<PAGE> 1
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 June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition from to
------------------------- -------------------------
Commission file number 1-11723
-------------------
WYNDHAM HOTEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
- -------------------------------
(State of other jurisdiction of 75-2636072
incorporation or organization) -------------------
(I. R. S. Employer
Identification No.)
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
- ---------------------------------------- ------------------
(address of principal executive offices) (Zip Code)
(214) 863-1000
----------------------------------------------------
(Registrant's telephone number, including area code)
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 shorten period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.
YES NO X
----- -----
The number of shares outstanding of the issuer's common stock as of August 14,
1996:
Common Stock, $.01 par value - 20,018,299 shares.
<PAGE> 2
WYNDHAM HOTEL CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheets as of December 31, 1995 and June 30, 1996 . . . . . . . . . . . . . . 2
Consolidated Statements of Income - Quarter and Six Months Ended June 30, 1995 and 1996 . . . . . . 3
Consolidated Statements of Cash Flows - Six Months Ended June 30, 1995 and 1996 . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
1
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WYNDHAM HOTEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 4,160 $ 51,675
Cash, restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,053 1,188
Accounts receivable, less allowance of $267 at December 31, 1995
and $774 at June 30, 1996 . . . . . . . . . . . . . . . . . . . 10,838 11,651
Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 3,584 15,064
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,020 1,254
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . - 1,448
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769 1,424
--------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 23,424 83,704
Investment in an affiliate's hotel partnership . . . . . . . . . . . . . . 2,597 -
Notes and other receivables from affiliates . . . . . . . . . . . . . . . . 7,674 7,685
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,450 106
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . 87,604 97,112
Management contract costs, net . . . . . . . . . . . . . . . . . . . . . . 7,579 7,231
Security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14,397
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14,749
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,075 12,232
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,403 $237,216
======== ========
LIABILITIES AND PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . $ 8,454 $ 21,875
Accounts payable and accrued expenses due to affiliates . . . . . . . . 1,578 1,364
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,667 1,307
Deposits from affiliates . . . . . . . . . . . . . . . . . . . . . . . 354 344
Current portion of long-term debt and capital lease obligations . . . . 16,035 488
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,592 -
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 30,680 25,378
-------- --------
Payable to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,627 -
Payable to minority interest . . . . . . . . . . . . . . . . . . . . . . . 218 -
Long-term debt and capital lease obligation . . . . . . . . . . . . . . . . 74,943 130,211
Deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12,434
-------- --------
77,788 142,645
-------- --------
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,378 -
-------- --------
Partners' Capital and Stockholders' Equity:
Partners' capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,860 -
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 200
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . - 84,342
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4,847
Receivables from affiliates . . . . . . . . . . . . . . . . . . . . . . (2,303) (1,307)
Notes receivable from stockholders . . . . . . . . . . . . . . . . . . - (18,889)
-------- --------
Total partners' capital and stockholders' equity . . . . . . . . . . 17,557 69,193
-------- --------
$133,403 $237,216
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE> 4
WYNDHAM HOTEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------- ---------------------
1995 1996 1995 1996
------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Hotel revenues . . . . . . . . . . . . . . . $13,324 $24,214 $28,660 $40,914
Management fees . . . . . . . . . . . . . . . 2,228 1,879 3,884 4,481
Management fees - affiliates . . . . . . . . 2,029 3,496 3,777 6,097
Service fees . . . . . . . . . . . . . . . . 491 275 912 685
Service fees - affiliates . . . . . . . . . . 625 532 911 1,087
Reimbursements . . . . . . . . . . . . . . . 1,517 1,506 2,450 3,133
Reimbursements - affiliates . . . . . . . . . 986 1,834 2,410 3,790
Other . . . . . . . . . . . . . . . . . . . . 115 306 230 339
------- ------- ------- -------
Total revenues . . . . . . . . . . . . . . 21,315 34,042 43,234 60,526
------- ------- ------- -------
Operating costs and expenses:
Hotel expenses . . . . . . . . . . . . . . 9,601 17,961 18,798 28,313
Selling, general and administrative
expenses . . . . . . . . . . . . . . 3,001 4,222 5,922 8,496
Equity participation compensation . . . . . . 998 2,919 1,996 2,919
Reimbursable expenses . . . . . . . . . . . . 1,517 1,506 2,450 3,133
Reimbursable expenses - affiliates . . . . . 986 1,834 2,410 3,790
Depreciation and amortization . . . . . . . . 1,472 1,797 2,941 3,458
------- ------- ------- -------
Total operating costs and expenses . . . . 17,575 30,239 34,517 50,109
------- ------- ------- -------
Operating income . . . . . . . . . . . . . . . . 3,740 3,803 8,717 10,417
Interest income . . . . . . . . . . . . . . . . . 82 190 138 443
Interest income - affiliates . . . . . . . . . . 9 178 9 356
Interest expense . . . . . . . . . . . . . . . . (2,151) (2,941) (4,252) (5,055)
Equity in earnings of affiliate's hotel partnership 459 42 1,015 870
Foreign currency gain . . . . . . . . . . . . . . 76 - 114 -
Amortization of deferred gain . . . . . . . . . . - 135 - 135
------- ------- ------- -------
Income before minority interests . . . . . . . . 2,215 1,407 5,741 7,166
Income (loss) attributable to minority interests 38 (22) 546 571
------- ------- ------- -------
Income before income taxes and extraordinary item 2,177 1,429 5,195 6,595
Federal income tax benefits . . . . . . . . . . . - 12,195 - 12,195
------- ------- ------- -------
Income before extraordinary item . . . . . . . . 2,177 13,624 5,195 18,790
Extraordinary item (less applicable
income tax benefits of $270) . . . . . . . . - (1,131) - (1,131)
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . $ 2,177 $12,493 $ 5,195 $17,659
======= ======= ======= =======
Earnings per share:
Income before extraordinary item - primary
and fully diluted . . . . . . . . . . . . N/A $ .67 N/A $ .93
Extraordinary item . . . . . . . . . . . . . N/A (.06) N/A (.06)
------- -------
Net income - primary and fully diluted . . . N/A $ .61 N/A $ .87
======= =======
Average number of common and common
equivalent shares outstanding . . . . . . . 20,232 20,232
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 5
WYNDHAM HOTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
-------------------------
1995 1996
------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,195 $17,659
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 2,941 3,458
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . - (12,958)
Provision for bad debt . . . . . . . . . . . . . . . . . . . . . . . . . . 43 507
Amortization of deferred debt issuance costs . . . . . . . . . . . . . . . - 110
Write-off of predecessor deferred debt issuance costs . . . . . . . . . . . - 1,401
Amortization of deferred gain . . . . . . . . . . . . . . . . . . . . . . . - (127)
Equity in earnings (loss) of affiliate's hotel partnership . . . . . . . . (379) -
Foreign translation gain . . . . . . . . . . . . . . . . . . . . . . . . . (114) -
Equity participation compensation . . . . . . . . . . . . . . . . . . . . . 1,996 2,919
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546 571
Net (deposits to)/withdrawals from restricted cash . . . . . . . . . . . . (134) 1,865
Changes to operating assets and liabilities, net of effects from purchase
of hotels:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,057) (2,211)
Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,172 (5,090)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) 4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37 ) (2,174)
Current income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . - 763
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . 957 10,618
Accounts payable and accrued expenses due affiliates . . . . . . . . . . . (2,933) (1,144)
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (213) (1,394)
Deposits from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . (253) (10)
Security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (13,600)
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,301 (2,372)
------- --------
Net cash provided by (used in) operating activities . . . . . . . 8,029 (1,205)
------- --------
Cash flows from investing activities:
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . (1,425) (1,809)
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . - 136,374
Investments in management contracts . . . . . . . . . . . . . . . . . . . . (2,837) (155)
Notes and other receivable from affiliates . . . . . . . . . . . . . . . . (2,184) (11)
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (430) 2,344
Payment for purchase of hotels, net of cash acquired . . . . . . . . . . . - (2,520)
Acquisition of minority interest . . . . . . . . . . . . . . . . . . . . . - (5,479)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (328) -
------- --------
Net cash provided by (used in) investing activities . . . . . . . . . (7,204) 128,744
------- --------
Cash flows from financing activities:
Partners' contributed capital . . . . . . . . . . . . . . . . . . . . . . . 13,960 4,801
Partners' capital distributions . . . . . . . . . . . . . . . . . . . . . . (5,071) (29,593)
Distribution made to withdrawing partner . . . . . . . . . . . . . . . . . (2,577) (982)
Decrease (increase) in receivables from affiliates . . . . . . . . . . . . (51) 996
Decrease in payable to affiliates . . . . . . . . . . . . . . . . . . . . . (1,223) (2,627)
Increase (decrease) in payable to minority interest . . . . . . . . . . . . 8 (218)
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . - 69,504
Net proceeds from issuance of debt . . . . . . . . . . . . . . . . . . . . 1,069 94,383
Repayments on long-term debt and capital lease obligations . . . . . . . . (3,374) (197,399)
Notes receivable from stockholders . . . . . . . . . . . . . . . . . . . . - (18,889)
------- --------
Net cash provided by (used in) financing activities . . . . . . . . . 2,741 (80,024)
------- --------
Increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . 3,566 47,515
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . 3,617 4,160
------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . $ 7,183 $ 51,675
======= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 6
WYNDHAM HOTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
Wyndham Hotel Corporation ("WHC") was incorporated and formed in
February 1996. In May 1996, WHC implemented substantially all of its
formation and financing plan. The accompanying consolidated financial
statements of WHC at June 30, 1996 and for the period since the Company's
implementation of its formation and financing plan in May 1996 and through
June 30, 1996 include the accounts of WHC and its wholly owned subsidiaries
resulting from the formation (collectively, the "Company"). Financial
statements at December 31, 1995 and for the periods prior to the formation
are included in the combined accounts of WHC and its majority owned
entities. All significant intercompany balances and transactions have been
eliminated.
These unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. 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 at
June 30, 1996 have been included. Operating results for the three months
and six months ended June 30, 1996 are not necessarily indicative of the
operating results for the year ending December 31, 1996. These financial
statements should be read in conjunction with the consolidated financial
statements and footnotes thereto included in the prospectus of the Company
(the "Prospectus") dated May 20, 1996, as filed with the Securities and
Exchange Commission.
Certain prior period amounts have been reclassified to conform to the
current period presentation.
2. INITIAL PUBLIC OFFERINGS ("OFFERINGS") AND REVOLVING CREDIT FACILITY:
During the quarter ended June 30, 1996, the Company implemented a
financing plan. As a part of the financing plan, the Company offered
4,197,500 shares of its common stock for public trading on the New York
Stock Exchange and concurrently issued $100.0 million of subordinated notes
(the "Notes".) The Company also entered into a new $100.0 million
revolving credit facility (the "Revolving Credit Facility") with a
financial institution. For more information regarding the Company's
financing plan, reference is made to the Prospectus.
3. ACQUISITIONS:
On May 2, 1996, a 70% partnership interest in Garden Hotel Associates,
L.P. ("GHALP") owned by an unaffiliated third party was acquired by a newly
formed partnership owned by an affiliate and senior executive officers. In
a subsequent series of transactions the properties were sold to an
unaffiliated real estate investment trust, and all debt was paid off. The
hotel properties (the "GHALP Properties") were leased back to a newly
formed limited partnership owned by the affiliate and senior executive
officers under a leasing arrangement qualifying as an operating lease and
the lease was transferred to the Company in connection with the formation
of the Company. For a detailed description of the transaction, reference
is made to the Prospectus.
During the quarter ended June 30, 1996, the Company acquired from an
unaffiliated party the Wyndham Vinings Hotel. The acquisition was
accounted for using the purchase method and, accordingly, the acquired
assets, which consisted primarily of property and equipment, were recorded
based on their estimated fair values at the date of acquisition. The
acquisition cost was approximately $12.5 million, comprised of a cash
payment of $3.6 million and the assumption of existing indebtedness
encumbering the property. The cash payment was funded with a portion of
the net proceeds from the initial public offerings.
5
<PAGE> 7
4. CONTINGENT LIABILITIES:
During the quarter ended June 30, 1996, the Company wrote off a reserve
for contingent liabilities as a result of the final settlement of contract
assignments on one of its hotel properties in the amount of $544,000. The
transaction was reflected as a reduction in "Hotel expenses" in the
accompanying statements of income.
5. EARNINGS PER SHARE:
The Company adopted Statement of Financial Accounting Standards No. 123
("SFAS No. 123"), "Accounting for Stock-Based Compensation," effective
January 1, 1996. SFAS No. 123 defines a fair value based method of
accounting for employee stock options or similar instruments and permits
companies to adopt that method of accounting for all of their employee stock
compensation plans. However, it also allows a company to measure
compensation cost for those plans using the intrinsic value based method of
accounting prescribed by APB Opinion No. 25 ("APB No. 25"), "Accounting for
Stock Issued to Employees." The Company has elected to measure compensation
cost in conformity with APB No. 25 and to make pro forma disclosures of net
income and earnings per share in its annual report on Form 10-K for the year
ending December 31, 1996, as if the fair value based method of accounting
defined in SFAS No. 123 had been applied.
