal amount which, when
added to the product of (A) such Bank's Percentage and (B) the sum of (I) the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time and
(II) the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Revolving Loan Commitment of such Bank at such time and
(iv) shall not exceed for all Banks at any time outstanding that aggregate
principal amount which, when added to (I) the aggregate amount of all Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time and (II) the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which are repaid
with the proceeds of, and
-3-
<PAGE>
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals the Total Revolving Loan Commitment at such
time.
(e) Subject to and upon the terms and conditions set forth herein,
the Swingline Bank agrees to make, at any time and from time to time on and
after the Restatement Effective Date and prior to the Swingline Expiry Date, a
revolving loan or revolving loans (each a "Swingline Loan" and, collectively,
the "Swingline Loans") to the Borrower, which Swingline Loans (i) shall be made
and maintained as Base Rate Loans, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed in aggregate
principal amount at any time outstanding, when combined with the aggregate
principal amount of all Revolving Loans then outstanding and the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Swingline Loans) at such time, an amount equal to the Total
Revolving Loan Commitment at such time, and (iv) shall not exceed in aggregate
principal amount at any time outstanding the Maximum Swingline Amount. The
Swingline Bank shall not be obligated to make any Swingline Loans at a time when
a Bank Default exists unless the Swingline Bank has entered into an arrangement
satisfactory to it and the Borrower, to eliminate the Swingline Bank's risk with
respect to the Bank which is the subject of such Bank Default, including by cash
collateralizing the Bank's Percentage of the outstanding Swingline Loans.
Notwithstanding anything to the contrary contained in this Section 1.01(e), the
Swingline Bank shall not make any Swingline Loan after it has received written
notice from the Borrower or the Required Banks stating that a Default or an
Event of Default exists and is continuing until such time as the Swingline Bank
shall have received written notice (i) of rescission of all such notices from
the party or parties originally delivering such notice, (ii) of the waiver of
such Default or Event of Default by the Required Banks or (iii) that the Agents
in good faith believe that such Default or Event of Default has ceased to exist.
(f) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks that its outstanding Swingline Loans shall
be funded with one or more Borrowings of Revolving Loans (provided that such
--------
notice shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 10.05 or upon the exercise of any
of the remedies provided in the last paragraph of Section 10), in which case one
or more Borrowings of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately succeeding
Business Day by all Banks pro rata based on each such Bank's Percentage
--- ----
(determined before giving effect to any termination of the Revolving Loan
Commitments pursuant to the last paragraph of Section 10) and the proceeds
thereof shall be applied directly by the Swingline Bank to repay the Swingline
Bank for such outstanding Swingline Loans. Each such Bank hereby irrevocably
agrees to make Revolving Loans upon one Business Day's notice pursuant to each
Mandatory Borrowing in the amount and in the manner specified in the preceding
sentence and on the date specified in writing by
-4-
<PAGE>
the Swingline Bank notwithstanding (i) the amount of the Mandatory Borrowing may
not comply with the Minimum Borrowing Amount otherwise required hereunder, (ii)
whether any conditions specified in Section 6 are then satisfied, (iii) whether
a Default or an Event of Default then exists, (iv) the date of such Mandatory
Borrowing and (v) the amount of the Total Revolving Loan Commitment at such
time. In the event that any Mandatory Borrowing cannot for any reason be made on
the date otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower), then each such Bank hereby agrees that it shall forthwith purchase
(as of the date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrower on or after such date and
prior to such purchase) from the Swingline Bank such participations in the
outstanding Swingline Loans as shall be necessary to cause such Banks to share
in such Swingline Loans ratably based upon their respective Percentages
(determined before giving effect to any termination of the Total Revolving Loan
Commitment pursuant to the last paragraph of Section 10), provided that (x) all
--------
interest payable on the Swingline Loans shall be for the account of the
Swingline Bank until the date as of which the respective participation is
required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date, (y)
at the time any purchase of participations pursuant to this sentence is actually
made, the purchasing Bank shall be required to pay the Swingline Bank interest
on the principal amount of participation purchased for each day from and
including the day upon which the Mandatory Borrowing would otherwise have
occurred to but excluding the date of payment for such participation, at the
overnight Federal Funds Rate for the first three days and at the rate otherwise
applicable to Revolving Loans maintained as Base Rate Loans hereunder for each
day thereafter and (z) whenever the Swingline Bank receives a payment in respect
of a Swingline Loan in which such a participation has been purchased, the
Swingline Bank shall pay to the Banks which acquired such participation on
amount equal to such Banks' share in such Swingline Loan.
(g) Notwithstanding the foregoing, no Loan may be incurred, or Letter
of Credit issued, if after giving effect to the incurrence of such Loans or the
issuance of such Letter of Credit, the sum of the outstanding aggregate
principal amount of the Loans and the aggregate amount of the Letter of Credit
Outstandings would exceed $200,000,000, unless the Specific Borrowing Conditions
are satisfied on the date thereof.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
---------------------------------
amount of each Borrowing of Loans shall not be less than the Minimum Borrowing
Amount applicable thereto. More than one Borrowing may occur on the same date,
but at no time shall there be outstanding as Eurodollar Loans more than (a)
twenty Borrowings of Tranche A Term Loans and Revolving Loans, (b) four
Borrowings of Tranche B Term Loans and (c) the number of Borrowings of Tranche C
Term Loans under a single Tranche C Term Loan Sub-Facility equal to the Total
Tranche C Term Loan Commitment under such Tranche C Term Loan Sub-Facility
divided by $25,000,000.
-5-
<PAGE>
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
--------------------
incur a Borrowing of Loans (excluding Revolving Loans incurred pursuant to a
Mandatory Borrowing), the Borrower shall give the Administrative Agent at its
Notice Office at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of each Base Rate Loan and at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) of each Eurodollar Loan to be made hereunder, provided that any such
--------
notice shall be deemed to have been given on a certain day only if given before
1:00 P.M. (New York time) on such day. Each such written notice or written
confirmation of telephonic notice (each a "Notice of Borrowing"), except as
otherwise expressly provided in Section 1.10, shall be irrevocable and shall be
given by the Borrower in the form of Exhibit A, appropriately completed to
specify (i) the aggregate principal amount of the Loans to be incurred pursuant
to such Borrowing, (ii) the date of such Borrowing (which shall be a Business
Day) and (iii) whether the Loans being made pursuant to such Borrowing shall
constitute Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans or
Revolving Loans and whether the Loans being incurred pursuant to such Borrowing
are to be initially maintained as Base Rate Loans or Eurodollar Loans and, if
Eurodollar Loans, the initial Interest Period to be applicable thereto. The
Administrative Agent shall promptly give each Bank notice of such proposed
Borrowing, of such Bank's proportionate share thereof and of the other matters
required by the immediately preceding sentence to be specified in the Notice of
Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, the Borrower shall give the Swingline Bank no later than 2:00 P.M.
(New York time) on the date that a Swingline Loan is to be incurred, written
notice or telephonic notice promptly confirmed in writing of each Swingline Loan
to be incurred hereunder. Each such notice shall be irrevocable and specify in
each case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(f), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(f).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing or prepayment of
Loans, the Administrative Agent or the Swingline Bank, as the case may be, may
act with out liability upon the basis of telephonic notice of such Borrowing or
prepayment believed by the Administrative Agent or the Swingline Bank, as the
case may be, in good faith to be from an Authorized Officer of the Borrower
prior to receipt of written confirmation. In each such case, the Borrower
hereby waives the right to dispute the Administrative Agent's or the Swingline
Bank's record of the terms of such telephonic notice of such Borrowing or
prepayment of Loans (absent manifest error).
-6-
<PAGE>
1.04 Disbursement of Funds. No later than 1:00 P.M. (New York time)
----------------------
on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, no later than 3:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, no
later than 12:00 Noon (New York time) on the date specified in Section 1.01(f)),
each Bank which has received the notice referred to in the last sentence of
Section 1.03(a) (or (x) in the case of Swingline Loans, Section 1.03(b)(i) or
(y) in the case of Mandatory Borrowings, Section 1.01(f)) will disburse its pro
---
rata portion of each Borrowing requested to be made on such date (or, in the
- ----
case of Swingline Loans, the Swingline Bank will make available the full amount
thereof). All such amounts shall be disbursed in Dollars and in immediately
available funds at the Payment Office of the Administrative Agent, and the
Administrative Agent will promptly disburse to the Borrower at the Payment
Office, in Dollars and in immediately available funds, the aggregate of the
amounts so made available by the Banks (other than in respect of Mandatory
Borrowings). Unless the Administrative Agent shall have been notified by any
Bank prior to the date of Borrowing that such Bank does not intend to disburse
to the Administrative Agent such Bank's portion of any Borrowing to be made on
such date, the Administrative Agent may assume that such Bank has disbursed such
amount to the Administrative Agent on such date of Borrowing and the
Administrative Agent may, in reliance upon such assumption, disburse to the
Borrower a corresponding amount. If such corresponding amount is not in fact
disbursed to the Administrative Agent by such Bank, the Administrative Agent
shall be entitled to recover such corresponding amount on demand from such Bank.
If such Bank does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and the Borrower shall within three Business Days thereafter
pay such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover (without duplication) on demand from
such Bank or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
disbursed by the Administrative Agent to the Borrower until the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (i) if recovered from such Bank, at the overnight Federal Funds
Rate and (ii) if recovered from the Borrower, the rate of interest applicable to
the respective Borrowing, as determined pursuant to Section 1.08. Nothing in
this Section 1.04 shall be deemed to relieve any Bank from its obligation to
make Loans hereunder or to prejudice any rights which the Borrower may have
against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
------and interest on, the Loans made by each Bank to the
Borrower shall be evidenced (i) if Tranche A Term Loans, by a promissory note
duly executed and delivered by the Borrower substantially in the form of Exhibit
B-1 with blanks appropriately completed in conformity herewith (each, a "Tranche
A Term Note" and, collectively, the "Tranche A Term Notes"), (ii) if Tranche B
Term Loans, by a promissory note duly executed and delivered by the
-7-
<PAGE>
Borrower substantially in the form of Exhibit B-2 with blanks appropriately
completed in conformity herewith (each, a "Tranche B Term Note" and,
collectively, the "Tranche B Term Notes"), (iii) if Tranche C Term Loans under a
Tranche C Term Loan Sub-Facility, by a promissory note duly executed and
delivered by the Borrower substantially in the form of Exhibit B-3 with blanks
appropriately completed in conformity herewith (each, a "Tranche C Term Note"
and, collectively, the "Tranche C Term Notes"), (iv) if Revolving Loans, by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B-4, with blanks appropriately completed in conformity herewith
(each, a "Revolving Note" and, collectively, the "Revolving Notes") and (v) if
Swingline Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-5, with blanks appropriately
completed in conformity herewith (the "Swingline Note").
(b) The Tranche A Term Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank or its registered
assigns and be dated the Restatement Effective Date (or, if issued after the
Restatement Effective Date, be dated the date of the issuance thereof), (iii) be
in a stated principal amount equal to the Tranche A Term Loan Commitment of such
Bank on the Restatement Effective Date (or, if issued after the Restatement
Effective Date, equal to the sum of the Tranche A Term Loan Commitment plus the
outstanding Tranche A Term Loans of such Bank on such date of issuance) and be
payable in the principal amount of Tranche A Term Loans evidenced thereby, (iv)
mature on the A/RF Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(c) The Tranche B Term Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank or its registered
assigns and be dated the Restatement Effective Date (or, if issued after the
Restatement Effective Date, be dated the date of the issuance thereof), (iii) be
in a stated principal amount equal to the Tranche B Term Loan Commitment of such
Bank on the Restatement Effective Date (or, if issued after the Restatement
Effective Date, equal to the sum of the Tranche B Term Loan Commitment plus the
outstanding Tranche B Term Loans of such Bank on such date of issuance) and be
payable in the principal amount of Tranche B Term Loans evidenced thereby, (iv)
mature on the B Maturity Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans,
as the case may be, evidenced thereby, (vi) be subject to voluntary prepayment
as provided in Section 4.01, and mandatory repayment as provided in Section 4.02
and (vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
-8-
<PAGE>
(d) The Tranche C Term Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank and be dated the date
of the issuance thereof, (iii) be in a stated principal amount equal to the sum
of the Tranche C Term Loan Commitment under the relevant Tranche C Term Loan
Sub-Facility and all outstanding Tranche C Term Loans under the relevant Tranche
C Term Loan Sub-Facility of such Bank on the date of issuance and be payable in
the principal amount of Tranche C Term Loans evidenced thereby, (iv) mature on
the date provided in the Tranche C Supplement for such Tranche C Term Loan Sub-
Facility, (v) bear interest as provided in the Tranche C Supplement for such
Tranche C Term Loan Sub-Facility, (vi) be subject to voluntary prepayment as
provided in Section 4.01, and mandatory repayment as provided in Section 4.02
and (vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
(e) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the Restatement Effective Date (or, if issued after the Restatement
Effective Date, be dated the date of the issuance thereof), (iii) be in a stated
principal amount equal to the Revolving Loan Commitment of such Bank and be
payable in the outstanding principal amount of the Revolving Loans evidenced
thereby, (iv) mature on the A/RF Maturity Date, (v) bear interest as provided in
the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(f) The Swingline Note issued to the Swingline Bank shall (i) be
executed by the Borrower, (ii) be payable to the Swingline Bank or its
registered assigns and be dated the Restatement Effective Date (or, if issued
after the Restatement Effective Date, be dated the date of the issuance
thereof), (iii) be in a stated principal amount equal to the Maximum Swingline
Amount and be payable in the outstanding principal amount of the Swingline Loans
evidenced thereby from time to time, (iv) mature on the Swingline Expiry Date,
(v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans evidenced thereby, (vi) be subject to voluntary
prepayment as provided in Section 4.01, and mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(g) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of its Note endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
(or any error in such notation) shall not affect the Borrower's obligations in
respect of such Loans.
-9-
<PAGE>
1.06 Conversions. The Borrower shall have the option to convert, on
------------
any Business Day occurring after the Restatement Effective Date, all or a
portion equal to at least the applicable Minimum Borrowing Amount of the
outstanding principal amount of Loans made to the Borrower into a Borrowing or
Borrowings (of the same Tranche) of another Type of Loan, provided that (i)
--------
except as otherwise provided in Section 1.10(b), Eurodollar Loans may be
converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Loans being converted and no partial conversion of a Borrowing
of Eurodollar Loans shall reduce the outstanding principal amount of such
Eurodollar Loans made pursuant to a single Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default is in existence on the
date of the conversion, (iii) unless the Agents otherwise shall have determined
that the Syndication Date has occurred, prior to the 90th day after the
Restatement Effective Date, conversions of Tranche B Term Loans maintained as
Base Rate Loans into Eurodollar Loans may only be made if the conversion is
effective on the first day of the first, second or third Interest Period
referred to in clause (B) of the proviso of Section 1.01(b)(i) and so long as
such conversion does not result in a greater number of Borrowings of Eurodollar
Loans prior to the 90th day after the Initial Borrowing Date than are permitted
under Section 1.01(b), and (iv) no conversion pursuant to this Section 1.06
shall result in a greater number of Borrowings of Eurodollar Loans than is
permitted under Section 1.02. Each such conversion shall be effected by the
Borrower by giving the Administrative Agent at its Notice Office prior to 1:00
P.M. (New York time) at least three Business Days' prior written notice (each a
"Notice of Conversion") specifying the Loans to be so converted, the
Borrowing(s) pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank prompt notice of any such proposed con
version affecting any of its Loans. Upon any such conversion the proceeds
thereof will be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Tranche A Term Loans,
--------------------
Tranche B Term Loans, Tranche C Term Loans under a Tranche C Term Loan Sub-
Facility and Revolving Loans under this Agreement shall be incurred from the
Banks pro rata on the basis of their respective Tranche A Term Loan
--- ----
Commitments, Tranche B Term Loan Commitments, Tranche C Term Loan Commitments
under such Trance C Term Loan Sub-Facility or Revolving Loan Commitments, as the
case may be. It is understood that no Bank shall be responsible for any default
by any other Bank of its obligation to make Revolving Loans hereunder and that
each Bank shall be obligated to make the Revolving Loans pro vided to be made by
it hereunder, regardless of the failure of any other Bank to make its Revolving
Loans hereunder.
-10-
<PAGE>
1.08 Interest. (a) The Borrower agrees to pay interest in respect
---------
of the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower or from the date of any conversion to
a Base Rate Loan pursuant to Sections 1.06, 1.09 or 1.10, as applicable, until
the earlier of (i) the maturity (whether by acceleration or otherwise) of such
Base Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar
Loan pursuant to Section 1.06, at a rate per annum which shall be equal to the
sum of the Applicable Margin for the Tranche under which such Loans were
incurred, plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower or from the date of any conversion to a
Eurodollar Loan pursuant to Section 1.06 until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Eurodollar Loan and (ii) the
conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06,
1.09 or 1.10, as applicable, at a rate per annum which shall, during each
Interest Period applicable thereto, be equal to the sum of the Applicable Margin
for the Tranche under which such Loans were incurred, plus the Eurodollar Rate
for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
from time to time and (y) the rate which is 2% in excess of the rate otherwise
applicable to such Loans, in each case with such interest to be payable on
demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Loan, on any repayment
or prepayment (on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 Interest Periods. At the time the Borrower gives any Notice of
-----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third
-11-
<PAGE>
Business Day prior to the expiration of an Interest Period applicable to such
Eurodollar Loan (in the case of any subsequent Interest Period), the Borrower
shall have the right to elect, by giving the Administrative Agent notice
thereof, the interest period (each an "Interest Period") applicable to such
Eurodollar Loan, which Interest Period shall, at the option of the Borrower, be
a one, two, three or six-month period, provided that:
--------
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end on
the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period for
-------- -------
a Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(v) no Interest Period may be selected at any time when a Default or
an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any Tranche of
Loans shall be selected which extends beyond the respective Maturity Date
for such Tranche of Loans; and
(vii) no Interest Period in respect of any Borrowing of Tranche B
Term Loans or Tranche C Term Loans, as the case may be, shall be selected
which extends beyond any date upon which a mandatory repayment of such
Tranche of Term Loans will be required to be made under Section 4.02(b) if
the aggregate principal amount of Tranche B Term Loans or Tranche C Term
Loans, as the case may be, which have Interest Periods which will expire
after such date will be in excess of the aggregate principal amount of
Tranche B Term Loans or Tranche C Term
-12-
<PAGE>
Loans, as the case may be, then outstanding less the aggregate amount of
such required prepayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
----------------------------------
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the Restatement Effective Date affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the Restatement
Effective Date in any applicable law or governmental rule, regulation,
order, guideline or request (whether or not having the force of law) or in
the interpretation or administration thereof and including the introduction
of any new law or governmental rule, regulation, order, guideline or
request, such as, for example, but not limited to: (A) a change in the
basis of taxation of payment to any Bank of the principal of or interest on
such Eurodollar Loan or any other amounts payable hereunder (except for
changes in the rate of tax on, or determined by reference to, the net
income or net profits of such Bank, or any franchise tax based on the net
income or net profits of a Bank, in either case pursuant to the laws of the
jurisdiction in which such Bank is organized or in which such Bank's
principal office or applicable lending office is located or any subdivision
thereof or therein), or (B) a change in official reserve requirements, but,
in all events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate and/or (y) other
circumstances since the Restatement Effective Date affecting such Bank or
the interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a
-13-
<PAGE>
contingency occurring after the Restatement Effective Date which materially
and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the Banks
that the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall, subject to the provisions
of Section 13.17 (to the extent applicable), pay to such Bank, upon written
demand therefor, such additional amounts (in the form of an increased rate of,
or a different method of calculating, interest or otherwise as such Bank in its
sole discretion shall determine) as shall be required to compensate such Bank
for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Bank,
showing the basis for the calculation thereof, submitted to the Borrower by such
Bank in good faith shall, absent manifest error, be final and conclusive and
binding on all the parties hereto) and (z) in the case of clause (iii) above,
the Bor rower shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.
Each of the Administrative Agent and each Bank agrees that if it gives notice to
the Borrower of any of the events described in clause (i) or (iii) above, it
shall promptly notify the Borrower and, in the case of any such Bank, the
Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations of
such Bank to make Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein shall be
reinstated. In addition, if the Administrative Agent gives notice to the
Borrower that the events described in clause (i) above cease to exist, then the
obligations of the Banks to make Eurodollar Loans and to convert Base Rate Loans
into Eurodollar Loans on the terms and conditions contained herein (but subject
to clause (iii) above) shall also be reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) the Borrower shall) either (x) if the affected Eurodollar
Loan is then being made initially or pursuant to a conversion, cancel the
respective Borrowing by giving the Administrative Agent telephonic notice
(confirmed in writing) on the same date that the Borrower was notified by the
affected Bank or the Administrative Agent pursuant to Section 1.10(a)(ii) or
(iii) or (y) if the affected Eurodollar Loan is then outstanding, upon at least
three
-14-
<PAGE>
Business Days' written notice to the Administrative Agent, require the affected
Bank to convert such Eurodollar Loan into a Base Rate Loan, provided that, if
--------
more than one Bank is affected at any time, then all affected Banks must be
treated the same pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that, after the Restatement
Effective Date, the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law and including, without limitation, those
announced or published prior to the Restatement Effective Date) concerning
capital adequacy, or any change in interpretation or administration thereof by
the NAIC or any governmental authority, central bank or comparable agency, will
have the effect of increasing the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank based on the
existence of such Bank's Commitments hereunder or its obligations hereunder,
then the Borrower shall, subject to the provisions of Section 13.17 (to the
extent applicable), pay to such Bank, upon its written demand therefor, such
additional amounts as shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other corporation or the
reduction in the rate of return to such Bank or such other corporation as a
result of such increase of capital. In determining such additional amounts, each
Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, provided that such Bank's reasonable
--------
good faith determination of compensation owing under this Section 1.10(c) shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto. Each Bank, upon determining that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall show the basis for calculation of such additional
amounts. In addition, each such Bank, upon determining that the circumstances
giving rise to the payment of additional amounts pursuant to this Section
1.10(c) cease to exist, will give prompt written notice thereof to the Borrower.
1.11 Compensation . The Borrower shall compensate each Bank, upon
-------------
its written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any reason (other than a default by such Bank
or the Administrative Agent) a Borrowing of, or conversion from or into,
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment (including
any repayment made pursuant to Section 4.01 or 4.02 or as a result of an
acceleration of the Loans pursuant to Section 10) or conversion of any of the
Borrower's Eurodollar Loans occurs on a date which is not the last day of an
Interest Period with respect thereto; (iii) if any prepayment of any of the
-15-
<PAGE>
Borrower's Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay its Loans when required by the terms of this
Agreement or the Note held by such Bank or (y) any election made pursuant to
Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
-------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans and/or Letters of Credit affected by such event, provided that
--------
such designation is made on such terms that such Bank and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Bank provided in Sections 1.10,
2.06 and 4.04.
1.13 Replacement of Banks. (a) (x) If any Bank (i) becomes a
---------------------
Defaulting Bank or otherwise defaults in its obligations to make Loans or fund
Unpaid Drawings or (ii) refuses to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks as provided in Section 13.12(b) or (y) upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to any Bank
which results in such Bank charging to the Borrower increased costs in excess of
those being generally charged by the other Banks, the Borrower shall have the
right, in accordance with the requirements of Section 13.04(b), if no Default or
Event of Default will exist after giving effect to such replacement, to replace
such Bank (the "Replaced Bank") with one or more other Eligible Transferee or
Transferees, none of whom shall constitute a Defaulting Bank at the time of
such replacement (collectively, the "Replacement Bank"), reasonably acceptable
to the Administrative Agent, provided that (i) at the time of any replacement
--------
pursuant to this Section 1.13, the Replaced Bank and the Replacement Bank shall
enter into one or more Assignment and Assumption Agreements pursuant to Section
13.04(b) (and with all fees payable pursuant to said Section 13.04(b) to be paid
by the Replacement Bank) pursuant to which the Replacement Bank shall acquire
all of the Commitments and all of the outstanding Loans of the Replaced Bank
and, in connection therewith, shall pay to the Replaced Bank in respect thereof
an amount equal to the sum of (1) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Bank together with
all then unpaid interest with respect thereto at such time, (2) an amount equal
to all Unpaid Drawings that have been funded by (and not reimbursed to) such
Replaced Bank, together with all then unpaid interest with respect thereto at
such time and (3) an amount equal to all accrued, but theretofore unpaid, Fees
owing to the Replaced Bank pursuant to Section 3.01 and (ii) all obligations of
the Borrower owing to the Replaced Bank (other than those specifically described
in clause (i)
-16-
<PAGE>
above in respect of which the assignment purchase price has been, or is
concurrently being, paid) shall be paid in full to such Replaced Bank
concurrently with such replacement.
(b) Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts re ferred to in clauses (i) and (ii) of
Section 1.13(a) and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Note executed by the Borrower, the
Replacement Bank shall become a Bank here under and the Replaced Bank shall
cease to constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections 1.10,
1.11, 2.06, 4.04, 13.01 and 13.06), which shall survive as to such Replaced
Bank.
1.14 Special Provisions Relating to the Tranche C Term Loan Sub-
----------------------------------------------------------
Facility. (a) At any time after the Restatement Effective Date, the Borrower
- ---------
may request, pursuant to the procedure set forth in Section 1.14(b), one or more
of the Banks or any other financial institution which would become a Bank
pursuant to Section 13.04(c) upon its execution of a Tranche C Supplement, to
provide commitments to make one or more term loans to the Borrower (each a
"Tranche C Term Loan"), each of which Tranche C Term Loans shall be deemed to be
a Loan under this Agreement and shall be entitled to the benefits of this
Agreement and the other Credit Documents (including, but not limited to, sharing
on a pari passu basis benefits of the Subsidiaries Guaranties and the Security
---- -----
Documents), provided that (i) the initial aggregate principal amount of the
Tranche C Term Loans shall not exceed the Maximum Tranche C Permitted Amount,
(ii) the initial aggregate principal amount of the Tranche C Term Loans incurred
on or prior to any date shall not exceed the Available Maximum Tranche C Term
Loan Amount on such date, (iii) no Tranche C Term Loan may be incurred to the
extent that after giving effect to the incurrence thereof the sum of the initial
aggregate principal amount of the Tranche B Term Loans and the Tranche C Term
Loans would exceed $200,000,000 unless on the date of such incurrence (and prior
to giving effect to the application of the proceeds thereof) the aggregate
principal amount of the Revolving Loans equals or exceeds $275,000,000, (iv) the
maturity date and the scheduled amortization of Tranche C Term Loans under a
Tranche C Term Loan Sub-Facility shall be as set forth in the Tranche C
Supplement for such Sub-Facility, provided (x) that no Tranche C Term Loan
--------
shall mature prior to the B Maturity Date or require that more than 1% of the
initial principal amount thereof be paid in any year prior to the A/RF Maturity
Date and (y) scheduled amortization of Tranche C Term Loans shall otherwise
comply with Section 4.02(b)(iii) and (v) the interest rate, facility fees,
commitment commission and other amounts payable in respect of the Tranche C Term
Loan Commitment and Tranche C Term Loans under a Tranche C Term Loan Sub-
Facility shall be as set forth in the Tranche C Supplement for such Sub-
Facility, provided that such interest rate shall be expressed as a margin in
excess of the Base Rate or Eurodollar Rate. Within such limits, and subject to
the other terms and conditions hereof, the Borrower may borrow Tranche C Term
Loans under Section 1.01(c) and prepay Tranche C Term Loans
-17-
<PAGE>
pursuant to Sections 4.01 and 4.02. No Bank, by virtue of its being a party
hereto, shall have any obligation to provide commitments for any Tranche C Term
Loan Sub-Facility, and each Bank may determine in its sole and absolute
discretion whether to provide such commitments.
(b) Each Tranche C Term Loan Sub-Facility (and the Tranche C Term Loan
Commitments thereunder) shall become effective on the Supplement Effective Date
for the Tranche C Supplement for such Tranche C Term Loan Sub-Facility.
(c) The Total Tranche C Term Loan Commitment under any Tranche C Term Loan
Sub-Facility shall not be less than $50,000,000.
(d) The Administrative Agent shall promptly give each Bank notice of the
occurrence of the Supplement Effective Date for the Tranche C Supplement for
each Tranche C Term Loan Sub-Facility and shall deliver to each Bank a copy of
each such Tranche C Supplement.
SECTION 2. Letters of Credit.
------------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
------------------
conditions set forth herein, the Borrower may request that any Issuing Bank
issue, at any time and from time to time on and after the Restatement Effective
Date and prior to the 30th day prior to the A/RF Maturity Date, (x) for the
account of the Borrower and for the benefit of any holder (or any trustee, agent
or other similar representative for any such holders) of L/C Supportable
Obligations of the Borrower or any of its Subsidiaries, an irrevocable standby
letter of credit, in a form customarily used by such Issuing Bank or in such
other form as has been approved by such Issuing Bank (each such standby letter
of credit, a "Standby Letter of Credit") in support of such L/C Supportable
Obligations and (y) for the account of the Borrower and for the benefit of
sellers of goods and materials used in the ordinary course of business of the
Borrower or any of its Subsidiaries an irrevocable sight commercial letter of
credit in a form customarily used by such Issuing Bank or in such other form as
has been approved by such Issuing Bank (each such commercial letter of credit, a
"Trade Letter of Credit", and each such Trade Letter of Credit and each Standby
Letter of Credit, a "Letter of Credit") in support of commercial transactions of
the Borrower and its Subsidiaries. All Letters of Credit shall be denominated in
Dollars. On the Restatement Effective Date, all Original Letters of Credit shall
be deemed to have been issued under this Agreement and shall for all purposes
constitute "Letters of Credit" hereunder.
(b) Subject to and upon the terms and conditions set forth herein,
each Issuing Bank hereby agrees that it will, at any time and from time to time
on and after the Restatement Effective Date and prior to the 30th day prior to
the A/RF Maturity Date,
-18-
<PAGE>
following its receipt of the respective Letter of Credit Request, issue for the
account of the Borrower, one or more Letters of Credit (x) in the case of
Standby Letters of Credit, in support of such L/C Supportable Obligations of the
Borrower or any of its Subsidiaries or as are permitted to remain outstanding
without giving rise to a Default or an Event of Default and (y) in the case of
Trade Letters of Credit, in support of sellers of goods or materials used in the
ordinary course of business of the Borrower or any of its Subsidiaries as
referenced in Section 2.01(a), provided that the respective Issuing Bank shall
--------
be under no obligation to issue any Letter of Credit of the types described
above if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over such Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon such Issuing Bank with respect
to such Letter of Credit any restriction or reserve or capital requirement
(for which such Issuing Bank is not otherwise compensated) not in effect on
the date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date hereof
and which such Issuing Bank reasonably and in good faith deems material to
it; or
(ii) such Issuing Bank shall have received notice from the Required
Banks prior to the issuance of such Letter of Credit of the type described
in the penultimate sentence of Section 2.03(b).
2.02 Maximum Letter of Credit Outstandings; Final Maturities.
--------------------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the initial Stated Amount of which, when added
to the Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid on the date of, and prior to the issuance of, the respective Letter of
Credit) at such time would exceed either (x) $25,000,000 or (y) when added to
the aggregate principal amount of all Revolving Loans then outstanding and the
aggregate principal amount of all Swingline Loans then outstanding, an amount
equal to the Total Revolving Loan Commitment at such time and (ii) each Letter
of Credit shall by its terms terminate on or before (A) in the case of Standby
Letters of Credit, the earlier of (x) the date which occurs 12 months after the
date of the issuance thereof (although any such Standby Letter of Credit may be
extendable for successive periods of up to 12 months, but not beyond the third
Business Day prior to the A/RF Maturity Date, on terms accept able to the
Issuing Bank thereof) and (y) the third Business Day prior to the A/RF Maturity
Date and (B) in the case of Trade Letters of
-19-
<PAGE>
Credit, the earlier of (x) the date which occurs 360 days after the date of
issuance thereof and (y) 30 days prior to the A/RF Maturity Date.