Earnings per share for the quarter and six months ended June 30, 1996
are computed based on the weighted average number of shares of common stock
outstanding and common stock equivalents when dilative. Common stock
equivalents include the assumed exercise of dilative stock options under the
treasury stock method.
Earnings per share data for the quarter and six months ended June 30,
1995 relates to periods prior to the Company's formation and therefore is
not presented.
6. FEDERAL INCOME TAXES:
Since the Company's formation in May 1996, federal income taxes have
been provided in accordance with Statement of Financial Accounting Standards
No. 109 ("SFAS 109"). Under the liability method of SFAS 109, deferred
taxes are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect in
the years the differences are expected to reverse. In accordance with SFAS
109, the Company has recorded a net income tax benefit of $12.5 million
since its formation.
7. PREPAYMENT OF DEBT:
During the quarter ended June 30, 1996, the Company repaid its
predecessor's and certain of its wholly owned subsidiaries' debt upon
consummation of its financing plan. The unamortized debt costs associated
with that debt in the amount of $1.4 million were written off. The
write-off, net of applicable tax of approximately $270,000, is included in
the accompanying statements of income as an extraordinary item.
8. COMMITMENTS AND CONTINGENCIES:
Litigation has been initiated against the Company pertaining to the
right to use the Wyndham name for hotel service in the New York
metropolitan area. On January 29, 1996, a temporary restraining order was
issued by the Supreme Court of the State of New York which, pending the
outcome of a trial, prevents the Company from using the Wyndham name in the
New York area. An adverse decision in the litigation could prevent the
Company from operating Wyndham brand hotels or advertising the Wyndham name
in connection with the operation of a Wyndham brand hotel within a 50 mile
radius of a hotel in Manhattan operated under the "Wyndham" name. It is
management's opinion, based on legal counsel, that the range of losses
resulting from the ultimate resolution of the aforementioned claim cannot
be determined. The cost of $824,000 at June 30, 1996 for defending the
trademark has been capitalized, pending the ultimate resolution. An
adverse decision may result in the expense of those capitalized costs.
6
<PAGE> 8
The Company received a Notice of Intent to make Sales and Use Tax
audit changes from the Tampa Region of the Florida Department of Revenue
for the period from July 31, 1990 through June 30, 1995. The audit
assessed additional taxes of $584,399, penalty of $223,494 and interest of
$201,024 for a total assessment of $1,008,917. The previous owners (an
affiliate) have agreed to indemnify the Company with respect to any
additional sales and use tax paid by the Company for the audit period.
Management, after review and consultation with legal counsel, believes the
Company has meritorious defenses to this matter and that any potential
liability in excess of the $189,000 recorded would not materially effect
the Company's consolidated financial statements.
On February 29, 1996, an affiliate and the Company were served with a
complaint filed on November 22, 1995 by an owner of a hotel managed by the
affiliate. The claim involves the collection of a promissory note relating
to an earlier litigation between the affiliate and the owner. The owner
alleges that the transfer of certain management contracts by the affiliate
to the Company was a fraudulent conveyance that rendered the affiliate
insolvent. Liability for payment of the promissory note was not
transferred to or assumed by the Company. The affiliate has agreed to
indemnify the Company with respect to this litigation.
The Company has pending several other claims incurred in the normal
course of business which, in the opinion of management, based on the advice
of legal counsel, will not have a material effect on the consolidated
financial statements.
Pursuant to the terms of the management agreements of two
affiliate-owned hotels under construction, the Company has undertaken
certain commitments to provide furniture, fixtures and equipment for each
hotel at a fixed price totaling $8.1 million. Additionally, for one of
these hotels the Company has agreed to provide certain pre-opening services
at a fixed price of $420,000; the Company has guaranteed to fund up to
$230,000 in working capital per year for three years after the hotel is
opened in the event that the hotel generates inadequate cash flow; and, the
Company has guaranteed $875,000 in indebtedness.
Pursuant to the terms of a management agreement of a hotel owned by an
affiliate, the Company has guaranteed to fund up to $600,000 of working
capital per year to the extent the entity experiences operating deficits,
with a maximum required contribution of $2.3 million over the term of the
guarantee extending from 1995 to 2000. The Company has not to date been
required to make any capital contribution under the guarantee.
The Company is subject to environmental regulations related to the
ownership, management, development and acquisition of real estate (hotels).
The cost of complying with the environmental regulations was not material
to the Company's consolidated statements of income for the year ended
December 31, 1995 and the six months ended June 30, 1996. The Company is
not aware of any environmental condition on any of its properties which is
likely to have a material adverse effect on the Company's financial
statements.
9. CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF GUARANTOR SUBSIDIARIES:
In connection with the issuance of the $100 million subordinated notes
("Notes"), all of the Company's direct and indirect subsidiaries, with the
exception of a number of subsidiaries (which subsidiaries are individually
and collectively inconsequential), are fully and unconditionally
guaranteeing the Company's obligations under the Notes on a joint and
several basis (the "Guarantor Subsidiaries"). Accordingly, the condensed
consolidated financial information set forth below summarizes financial
information for all of the Guarantor Subsidiaries on a consolidated basis.
Separate complete financial statements and other disclosure for the
Guarantor Subsidiaries have not been presented because management does not
believe that such information is material to investors. The condensed
consolidated financial information of the Guarantor Subsidiaries as of
December 31, 1995 and June 30, 1996, and for the quarter and six months
ended June 30, 1995 and 1996 are presented as follows:
7
<PAGE> 9
GUARANTOR SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $ 3,708 $ 3,004
Cash, restricted . . . . . . . . . . . . . . . . . . . . . . . . . 2,595 1,202
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . 10,095 15,495
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,243 2,445
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . 21,641 22,146
Investment in an affiliate's hotel partnership . . . . . . . . . . . 2,597 -
Notes and other receivables from affiliates . . . . . . . . . . . . 7,674 7,685
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 2,450 106
Property and equipment, net . . . . . . . . . . . . . . . . . . . . 47,321 57,540
Management contract costs, net . . . . . . . . . . . . . . . . . . . 7,579 7,231
Security deposits . . . . . . . . . . . . . . . . . . . . . . . . . - 14,397
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,068 3,884
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 90,330 $112,989
======== ========
LIABILITIES AND PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities . . . . . . . . . . . $ 6,600 $ 16,744
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,914 1,445
Current portion of long-term debt and capital lease obligation . 3,428 488
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . 1,454 32,715
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . 13,396 51,392
-------- --------
Payable to affiliates . . . . . . . . . . . . . . . . . . . . . . 2,627 -
Payable to minority interest . . . . . . . . . . . . . . . . . . . 218 -
Long-term debt and capital lease obligation . . . . . . . . . . . 40,659 30,211
-------- --------
43,504 30,211
-------- --------
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . 7,379 -
-------- --------
Partners' capital and stockholders' equity:
Receivable from affiliates . . . . . . . . . . . . . . . . . . . (1,927) (1,307)
Partners' capital . . . . . . . . . . . . . . . . . . . . . . . 27,978 -
Additional paid-in capital . . . . . . . . . . . . . . . . . . . - 31,943
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . - 750
-------- --------
Total partners' capital and stockholders' equity . . . . . 26,051 31,386
-------- --------
$ 90,330 $112,989
======== ========
</TABLE>
See note to the condensed consolidated financial information
8
<PAGE> 10
GUARANTOR SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- -------------------
1995 1996 1995 1996
--------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . $15,316 $27,714 $31,975 $48,858
------- ------- ------- -------
Operating costs and expenses . . . . . . . . . . . . 11,998 21,331 23,680 35,340
Depreciation and amortization . . . . . . . . . . . 884 1,103 1,764 2,172
Other . . . . . . . . . . . . . . . . . . . . . . 43 349 (14) 444
------- ------- ------- -------
Total operating costs and expenses . . . . . 12,925 22,783 25,430 37,956
------- ------- ------- -------
Operating income . . . . . . . . . . . . . . . . . . 2,391 4,931 6,545 10,902
Interest expense, net . . . . . . . . . . . . . . . (957) (902) (1,994) (1,790)
Equity in earnings of affiliate's hotel partnership 459 42 1,015 870
Foreign currency gain . . . . . . . . . . . . . . . 76 - 114 -
------- ------- ------- -------
Income before minority interests . . . . . . . . . . 1,969 4,071 5,680 9,982
Income (loss) attributable to minority interests 38 (22) 546 571
------- ------- ------- -------
Income before income taxes and
extraordinary item . . . . . . . . . . . . . . . 1,931 4,093 5,134 9,411
Federal income taxes . . . . . . . . . . . . . . . . - 801 - 801
------- ------- ------- -------
Income before extraordinary item . . . . . . . . . . 1,931 3,292 5,134 8,610
Extraordinary item (less applicable tax benefits). . - (1,028) - (1,028)
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . $ 1,931 $ 2,264 $ 5,134 $ 7,582
======= ======= ======= =======
</TABLE>
See note to the condensed consolidated financial information
9
<PAGE> 11
GUARANTOR SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
------------------------
1995 1996
--------- ---------
(UNAUDITED)
<S> <C> <C>
Net cash provided by operating activities . . . . . . . . . . . . . . . . $ 6,093 $ 11,720
------- ---------
Cash flows from investing activities:
Purchase of property and equipment . . . . . . . . . . . . . . . . . . (1,126) (1,286)
Sale of property and equipment . . . . . . . . . . . . . . . . . . . . - 133,778
Investments in management contracts . . . . . . . . . . . . . . . . . . (126) (155)
Notes and other receivable from affiliates . . . . . . . . . . . . . . (2,184) (11)
Payment for purchase of hotels, net of cash acquired . . . . . . . . . - (2,520)
Acquisition of minority interest . . . . . . . . . . . . . . . . . . . - (5,479)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (657) 2,294
------- ---------
Net cash provided by (used in) investing activities . . . . . . . (4,093) 126,621
------- ---------
Cash flows from financing activities:
Partners' contributed capital . . . . . . . . . . . . . . . . . . . . . 10,240 26,502
Partners' capital distributions . . . . . . . . . . . . . . . . . . . . (7,067) (42,572)
Decrease (increase) in receivables from affiliates . . . . . . . . . . (51) 620
Increase (decrease) in payable to affiliates . . . . . . . . . . . . . (85) 22,201
Increase (decrease) in payable to minority interest . . . . . . . . . . 8 (218)
Proceeds from issuance of debt . . . . . . . . . . . . . . . . . . . . 1,100 2,500
Repayment of long-term debt and capital lease obligations . . . . . . . (2,004) (148,078)
------- ---------
Net cash provided by (used in) financing activities . . . . . . . 2,141 (139,045)
------- ---------
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . 4,141 (704)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . 2,469 3,708
------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . $ 6,610 $ 3,004
======= =========
</TABLE>
Note to Condensed Consolidated Financial Information:
(1) The foregoing condensed combined financial information includes GHALP
Corporation, Waterfront Management Corporation, WHCMB, Inc., Wyndham
Management Corporation, Wyndham Hotels & Resorts (Aruba) N.V., WHC
Vinings Corporation, WH Interest, Inc., Wyndham IP Corporation, Rose
Hall Associates, L.P., XERXES Limited and WHC Caribbean, Ltd. They
all are wholly-owned subsidiaries of the Company at June 30, 1996.
10. SUBSEQUENT EVENTS:
During August 1996, the Company made a non-refundable earnest money
deposit totaling approximately $1.1 million pursuant to a purchase and sale
agreement to acquire a 287 room hotel in Toronto, Canada for approximately
$16.8 million.
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company's revenues are derived from the following primary sources:
(1) The Company's hotel revenues are generated from the hotels owned or
leased by the Company during the periods presented and reflect revenues from
room rentals, food and beverage sales and other sources, including telephone,
guest services, meeting room rentals, gift shops and other amenities.
(2) The Company derives management fees from the hotels it manages. These
fees are comprised of base and incentive management fees, as well as trade name
fees. Base management fees are typically calculated based upon a specified
percentage of gross revenues from hotel operations, and incentive management
fees are usually calculated based upon a specified percentage of the hotel's
operating profit or the amount by which the hotel's operating profit exceeds
specified performance targets. Trade name fees are typically calculated based
upon a specified percentage of gross room revenues for hotels operated under
the Wyndham brand name.
(3) The Company generates service fee revenues from hotels that it manages
or franchises. Service fees revenues include fees derived from accounting,
design, construction and purchasing services, as well as technical assistance
provided to managed or franchised portfolio hotels. As a substantial portion
of the fees derived from the provision of design, construction and initial
purchasing services are generated in connection with hotel construction and
renovation activities, the amount of these fees varies depending upon the level
of the Company's external activities, including new hotel management contracts
and construction projects.
(4) The Company derives reimbursement revenues from hotels that it manages
or franchises. These revenues are intended primarily to match corresponding
expenses and serve to reimburse the Company for the expense associated with
providing advertising and promotion, sales and marketing, centralized
reservations and other services.