2.03 Letter of Credit Requests; Minimum Stated Amount. (a)
-------------------------------------------------
Whenever the Borrower desires that a Letter of Credit be issued for its account,
the Borrower shall give the Administrative Agent and the respective Issuing Bank
at least five Business Days' (or such shorter period as is acceptable to the
respective Issuing Bank) written notice thereof. Each notice shall be in the
form of Exhibit C (each a "Letter of Credit Request"). The Administrative Agent
shall promptly transmit copies of each Letter of Credit Request to each Bank.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.02. Unless the respective Issuing Bank has received notice from the Required
Banks before it issues a Letter of Credit that one or more of the conditions
specified in Section 5 are not satisfied on the Restatement Effective Date or
Section 6 are not then satisfied, or that the issuance of such Letter of Credit
would violate Section 2.02, then such Issuing Bank may issue the requested
Letter of Credit for the account of the Borrower in accordance with such Issuing
Bank's usual and customary practices. Upon the issuance of or amendment or
modification to a Letter of Credit, the respective Issuing Bank shall promptly
notify the Borrower and the Administrative Agent of such issuance, amendment or
modification and such notification shall be accompanied by a copy of the issued
Letter of Credit or amendment or modification.
(c) The initial Stated Amount of each Letter of Credit shall not be
less than $10,000 or such lesser amount as is acceptable to the respective
Issuing Bank.
2.04 Letter of Credit Participation. (a) Immediately upon the
------------------------------
issuance by the respective Issuing Bank of any Letter of Credit, such Issuing
Bank shall be deemed to have sold and transferred to each Bank, other than such
Issuing Bank (each such Bank, in its capacity under this Section 2.04, a
"Participant"), and each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from such Issuing Bank, without
recourse or warranty, an undivided interest and participation, to the extent of
such Participant's Percentage in such Letter of Credit, each drawing or payment
made thereunder and the obligations of the Borrower under this Agreement with
respect thereto, and any security therefor or guaranty pertaining thereto. Upon
any change in the Revolving Loan Commitments of the Banks pursuant to Section
1.13 or 13.04, it is hereby agreed that, with respect to all outstanding Letters
of Credit and Unpaid Drawings, there shall be an automatic adjustment to the
participations pursuant to this Section 2.04 to reflect the new Percentages of
the assignor and assignee Bank, as the case may be.
-20-
<PAGE>
(b) In determining whether to pay under any Letter of Credit, the
respective Issuing Bank shall have no obligation relative to the other Banks
other than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Issuing Bank any
resulting liability to the Borrower, any other Credit Party, any Bank or any
other Person.
(c) In the event that any Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Issuing Bank pursuant to Section 2.05(a), such Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Percentage of such unreimbursed payment in Dollars and in same day funds. If the
Administrative Agent so notifies, prior to 11:00 A.M. (New York time) on any
Business Day, any Participant required to fund a payment under a Letter of
Credit, such Participant shall make available to such Issuing Bank in Dollars
such Participant's Percentage of the amount of such payment on such Business Day
in same day funds. If and to the extent such Participant shall not have so made
its Percentage of the amount of such payment available to such Issuing Bank,
such Participant agrees to pay to such Issuing Bank, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to such Issuing Bank at the overnight Federal Funds
Rate for the first three days and at the interest rate applicable to Revolving
Loans maintained as Base Rate Loans for each day thereafter. The failure of any
Participant to make available to such Issuing Bank its Percentage of any payment
under any Letter of Credit shall not relieve any other Participant of its
obligation hereunder to make available to such Issuing Bank its Percentage of
any Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other Participant to
make available to such Issuing Bank such other Participant's Percentage of any
such payment.
(d) Whenever any Issuing Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, such Issuing Bank shall pay to each Participant
which has paid its Percentage thereof, in Dollars and in same day funds, an
amount equal to such Participant's share (based upon the proportionate
aggregate amount originally funded by such Participant to the aggregate amount
funded by all Participants) of the principal amount of such reimbursement
obligation and interest thereon accruing after the purchase of the respective
participations.
-21-
<PAGE>
(e) Upon the request of any Participant, each Issuing Bank shall
furnish to such Participant copies of any Letter of Credit issued by it and such
other documentation relating thereto as may reasonably be requested by such
Participant.
(f) The obligations of the Participants to make payments to each
Issuing Bank with respect to Letters of Credit issued by it shall be irrevocable
and not subject to any qualification or exception whatsoever and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower or any of its Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, any Participant, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between the Borrower or any Subsidiary of the Borrower and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or 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 Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
---------------------------------------------
hereby agrees to reimburse the respective Issuing Bank, by making payment to the
Administrative Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by such Issuing Bank under any Letter of Credit
issued by it (each such amount, so paid until reimbursed, an "Unpaid Drawing"),
immediately after, and in any event on the date of, such payment or
disbursement, with interest on the amount so paid or disbursed by such Issuing
Bank, to the extent not reimbursed prior to 3:00 P.M. (New York time) on the
date of such payment or disbursement, from and including the date paid or
disbursed to but excluding the date such Issuing Bank was reimbursed by the
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Margin for Revolving Loans maintained as
Base Rate Loans;
-22-
<PAGE>
provided, however, to the extent such amounts are not reimbursed prior to 3:00
- -------- -------
P.M. (New York time) on the third Business Day following the receipt by the
Borrower of notice of such payment or disbursement or following the occurrence
of a Default or an Event of Default under Section 10.05, interest shall
thereafter accrue on the amounts so paid or disbursed by such Issuing Bank (and
until reimbursed by the Borrower) at a rate per annum which shall be the Base
Rate in effect from time to time plus the Applicable Margin for Revolving Loans
maintained as Base Rate Loans plus 2%, in each such case, with interest to be
payable on demand. The respective Issuing Bank shall give the Borrower prompt
written notice of each Drawing under any Letter of Credit, provided that the
--------
failure to give any such notice shall in no way affect, impair or diminish the
Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against any Bank
(including in its capacity as issuer of the Letter of Credit or as Participant),
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit (each a "Drawing") to conform to the terms of the
Letter of Credit or any nonapplication or misapplication by the beneficiary of
the proceeds of such Drawing; provided, however, that the Borrower shall not be
-------- -------
obligated to reimburse any Issuing Bank for any wrongful payment made by such
Issuing Bank under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Issuing
Bank.
2.06 Increased Costs. If at any time after the Restatement Effective
----------------
Date, the introduction of or any change in any applicable law, rule, regulation,
order, guideline or request or in the interpretation or administration thereof
by the NAIC or any governmental authority charged with the interpretation or
administration thereof, or compliance by any Issuing Bank or any Participant
with any request or directive by any such authority (whether or not having the
force of law), shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against letters of credit
issued by any Issuing Bank or participated in by any Participant, or (ii) impose
on any Issuing Bank or any Participant any other conditions relating, directly
or indirectly, to this Agreement; and the result of any of the foregoing is to
increase the cost to any Issuing Bank or any Participant of issuing, maintaining
or participating in any Letter of Credit, or reduce the amount of any sum
received or receivable by any Issuing Bank or any Participant hereunder or
reduce the rate of return on its capital with respect to Letters of Credit
(except for changes in the rate of tax on, or determined by reference to, the
net income or profits of such Issuing Bank or such Participant pursuant to the
laws of the jurisdiction in which it is organized or in which its principal
office or applicable lending office is located or any subdivision thereof or
therein), then, upon the delivery of the
-23-
<PAGE>
certificate referred to below to the Borrower by such Issuing Bank or any
Participant, the Borrower shall, subject to the provisions of Section 13.17 (to
the extent applicable), pay to such Issuing Bank or such Participant such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction in the amount receivable or reduction on the rate of return
on its capital. Any Issuing Bank or any Participant, upon determining that any
additional amounts will be payable pursuant to this Section 2.06, will give
prompt written notice thereof to the Borrower, which notice shall include a
certificate submitted to the Borrower by such Issuing Bank or such Participant
(a copy of which certificate shall be sent by such Issuing Bank or such
Participant to the Administrative Agent), setting forth in reasonable detail the
basis for the calculation of such additional amount or amounts necessary to
compensate such Issuing Bank or such Participant. In determining such
additional amounts, each Issuing Bank and each Participant will act reasonably
and in good faith, provided that the certificate required to be delivered
pursuant to this Section 2.06 shall, absent manifest error, be final and
conclusive and binding on the Borrower.
SECTION 3. Fees; Reductions of Commitment .
-------------------------------
3.01 Fees. (a) (i) The Borrower agrees to pay to the Administrative
-----
Agent for distribution to each Non-Defaulting Bank with a Tranche A Term Loan
Commitment a commitment commission (the "Tranche A Term Loan Commitment
Commission") for the period from the Restatement Effective Date to but not
including the Final A Draw Date (or to but not including such earlier date as
the Total Tranche A Term Loan Commitment shall have been terminated), computed
at a rate per annum for each day equal to the Applicable Commitment Commission
Percentage on the Tranche A Term Loan Commitment of such Non-Defaulting Bank on
such day. Accrued Tranche A Term Loan Commitment Commission shall be due and
payable quarterly in arrears on each Quarterly Payment Date and on the Final A
Draw Date or such earlier date upon which the Total Tranche A Term Loan
Commitment is terminated.
(ii) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Tranche B Term Loan Commitment a
commitment commission (the "Tranche B Term Loan Commitment Commission") for the
period from the Restatement Effective Date to but not including the Final B Draw
Date (or to but not including such earlier date as the Total Tranche B Term Loan
Commitment shall have been terminated), computed at a rate per annum for each
day equal to 1/2 of 1% on the Tranche B Term Loan Commitment of such Non-
Defaulting Bank on such day. Accrued Tranche B Term Loan Commitment Commission
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the Final B Draw Date or such earlier date upon which the Total Tranche B
Term Loan Commitment is terminated.
(iii) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank a commitment commission (the "Revolving
Loan Commitment
-24-
<PAGE>
Commission") for the period from the Original Effective Date to but not
including the A/RF Maturity Date (or to but not including such earlier date as
the Total Revolving Loan Commitment shall have been terminated), computed at a
rate per annum for each day equal to the Applicable Commitment Commission
Percentage on the Unutilized Revolving Loan Commitment of such Non-Defaulting
Bank on such day. Accrued Revolving Loan Commitment Commission shall be due and
payable quarterly in arrears on each Quarterly Payment Date and on the A/RF
Maturity Date or such earlier date upon which the Total Revolving Loan
Commitment is terminated.
(iv) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Tranche C Term Loan Commitment
under a Tranche C Term Loan Sub-Facility such facility fees, commitment
commission and other amounts, if any, as are specified in the Tranche C
Supplement for such Tranche C Term Loan Sub-Facility, such facility fees,
commitment commissions and other amounts, if any, to be payable at the times set
forth in such Tranche C Supplement.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank (based on each such Bank's respective
Percentage) a fee in respect of each Letter of Credit issued hereunder (the
"Letter of Credit Fee"), for the period from and including the date of issuance
of such Letter of Credit to and including the date of termination or expiration
of such Letter of Credit, computed at a rate per annum equal to the Applicable
Margin for Revolving Loans maintained as Eurodollar Loans on the daily Stated
Amount of such Letter of Credit. Accrued Letter of Credit Fees payable with
respect to Standby Letters of Credit shall be due and payable quarterly in
arrears on each Quarterly Payment Date and on the first day after the
termination of the Total Revolving Loan Commitment upon which no Standby Letters
of Credit remain outstanding.
(c) The Borrower agrees to pay to each Issuing Bank, for its own
account, a facing fee in respect of each Letter of Credit issued by such Issuing
Bank (the "Facing Fee"), (x) in the case of each Standby Letter of Credit, for
the period from and including the date of issuance of such Standby Letter of
Credit to and including the date of the termination of such Standby Letter of
Credit, computed at a rate equal to 1/4 of 1% per annum (or such lesser rate as
is agreed on by the Borrower and the respective Issuing Bank) of the daily
Stated Amount of such Standby Letter of Credit and (y) in the case of each Trade
Letter of Credit, in an amount equal to 1/4 of 1% (or such lesser rate as is
agreed on by the Borrower and the respective Issuing Bank) of the Stated Amount
of such Trade Letter of Credit as of the date of issuance thereof. Accrued
Facing Fees payable with respect to Standby Letters of Credit shall be due and
payable quarterly in arrears on each Quarterly Payment Date and upon the first
day after the termination of the Total Revolving Loan Commitment upon which no
Standby Letters of Credit remain outstanding and all Facing Fees payable with
respect to each Trade Letter of Credit shall be due and payable on the date of
issuance of such Trade Letter of Credit.
-25-
<PAGE>
(d) The Borrower agrees to pay, upon each drawing under, issuance
of, or amendment to, any Letter of Credit, such amount as shall at the time of
such event be the administrative charge and the reasonable expenses which the
applicable Issuing Bank is generally imposing in connection with such occurrence
with respect to letters of credit.
(e) The Borrower agrees to pay to the Agents, for their own account,
such other fees as have been agreed to in writing by the Borrower with the
Agents.
3.02 Voluntary Termination of Unutilized Commitments. (a) (i) Upon at
------------------------------------------------
least one Business Days' prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks), the Borrower shall have the right, at any time or from time
to time, without premium or penalty, to terminate or partially reduce the Total
Unutilized Revolving Loan Commitment, in integral multiples of $1,000,000;
provided that each such reduction shall apply proportionately to permanently
- --------
reduce the Revolving Loan Commitment of each Bank.
(ii) At any time after the Restatement Effective Date and prior to
the termination of the Total Tranche A Term Loan Commitment and upon at least
one Business Day's prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks), the Borrower shall have the right, without premium or
penalty, to terminate or partially reduce the remaining Total Tranche A Term
Loan Commitment. The termination or reduction of the remaining Total Tranche A
Term Loan Commitment pursuant to this Section 3.02(a)(ii) shall be applied to
terminate or reduce, as the case may be, the remaining Tranche A Term Loan
Commitment of each Bank with such a Commitment.
(iii) At any time after the Restatement Effective Date and prior to
the termination of the Total Tranche B Term Loan Commitment and upon at least
one Business Day's prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks), the Borrower shall have the right, without premium or
penalty, to terminate or partially reduce the remaining Total Tranche B Term
Loan Commitment. The termination or reduction of the remaining Total Tranche B
Term Loan Commitment pursuant to this Section 3.02(a)(iii) shall be applied to
terminate or reduce, as the case may be, the remaining Tranche B Term Loan
Commitment of each Bank with such a Commitment.
(iv) Unless otherwise provided in the relevant Tranche C Supplement,
at any time after the Supplement Effective Date of such Tranche C Supplement and
prior to the termination of the Total Tranche C Term Loan Commitment under the
relevant Tranche C Term Loan Sub-Facility and upon at least one Business Day's
prior written notice to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the Banks),
the Borrower shall have the right, without
-26-
<PAGE>
premium or penalty, to terminate or partially reduce the remaining Total Tranche
C Term Loan Commitment under the relevant Tranche C Term Loan Sub-Facility. The
termination or reduction of the Total Tranche C Term Loan Commitment pursuant to
this Section 3.02(a)(iv) shall be applied to terminate or reduce, as the case
may be, the remaining Tranche C Term Loan Commitment under the relevant Tranche
C Term Loan Sub-Facility of each Bank with such a Commitment.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
13.12(b), the Borrower may, subject to the requirements of said Section 13.12(b)
and upon five Business Days' written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks) terminate the entire Commitment of such Bank so long as all
Loans, together with accrued and unpaid interest, Fees and all other amounts
owing to such Bank are repaid concurrently with the effectiveness of such
termination pursuant to this Section 3.02(b) (at which time Schedule I shall be
deemed modified to reflect such changed amounts), and at such time, such Bank
shall no longer constitute a "Bank" for purposes of this Agreement, except with
respect to indemnifications under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall survive as to
such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Tranche A Term Loan
-----------------------------------
Commitment, the Tranche B Term Loan Commitment, the Tranche C Term Loan
Commitment, if any, and the Revolving Loan Commitment of each Bank shall
terminate in their entirety on April 30, 1998, and the Original Credit Agreement
shall continue in effect unless the Restatement Effective Date shall have
occurred on or prior to such date.
(b) (i) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Tranche A Term Loan Commitment (and the
Tranche A Term Loan Commitment of each Bank) shall (x) be reduced on each
Tranche A Term Loan Borrowing Date, in each case after giving effect to, and in
an amount equal to, the Tranche A Term Loans made on such date (which in the
case of each Bank, shall include the principal amount of Tranche A Term Loans,
if any, converted on the Restatement Effective Date pursuant to Section
1.01(a)(A)), and (y) be further reduced from time to time to the extent required
by Section 4.02. Notwithstanding anything to the contrary contained in this
Agreement, the Total Tranche A Term Loan Commitment (and the Tranche A Term Loan
Commitment of each Bank) shall terminate in its entirety (if not theretofore
terminated) at 5:00 P.M. (New York time) on the Final A Draw Date.
(ii) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Tranche B Term Loan Commitment (and the Tranche
B Term Loan Commitment of each Bank) shall (x) be reduced on each Tranche B Term
Loan Bor-
-27-
<PAGE>
rowing Date, in each case after giving effect to, and in an amount equal to, the
Tranche B Term Loans made on such date and (y) be further reduced from time to
time to the extent required by Section 4.02. In addition, the Total Tranche B
Term Loan Commitment (and the Tranche B Term Loan Commitment of each Bank) shall
be reduced on each date set forth below by the amount by which the amount set
forth below opposite such date exceeds the aggregate principal amount of the
Tranche B Term Loans outstanding on such date:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
One Month Anniversary of
the Restatement Effective Date
$150,000,000
Two Month Anniversary of
the Restatement Effective Date
$100,000,000
Three Month Anniversary of
the Restatement Effective Date
$ 50,000,000
Four Month Anniversary of
the Restatement Effective Date
$ 0
</TABLE>
Notwithstanding anything to the contrary contained in this Agreement, the Total
Tranche B Term Loan Commitment (and the Tranche B Term Loan Commitment of each
Bank) shall terminate in its entirety (if not theretofore terminated) at 5:00
P.M. (New York time) on the Final B Draw Date.
(iii) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the total Tranche C Term Loan Commitment under a
Tranche C Term Loan Sub-Facility (and the Tranche C Term Loan Commitment of each
Bank under such Tranche C Term Loan Sub-Facility) shall (x) be reduced on each
date on which Tranche C Term Loans are incurred under such Tranche C Term Loan
Sub-Facility, in each case after giving effect to, and in the amount equal to
the Tranche C Term Loans made on such date, and (y) be further reduced from time
to time to the extent required by Section 4.02.
(iv) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the
Revolving Loan Commitment of each Bank) shall terminate in its entirety on the
A/RF Maturity Date.
-28-
<PAGE>
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date after the Restatement Effective Date upon
which the Total Revolving Loan Commitment is required to be reduced pursuant to
Section 4.02(h), the Total Revolving Loan Commitment shall be permanently
reduced by the amount required to be applied pursuant to said Sections.
(d) Each reduction to the Total Tranche A Term Loan Commitment, the
Total Tranche B Term Loan Commitment, the Total Tranche C Term Loan Commitment
under a Tranche C Term Loan Sub-Facility or the Total Revolving Loan Commitment
pursuant to this Section 3.03 shall be applied proportionately to reduce the
Tranche A Term Loan Commitment, the Tranche B Term Loan Commitment, the Tranche
C Term Loan Commitment under such Tranche C Term Loan Sub-Facility or the
Revolving Loan Commitment, respectively, of each Bank with such a Commitment.
SECTION 4. Prepayments; Payments; Taxes .
-----------------------------
4.01 Voluntary Prepayments. (a) Unless otherwise provided in a
----------------------
Tranche C Supplement with respect to Tranche C Term Loans under a Tranche C Term
Loan Sub-Facility, the Borrower shall have the right to prepay the Loans,
without premium or penalty, in whole or in part at any time and from time to
time on the following terms and conditions: (i) the Borrower shall give the
Administrative Agent prior to 2:00 P.M. (New York time) at its Notice Office (x)
at least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of the Borrower's intent to prepay Base Rate Loans and (y)
at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of the Borrower's intent to prepay Eurodollar
Loans, whether Term Loans, Revolving Loans or Swingline Loans shall be prepaid,
the amount of such prepayment and the Types of Loans to be prepaid and, in the
case of Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which
made, which notice the Administrative Agent shall promptly transmit to each of
the Banks; (ii) each prepayment of Loans shall be in an aggregate principal
amount of at least $500,000 (or $100,000 in the case of Swingline Loans),
provided that if any partial prepayment of Eurodollar Loans made pursuant to any
- --------
Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto, then such Borrowing may not be continued as a Borrowing of Eurodollar
Loans and any election of an Interest Period with respect thereto given by the
Borrower shall have no force or effect; (iii) at the time of any prepayment of
Eurodollar Loans pursuant to this Section 4.01 on any date other than the last
day of the Interest Period applicable thereto, the Borrower shall pay the
amounts required pursuant to Section 1.11; (vi) each voluntary prepayment of
Term Loans pursuant to this Section 4.01 (except pursuant to clause (b) below)
shall be applied to the Tranche A Term Loans, the Tranche B Term Loans, and the
Tranche C Term Loans on a pro rata basis (based upon the then outstanding
--- ----
principal amount of Tranche A Term Loans, Tranche B Term Loans and Tranche C
Term Loans);
-29-
<PAGE>
and (v) each prepayment in respect of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans, provided that at the Borrower's
--- ---- --------
election in connection with any prepayment of Revolving Loans, such prepayment
shall not be applied to the prepayment of Revolving Loans of a Defaulting Bank.
Unless otherwise provided in a Tranche C Supplement with respect to Tranche C
Term Loans under a Tranche C Term Loan Sub-Facility, each prepayment of
principal of any Tranche B Term Loans or Tranche C Term Loans pursuant to this
Section 4.01 shall be applied to reduce the then remaining Scheduled Repayments
of such respective Tranche of Term Loans pro rata based upon the then remaining
--- ----
principal amounts of the Scheduled Repayments of such Tranche after giving
effect to all prior reductions thereto.
(b) In the event of a refusal by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
13.12(b), the Borrower may, upon five Business Days' prior written notice to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks) repay all Loans, together with
accrued and unpaid interest, Fees, and all other amounts owing to such Bank in
accordance with said Section 13.12(b) so long as (A) in the case of the
repayment of any Loans of any Bank pursuant to this Section 4.01(b) the
Commitments of such Bank are terminated concurrently with such repayment
pursuant to Section 3.02(b) (at which time Schedule I shall be deemed modified
to reflect the changed Commitments) and (B) the consents required by Section
13.12(b) in connection with the repayment pursuant to this Section 4.01(b) have
been obtained.
4.02 Mandatory Repayments. (a) On any day on which the aggregate
---------------------
outstanding principal amount of Revolving Loans, Swingline Loans and the Letter
of Credit Outstandings exceeds the Total Revolving Loan Commitment as then in
effect, the Borrower shall prepay on such day principal of Swingline Loans and,
after all Swingline Loans have been repaid in full, Revolving Loans in an amount
equal to such excess. If, after giving effect to the prepayment of all
outstanding Swingline Loans and Revolving Loans, the aggregate amount of the
Letter of Credit Outstandings exceeds the Total Revolving Loan Commitment as
then in effect, the Borrower shall pay to the Administrative Agent at the
Payment Office on such day an amount of cash or Cash Equivalents equal to the
amount of such excess (up to a maximum amount equal to the Letter of Credit
Outstandings at such time), such cash or Cash Equivalents to be held as security
for all obligations of the Borrower hereunder in a cash collateral account to
be established by the Administrative Agent.
(b) (i) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, the Borrower shall be required to
repay all then outstanding Tranche A Term Loans on the A/RF Maturity Date.
-30-
<PAGE>
(ii) In addition to any mandatory repayments or commitment reductions
pursuant to this Section 4.02, the Borrower shall be required to repay on each
date set forth below the principal amount of Tranche B Term Loans, to the extent
outstanding, set forth opposite such date (each such repayment as the same may
be reduced as provided in Sections 4.01 and 4.02(h) and (i), a "Tranche B Term
Loan Scheduled Repayment"):
<TABLE>
<CAPTION>
Tranche B Scheduled Repayment Date Amount
- ---------------------------------- ------
<S> <C>
Each December 31 commencing December 31, 1999 An amount equal to 1% of the
through and including aggregate principal amount
December 31, 2002 of Tranche B Term Loans
outstanding on the Final B
Draw Date
Each of March 31, 2003,
June 30, 2003, September 30, 2003 and the B
Maturity Date An amount equal to 24% of
the aggregate principal
amount of Tranche B Term
Loans outstanding on the
Final B Draw Date
</TABLE>
(iii) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, the Borrower shall be required to
repay the Tranche C Term Loans made under a Tranche C Term Loan Sub-Facility on
the dates and in the amounts set forth in the Tranche C Supplement for such
Tranche C Term Loan Sub-Facility (each such repayment as the same may be reduced
as provided in Sections 4.01 and 4.02(h) and (i), a "Tranche C Term Loan
Scheduled Repayment"), provided that (x) prior to the A/RF Maturity Date, the
--------
Borrower shall not be required to repay in any year an amount in excess of 1% of
the initial aggregate principal amount of Tranche C Term Loans incurred by the
Borrower and (y) thereafter in amounts set forth in the Tranche C Supplement (it
being understood that amortization during the one year period immediately
following the A/RF Maturity Date shall be in equal quarterly installments).
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Original
Effective Date upon which the Borrower or any of its Subsidiaries receives any
cash proceeds from any sale or issuance of its equity (excluding (i) cash
proceeds received from capital contributions to, or equity investments in, any
Wholly-Owned Subsidiary of the Borrower or any Subsidiary Guarantor to the
extent made by the Borrower or any Subsidiary of the Borrower and (ii) cash
proceeds received from sales or issuances of equity to directors or employees of
the Borrower or any of its Subsidiaries pursuant to any stock option or other
similar incentive plan), an amount equal to 100% of the Net Equity Proceeds of
the respective sale or
-31-
<PAGE>
issuance shall be applied as a mandatory repayment of Revolving Loans to the
extent outstanding at such time in accordance with the requirements of Section
4.02(i).
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Original
Effective Date upon which the Borrower or any of its Subsidiaries receives any
cash proceeds from any incurrence by the Borrower or any of its Subsidiaries of
Indebtedness for borrowed money (excluding Indebtedness for borrowed money
permitted to be incurred pursuant to Section 9.04), an amount equal to 100% of
the Net Debt Proceeds of the respective incurrence of Indebtedness shall be
applied as a mandatory repayment (or commitment reduction, as the case may be)
of outstanding Loans (or Commitments) in accordance with the requirements of
Section 4.02(h) and (i).
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Original
Effective Date upon which the Borrower or any of its Subsidiaries receives
proceeds from any sale or other disposition of assets (including capital stock
and securities held thereby, but excluding (i) sales or transfers of assets
permitted by Sections 9.02(ii), (v), (ix) and (x), (ii) sales or transfers of
assets with a fair market value less than (A) $10,000,000 per such sale or
disposition (or in a series of related sales or dispositions) and (B)
$25,000,000 in the aggregate for all such transfers in any fiscal year and (iii)
so long as no Default or Event of Default then exists, sales or transfers of
assets the Net Sale Proceeds of which do not exceed $35,000,000 in any fiscal
year of the Borrower provided that such Net Sale Proceeds are used to purchase
similar assets within two years following the receipt of such Net Sale Proceeds
and (x) the Borrower delivers a certificate to the Agents on or prior to such
date of receipt stating that such Net Sale Proceeds shall be used to purchase
similar assets within two years following the date of the receipt of such Net
Sale Proceeds (which certificate shall set forth the estimates of the proceeds
to be so expended) and (y) within 360 days following the date of such receipt of
Net Sale Proceeds, the Borrower or the applicable Subsidiary has purchased such
similar assets or entered into a binding commitment to purchase such similar
assets), an amount equal to 100% of the Net Sale Proceeds therefrom shall be
applied as a mandatory repayment (or commitment reduction, as the case may be)
of outstanding Loans (or Commitments) in accordance with the requirements of
Section 4.02(h) and (i). To the extent Net Sale Proceeds are not required to be
applied pursuant to this Section 4.02(e) as a result of clause (iii) contained
in the parenthetical appearing in the first sentence of this Section 4.02(e) and
all or any portion of such Net Sale Proceeds are not so reinvested in like
assets within such two-year period (or committed to be so reinvested within such
360-day period), then the remaining portion of such Net Sale Proceeds shall be
applied on the last day of such applicable period as otherwise required by this
Section 4.02(e) (determined without regard to clause (iii) contained in the
parenthetical appearing in the first sentence of this Section 4.02(e)).
-32-
<PAGE>
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each Excess Cash Payment Date, so
long as Excess Cash Flow for the relevant Excess Cash Payment Period exceeds
$1,000,000, an amount equal to 50% of the Excess Cash Flow for such relevant
Excess Cash Payment Period shall be applied as a mandatory repayment (or
commitment reduction, as the case may be) of outstanding Loans (or Commitments)
in accordance with the requirements of Section 4.02(h) and (i).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, within 10 days following each date
after the Original Effective Date on which the Borrower or any of its
Subsidiaries receives any proceeds in excess of $500,000 from any Recovery
Event, an amount equal to 100% of the Net Insurance Proceeds (and not just the
portion in excess of $500,000) shall be applied as a mandatory repayment (or
commitment reduction, as the case may be) of outstanding Loans (or Commitments)
in accordance with Section 4.02(h) and (i), provided that so long as no Default
--------
or Event of Default then exists, such Net Insurance Proceeds shall not be
required to be so applied on such date of receipt to the extent that the
Borrower has delivered a certificate to the Agents on or prior to such date
stating that such proceeds shall be used or shall be committed to be used to
replace or restore any properties or assets in respect of which such proceeds
were paid within one year following the date of receipt of such proceeds (which
certificate shall set forth the estimates of the proceeds to be so expended)
and provided further, that if all or any portion of such Net Insurance Proceeds
----------------
not required to be applied to the repayment of Loans pursuant to the preceding
proviso are either (A) not so used or committed to be so used within one year
after the date of receipt of such proceeds or (B) if committed to be used within
one year after the date of receipt of such Net Insurance Proceeds and not so
used within two years after the date of receipt of such proceeds then, in either
such case, such remaining portion not used or committed to be used in the case
of preceding clause (A) and not used in the case of preceding clause (B) shall
be applied on the date which is the first anniversary of the date of receipt of
such proceeds in the case of clause (A) above or the date occurring two years
after the date of receipt of such proceeds in the case of clause (B) above as a
mandatory repayment (or commitment reduction, as the case may be,) of
outstanding Term Loans (or Term Loan Commitments) in accordance with Section
4.02(h) and (i).