11
<PAGE> 13
RESULTS OF OPERATIONS
The following table sets forth certain financial data expressed as a
percentage of total revenues and certain other data for each of the periods
presented:
<TABLE>
<CAPTION>
Quarter Ended June 30 Six Months Ended June 30
--------------------- ------------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Hotel revenues . . . . . . . . . . . . . . . . 62% 71% 66% 68%
Management fees . . . . . . . . . . . . . . . 20 16 18 17
Services fees . . . . . . . . . . . . . . . . 5 2 4 3
Reimbursement revenues . . . . . . . . . . . . 12 10 11 11
Other . . . . . . . . . . . . . . . . . . . . 1 1 1 1
--- --- --- ---
Total revenues . . . . . . . . . . . . . 100 100 100 100
--- --- --- ---
Operating costs and expenses:
Hotel expenses . . . . . . . . . . . . . . . . 45 53 43 47
Selling, general and administrative expense . 14 12 14 14
Equity participation compensation . . . . . . 5 9 5 5
Reimbursable expense . . . . . . . . . . . . . 12 10 11 11
Depreciation and amortization . . . . . . . . 7 5 7 6
--- --- --- ---
Total operating costs and expenses . . . . 83 89 80 83
--- --- --- ---
Operating income . . . . . . . . . . . . . . . . . 17 11 20 17
Interest expense, net . . . . . . . . . . . . . . . (9) (7) (9) (7)
Equity in earnings of affiliate's hotel partnership 2 - 2 2
Foreign currency gain . . . . . . . . . . . . . . . - - - -
Amortization of deferred gain . . . . . . . . . . . - - - -
--- --- --- ---
Income before minority interests . . . . . . . . . 10 4 13 12
Income attributable to minority interests . . . . . - - 1 1
--- --- --- ---
Income before income tax benefit
and extraordinary item . . . . . . . . . 10% 4% 12% 11%
=== === === ===
</TABLE>
1996 Second Quarter Compared to 1995 Second Quarter
Total revenues increased by 60%, or $12.7 million to $34.0 million in 1996
from $21.3 million in 1995. Total operating expenses increased by 72%, or
$12.6 million to $30.2 million in 1996 from $17.6 million in 1995. The
increase in total revenues and expenses was attributable principally to the
addition of the GHALP Properties resulting from the consummation of the GHALP
transaction on May 2, 1996, reflecting the consolidation of the results of the
GHALP Properties resulting from a change from an equity investment to a
leasehold interest. The GHALP Properties accounted for 76%, or $9.6 million of
the increase in total revenues and 71%, or $8.9 million of the increase in
total expenses. The increase in total revenues and expenses was also
attributable to the increase in the number of hotels in the hotel portfolio.
Hotel revenues increased by 82%, or $10.9 million, to $24.2 million in 1996
from $13.3 million in 1995. Approximately 88% of the increase, or $9.6 million
was due to the GHALP Properties. The balance of the increase was the result of
an increase in hotel room rental revenues and the acquisition of a new hotel.
As a percentage of total revenues, hotel revenues increased to 71% in 1996
compared to 62% in 1995, primarily reflecting the effects of consolidating the
GHALP Properties.
Revenues from management fees increased by 26% or approximately $1.1
million to $5.4 million in 1996 from $4.3 million in 1995. Approximately $1.9
million of this increase resulted from 17 new managed hotels added between June
30, 1995 and June 30, 1996. The increase was offset by approximately $283,000
from the loss of certain management contracts and $481,000 from the elimination
of the revenues from GHALP Properties as a result of consolidating the GHALP
Properties into the Company.
12
<PAGE> 14
Revenues from service fees decreased by 28%, or approximately $309,000, to
approximately $807,000 in 1996 from $1.1 million in 1995. Of the decrease,
approximately $122,000 was attributable to the elimination of service fees
earned from GHALP Properties as a result of the consolidation of the results of
operations of GHALP Properties.
Reimbursable revenues increased by 33%, or approximately $837,000, to $3.3
million in 1996 from $2.5 million in 1995. The increase was due to growth of
the hotel portfolio for the 1996 quarter as noted above in comparison to 1995,
resulting in increased payments to the Company's Marketing Fund. The increase
was partially offset by approximately $234,000, reflecting the elimination of
reimbursable revenues from the GHALP Properties as a result of consolidation of
the operating results of GHALP Properties.
Other income increased approximately $191,000, or 166%, comparing the 1996
quarter with the 1995 quarter. The increase was principally due to a $250,000
fee recognized from the termination of a management contract.
Hotel expenses increased by 87%, or $8.4 million, to $18.0 million in 1996
from $9.6 million in 1995, reflecting the additional hotel expenses for GHALP
Properties as a result of the consolidation of the results of operations of
GHALP Properties. Hotel expenses increased as a result of $8.9 million in
additional expense resulting from the consolidation of results of operations of
the GHALP Properties, which was partially offset by an 8% decrease in other
hotel expenses, or approximately $669,000. This decrease was primarily due to
a $544,000 reduction in hotel expense resulting from the write off of a reserve
for contingent liabilities as a result of the final settlement of contract
assignments on one of the Company's hotel properties. As a percentage of total
revenues, hotel expenses increased to 53% in 1996 as compared with 45% in 1995,
primarily reflecting the effects of consolidating the GHALP Properties.
SG&A expenses increased by 41%, or $1.2 million, to $4.2 million in 1996
from $3.0 million in 1995. As a percentage of total revenues, SG&A expenses
decreased to 12% in 1996 from 14% in 1995. Of the increase in SG&A expenses,
54% of the increase, or approximately $660,000 was due to increased wages,
contract labor and benefit costs arising from the addition of corporate
management and staff personnel related to the general growth of the Company.
In addition, 7% of the increase, or approximately $90,000, is due to the
establishment of a provision for bad debt expense for management fees on an
unaffiliated hotel, and 26% or $321,000 is due to the establishment of a
provision for bad debt related to certain receivables. The increase also
reflected an additional $114,000 cost of managing and administering a publicly
held company.
Equity participation compensation expenses increased by 193%, or $1.9
million, to $2.9 million in 1996 from $1.0 million in 1995. The increase was
due to the recognition of significant compensation expense as a result of the
consummation of the equity offering. The primary component of compensation
expense, which is that attributable to the senior executive officers, was fixed
at the initial public offering price, and the Company will not incur additional
expense for such component for periods subsequent to the equity offering. See
Prospectus.
Reimbursable expenses grew by 33%, or approximately $837,000, to $3.3
million in 1996 from $2.5 million in 1995. As a percentage of total revenues,
reimbursable expense constituted 10% of total revenues in 1996 compared with
12% in 1995. These increases were primarily due to increased advertising and
promotional expense, as well as costs associated with expanding the Company's
national sales staff to support both individual business and group sales as a
result of growth of the hotel portfolio in 1996 as noted previously in
comparison to 1995. Offset to the increase was a decrease of $234,000,
reflecting the elimination of reimbursable expenses from the GHALP Properties
as a result of the consolidation of the results of the operations of the GHALP
Properties.
Depreciation and amortization expense increased by 22%, or approximately
$325,000, to $1.8 million in 1996 from $1.5 million in 1995 due to the net
acquisition of property and equipment and the amortization of the acquisition
costs of management contracts. Also included in the increase was approximately
$110,000 from amortization of deferred debt issuance costs relating to the
Notes and the Revolving Credit Facility.
Interest expense increased by 37%, or approximately $790,000, to $2.9
million in 1996 from $2.1 million in 1995, reflecting the additional interest
from the Notes, capital leases, affiliated borrowings and bank fees, less the
elimination of interest expense from the retired debt.
13
<PAGE> 15
Earnings from the Company's equity investment in hotel partnership were
terminated following the May 2, 1996 consolidation of the results of operations
of GHALP Properties.
Income attributable to minority interest was eliminated as a result of the
acquisition of the minority interest as part of the Company's formation.
Reference is made to the Prospectus.
As a result of the changes noted above, income before income tax benefit
decreased by 34%, or approximately $748,000, to $1.4 million in 1996 from $2.2
million in 1995.
Income tax benefit of $12.2 million reflects the effect of recording
deferred income taxes arising as a result of incorporation in the amount of
$13.0 million, net of approximately $763,000 for a provision for the results of
operations since incorporation.
The extraordinary item of $1.1 million was a write-off of the unamortized
debt costs of $1.4 million as the Company's pre-existing debt was paid off at
the Company's formation, net of applicable tax of approximately $270,000.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Total revenues increased by 40%, or $17.3 million to $60.5 million in 1996
from $43.2 million in 1995. Total operating costs and expenses increased by
45%, or $15.6 million to $50.1 million in 1996 from $34.5 million in 1995.
The increase in total revenues and operating expenses was attributable
principally to the addition of the GHALP Properties resulting from the
consummation of the GHALP Properties transaction on May 2, 1996 and to an
increase in the number of hotels in the hotel portfolio.
Hotel revenues increased by 43%, or $12.2 million, to $40.9 million in 1996
from $28.7 million in 1995. Approximately 78% of the increase, or $9.6 million
was due to the GHALP Properties. The balance of the increase was the result of
an increase in hotel room rental revenues and the acquisition of a new hotel.
Revenues from management fees increased by 38%, or approximately $2.9
million, to $10.6 million in 1996 from $7.7 million in 1995. Approximately
$3.2 million of this increase resulted from 17 new managed hotels added between
June 30, 1995 and June 30, 1996. The increase was offset by $335,000 from the
loss of certain management contracts and $481,000 was attributable to the
elimination of management fees earned from GHALP Properties as a result of the
consolidation of the results of operations of GHALP Properties.
Revenues from service fees decreased by 3%, or approximately $51,000, to
approximately $1.7 million in 1996 from approximately $1.8 million in 1995. Of
the decrease, approximately $122,000 was attributable to the elimination of
service fees earned from GHALP Properties as a result of the consolidation of
the results of operations of GHALP Properties. The decrease was offset by
increased service fees from existing hotels.
Reimbursable revenues increased by 42%, or approximately $2.1 million, to
$6.9 million in 1996 from $4.9 million in 1995. The increase was due to growth
of the hotel portfolio for 1996 as noted previously in comparison to 1995,
resulting in increased payments to the Company's Marketing Fund. The increase
was partially offset by approximately $234,000 reflecting the elimination of
reimbursable revenues earned from the GHALP Properties as a result of the
consolidation of the results of operations of GHALP Properties.
Other income increased by 47%, or approximately $109,000 in 1996. The
increase was principally due to a $250,000 fee recognized from the termination
of a management contract.
Hotel expenses increased by 51%, or $9.5 million, to $28.3 million in 1996
from $18.8 million in 1995, reflecting the additional hotel expenses from GHALP
Properties as a result of the consolidation of the results of operations of
GHALP Properties. Approximately 94% of the increase or, $8.9 million, was a
result of the consolidation of the GHALP Properties. This increase also
reflected an increase in room expenses and food and beverages expenses
commensurate with revenue increases. These increases were offset by a $544,000
reduction in hotel expense resulting from the write off of a reserve for
14
<PAGE> 16
contingent liabilities as a result of the final settlement of contract
assignments on one of the Company's hotel properties. As a percentage of hotel
revenues, hotel expenses increased to 69% in 1996 from 66% in 1995. The
increase in hotel expense percentage was primarily attributable to a $2.4
million lease payment associated with the GHALP Properties. Excluding the GHALP
Properties lease payment and the reversal of contingent liabilities, the
percentage of hotel expenses to hotel revenues would have been 63%.
SG&A expenses increased by 44%, or $2.6 million, to $8.5 million in 1996
from $5.9 million in 1995. As a percentage of total revenues, SG&A expenses
remained flat at 14% in 1996 and 1995. Of the increase in SG&A expenses, 63%
of the increase, or $1.6 million was due to increased wage, contract labor and
benefit costs arising from the addition of corporate management and staff
personnel related to the general growth of the Company. In addition, 7% of the
increase, or approximately $184,000, is due to the establishment of a provision
for bad debt expense for management fees on an unaffiliated hotel, and 13% or
$321,000 is due to the establishment of a provision for bad debt related to
certain receivables. The increase also reflected an additional approximately
$114,000 cost of managing and administering a publicly held company.
Equity participation compensation expenses increased by 46%, or
approximately $923,000, to $2.9 million in 1996 from $2.0 million in 1995. The
increase was due to the recognition of significant compensation expense as a
result of the consummation of the equity offering. The primary component of the
compensation expense, which is that attributable to the senior executive
officers, was fixed at the initial public offering price, and the Company will
not incur additional expense for such component for periods subsequent to the
equity offering. See Prospectus.
Reimbursable expenses grew by 42%, or $2.1 million, to $6.9 million in 1996
from $4.9 million in 1995. As a percentage of total revenues, reimbursable
expenses remained flat at 11% in 1996 and 1995. These increases were primarily
due to increased advertising and promotional expense, as well as costs
associated with expanding the Company's national sales staff to support both
individual business and group sales as a result of growth of the hotel
portfolio in 1996 as noted previously in comparison to 1995. Offsetting the
increase was a decrease of $234,000, reflecting the elimination of reimbursable
expenses from the GHALP Properties as a result of the consolidation of the
results of the operations of GHALP Properties.
Depreciation and amortization expense increased by 18%, or approximately
$517,000, to $3.5 million in 1996 from $2.9 million in 1995 due to the net
acquisition of property and equipment and the amortization of the acquisition
costs of management contracts. Also included in the increase was approximately
$110,000 from the amortization of deferred debt issuance costs relating to the
Notes and the Revolving Credit Facility.
Interest expense increased by 19%, or approximately $803,000, to $5.1
million in 1996 from $4.3 million in 1995, reflecting the additional interest
from the Notes, capital leases, affiliated borrowings and bank fees, less the
elimination of interest expense from the retired debt.
Earnings from the Company's equity investment in hotel partnership were
terminated following the May 2, 1996 consolidation of the results of operations
of the GHALP Properties.
Income attributable to minority interest was eliminated as a result of the
acquisition of the minority interest as part of the Company's formation.
Reference is made to the Prospectus.
As a result of the changes noted above, income before income tax benefit
increased by 27%, or $1.4 million, to $6.6 million in 1996 from $5.2 million in
1995.
Income tax benefit of $12.2 million reflected the effect of recording
deferred income taxes arising as a result of incorporation in the amount of
$13.0 million, net of approximately $763,000 for the provision for the results
of operations since incorporation.
The extraordinary item of $1.1 million was a writeoff of the unamortized
debt costs of $1.4 million as the Company's pre-existing debt was paid off at
the Company's formation, net of applicable tax of approximately $270,000.
15
<PAGE> 17
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital and liquidity needs include cash to finance
operations, capital requirements relating to ongoing hotel maintenance and
improvements at the Company's owned and leased hotels, capital requirements
associated with the Company's entry into new management contracts and
improvements to the related hotel properties, hotel acquisition financing and
the repayment of indebtedness. The Company has historically satisfied its
capital and liquidity needs through cash generated by operations, mortgage
indebtedness and commercial debt financing.
During the six months ended June 30, 1996, the Company used cash from
operations of $1.2 million as compared to a generation of cash of $8.0 million
in the 1995 period. On acquired properties, the Company intends to make
renovations of approximately $6.7 million and make improvements of
approximately $4 million on an existing resort property.
During the quarter ended June 30, 1996, the Company consummated the
formation and the Offerings. The Company received net proceeds from the
Offerings in the aggregate amount of $161 million. These proceeds, including
the "Bedrock" contribution of $10.0 million (as described in the Prospectus),
were used to implement the Company's formation and financing plan. Remaining
proceeds will be applied in accordance with the formation and financing plan.
See Prospectus.
The Company issued $100 million in 10-1/2% Senior Subordinated Notes which
are due in 2006. The Notes are unsecured obligations of the Company and are
guaranteed by each of the Company's subsidiaries (except for a number of
inconsequential subsidiaries). The Notes bear interest at 10-1/2% per annum
and such interest is payable semi-annually on May 15 and November 15,
commencing November 15, 1996. Except in the event of a "change of control" (as
defined), there will be no principal due on the Notes prior to final maturity.
The Indenture relating to the Notes contains certain covenants restricting the
Company's ability to incur indebtedness and otherwise limiting the Company's
activities.
The Company also obtained a $100 million revolving line of credit in May,
1996 (the "Revolving Credit Facility"). The Revolving Credit Facility is a
direct obligation of the Company and is fully and unconditionally guaranteed by
each of the Company's subsidiaries. Such obligations and guaranties rank
senior in right of payment to the Notes and are secured by substantially all of
the assets of the Company and subsidiaries. While no amounts had been drawn
under the Revolving Credit Facility at June 30, 1996, approximately $35.2
million aggregate principal amount was available for borrowings at such date in
accordance with the terms of the Revolving Credit Facility. Availability under
the Revolving Credit Facility is subject, among other things, to a borrowing
base test calculated with reference to the cash flow from the Company's hotels,
hotel properties and management contracts pledged to secure the obligations of
the Company under the Revolving Credit Facility, the location of certain of
such properties, the terms of such management contracts, the relative
contribution to the borrowing base of the different values attributed to such
properties and the values attributable to both the properties taken as a whole
and the management contracts taken as a whole and other factors. Under the
terms of the Revolving Credit Facility, no further borrowings may be made by
the Company following the third anniversary of the closing of the Revolving
Credit Facility. The Revolving Credit Facility will mature four years from its
closing date. Amounts drawn under the Revolving Credit Facility bear interest
at a variable rate. The Revolving Credit Facility contains covenants requiring
the Company to maintain certain financial ratios and certain covenants
restricting the activities of the Company.
The Company assumed $9.7 million in bond indebtedness as part of the
acquisition of the Wyndham Vinings Hotel.
The Company does not intend to declare any cash dividends in the
foreseeable future. The Company anticipates that any cash provided by
operations, the Offerings and the Revolving Credit Facilities discussed above
and in the Prospectus will be sufficient to meet anticipated cash requirements
in the near future.
16
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Mados Trademark Proceedings
In June 1992, John and Suzanne Mados (the "Madoses"), the managers and
lessees of an unaffiliated hotel operated under the "Wyndham" name in New York
City (Manhattan borough) (the "Mados Wyndham Hotel"), registered the name
"Wyndham Hotel" with the New York Secretary of State pursuant to a New York
State statute which provides that the owner or operator of a hotel in the State
of New York may register the name of a hotel and such registration grants the
exclusive right to use the name in the State of New York. No reported cases to
date indicate how New York courts will interpret the scope of the rights created
by the New York statute, and, therefore, it is not currently known whether the
Madoses' registration pursuant to the statute could prevent the Company from
operating a Wyndham brand hotel anywhere in the State of New York.
In February 1993 and June 1995, respectively, the current owners of the
Mados Wyndham Hotel, Yassky-Wyndham Partnership ("Yassky"), filed Notices of
Opposition to the Company's applications with the USPTO for registration of
"Wyndham" and "Wyndham Garden," as service marks, claiming prior use of the
"Wyndham" mark and requesting that Wyndham's registrations be denied. The
Company subsequently entered into a settlement agreement with Yassky pursuant
to which Yassky assigned to the Company all of its rights in the "Wyndham" mark
throughout the world with the exception of 11 New York State counties
surrounding the Mados Wyndham Hotel, including New York County. In addition,
Yassky withdrew its Notices of Opposition to the Company's federal applications
for registration of the "Wyndham" and "Wyndham Garden" marks. Pursuant to the
settlement agreement, the Company must pay a royalty to Yassky if it undertakes
the operation of a Wyndham brand hotel in any of the 11 counties identified in
the agreement.
In June 1995, the Madoses filed a late Notice of Opposition to the
Company's application for federal registration of the "Wyndham" mark, also
claiming prior use of the "Wyndham" mark and requesting that Wyndham's
registration be denied. There has been no determination as to whether the
Trademark Trial and Appeal Board will accept the untimely Notice of Opposition,
and, if accepted, what the resulting impact would be on the Company's
application for registration.
On May 8, 1996, the Madoses filed a Petition for Cancellation of the
Company's registration for the "Wyndham Garden" service mark with the Trademark
Trial and Appeal Board. It is anticipated that the Trademark Trial and Appeal
Board will suspend the cancellation proceeding pending the outcome of the New
York lawsuit described above.
The Company does not believe that the Madoses' federal and common law
rights to use the Wyndham name will prevent the Company's application for
registration of exclusive use of the "Wyndham" mark throughout the country with
the exception of the area surrounding the Mados Wyndham Hotel. In addition,
because of national recognition of the Wyndham name as a result of the
Company's operations, the Company believes that it has substantial common law
rights to the "Wyndham" marks in many areas throughout the country. It is
likely, however, that the Madoses' prior operation of the Mados Wyndham Hotel
will prevent the Company from operating Wyndham brand hotels or advertising the
Wyndham brand name in connection with the operation of a Wyndham brand hotel
within a geographic area within the borough of Manhattan or possibly within a
50 mile radius of the Mados Wyndham Hotel.
Mados Court Proceedings
On June 29, 1992, the Madoses, who lease and manage the Mados Wyndham
Hotel, filed a lawsuit in the New York Supreme Court, County of New York,
against Wyndham Hotel Company, Wyndham Hotel Company, Ltd., Wyndham Hotel
Management Corporation d/b/a Wyndham Hotels & Resorts (referred to herein as
"Old Wyndham") and Yassky. The lawsuit seeks a declaratory judgment that, based
on their prior use of the Wyndham name, the Madoses possess the exclusive right
to use the Wyndham name and mark in connection with the operation of a hotel in
New York City or within a 50 mile radius thereof. Old Wyndham acknowledges that
use of the Wyndham name in connection with the operation of the Mados Wyndham
Hotel has created certain service mark rights in a geographic area within the
borough of Manhattan, but denies the Madoses' claim to exclusive use of the
Wyndham name within a 50 mile radius of the Mados Wyndham Hotel. The suit
also seeks an injunction enjoining Old Wyndham from using the "Wyndham" mark in
connection with the advertisement, promotion, management or operation of a
hotel in New York City or within a 50 mile radius thereof.
On January 29, 1996, the court issued a temporary restraining order, which,
as modified in a subsequent opinion, prohibits the Company from operating a
Wyndham brand hotel or advertising the Wyndham name in connection with the
operation of a Wyndham brand hotel in the borough of Manhattan or within a 50
mile radius (within the state of New York) of the Mados Wyndham Hotel pending
the outcome of the lawsuit. The court also granted Old Wyndham's (see
Prospectus) motion for an accelerated trial date and the trial concluded on May
31, 1996. The parties have submitted post-trial briefs and are awaiting a
decision from the trial court.
It is possible that the Company could be named as a defendant in this
litigation or that additional proceedings could be instituted against the
Company. An adverse decision in the litigation could prevent the Company from
operating Wyndham brand hotels or advertising the Wyndham name in connection
with the operation of a Wyndham brand hotel within a geographic area within the
borough of Manhattan or possibly within a 50 mile radius of the Mados Wyndham
Hotel. In addition, an adverse decision in the litigation or a delay in the
resolution of the lawsuit beyond the anticipated Fall 1996 opening date for the
Company's La Guardia hotel would require the Company to open such hotel under a
brand name other than Wyndham or Wyndham Garden. It is management's opinion,
based on legal counsel, that the losses resulting from the ultimate resolution
of the aforementioned claim are not estimable.
17
<PAGE> 19
Other Matters
The Tampa Region of the Florida Department of Revenue (the "FDR") has
asserted that the Company may be liable for sales and use tax as a result of
the Company's management of the Wyndham Harbour Island Hotel ("Harbour Island")
in Tampa, Florida. The FDR recently performed an audit of Harbour Island
covering the period from August 1990 through June 1995. On the basis of the
audit, the FDR made a determination that the Company owed approximately $1
million (including penalties and interest) in taxes for such period. The
Company believes that it has meritorious defenses with respect to the amount
claimed by the FDR and is providing information with respect to the FDR's
assertion for the audit period. The owners of Harbour Island have agreed to
indemnify the Company with respect to any additional sales and use tax paid by
the Company for the audit period. The Company does not believe that the
outcome of this matter will have a material adverse effect on its financial
condition.
On February 29,1996, Caribbean Hotel Management Company ("CHMC") , certain
predecessors in interest to the Company and certain Crow Family Members were
served with a complaint filed on November 22, 1995, by Allen-Williams V.I.,
Inc. ("Allen-Williams") in the District Court of the Virgin Islands, Division
of St. Croix. The claim involves collection on a $1.0 million promissory note
issued by a predecessor in interest to CHMC (the "Promissory Note") and relates
to earlier litigation between Allen-Williams and CHMC. Allen-Williams alleges
that a transfer of certain management contracts by CHMC to the Company's
predecessor was a fraudulent conveyance that rendered CHMC insolvent or unable
to pay its liabilities under the Promissory Note and that CHMC and the other
named defendants engaged in certain misrepresentations, including those
resulting in certain violations of the Racketeer Influenced and Corrupt
Organizations Act ("RICO"). Allen-Williams seeks to set aside the alleged
fraudulent conveyance to the extent necessary to pay the indebtedness owed by
CHMC, plus damages (including punitive and treble damages). Liability for
payment of the Promissory Note was not transferred to or assumed by
predecessors to the Company. CHMC has agreed to indemnify the Company's
predecessor (and hence the Company) with respect to this litigation. The
Company does not believe that the outcome of this matter will have a material
adverse effect on its financial condition.