(h) Each amount required to be applied to repay Loans (or to reduce
Commitments) pursuant to Sections 4.02(d), (e), (f) and (g) shall be applied
first, pro rata, to the reduction of the Term Loan Facilities as set forth below
- ----- --- ----
and second after all Term Loan Commitments have been reduced to zero and all
Term Loans shall have been repaid, to the reduction of the Total Revolving Loan
Commitment. Each required reduction of Term Loan Facilities shall be applied
pro rata to each Tranche of Term Loans based upon the then remaining Commitments
- --- ----
and principal amounts outstanding under the respective Tranche (with each
Tranche to be allocated that percentage of the amount to be applied as
-33-
<PAGE>
is equal to a fraction (expressed as a percentage) the numerator of which is the
sum of the then outstanding principal amount of the remaining Term Loan
Commitments and Term Loans outstanding under such Tranche, and the denominator
of which is equal to the then remaining Term Loan Commitments and outstanding
principal amount of all Term Loans under all Tranches of Term Loan Facilities.
For purposes of this Section 4.02, each Tranche C Term Loan Sub-Facility shall
be deemed to be a Tranche. Each amount required to be applied to a respective
Term Loan Facility shall be applied first to reduce the Commitment under such
-----
Term Loan Facility and second to repay the outstanding principal amount of Term
------
Loans under such Term Loan Facility. Unless otherwise provided in a Tranche C
Supplement with respect to Tranche C Term Loans under a Tranche C Term Loan Sub-
Facility, the amount of each principal repayment of Term Loans made as required
by Sections 4.02(d), (e), (f), and (g) shall be applied to reduce the then
remaining Scheduled Repayments of the respective Tranche pro rata based upon the
--- ----
then remaining principal amounts of the Scheduled Repayments of the respective
Tranche after giving effect to all prior reductions thereto.
(i) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans of the respective Tranche
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, provided that: (i) repayments of
--------
Eurodollar Loans pursuant to this Section 4.02 shall be made on the last day of
an Interest Period applicable thereto unless all Eurodollar Loans with Interest
Periods ending on such date of required repayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto, such Borrowing shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; and (iii) each repayment of
Loans made pursuant to a Borrowing shall be applied pro rata among such Loans of
--- ----
all Banks. In the absence of a designation by the Borrower as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion.
(j) Notwithstanding anything to the contrary contained elsewhere in
the Agreement, (i) all then outstanding Tranche A Term Loans and Revolving Loans
shall be repaid in full on the A/RF Maturity Date, (ii) all then outstanding
Tranche B Term Loans shall be repaid in full on the B Maturity Date, (iii) all
then outstanding Tranche C Term Loans under a Tranche C Term Loan Sub-Facility
shall be repaid in full on the date specified in the Tranche C Supplement for
such Tranche C Term Loan Sub-Facility and (iv) all then outstanding Swingline
Loans shall be repaid in full on the Swingline Expiry Date.
4.03 Method and Place of Payment. Except as otherwise specifically
----------------------------
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
not later than 2:00 P.M. (New
-34-
<PAGE>
York time) on the date when due and shall be made in Dollars in immediately
available funds at the Payment Office of the Administrative Agent. Whenever any
payment to be made here under or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
4.04 Net Payments; Taxes. (a) All payments made by any Credit Party
--------------------
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or net profits of a Bank, or any
franchise tax based on the net income or net profits of a Bank, in either case
pursuant to the laws of the jurisdiction in which it is organized or the
jurisdiction in which the principal office or applicable lending office of such
Bank is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect to such non-excluded taxes,
levies, imposts, duties, fees or other charges (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). Subject to Section 4.04(b), if any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Note, after withholding or deduction for
or on account of any Taxes, will not be less than the amount provided for herein
or in such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, promptly after
the written request of such Bank, for taxes imposed on or measured by the net
income or net profits of such Bank, or any franchise tax based on the net income
or net profits of a Bank, in either case pursuant to the laws of the
jurisdiction in which such Bank is organized or in which the principal office
or applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which such
Bank is organized or in which the principal office or applicable lending office
of such Bank is located and for any withholding of income or similar taxes
imposed by the United States of America as such Bank shall determine are payable
by, or withheld from, such Bank in respect of such amounts so paid to or on
behalf of such Bank pursuant to the preceding sentence and in respect of any
amounts paid to or on behalf of such Bank pursuant to this sentence. The
Borrower will furnish to the Administrative Agent within 45 days after the date
the payment of any Taxes is due pursuant to applicable law certified copies of
tax receipts evidencing such payment by the Borrower. The Borrower agrees to
indemnify and hold harmless each Bank, and reimburse such
-35-
<PAGE>
Bank upon its written request, for the amount of any Taxes so levied or imposed
and paid by such Bank. All amounts payable pursuant to this Section 4.04(a)
shall be subject to the provisions of Section 13.17 (to the extent applicable).
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Original Effective Date (or the
Restatement Effective Date in the case of such Banks that first become party
hereto on the Restatement Effective Date), or in the case of a Bank that is an
assignee or transferee of an interest under this Agreement pursuant to Section
1.13 or 13.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Restatement Effective Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
re spect, such Bank will deliver to the Borrower and the Administrative Agent
two new accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as the
case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Note, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such Form or Certificate,
in which case such Bank should not be required to deliver any such Form or
Certificate pursuant to this Section 4.04(b). Notwithstanding anything to the
contrary contained in Section 4.04(a), but subject to Section 13.04(b) and the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, Fees or other amounts payable
hereunder for the account of any Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes to the extent that such Bank has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding and (y) the Borrower shall not be obligated pursuant to
Section 4.04(a) to gross-up payments to be made to a Bank in respect of income
or similar taxes imposed by
-36-
<PAGE>
the United States if (I) such Bank has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Borrower pursuant to this
Section 4.04(b) or (II) in the case of a payment, other than interest, to a Bank
described in clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this Section
4.04 and except as set forth in Section 13.04(b), the Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set forth in Section
4.04(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any Taxes deducted or withheld by it as
described in the immediately preceding sentence as a result of any changes after
the Restatement Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of such Taxes.
(c) If the Borrower pays any additional amount under this Section 4.04 to
a Bank and such Bank determines in its sole discretion that it has actually
received or realized in connection therewith any refund or any reduction of, or
credit against, its Tax liabilities in or with respect to the taxable year in
which the additional amount is paid (a "Tax Benefit"), such Bank shall pay to
the Borrower an amount that the Bank shall, in its sole discretion, determine is
equal to the net benefit, after tax, which was obtained by the Bank in such year
as a consequence of such Tax Benefit; provided, however, that (i) any Taxes that
are imposed on a Bank as a result of a disallowance or reduction (including
through the expiration of any tax credit carryover or carryback of such Bank
that otherwise would not have expired) of any Tax Benefit with respect to which
such Bank has made a payment to the Borrower pursuant to this Section 4.04(c)
shall be treated as a Tax for which the Borrower is obligated to indemnify such
Bank pursuant to this Section 4.04 without any exclusions or defenses; and (ii)
nothing in this Section 4.04(c) shall require the Bank to disclose any
confidential information to the Borrower (including, without limitation, its tax
returns).
SECTION 5. Conditions Precedent to Restatement Effective Date. The
--------------------------------------------------
occurrence of the Restatement Effective Date, and the obligation of each Bank to
continue, convert and/or make Loans, and the obligation of each Issuing Bank to
issue Letters of Credit, on the Restatement Effective Date, is subject at the
time of the occurrence of the Restatement Effective Date to the satisfaction of
the following conditions:
5.01 Execution of Agreement; Notes. (i) On or prior to the
-----------------------------
Restatement Effective Date (i) this Agreement shall have been executed and
delivered as provided in Section 13.10 and (ii) there shall have been delivered
to the Administrative Agent for the account of each of the Banks (and shall be
held in escrow by the Administrative Agent for each Bank pending the return by
such Bank of any Notes issued to such Bank under the Original Credit Agreement)
the appropriate Tranche A Term Note, Tranche B Term Note and/or Revolving Note
executed by the Borrower and to the Swingline Bank, the Swingline
-37-
<PAGE>
Note executed by the Borrower, in each case in the amount, maturity and as
otherwise provided herein.
5.02 Fees, etc. On or prior to the Restatement Effective Date, the
---------
Borrower shall have paid to the Agents and the Banks all reasonable costs, fees
and expenses (including, without limitation, reasonable legal fees and expenses)
payable to the respective Agents and the Banks to the extent then due.
5.03 Opinion of Counsel. On the Restatement Effective Date, the
------------------
Administrative Agent shall have received from Bell, Boyd & Lloyd, counsel to the
Borrower and the Subsidiary Guarantors, an opinion addressed to each of the
Agents and each of the Banks and dated the Restatement Effective Date covering
the matters set forth in Exhibit E and such other matters incident to the
transactions contemplated herein as either Agent may reasonably request.
5.04 Corporate Documents; Proceedings; etc. (a) On the Restatement
-------------------------------------
Effective Date, the Administrative Agent shall have received a certificate,
dated the Restatement Effective Date, signed by the chairman of the board, the
president, any vice president or the treasurer of the Borrower and each
Subsidiary of the Borrower which is to become a Credit Party on the Restatement
Effective Date (excluding any such Person which was a Credit Party on the
Original Effective Date), and attested to by the secretary or any assistant
secretary of the respective such Person, in the form of Exhibit F with
appropriate insertions, together with copies of the certificate of incorporation
and by-laws of the respective such Person, and the resolutions of the respective
such Person referred to in such certificate, and the foregoing shall be
reasonably acceptable to the Agents.
(b) On the Restatement Effective Date, the Administrative Agent shall
have received certificates of all Credit Parties (other than the Credit Parties
delivering certificates pursuant to preceding clause (a)) (x) certifying that
there were no changes, or providing the text of any changes, to the certificate
of incorporation and by-laws of such Credit Parties as delivered pursuant to
Section 5.04 of the Original Credit Agreement, (y) to the effect that each such
Credit Party is in good standing in its respective state of incorporation and in
those states where each such Credit Party conducts business and (z) providing
the resolutions adopted by each such Credit Party with respect to the actions
contemplated in this Agreement (including without limitation with respect to the
amendment and restatement of this Agreement, and the obligations of such Credit
Party with respect to the increased extensions of credit pursuant hereto), and
the foregoing shall be reasonably acceptable to the Agents in their reasonable
discretion.
(c) On or prior to the Restatement Effective Date, all corporate, and
legal proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Credit Documents shall
be reasonably
-38-
<PAGE>
satisfactory in form and substance to the Agents and the Required Banks, and the
Agents shall have received all information and copies of all documents and
papers, including records of corporate and partnership proceedings, governmental
approvals, good standing certificates and bring-down telegrams, if any, which
any Agent may have reasonably requested in connection therewith, such documents
and papers where appropriate to be certified by proper corporate, or
governmental authorities.
5.05 Employee Benefit Plans; Shareholders' Agreements; Management
------------------------------------------------------------
Agreements; Collective Bargaining Agreements; Existing Indebtedness Agreements;
- ------------------------------------------------------------------------------
Tax Sharing Agreements; Material Leases. On or prior to the Restatement
- ---------------------------------------
Effective Date, there shall have been delivered to the Agents true and correct
copies of the following documents (in each case except to the extent already
delivered to the Agents and the Banks on or prior to the Original Effective
Date), in each case as same will be in effect on the Restatement Effective Date:
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of the Borrower or any of its
Subsidiaries or any ERISA Affiliate (provided that the foregoing shall
--------
apply in the case of any multiemployer plan, as defined in 4001(a)(3) of
ERISA, only to the extent that any document described therein is in the
possession of the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate or reasonably available thereto from the sponsor or trustee of
any such plan) (collectively, together with any agreements, plans or
arrangements referred to in Section 5.05(i) of the Original Credit
Agreement, and any amendments thereto referred in Section 5.05(b), the
"Employee Benefit Plans");
(ii) all material agreements entered into by the Borrower or any of
its Subsidiaries governing the terms and relative rights of its capital
stock and any agreements entered into by shareholders relating to any such
entity with respect to its capital stock (collectively, together with any
agreements referred to in Section 5.05(ii) of the Original Credit
Agreement, and any amendments thereto referred in Section 5.05(b), the
"Share holders' Agreements");
(iii) all material agreements with members of, or with respect to, the
senior management and management of the Borrower or any of its Subsidiaries
(collectively, together with any agreements referred to in Section
5.05(iii) of the Original
-39-
<PAGE>
Credit Agreement, and any amendments thereto referred in Section 5.05(b),
the "Management Agreements");
(iv) all collective bargaining agreements applying or relating to any
employee of the Borrower or any of its Subsidiaries (collectively, together
with any agreements referred to in Section 5.05(iv) of the Original Credit
Agreement, and any amendments thereto referred in Section 5.05(b), the
"Collective Bar gaining Agreements");
(v) all agreements evidencing or relating to Indebtedness of the
Borrower or any of its Subsidiaries which is to remain outstanding after
giving effect to the Restatement Effective Date to the extent such
Indebtedness exceeds (or upon the utilization of any unused commitments may
exceed) $10,000,000 (collectively, together with any agreements referred to
in Section 5.05(v) of the Original Credit Agreement, and any amendments
thereto referred in Section 5.05(b), the "Existing Indebtedness
Agreements");
(vi) all tax sharing, tax allocation and other similar agreements
entered into by the Borrower or any of its Subsidiaries (collectively,
together with any agreements referred to in Section 5.05(vi) of the
Original Credit Agreement and any amendments thereto referred to in Section
5.05(b), the "Tax Sharing Agreements"); and
(vii) all material leases under which the Borrower or any of its
Subsidiaries lease (as lessee) any Hotel Property (collectively, together
with any agreements referred to in Section 5.05(vi) of the Original Credit
Agreement and any amendments thereto referred to in Section 5.05(b), the
"Material Leases");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Collective Bargaining Agreements, Existing Indebtedness Agreements,
Tax Sharing Agreements and Material Leases shall be in full force and effect on
the Restatement Effective Date.
(b) On or prior to the Restatement Effective Date, the Administrative
Agent shall have received (i) a certification from the chairman of the board,
the president, any vice president or the treasurer of the Borrower that all
agreements and plans referenced in Section 5.05 of the Original Credit
Agreement, previously delivered to the Administrative Agent by each Credit
Party, remain in full force and effect (or specifying which of such agreements
and plans do not remain in full force and effect) and (ii) any amendments
thereto or additional such agreements.
-40-
<PAGE>
5.06 Pledge Agreement. On or prior to the Restatement Effective Date,
----------------
the Credit Parties shall furnish to the Administrative Agent true and correct
updates, as necessary, to the schedules to the Pledge Agreement (as prepared as
of the Restatement Effective Date and after giving effect thereto) and each
Credit Party shall deliver to the Collateral Agent, as Pledgee, all of the
Pledged Securities, if any, referred to therein that are owned by such Credit
Party (to the extent not already delivered pursuant to the Pledge Agreement) (x)
endorsed in blank in the case of promissory notes constituting Pledged
Securities and (y) together with executed and undated stock powers, in the case
of capital stock constituting Pledged Securities.
5.07 Security Agreement. On or prior to the Restatement Effective
------------------
Date, the Credit Parties shall furnish to the Administrative Agent true and
correct updates, as necessary, to the schedules to the Security Agreement (as
prepared as of the Restatement Effective Date and after giving effect thereto).
In addition, each Subsidiary of the Borrower which becomes party to the Security
Agreement on the Restatement Effective Date shall, in addition to executing
counterparts of the Security Agreement as required above, deliver the following:
(a) proper Financing Statements (Form UCC-1) fully executed for
filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Security Agreement, as the case may be;
(b) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, listing all effective financing statements that
name such Credit Party as debtor and that are filed in the jurisdictions
referred to in clause (a) above, together with copies of such other
financing statements that name any such Credit Party as debtor (none of
which shall cover the Collateral except to the extent evidencing Permitted
Liens or in respect of which the Collateral Agent shall have received
termination statements (Form UCC-3 or such other termination statements as
shall be required by local law) fully executed for filing); and
(c) evidence that all other actions reasonably necessary (including
the amending of any existing financing statements) or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect (or
maintain the perfection of) the security interests purported to be created
(or maintained) by the Security Agreement have been taken.
5.08 Subsidiary Credit Parties; etc. (a) Each Subsidiary Guarantor
------------------------------
shall have executed and delivered a counterpart of this Agreement, pursuant to
which it makes
-41-
<PAGE>
the acknowledgements in the form appearing before the signature pages of the
Subsidiary Guarantors at the end of this Agreement.
(b) Each Subsidiary Guarantor which was not a Subsidiary Guarantor
immediately before giving effect to the Restatement Effective Date, shall have
duly authorized, executed and delivered counterparts of the Subsidiaries
Guaranty, the Security Agreement and the Pledge Agreement, thereby becoming
parties thereto.
5.09 Adverse Change, etc. (a) On the Restatement Effective Date,
-------------------
nothing shall have occurred (and the Banks shall have become aware of no facts,
conditions or other information not previously known) which any Agent or the
Required Banks believe would reasonably be expected to have a material adverse
effect (i) on the rights or remedies of the Agents or the Banks, or on the
ability of any Credit Party to perform its respective obligations to the Agents
and the Banks or (ii) on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
(b) On or prior to the Restatement Effective Date, all necessary
governmental (domestic and foreign) and third party approvals and/or consents
(if any) in connection with the making of the Loans and the transactions
contemplated by the Credit Documents and otherwise referred to herein or therein
shall have been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which re strains, prevents or imposes materially adverse conditions
upon the making of the Loans and the transactions contemplated by the Credit
Documents or otherwise referred to herein or therein. Additionally, there shall
not exist any judgment, order, injunction or other restraint issued or filed or
a hearing seeking injunctive relief or other restraint pending or notified
prohibiting or imposing materially adverse conditions upon the making of the
Loans or the transactions contemplated by the Credit Documents.
5.10 Litigation. On the Restatement Effective Date, no litigation
----------
by any entity (private or governmental) shall be pending or, to the best of the
Borrower's knowledge, threatened with respect to the making of the Loans or the
Credit Documents or any documentation executed in connection therewith or the
transactions contemplated thereby.
5.11 Solvency Certificate; Environmental Assessments; Insurance
----------------------------------------------------------
Certificates. On or prior to the Restatement Effective Date, there shall have
- ------------
been delivered to the Agents:
(a) a solvency certificate in the form of Exhibit G, addressed to
each of the Agents and each of the Banks and dated the Restatement
Effective Date from the
-42-
<PAGE>
Chief Financial Officer of the Borrower providing the opinion of such Chief
Financial Officer as to the solvency of the Borrower and the Borrower's
Subsidiaries;
(b) such environmental updates as may be reasonably requested by the
Agents; and
(c) certificates of insurance complying with the requirements of
Section 8.03 for the business and properties of the Borrower and its
Subsidiaries, in scope, form and substance reasonably satisfactory to the
Administrative Agent and naming the Collateral Agent as an additional
insured and/or loss payee (as its respective interest may appear), and
stating that such insurance shall not be cancelled or materially changed
without at least 30 days' prior written notice by the respective insurer to
the Collateral Agent.
5.12 Projections. On or prior to the Restatement Effective Date, the
-----------
Agents shall have received copies of the financial statements and Projections
referred to in Sections 7.05(a) and (d).
5.13 Payment of Amounts Under Original Credit Agreement; etc. On
-------------------------------------------------------
the Restatement Effective Date, (i) the Borrower shall have repaid a portion of
the Original Revolving Loans outstanding in a principal amount equal to the
amount by which the sum of the aggregate principal amount of Original Revolving
Loans, Swingline Loans and Letter of Credit Outstanding (in each case after
giving effect to conversions of Tranche A Term Loans pursuant to Section
1.01(a)) outstanding exceeds the Total Revolving Loan Commitment (immediately
after giving effect to the Restatement Effective Date), (ii) each Original Bank
shall have received payment in full of all amounts (including any accrued and
unpaid interest and fees) then due and owing to it under the Original Credit
Agreement in respect of those Original Revolving Loans being repaid, (iii) all
accrued interest on all outstanding extensions of credit pursuant to the
Original Credit Agreement, and all regularly accruing fees pursuant to the
Original Credit Agreement, shall be repaid in full on, and through, the
Restatement Effective Date (whether or not same would otherwise be then due and
payable pursuant to the Original Credit Agreement) and (iv) the Administrative
Agent shall have received evidence in form, scope and substance reasonably
satisfactory to it that the matters set forth in this Section 5.13 have been
satisfied on such date.
SECTION 6. Conditions Precedent to All Credit Events. The
-----------------------------------------
obligation of each Bank to make Loans (including any Loans made on the
Restatement Effective Date), and the obligation of each Issuing Bank to issue
Letters of Credit (including any Letters of Credit issued on the Restatement
Effective Date), is subject, at the time of each
-43-
<PAGE>
such Credit Event (except as hereinafter indicated), to the satisfaction of the
following conditions:
6.01 No Default; Representations and Warranties. At the time of each
------------------------------------------
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of the making of such Credit Event (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 in
all material respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to the
---------------------------------------------
making of each Loan (other than a Swingline Loan or a Revolving Loan made
pursuant to a Mandatory Borrowing), the Administrative Agent shall have received
a Notice of Borrowing meeting the requirements of Section 1.03(a). Prior to the
making of each Swingline Loan, the Swingline Bank shall have received the notice
referred to in Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.
6.03 Specific Borrowing Conditions. If after giving effect to the
-----------------------------
incurrence of such Loans or the issuance of such Letter of Credit, the sum of
the aggregate outstanding principal amount of Loans and the aggregate amount of
the Letter of Credit Outstandings would exceed $200,000,000, the Specific
Borrowing Conditions shall have been satisfied on the date of such Credit Event
and the Borrower shall have delivered a certificate, in form and substance
reasonably satisfactory to the Agents, from the Chief Financial Officer of the
Borrower, setting forth in reasonable detail the calculations required to
establish that the Specific Borrowing Conditions shall be satisfied on the date
of such Credit Event and after giving effect thereto.
6.04 Special Borrowing Condition Applicable to Tranche C Term Loans.
--------------------------------------------------------------
The obligation of each Bank with Commitments under a Tranche C Term Loan Sub-
Facility to make Tranche C Term Loans is subject, at the time of the incurrence
of each such Tranche C Term Loan, to the satisfaction of the condition that if,
after giving effect to the incurrence of such Tranche C Term Loan, the sum of
the aggregate initial principal amount of Tranche B Term Loans and the aggregate
initial principal amount of Tranche C Term Loans would exceed $200,000,000, then
the aggregate principal amount of Revolving Loans shall be no less than
$275,000,000.
-44-
<PAGE>
The occurrence of the Restatement Effective Date and the acceptance of
the proceeds of each Loan and the making of each Letter of Credit Request shall
constitute a representation and warranty by the Borrower to each of the Agents
and each of the Banks that all the conditions specified in Section 5 (with
respect to Credit Events on the Initial Borrowing Date) and in this Section 6
(with respect to Credit Events on and after the Initial Borrowing Date) and
applicable to the Initial Borrowing Date and/or such Credit Event, as the case
may be, exist as of that time. All of the Notes, certificates, legal opinions
and other documents and papers referred to in Section 5 and in this Section 6,
unless other wise specified, shall be delivered to the Administrative Agent at
the Notice Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts for each of the Banks and shall be in form and
substance reasonably satisfactory to the Agents and the Required Banks.
SECTION 7. Representations and Warranties. In order to induce the
------------------------------
Banks to enter into this Agreement and to make the Loans and issue (or
participate in) the Letters of Credit as provided herein, the Borrower makes the
following representations, warranties and agreements, all of which shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and issuance of the Letters of Credit, with the occurrence of the
Restatement Effective Date and the occurrence of each Credit Event on or after
the Restatement Effective Date being deemed to constitute a representation and
warranty that the matters specified in this Section 7 are true and correct on
and as of the Restatement Effective Date and on the date of each such Credit
Event (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 in all material respects only as of such specified date).
7.01 Corporate and Other Status. The Borrower and each of its
--------------------------
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization, (ii) has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (iii) is
duly qualified and is authorized to do business and is in good standing in each
jurisdiction where the conduct of its business requires such qualifications
except for failures to be so qualified which, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
7.02 Corporate or Partnership Power and Authority. Each Credit Party
--------------------------------------------
has the corporate power and authority, to execute, deliver and perform the terms
and provisions of each of the Credit Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Credit Documents. Each Credit Party has duly
executed and delivered each
-45-
<PAGE>
of the Credit Documents to which it is a party, and each of such Credit
Documents constitutes the legal, valid and binding obligation of such Credit
Party enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
7.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Credit Documents to which it is a party, nor compliance
by it with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents) upon any of the properties or assets of the Borrower
or any of its Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, credit agreement or loan agreement, or any other material
agreement, contract or instrument, to which the Borrower or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
certificate of incorporation, or by-laws of the Borrower or any of its
Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made and which remain in full force and
effect), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Credit Document or (ii)
the legality, validity, binding effect or enforceability of any such Credit
Document.
7.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. (a) The consolidated balance sheet of the
- -----------------------------
Borrower and its Subsidiaries at December 31, 1996 and December 31, 1997 and the
related consolidated statements of operations, cash flows and shareholders'
equity of the Borrower and its Subsidiaries for the fiscal years ended on such
dates, as the case may be, copies of which have been furnished to the Banks
prior to the Restatement Effective Date, present fairly the financial position
of the Borrower and its Subsidiaries at the date of such balance sheets and the
results of the operations of the Borrower and its Subsidiaries for the periods
covered thereby. All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied. Since
December 31, 1997, there has been no material adverse change in the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
-46-
<PAGE>
(b) (i) On and as of the Restatement Effective Date and after giving
effect to the transaction contemplated hereby and to all Indebtedness (including
the Loans) being incurred or assumed and Liens created by the Credit Parties in
connection therewith, (a) the sum of the assets, at a fair valuation, of each
of the Borrower on a stand alone basis and of the Borrower and its Subsidiaries
taken as a whole will exceed its debts; (b) each of the Borrower on a stand
alone basis and the Borrower and its Subsidiaries taken as a whole has not
incurred and does not intend to incur, and does not believe that they will
incur, debts beyond their ability to pay such debts as such debts mature; and
(c) each of the Borrower on a stand alone basis and the Borrower and its
Subsidiaries taken as a whole will have sufficient capital with which to conduct
its business. For purposes of this Section 7.05(b), "debt" means any liability
on a claim, and "claim" means (i) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or
(ii) right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured. The amount of contingent liabilities at any time shall be
computed as the amount that, in the 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.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 7.05(a), there were as of the Restatement Effective Date no
liabilities or obligations (other than (x) the Obligations under, and as defined
in, the Original Credit Agreement and (y) the 9.15% Senior Subordinated Notes)
with respect to the Borrower or any of its Subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
which, either individually or in aggregate, would reasonably be expected to be
material to the Borrower and its Subsidiaries taken as a whole. As of the
Restatement Effective Date, the Borrower does not know of any basis for the
assertion against it or any of its Subsidiaries of any liability or obligation
of any nature whatsoever that is not fully disclosed in the financial statements
delivered pursuant to Section 7.05(a) which, either individually or in the
aggregate, would reasonably be expected to be material to the Borrower and its
Subsidiaries taken as a whole.
(d) On and as of the Restatement Effective Date, the Projections
delivered to the Agents and the Banks prior to the Restatement Effective Date
have been prepared in good faith and are based on reasonable assumptions, and
there are no statements or conclusions in the Projections which are based upon
or include information known to the Borrower to be misleading in any material
respect or which fail to take into account material information known to the
Borrower regarding the matters reported therein. On the Restatement Effective
Date, the Borrower believes that the Projections are reasonable, it being
understood that the Projections include assumptions as to future events that are
not to be viewed as facts and there can be no assurance that such assumptions,
statements,
-47-
<PAGE>
estimates and Projections will be realized and that actual results may differ
from the projected results and such differences may be material and adverse.
7.06 Litigation. There are no actions, suits or proceedings pending
----------
or, to the Borrower's knowledge, threatened (i) with respect to any Credit
Document or (ii) that would reasonably be expected to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
7.07 True and Complete Disclosure. To the best knowledge of the
----------------------------
Borrower, all factual information (taken as a whole) regarding the Borrower or
any of its Subsidiaries furnished by or on behalf of the Borrower or any of its
Subsidiaries in writing to any Agent or any Bank (including, without limitation,
all information contained in the Credit Documents) for purposes of or in
connection with this Agreement, the other Credit Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of the Borrower or any of its
Subsidiaries in writing to any Agent or any Bank will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. It is understood that the Projections do not constitute factual
information for purposes of this Section 7.07.
7.08 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Loans shall be used by the Borrower (i) for its general corporate purposes,
including, without limitation, the construction or acquisition of Qualified
Hotel Properties and (ii) to pay fees and expenses incurred in connection with
the Credit Documents.
(b) No part of any Credit Event (or the proceeds thereof) will be
used to purchase or carry any Margin Stock or to extend credit for the purpose
of purchasing or carrying any Margin Stock. Neither the making of any Loan nor
the use of the proceeds thereof nor the occurrence of any other Credit Event
will violate or be inconsistent with the provisions of Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Each of the Borrower and each of its
------------------------
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, except for
those contested in good faith and adequately disclosed and fully provided for on
the financial statements of the Borrower and its Subsidiaries in accordance with
generally accepted accounting principles. The Borrower and each of its
Subsidiaries have at all times paid, or have provided adequate
-48-
<PAGE>
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to date. There is no material (with
respect to the Borrower and its Subsidiaries taken as a whole) action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
the Borrower, threatened by any authority regarding any taxes relating to the
Borrower or any of its Subsidiaries. Neither the Borrower nor any of its
Subsidiaries has entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of taxes of the Borrower or any of its Subsidiaries, or is
aware of any circumstances that would cause the taxable years or other taxable
periods of the Borrower or any of its Subsidiaries not to be subject to the
normally applicable statute of limitations.
7.10 Compliance with ERISA. (i) Schedule VIII sets forth each Plan;
---------------------
each Plan (and each related trust, insurance contract or fund) is in substantial
compliance with its terms and with all applicable laws, including without
limitation ERISA and the Code; each Plan (and each related trust, if any) which
is intended to be qualified under Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable
Event has occurred; no Plan which is a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has an Unfunded
Current Liability; no Plan which is subject to Section 412 of the Code or
Section 302 of ERISA has an accumulated funding deficiency, within the meaning
of such sections of the Code or ERISA, or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period,
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
all contributions required to be made with respect to a Plan have been timely
made; neither the Borrower nor any Subsidiary of the Borrower nor any ERISA
Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any
such liability under any of the foregoing sections with respect to any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate of incurring a liability to or
on account of a Plan pursuant to the foregoing provisions of ERISA and the Code;
no proceedings have been instituted to terminate or appoint a trustee to
administer any Plan which is subject to Title IV of ERISA; no action, suit,
proceeding, hearing, audit or investigation with respect to the administration,
operation or the investment of assets of any Plan (other than routine claims for
benefits) is pending, expected or threatened; using actuarial assumptions and
computation methods consistent with Part 1 of subtitle E of Title IV of ERISA,
the aggregate liabilities of the Borrower and its Subsidiaries and its ERISA
Affiliates to all Plans which are multiemployer plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan ended prior to the date
of
-49-
<PAGE>
the most recent Credit Event, would not exceed $200,000; each group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which
covers or has covered employees or former employees of the Borrower, any
Subsidiary of the Borrower, or any ERISA Affiliate has at all times been
operated in material compliance with the provisions of Part 6 of subtitle B of
Title I of ERISA and Section 4980B of the Code; no lien imposed under the Code
or ERISA on the assets of the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate exists or is likely to arise on account of any Plan; and the
Borrower and its Subsidiaries may cease contributions to or terminate any
employee benefit plan maintained by any of them without incurring any material
liability.
(ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. All
contributions required to be made with respect to a Foreign Pension Plan have
been timely made. Neither the Borrower nor any of its Subsidiaries has incurred
any obligation in connection with the termination of or withdrawal from any
Foreign Pension Plan. The present value of the accrued benefit liabilities
(whether or not vested) under each Foreign Pension Plan, determined as of the
end of the Borrower's most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities.
7.11 The Security Documents. (a) On and after the Initial
----------------------
Borrowing Date, the provisions of the Security Agreement are effective to create
in favor of the Collateral Agent for the benefit of the Secured Creditors a
legal, valid and enforceable security interest in all right, title and interest
of the Credit Parties in the Security Agreement Collateral described therein,
and the Security Agreement, upon the filing of Form UCC-1 financing statements
or the appropriate equivalent (which filings have been made), create a fully
perfected first lien on, and security interest in, all right, title and interest
in all of the Security Agreement Collateral described therein, to the extent
that a security interest may be perfected therein by filing a financing
statement under the UCC, subject to no other Liens other than Permitted Liens.
The recordation of the Assignment of Security Interest in U.S. Patents and
Trademarks in the form attached to the Security Agreement in the United States
Patent and Trademark Office together with filings on Form UCC-1 made pursuant to
the Security Agreement will be effective, under applicable law, to perfect the
security interest granted to the Collateral Agent in the trademarks and patents
covered by the Security Agreement. Each of the Credit Parties party to the
Security Agreement has good and valid title to all Security Agreement Collateral
owned by such Credit Party described therein, free and clear of all Liens except
those described above in this clause (a) and as contemplated by Section 5.07(b)
with respect to Liens securing the Existing Credit Facilities which shall be
released and terminated on or before the Initial Borrowing Date.
-50-
<PAGE>
Except for filings made pursuant to Section 5.07 on or prior to the Restatement
Effective Date, no additional filings with respect to the Security Agreement are
required at the time of, or in connection with the occurrence of, the
Restatement Effective Date.
(b) On and after the Initial Borrowing Date and assuming the
continued possession by the Collateral Agent of the Pledged Securities, the
security interests created in favor of the Collateral Agent, as Pledgee, for the
benefit of the Secured Creditors under the Pledge Agreement constitute first
priority perfected security interests in the Pledged Securities described in the
Pledge Agreement, subject to no security interests of any other Person.
Assuming the continued possession by the Collateral Agent of the Pledged
Securities, no filings or recordings are required in order to perfect (or
maintain the perfection or priority of) the security interests created in the
Pledged Securities and the proceeds thereof under the Pledge Agreement.
7.12 Manager Subordination Agreements. To the extent required to be
--------------------------------
executed and delivered pursuant to Section 8.14, each Manager Subordination
Agreement is in full force and effect and all Obligations hereunder and under
the other Credit Documents are within the definition of "senior debt" or any
substantially similar definition contained in the subordination provisions of
each Manager Subordination Agreement.
7.13 Properties. The Borrower and each of its Subsidiaries have good
----------
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheets of the Borrower referred to in
Section 7.05(a) (except as sold or otherwise disposed of since the date of such
balance sheets in the ordinary course of business), free and clear of all Liens,
other than Permitted Liens.
7.14 Capitalization. On the Restatement Effective Date, the
--------------
authorized capital stock of the Borrower shall consist of (i) 500,000,000 shares
of common stock, $.01 par value per share and (ii) 10,000,000 shares of
preferred stock, $.01 par value per share, none of which preferred stock is
issued and outstanding. All outstanding shares of such capital stock have been
duly and validly issued, are fully paid and nonassessable and are free of
preemptive rights. Except for certain options issued pursuant to employee and
director stock option plans (including any assumed plans), the Borrower does not
have outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock.
7.15 Subsidiaries. The Borrower has no Subsidiaries other than (i)
------------
those Subsidiaries listed on Schedule IV and (ii) new Subsidiaries created in
compliance with Section 9.16. Schedule IV correctly sets forth, as of the
Restatement Effective Date, the
-51-
<PAGE>
percentage ownership (direct or indirect) of the Borrower in each class of
capital stock or other equity of each of its Subsidiaries and also identifies
the direct owner thereof.
7.16 Compliance with Statutes, etc. The Borrower and each of its
-----------------------------
Subsidiaries are in compliance with all applicable statutes, regulations and
orders of all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property (including applicable
Environmental Laws) except such noncompliances as would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
7.17 Investment Company Act. Neither the Borrower nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.18 Public Utility Holding Company Act. Neither the Borrower nor
----------------------------------
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
7.19 Environmental Matters. (a) The Borrower and each of its
---------------------
Subsidiaries have complied with all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws. There are no
pending or, to the Borrower's knowledge, threatened Environmental Claims against
the Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries. There are no facts, circumstances,
conditions or occurrences on any Real Property owned or operated by the Borrower
or any of its Subsidiaries or, to the Borrower's knowledge, on any property
adjoining or in the vicinity of any such Real Property that would reasonably be
expected (i) to form the basis of an Environmental Claim against the Borrower or
any of its Subsidiaries or any such Real Property or (ii) to cause any such Real
Property to be subject to any restrictions on the ownership, occupancy, use or
transfer ability of such Real Property by the Borrower or any of its
Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, or Released on or from, any
Real Property owned or operated by the Borrower or any of its Subsidiaries
except in compliance with all applicable Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section 7.19,
the representations made in this Section 7.19 shall only be untrue if the
aggregate effect of all
-52-
<PAGE>
failures, noncompliance, activities, facts, circumstances, conditions and
occurrences of the types described above would reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
7.20 Labor Relations. Neither the Borrower nor any of its
---------------
Subsidiaries nor any Facility Manager is engaged in any unfair labor practice
that could reasonably be expected to have a material adverse effect on the
Borrower and its Subsidiaries taken as a whole. There is (i) no unfair labor
practice complaint pending against the Borrower or any of its Subsidiaries or
any Facility Manager or, to the best knowledge of the Borrower, threatened
against any of them, before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Borrower or any of its Subsidiaries or any
Facility Manager or, to the best knowledge of the Borrower, threatened against
any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
the Borrower or any of its Subsidiaries or any Facility Manager or, to the best
knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries and (iii) no union representation question exists with respect to
the employees of the Borrower or any of its Subsidiaries or any Facility
Manager, except (with respect to any matter specified in clause (i), (ii) or
(iii) above, either individually or in the aggregate) such as would not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
7.21 Patents, Licenses, Franchises and Formulas. Each of the
------------------------------------------
Borrower and each of its Subsidiaries owns all the patents, trademarks, permits,
service marks, trade names, copyrights, licenses, franchises, proprietary
information (including but not limited to rights in computer programs and
databases) and formulas, or rights with respect to the foregoing, and has
obtained assignments of all leases and other rights of whatever nature,
necessary for the present conduct of its business, without any known conflict
with the rights of others which, or the failure to obtain which, as the case may
be, would reasonably be expected to result in a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
7.22 Indebtedness. (a) Schedule V sets forth a true and complete
------------
list of all Indebtedness of the Borrower and its Subsidiaries as of the
Restatement Effective Date (excluding the Loans and the Letters of Credit, the
"Existing Indebtedness"), in each case showing the aggregate principal amount
thereof and the name of the respective borrower and any other entity which
directly or indirectly guaranteed such Indebtedness.
-53-
<PAGE>
(b) At all times after the issuance of any New Subordinated Notes,
all Obligations of the Borrower hereunder and under the other Credit Documents
will be within the definition of "senior debt" or any similar definition
contained in such New Subordinated Notes.
7.23 Hotel Properties. The Borrower owns no Hotel Properties
----------------
directly and (i) on the Restatement Effective Date, each Hotel Property is owned
by a Wholly-Owned Subsidiary of the Borrower and (ii) after the Restatement
Effective Date, each Hotel Property is owned by a Wholly-Owned Subsidiary of the
Borrower which is a Foreign Subsidiary or a Subsidiary of the Borrower which is
a Subsidiary Guarantor. Each Hotel Property which is located in the United
States is owned by a Subsidiary Guarantor which is organized under the laws of a
state in the United States.
7.24 Updated Security Agreement and Pledge Agreement Schedules. The
---------------------------------------------------------
updated schedules to the Pledge Agreement and Security Agreement furnished
pursuant to Sections 5.06 and 5.07 are true and correct, in all material
respects, as of the Restatement Effective Date, and accurately present all
information which was originally required to be scheduled pursuant to the Pledge
Agreement and Security Agreement on the Original Effective Date, but modified to
reflect the additional Credit Parties on the Restatement Effective Date and any
changes which occurred between the Original Effective Date and the Restatement
Effective Date.
SECTION 8. Affirmative Covenants. The Borrower hereby covenants and
---------------------
agrees that on and after the Restatement Effective Date and until the Total
Commitments and all Letters of Credit have terminated and the Loans, Notes and
Unpaid Drawings, together with interest, Fees and all other obligations incurred
hereunder and thereunder, are paid in full:
8.01 Information Covenants. The Borrower will furnish to the
---------------------
Administrative Agent (with sufficient copies for each of the Banks, and the
Administrative Agent will promptly forward to each of the Banks):
(a) Quarterly Financial Statements. Within 55 days after the close
------------------------------
of the first three quarterly accounting periods in each fiscal year of the
Borrower, (i) the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly accounting period and the related
consolidated statements of income and retained earnings and statement of cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly accounting period, in each
case setting forth comparative figures for the related periods in the prior
fiscal year, all of which shall be certified by the Chief Financial Officer of
the Borrower, subject to normal recurring adjustments and (ii) management's
discussion and analysis of the important operational and financial developments
during the quarterly and year-to-date periods, it
-54-
<PAGE>
being understood that the delivery by the Borrower of its Form 10-Q as filed
with the SEC shall satisfy the requirements of this Section 8.01(a).
(b) Annual Financial Statements. (A) Within 100 days after the close
---------------------------
of each fiscal year of the Borrower, (i) the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
such fiscal year setting forth comparative figures for the preceding fiscal year
and certified by Coopers & Lybrand L.L.P., any other "Big Six" independent
certified public accountants or such other independent certified public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent and (ii) management's discussion and analysis of the
important operational and financial developments during the respective fiscal
year, it being understood that the delivery by the Borrower of its Form 10-K as
filed with the SEC shall satisfy the requirements of this Section 8.01(b).
(B) At the time of the delivery of the annual financial statements
pursuant to clause (A) above, a report of the applicable accounting firm stating
that in the course of its regular audit of the financial statements of the
Borrower and its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm obtained no
knowledge of any Default or Event of Default which has occurred and is
continuing under Section 9.08, 9.09, 9.10 or 9.11 or, if in the opinion of such
accounting firm such a Default or an Event of Default has occurred and is
continuing, a statement as to the nature thereof.
(c) Budgets. No later than the 30th day of each fiscal year of the
-------
Borrower, a budget in form reasonably satisfactory to the Agents (including, in
any event, budgeted statements of income and sources and uses of cash and
balance sheets of cash flow and budgeted debt and cash balances) for such fiscal
year prepared by the Borrower in reasonable detail and accompanied by a
statement of the Chief Financial Officer of the Borrower to the effect that, to
the best of such officer's knowledge, the budget is a reasonable estimate of
the period covered thereby.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Sections 8.01(a) and (b), a certificate of
the Chief Financial Officer of the Borrower to the effect that, to the best of
such officer's knowledge, no Default or Event of Default has occurred and is
continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which certificate shall
(x) set forth the calculations required to establish whether the Borrower and
its Subsidiaries were in compliance with the provisions of Sections 4.02(d),
4.02(e) (to the extent delivered with the financial statements required by
Section 8.01(b)), 9.02, 9.04, 9.05, 9.07 and 9.08 through 9.11, inclusive, at
the end of such fiscal quarter or year, as the case may be and (y) if delivered
with the financial statements required by Section
-55-
<PAGE>
8.01(b), set forth the amount of (and the calculations required to establish)
Excess Cash Flow for the respective Excess Cash Payment Period.
(e) Management Letters. Promptly after the Borrower's or any of its
------------------
Subsidiaries' receipt thereof, a copy of any "management letter" received from
its certified public accountants.
(f) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within five Business Days after any officer of any Credit Party obtains
knowledge thereof, notice of (i) the occurrence of any event which constitutes a
Default or an Event of Default and (ii) any litigation or governmental
investigation or proceeding pending or threatened (x) against the Borrower or
any of its Subsidiaries which would reasonably be expected to materially and
adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole or (y) with respect to the transaction
contemplated hereby or any Credit Document.
(g) Other Reports and Filings. Promptly after the filing or delivery
-------------------------
thereof, copies of all financial information, proxy materials and other
information and reports with respect to the Borrower or any of its Subsidiaries,
if any, which the Borrower or any of its Subsidiaries shall file with or furnish
to the Securities and Exchange Commission or any succes sor thereto (the "SEC")
and copies of all material notices and reports which the Borrower or its
Subsidiaries shall deliver to holders of its Indebtedness pursuant to the terms
of the documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
(h) Environmental Matters. Promptly upon, and in any event within
---------------------
fifteen Business Days after, any senior or executive officer of any Credit Party
obtaining knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters would not, individually
or when aggregated with all other such environmental matters, be reasonably
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole:
(i) any pending or threatened material Environmental Claim
against the Borrower or any of its Subsidiaries or any Real Property owned
or operated by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by the Borrower or any of its Subsidiaries that
(a) results in non-compliance by the Borrower or any of its Subsidiaries
with any applicable Environmental Law or (b) could reasonably be expected
to form the basis of a material Environmental Claim against the Borrower or
any of its Subsidiaries or any such Real Property;
-56-
<PAGE>
(iii) any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that could reasonably
be expected to cause such Real Property to be subject to any restrictions
on the ownership, occupancy, use or transferability by it or any of its
Subsidiaries of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by the Borrower or any of its Subsidiaries as
required by any Environmental Law or any governmental or other
administrative agency, provided that in any event the Borrower shall
deliver to each Bank all notices received by the Borrower or any of its
Subsidiaries from any government or governmental agency under, or pursuant
to, CERCLA which identify the Borrower or any of its Subsidiaries as
potentially responsible parties for remediation costs or which otherwise
notify the Borrower or any of its Subsidiaries of potential liability under
CERCLA.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and the Borrower's or such Subsidiary's response or proposed response
thereto. In addition, the Borrower and any of its Subsidiaries will
provide the Banks with copies of all material communications with any
governmental agency or other third Person that is adverse to the Borrower
or such Subsidiary relating to material Environmental Claims, and such
detailed reports of any material Environmental Claim as may reasonably be
requested by any Agent or any Bank.
(i) Other Information. From time to time, such other information or
-----------------
documents (financial or otherwise) with respect to the Borrower or its
Subsidiaries as any Agent may reasonably request.
8.02 Books, Records and Inspections. The Borrower will, and will
-------------------------------
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities. Upon reasonable
notice, the Borrower will, and will cause each of its Subsidiaries to, per mit
officers and designated representatives of any Agents or any Bank (at the
expense of such Agent or Bank) to visit and inspect, under guidance of officers
of its or such Subsidiary, any of the properties of the Borrower or any of its
Subsidiaries, and to examine the books of account of the Borrower and any of
its Subsidiaries and discuss the affairs, finances and accounts of the Borrower
and any of its Subsidiaries with, and be advised as to the same by, its and
their officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as such Agent or such Bank
-57-
<PAGE>
may reasonably request (provided that the Borrower shall have the right to take
part in any discussions with its independent accountants).
8.03 Maintenance of Property; Insurance. (a) Schedule VI sets forth
----------------------------------
a true and complete listing of all insurance maintained by, or on behalf of, the
Borrower and its Subsidiaries as of the Restatement Effective Date. The
Borrower will, and will cause each of its Subsidiaries and Facility Managers to,
(i) keep all property necessary to the business of the Borrower and its
Subsidiaries in good working order and condition, ordinary wear and tear
excepted, (ii) maintain insurance on all its property in at least such amounts
and against at least such risks as is consistent and in accordance with
industry practice and (iii) furnish to the Administrative Agent, upon written
request, full information as to the insurance carried. The Borrower will at all
times cause insurance to be maintained at levels which are consistent and in
accordance with industry practice for a company similarly situated.
(b) The Borrower will, and will cause each of its Subsidiaries and
Facility Managers to, at all times keep its property insured in favor of the
Collateral Agent, and all policies or certificates with respect to such
insurance (and any other insurance maintained by, or on behalf of, the Borrower
or any Subsidiary of the Borrower) (i) shall be endorsed to the Collateral
Agent's satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as loss payee and/or additional
insured), (ii) shall state that such insurance policies shall not be cancelled
without at least 30 days' prior written notice thereof by the respective insurer
to the Collateral Agent (or such shorter period of time as a particular
insurance company policy generally provides), (iii) shall provide that the
respective insurers irrevocably waive any and all rights of subrogation with
respect to the Collateral Agent and the Secured Creditors, (iv) shall contain
the standard non-contributory mortgage clause endorsement in favor of the
Collateral Agent with respect to hazard insurance coverage, (v) shall, except in
the case of public liability insurance, provide that any losses shall be payable
notwithstanding (A) any act or neglect of the Borrower or any Subsidiary of the
Borrower, (B) the occupation or use of the properties for purposes more
hazardous than those permitted by the terms of the respective policy if such
coverage is obtainable at commercially reasonable rates and is of the kind from
time to time customarily insured against by Persons owning or using similar
property and in such amounts as are customary, (C) any foreclosure or other
proceeding relating to the insured properties or (D) any change in the title to
or ownership or possession of the insured properties and (vi) shall be deposited
with the Collateral Agent.
(c) If the Borrower or any of its Subsidiaries or any Facility
Manager shall fail to insure its property in accordance with this Section 8.03,
or if the Borrower or any of its Subsidiaries or any Facility Manager shall fail
to so endorse and deposit all policies or certificates with respect thereto, the
Collateral Agent shall have the right (but shall be under no obligation), after
giving the Borrower at least five Business Days' prior written notice,
-58-
<PAGE>
to procure such insurance and the Borrower agrees to reimburse the Collateral
Agent for all reasonable costs and expenses of procuring such insurance.
8.04 Corporate Franchises. The Borrower will, and will cause each
--------------------
of its Subsidiaries to, do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises, licenses and patents; provided, however, that nothing in this
-------- -------
Section 8.04 shall prevent (i) any of the transactions permitted in accordance
with Section 9.02 or (ii) the withdrawal by the Borrower or any of its
Subsidiaries of its qualification as a foreign corporation in any jurisdiction
where such withdrawal would not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. The Borrower will, and will
-----------------------------
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property
(including applicable Environmental Laws), except such noncompliances as would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) The Borrower will
----------------------------------
comply, and will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership or use of its Real Property now
or hereafter owned or operated by the Borrower or any of its Subsidiaries
(except such noncompliances as would not, individually or in the aggregate,
reasonably be expected to have the material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole), will promptly
pay or cause to be paid all costs and expenses incurred in connection with such
compliance, and will keep or cause to be kept all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws except for
Permitted Liens. Neither the Borrower nor any of its Subsidiaries will
generate, use, treat, store, Release or dispose of, or knowingly permit the
generation, use, treatment, storage, Release or disposal of Hazardous Materials
on any Real Property now or hereafter owned or operated by the Borrower or any
of its Subsidiaries, or transport or permit the transportation of Hazardous
Materials to or from any such Real Property except for Hazardous Materials
generated, used, treated, stored, released or disposed of at any such Real
Properties in compliance with all applicable Environmental Laws (except such
noncompliances as would not, individually or in the aggregate, reasonably be
expected to have the material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole), and reasonably required
in connection
-59-
<PAGE>
with the operation, use and maintenance of the business or operations of the
Borrower or any of its Subsidiaries.
(b) To the extent any Credit Party delivers notice of the occurrence
of the environmental matters as described in Section 8.01(i), the Borrower will
provide, upon the written request of the Agents or the Required Banks, which
request shall specify in reasonable detail the basis therefor, at its sole cost
and expense, an environmental site assessment report concerning the relevant
Real Property now or hereafter owned or operated by such Credit Party, prepared
by an environmental consulting firm reasonably approved by the Agents,
indicating the presence or absence of Hazardous Materials and the potential cost
of any removal or remedial action in connection with any Hazardous Materials on
such Real Property. If the Borrower fails to provide the same within 90 days
after such request was made, the Agents may order the same, and the Borrower
shall grant and hereby grants, to the Agents and the Banks and their agents
access to such Real Property and specifically grants, the Agents and the Banks
an irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at the Borrower's reasonable expense.
8.07 ERISA. As soon as possible and, in any event, within ten (10)
-----
days after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the following, the
Borrower will deliver to the Administrative Agent a certificate of the chief
financial officer of the Borrower setting forth the full details as to such
occurrence and the action, if any, that the Borrower, such Subsidiary or such
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Borrower, the
Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred
(except to the extent that the Borrower has previously delivered to the Banks a
certificate and notices (if any) concerning such event pursuant to the next
clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13)
of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur with respect to such Plan within the following 30 days; that an
accumulated funding deficiency, within the meaning of Section 412 of the Code or
Section 302 of ERISA, has been incurred or an application may be or has been
made for a waiver or modification of the minimum funding standard (including any
required installment payments) or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA with respect to a Plan;
that any contribution required to be made with respect to a Plan or Foreign
Pension Plan has not been timely made; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability; that proceedings may be or
have been instituted to terminate or appoint
-60-
<PAGE>
a trustee to administer a Plan which is subject to Title IV of ERISA; that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate will or may incur any material liability
(including any indirect, contingent, or secondary liability) to or on account of
the termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section
401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of
ERISA or with respect to a group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or
that the Borrower or any Subsidiary of the Borrower may incur any material
liability pursuant to any employee welfare benefit plan (as defined in Section
3(1) of ERISA) that provides benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or any Plan or any
Foreign Pension Plan. The Borrower will deliver to each of the Banks (i) a
complete copy of the annual report (on Internal Revenue Service Form 5500-
series) of each Plan (including, to the extent required, the related financial
and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service and (ii) copies of any records, documents or other
information that must be furnished to the PBGC with respect to any Plan pursuant
to Section 4010 of ERISA. In addition to any certificates or notices delivered
to the Banks pursuant to the first sentence hereof, copies of annual reports and
any records, documents or other information required to be furnished to the
PBGC, and any material notices received by the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan
shall be delivered to the Banks no later than ten (10) days after the date such
annual report has been filed with the Internal Revenue Service or such records,
documents and/or information has been furnished to the PBGC or such notice has
been received by the Borrower, the Subsidiary or the ERISA Affiliate, as
applicable.
8.08 End of Fiscal Years; Fiscal Quarters. The Borrower will cause
------------------------------------
(i) each of its, and each of its Subsidiaries', fiscal years to end on December
31 and (ii) each of its, and each of its Subsidiaries', fiscal quarters to end
on March 31, June 30, September 30 and December 31, provided any such fiscal
--------
year or fiscal quarter, as the case may be, may be modified so long as (i) no
Default or Event of Default then exists or would result therefrom, (ii) the
Borrower shall have given the Agents at least 10 Business Days' prior written
notice thereof and (iii) at the time of such modification, the Borrower and the
Required Banks shall have entered into certain technical amendments and
modifications to this Agreement to preserve the intent of the parties with
respect to the covenants and agreements set forth in Section 6.03, Sections 9.08
through 9.11, inclusive, the definitions of Applicable Commitment Percentage and
Applicable Margin and any other provisions of this Agreement deemed appropriate
by the Agents and the Borrower.
-61-
<PAGE>
8.09 Performance of Obligations. The Borrower will, and will cause
--------------------------
each of its Subsidiaries to, perform all of its obligations under the terms of
each mortgage, deed of trust, indenture, security agreement, loan agreement or
credit agreement and each other material agreement, contract or instrument by
which it or any Real Property is bound, except such non-performances as would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
8.10 Payment of Taxes. The Borrower will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims for sums that have become due
and payable which, if unpaid, might become a Lien not otherwise permitted under
Section 9.01(i); provided, that neither the Borrower nor any of its
--------
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with GAAP.
8.11 Certain Requirements with Respect to Acquisitions/Construction
--------------------------------------------------------------
of Qualified Hotel Properties. Unless the Required Banks otherwise agree in
- -----------------------------
writing (as described in the definition of Qualified Hotel Property) with
respect to any Qualified Hotel Property acquired or for which construction
commences after the Original Effective Date, no later than 10 days after any
acquisition (including any acquisition effected by the acquisition of a
Subsidiary) or the commencement of any construction, of a Qualified Hotel
Property by any Subsidiary of the Borrower, the Administrative Agent shall have
received (and shall have promptly delivered copies to each Bank):
(i) a certificate from an Authorized Officer of the Borrower in the
form of Exhibit H with appropriate insertions (the
"Acquisition/Construction Certificate") certifying that the Borrower has
received each of the following, and each of the following is acceptable to
the Borrower in accordance with its customary practice:
(u) evidence of a commitment for insured title to such Hotel
Property evidencing that such title is free and clear of all defects
and encumbrances except Permitted Liens;
(v) a recent survey of such Hotel Property certified by a
licensed professional surveyor;
(w) in the case of an acquisition, a certificate of occupancy or,
in the case of construction, a permit allowing commencement of
construction (or
-62-
<PAGE>
such other proof of compliance with local ordinances which are
customarily obtained prior to the commencement of construction in the
relevant jurisdiction) with respect to such Hotel Property;
(x) a recent Phase I (and to the extent deemed necessary by the
Borrower in accordance with its customary practice, Phase II)
environmental assessment on such Hotel Property from an independent
environmental firm;
(y) in the case of an acquisition and if such reports are
available, recent engineering reports on such Hotel Property prepared
by an independent engineering firm; and
(z) to the extent such Hotel Property is not otherwise covered by
the Borrower's existing insurance, a certificate of insurance
evidencing that there has been obtained insurance coverage for such
Hotel Property which satisfies the requirements of Section 8.03 and
all of such coverage is in full force and effect; and
(ii) an officer's certificate of the Borrower certifying (x) the
proposed cost to acquire or construct, as the case may be, the respective
Qualified Hotel Property, including, in the case of an acquisition, the
amount expected to be used to pay fees and expenses in connection therewith
and (y) in the case of an acquisition the amount anticipated to be spent
within one year after the date of the acquisition of such Qualified Hotel
Property to make improvements on such Qualified Hotel Property so acquired
to bring it up to the Borrower's standards.
8.12 Additional Security; Further Assurances. (a) On the
---------------------------------------
Restatement Effective Date and thereafter, at the reasonable request from time
to time by the Administrative Agent, the Borrower will, and will cause each of
the Subsidiary Guarantors to, grant to the Collateral Agent security interests
in such assets and properties (other than Real Property) of the Borrower and
such Subsidiary Guarantors, which assets and property are of the kind that are
the subject of the Pledge Agreement and/or the Security Agreement and which are
not covered by the original Security Documents (collectively, the "Additional
Security Documents"). All such security interests shall be granted pursuant to
documentation reasonably satisfactory in form and substance to the Agents and
shall constitute valid and enforceable perfected security interests superior to
and prior to the rights of all third Persons and subject to no other Liens
except for Permitted Liens. The Additional Security Documents or instruments
related thereto shall have been duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and protect
the Liens in favor of the Collateral Agent required to be granted pursuant to
the Additional Security Documents and all taxes, fees and other charges payable
in connection therewith shall have been paid in full.
-63-
<PAGE>
(b) On the Restatement Effective Date and thereafter, the Borrower
will, and will cause each of the Subsidiary Guarantors to, at the expense of the
Borrower, take such further reasonable steps relating to the collateral covered
by any of the Security Documents as the Collateral Agent may reasonably require
which are necessary to maintain the liens and security interest pursuant to the
Security Documents. Furthermore, the Borrower will cause to be delivered to the
Collateral Agent such opinions of counsel and other related documents as may be
reasonably requested by the Agents to assure itself that this Section 8.12 has
been complied with.
(c) The Borrower agrees that each action required above by this
Section 8.12 shall be completed within 90 days after such action is either
requested to be taken by the Agents or the Required Banks or required to be
taken by the Borrower and the Subsidiary Guarantors pursuant to the terms of
this Section 8.12; provided that (x) in no event will the Borrower be required
--------
to take any action, other than using its best efforts, to obtain consents from
third parties with respect to its compliance with this Section 8.12 and (y) the
Borrower shall not be deemed to be in default under its obligations under this
clause (c) to the extent that any action is not completed within the time
required hereunder solely by reason of the failure of a third Person to take
such actions provided that the Borrower has utilized, and continues to utilize,
its best efforts to cause such third Person to take such action.
8.13 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Agents does not within 30 days after a
request from the Agents or the Required Banks deliver evidence, in form and
substance mutually satisfactory to the Agents and the Borrower, with respect to
any Foreign Subsidiary of the Borrower which has not already had all of its
stock pledged pursuant to the Pledge Agreement that (i) a pledge of 66-2/3% or
more of the total combined voting power of all classes of capital stock of such
Foreign Subsidiary entitled to vote, (ii) the entering into by such Foreign
Subsidiary of a security agreement in substantially the form of the Security
Agreement and (iii) the entering into by such Foreign Subsidiary of a guaranty
in substantially the form of the Subsidiaries Guaranty, in any such case would
cause the undistributed earnings of such Foreign Subsidiary as determined for
Federal income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes, then in the
case of a failure to deliver the evidence described in clause (i) above, that
portion of such Foreign Subsidiary's outstanding capital stock not theretofore
pledged pursuant to the Pledge Agreement shall be pledged to the Collateral
Agent for the benefit of the Secured Creditors pursuant to the Pledge Agreement
(or another pledge agreement in substantially similar form, if needed), and in
the case of a failure to deliver the evidence described in clause (ii) above,
such Foreign Subsidiary (to the extent that same is a Wholly-Owned Foreign
Subsidiary) will execute and deliver the Security Agreement (or another security
-64-
<PAGE>
agreement in substantially similar form, if needed), granting the Secured
Creditors a security interest in all of such Foreign Subsidiary's assets and
securing the Obligations of the Borrower under the Credit Documents and under
any Interest Rate Protection Agreement or Other Hedging Agreement and, in the
event the Subsidiaries Guaranty shall have been executed by such Foreign
Subsidiary, the obligations of such Foreign Subsidiary thereunder, and in the
case of a failure to deliver the evidence described in clause (iii) above, such
Foreign Subsidiary (to the extent that same is a Wholly-Owned Foreign
Subsidiary) will execute and deliver the Subsidiaries Guaranty (or another
guaranty in substantially similar form, if needed), guaranteeing the Obliga
tions of the Borrower under the Credit Documents and under any Interest Rate
Protection Agreement or Other Hedging Agreement, in each case to the extent that
the entering into such Security Agreement or Subsidiaries Guaranty is permitted
by the laws of the respective foreign jurisdiction and with all documents
delivered pursuant to this Section 8.13 to be in form and substance reasonably
satisfactory to the Agents.
8.14 Hotel Property Management. The Borrower will take, and will
-------------------------
cause each of its Subsidiaries to take, all action necessary so that each
Qualified Hotel Property is managed by either the Subsidiary Guarantor owning
such Qualified Hotel Property or another Wholly-Owned Subsidiary of the
Borrower, provided that such Qualified Hotel Property may be managed by a Person
other than such owner or such Wholly-Owned Subsidiary of the Borrower so long as
(i) such manager is a Permitted Facility Manager, (ii) such Permitted Facility
Manager executes and delivers a Hotel Property Management Agreement and Manager
Subordination Agreement.