In addition to the above proceedings, the Company is involved in various
lawsuits arising in the normal course of business. The Company believes that
the ultimate outcome of such lawsuits and proceedings will not, individually or
in the aggregate, have a material adverse effect on the results of operations
or financial condition of the Company; however, there can be no assurance that
this will be the case.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 17, 1996, prior to the completion of the Company's Offerings, the
sole stockholder of the Company at that time executed a Written Consent in Lieu
of Special Meeting. The Consent provided for (1) approval of the Company's
Amended and Restated Certificate of Incorporation, (2) provision for multiple
classes of directors and the election of directors to such classes, including
the election of James D. Carreker, Harlan R. Crow, Susan T. Groenteman, Robert
A. Whitman, Anne L. Raymond and Daniel A. Decker, and (3) approval of the
Company's Non-Employee Directors' Retainer Stock Plan and Long Term Incentive
Plan.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number
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<S> <C>
(10.1) Senior Secured Revolving Credit Agreement among Wyndham Hotel
Corporation, The Lenders Party Thereto and Bankers Trust
Company dated May 29, 1996. *
(10.2) Assignment, Assumption and Amendment of Management Agreement
between Houston Greenspoint Hotel Associates, L.P. and Wyndham
Management Corporation, dated July 11, 1996. **
</TABLE>
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<TABLE>
<S> <C>
(10.3) Bristol Place Hotel Agreement of Purchase and Sale by and among WHC Development Corporation,
Confederation Life Insurance Company and Peat Marwick Thorne Inc. (in its capacity as receiver and
manager) dated June 13, 1996 (together with Supplemental Agreement dated as of August 6, 1996).
(11) Computation of Earnings Per Share.
(27) Financial Data Schedule.
</TABLE>
- --------------------
* Filed previously as Exhibit 10.30 to Registration Statement No. 333-2214
** Relating to Exhibit 10.1 (e) of Registration No. 333-2214
(b) Reports on Form 8-K: None.
19
<PAGE> 21
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.
WYNDHAM HOTEL CORPORATION
(Registrant)
Date: August 14, 1996 By: /s/ JAMES D. CARREKER
--------------------------------------
James D. Carreker
President and Chief Executive Officer
Date: August 14, 1996 By: /s/ ANNE L. RAYMOND
--------------------------------------
Anne L. Raymond
Chief Financial Officer, Executive
Vice President and Director
(Principal Financial Officer)
20
<PAGE> 22
Exhibit Index:
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Number Description Page
- ------ ----------- ----
<S> <C>
10.1 Senior Secured Revolving Credit Agreement among Wyndham Hotel
Corporation, The Lenders Party Thereto and Bankers Trust
Company dated May 29, 1996.
10.2 Assignment, Assumption and Amendment of Management Agreement
between Houston Greenspoint Hotel Associates, L.P. and Wyndham
Management Corporation, dated July 11, 1996.
10.3 Bristol Place Hotel Agreement of Purchase and Sale by and among WHC
Development Corporation, Confederation Life Insurance Company and
Peat Marwick Thorne Inc. (in its capacity as receiver and manager)
dated June 13, 1996 (together with Supplemental Agreement dated
as of August 6, 1996).
11 Computation of Earnings Per Share.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
================================================================================
SENIOR SECURED REVOLVING CREDIT AGREEMENT
DATED AS OF MAY 29, 1996
AMONG
WYNDHAM HOTEL CORPORATION,
AS BORROWER,
THE LENDERS PARTY HERETO
AND
BANKERS TRUST COMPANY,
AS AGENT
================================================================================
<PAGE> 2
WYNDHAM HOTEL CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
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SECTION 1
INTERPRETATION . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement; Pro Forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
1.3 References to Articles, Sections, Exhibits, Schedules and Attachments . . . . . . . . . . . . . . . . . . . . . . 72
1.4 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.5 Drafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.6 References to Persons Include Permitted Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.7 References to Applicable Law and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.8 Herein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.9 Including Without Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.10 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.11 Singular and Plural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
1.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 2
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
2.1 Commitments; Loans; Notes; the Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
2.2 Interest on the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
2.4 Repayments and Prepayments; General Provisions Regarding Payments . . . . . . . . . . . . . . . . . . . . . . . . 84
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
2.6 Special Provisions Governing Eurodollar Rate Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
2.7 Increased Costs; Taxes; Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
2.8 Obligation of the Lenders to Mitigate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
2.9 Releases of Pool A Properties, Pool B Properties, Management
Agreements and Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 3
LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
3.2 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
</TABLE>
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3.4 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
3.5 Indemnification; Nature of Issuing Lenders' Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
3.6 Increased Costs and Taxes Relating to Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
SECTION 4
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l09
4.1 Conditions to Effectiveness of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
4.2 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
4.3 Conditions to Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
SECTION 5
COMPANY'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
5.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
5.3 Financial Condition; Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
5.4 Properties; DAB Notes and Affiliate Notes; Agreements; Licenses . . . . . . . . . . . . . . . . . . . . . . . . 127
5.5 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
5.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
5.7 Performance of Agreements; Materially Adverse Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
5.8 Governmental Regulation; Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
5.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
5.10 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
5.11 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
5.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
5.13 Liens on the Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
5.14 Zoning; Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
5.15 Physical Condition; Encroachment; Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
5.17 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
5.18 Environmental Reports; Engineering Reports; Appraisals; Market
Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
5.19 No Condemnation or Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
5.20 Utilities and Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
5.21 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
5.22 Wetlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
5.23 Cash Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
5.24 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
5.25 Employment and Labor Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
5.26 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
SECTION 6
COMPANY'S AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
6.1 Financial Statements and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
</TABLE>
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6.2 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 148
6.3 Corporate Existence; Corporate Separateness etc. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 148
6.4 Taxes and Claims; Tax Consolidation. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 149
6.5 Maintenance of Properties; Repair; Alteration . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 150
6.6 Inspection; Lenders' Meeting; Appraisals . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 151
6.7 Compliance with Laws, Authorizations, etc. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 152
6.8 Performance of Loan Documents and Related Documents . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 152
6.9 Payment of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 152
6.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.11 Casualty and Condemnation; Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
6.12 Renovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
6.13 Brundage Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
6.14 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
6.15 Cash Management System; Agent Rights; Application of Cash Flow;
Depository Account Names .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
6.16 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
6.17 Deferred Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
6.18 Management of Properties; Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
6.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
6.20 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
SECTION 7
COMPANY'S NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 175
7.1 Indebtedness . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
7.2 Liens and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
7.3 Investments, Guaranties and Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
7.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
7.5 Restricted Junior Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
7.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
7.7 Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
7.8 Zoning and Contract Changes and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
7.9 No Joint Assessment; Separate Lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
7.10 Transactions with Affiliated Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
7.11 Sales and Lease-Backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
7.12 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
7.13 Transfer of Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
7.14 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
7.15 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
7.16 Management Agreements, Servicing Agreements and Other
Management Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
7.17 Intellectual Property; Franchise Agreements; Other Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . 209
7.18 Material Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
</TABLE>
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<TABLE>
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7.19 Amendments of Credit Agreement, Other Indebtedness, Obligations,
Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
7.20 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
SECTION 8
EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 213
8.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
8.2 Certain Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
SECTION 9
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
9.1 Assignments and Participations in Loans and Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 221
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
9.3 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
9.4 No Joint Venture or Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
9.5 Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
9.6 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
9.7 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
9.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
9.9 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
9.10 Agent's Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
9.11 Obligations Several; Independent Nature of the Lenders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . 229
9.12 Remedies of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
9.13 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
9.14 Maximum Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
9.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
9.16 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
9.17 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
9.18 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
9.19 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
9.20 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
9.21 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
9.22 Material Inducement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
9.23 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
9.24 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
9.25 Reliance by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
I FORM OF REVOLVING NOTE
II FORM OF SWING LINE NOTE
III FORM OF NOTICE OF BORROWING
IV FORM OF NOTICE OF CONVERSION/CONTINUATION
V FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
VI FORM OF COMPLIANCE CERTIFICATE
VII FORM OF BORROWING BASE CERTIFICATE
VIII FORM OF SUBSIDIARY GUARANTY
IX FORM OF SECURITY AGREEMENT
X FORM OF TRADEMARK SECURITY AGREEMENT
XI FORM OF CASH MANAGEMENT LETTER
XII FORM OF OMNIBUS MANAGEMENT AND LIQUOR LICENSE AGREEMENT
XIII FORM OF ENVIRONMENTAL INDEMNITY
XIV FORM OF COLLATERAL ACCOUNT AGREEMENT
XV FORM OF OPINION OF LOAN PARTIES' COUNSEL
XVI FORM OF ADDITION CERTIFICATE
XVII FORM OF NOTICE OF RENOVATION/RESTORATION
XVIII FORM OF COMPLETION CERTIFICATE
XIX FORM OF MANAGEMENT AGREEMENT REPORT
XX MANAGEMENT AGREEMENT CRITERIA
XXI FORM OF CONFIDENTIALITY AGREEMENT
</TABLE>
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SCHEDULE
<TABLE>
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1.1A PAYROLL SUBSIDIARIES
1.1B HPT PROPERTIES
2.1A LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1G POOL A GROUND LEASE ESTOPPELS
4.1H POOL B GROUND LEASE ESTOPPELS
4.1I MANAGEMENT AGREEMENTS AND ESTOPPELS
4.1J SERVICING AGREEMENTS
4.1K FRANCHISE AGREEMENTS
4.1L MATERIAL LEASES AND ESTOPPELS
4.1S POOL A SECURED INDEBTEDNESS
4.1U AFFILIATE STOCK OWNERSHIP
5.1A ORGANIZATION AND CAPITALIZATION
5.1B GOOD STANDING
5.lF FORMATION
5.2C GOVERNMENT CONSENTS
5.3C CONTINGENT OBLIGATIONS
5.4A1 POOL A PROPERTIES
5.4A2 POOL B PROPERTIES
5.4A3 POOL C PROPERTIES
5.4B DAB NOTES AND AFFILIATE NOTES
5.4C POOL A GROUND LEASES
5.4D POOL B DOCUMENTS
5.4I LIQUOR LICENSES
5.5 LITIGATION
5.7 CERTAIN CONTRACTUAL OBLIGATIONS
5.14A ZONING
5.15B REQUIRED CAPITAL EXPENDITURES
5.16 INSURANCE
5.21A INTELLECTUAL PROPERTY
5.22 WETLANDS
5.23 CASH MANAGEMENT SYSTEM
5.25 EMPLOYMENT AND LABOR AGREEMENTS
5.26B AFFILIATE INTERESTS
6.1 FORM OF FINANCIAL STATEMENT
6.16B RENOVATION PLANS FOR ROSE HALL PROPERTY
6.17A DEFERRED MAINTENANCE
7.1(iv) POOL B OBLIGATIONS
7.2 PERMITTED ENCUMBRANCES
7.10A AFFILIATE TRANSACTIONS
</TABLE>
(vi)
<PAGE> 8
SENIOR SECURED REVOLVING CREDIT AGREEMENT
This SENIOR SECURED REVOLVING CREDIT AGREEMENT is dated as of May 29,
1996 and entered into among WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (individually
referred to herein as a "LENDER" and collectively as the "LENDERS") and BANKERS
TRUST COMPANY ("BANKERS"), as agent for the Lenders (in such capacity, the
"AGENT").
RECITALS
A. The Company and its Subsidiaries desire that the Lenders provide
certain loan facilities, the proceeds of which, together with the proceeds of
the Public Offerings, will be used for the general corporate purposes of the
Company and its Subsidiaries, which include but are not limited to (i) the
reimbursement of an Issuing Lender of any amounts drawn under any Letter of
Credit, (ii) the acquisition, ownership, renovation, restoration, management,
operation and disposition of upscale full service hotels, garden style hotels
and resort hotels located in the United States of America, (iii) the provision
of Investments in Joint Ventures formed to acquire such hotels and (iv) the
acquisition, extension, renewal or modification of Management Agreements,
Servicing Agreements and Other Management Agreements and the provision of
Investments in, and Guaranties of Indebtedness or other obligations of, owners
of Managed Properties.
B. The Subsidiaries of the Company that are Loan Parties desire to
guaranty the obligations of the Company under the Credit Agreement.
C. The Company and the other Loan Parties desire to grant Liens in
the Collateral in favor of the Agent to secure their respective obligations
under the Loan Documents.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Company, the Lenders and the
Agent agree as follows:
SECTION 1
INTERPRETATION
This Agreement and the other Loan Documents shall be construed and
interpreted in accordance with this Section 1.
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement and the other Loan Documents
shall have the following meanings when used herein with initial capital letters:
<PAGE> 9
"ACQUISITION" means any acquisition by the Company, any Pool B
Subsidiary or any Pool C Subsidiary of any fee or ground leasehold interest in
any hotel property, including, without limitation, the acquisition by a Wholly
Owned Subsidiary of the Company of the fee interest in the Vinings Property.
"ACQUISITION AGREEMENTS" means, collectively, the agreements entered
into by the Company and any of its Subsidiaries in connection with an
Acquisition by (i) the Company or, if approved by the Agent in its sole
discretion, a Wholly Owned Subsidiary pursuant to subsection 7.15A(i), (ii) by a
Subsidiary of the Company pursuant to subsection 7.15A(ii), (iii) by any Pool C
Subsidiary pursuant to subsection 7.15A(iii) or (iv) by the Vinings Subsidiary
pursuant to subsection 7.15A(iv).
"ADDITIONAL FRANCHISE AGREEMENT" has the meaning assigned to that term
in subsection 7.17B.
"ADDITIONAL MANAGEMENT AGREEMENT" has the meaning assigned to that term
in subsection 7.16A(i).
"ADDITIONAL POOL A PROPERTY" has the meaning assigned to that term in
subsection 7.15A(i).
"ADDITIONAL POOL B PROPERTY" has the meaning assigned to that term in
subsection 7.15A(ii).
"ADDITION CERTIFICATE" means an Officers' Certificate, substantially in
the form attached hereto as Exhibit XVI, delivered to the Agent pursuant to
subsection 7.15A or subsection 7.16A.
"ADDITION DATE" means the following:
(i) with respect to any Pool A Property, Pool B Property,
Management Agreement or Servicing Agreement listed on Schedule 5.4A1,
5.4A2, 4.1I or 4.15, as the case may be, as of the Effective Date, the
Effective Date;
(ii) with respect to any Additional Pool A Property, any
Additional Pool B Property, or any Pool C Property (including the
Vinings Property) acquired after the Funding Availability Date in
accordance with subsection 7.15A, the latest to occur of (a) the date on
which the Acquisition of such Property is consummated, and (b) the date
on which all the conditions to such Acquisition set forth in subsection
7.15(A)(i), (ii), (iii) or (iv), as the case may be, shall have been
satisfied with respect to such Property; and
(iii) with respect to any Additional Management Agreement,
Servicing Agreement or Other Management Agreement acquired or entered
into after the Funding Availability Date, in each case in accordance
with subsection 7.15A or 7.16A, as the case may be, the latest to occur
of (a) the date on which the acquisition of such Management Agreement or
Other Management Agreement is consummated or the
2
<PAGE> 10
effective date of such Additional Management Agreement, Servicing
Agreement or Other Management Agreement, as the case may be, and (b) the
date on which all the conditions to such acquisition or effectiveness
set forth in subsection 7.15A(i), (ii), (iii) or (iv) or 7.16A(i) or
(ii), as the case may be, shall have been satisfied with respect to such
Management Agreement, Servicing Agreement or Other Management Agreement.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to a Eurodollar Rate Loan, the rate per annum obtained by
dividing (i) the arithmetic average (rounded upward to the nearest 1/16 of one
percent) of the offered quotation, if any, to first class banks in the interbank
Eurodollar market by each of the Reference Lenders for U.S. dollar deposits of
amounts in same day funds comparable to the principal amount of the Eurodollar
Rate Loan of that Reference Lender for which the Adjusted Eurodollar Rate is
then being determined with maturities comparable to the Interest Period for
which such Adjusted Eurodollar Rate will apply as of approximately 10:00 A.M.
(New York time) on such Interest Rate Determination Date by (ii) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements
(including any marginal, emergency, supplemental, special or other reserves)
applicable on such Interest Rate Determination Date to any member bank of the
Federal Reserve System in respect of "Eurocurrency liabilities" as defined in
Regulation D (or any successor category of liabilities under Regulation D);
provided, however, that if any Reference Lender fails to provide the Agent with
its aforementioned quotation then the Adjusted Eurodollar Rate shall be
determined based on the quotation(s) provided to the Agent by the other
Reference Lender(s).
"ADJUSTED STOCKHOLDERS' EQUITY" means, as of any date of determination,
the sum of (i) $204,500,000; plus (ii) the cumulative net income (loss) of the
Company and its Subsidiaries, determined in accordance with GAAP, determined
from December 31, 1995, to the last day of the calendar month ending not less
than 30 days before such date of determination; provided that the calculation of
Adjusted Stockholders' Equity shall exclude gains and losses, together with any
related provision for taxes on such gains and losses, realized in connection
with the sale or other permanent disposition of any Property or other asset, and
excluding any extraordinary gains and losses, together with any related
provision for taxes on such extraordinary gains and losses; plus (iii) an amount
equal to the aggregate net cash proceeds received by the Company from the issue
or sale of equity Securities of the Company in excess of the initial 3,350,000
shares to be issued in connection with the Public Offerings.
"ADJUSTMENT CONDITION" means, as of any date of determination, that:
(i) as of such date of determination, any unsecured Indebtedness
that is recourse to the Company shall have both at least a "BBB" rating
from S&P and a "Baa2" rating from Moody's;
(ii) as of such date of determination, the Senior Notes shall
have both at least a "BB+" rating from S&P and a "Ba1" rating from
Moody's; or
(iii) as of the last day of the month preceding such date of
determination, the ratio of Total Consolidated Indebtedness to
Consolidated EBITDA (calculated for the 12
3
<PAGE> 11
consecutive months ending on the last day of such month) (a) is equal to
or less than 3.0 to 1.0 and (b) shall not have been greater than 3.0 to
1.0 as of any date of determination during the six months ending on the
last day of such month.
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE" means with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AFFILIATE NOTES" means, collectively, the promissory notes of the
obligors and in the principal amounts listed on Schedule 5.4B annexed hereto.
"AFFILIATED OWNERS" means, collectively, the Joint Ventures and other
Persons, and the respective Affiliates thereof, in each of which the Loan
Parties and their respective Subsidiaries shall have made Investments following
the Effective Date, for whose benefit the Loan Parties and their respective
Subsidiaries shall have become liable with respect to Guaranties following the
Effective Date or to which the Loan Parties and their prospective Subsidiaries
shall have made payments following the Effective Date, in each case as permitted
by subsections 7.3(vi), (vii) and (viii), or from which Persons one or more Pool
B Properties shall have been leased by one or more Pool B Subsidiaries in which
the Loan Parties shall have made Investments permitted by subsection 7.3(viii).
"AGENT" has the meaning assigned to that term in the introduction to
this Agreement and also means and includes any successor Agent hereunder.
"AGREEMENT" means this Credit Agreement dated as of the date first
written above among the Company, the Lenders and the Agent, as it may be
amended, restated, supplemented or otherwise modified from time to time.
"ALTA" means the American Land Title Association or any successor
thereto.
"APPLICABLE BASE RATE MARGIN" means, as of any date of determination, a
per annum rate equal to 1.00%; provided that the Applicable Base Rate Margin
shall be a per annum rate of .75% if and so long as any Adjustment Condition
shall occur and be continuing.
"APPLICABLE EURODOLLAR RATE MARGIN" means, as of any date of
determination, a per annum rate equal to 2.00%; provided that the Applicable
Eurodollar Rate Margin shall be a per annum rate of 1.75% if and so long as any
Adjustment Condition shall occur and be continuing.
4
<PAGE> 12
"APPLICABLE LAWS" means, collectively, all statutes, laws, rules,
regulations, ordinances, orders, decisions, writs, judgments, decrees and
injunctions of Governmental Authorities (including Environmental Laws) affecting
the Company, any Loan Party or the Collateral or any part thereof (including the
acquisition, development, construction, Renovation, occupancy, use, improvement,
alteration, management, operation, maintenance, repair or restoration thereof),
whether now or hereafter enacted and in force, and all Authorizations relating
thereto, and all covenants, conditions and restrictions contained in any
instruments, either of record or known to the Company or any other Loan Party,
at any time in force affecting any Property or any part thereof, including any
such covenants, conditions and restrictions which may (i) require improvements,
repairs or alterations in or to such Property or any part thereof or (ii) in any
way limit the use and enjoyment thereof; for purposes of usury, Applicable Laws
means the law of the State of New York applicable to maximum rates of interest.
"APPRAISAL" means, with respect to any Property, a written appraisal of
such Property prepared by an Appraiser and requested by the Agent pursuant to
subsection 6.6B or delivered to the Agent pursuant to subsection 4.1L, 7.15A(i)
or (ii) in each case in form, content and methodology satisfactory to the Agent
and in compliance with all applicable legal and regulatory requirements
(including the requirements of Title XI of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, 12 U.S.C. Sections 3331, et seq., as
amended (or any successor statute thereto), and the regulations promulgated
thereunder).
"APPRAISER" means Cushman & Wakefield, Hospitality Valuation Services,
Inc. or any other independent appraiser selected by the Agent and reasonably
acceptable to the Company who meets all regulatory requirements applicable to
the Agent and the Lenders, who is a member of the American Institute with a
national practice and who has at least 10 years experience with real estate of
the same type and in the geographic area of the Property to be appraised.
"APPROVED CAPITAL POLICY" means the Company's stated policy for the
capitalization of expenditures delivered to the Agent and the Lenders on or
before the Funding Availability Date pursuant to subsection 4.1R and, for
purposes of the calculation of Operating Expenses hereunder, shall include any
subsequent changes to such stated policy as shall be approved in writing by the
Agent, in its reasonable discretion.
"APPROVED ENVIRONMENTAL CONSULTANT" means Law Engineering and
Environmental Services, Inc. or any other qualified, independent environmental
consultant reasonably acceptable to the Agent.
"APPROVED MANAGEMENT FEES" has the meaning assigned to that term in the
definition of Management EBITDA.
"ASSIGNMENT OF RENTS AND LEASES" means each Assignment of Rents and
Leases executed and acknowledged by the Loan Party thereto in favor of the Agent
for the benefit of the Agent and the Lenders in the form delivered on or before
the Funding Availability Date pursuant to subsection 4.1E(i), as any such
Assignment of Rents and Leases may be amended,
5
<PAGE> 13
restated, supplemented, consolidated, extended or otherwise modified from time
to time in accordance with the terms thereof and hereof.
"ATTRIBUTABLE INDEBTEDNESS" means, when used with respect to any sale
and leaseback transaction, as of any date of determination, the greater of (i)
the gross purchase price for the property subject to such transaction and (ii)
the present value (discounted at 10% per annum, compounded on a monthly basis)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such arrangement (including any period for which
such lease has been extended), as each such amount shall be reasonably
determined by the Company and certified to the Agent in an Officer's Certificate
of the Chief Executive Officer or the Chief Financial Officer of the Company,
together with the information utilized by the Company to make such
determination.
"AUTHORIZATION" means any authorization, approval, franchise, license,
variance, land use entitlement, sewer and waste water discharge permit, storm
water discharge permit, air pollution authorization to operate, certificate of
occupancy, municipal water and sewer connection permit, and any like or similar
permit now or hereafter required for the construction or Renovation of any
Improvements located on any Property or for the use, occupancy or operation of
any Property and all amendments, modifications, supplements and addenda thereto.
"BANKERS" has the meaning assigned to that term in the introduction to
this Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the rate per annum that is the higher of
(i) of the Prime Rate and (ii) the sum of (a) the Federal Funds Effective Rate
plus (b) 1/2 of 1.00%.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BEDROCK" means, collectively, Wynopt Investment Partnership, L.P., a