8.15 Maintenance of Corporate Separateness. (a) The Borrower will,
-------------------------------------
and will cause each of its Unrestricted Subsidiaries to, satisfy customary
corporate formalities, including the holding of regular board of directors' and
shareholders' meetings or action by directors or shareholders without a meeting
and the maintenance of corporate offices and records. Neither the Borrower nor
any of its Subsidiaries will make any payment to a creditor of any Unrestricted
Subsidiary in respect of any liability of any Unrestricted Subsidiary, and no
bank account of any Unrestricted Subsidiary shall be commingled with any bank
account of the Borrower or any of its Subsidiaries. Any financial statements
distributed to any creditors of any Unrestricted Subsidiary shall clearly
establish or indicate the corporate separateness of such Unrestricted Subsidiary
from the Borrower and its Subsidiaries. Finally, neither the Borrower nor any
of its Subsidiaries shall take any action, or conduct its affairs in a manner,
which is likely to result in the corporate existence of the Borrower or any of
its Subsidiaries or Unrestricted Subsidiaries being ignored, or in the assets
and liabilities of the Borrower or any of its Subsidiaries being substantively
consolidated with those of any other such Person or any Unrestricted Subsidiary
in a bankruptcy, reorganization or other insolvency proceeding.
-65-
<PAGE>
(b) All Hotel Properties owned by the Borrower or a Subsidiary shall
be owned by a Wholly-Owned Subsidiary of the Borrower which is a Foreign
Subsidiary or by a Subsidiary Guarantor. All Qualified Hotel Properties which
are located in the United States will be owned by a Subsidiary Guarantor which
is organized under the laws of a state in the United States.
SECTION 9. Negative Covenants. The Borrower covenants and agrees
------------------
that on and after the Restatement Effective Date and until the Total Commitments
and all Letters of Credit have terminated and the Loans, Notes and Unpaid
Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
9.01 Liens. The Borrower will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or intangible) of
the Borrower or any of its Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to the Borrower or any
Subsidiary of the Borrower), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute, provided that the provisions
--------
of this Section 9.01 shall not prevent the creation, incurrence, assumption or
existence of the following Liens (collectively, "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of the Borrower's or
such Subsidiary's property or assets or materially impair the use thereof
in the operation of the business of the Borrower or such Subsidiary or (y)
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien;
(iii) Liens in existence on the Restatement Effective Date which are
listed, and the property subject thereto described, in Schedule VII, but
only to the
-66-
<PAGE>
respective date, if any, set forth in such Schedule VII for the removal and
termination of any such Liens, but no renewals or extensions of such Liens
shall be permitted;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of the Borrower or any of its
Subsidiaries or the interest of a ground lessor arising by operation of law
in real property interests located on the property subject to such ground
lease;
(vii) Liens upon assets subject to Capitalized Lease Obligations to
the extent such Capitalized Lease Obligations are permitted by Section
9.04(iii), provided that (x) such Liens only serve to secure the payment of
--------
Indebtedness arising under such Capitalized Lease Obligation and (y) the
Lien encumbering the asset giving rise to the Capitalized Lease Obligation
does not encumber any other asset of the Borrower or any of the Borrower's
Subsidiaries;
(viii) Liens placed upon equipment or machinery used in the ordinary
course of business of the Borrower or any of its Subsidiaries at the time
of acquisition thereof by the Borrower or any such Subsidiary or within 90
days thereafter to secure Indebtedness incurred to pay all or a portion of
the purchase price thereof, provided that (x) the aggregate outstanding
--------
principal amount of all Indebtedness secured by Liens permitted by this
clause (viii) shall not at any time exceed $15,000,000 and (y) in all
events, the Lien encumbering the equipment or machinery so acquired does
not encumber any other asset of the Borrower or such Subsidiary;
(ix) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each case
not securing Indebtedness and not materially interfering with the conduct
of the business of the Borrower or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings in respect of operating leases;
(xi) statutory and common law landlords' liens under leases to which
the Borrower or any of its Subsidiaries is a party;
-67-
<PAGE>
(xii) Liens (other than Liens created or imposed under ERISA)
incurred in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety bonds,
bids, government contracts, performance and return-of-money bonds and
other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money),
provided that the aggregate outstanding amount of obligations secured by
--------
Liens permitted by this clause (xii) (and the value of all cash and
property encumbered by Liens permitted pursuant to this clause (xii)) shall
not at any time exceed $10,000,000;
(xiii) Liens arising out of judgments or awards in respect of which
the Borrower or any of the Borrower's Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review in respect of which there
shall have been secured a subsisting stay of execution pending such appeal
or proceedings, provided that the aggregate amount of all such judgments or
--------
awards does not exceed $10,000,000 at any time outstanding;
(xiv) Liens on Escrowed Securities, for the benefit of the holders of
the New Subordinated Notes, to secure payments on or with respect to the
New Subordinated Notes or interest thereon, provided that such Liens are
established in connection with the issuance of such New Subordinated Notes
and such Escrowed Securities and the proceeds thereof are used solely to
make payments in respect of the related New Subordinated Notes;
(xv) Liens on property or assets acquired pursuant to a Hotel
Property acquisition effected pursuant to Section 9.02(viii), or on
property or assets of a Subsidiary of the Borrower in existence at the time
such property or assets are acquired pursuant to such Hotel Property
acquisition, provided that (i) any Indebtedness that is secured by such
--------
Liens is permitted to exist under Section 9.04(ix) and (ii) such Liens are
not incurred in connection with or in anticipation of such Hotel Property
acquisition and do not attach to any other asset of the Borrower or any of
its Subsidiaries;
(xvi) Liens upon cash and Cash Equivalents not exceeding $15,000,000
at any one time to secure Indebtedness in respect of any letters of credit
issued pursuant to Section 9.04(x); and
(xvii) additional Liens incurred by the Borrower and its Subsidiaries
so long as the aggregate amount of the Indebtedness and other obligations
secured thereby, do not exceed $1,000,000.
-68-
<PAGE>
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. The
-------------------------------------------------------
Borrower will not, and will not permit any of the Borrower's Subsidiaries to,
wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or any part of its
property or assets, or enter into any sale-leaseback transactions, or purchase
or otherwise acquire (in one or a series of related transactions) any part of
the property or assets (other than purchases or other acquisitions of inventory,
materials and equipment in the ordinary course of business) of any Person,
except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries shall
be permitted to the extent not in violation of Section 9.07;
(ii) the Borrower and each of its Subsidiaries may in the ordinary
course of business, sell or otherwise dispose of equipment and materials
which, in the reasonable opinion of such Person, are obsolete, uneconomic
or no longer useful in the conduct of such Person's business;
(iii) Investments may be made to the extent permitted by Section
9.05;
(iv) the Borrower and each of its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
any such lease does not create a Capitalized Lease Obligation unless
permitted by Section 9.04(iii));
(v) the Borrower and each of its Subsidiaries may make sales of
inventory in the ordinary course of business;
(vi) each of the Borrower and its Subsidiaries may sell other assets
(other than less than all of the capital stock of any Subsidiary held by
the Borrower and its Subsidiaries) so long as (i) no Default or Event of
Default then exists or would result therefrom, (ii) each such sale is in an
arm's-length transaction and the Borrower or the respective Subsidiary
receives at least fair market value (as determined in good faith by the
Borrower or such Subsidiary, as the case may be), (iii) at least 75% of the
total consideration received by the Borrower or such Subsidiary is cash and
is received at the time of the consummation of such sale and (iv) the
amount of the proceeds received from the assets sold pursuant to this
clause (vi) shall not exceed (A) $10,000,000 per such sale (or in a series
of related sales) and (B) $25,000,000 in the aggregate for all such sales
in any fiscal year of the Borrower;
(vii) each of the Borrower and its Subsidiaries may sell other assets
(other than less than all of the capital stock of any Subsidiary held by
the Borrower
-69-
<PAGE>
and its Subsidiaries) so long as (i) no Default or Event of Default then
exists or would result therefrom, (ii) each such sale is in an arm's-length
transaction and the Borrower or the respective Subsidiary receives at least
fair market value (as determined in good faith by the Borrower or such
Subsidiary, as the case may be), (iii) at least 75% of the total
consideration received by the Borrower or such Subsidiary is cash and is
received at the time of the consummation of such sale, (iv) the aggregate
amount of the proceeds received from all assets sold pursuant to this
clause (vii) shall not exceed $35,000,000 in any fiscal year of the
Borrower and (v) the Net Sale Proceeds therefrom are either applied as
provided in Section 4.02(d) or reinvested in assets to the extent permitted
by Section 4.02(d);
(viii) any of the Borrower's Subsidiaries may acquire or construct
Hotel Properties (including by purchasing the capital stock or partnership
interests of the Person or Persons that own such Hotel Properties);
(ix) the Borrower may transfer assets to a Subsidiary Guarantor, and
any Wholly-Owned Subsidiary of the Borrower may merge with and into any
Subsidiary Guarantor which is a Wholly-Owned Subsidiary, in each case so
long as the respective Subsidiary Guarantor is the surviving corporation of
any such merger;
(x) each of the Borrower and its Subsidiaries may grant leases or
subleases to other Persons not materially interfering with the conduct of
the business of the Borrower or any of its Subsidiaries; and
(xi) each of the Borrower and its Subsidiaries may, in the ordinary
course of business, license, as licensor or licensee, patents, trademarks,
copyrights and know-how to third Persons and to one another so long as any
such license by the Borrower or any other Credit Party in its capacity as
licensor is permitted to be assigned pursuant to the Security Agreement (to
the extent that the security interest in such patents, trademarks,
copyrights and know-how is granted thereunder) and does not otherwise
prohibit the granting of a Lien by the Borrower or any other Credit Party
pursuant to the Security Agreement in the intellectual property covered by
such license.
To the extent the Required Banks or all of the Banks, as the case may be, waive
the provisions of this Section 9.02 with respect to the sale of any Collateral,
or any Collateral is sold or otherwise disposed of as permitted by this Section
9.02, such Collateral shall be sold or otherwise disposed of free and clear of
the Liens created by the Security Documents, and the Administrative Agent and
the Collateral Agent shall be authorized to take any actions deemed appropriate
in order to effect the foregoing.
-70-
<PAGE>
9.03 Dividends. The Borrower will not, and will not permit any of
----------
its Subsidiaries to, authorize, declare or pay any Dividends with respect to the
Borrower or any of its Subsidiaries, except that (i) any Subsidiary of the
Borrower may pay cash Dividends to the Borrower or to a Wholly-Owned Subsidiary
of the Borrower, (ii) so long as there shall exist no Default under Section
10.01 or Event of Default (both before and after giving effect to the payment
thereof) any non-Wholly-Owned Subsidiary of the Borrower may pay cash Dividends
to its shareholders or partners generally so long as the Borrower or its
respective Subsidiary which owns the equity interest or interests in the
Subsidiary paying such Dividends receives at least its proportionate share
thereof (based upon its relative holdings of equity interests in the Subsidiary
paying such Dividends and taking into account the relative preferences, if any,
of the various classes of equity interests in such Subsidiary) and (iii) so long
as there shall exist no Default or Event of Default (both before and after
giving effect to the payment thereof), the Borrower may pay Dividends so long as
the aggregate amount of Dividends paid by the Borrower pursuant to this clause
(iii) shall not exceed $10,000,000 in any fiscal year of the Borrower. For
purposes of this Section 9.03, the amount of any non-cash Dividends shall be
deemed to be the greater of the book value or the fair market value thereof at
the time of the declaration thereof.
9.04 Indebtedness. The Borrower will not, and will not permit any
-------------
of its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Existing Indebtedness to the extent the same is listed on
Schedule V, but no refinancings or renewals thereof;
(iii) Indebtedness of the Borrower and its Subsidiaries evidenced by
Capitalized Lease Obligations to the extent permitted pursuant to Section
9.07, provided that in no event shall the aggregate principal amount of
--------
Capitalized Lease Obligations permitted by this clause (iii) exceed
$15,000,000 at any time outstanding;
(iv) Indebtedness of the Borrower and its Subsidiaries subject to
Liens permitted under Section 9.01(viii) or to the extent that such
Indebtedness does not constitute Indebtedness of a type described in clause
(i), (ii), (iii), (iv) or (v) of the definition of Indebtedness, Liens
permitted under Section 9.01(xii) or (xiii);
(v) intercompany Indebtedness among the Borrower and Subsidiaries of
the Borrower to the extent permitted by Section 9.05(iv);
-71-
<PAGE>
(vi) Indebtedness of the Borrower under Interest Rate Protection
Agreements;
(vii) Indebtedness under Other Hedging Agreements providing
protection against fluctuations in currency values in connection with the
Borrower's or any of its Subsidiaries' ordinary course of business
operations so long as management of the Borrower or such Subsidiary, as the
case may be, has determined in good faith that the entering into of such
Other Hedging Agreements are bona fide hedging activities;
(viii) unsecured subordinated Indebtedness of the Borrower (the "New
Subordinated Notes") so long as (w) the aggregate initial principal amount
thereof (exclusive of any initial Escrowed Amount in respect thereof) does
not exceed the Aggregate Permitted Amount, (x) except in the case of the
9.15% Senior Subordinated Notes, at least 10 days prior to the issuance
thereof, the Borrower shall have delivered to each of the Banks
substantially final drafts of the documents pursuant to which the New
Subordinated Notes are to be issued and with any changes thereto made after
the initial delivery of such documents to be delivered to the Agents and
with any significant changes thereto made after such initial delivery to be
delivered to each of the Banks at least three days prior to the issuance of
such New Subordinated Notes, (y) all terms and conditions of the New
Subordinated Notes and the documentation with respect thereto (including,
without limitation, the maturity thereof, the interest rate applicable
thereto, the required repayments with respect thereto, the covenants,
events of default and ranking provisions with respect thereto) shall be in
form and substance reasonably satisfactory to each Agent, and (z) no
Default or Event of Default then exists or would result therefrom;
(ix) Indebtedness of a Subsidiary acquired pursuant to a Hotel
Property acquisition, provided that (i) such Indebtedness was not incurred
--------
in connection with or in anticipation of such Hotel Property acquisition,
(ii) such Indebtedness does not constitute Indebtedness for borrowed money,
it being understood and agreed that Capitalized Lease Obligations and
purchase money Indebtedness shall not constitute Indebtedness for borrowed
money for purposes of this clause (ix), and (iii) at the time of such Hotel
Property acquisition such Indebtedness does not exceed 10% of the total
value of the assets of the Subsidiary so acquired; and
(x) additional Indebtedness of the Borrower and its Subsidiaries
not to exceed $15,000,000 in aggregate principal amount at any time
outstanding.
9.05 Advances, Investments and Loans. The Borrower will not, and
--------------------------------
will not permit any of its Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or
-72-
<PAGE>
any other interest in, or make any capital contribution to, any other Person, or
purchase or own a futures contract or otherwise become liable for the purchase
or sale of currency or other commodities at a future date in the nature of a
futures contract, or hold any cash or Cash Equivalents (each of the foregoing an
"Investment" and, collectively, "Investments"), except that the following shall
be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary terms, and the Borrower and its Subsidiaries may own Investments
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;
(ii) the Borrower and its Subsidiaries may acquire and hold cash and
Cash Equivalents;
(iii) the Borrower may enter into Interest Rate Protection Agreements
to the extent permitted by Section 9.04(vi);
(iv) the Borrower and its Subsidiaries may make intercompany loans
and advances to one another so long as (i) no more than $10,000,000 in
aggregate principal amount of intercompany loans may be outstanding at any
one time to Subsidiaries that are not Subsidiary Guarantors (determined
without regard to any write-downs or write-offs thereof) and (ii) each
intercompany loan or advance, the principal amount of which exceeds
$500,000, shall be evidenced by a note that is pledged to the Collateral
Agent pursuant to (and to the extent required by) the Pledge Agreement;
(v) the Borrower and its Subsidiaries may make loans and advances
in the ordinary course of business to their respective employees so long as
the aggregate principal amount thereof at any time outstanding (determined
without regard to any write-downs or write-offs of such loans and advances)
shall not exceed $5,000,000;
(vi) the Borrower and its Subsidiaries may enter into Other Hedging
Agreements to the extent permitted by Section 9.04(vii);
(vii) the Borrower and its Subsidiaries may receive non-cash
consideration in connection with any asset sale permitted by Sections
9.02(vi) and (vii) but only to the extent set forth in such Sections
9.02(vi) and (vii);
-73-
<PAGE>
(viii) the Borrower may purchase securities (the "Escrowed
Securities") with the proceeds of the Escrowed Amount at such time;
(ix) the Borrower and its Subsidiaries may acquire Hotel Properties
consisting in whole or in part of stock acquisitions (and otherwise in
compliance with this Agreement); and
(x) in addition to investments permitted by clauses (i) through (x)
above, the Borrower and its Wholly-Owned Subsidiaries may make investments
in Unrestricted Subsidiaries, so long as the aggregate amount invested
pursuant to this clause (x) does not exceed $25,000,000 in the aggregate.
9.06 Transactions with Affiliates. The Borrower will not, and will
-----------------------------
not permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
(x) any Affiliate of the Borrower or any of its Subsidiaries or (y) any
Unrestricted Subsidiary, other than in the ordinary course of business and on
terms and conditions substantially as favorable to the Borrower or such
Subsidiary as would reasonably be obtained by the Borrower or such Subsidiary at
that time in a comparable arm's-length transaction with a Person other than an
Affiliate, except that notwithstanding the foregoing:
(i) Dividends may be paid to the extent provided in Section 9.03;
(ii) loans may be made and other transactions may be entered into by
and among the Borrower and the Borrower's Subsidiaries to the extent
permitted by Section 9.02, 9.04 or 9.05;
(iii) customary fees may be paid to non-officer directors of the
Borrower; and
(iv) Subsidiaries of the Borrower may pay management and similar
fees to the Borrower or any Wholly-Owned Subsidiary of the Borrower.
9.07 Capital Expenditures. (a) The Borrower will not, and will
---------------------
not permit any of its Subsidiaries to make any Capital Expenditures (other than
such Capital Expenditures of the type permitted by clauses (b), (c) and (d)
hereof), except that the Borrower and its Subsidiaries may make Capital
Expenditures in an aggregate amount not to exceed the Permitted CapEx Amount at
the time of such Capital Expenditure.
(b) In addition to the foregoing, the Borrower and its Subsidiaries
may effect construction and acquisitions of Hotel Properties.
-74-
<PAGE>
(c) In addition to the Capital Expenditures permitted pursuant to
preceding clauses (a) and (b) the Borrower and its Subsidiaries may make
additional Capital Expenditures consisting of the reinvestment of proceeds of
Recovery Events not required to be applied as a mandatory repayment pursuant to
Section 4.02(g).
(d) In addition to the Capital Expenditures permitted pursuant to
preceding clauses (a), (b) and (c) the Borrower and its Subsidiaries may make
additional Capital Expenditures in an aggregate amount not to exceed the CapEx
Cumulative Basket at the time of such Capital Expenditure.
(e) For purposes of determining compliance with Sections 9.07(a) and
(d), the amount of Capital Expenditures shall be first applied to the amount
permitted under Section 9.07(a) at the time of such Capital Expenditures to the
extent permitted thereby and thereafter to the amount permitted under Section
9.07(d).
9.08 Consolidated Interest Coverage Ratio. The Borrower will not
------------------------------------
permit the Consolidated Interest Coverage Ratio for any Test Period ending
during a fiscal quarter of the Borrower set forth below to be less than the
ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended in Ratio
----------------------- -----
or Closest to
-------------
<S> <C>
March 1998 1.50:1.00
June 1998 1.50:1.00
September 1998 1.50:1.00
December 1998 1.50:1.00
March 1999 1.75:1.00
June 1999 1.75:1.00
September 1999 1.75:1.00
December 1999 1.75:1.00
March 2000 2.00:1.00
June 2000 2.00:1.00
September 2000 2.00:1.00
December 2000 2.00:1.00
March 2001
and each Fiscal Quarter thereafter 2.25:1.00
</TABLE>
9.09 Maximum Run Rate Leverage Ratio. The Borrower will not permit
--------------------------------
the Run Rate Leverage Ratio at any time during a fiscal quarter of the Borrower
set forth below to be greater than (x) at any time prior to date on which the
conditions set forth in
-75-
<PAGE>
the proviso to the definition of Specific Borrowing Conditions have been met,
the ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended in Ratio
----------------------- -----
or Closest to
-------------
<S> <C>
March 1998 6.50:1.00
June 1998 6.50:1.00
September 1998 6.00:1.00
December 1998 6.00:1.00
March 1999 6.00:1.00
June 1999 6.00:1.00
September 1999 6.00:1.00
December 1999 6.00:1.00
March 2000 5.25:1.00
and each fiscal quarter thereafter
</TABLE>
or (y) at any time on or after the date on which the conditions set forth in the
proviso to the definition of Specific Borrowing Conditions have been met, the
ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended in Ratio
----------------------- -----
or Closest to
-------------
<S> <C>
March 1998 7.00:1.00
June 1998 7.00:1.00
September 1998 7.00:1.00
December 1998 7.00:1.00
March 1999 6.50:1.00
June 1999 6.50:1.00
September 1999 6.50:1.00
December 1999 6.50:1.00
March 2000 5.75:1.00
and each fiscal quarter thereafter
</TABLE>
9.10 Maximum Senior Debt Leverage Ratio. At any time after the
-----------------------------------
conditions set forth in the proviso to the definition of Specific Borrowing
Conditions have been met, the Borrower will not permit the Senior Debt Leverage
Ratio at any time during a fiscal quarter set forth below to be greater than the
ratio set forth opposite such fiscal quarter below:
-76-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Quarter Ended in Ratio
----------------------- -----
or Closest to
-------------
<S> <C>
March 1998 5.00:1.00
June 1998 5.00:1.00
September 1998 5.00:1.00
December 1998 5.00:1.00
March 1999 4.50:1.00
June 1999 4.50:1.00
September 1999 4.50:1.00
December 1999 4.50:1.00
March 2000 3.75:1.00
and each fiscal quarter thereafter
</TABLE>
9.11 Maximum Debt to Capitalization Ratio . The Borrower will not
-------------------------------------
permit Consolidated Debt at any time to be more than 55% of Consolidated
Capitalization at such time.
9.12 Limitation on Payments of Certain Indebtedness; Modifications of
----------------------------------------------------------------
Certain Indebtedness; Modifications of Certificate of Incorporation, By-Laws and
- --------------------------------------------------------------------------------
Certain Agreements; etc. The Borrower will not, and will not permit any of the
- ------------------------
Borrower's Subsidiaries to, (i) make (or give any notice in respect of) any
voluntary or optional payment or prepayment on or redemption or acquisition for
value of, or any prepayment or redemption as a result of any change of control
or similar event of, including, in each case without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due, any New Subordinated Notes, (ii) amend or
modify, or permit the amendment or modification of, any provision of the New
Subordinated Notes or any agreement (including, without limitation, any purchase
agreement, indenture or loan agreement) related thereto other than amendments
not adverse to the interests of the Banks in any material respect provided that
a copy of such amendment is delivered to the Agents at least 10 Business Days
prior to the execution thereof by the Borrower, (iii) amend or modify, or permit
the amendment or modification of, any provision of any Hotel Property Management
Agreement between the Borrower and a Person other than a Subsidiary Guarantor
(other than any amendment or modification thereto which would not violate or be
inconsistent with any of the terms or provisions of this Agreement and the other
Credit Documents and could not be adverse to the interests of the Banks in any
respect) or enter into any new management agreement (other than Hotel Property
Management Agreements, if applicable, entered into in connection with the
acquisition or construction of new Hotel Properties), or (iv) amend, modify or
change its certificate of incorporation (including, without limitation, by the
filing or modification of any certificate of designation) or by-laws, or any
agreement entered into by it, with respect to its capital stock, or enter into
any new agreement with respect to its capital stock, other
-77-
<PAGE>
than any amendments, modifications or changes pursuant to this clause (iv) or
any such new agreements which are not adverse in any respect to the interests of
the Banks.
9.13 Limitation on Certain Restrictions on Subsidiaries. The
---------------------------------------------------
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary of the Borrower to
(a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits owned by the Borrower or any of
its Subsidiaries, or pay any Indebtedness owed to the Borrower or any Subsidiary
of the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary of the Borrower, except in each case for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of the Borrower or any Subsidiary of the Borrower, (iv) customary provisions
restricting assignment of any licensing agreement entered into by the Borrower
or any Subsidiary of the Borrower in the ordinary course of business and (v)
customary provisions restricting the transfer of assets subject to Liens
permitted under Section 9.01(vii) or (viii).
9.14 Limitation on Issuance of Capital Stock. (a) The Borrower will
----------------------------------------
not issue (i) any preferred stock other than Qualified Preferred Stock or (ii)
any redeemable common stock.
(b) The Borrower will not permit any of its Subsidiaries to issue
any capital stock (including by way of sales of treasury stock) or any options
or warrants to purchase, or securities convertible into, capital stock, except
(i) for transfers and replacements of then outstanding shares of capital stock,
(ii) for stock splits, stock dividends and similar or additional issuances which
do not decrease the percentage ownership of the Borrower or any of the
Borrower's Subsidiaries in any class of the capital stock of such Subsidiary,
(iii) to qualify directors to the extent required by applicable law, (iv) for
issuances by newly created or acquired Subsidiaries in accordance with the terms
of this Agreement or (v) issuances of capital stock to the Borrower or a Wholly-
Owned Subsidiary provided that such capital stock is pledged to the Collateral
Agent pursuant to the Security Documents.
9.15 Business. The Borrower will not, and will not permit any of
---------
its Subsidiaries to, engage (directly or indirectly) in any business other than
the business in which the Borrower and its Subsidiaries are engaged on the
Restatement Effective Date and reasonable extensions thereof and reasonably
related thereto.
9.16 Limitation on Creation of Subsidiaries. Notwithstanding
---------------------------------------
anything to the contrary contained in this Agreement, the Borrower will not, and
will not permit any of its Subsidiaries to establish, create or acquire after
the Restatement Effective Date any
-78-
<PAGE>
Subsidiary, provided that the Borrower and its Wholly-Owned Subsidiaries shall
--------
be permitted to (i) establish or create one or more Wholly-Owned Subsidiaries so
long as within a reasonable time from such establishment or creation (x) the
capital stock of such new Wholly-Owned Subsidiary that is owned by any Credit
Party is pledged pursuant to, and to the extent required by, the Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent for the
benefit of the Secured Creditors, (y) such new Wholly-Owned Subsidiary (other
than a Wholly-Owned Foreign Subsidiary, except to the extent otherwise required
pursuant to Section 8.13) executes a counterpart of the Subsidiaries Guaranty,
the Pledge Agreement and the Security Agreement, and (z) such new Wholly-Owned
Subsidiary, to the extent requested by the Agents or the Required Banks, takes
all actions required pursuant to Section 8.12 and (ii) acquire a Person which
immediately upon such acquisition will constitute a Subsidiary of the Borrower
in connection with the acquisition of a Hotel Property so long as within a
reasonable time from such acquisition (x) the capital stock of such Subsidiary
that is owned by any Credit Party is pledged pursuant to, and to the extent
required by, the Pledge Agreement and the certificates representing such stock,
together with stock powers duly executed in blank, are delivered to the
Collateral Agent for the benefit of the Secured Creditors, (y) such Subsidiary
(including any such Subsidiary which is a Foreign Subsidiary) executes a
counterpart of the Subsidiaries Guaranty, the Pledge Agreement and the Security
Agreement, and (z) such Subsidiary, to the extent requested by the Agents or the
Required Banks, takes all actions required pursuant to Section 8.12. In
addition, each such Subsidiary shall execute and deliver, or cause to be
executed and delivered, all other relevant documentation of the type described
in Section 5 as such Subsidiary would have had to deliver if such new Wholly-
Owned Subsidiary were a Credit Party on the Restatement Effective Date.
9.17 Designated Senior Indebtedness. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, designate any holder of
Indebtedness, other than the Banks or their representative, to deliver blockage
notices which the holders of senior debt are permitted to provide under the New
Subordinated Notes.
SECTION 10. Events of Default. Upon the occurrence of any of the
------------------
following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment when
---------
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for three or more Business Days, in the payment when
due of any interest on any Loan or Note, any Unpaid Drawing or any Fees or any
other amounts owing hereunder or under any other Credit Document; or
10.02 Representations, etc. Any representation or warranty made by
---------------------
any Credit Party herein or in any other Credit Document or in any certificate
delivered to any
-79-
<PAGE>
Agent or any Bank pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
10.03 Covenants. Any Credit Party shall (i) default in the due
----------
performance or observance by it of any term, covenant or agreement contained in
Section 9 or (ii) default in the due performance or observance by it of any
other term, covenant or agreement contained in this Agreement or any other
Credit Document (other than as provided in Sections 10.01 and 10.02) and such
default shall continue unremedied for a period of 45 days after written notice
to the Borrower by the Administrative Agent or the Required Banks; or
10.04 Default Under Other Agreements. (i) The Borrower or any of
-------------------------------
its Subsidiaries shall (x) default in any payment of any Indebtedness (other
than the Obligations) beyond the period of grace or cure, if any, provided in
the instrument or agreement under which such Indebtedness was created or (y)
default in the observance or performance of any agreement or condition relating
to any Indebtedness (other than the Obligations) or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (ii) any Indebtedness (other than
the Obligations) of the Borrower or any of its Subsidiaries shall be declared to
be (or shall become) due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment (including, without limitation, by
reason of the occurrence of a change of control or other similar event), prior
to the stated maturity thereof, provided that it shall not be a Default or an
--------
Event of Default under clauses (i) or (ii) of this Section 10.04 unless the
aggregate outstanding principal amount of all Indebtedness as described in such
clauses (i) and (ii) is at least $15,000,000; or
10.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries
----------------
(other than an Immaterial Subsidiary) shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or here after in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against the Borrower or
any of its Subsidiaries (other than an Immaterial Subsidiary) and the petition
is not controverted within 15 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Subsidiaries (other than an Immaterial Subsidiary) or
the Borrower or any of its Subsidiaries (other than an Immaterial Subsidiary)
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or here after in effect
-80-
<PAGE>
relating to the Borrower or any of its Subsidiaries (other than an Immaterial
Subsidiary), or there is commenced against the Borrower or any of its
Subsidiaries (other than an Immaterial Subsidiary) any such proceeding which
remains undismissed for a period of 60 days, or the Borrower or any of its
Subsidiaries (other than an Immaterial Subsidiary) is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower or any of its Subsidiaries (other than an
Immaterial Subsidiary) suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or the Borrower or any of its Subsidiaries (other than
an Immaterial Subsidiary) makes a general assignment for the benefit of
creditors; or any corporate action is taken by the Borrower or any of its
Subsidiaries (other than an Immaterial Subsidiary) for the purpose of effecting
any of the fore going; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
------
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan or a
Foreign Pension Plan has not been timely made, the Borrower or any Subsidiary of
the Borrower or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971
or 4975 of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code, or the Borrower or any Subsidiary of the Borrower has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or Plans or Foreign Pension Plans; (b) there shall result from any such
event or events the imposition of a lien on, the granting of a security interest
by, or a liability or a material risk of incurring a liability by, the Borrower,
a Subsidiary of the Borrower or an ERISA Affiliate; and (c) such lien, security
interest or liability, individually, and/or in the aggregate, in the opinion of
the Required Banks, has had, or could reasonably be expected
-81-
<PAGE>
to have, a material adverse effect upon the business, operations, condition
(financial or other wise) or prospects of the Borrower or any Subsidiary of the
Borrower; or
10.07 Security Documents. At any time after the execution and
-------------------
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except as permitted by
Section 9.01), and subject to no other Liens (except as permitted by Section
9.01), provided that it shall not be a Default or Event of Default under this
Section 10.07 unless the value of the Collateral adversely affected thereby
exceeds $500,000 in the aggregate; or
10.08 Subsidiaries Guaranty. At any time after the execution and
----------------------
delivery thereof, the Subsidiaries Guaranty or any provision thereof shall cease
to be in full force or effect as to any Subsidiary Guarantor (other than a
Subsidiary Guarantor which is an Immaterial Subsidiary), or any Subsidiary
Guarantor (other than a Subsidiary Guarantor which is an Immaterial Subsidiary)
or any Person acting by or on behalf of such Subsidiary Guarantor shall deny or
disaffirm such Subsidiary Guarantor's obligations under the Subsidiaries
Guaranty or any Subsidiary Guarantor shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered
----------
against the Borrower or any of its Subsidiaries involving in the aggregate for
the Borrower and its Subsidiaries a liability (not paid or not fully covered by
a reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 30 consecutive days, and the
aggregate amount of all such judgments exceeds $15,000,000; or
10.10 Manager Subordination Agreements. Any Manager Subordination
---------------------------------
Agreement (to the extent required pursuant to Section 8.14) or any provision
thereof shall cease to be a legal, valid and binding obligation enforceable
against any party to such Manager Subordination Agreement, or any party to a
Manager Subordination Agreement (other than the Administrative Agent) or any
Person acting by or on behalf of any such party shall deny or disaffirm such
party's obligations under any such Manager Subordination Agreement, or any such
party shall default in the due performance of any term, covenant or agreement on
its part to be performed or observed pursuant to any such Manager Subordination
Agreement, in each case so long as such event, act or condition would either
individually or in the aggregate have a material adverse effect in the interests
of the Banks; or
-82-
<PAGE>
10.11 Change of Control. A Change of Control shall occur;
------------------
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of any Agent, any Bank or
the holder of any Note to enforce its claims against any Credit Party (provided,
--------
that, if an Event of Default specified in Section 10.05 shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Administrative Agent to the Borrower as specified in clauses (i) and (ii)
below shall occur automatically without the giving of any such notice): (i)
declare the Total Commitments terminated, whereupon all of the Commitments of
each Bank shall forthwith terminate immediately and any Commitment Commission
shall forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and any accrued interest in respect of all Loans
and the Notes and all Obligations owing here under and thereunder to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Credit Party; (iii) terminate any Letter of Credit which may be terminated
in accordance with its terms; (iv) direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05 with respect to the Borrower, it will pay) to
the Collateral Agent at the Payment Office such additional amount of cash, to be
held as security by the Collateral Agent, as is equal to the aggregate Stated
Amount of all Letters of Credit issued for the account of the Borrower and then
outstanding; (v) enforce, as Collateral Agent, all of the Liens and security
interests created pursuant to the Security Documents; and (vi) apply any cash
collateral held by the Administrative Agent pursuant to Section 4.02 to the
repayment of the Obligations.