Delaware limited partnership, Wynopt Investment Partnership Level II, L.P., a
Delaware limited partnership, Bedrock Hotel Partners, L.L.C., a Delaware limited
liability company, Bedrock Holdings Partners, a Texas general partnership,
Hampstead Investments, Inc., a Texas corporation, Bedrock Hotel subsidiary,
L.L.C., a Delaware limited liability company, The Hampstead Group, L.L.C., a
Texas limited liability company, and any holder of 5% or more of any class of
equity Securities of any of the foregoing (in each case as of the Funding
Availability Date) and the respective Affiliates of each of the foregoing,
including, without limitation, Donald J. McNamara, Robert A. Whitman and Daniel
A. Decker.
"BEDROCK INVESTMENT PROGRAM AGREEMENTS" means the Investment Agreement
dated as of May 2, 1994 among The Hampstead Group, Inc., Wyndham Hotel Company
Ltd., the partners in Wyndham Hotel Company, Ltd. listed on the signature pages
thereto and Crow Family Partnership, L.P., as amended by a letter agreement
dated May 17, 1995, and by the
6
<PAGE> 14
Hampstead Exchange Agreement; as such agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"BORROWING BASE" means, as of any date of determination from and after
the Funding Availability Date through and including the Maturity Date, the
amount determined by the Agent as of the last day of the preceding month or, if
subsequent thereto, the most recent Addition Date or Release Date, that is equal
to the sum of the following:
(i) the sum of the Pool A Property Amounts in respect of all Pool A
Properties as of such date of determination; provided that the calculation
of the amount referred to in this clause (i) shall exclude (a) the amount,
if any, by which the Pool A Property Amount with respect to any Pool A
Property (other than the Rose Hall Property and any Additional Pool A
Property referred to in clause (c) below) as of such date of determination
otherwise exceeds 25% of the amount determined pursuant to this clause (i)
for such period, (b) the amount, if any, by which the Pool A Property Amount
with respect to the Rose Hall Property as of such date of determination,
otherwise exceeds the correlative percentages of the amount determined
pursuant to this clause (i) indicated for the periods set forth below:
<TABLE>
<CAPTION>
PERIOD PERCENTAGE
---------------------- ------------
<S> <C>
F.A. Date-12/31/96 35%
01/01/97-6/30/97 30%
07/01/97-Maturity Date 25%; and
</TABLE>
(c) if the Pool A Amount with respect to an Additional
Pool A Property exceeds 25% of the amount determined pursuant
to this clause (i) as of such Addition Date, the amount, if
any, by which the Pool A Property Amount with respect to such
Additional Pool A Property otherwise exceeds the amount that
bears the same percentage relationship to the amount
determined pursuant to this clause (i) as of such date of
determination as the Pool A Property Amount with respect to
such Additional Pool A Property on the Addition Date with
respect thereto bears to the amount determined pursuant to
this clause (i) as of such Addition Date; plus
(ii) the lesser of (a) the sum of the Management Amounts
in respect of all Management Agreements and Servicing
Agreements as of such date of determination; provided that,
assuming for the purpose of calculating the amount referred to
in this clause (a) that all Servicing Agreements for the Pool
A Properties (other than the Rose Hall Property) have been
assigned the ranking 2 (as so contemplated by the definition
of Management Amount), the calculation of the amount referred
to in this clause (a) shall exclude the amount, if any, by
which the sum of the Management Amounts in respect of all
Management Agreements and Servicing Agreements as of such date
of determination for which the Agent has then specified the
ranking 3 (as so contemplated) exceeds the sum of the
Management Amounts in respect of the Management Agreements and
Servicing Agreements as of such date of determination for
which the Agent has then specified ranking 1 or 2 (as so
contemplated), and (b) the greater of (x) an amount equal
7
<PAGE> 15
to 66 2/3% of the amount determined pursuant to the preceding
clause (i) and (y) the amount by which $15,000,000 is greater
than the amount determined pursuant to the preceding clause
(i);
provided, however, that, as of any date of determination, the amount calculated
pursuant to this definition of the Borrowing Base shall not be greater than the
following:
(x) if giving effect to the preceding clause (ii)(b)(y)
does not cause the amount calculated pursuant to this
definition of the Borrowing Base to be greater than the amount
that would be so calculated if effect were not given to such
clause, then the amount so calculated shall not be greater
than the amount which, if multiplied by the weighted average
interest rate of all Loans then outstanding, as determined by
the Agent after taking into account the Interest Rate
Agreements then in effect, or, if no Loans are then
outstanding, the rate per annum that is the Adjusted
Eurodollar Rate for Loans with an initial Interest Period of
one month plus the Applicable Eurodollar Rate Margin, in each
case as of such date of determination (the product obtained
thereby being referred to in this definition of Borrowing Base
as the "Assumed Interest Charge"), would permit the
ratios of (a) Collateral EBITDA and (b) Collateral EBITDA-Cap.
Ex, in each case calculated for the 12 most recently completed
calendar months ending not less than 30 days before such date
of determination, to (c) the Assumed Interest Charge, to be
equal to or greater than the respective correlative ratios
indicated for such period:
<TABLE>
<CAPTION>
RATIO RATIO
PERIOD (a):(c) (b):(c)
----------------------- ----------- ----------------
<S> <C> <C>
F.A. Date-12/31/96 4.00 to 1.0 3.65 to 1.0
01/01/97-12/31/97 4.25 to 1.0 3.80 to 1.0
01/01/98-12/31/98 4.50 to 1.0 4.00 to 1.0
01/01/99-Maturity Date 4.75 to 1.0 4.25 to 1.0; and
</TABLE>
(y) if giving effect to the preceding clause (ii)(b)(y)
causes the amount calculated pursuant to this definition of
the Borrowing Base to be greater than the amount that would be
so calculated if effect were not given to such clause, then
the amount so calculated shall not be greater than the amount
which, if multiplied by the Assumed Interest Charge, would
permit the ratios of (A) Collateral EBITDA and (B) Collateral
EBITDA-Cap. Ex, in each case calculated for the 12 most
recently completed calendar months ending not less than 30
days before such date of determination, to (C) the Assumed
Interest Charge, to be equal to 5.0 to 1.0 and 4.75 to 1.0,
respectively.
The Borrowing Base is subject to (1) reduction from time to time as provided in
subsections 2.4B(iii) and 2.9 and (2) adjustment from time to time as provided
in the definitions of Pool A Property Amount, Property EBITDA, Management
Amount and Management EBITDA, respectively.
8
<PAGE> 16
"BORROWING BASE CERTIFICATE" means a certificate delivered by the
Company pursuant to Section 4 or subsection 6.1(iv) substantially in the form
delivered on the Funding Availability Date pursuant to subsection 4.1C(v).
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CAPITAL EXPENDITURES" means, with respect to any Property, for any
period and as of any date of determination, the sum of (i) 3.50% of Property
Gross Revenues from such Property for such period plus (ii) the aggregate
amount, if any, in excess of 3.50% of Property Gross Revenues which is required
to be paid, deposited or reserved by the Company or any of its Subsidiaries in
respect of such Property for Capital Items pursuant to the Pool B Obligations or
the Pool C Obligations, as the case may be, for such period.
"CAPITAL ITEMS" means, with respect to any Property for any period and
as of any date of determination, the cost of capital repairs and replacements of
all or any portion of the Improvements or any other portion of such Property,
including (i) costs of tenant improvements and brokerage commissions payable in
connection with lease transactions at any Property, (ii) costs of environmental
audits and monitoring, environmental remediation work or any other costs and
expenses incurred with respect to compliance with Environmental Laws, (iii)
costs of any Restoration, (iv) costs of any Renovation, (v) costs of FF&E, (vi)
costs of appraisals, valuations, title insurance and inspections and (vii) any
other costs incurred in connection with the Properties that are not included in
Operating Expenses, in each case to the extent such costs would be capitalized
on a balance sheet in accordance with GAAP.
"CAPITAL LEASE" means, with respect to any Person, lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"CAPITAL RESERVE ACCOUNT" means, collectively, one or more
interest-bearing accounts to be established and maintained by the Company at the
offices of the Agent located at 280 Park Avenue, New York, New York, each in the
name of "Bankers Trust Company, as Agent - Hotel Corporation Capital Reserve
Account," with such additional identifying references in such name as the
Company and the Agent shall agree. Capital Reserve Accounts are not, and do not
include, Other Capital Reserve Accounts.
"CAPITAL STOCK" means, with respect to any Person, any capital stock,
partnership or joint venture interests of such Person and shares, interests,
participations or other ownership interests (however designated) of any Person
and any rights (other than debt securities convertible into any of the
foregoing), warrants or options to purchase any of the foregoing.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as of any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United
9
<PAGE> 17
States Government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time
of the acquisition thereof, the highest rating obtainable from either S&P or
Moody's; (iii) commercial paper maturing no more than one year from the date of
creation thereof and having, at the time of the acquisition thereof, a rating
of at least A-1 from S&P or at least P-1 from Moody's; (iv) Eurodollar deposits
due within one year of any commercial banks whose outstanding senior long-term
debt securities are rate either A- or higher by S&P or A-3 or higher by
Moody's; (v) repurchase obligations with a term of not more than 7 days for
underlying securities of the types described in clause (i) of this paragraph
with any bank meeting the qualifications specified in clause (vi) of this
paragraph; (vi) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (vii) shares of any money market mutual fund that
(a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of
not less than $500,000,000, and (c) has the highest rating obtainable from
either S&P or Moody's.
"CASH MANAGER" means Bank One, Texas, N.A., or any successor thereto
approved by the Agent.
"CASH MANAGER CASH MANAGEMENT AGREEMENT" means the letter agreement
delivered pursuant to subsection 4.1E(xi) with respect to the Concentration
Account by and among the Cash Manager, the Agent and the Company.
"CASH MANAGEMENT LETTERS" means (i) each letter agreement with respect
to the Local Accounts among each Loan Party, its Subsidiaries (if applicable),
the financial institutions at which Deposit Accounts are located pursuant to the
Cash Management System and the Agent, in each case substantially in the form of
Exhibit XI annexed hereto with such changes as are acceptable to the Agent, (ii)
the Cash Manager Cash Management Agreement, and (iii) all other agreements with
or directions to the financial institutions at which Deposit Accounts are
located satisfactory to the Agent, in either case pursuant to which, in
accordance with subsection 6.15, such financial institutions are to direct funds
from such Deposit Accounts to the Concentration Account.
"CASH MANAGEMENT SYSTEM" means the system of Deposit Accounts of Loan
Parties and their Subsidiaries pursuant to which all Receipts of Loan Parties
and such Subsidiaries are collected and distributed, all as described in
Schedule 5.23 annexed hereto, as it may be modified from time to time in
accordance with the terms hereof.
"CASH PROCEEDS" means, with respect to any sale or other disposition or
refinancing of any Property, Cash payments received from such sale or
disposition or refinancing.
10
<PAGE> 18
"COLLATERAL" means, collectively, all property (including Capital
Stock), whether real, personal or mixed, tangible or intangible, owned or to be
owned or leased or to be leased or otherwise held or to be held by the Company
or any of its Subsidiaries (other than all property, whether real, personal,
mixed, tangible or intangible, owned or to be owned or leased or to be leased or
otherwise held or to be held by a Pool C Subsidiary) or in which the Company or
any of its Subsidiaries (other than a Pool C Subsidiary) has or shall acquire an
interest, to the extent of the Company's or such Subsidiary's interest therein,
now or hereafter granted, assigned, transferred, mortgaged or pledged to the
Agent and/or the Lenders or in which a Lien is granted to the Agent and/or the
Lenders to secure all or any part of the Obligations, whether pursuant to the
Security Documents or otherwise, including, without limitation, the Mortgaged
Properties, the Leases and Rents (other than those generated by or related to a
Pool C Property), the DAB Notes and rights under the Original Acquisition
Documents, the Acquisition Documents (other than Acquisition Documents with
respect to a Pool C Property) and the Management Agreements, and any and all
proceeds of the foregoing, but excluding the Excluded Assets.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL EBITDA" means, for any period and as of any date of
determination, the sum of Total Pool A Property EBITDA and Management EBITDA, in
each case for such period.
"COLLATERAL EBITDA-CAP. EX", means, for any period and as of any date of
determination, the sum of Total Pool A Property EBITDA-Cap. Ex plus Management
EBITDA, in each case for such period.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
executed and delivered by the Company and the Agent on or before the Funding
Availability Date, substantially in the form of Exhibit XIV annexed hereto,
pursuant to which the Company may pledge cash to the Agent to secure the
obligations of the Company to reimburse Issuing Lenders for payments made under
one or more Letters of Credit as provided in Section 8, as such Collateral
Account Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"COLLECTING AGENT(S)" has the meaning assigned to that term in
subsection 6.15B(i).
"COMMERCE LEASE" means the Sublease Agreement dated as of November 17,
1989 between Crow-Staley Commerce #1 Limited Partnership and Commerce Hotel
Partners Ltd. (which shall be succeeded in interest by the Company after giving
effect to the Formation as of the Funding Availability Date), with respect to
the Commerce Property, as such agreement may be amended, restated, supplemented
or otherwise modified from time to time in accordance with the terms thereof and
hereof.
"COMMERCE PROPERTY" means the real property (including the leasehold
created by the Commerce Lease), together with all Improvements thereon and all
fixtures attached thereto and all personal property used in connection
therewith, located in the City of Commerce, California
11
<PAGE> 19
and known, as of the date of this Agreement, as the Commerce Wyndham Garden
Hotel, as more particularly described in Schedule 5.4Al annexed hereto.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by the Company
or any of its Subsidiaries.
"COMMITMENT" means the commitment of a Lender to maintain or make Loans
pursuant to subsection 2.1A, and "Commitments" means such commitments of all
Lenders in the aggregate.
"COMMON STOCK" means the common stock of the Company, par value $.Ol
per share.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPANY'S ADJUSTED EQUITY INTEREST" means, with respect to any Joint
Venture or other Person in which any Loan Party or any of its Subsidiaries shall
have made an Investment or for whose benefit such Loan Party or Subsidiary shall
have become liable with respect to a Guaranty, and as of any date of
determination, the aggregate fair market value of the equity and debt
Investments of the Loan Parties and their respective Subsidiaries in such Joint
Venture or other Person or any Subsidiary thereof as of such date of
determination, as reasonably determined by the Company and certified to the
Agent in an Officers' Certificate of the Chief Executive Officer or the Chief
Financial Officer of the Company to such effect, together with the information
utilized by the Company to make such determination; provided that, for the
purpose of calculating such amount, (i) the principal amount of any obligation
of such Joint Venture or other Person or Subsidiary thereof so Guaranteed shall
be deemed to be a debt Investment by such Loan Party or Subsidiary so
Guaranteeing such obligation and (ii) there shall be excluded from such amount
debt Investments made in such Joint Venture or other Person if both (a) there
shall not be outstanding any Indebtedness of any Subsidiary of such Joint
Venture or other Person that is not subordinate in right and time of payment to
such debt Investments and (b) such debt Investments (which, with respect to debt
Investments that are evidenced by Guaranties made by any Loan Party or any of
its subsidiaries, shall mean the Indebtedness so Guaranteed) rank pari passu
with all other Indebtedness of such Joint Venture or other Person that is not
subordinate in right or time of payment to any other Indebtedness of such Joint
Venture or other Person or their respective Subsidiaries and rank prior in right
and time of payment to all equity Securities of such Joint Venture or other
Person outstanding from time to time.
"COMPARABLE COMPANIES" has the meaning assigned to that term in
subsection 7.6B.