SECTION 11. Definitions and Accounting Terms.
---------------------------------
11.01 Defined Terms. As used in this Agreement, the following terms
--------------
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"9.15% Senior Subordinated Notes" shall mean the New Subordinated
Notes consisting of the Borrower's 9.15% Senior Subordinated Note due 2008
having terms and conditions as described in the Preliminary Offering Memorandum.
"Acquisition/Construction Certificate" shall have the meaning provided
in Section 8.11.
"Additional Security Documents" shall have the meaning provided in
Section 8.12(a).
-83-
<PAGE>
"Adjusted Consolidated Net Income" shall mean for any period
Consolidated Net Income of the Borrower and its Subsidiaries for such period
plus, without duplication, the sum of the amount of all net non-cash charges
(including, without limitation, depreciation, amortization, deferred tax
expense, non-cash interest expense) and net non-cash losses which were included
in arriving at Consolidated Net Income for such period less the sum of the
amount of all net non-cash gains and gains from the sale of assets (other than
sales of inventory in the ordinary course of business) which were included in
arriving at Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities at such time.
"Administrative Agent" shall mean IBJ in its capacity as
Administrative Agent (including in its capacity as Collateral Agent) for the
Banks hereunder, and shall include any successor to the Administrative Agent
appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any other Person
(i) directly or indirectly controlling (including, but not limited to, all
directors, officers and partners of such Person) controlled by, or under direct
or indirect common control with, such Person or (ii) that directly or indirectly
owns more than 5% of any class of the voting securities or capital stock of or
equity interests in such Person. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean the Administrative Agent and the Syndication Agent.
"Aggregate Permitted Amount" shall mean, on any date of determination,
an amount equal to $300,000,000 plus the sum of (i) the lesser of $300,000,000
or the Net Subordinated Notes Amount (determined on the date of issuance
thereof) of New Subordinated Notes issued by the Borrower within six months
after the Original Effective Date plus (ii) 50% of the Net Equity Proceeds
received by the Borrower from issuances of its common equity after July 21, 1997
and on or prior to such date, plus (iii) 33% of the Net Debt Proceeds received
by the Borrower from any issuance by it on or prior to such date of Qualified
Convertible Subordinated Notes (excluding any Qualified Convertible Subordinated
Notes already included as an adjustment pursuant to preceding clause (i)).
-84-
<PAGE>
"Agreement" shall mean this Credit Agreement, as modified,
supplemented (including, without limitation, pursuant to Tranche C Supplements),
amended, restated, extended, renewed, refinanced or replaced from time to time.
"Annualized Corporate Overhead Amount" shall mean, for any period, the
amount of corporate overhead for the Borrower and its Subsidiaries determined on
a consolidated basis for the last three fiscal months in such period multiplied
by four.
"Applicable B Margin" shall mean in the case of Tranche B Term Loans
maintained as (x) Base Rate Loans, 1.75% and (y) Eurodollar Loans, 2.75%.
"Applicable C Margin" shall mean, with respect to Tranche C Term Loans
incurred under a Tranche C Term Loan Sub-Facility, the percentages set forth in
the applicable Tranche C Supplement, provided that in no event shall the
--------
Applicable C Margin exceed in the case of (x) Base Rate Loans, 4.00% and (y)
Eurodollar Loans, 5.00%.
"Applicable Commitment Commission Percentage" and the "Applicable A/RF
Margin" shall mean, on any date, the percentage per annum set forth below
opposite the Consolidated Leverage Ratio indicated to have been achieved on such
date:
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE A/RF
COMMITMENT APPLICABLE A/RF MARGIN FOR
CONSOLIDATED COMMISSION MARGIN FOR BASE RATE EURODOLLAR
LEVEL LEVERAGE RATIO PERCENTAGE LOANS LOANS
<S> <C> <C> <C> <C>
1 Less than 3.00:1.00 0.250% 0% 1.0%
2 Greater than or equal 0.300% 0.250% 1.250%
to 3.00:1.00 but less
than 3.50:1.00
3 Greater than or equal 0.350% 0.500% 1.500%
to 3.50:1.00 but less
than 4.00:1.00
4 Greater than or equal 0.375% 0.750% 1.750%
to 4.00:1.00 but less
than 4.50:1.00
</TABLE>
-85-
<PAGE>
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE A/RF
COMMITMENT APPLICABLE A/RF MARGIN FOR
CONSOLIDATED COMMISSION MARGIN FOR BASE RATE EURODOLLAR
LEVEL LEVERAGE RATIO PERCENTAGE LOANS LOANS
<S> <C> <C> <C> <C>
5 Greater than or equal 0.375% 1.000% 2.000%
to 4.50:1.00 but less
than 5.00:1.00
6 Greater than or equal 0.425% 1.125% 2.125%
to 5.00:1.00 but less
than 5.50:1.00
7 Greater than or equal 0.475% 1.250% 2.250%
to 5.50:1.00 but less
than 6.00:1.00
8 Greater than or equal 0.500% 1.375% 2.375%
to 6.00:1.00
</TABLE>
Notwithstanding anything to the contrary contained in the table set
forth above, if at least $200,000,000 of gross cash proceeds are received within
twelve months after the Original Effective Date from the issuance of New
Subordinated Notes or shares of equity, and so long as all the Net Debt Proceeds
or Net Equity Proceeds, as the case may be, therefrom are used (x) first, to
repay any then outstanding Revolving Loans and (y) to the extent in excess
thereof, are used in the business of the Borrower and its Subsidiaries prior to
any further incurrence of Revolving Loans, the table set forth below shall
instead be applicable for purposes of determining the Applicable Commitment
Commission Percentage and Applicable Margin:
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE A/RF APPLICABLE A/RF
COMMITMENT MARGIN FOR MARGIN FOR
CONSOLIDATED COMMISSION BASE RATE EURODOLLAR
LEVEL LEVERAGE RATIO PERCENTAGE LOANS LOANS
<S> <C> <C> <C> <C>
1 Less than 3.00:1.00 0.250% 0% 1.0%
</TABLE>
-86-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
2 Greater than or equal 0.300% 0.125% 1.125%
to 3.00:1.00 but less
than 3.50:1.00
3 Greater than or equal 0.325% 0.250% 1.250%
to 3.50:1.00 but less
than 4.00:1.00
4 Greater than or equal 0.350% 0.375% 1.375%
to 4.00:1.00 but less
than 4.50:1.00
5 Greater than or equal 0.375% 0.500% 1.500%
to 4.50:1.00 but less
than 5.00:1.00
6 Greater than or equal 0.375% 0.625% 1.625%
to 5.00:1.00 but less
than 5.50:1.00
7 Greater than or equal 0.375% 0.750% 1.750%
to 5.00:1.00 but less
than 6.00:1.00
8 Greater than or equal 0.425% 0.875% 1.875%
to 6.00:1.00
</TABLE>
Notwithstanding anything to the contrary contained in the tables set
forth above (i) if the Borrower has failed to deliver the financial statements
required to be delivered pursuant to Section 8.01(a) and (b) as at the end of
the fiscal quarter or year, as the case may be, by the date required pursuant to
Section 8.01(a) or (b), as the case may be, the Applicable Commitment Commission
Percentage and Applicable Margin for each day during which such failure
continues unremedied shall be computed as if the Consolidated Leverage Ratio
were at Level 8 and (ii) the Applicable Commitment Commission Percentage and the
Applicable Margin for each day during which a Default under Section 10.05 or an
Event of Default continues unremedied shall be computed as if the Consolidated
Leverage Ratio were at Level 8.
-87-
<PAGE>
"Applicable Margin" shall mean each of the Applicable A/RF Margin,
Applicable B Margin and Applicable C Margin.
"A/RF Maturity Date" shall mean December 31, 2002.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit I (appropriately
completed).
"Authorized Officer" of any Credit Party shall mean any of the
President, the Chief Financial Officer or any Vice-President of such Credit
Party or any other officer of such Credit Party which is designated in writing
to the Administrative Agent by any of the foregoing officers of such Credit
Party as being authorized to give such notices under this Agreement.
"Available Maximum Tranche C Term Loan Amount" shall mean an amount
equal to (i) at any time prior to January 1, 1999 (x) $200,000,000 less (y) the
amount of the Total Original Tranche B Term Loan Commitment plus (z) at any time
on or after September 1, 1998, the amount by which the Total Original Tranche B
Term Loan Commitment exceeds the aggregate principal amount of the Tranche B
Term Loans outstanding on September 1, 1998 and (ii) at any time on or after
January 1, 1999, the Maximum Tranche C Permitted Amount.
"B Maturity Date" shall mean December 31, 2003.
"Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to Section 1.13,
13.04(b) or 13.04(c).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) or the failure of a Bank to make available its portion of any
Borrowing (including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) or (ii) a Bank having notified in
writing the Borrower and/or the Administrative Agent that it does not intend to
comply with its obligations under Section 1.01(a), (b), (c), (d), (e) or (f) or
Section 2, in case of either clause (i) or (ii) as a result of any takeover or
control (including, without limitation, as a result of the occurrence of any
event of the type described in Section 10.05 with respect to such Bank) of such
Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the higher of (i) the rate which is
1/2 of 1% in excess of the Federal Funds Rate and (ii)
the Prime Lending Rate.
-88-
<PAGE>
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each
other Loan designated or deemed designated as such by the Borrower at the time
of the incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan from all the
Banks (or from the Swingline Bank in the case of Swingline Loans) on a given
date (or resulting from a conversion or conversions on such date) having in the
case of Eurodollar Loans the same Interest Period, provided that Base Rate Loans
--------
incurred pursuant to Section 1.10(b) shall be considered part of the related
Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York, New York a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.
"C Maturity Date" shall mean the maturity date for each Tranche C Term
Loan Sub-Facility as set forth in the Tranche C Supplement for such Tranche C
Term Loan Sub-Facility.
"CapEx Cumulative Basket" shall mean at any time an amount equal to
(x) $10,000,000 plus $5,000,000 for each January 1 which has occurred since the
Original Effective Date and prior to such time (other than January 1, 1998) less
(y) the amount theretofore expended by the Borrower and its Subsidiaries to make
Capital Expenditures pursuant to Section 9.07(d) during the period commencing on
October 1, 1997 and ending at such time.
"CapEx Test Period" shall mean on any date of determination the period
of eight consecutive fiscal quarters or 24 consecutive fiscal months, as the
case may be, ended on the last day of the then most recently ended Test Period.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, and, without duplication, the amount
of Capitalized Lease Obligations incurred by such Person, provided that Capital
--------
Expenditures shall not include financing costs required to be capitalized.
-89-
<PAGE>
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under generally accepted accounting principles, are or will
be required to be capitalized on the books of such Person, in each case taken at
the amount thereof accounted for as indebtedness in accordance with such
principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
--------
United States is pledged in support thereof) having maturities of not more than
six months from the date of acquisition, (ii) Dollar denominated time deposits
and certificates of deposit of any commercial bank having, or which is the
principal banking subsidiary of a bank holding company having, a long-term
unsecured debt rating of at least "A" or the equivalent thereof from S&P or "A2"
or the equivalent thereof from Moody's with maturities of not more than six
months from the date of acquisition by such Person, (iii) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
and in each case maturing not more than six months after the date of acquisition
by such Person, (v) other Dollar denominated securities issued by any Person
incorporated in the United States rated at least "A-" or the equivalent by S&P
or at least "A3" or the equivalent by Moody's and in each case either (x)
maturing not more than 90 days after the date of acquisition by such Person or
(y) which are subject to a repricing arrangement (such as a Dutch auction) not
more than 90 days after the date of acquisition by such Person which such Person
believes in good faith will permit such Person to sell such security at par in
connection with such repricing mechanism and (vi) investments in money market
funds substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C.A. (S) 9601 et seq.
-- ----
"Change of Control" shall mean (i) any Person or "group" (within the
meaning of Rules 13d-3 or 13d-5 under the Securities Exchange Act (as in effect
on the Restatement Effective Date)), other than the Permitted Holders, shall (A)
have acquired beneficial ownership of 35% or more on a fully diluted basis of
the voting and/or economic interest in the Borrower's capital stock or (B) have
obtained the power (whether or not exercised) to elect a majority of the
Borrowers' directors or (ii) the Board of Directors of the Borrower shall cease
to consist of a majority of Continuing Directors.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
-90-
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder. Section references to
the Code are to the Code, as in effect at the date of this Agreement, and to any
subsequent provision of the Code, amendatory thereof, supplemental thereto or
substituted therefor.
"Collateral" shall mean all property with respect to which any
security interests have been granted (or purported to be granted) pursuant to
any Security Document, including, without limitation, all Pledge Agreement
Collateral and all Security Agreement Collateral.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.05.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
----
whether the Tranche A Term Loan Commitment, Tranche B Term Loan Commitment,
Tranche C Term Loan Commitment under a Tranche C Term Loan Sub-Facility or
Revolving Loan Commitment.
"Commitment Commission" shall mean each of the Tranche A Term Loan
Commitment Commission, Tranche B Term Loan Commitment Commission, the commitment
commission, if any, in respect of the Tranche C Term Loan Commitments and
Revolving Loan Commitment Commission.
"Consolidated Capitalization" shall mean, at any time, the sum of (x)
Consolidated Debt and (y) Consolidated Net Worth at such time.
"Consolidated Current Assets" shall mean, at any time, the amounts
that would be classified as consolidated current assets of the Borrower and its
Subsidiaries in accordance with GAAP in a classified balance sheet.
"Consolidated Current Liabilities" shall mean, at any time, the
amounts that would be classified as consolidated current liabilities of the
Borrower and its Subsidiaries at such time in accordance with GAAP in a
classified balance sheet, but excluding the current portion of any Indebtedness
under this Agreement and any other long-term Indebtedness which would otherwise
be included therein.
"Consolidated Debt" shall mean, at any time, the principal amount of
all Indebtedness of the Borrower and its Subsidiaries at such time (including
any Indebtedness incurred at such time); provided that to the extent that a Net
--------
Escrowed Amount exists at
-91-
<PAGE>
such time, the aggregate principal amount of Indebtedness in respect of the New
Subordinated Notes shall equal the Net Subordinated Notes Amount at such time.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income of the Borrower and its Subsidiaries before Consolidated Interest Expense
and provision for taxes for such period and without giving effect (x) to any
extraordinary gains or losses and (y) to any gains or losses from sales of
assets other than from sales of inventory sold in the ordinary course of
business.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT
for such period, adjusted by adding thereto the amount of all amortization of
intangibles and depreciation that were deducted in arriving at Consolidated EBIT
for such period.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of Consolidated EBITDA to Consolidated Interest Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated cash interest expense reduced by cash interest income (including,
without limitation, investment income on the Escrowed Amount) and other
investment earnings earned on Cash Equivalents of the Borrower and its
Subsidiaries, in each case, for such period (calculated without regard to any
limitations on the payment thereof) plus, without duplication, that portion of
Capitalized Lease Obligations of the Borrower and its Subsidiaries representing
the interest factor for such period, but excluding the amortization of any
deferred financing costs .
"Consolidated Leverage Ratio" shall mean, at any time the ratio of
Consolidated Debt at such time to Consolidated EBITDA for the then most recently
ended Test Period.
"Consolidated Net Income" shall mean, for any Person and period, the
net income (or loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis, provided that (i) in determining
Consolidated Net Income of the Borrower, the net income of any other Person
which is not a Subsidiary of the Borrower or a Subsidiary thereof or is
accounted for by the Borrower or a Subsidiary thereof by the equity method of
accounting shall be included only to the extent of the payment of dividends or
distributions by such other Person to the Borrower or a Subsidiary thereof
during such period, (ii) the net income (or loss) of any other Person (other
than Studio Plus Hotels, Inc.) acquired by such specified Person or a Subsidiary
of such Person in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded, (iii) to the extent Consolidated Net
Income reflects amounts attributable to minority interests in Subsidiaries that
are not Wholly-Owned Subsidiaries of the Borrower, Consolidated Net Income shall
be reduced by the amounts attributable to such minority
-92-
<PAGE>
interests and (iv) in determining Consolidated Net Income of the Borrower, the
net income attributable to Hotel Properties which do not constitute Qualified
Hotel Properties shall be excluded.
"Consolidated Net Worth" shall mean, at any time, the consolidated net
worth of the Borrower and its Subsidiaries at such time, provided that to the
extent Consolidated Net Worth reflects amounts attributable to minority
interests in Subsidiaries that are not Wholly-Owned Subsidiaries of the
Borrower, Consolidated Net Worth shall be reduced by the amount attributable to
such minority interests.
"Consolidated Senior Debt" at any time shall mean Consolidated Debt on
such date, adjusted by excluding therefrom the amount of New Subordinated Notes
reflected in Consolidated Debt on such date.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee (including, without
limitation, as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner) any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
-------- -------
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the Borrower on the
Restatement Effective Date and each other director, if such other director's
nomination for election or appointment to the Board of Directors of the Borrower
is recommended or approved by a majority of the then Continuing Directors or is
recommended or approved by a committee of the Board of Directors a majority of
which is composed of the then Continuing Directors.
-93-
<PAGE>
"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, the
Subsidiary Guaranty, each Security Document and each Manager Subordination
Agreement.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit but shall not include the commencement of a new Interest
Period applicable to a Borrowing of Eurodollar Loans upon the expiration of the
Interest Period applicable thereto or the conversion of Loans of one Type into
Loans of the other Type, provided that, in any such case, the aggregate
outstanding principal amount of Loans is not increased as a result thereof.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividends" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or partners or authorized or made any other distribution, payment or delivery of
property (other than common stock of such Person and, in the case of the
Borrower, other than additional shares of Qualified Preferred Stock) or cash to
its stockholders or partners as such, or redeemed, retired, purchased or
otherwise acquired, directly or indirectly, for a consideration any shares of
any class of its capital stock or any partnership interests out standing on or
after the Original Effective Date (or any options or warrants issued by such
Person with respect to its capital stock or partnership interest), or set aside
any funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock or any partnership interests of such Person
outstanding on or after the Original Effective Date (or any options or warrants
issued by such Person with respect to its capital stock or partnership
interest). Without limiting the foregoing, "Dividends" with respect to any
Person shall also include all payments (other than as excluded above) made or
required to be made by such Person with respect to any stock appreciation
rights, plans, equity incentive or achievement plans or any similar plans or
setting aside of any funds for the foregoing purposes.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
incorporated or organized in the Untied States or any State or territory
thereof.
-94-
<PAGE>
"Drawing" shall have the meaning provided in Section 2.05(b).
"EBITDA" shall mean for any period in respect of the Qualified Hotel
Properties, net income of the Qualified Hotel Properties for such period before
interest expense, provisions for taxes and depreciation and amortization charges
for such period for the Qualified Hotel Properties, provided that if a Qualified
Hotel Property is not owned by a Wholly-Owned Subsidiary of the Borrower, the
net income of such Qualified Hotel Property shall be reduced by the amounts
attributable to such minority interests.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in Section
5.05.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, formal demands, demand letters, claims,
liens, notices of non-compliance or violation, investigations or proceedings
relating in any way to any Environmental Law or any permit issued, or any
approval given, under any such law (hereafter "Claims"), including, without
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief in connection with alleged injury or threat of
injury to health, safety or the environment due to the presence of Hazardous
Materials.
"Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, written guideline,
written policy and rule of common law now or hereafter in effect and in each
case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgement
relating to the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 U.S.C.A. (S) 2601 et seq., the Toxic Substances Control Act, 15 U.S.C.
-- ----
(S) 2601 et seq.; the Clean Air Act, 42 U.S.C.A. (S) 7401 et seq.; the Safe
-- ---- -- ----
Drinking Water Act, 42 U.S.C.A. (S) 3803 et seq.; the Oil Pollution Act of 1990,
-- ----
33 U.S.C.A. (S) 2701 et seq.; the Emergency Planning and the Community
-- ----
Right-to-Know Act of 1986, 42 U.S.C.A. (S) 11001 et seq., the Hazardous Material
-- ----
Transportation Act, 49 U.S.C.A. (S) 1801 et seq. and the Occupational Safety and
-- ----
Health Act, 29 U.S.C.A. (S) 651 et seq.; and any state and local or foreign
-- ----
counterparts or equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued
-95-
<PAGE>
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower or a Subsidiary of the Borrower would
be deemed to be a "single employer" (i) within the meaning of Section 414(b),
(c), (m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary
of the Borrower being or having been a general partner of such person.
"Escrowed Amount" shall mean the portion of the proceeds of the New
Subordinated Notes which is deposited in an escrow account in accordance with
the terms of the documentation in respect of the New Subordinated Notes and is
used to make payments of principal or interest in respect of the New
Subordinated Notes and any cash investment income earned thereon to the extent
actually received.
"Escrowed Securities" shall have the meaning provided in Section
9.05(ix).
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean for any Interest Determination Date with
respect to an Interest Period for a Eurodollar Loan, the rate per annum obtained
by dividing (i)(a) per annum rate for deposits in Dollars for a period
--------
corresponding to the duration of the relevant Interest Period which appears on
Telerate Page 3750 at approximately 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 on
such Interest Determination Date, per annum rate (rounded upward to the nearest
1/16 of one percent) at which deposits in Dollars are offered by Administrative
Agent to first-class banks in the London interbank market, in the approximate
amount of Administrative Agent's relevant Eurodollar Loan and having a maturity
approximately equal to such Interest Period, at approximately 11:00 a.m. (London
time) on such Interest Determination Date by (ii) a percentage equal to 100%
--
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves required by applicable law) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D). The Eurodollar Rate shall be rounded to the next higher multiple
of 1/100 of 1% if the rate is not such a multiple. The reference to Telerate
Page 3750 in this definition shall be construed to be a reference to the
relevant page or any other page that may replace such page on the Telerate
service or any other service that may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for deposits in Dollars.
-96-
<PAGE>
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (i)
the sum of (a) Adjusted Consolidated Net Income for such period and (b) the
decrease, if any, in Adjusted Consolidated Working Capital from the first day to
the last day of such period, minus (ii) the sum of (a) the amount of all Capital
Expenditures made by the Borrower and its Subsidiaries pursuant to Sections
9.07(a), (b) and (d) during such period, (b) the aggregate principal amount of
permanent principal payments of Indebtedness for borrowed money of the Borrower
and its Subsidiaries (other than repayments of Loans, provided that repayments
--------
of Loans shall be deducted in determining Excess Cash Flow if such repayments
were (x) required as a result of a Scheduled Repayment under Section 4.02(b) or
(y) made as a voluntary prepayment with internally generated funds (but in the
case of a voluntary prepayment of Revolving Loans or Swingline Loans, only to
the extent accompanied by a voluntary reduction to the Total Revolving Loan
Commitment in an equal amount)) during such period and (c) the increase, if any,
in Adjusted Consolidated Working Capital from the first day to the last day of
such period.
"Excess Cash Payment Date" shall mean the date occurring 100 days
after the last day of each fiscal year of the Borrower (beginning with its
fiscal year ending December 31, 1998).
"Excess Cash Payment Period" shall mean, with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of the Borrower.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Indebtedness" shall have the meaning provided in Section
7.22.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.05.
"Facility Manager" shall mean each manager of a Qualified Hotel
Property owned or leased by the Borrower or any Subsidiary Guarantor.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate 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,
-97-
<PAGE>
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 the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final A Draw Date" shall mean July 31, 1998.
"Final B Draw Date" shall mean September 1, 1998.
"Foreign Pension Plan" means any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by the Borrower or any one or
more of its Subsidiaries primarily for the benefit of employees of the Borrower
or such Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower other
than a Domestic Subsidiary.
"GAAP" shall have the meaning provided in Section 13.07(a).
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous wastes," "restrictive
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or
"pollutants," or words of similar meaning and regulatory effect under any
applicable Environmental Law; and (c) any other chemical, material or substance,
the Release of which is prohibited, limited or regulated by any governmental
authority.
"Hotel Property" shall mean each hotel owned or leased by the Borrower
or any of its Subsidiaries (including the furniture, fixture and equipment
thereon), provided that the term "Hotel Property" shall not include any casino
--------
or gaming hotel.
-98-
<PAGE>
"Hotel Property Management Agreement" shall mean an agreement, in form
and substance reasonably satisfactory to the Agents, with respect to the
management of a Hotel Property.
"IBJ" shall mean The Industrial Bank of Japan, Limited, in its
individual capacity.
"Immaterial Subsidiary" shall mean any Subsidiary of the Borrower that
does not have assets with a fair market value or book value in excess of
$1,000,000 and has not had revenues in excess of $1,000,000 for the Test Period
then most recently ended and whose obligations are non-recourse to the Borrower
or any other Subsidiary of the Borrower that is not an Immaterial Subsidiary,
provided that (x) a Subsidiary shall not be considered to be an Immaterial
Subsidiary for purposes of Sections 10.05 and 10.08 if more than 15 other
Subsidiaries are affected by the events, acts or conditions described in
Sections 10.05 and 10.08 and (y) the EBITDA of Qualified Hotel Properties of
Immaterial Subsidiaries affected by the events, acts or conditions described in
Sections 10.05 and 10.08 shall not be included in the determination of Property
Level EBITDA or Consolidated Net Income.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit issued for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any
Lien on any property owned by such Person, whether or not such Indebtedness has
been assumed by such Person (provided that, if the Person has not assumed or
--------
otherwise become liable in respect of such Indebtedness, such Indebtedness shall
be deemed to be in an amount equal to the fair market value of the property to
which such Lien relates as determined in good faith by such Person), (iv) the
aggregate amount required to be capitalized under leases under which such Person
is the lessee, (v) all obligations of such person to pay a specified purchase
price for goods or services, whether or not delivered or accepted, i.e., take-
----
or-pay and similar obligations, (vi) all Contingent Obligations of such Person,
and (vii) all obligations under any Interest Rate Protection Agreement or Other
Hedging Agreement or under any similar type of agreement or arrangement.
Notwithstanding the foregoing, Indebtedness shall not include obligations under
(or in respect of) construction contracts (to the extent such obligations do not
constitute Indebtedness for borrowed money), trade payables and accrued expenses
incurred by any Person in accordance with its customary practices and in the
ordinary course of business of such Person.
-99-
<PAGE>
"Initial Borrowing Date" shall mean the date occurring on or after the
Original Effective Date on which the initial Credit Event under the Original
Credit Agreement occurred.
"Initial Hotel Properties" shall mean the Hotel Properties listed on
Schedule III.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement, interest rate floor agreement or other similar agreement
or arrangement.
"Investment" shall have the meaning provided in Section 9.05.
"Issuing Bank" shall mean IBJ and any other Bank which at the request
of the Borrower and with the consent of the Administrative Agent (which consent
shall not be unreasonably withheld) agrees, in such Bank's sole discretion, to
become an Issuing Bank for the purpose of issuing Letters of Credit pursuant to
Section 2. The only Issuing Bank on the Restatement Effective Date is IBJ.
"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under any lease or
license of land, improvements and/or fixtures.
"L/C Supportable Obligations" shall mean (i) obligations of the
Borrower or any of its Subsidiaries incurred in the ordinary course of business
with respect to workers compensation, surety bonds and other similar statutory
obligations and (ii) such other obligations of the Borrower or any of its
Subsidiaries as are otherwise permitted to exist pursuant to (or otherwise not
restricted by) the terms of this Agreement.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
-100-
<PAGE>
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, with out limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Tranche A Term Loan, each Tranche B Term Loan
and each Tranche C Term Loan, each Revolving Loan and each Swingline Loan.
"Management Agreements" shall have the meaning provided in Section
5.05.
"Manager Subordination Agreement" shall mean an agreement, in form and
substance reasonably satisfactory to the Agents, in respect of a Hotel Property
whereby, inter alia, the manager thereof subordinates certain of the
----- ----
obligations, owed to it under the respective Hotel Property Management
Agreement, to the payment of the Obligations hereunder.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(f).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Leases" shall have the meaning provided in Section 5.05.
"Maturity Date" shall mean, with respect to any Tranche of Loans, the
A/RF Maturity Date, the B Maturity Date, the C Maturity Date or the Swingline
Expiry Date, as the case may be.
"Maximum Swingline Amount" shall mean $10,000,000.
"Maximum Tranche C Permitted Amount" shall mean an amount equal to,
the difference of (i) $300,000,000, less (ii) the amount of the Total Original
Tranche B Term Loan Commitment, provided that the Maximum Tranche C Permitted
--------
Amount shall be increased on September 1, 1998, by the amount by which the Total
Original Tranche B Term Loan Commitment exceeds the aggregate principal amount
of Tranche B Term Loans on such date.
"Minimum Borrowing Amount" shall mean (i) for Swingline Loans,
$250,000, (ii) for Tranche C Term Loans, $25,000,000 and (iii) for all other
Loans, $2,500,000.
-101-
<PAGE>
"Moody's" shall mean Moody's Investors Service, Inc.
"MSSF" shall mean Morgan Stanley Senior Funding, Inc., in its
individual capacity.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Net Debt Proceeds" shall mean, with respect to each incurrence of
Indebtedness for borrowed money by any Person, the cash proceeds (net of
underwriting discounts and commissions and other reasonable costs associated
therewith) received by such Person from the respective incurrence of such
Indebtedness for borrowed money.
"Net Equity Proceeds" shall mean, with respect to each issuance or
sale of any equity by any Person or any capital contribution to such Person, the
cash proceeds (net of underwriting discounts and commissions and other
reasonable costs associated therewith) received by such Person from the
respective sale or issuance of its equity or from the respective capital
contribution.
"Net Escrowed Amount" shall mean the Escrowed Amount less any amounts
that are released from time to time from the relevant escrow account in order to
make payments on or in respect of the New Subordinated Notes.
"Net Insurance Proceeds" shall mean, with respect to any Recovery
Event, the cash proceeds (net of reasonable costs and taxes incurred in
connection with such Recovery Event) received by the respective Person in
connection with the respective Recovery Event.
"Net Sale Proceeds" shall mean, for any asset sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the reasonable costs of such sale
(including fees and commissions, payments of unassumed liabilities relating to
the assets sold and required payments of any Indebtedness (other than
Indebtedness under the Credit Documents or any Indebtedness owned to the
Borrower or a Subsidiary thereof) which is secured by the respective assets
which were sold), and the incremental taxes paid or payable as a result of such
asset sale.
"Net Subordinated Notes Amount" shall mean the aggregate principal
amount originally issued pursuant to the New Subordinated Notes less the Net
Escrowed Amount.
"New Bank" shall mean each of the Persons listed on Schedule I that is
not an Original Bank.
-102-
<PAGE>
"New Subordinated Notes" shall have the meaning provided in Section
9.04(viii).
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Note" shall mean each Tranche A Term Note, each Tranche B Term Note,
each Tranche C Term Note, each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 1251 Avenue of the Americas, New York, NY 10020-1104 Attention: Chris
Droussiotis, with a copy to IBJ Agent Services, One State Street, New York, NY
10004 Attention: Meredith McRae, or such other office as the Administrative
Agent may hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to any Agent, the
Collateral Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
"Original Banks" shall mean each Person which is a Bank under, and as
defined in, the Original Credit Agreement on the Restatement Effective Date.
"Original Credit Agreement" shall have the meaning provided in the
first WHEREAS clause to this Agreement.
"Original Effective Date" shall mean the Effective Date under, and as
defined in, the Original Credit Agreement.
"Original Letters of Credit" shall mean the letters of credit listed
on Schedule IX and previously issued under the Original Credit Agreement.
"Original Revolving Loan Commitment" shall mean, with respect to each
Bank, the "Commitment" of such Bank under, and as defined in, the Original
Credit Agreement.
"Original Revolving Loans" shall mean the "Revolving Loans" under, and
as defined in, the Original Credit Agreement.
-103-
<PAGE>
"Original Total Revolving Loan Commitment" shall mean the "Total
Commitment" under, and as defined in, the Original Credit Agreement.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Administrative Agent
located at One State Street, New York, NY 10004, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage) the numerator of which is the Revolving Loan Commitment of such
Bank at such time and the denominator of which is the Total Revolving Loan
Commitment at such time, provided that if the Percentage of any Bank is to be
--------
determined after the Total Revolving Loan Commitment has been terminated, then
the Percentages of the Banks shall be determined immediately prior (and without
giving effect) to such termination.
"Permitted CapEx Amount" shall mean on any date of the determination
thereof an amount equal to (i) 5% of the aggregate gross revenues from Qualified
Hotel Properties owned or leased by the Borrower or any of its Wholly-Owned
Subsidiaries for the CapEx Test Period last ended less (ii) the amount
theretofore expended by the Borrower and its Subsidiaries to make Capital
Expenditures pursuant to Section 9.07(a) during the period commencing on the
later of October 1, 1997 or the first day of such CapEx Test Period and ending
on such date of determination.
"Permitted Encumbrances" shall mean, with respect to any Real
Property, such exceptions to title (i) which, individually or in the aggregate,
do not materially detract from the value of such Real Property or (ii) are
otherwise acceptable to the Agents in their reasonable discretion.
"Permitted Facility Manager" shall mean, with respect each Qualified
Hotel Property, a Wholly-Owned Subsidiary of the Borrower or another hotel
management company in good standing.
"Permitted Holders" shall mean the directors of the Borrower on the
Restatement Effective Date, their spouses and any one or more of their lineal
descendants
-104-
<PAGE>
and their spouses or any trust which has been created solely for the benefit of
any such Person or any corporation, partnership or other entity controlled by
any such Person.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, limited liability
company, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate, and each such plan for the five year period immediately
following the latest date on which the Borrower, or a Subsidiary of the Borrower
or an ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of
September 26, 1997, executed and delivered pursuant to Section 5.06 of the
Original Credit Agreement, as same may from time to time be amended, modified or
supplemented (including by the addition of certain additional Credit Parties as
parties thereto as required by Section 5.08 hereof) in accordance with the terms
thereof.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreement.
"Pledged Securities" shall have the meaning provided in the Pledge
Agreement.
"Pledged Stock" shall have the meaning provided in the Pledge
Agreement.
"Preliminary Offering Memorandum" shall mean the Offering Memorandum,
dated as of February 19, 1998, in respect of the 9.15% Senior Subordinated
Notes.
"Prime Lending Rate" shall mean the rate which the Administrative
Agent announces from time to time as its prime lending rate, the Prime Lending
Rate to change when and as such prime lending rate changes. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. The Administrative Agent may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
-105-
<PAGE>
"Pro Forma Borrowing Interest Coverage Ratio" shall mean, for any date
of determination (which in the case of a determination of whether the Specific
Borrowing Conditions are satisfied is the date of the related Credit Event), the
ratio of (x) Run Rate EBITDA for the Test Period then most recently ended to (y)
Consolidated Interest Expense for such Test Period determined on a pro forma
basis as if any Indebtedness outstanding on such date of determination
(including any Indebtedness incurred on such date of determination) had been
incurred on the first day of such Test Period and had remained outstanding
throughout such Test Period; provided that, in case of any Test Period ended
--------
before October 1, 1998, for purposes of calculating Pro Forma Borrowing Interest
Coverage Ratio only, Consolidated Interest Expense shall mean for each such
period (x) an amount equal to the actual Consolidated Interest Expense for the
period from October 1, 1997 through the date of determination, multiplied by (y)
a fraction the numerator of which is 360 and the denominator of which is the
number of days actually elapsed during such period.
"Pro Forma Borrowing Leverage Ratio" shall mean for any date of
determination (which in the case of a determination of whether the Specific
Borrowing Conditions are satisfied is the date of the related Credit Event), the
ratio of (x) Consolidated Debt on such date to (y) Run Rate EBITDA for the Test
Period then most recently ended.
"Pro Forma Borrowing Senior Debt Leverage Ratio" shall mean on any
date a ratio calculated as provided in the definition of Pro Forma Borrowing
Leverage Ratio contained herein, provided that the term "Consolidated Senior
Debt" shall be deemed inserted in lieu of the term "Consolidated Debt" in clause
(x) of the definition of Pro Forma Borrowing Leverage Ratio.
"Projections" mean the financial assumptions and projections prepared
by the Borrower, dated February, 1997 and delivered to Agents and the Banks
prior to the Restatement Effective Date.
"Property Level EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) in the case of each Qualified Hotel Property
which has been operational for at least twelve months during such period
(collectively, the "Pool I Properties"), the aggregate actual EBITDA for such
period for all such Pool I Properties, plus (ii) in the case of each Qualified
Hotel Property which has been operational for less than twelve months during
such period (collectively, the "Pool II Properties") the aggregate Annualized
Property Level EBITDA for such period for all such Pool II Properties. For
purposes hereof, "Annualized Property Level EBITDA" shall mean for any period
(i) the average occupancy rate for the Pool II Properties for the last month in
such period, multiplied by the average weekly rate for the Pool II Properties
for the last month in such period; divided by (ii) the product of the average
occupancy rate for the Pool I Properties for the last month in such period and
the average weekly rate for the Pool I Properties for
-106-
<PAGE>
the last month in such period; multiplied by (iii) the Pool I Properties' actual
EBITDA per room for such period; multiplied by (iv) the number of open rooms at
Pool II Properties on the last day of such period.
"Qualified Convertible Subordinated Notes" shall mean New Subordinated
Notes issued by the Borrower which (i) are convertible into common equity of the
Borrower, (ii) bear interest (after giving effect to any original issue
discount) at a rate per annum not to exceed 7.50% and (iii) mature not less than
one year after the latest C Maturity Date.
"Qualified Hotel Property" shall mean (i) each Initial Hotel Property
and (ii) any other Hotel Property meeting, or after construction thereof will
meet, each of the following criteria:
(i) such Hotel Property is a full-service hotel, limited service
hotel or extended stay hotel;
(ii) such Hotel Property has more than 50 rooms or units, as the case
may be;
(iii) such Hotel Property carries an Extended Stay America, StudioPLUS
or Crossland brand/flag or which, in the case of an acquisition, within six
months following such acquisition, will be converted to an Extended Stay
America, StudioPLUS or Crossland brand/flag;
(iv) such Hotel Property is a wholly-owned fee interest or leasehold
interest; provided in the case of a leasehold, the original term thereof
(including any rights of renewal) shall not be less than ten years;
(v) such Hotel Property is located in the United States or Canada;
and
(vi) all of the requirements set forth in Section 8.11 with respect
to such Hotel Property have been satisfied in accordance with the
provisions of such Section;
provided that notwithstanding the foregoing, upon the written consent of the
- --------
Required Banks a Hotel Property not otherwise meeting the above criteria shall
be a Qualified Hotel Property so long as (x) each such Bank shall have ten
Business Days from the date of receipt of the information described in Section
8.11 to either approve or disapprove of the construction or acquisition of such
Hotel Property, with a failure by any Bank to respond within such ten Business
Day period to be deemed to constitute approval; and provided further that
-------- -------
notwithstanding the foregoing, the Borrower may designate any future Hotel
-107-
<PAGE>
Property to be a Qualified Hotel Property so long as the aggregate cost of all
such Hotel Properties so included pursuant to this proviso does not exceed
$25,000,000.
"Qualified Non-Convertible Subordinated Notes" shall mean all New
Subordinated Notes other than the Qualified Convertible Subordinated Notes.
"Qualified Preferred Stock" shall mean any preferred stock of the
Borrower so long as the terms of any such preferred stock (i) do not contain any
mandatory put, redemption, repayment, sinking fund or other similar provision
occurring before December 31, 2003, (ii) do not require the cash payment of
dividends prior to December 31, 2003 (provided that the terms of Qualified
Preferred Stock shall provide that the payment of such Dividends are otherwise
subject to the provisions set forth in this Agreement, as same may be amended,
modified, replaced or refinanced from time to time), (iii) do not contain any
covenants that are more restrictive in any material respect than those covenants
contained in any indenture in respect of the New Subordinated Notes, (iv) do not
grant the holders thereof any voting rights except for (x) voting rights
required to be granted to such holders under applicable law and (y) limited
customary voting rights on fundamental matters such as mergers, consolidations,
sales of all or substantially all of the assets of the Borrower, liquidations
involving the Borrower or amendments to any of the covenants set forth therein,
and (v) are otherwise reasonably satisfactory to the Agents.
"Quarterly Payment Date" shall mean the last Business day of each
March, June, September and December occurring after the Original Effective Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. (S) 6901 et seq.
-- ---
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation awards payable (i)
by reason of theft, loss, physical destruction or damage or any other similar
event with respect to any property or assets of the Borrower or any of its
Subsidiaries and (ii) under any policy of insurance required to be maintained
under Section 8.03.
"Register" shall have the meaning provided in Section 13.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
-108-
<PAGE>
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Related Business" shall mean the business of developing, owning and
operating lodging facilities, conducted by the Borrower and its Subsidiaries
(or, if the reference is to an Unrestricted Subsidiary, by such Unrestricted
Subsidiary) and any and all related businesses in support of and ancillary to or
reasonably related to such business of developing, owning and operating lodging
facilities.
"Release" shall have the meaning provided such term in CERCLA.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
outstanding Term Loans (and Term Loan Commitments, if any) and Revolving Loan
Commitments (or after the termination of the Revolving Loan Commitments,
outstanding Revolving Loans and Percentage of Swingline Loans and Letter of
Credit Outstandings) represent an amount greater than 50% of the sum of all
outstanding Term Loans (or Term Loan Commitments, if any) of Non-Defaulting
Banks and the Total Revolving Loan Commitment (or after the termination of the
Total Revolving Loan Commitment, the sum of the then total outstanding Revolving
Loans of Non-Defaulting Banks and the aggregate
-109-
<PAGE>
Percentages of all Non-Defaulting Banks of the total outstanding Swingline Loans
and Letter of Credit Outstandings at such time).
"Restatement Effective Date" shall have the meaning provided in
Section 13.10.
"Revolving Loan" shall have the meaning provided in Section 1.01(d).
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column entitled
"Revolving Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"Revolving Loan Commitment Commission" shall have the meaning provided
in Section 3.01(a)(iii).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"Run Rate EBITDA" shall mean, for any period, Property Level EBITDA
(including Qualified Hotel Properties only) for such period less the Annualized
Corporate Overhead Amount for such period.
"Run Rate Leverage Ratio" shall mean, at any time, the ratio of
Consolidated Debt at such time to Run Rate EBITDA for the then most recently
ended Test Period.
"S&P" shall mean Standard & Poor's Ratings Services.
"Schedule Repayments" shall mean Tranche B Term Loan Scheduled
Repayments and Tranche C Term Loan Scheduled Repayments.
"SEC" shall have the meaning provided in Section 8.01(g).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b).
"Secured Creditors" shall have the meaning provided in the respective
Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
-110-
<PAGE>
"Security Agreement" shall mean the Security Agreement, dated as of
September 26, 1997, executed and delivered pursuant to Section 5.07 of the
Original Credit Agreement, as same may from time to time be amended, modified or
supplemented (including by the addition of certain additional Credit Parties as
parties thereto as required by Section 5.08 hereof) in accordance with the terms
thereof.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean the Pledge Agreement and the Security
Agreement.
"Senior Debt Leverage Ratio" shall mean on any date a ratio calculated
as provided in the definition of Run Rate Leverage Ratio contained herein,
provided that the term "Consolidated Senior Debt" be deemed inserted in lieu of
the term "Consolidated Debt" appearing therein.
"Shareholders' Agreements" shall have the meaning provided in Section
5.05.
"Special Financial Statements" shall mean for any date the
consolidated balance sheet of the Borrower and its Subsidiaries as at such date
and the related year to date consolidated statements of income and retained
earnings and statements of cash flow for the period commencing on the first day
of the fiscal year in which such date occurs and ending on such date, all of
which shall be certified by the Chief Financial Officer of the Borrower, subject
to normal recurring adjustments.
"Specific Borrowing Conditions" shall mean in respect of any Credit
Event that each of the following tests shall have been satisfied on the date of
such Credit Event:
(i) the Pro Forma Borrowing Leverage Ratio determined on the date of
such Credit Event shall be less than the ratio set forth below opposite the
period in which such date occurs:
Year Ratio
---- -----
1998 6.0:1.0
1999 5.5:1.0
2000
and thereafter 5.0:1.0; and
-111-
<PAGE>
(ii) the Pro Forma Borrowing Interest Coverage Ratio determined on
the date of such Credit Event shall be greater than the ratio set forth
below opposite the period in which such date occurs:
Year Ratio
---- -----
1998 1.75:1.0
1999 2.00:1.0
2000
and thereafter 2.50:1.0; and
; provided that notwithstanding the foregoing, (x) if at least $200,000,000
of gross cash proceeds are received within twelve months after the Original
Effective Date from the issuance of New Subordinated Notes or shares of
capital stock of the Borrower and (y) so long as 100% of the net cash
proceeds therefrom are used (A) first, to repay any then outstanding
Revolving Loans and (B) to the extent in excess thereof, are used in the
business of the Borrower and its Subsidiaries prior to the further
incurrence of Revolving Loans, then "Specific Borrowing Conditions" shall
instead mean in respect of any Credit Event that each of the following
tests shall have been satisfied on the date of such Credit Event:
(i) the Pro Forma Borrowing Leverage Ratio determined on the date of
such Credit Event shall be less than the ratio set forth below opposite the
period in which such date occurs:
Year Ratio
---- -----
1998 6.5:1.0
1999 6.0:1.0
2000
and thereafter 5.5:1.0; and
(ii) the Pro Forma Borrowing Interest Coverage Ratio determined on
the date of such Credit Event shall be greater than the ratio set forth
below opposite the period in which such date occurs:
Year Ratio
---- -----
1998 1.75:1.0
1999 2.00:1.0
2000
and thereafter 2.50:1.0; and
-112-
<PAGE>
(iii) the Pro Forma Borrowing Senior Debt Leverage Ratio determined on
the date of such Credit Event shall be less than the ratio set forth below
opposite the period in which such date occurs:
Year Ratio
---- -----
1998 4.5:1.0
1999 4.0:1.0
2000
and thereafter 3.5:1.0
"Standby Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Stated Amount" of each Letter of Credit shall mean, at any time, the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time. Notwithstanding the foregoing (and except for purposes of the
definition of Unrestricted Subsidiary contained herein) an Unrestricted
Subsidiary shall be deemed not to be a Subsidiary of the Borrower or any of its
other Subsidiaries for purposes of this Agreement.
"Subsidiary Guarantor" shall mean each Subsidiary of the Borrower
designated as a "Subsidiary Guarantor" on Schedule IV hereto or which executes a
guarantee after the Restatement Effective Date pursuant to Section 9.16.
"Subsidiaries Guaranty" shall mean the Subsidiaries Guaranty, dated as
of September 26, 1997, executed and delivered pursuant to Section 5.08 of the
Original Credit Agreement, as same may from time to time be amended, modified or
supplemented (including by the addition of certain additional Credit Parties as
parties thereto as required by Section 5.08 hereof) in accordance with the terms
thereof.
"Supplement Effective Date" shall mean with respect to each Tranche C
Supplement, the date on which such Tranche C Supplement (and the Tranche C Term
Loan Commitments under the relevant Tranche C Term Loan Sub-Facility) shall
become effective
-113-
<PAGE>
in accordance with the terms of such Tranche C Supplement, provided that such
--------
effective date shall be no earlier than the date on which the Administrative
Agent actually receives a fully executed counterpart thereof.
"Swingline Bank" shall mean IBJ and its successors and assigns.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the A/RF Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(e).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Agent" shall mean MSSF in its capacity as Syndication
Agent and Arranger for the Banks hereunder.
"Syndication Date" shall have the meaning provided in Section 1.01(b).
"Tax Benefit" shall have the meaning provided in Section 4.04(c).
"Tax Sharing Agreements" shall have the meaning provided in Section
5.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan" shall mean each Tranche A Term Loan, Tranche B Term Loan
and Tranche C Term Loan.
"Term Loan Commitment" shall mean each Tranche A Term Loan Commitment,
each Tranche B Term Loan Commitment, and each Tranche C Term Loan Commitment,
with the Term Loan Commitment of any Bank at any time to equal the sum of its
Tranche A Term Loan Commitment, Tranche B Term Loan Commitment and Tranche C
Term Loan Commitment as then in effect.
"Term Loan Facility" shall mean each of the Tranche A Term Loan
Facility, the Tranche B Term Loan Facility and each Tranche C Term Loan Sub-
Facility.
"Test Period" shall mean in respect of any date, either (i) the period
of four consecutive fiscal quarters of the Borrower last ended prior to such
date for which financial statements have been delivered (or should have been
delivered on or before such date) to the Administrative Agent pursuant to
Section 8.01(a) or (b), as the case may be, or (ii) in the event that the
Borrower so elects, the period of 12 consecutive fiscal months of the Borrower
last ended prior to such date provided that the Borrower shall have delivered to
-114-
<PAGE>
the Administrative Agent Special Financial Statements for the last day of such
period, provided that financial statements have not been delivered (or have not
--------
been required to be delivered) to the Banks pursuant to Section 8.01(a) or (b),
as the case may be, in respect of a fiscal quarter ending after such 12-month
period and prior to such date (provided that for purposes of calculating the
--------
Consolidated Interest Coverage Ratio only for the period ending prior to October
1, 1998, "Test Period" shall mean the period beginning on the first day of the
fiscal quarter beginning on July 1, 1997 and ending on the last day of the
fiscal quarter or month, as the case may be, ended thereafter), in each case
taken as one accounting period.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Original Tranche B Term Loan Commitment" shall mean the Total
Tranche B Term Loan Commitment existing on the Restatement Effective Date
immediately before giving effect to any Tranche B Term Loans incurred on such
date.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks, it being understood that on
the Restatement Effective Date, the Total Revolving Loan Commitment shall equal
$350,000,000.
"Total Tranche A Term Loan Commitment" shall mean, at any time, the
sum of the Tranche A Term Loan Commitments of each of the Banks.
"Total Tranche B Term Loan Commitment" shall mean, at any time, the
sum of the Tranche B Term Loan Commitments of each of the Banks.
"Total Tranche C Term Loan Commitment" shall mean, at any time, in
respect of a Tranche C Term Loan Sub-Facility the sum of the Tranche C Term Loan
Commitments of each of the Banks under such Tranche C Term Loan Sub-Facility.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the Total Revolving Loan Commitment then
in effect less (y) the sum of the aggregate principal amount of Revolving Loans
and Swingline Loans then outstanding plus the then aggregate amount of Letter of
Credit Outstandings.
"Trade Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being five separate Tranches, i.e.,
----
Tranche A Term
-115-
<PAGE>
Loans, Tranche B Term Loans, Tranche C Term Loans, Revolving Loans and Swingline
Loans.
"Tranche A Term Loan" shall have the meaning provided in Section
1.01(a).
"Tranche A Term Loan Borrowing Date" shall mean one or more dates
occurring on and after the Restatement Effective Date and on or prior to the
Final A Draw Date on which Tranche A Term Loans are incurred hereunder.
"Tranche A Term Loan Commitment" shall mean for each Bank, the amount
set forth opposite such Bank's name in Schedule I hereto directly below the
column entitled "Tranche A Term Loan Commitment," as same may be (x) reduced
from time to time pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Sections 1.13 and 13.04(b).
"Tranche A Term Loan Commitment Commission" shall have the definition
provided in Section 3.01(a)(i).
"Tranche A Term Loan Facility" shall mean the credit facility
evidenced by the Tranche A Term Loan Commitments and the Tranche A Term Loans.
"Tranche A Term Note" shall have the meaning provided in Section
1.05(a).
"Tranche B Term Loan" shall have the meaning provided in Section
1.01(b).
"Tranche B Term Loan Borrowing Date" shall mean one or more dates
occurring after the Restatement Effective Date and on or prior to the Final B
Draw Date on which Tranche B Term Loans are incurred hereunder.
"Tranche B Term Loan Commitment" shall mean for each Bank, the amount
set forth opposite such Bank's name in Schedule I hereto directly below the
column entitled "Tranche B Term Loan Commitment," as same may be (x) reduced
from time to time pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Sections 1.13 and 13.04(b).
"Tranche B Term Loan Commitment Commission" shall have the meaning
provided in Section 3.01(a)(ii).
"Tranche B Term Loan Facility" shall mean the credit facility
evidenced by the Tranche B Term Loan Commitments and the Tranche B Term Loans.
-116-
<PAGE>
"Tranche B Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(b)(ii).
"Tranche B Term Note" shall have the meaning provided in Section
1.05(a).
"Tranche C Supplement" shall mean for each Tranche C Term Loan Sub-
Facility, a supplement to this Agreement substantially in the form of Exhibit J
hereto which shall (i) be executed and delivered by the Borrower and each Bank
which is to have a Tranche C Term Loan Commitment under such Tranche C Term Loan
Sub-Facility, (ii) set forth the amount of Tranche C Term Loan Commitment of
each Bank under such Tranche C Term Loan Sub-Facility, (iii) set forth the
maturity date and scheduled amortization of the Tranche C Term Loans to be
incurred under such Tranche C Term Loan Sub-Facility, (iv) set forth the
interest rate, facility fees, commitment commissions and other amounts which are
to be payable in respect of the Tranche C Term Loans and the Tranche C Term Loan
Commitment under such Tranche C Term Loan Sub-Facility, (v) set forth any
additional conditions precedent to the incurrence of Tranche C Term Loans under
such Tranche C Term Loan Sub-Facility, if any, and (vi) set forth the conditions
precedent, if any, to the effectiveness of such Tranche C Supplement. All of the
matters set forth in a Tranche C Supplement shall be subject to the restrictions
and limitations set forth in Section 1.14.
"Tranche C Term Loan" shall have the meaning provided in Section
1.01(c).
"Tranche C Term Loan Commitment" shall mean for each Bank in respect
of a Tranche C Term Loan Sub-Facility, the amount set forth opposite such Bank's
name in Annex I to the Tranche C Supplement for such Tranche C Term Loan Sub-
Facility directly below the column entitled "Tranche C Term Loan Commitment" for
such Tranche C Term Loan Sub-Facility (as such Schedule shall be deemed to have
been amended pursuant to Section 1.01(c)(ii)), as same may be (x) reduced from
to time to time pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y) adjusted
from time to time as a result of assignments to or from such Bank pursuant to
Sections 1.13 and 13.04(b).
"Tranche C Term Loan Facility" shall mean a facility under this
Agreement pursuant to which one or more Banks commit to make a Tranche C Term
Loan or Tranche C Term Loans to the Borrower each of which Tranche C Term Loans
shall constitute a Loan under this Agreement entitled to the benefits hereto and
the other Credit Documents (including, but not limited to, sharing on a pari
----
passu basis the benefits of the Subsidiaries Guaranty and the Security
- -----
Documents).
"Tranche C Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(b)(iii).
-117-
<PAGE>
"Tranche C Term Loan Sub-Facility" shall mean a sub-facility under the
Tranche C Term Loan Facility relating to the commitments of one or more Banks to
make a Tranche C Term Loan or Tranche C Term Loans under such Sub-Facility
having identical interest rates, maturities and scheduled amortizations.
"Tranche C Term Note" shall have the meaning provided in Section
1.05(a).
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year, determined in accordance
with actuarial assumptions at such time consistent with Statement of Financial
Accounting Standards No. 87, exceeds the market value of the assets allocable
thereto.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unrestricted Subsidiary" shall mean any Subsidiary of the Borrower
that, at the time of determination, shall be an Unrestricted Subsidiary (as
designated by the Borrower, as provided below) provided that such Subsidiary
does not and shall not engage, to any substantial extent, in any line or lines
of business activity other than a Related Business. The Borrower may designate
any Person acquired after the Restatement Effective Date to be an Unrestricted
Subsidiary so long as (a) no Default or Event of Default is existing or will
occur as a consequence thereof, and (b) such Subsidiary does not own any equity
interests in, or hold any Lien on any property of, the Borrower or any other
Subsidiary (excluding other Unrestricted Subsidiaries). Any such designation
shall also be deemed to constitute an investment pursuant to Section 9.05(xi) in
an amount equal to the Borrower's and its Subsidiaries' percentage ownership
interest of such Unrestricted Subsidiary of the sum of the net assets (with
assets other than cash and Cash Equivalents valued at fair market value) of such
Subsidiary at the time of the designation (which investment must be permitted to
be made in accordance with the requirements of Section 9.05(xi)). The Borrower
may designate any Unrestricted Subsidiary to be a Subsidiary, provided that no
Default or Event of Default is existing or will occur as a consequence thereof
and the provisions of Section 9.16 are complied with for such Subsidiary at the
time of such designation. Each such designation shall be evidenced by filing
with the Administrative Agent a certified copy of the resolution giving effect
to such designation and
-118-
<PAGE>
an officers' certificate of an Authorized Officer of the Borrower certifying
that such designation complied with the foregoing conditions.
"Unutilized Revolving Loan Commitment" with respect to any Bank at any
time shall mean such Bank's Revolving Loan Commitment at such time, if any, less
the sum of (i) the aggregate outstanding principal amount of Revolving Loans
made by such Bank and (ii) such Bank's Percentage of the Letter of Credit
Outstandings.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, limited liability company,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
SECTION 12. The Agents .
-----------
12.01 Appointment. The Banks hereby designate IBJ as Administrative
-----------
Agent (for purposes of this Section 12, the term "Administrative Agent" shall
include IBJ in its capacity as Collateral Agent pursuant to the Security
Documents) to act as specified herein and in the other Credit Documents. The
Banks hereby designate MSSF as Syndication Agent (for purposes of this Section
12, the term "Syndication Agent" also shall include MSSF in its capacity as
Arranger) to act as specified herein and in the other Credit Documents. Each
Bank hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize, any Agent to
take such action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of such Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. Each Agent may perform any of its duties hereunder by or through its
respective officers, directors, agents, employees or affiliates.
12.02 Nature of Duties. No Agent shall have any duties or
----------------
responsibilities except those expressly set forth in this Agreement and in the
other Credit Documents. Neither any Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of each Agent shall be mechanical and
administrative in nature; no Agent shall have by reason of this Agreement or any
other Credit Document a fiduciary relationship in respect of any Bank or the
holder of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is
-119-
<PAGE>
intended to or shall be so construed as to impose upon any Agent any obligations
in respect of this Agreement or any other Credit Document except as expressly
set forth herein or therein.
12.03 Lack of Reliance on the Agents. Independently and without
------------------------------
reliance upon any Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Borrower and each of
its Subsidiaries in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and (ii) its
own appraisal of the creditworthiness of the Borrower and each of its
Subsidiaries and, except as expressly provided in this Agreement, no Agent shall
have any duty or responsibility, either initially or on a continuing basis, to
provide any Bank or the holder of any Note with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. No Agent shall be responsible to
any Bank or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectability, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of the Borrower or any of its Subsidiaries or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of the Borrower or any of its Subsidiaries or the existence
or possible existence of any Default or Event of Default.
12.04 Certain Rights of the Agents. If any Agent shall request
-----------------------------
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled to refrain from such act or taking such
action unless and until such Agent shall have received instructions from the
Required Banks; and such Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank or the holder of any
Note shall have any right of action whatsoever against any Agent as a result of
such Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
12.05 Reliance. Each Agent shall be entitled to rely, and shall be
--------
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that such Agent believed to be the proper Person, and, with respect
to all legal matters pertaining to this Agreement and any other Credit Document
and its duties hereunder and thereunder, upon advice of counsel selected by such
Agent.
-120-
<PAGE>
12.06 Indemnification. To the extent any Agent is not reimbursed and
---------------
indemnified by the Borrower, the Banks will reimburse and indemnify such Agent,
in proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by such Agent in performing its respective duties hereunder or under
any other Credit Document, in any way relating to or arising out of this
Agreement or any other Credit Document; provided that to the extent that any
--------
Agent is reimbursed by the Borrower for amounts paid by the Banks pursuant to
this Section 12.06, such Agent shall reimburse the Banks for such amounts;
provided further that no Bank shall be liable for any portion of such
- ----------------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct.
12.07 Each Agent in Its Individual Capacity. With respect to its
-------------------------------------
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, each Agent shall have the rights and powers specified herein for
a "Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required Banks,"
"holders of Notes" or any similar terms shall, unless the context clearly
otherwise indicates, include each Agent in its individual capacity. Each Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, investment banking, trust or other business with, or provide debt
financing, equity capital or other services (including financial advisory
services) to, any Credit Party or any Affiliate of any Credit Party (or any
Person engaged in a similar business with any Credit Party or any Affiliate
thereof) as if they were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower or any other Credit Party
or any Affiliate of any Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
12.08 Holders. Each Agent may deem and treat the payee of any Note
-------
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment, transfer or endorsement thereof, as the case may be, shall
have been filed with such Agent. Any request, authority or consent of any Person
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent and the Syndication
-----------------------------------------------------------
Agent. (a) The Administrative Agent and/or the Syndication Agent may resign
- -----
from the performance of all their respective functions and duties hereunder
and/or under the other Credit Documents at any time by giving 15 Business Days'
prior written notice to the Banks and the Borrower (provided that no such notice
shall be required to be given to the
-121-
<PAGE>
Borrower if a Default or an Event of Default of the type described in Section
10.05 exists with respect to the Borrower). Such resignation, in the case of the
Administrative Agent, shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below, and such resignation, in the case of the Syndication Agent,
shall take effect immediately.
(b) Upon any such notice of resignation by the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company reasonably acceptable
to the Borrower (it being understood and agreed that (i) so long as no Default
or Event of Default exists at such time such successor Administrative Agent
shall be required to be reasonably satisfactory to the Borrower and (ii) at all
other times any Non-Defaulting Bank is deemed to be acceptable to the Borrower).
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent with the
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed), shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder or thereunder until such time, if any, as the
Required Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 30th Business Day after the date such notice
of resignation was given by the Administrative Agent, Administrative Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. The Borrower agrees that it shall:
-------------------------
(i) whether or not the transactions contemplated herein are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agents (including, without
limitation, the reasonable fees and disbursements of White & Case LLP), in
connection with the preparation, execution, delivery and performance of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein, any amendment, waiver or consent relating hereto
or thereto, of the Agents in connection with its syndication efforts with
respect to this Agreement and, upon the occurrence and during the continuance of
an Event of Default, the reasonable costs and expenses of each of the Agents and
each of the Banks in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein and
therein (including, without limitation, the reasonable fees and disbursements of
counsel for the Agents and,
-122-
<PAGE>
following an Event of Default, for each of the Banks), provided that the
--------
Borrower's obligation to reimburse the Agents for the reasonable fees and
disbursements of White & Case LLP incurred in connection with the preparation,
execution and delivery of this Agreement shall be subject to the letter dated
February 13, 1998 from the Syndication Agent to the Borrower; (ii) pay and hold
each of the Banks harmless from and against any and all present and future
stamp, excise and other similar documentary taxes with respect to the foregoing
matters and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Bank) to pay such taxes; and (iii) indemnify
each Agent and each Bank, and each of their respective officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all liabilities, obligations (including removal or remedial
actions), losses, damages, penalties, claims, actions, judgments, suits, costs,
expenses and disbursements (including reasonable attorneys' and consultants'
fees and disbursements) incurred by, imposed on or assessed against any of them
as a result of, or arising out of, or in any way related to, or by reason of,
(a) any investigation, litigation or other proceeding (whether or not any Agent
or any Bank is a party thereto) related to the entering into and/or performance
of this Agreement or any other Credit Document or the use of any Letter of
Credit or the proceeds of any Loans hereunder or the consummation of any
transactions contemplated herein or in any other Credit Document or the exercise
of any of their rights or remedies provided herein or in the other Credit
Documents, or (b) the actual or alleged presence of Hazardous Materials in the
air, surface water or groundwater or on the surface or subsurface of any Real
Property owned or at any time operated by any Credit Party or any of its
Subsidiaries, the Release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by any Credit Party or any of its Subsidiaries, the non-compliance of
any Real Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against any Credit Party, any of
its Subsidiaries or any Real Property owned or at any time operated by any
Credit Party or any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). To the extent that the undertaking
to indemnify, pay or hold harmless any Agent or any Bank set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Borrower shall make the maximum contribution to the payment
and satisfaction of each of the indemnified liabilities which is permissible
under applicable law.
13.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other
-123-
<PAGE>
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of any Credit
Party against and on account of the Obligations and liabilities of such Credit
Party to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations purchased
by such Bank pursuant to Section 13.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents; if to any Bank, at its address specified on Schedule II; if to
the Syndication Agent, at the address specified on Schedule II; and if to the
Administrative Agent, at its Notice Office; or, as to any Credit Party or any
Agent, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to each Bank, at such other address
as shall be designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to any Agent or any Credit
Party shall not be effective until received by such Agent or such Credit Party.
13.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, the Borrower may not
-------- -------
assign or transfer any of its rights, obligations or interest hereunder or under
any other Credit Document without the prior written consent of the Banks and,
provided further, that, although any Bank may transfer, assign or grant
- ----------------
participations in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of its
Commitments hereunder except as provided in Section 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
----------------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the A/RF Maturity Date) in which such participant is
partici-
-124-
<PAGE>
pating, or reduce the rate or extend the time of payment of interest or Fees
thereon (except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or increase
the amount of the participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default or
of a mandatory reduction in the Total Commitments shall not constitute a change
in the terms of such participation, and that an in crease in any Commitment or
Loan shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof), (ii) consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Collateral under all of the Security Documents (except as expressly provided
in the Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Revolving
Loan Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans (or, if not theretofore terminated, Term Loan Commitment)
to one or more Banks or (y) assign all, or if less than all, a portion equal to
at least $5,000,000 in the aggregate for the assigning Bank or assigning Banks,
of such Revolving Loan Commitment (and related outstanding Obligations
hereunder) and/or its outstanding Term Loans (or, if not theretofore terminated,
Term Loan Commitment) to one or more Eligible Transferees, each of which
assignees shall become a party to this Agreement as a Bank by execution of an
Assignment and Assumption Agreement, provided that (i) at such time Schedule I
--------
shall be deemed modified to reflect the Commitments (and/or out standing Loans,
as the case may be) of such new Bank and of the existing Banks, (ii) upon
surrender of the old Notes (or, upon such assigning Bank's indemnifying the
Borrower for any lost Note pursuant to a customary indemnification agreement),
new Notes will be issued, at the Borrower's expense, to such new Bank and to the
assigning Bank upon the request of such new Bank or assigning Bank, such new
Notes to be in conformity with the requirements of Section 1.05 (with
appropriate modifications) to the extent needed to reflect the revised
Commitments (and/or outstanding Loans, as the case may be), (iii) the consent
(which shall not be unreasonably withheld or delayed) of each Agent shall be
required in connection with any such assignment pursuant to clause (y) above,
(iv) so long as no Default or Event of Default exists, the consent of the
Borrower shall be required in connection with any assignment to an Eligible
Transferee pursuant to clause (y) above (which consent shall not be unreasonably
withheld or delayed), and (v) the Administrative Agent shall receive at the time
of each such assignment (other than in connection with an assignment by a Bank
to
-125-
<PAGE>
an affiliate of such Bank), from the assigning or assignee Bank, the payment of
a non-refundable assignment fee of $1,500 or in the case of an assignment to an
assignee which is not a Bank, the payment of a nontransferable assignment fee of
$3,000 and, provided further, that such transfer or assignment will not be
----------------
effective until recorded by the Administrative Agent on the Register pursuant to
Section 13.16. To the extent of any assignment pursuant to this Section
13.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitments. At the time of each assignment pursuant to
this Section 13.04(b) to a Person which is not already a Bank hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) described in Section 4.04(b). To the extent that an
assignment of all or any portion of a Bank's Commitments and related outstanding
Obligations pursuant to Section 1.13 or this Section 13.04(b) would, at the time
of such assignment, result in increased costs under Section 1.10, 1.11, 2.06 or
4.04 from those being charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay or reimburse such
increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment).
(c) In addition to the foregoing, one or more Eligible Transferees
which agree to provide a Tranche C Term Loan Commitment under a Tranche C Term
Loan Sub-Facility pursuant to Section 1.14 shall become a party to this
Agreement as a Bank with effect from the Supplement Effective Date of such
Tranche C Supplement, provided that (i) such new Bank executes and delivers to
the Administrative Agent the Tranche C Supplement for such Sub-Facility, (ii)
the consent (which shall not be unreasonably withheld or delayed) of the
Syndication Agent shall be required in connection with the addition of such new
Bank, and (iii) if such Bank is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes,
such Bank shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) described in Section 4.04(b).
(d) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of any Agent or any Bank or any holder of any Note in exercising any right,
power or privilege hereunder or under any other Credit Document and no course of
dealing between any Borrower or any other Credit Party and any Agent or any Bank
or the holder of any
-126-
<PAGE>
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which any Agent
or any Bank or the holder of any Note would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any Agent or any Bank or the holder of any
Note to any other or further action in any circumstances without notice or
demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in this
-----------------
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
--- ----
pro rata based upon their respective shares, if any, of the Obligations with
- --- ----
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided that if all or any portion of such excess
--------
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price re stored to the extent of such recovery, but without
interest.
13.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the Banks)
("GAAP"); provided that, (i) except as otherwise specifically provided herein,
--------
all computations of Excess Cash Flow and all computations determining compliance
with Sections 9.08 through 9.11, inclusive, and the determination of the
Applicable Margin, Applicable Commitment Commission Percentage and Specific
-127-
<PAGE>
Borrowing Conditions shall utilize accounting principles and policies in
conformity with those used to prepare the annual financial statements first
delivered to the Banks pursuant to Section 7.05(a) and (ii) for purposes of
calculating financial terms, all covenants and related definitions, all such
calculations based on the operations of the Borrower and its Subsidiaries on a
consolidated basis shall be made without giving effect to the operations of any
Unrestricted Subsidiaries.
(b) All computations of interest, Commitment Commission, and other
Fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest, Commitment Commission or other Fees are
payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
- ----------
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS. THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM
THAT ANY SUCH COURTS LACK JURISDICTION OVER THE BORROWER, AND AGREES NOT TO
PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY
SUCH COURT LACKS JURISDICTION OVER THE BORROWER. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, ANY BANK OR THE HOLDER OF ANY NOTE
TO SERVE PROCESS IN
-128-
<PAGE>
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(C) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Restatement Effective Date") on which (i) each of the Borrower, each
Subsidiary Guarantor, each New Bank, the Required Banks (determined immediately
before the occurrence of the Restatement Effective Date) shall have signed a
counterpart here of (whether the same or different counterparts) and shall have
delivered the same to the Administrative Agent at its Notice Office or, in the
case of the Banks, shall have given to the Administrative Agent telephonic
(confirmed in writing), written or telex notice (actually received) at such
office that the same has been signed and mailed to it and (ii) the conditions
contained in Sections 5 and 6 are met to the reasonable satisfaction of the
Administrative Agent and the Required Banks (determined immediately after the
occurrence of the Restatement Effective Date. Unless the Agents received actual
notice from any Bank that the conditions described in clause (ii) of the
preceding sentence have not been met to its satisfaction, upon the satisfaction
of the condition described in clause (i) of the immediately preceding sentence
and upon the Agents' good faith determination that the conditions described in
clause (ii) of the immediately preceding sentence have been met, then the
Restatement Effective Date shall have deemed to have occurred, regardless of any
-129-
<PAGE>
subsequent determination that one or more of the conditions thereto had not been
met. The Administrative Agent will give the Borrower, the Syndication Agent and
each Bank prompt written notice of the occurrence of the Restatement Effective
Date.
13.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected in the case of following clause (i)), (i)
extend the final scheduled maturity of any Loan or Note, or extend the stated
expiration date of any Letter of Credit beyond the A/RF Maturity Date, or reduce
the rate or extend the time of payment of interest or Fees thereon, or reduce
the principal amount thereof (except to the extent repaid in cash) (it being
understood that any amendment or modification to the financial definitions in
this Agreement or to Section 13.07(a) shall not constitute a reduction in the
rate of interest or any Fees for purposes of this clause (i)), (ii) release all
or substantially all of the Collateral (except as expressly provided in the
Credit Documents) under all the Security Documents, (iii) amend, modify or waive
any provision of this Section 13.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this Agreement may
be included in the determination of the Required Banks on substantially the same
basis as the extensions of Loans and Commitments are included on the Original
Effective Date) or (v) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement; provided further, that
----------------
no such change, waiver, discharge or termination shall (w) increase the
Commitment of any Bank over the amount thereof then in effect without the
consent of such Bank (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
reduction in the Total Commitments shall not constitute an increase of the
Commitment of any Bank, and that an increase in the available portion of any
Commitment of any Bank shall not constitute an increase in the Commitment of
such Bank), (x) without the consent of each Issuing Bank, amend, modify or waive
any provision of Section 2 or alter its rights or obligations with respect to
Letters of Credit, (y) without the consent of each Agent affected thereby,
amend, modify or waive any provision of Section 12 as same applies to such Agent
or any other provision as same relates to the rights or obligations of such
Agent and (z) without the consent of the Collateral Agent, amend, modify or
waive any provision relating to the rights or obligations of the Collateral
Agent.
-130-
<PAGE>
(b) If, in connection with any proposed change, waiver, discharge or
termination with respect to any of the provisions of this Agreement as
contemplated by clauses (i) through (v), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described in either clause
(A) or (B) below, to either (A) replace each such non-consenting Bank or Banks
with one or more Replacement Banks pursuant to Section 1.13 so long as at the
time of such replacement, each such Replacement Bank consents to the proposed
change, waiver, discharge or termination or (B) terminate such non-consenting
Bank's Commitments in accordance with Sections 3.02(b) and/or 4.01(b), provided
--------
that, unless the Commitments are terminated, and Loans repaid, pursuant to
preceding clause (B) are immediately re placed in full at such time through the
addition of new Banks or the increase of the Commitments and/or outstanding
Loans of existing Banks (who in each case must specifically consent thereto),
then in the case of any action pursuant to preceding clause (B) the Required
Banks (determined before giving effect to the proposed action) shall
specifically consent thereto, provided further, that in any event the Borrower
----------------
shall not have the right to replace a Bank, terminate any of its Commitments or
repay its Loans solely as a result of the exercise of such Bank's rights (and
the withholding of any required consent by such Bank) pursuant to the second
proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06 shall survive
the execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Obligations.
13.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 13.14 would, at the time of such
transfer, result in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from
those being charged by the respective Bank prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
13.15 Confidentiality. (a) Subject to the provisions of clause (b)
---------------
of this Section 13.15, each Bank agrees that it will use its reasonable efforts
not to disclose without the prior written consent of the Borrower (other than to
its directors, employees, auditors, advisors or counsel or to another Bank if
the Bank or such Bank's holding or parent company in its sole discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 13.15 to the
same extent as such Bank) any information with respect to any Credit Party or
any
-131-
<PAGE>
of its Subsidiaries which is now or in the future furnished pursuant to this
Agreement or any other Credit Document and which is designated by any Credit
Party to the Banks in writing as confidential, provided that any Bank may
--------
disclose any such information (a) as has become generally available to the
public other than by virtue of a breach of this Section 13.15(a), (b) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board, the Federal Deposit
Insurance Corporation or the NAIC or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, (e) to any Agent or the Collateral Agent and (f) to any
prospective or actual transferee or participant in connection with any
contemplated transfer or participation of any of the Notes or Commitments or any
interest therein by such Bank, provided, that such prospective transferee agrees
--------
in writing with such Bank for the benefit of the Borrower to be subject to the
provisions of this Section 13.15(a).
(b) The Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to Credit Parties or
any of their respective Subsidiaries (including, without limitation, any non
public customer information regarding the creditworthiness of the Credit Parties
and their respective Subsidiaries, provided such Persons shall be subject to the
provisions of this Section 13.15 to the same extent as such Bank), it being
understood that for purposes of this Section 13.15(b) the term "affiliate" shall
mean any direct or indirect holding company of a Bank as well as any direct or
indirect Subsidiary of such holding company.
13.16 Register. The Borrower hereby designates the Administrative
--------
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.16, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement
-132-
<PAGE>
to the Administrative Agent for acceptance and registration of assignment or
transfer of all or part of a Loan, or as soon thereafter as practicable, the
assigning or transferor Bank shall surrender the Note evidencing such Loan, and
thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Bank and/or the new Bank. The Borrower
agrees to indemnify the Administrative Agent from and against any and all
losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by the Agent in performing its duties
under this Section 13.16.
13.17 Limitation on Increased Costs. Notwithstanding anything to
-----------------------------
the contrary contained in Section 1.10, 1.11, 2.06 or 4.04, unless a Bank gives
notice to the Borrower that it is obligated to pay an amount under any such
Section within 180 days after the later of (x) the date such Bank incurs the
respective increased costs, Taxes, loss, expense or liability, or reduction in
amounts received or receivable or reduction in return on capital or (y) the date
such Bank has actual knowledge of its incurrence of the respective increased
costs, Taxes, loss, expense or liability, or reductions in amounts received or
receivable or reduction in return on capital, then such Bank shall only be
entitled to be compensated for such amount by the Borrower pursuant to said
Section 1.10, 1.11, 2.06 or 4.04, as the case may be, to the extent the costs,
Taxes, loss, expense or liability, or reduction in amounts received or
receivable or reduction in return on capital are incurred or suffered on or
after the date which occurs 180 days prior to such Bank giving notice to the
Borrower that it is obligated to pay the respective amounts pursuant to said
Section 1.10, 1.11, 2.06 or 4.04, as the case may be. This Section 13.17 shall
have no applicability to any Section of this Agreement or any other Credit
Document other than said Sections 1.10, 1.11, 2.06 and 4.04.
13.18 Addition of New Banks; Obligation to Pay Certain Amounts Owing
--------------------------------------------------------------
Pursuant to the Original Credit Agreement; Conversion of Commitments Under
- --------------------------------------------------------------------------
Original Credit Agreement; etc. (a) On and as of the occurrence of the
- ------------------------------
Restatement Effective Date in accordance with Section 13.10, each New Bank shall
become a "Bank" under, and for all purposes of, this Agreement and the other
Credit Documents.
(b) By their execution and delivery hereof, the Borrower and the
Required Banks (determined immediately before the occurrence of the Restatement
Effective Date) consent to the voluntary repayment by the Borrower of certain
Revolving Loans (as contemplated by the last sentence of Section 1.01(d)) and
certain other Obligations owing to the Original Banks as required by Section
5.13.
(c) On the Restatement Effective Date, (i) a portion of the Original
Total Revolving Loan Commitment equal to $150,000,000 shall be converted into
the Total Tranche A Term Loan Commitment under this Agreement (such conversion
to be applied pro rata to Original Revolving Loan Commitment of each Original
Bank) and after giving
-133-
<PAGE>
effects to such conversion the Tranche A Term Loan Commitment and the Revolving
Loan Commitment of each Original Bank shall be as set forth in Schedule I to
this Agreement and (ii) Original Revolving Loans shall be converted in Tranche A
Term Loans as provided in Section 1.01(a) and, to the extent not so converted,
into Revolving Loans under this Agreement
(d) The Borrower shall have the option to designate that one or more
Borrowings of Original Revolving Loans which are Eurodollar Loans outstanding on
the Restatement Effective Date shall constitute a Borrowing of Tranche A Term
Loans resulting from a conversion of Original Revolving Loans pursuant to
Section 1.01(a) and upon such designation, the Interest Period and interest rate
which applied to such Borrowing of Original Revolving Loans on the Restatement
Effective Date shall apply to the Tranche A Term Loans resulting from such
conversion until the expiry of such then current Interest Period.
(e) On and after the Restatement Effective Date, all references in the
Credit Documents to the "Credit Agreement" shall be deemed to be a reference to
this Agreement.
13.19 Acknowledgement and Agreement of Credit Parties. Each of the
-----------------------------------------------
Credit Parties, by executing and delivering a counterpart of this Agreement,
hereby consents to the increased extensions of credit pursuant to this Agreement
which will be made available as a result of the amendment and restatement hereof
on the Restatement Effective Date. All such extensions of credit, as well as
the extensions of credit pursuant to the Original Credit Agreement (and also as
contemplated by preceding Section 13.18) shall be entitled to all benefits of
(and shall be fully guaranteed pursuant to) each of the Guaranties and shall be
fully secured pursuant to, and in accordance with the terms of, the various
Security Documents.
* * *
-134-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- -------
450 East Las Olas Boulevard EXTENDED STAY AMERICA, INC.
Suite 1100
Ft. Lauderdale, FL 33301
Telephone No.: (954) 713-1600
Telecopier No.: (954) 713-1650
Attention: Robert A. Brannon By /s/ Robert A. Brannon
----------------------------
Title: Senior Vice - President
MORGAN STANLEY SENIOR FUNDING,
INC., Individually, as
Syndication Agent and as Arranger
By [SIGNATURE ILLEGIBLE]
----------------------------
Title:
THE INDUSTRIAL BANK OF
JAPAN, LIMITED,
Individually and as
Administrative Agent
By /s/ Takuya Honjo
----------------------------
Title: Takuya Honjo
Senior Vice President
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By [SIGNATURE ILLEGIBLE]
--------------------------------
Title: Senior Vice President
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
KZH-PAMCO
By /s/ Virginia Conway
------------------------------
Title: Virginia Conway
Authorized Agent
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
BANK ONE, KENTUCKY, NA
By [SIGNATURE ILLEGIBLE]
-------------------------------
Title: Executive Vice President
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By /s/ Brian S. Dossie
-------------------------
Title: Assistant Vice President
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
BEAR STEARNS INVESTMENT PRODUCTS,
INC.
By /s/ Harry Rosenberg
--------------------------
Title: Harry Rosenberg
Authorized Signatory
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
CIBC INC.
By /s/ William M. Swenson
--------------------------
Title: WILLIAM M. SWENSON
AUTHORIZED SIGNATORY
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
CHANG HWA COMMERCIAL BANK,
LTD., NEW YORK BRANCH
By /s/ Wan-tu Yeh
--------------------------
Title: WAN-TU YEH
VP & GENERAL MANAGER
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /s/ Marcus Edward
-----------------------------
Title: Vice President
By /s/ Sean Mounier
-----------------------------
Title: First Vice President
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By /s/ John S. Runnion
-----------------------------
Title: JOHN S. RUNNION
FIRST VICE PRESIDENT
[SIGNATURE ILLEGIBLE]
Assistant VP
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
FIRST COMMERCIAL BANK
By [SIGNATURE ILLEGIBLE]
----------------------------
Title: VP & GENERAL MANAGER
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
HELLER FINANCIAL, INC.
By /s/ Patrick Hayes
-----------------------------
Title: PATRICK HAYES
VICE PRESIDENT
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
IMPERIAL BANK
By /s/ Ray Vadalma
-------------------------------
Title: RAY VADALMA
SENIOR VICE PRESIDENT
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
KZH HOLDING CORPORATION III
By /s/ Virginia Conway
-----------------------------
Title: Virginia Conway
Authorized Agent
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
LEHMAN COMMERCIAL PAPER INC.
By /s/ Michele Swanson
----------------------------
Title: Michele Swanson
Authorized Signatory
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
MANUFACTURERS AND TRADERS
TRUST COMPANY
By [SIGNATURE ILLEGIBLE]
------------------------------
Title: VICE PRESIDENT
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
ORIX USA CORPORATION
By [SIGNATURE ILLEGIBLE]
----------------------------
Title: EXECUTIVE VICE PRESIDENT
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
RZB FINANCE LLC
By [SIGNATURE ILLEGIBLE]
------------------------------
Title: Vice President
[SIGNATURE ILLEGIBLE]
President
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
SUMMIT BANK
By [SIGNATURE ILLEGIBLE]
---------------------------
Title: Vice President
<PAGE>
EXTENDED STAY AMERICA, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
THE SUMITOMO BANK, LIMITED
By [SIGNATURE ILLEGIBLE]
----------------------------
Title: Joint General Manager
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT
-----------------------------
Each of the undersigned, each being a Subsidiary Guarantor on the
Restatement Effective Date (including each Subsidiary of the Borrower which was
a Subsidiary Guarantor immediately before the Restatement Effective Date and
each Subsidiary of the Borrower which becomes a Subsidiary Guarantor on the
Restatement Effective Date) hereby acknowledges and agrees to the provisions of
the foregoing amended and restated Agreement, and hereby agrees for the benefit
of the Banks that (i) all extensions of credit pursuant thereto (including the
increased extensions of credit made as a result of the occurrence of the
Restatement Effective Date and all other obligations pursuant to this
Agreement), shall be fully entitled to the benefits of (and shall be fully
guaranteed and secured pursuant to the provisions of) all Subsidiaries
Guaranties and Security Documents and (ii) all references in the Credit
Documents to the "Credit Agreement" shall be deemed to be a reference to this
Agreement.
ESA MANAGEMENT, INC.
ESA WEST, INC.
ESA INTERNATIONAL, INC.
STUDIO PLUS HOTELS, INC.
STUDIO PLUS PROPERTIES, INC.
ESA 0100, INC.
ESA 0102, INC.
ESA 0106, INC.
ESA 0115, INC.
ESA 0121, INC.
ESA 0123, INC.
ESA 0124, INC.
ESA 0125, INC.
ESA 0127, INC.
ESA 0131, INC.
ESA 0132, INC.
ESA 0140, INC.
ESA 0145, INC.
ESA 0153, INC.
ESA 0155, INC.
ESA 0161, INC.
ESA 0163, INC.
ESA 0172, INC.
ESA 0174, INC.
ESA 0175, INC.
ESA 0180, INC.
ESA 0186, INC.
ESA 0201, INC.
ESA 0206, INC.
ESA 0223, INC.
ESA 0231, INC.
ESA 0232, INC.
<PAGE>
ESA 0247, INC.
ESA 0280, INC.
ESA 0291, INC.
ESA 0295, INC.
ESA 0296, INC.
ESA 0302, INC.
ESA 0303, INC.
ESA 0305, INC.
ESA 0309, INC.
ESA 0311, INC.
ESA 0315, INC.
ESA 0316, INC.
ESA 0317, INC.
ESA 0325, INC.
ESA 0328, INC.
ESA 0331, INC.
ESA 0335, INC.
ESA 0341, INC.
ESA 0352, INC.
ESA 0355, INC.
ESA 0356, INC.
ESA 0361, INC.
ESA 0362, INC.
ESA 0370, INC.
ESA 0371, INC.
ESA 0373, INC.
ESA 0379, INC.
ESA 0381, INC.
ESA 0382, INC.
ESA 0396, INC.
ESA 0399, INC.
ESA 0410, INC.
ESA 0413, INC.
ESA 0414, INC.
ESA 0417, INC.
ESA 0418, INC.
ESA 0421, INC.
ESA 0450, INC.
EXTENDED STAY 0453, INC.
ESA 0455, INC.
ESA 0478, INC.
ESA 0479, INC.
ESA 0480, INC.
ESA 0486, INC.
ESA 0494, INC.
ESA 0501, INC.
<PAGE>
ESA 0503, INC.
ESA 0504, INC.
EXTENDED STAY 0507, INC.
ESA 0510, INC.
ESA 0521, INC.
ESA 0522, INC.
ESA 0525, INC.
ESA 0526, INC.
ESA 0527, INC.
ESA 0530, INC.
ESA 0532, INC.
ESA 0541, INC.
EXTENDED STAY 0547, INC.
ESA 0552, INC.
ESA 0553, INC.
ESA 0554, INC.
ESA 0555, INC.
ESA 0557, INC.
ESA 0561, INC.
ESA 0562, INC.
ESA 0564, INC.
ESA 0565, INC.
ESA 0574, INC.
ESA 0576, INC.
ESA 0590, INC.
ESA 0600, INC.
ESA 0629, INC.
ESA 0640, INC.
ESA 0646, INC.
ESA 0658, INC.
ESA 0659, INC.
ESA 0660, INC.
ESA 0670, INC.
ESA 0675, INC.
ESA 0677, INC.
ESA 0679, INC.
ESA 0680, INC.
ESA 0681, INC.
ESA 0691, INC.
ESA 0699, INC.
ESA 0700, INC.
ESA 0701, INC.
ESA 0706, INC.
ESA 0733, INC.
ESA 0734, INC.
ESA 0737, INC.
<PAGE>
ESA 0745, INC.
ESA 0752, INC.
ESA 0753, INC.
ESA 0765, INC.
ESA 0767, INC.
ESA 0780, INC.
ESA 0785, INC.
ESA 0788, INC.
ESA 0789, INC.
ESA 0795, INC.
ESA 0802, INC.
ESA 0805, INC.
ESA 0806, INC.
ESA 0810, INC.
ESA 0815, INC.
ESA 0817, INC.
ESA 0824, INC.
ESA 0828, INC.
ESA 0831, INC.
ESA 0838, INC.
ESA 0851, INC.
ESA 0857, INC.
ESA 0858, INC.
ESA 0859, INC.
ESA 0860, INC.
ESA 0861, INC.
ESA 0869, INC.
ESA 0876, INC.
ESA 0877, INC.
ESA 0884, INC.
ESA 0885, INC.
ESA 0886, INC.
ESA 0898, INC.
ESA 0901, INC.
ESA 0902, INC.
ESA 0903, INC.
ESA 0911, INC.
ESA 0916, INC.
ESA 0919, INC.
ESA 0931, INC.
ESA 0932, INC.
ESA 0936, INC.
ESA 0939, INC.
ESA 0942, INC.
ESA 0976, INC.
ESA 0977, INC.
<PAGE>
ESA 0979, INC.
ESA 0981, INC.
ESA 0985, INC.
ESA 0986, INC.
ESA 0990, INC.
ESA 0991, INC.
ESA 0992, INC.
ESA 0993, INC.
ESA 0994, INC.
ESA 0995, INC.
ESA 0996, INC.
ESA 1500, INC.
ESA 1501, INC.
ESA 1502, INC.
ESA 1510, INC.
ESA 1514, INC.
ESA 2503, INC.
ESA 4012, INC.
ESA 4014, INC.
ESA 4016, INC.
ESA 6000, INC.
ESA 6002, INC.
ESA 6005, INC.
ESA 6012, INC.
ESA 6022, INC.
ESA 6027, INC.
ESA 6028, INC.
ESA 6029, INC.
ESA 6036, INC.
ESA 6037, INC.
ESA 6057, INC.
ESA 6072, INC.
ESA 6074, INC.
ESA 7003, INC.
ESA 7010, INC.
ESA 7508, INC.
ESA 7512, INC.
ESA 7513, INC.
ESA 7519, INC.
ESA 8515, INC.
ESA 8525, INC.
ESA C1, INC.
<PAGE>
By /s/ Robert A. Brannon
---------------------------------
Title: Vice President
-----------------------------
On behalf of each Subsidiary
Guarantor listed above
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 38,021 0
<SECURITIES> 0 0
<RECEIVABLES> 4,505 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 58,710 0
<PP&E> 1,207,879 0
<DEPRECIATION> 40,572 0
<TOTAL-ASSETS> 1,245,734 0
<CURRENT-LIABILITIES> 81,565 0
<BONDS> 300,000 0
0 0
0 0
<COMMON> 958 0
<OTHER-SE> 841,033 0
<TOTAL-LIABILITY-AND-EQUITY> 1,245,734 0
<SALES> 0 0
<TOTAL-REVENUES> 54,231 19,763
<CGS> 0 0
<TOTAL-COSTS> 26,282 10,180
<OTHER-EXPENSES> 18,823 9,467
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,122 0
<INCOME-PRETAX> 8,004 4,103
<INCOME-TAX> 3,202 1,633
<INCOME-CONTINUING> 4,802 2,470
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,802 2,470
<EPS-PRIMARY> 0.05 0.03
<EPS-DILUTED> 0.05 0.03
</TABLE>