"COMPLETION CERTIFICATE" means any notice of completion of a Major
Renovation/Restoration delivered to the Agent pursuant to subsection 6.11G,
6.12C or 7.16B.
"COMPLIANCE CERTIFICATE" means a certificate delivered to the Agent by
the Company pursuant to subsection 6.1(vi) substantially in the form delivered
on the Funding Availability Date pursuant to subsection 4.1 C(v).
12
<PAGE> 20
"CONCENTRATION ACCOUNT" means the account established and maintained in
the name of the Agent at the offices of the Cash Manager pursuant to the terms
of the Security Agreement, to which all funds on deposit in the Deposit Accounts
included in the Cash Management System are directed by the Agent in accordance
with subsection 6.15.
"CONDEMNATION PROCEEDS" means all compensation, awards, damages, rights
of action and proceeds awarded to any Loan Party or any of its Subsidiaries by
reason of any Taking.
"CONSOLIDATED EBITDA" means, for any period, the remainder of the
following:
(i) the sum, without duplication, of (a) Total Property EBITDA
and Total Management EBITDA, in each case for such period, plus (b)
all revenue of the Company and its Subsidiaries for such period,
determined on a consolidated basis in conformity with GAAP, that was
not included in the calculation of Total Property EBITDA and Total
Management EBITDA for such period irrespective of whether such income
relates to the Properties, the Management Agreements, the Servicing
Agreements or the Other Management Agreements; provided that the
calculation of the amount referred to in this clause (i) shall exclude
(v) income expressly excluded from the definition of Property Gross
Revenue, (w) income resulting from the write-up of the value of
assets, (x) income from interest earned on the DAB Notes, the
Affiliate Notes or on other notes and receivables from affiliates
except to the extent actually received, (y) the income of a Joint
Venture and income accounted for by the equity method of accounting,
in each case except to the extent distributed to the Company or any of
its Subsidiaries, and increases or decreases in earnings attributable
to minority interests and (z) the income of any Person acquired in a
pooling of interests transaction before the date of acquisition; minus
(ii) all expenses, without duplication, of the Company and its
Subsidiaries (to the extent not deducted from the calculation of Total
Property EBITDA or Total Management EBITDA) for such period and
determined on a consolidated basis in accordance with GAAP, whether or
not such expenses relate to the Properties, the Management
Agreements, the Servicing Agreements or the Other Management
Agreements; provided that the calculation of the amount referred to in
this clause (ii) shall exclude the expenses expressly excluded from
the definitions of Operating Expenses, Property EBITDA and Management
EBITDA and any expense related to the charge off of amounts referred
to in clause (x) above previously recognized as revenue; plus
provided further, that the calculation of the amount referred to in this
definition of Consolidated EBITDA shall exclude the cumulative effect of
changes in accounting principles.
"CONSOLIDATED EBITDA-CAP EX" means, for any period, Consolidated EBITDA
minus Capital Expenditures with respect to all Properties.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of the
following, without duplication: (i) total interest expense of the Company and
its Subsidiaries on a consolidated basis in conformity with GAAP with respect to
(a) all outstanding Indebtedness
13
<PAGE> 21
under this Agreement and the other Loan Documents, (b) that portion of the Pool
B Obligations that is classified as a liability on a balance sheet in
accordance with GAAP, (c) the Pool C Indebtedness, (d) the FF&E Financing
Indebtedness and (e) the Senior Notes; plus (ii) the interest component of all
amounts payable under Capital Leases, including, without limitation, the WHI
Lease; plus (iii) one-third of the rental expense attributable to Operating
Leases with respect to real property, including, without limitation, the
Commerce Lease and the HPT Leases and one-third of the rental expense
attributable to operating leases with respect to personal property with an
initial term, including any renewals at the option of either party, in excess
of one year; plus (iv) net payments, if any, pursuant to Interest Rate
Agreements; plus (v) the amortization of original issue discount and deferred
costs related to Interest Rate Agreements; plus (vi) commissions, discounts and
other fees and charges paid or accrued with respect to letters of credit and
bankers' acceptance financing; plus (vii) interest expense attributable to that
portion of the Indebtedness or other obligations of a Person (other than the
Company or any of its Subsidiaries) that is Guaranteed by the Company or any of
its Subsidiaries or for the payment of which the Company or any of its
Subsidiaries is responsible or liable, directly or indirectly, primarily or
contingently, whether by law, contract, ownership of Securities or otherwise;
plus (viii) the sum of the amounts that are determined with respect to the Pool
B Ground Leases entered into pursuant to sale and lease-back transactions
permitted by subsection 7.11, which amounts shall, with respect to each such
Pool B Ground Lease, be equal to the greater of (a) an amount equal to interest
that would have accrued on the Attributable Indebtedness with respect to such
sale and lease-back transaction, calculated at a per annum interest rate equal
to the Adjusted Eurodollar Rate Loans with an initial Interest Period of one
month plus the Applicable Eurodollar Rate Margin, in each case as of such date
of determination, and (b) the payment under such Pool B Ground Lease; minus
(ix) if Property EBITDA with respect to a Property for such period shall be
zero by reason of the effect of clause (v)(2) to the proviso to the definition
of Property EBITDA (and not for any other reason), the sum of amounts
determined with respect to all such Properties, which amounts shall be equal to
interest that would have accrued on the principal amount of Indebtedness
secured by a Lien on such Property paid by the Loan Parties and their
respective Subsidiaries from gross purchase price paid to the Loan Parties and
their respective Subsidiaries in consideration of such sale or other permanent
disposition, calculated at a per annum interest rate equal to the Adjusted
Eurodollar Rate for Eurodollar Rate Loans with an initial Interest Period of
one month plus the Applicable Eurodollar Rate Margin, in each case as of such
date of determination.
"CONSOLIDATED TOTAL INDEBTEDNESS" means, as of any date of
determination, the sum of the following, without duplication: (i) all
Indebtedness of the Company and its Subsidiaries, determined on a consolidated
basis in conformity with GAAP; plus (ii) all other Indebtedness of the Company
and its Subsidiaries; plus (iii) all Capital Lease obligations; plus (iv) all
obligations owed for all or any part of the deferred purchase price of real
property and management contracts purchased by the Company or any of its
Subsidiaries and all indebtedness created or arising under any conditional sale
or title retention agreement with respect to real property purchased by the
Company and its Subsidiaries; plus (v) trade payables of the Company and its
Subsidiaries that by their terms are more than 90 days delinquent; plus (vi) all
Contingent Obligations of the Company and its Subsidiaries to make any
Investments, Guaranties or payments pursuant to subsection 7.3; plus (vii) all
Guaranties of the Company or any of its Subsidiaries and other obligations for
the payment of which the Company or any of its
14
<PAGE> 22
Subsidiaries is responsible or liable, directly or indirectly, primarily or
contingently, whether by law, contract, ownership of Securities or otherwise,
directly or indirectly, that either (a) are in existence as of the Effective
Date but not included in Schedule 5.3 annexed hereto, (b) are in existence as
of the Effective Date and are specified in such Schedule as Guaranties to be
included in this definition of Consolidated Total Indebtedness, (c) became
effective after the Effective Date or (d) are modified after the Effective Date
pursuant to this Agreement to increase the amount thereof or to change the
obligors with respect thereto or both, provided that, for purposes of
calculating the amount of Consolidated Total Indebtedness, the amount of any
guaranty subject to this clause (d) by reason of the increase in the amount
thereof shall be equal to the amount of such increase; plus (viii) the maximum
amount of all Letters of Credit minus the sum of (a) the amount of Letters of
Credit supporting other Indebtedness of the Company or any of its Subsidiaries
plus (b) the amount of Cash deposited and held pursuant to the terms of the
Collateral Account Agreement; plus (ix) withdrawal liability or insufficiency
under ERISA or under any qualified plan or related trust; plus (x) Attributable
Indebtedness; plus (xi) if any Senior Notes are then outstanding, all other
obligations of the Company and its Subsidiaries that are included in any
definition of Indebtedness contained in the Senior Note Documents.
"CONTINGENT OBLIGATION" means, with respect to any Person, as of any
date of determination and without duplication, any direct or indirect liability,
contingent or otherwise, of that Person which has not been (or to the extent
that it has not been) paid or otherwise discharged with respect to the
following: (i) any Guaranty; (ii) any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings (including, with respect to the Company, Letters of Credit); (iii)
performance, surety and similar bonds in respect of any Restoration, Renovation
or other design, construction, restoration, renovation or repair of any
Improvements, in each case with respect to any Property, Managed Property or
other hotel property; (iv) other performance, surety and appeal bonds; and (v)
indemnification or contribution obligations of any nature, including, without
limitation, liabilities in respect of (a) agreements providing for
indemnification, adjustment of purchase price or similar obligations or for
Guaranties or letters of credit, surety bonds and performance bonds securing any
obligations of that Person pursuant to such agreements, (b) environmental and
"bad deed" indemnities and (c) the issuance or sale of Securities of that
Person. The amount of any Contingent Obligation, as of any date of
determination, shall be equal to the least of (x) the amount of the obligation
so Guaranteed or that otherwise may be required to be paid, (y) the amount to
which such Contingent Obligation is expressly limited and (z) the maximum
exposure under such Contingent Obligation as reasonably calculated by Company
and approved by Agent on its sole discretion; provided, however, that if the
Contingent Obligation is described in two or more of the clauses in the
preceding sentence, the amount of the Contingent Obligation is the sum of the
amounts with respect to such Contingent Obligation, as calculated in accordance
with the preceding clauses (x) and (y).
"CONTRACTUAL OBLIGATION" means, with respect to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, deed to secure debt, contract, lease, purchase order,
undertaking, agreement or other instrument to which that Person is a party or by
which it or any of its properties is bound or to which it or any of its
properties is subject, including, with respect to the Company or any of its
Subsidiaries, any provision of the Related Documents to which the Company or
such Subsidiary
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<PAGE> 23
is a party or by which it or any of its properties is bound or to which it or
any of its properties is subject.
"CREDIT BID" means a bid in a foreclosure sale pursuant to a Mortgage
made by the Agent consisting of all or a portion of the outstanding amount of
the Obligations.
"CROW INTERESTS" means, collectively, (i) Mr. and Mrs. Trammell Crow,
any lineal descendant of Mr. and Mrs. Trammell Crow, or any trust of which not
less than 75 % of the beneficial interests are held by Mr. and Mrs. Trammell
Crow or such lineal descendants and (ii) any Joint Venture of which not less
than 75 % of the outstanding equity interests are owned directly or indirectly
by Mr. and Mrs. Trammell Crow or such lineal descendants, CF Securities, L.P.
and Mill Spring Holdings, Inc., The Trammell Crow 1994 Revocable Trust, Trammell
S. Crow, Harlan R. Crow, the Trammell S. & Barbara H. Crow Children's Trust, The
Stuart M. Crow Management Trust, the Stuart M. Crow Descendants' Trust, The
Howard D. Crow Special Trust, Crow Family, Inc., The Howard D. Crow Irrevocable
Family Branch Trust, The Harlan R. Crow Irrevocable Family Branch Trust, The
Trammell S. Crow Irrevocable Family Branch Trust, The Stuart M. Crow Irrevocable
Family Branch Trust, The Harlan R. Crow Descendants' Trust and The Crow
Long-Term Trust, any holder (as of the Formation Date) of 5 % or more of any
class of equity Securities of any of the foregoing Persons referred to in this
clause (ii) and the respective Affiliates of the Persons referred to in this
clause (ii).
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in currency values.
"CWS" means CW Synergistech, L.P., a limited partnership proposed to be
formed by Trammell Crow Company and an entity owned by the Crow Interests and
the Senior Executives, as described in the Debt Prospectus in the section
entitled "Certain Relationships and Transactions".
"CWS AGREEMENTS" means, collectively, the Service Agreement and
management information systems agreement to be executed and delivered by CWS and
the Company, each substantially in the form thereof that shall be approved by
the Agent, which approval may be granted, withheld, conditioned or delayed in
its sole discretion, as each such agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"DAB NOTES" means, collectively, the promissory notes of the obligors
and in the principal amounts listed on Schedule 5.4B annexed hereto.
"DEBT OFFERING" means the public offering by the Company of Senior Notes
in an aggregate principal amount of $100,000,000 pursuant to the Debt Offering
Documents.
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<PAGE> 24
"DEBT OFFERING DOCUMENTS" means, collectively, the Debt Underwriting
Agreements, the Debt Registration Statement, the Indenture and each of the other
documents and agreements executed in connection with the Debt Offering, as each
such document and agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"DEBT PROSPECTUS" means the prospectus relating to the Senior Notes in
the form included in the Debt Registration Statement or, if the prospectus
included in the Debt Registration Statement omits information in reliance on
Rule 430A under the Act and such information is included in prospectuses filed
with the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act, "Prospectus" means the prospectus relating to the Senior Notes
in the form included in the Debt Registration Statement as supplemented by the
addition of the Rule 430A information contained in the prospectus relating to
the Senior Notes filed with the Securities and Exchange Commission pursuant to
Rule 424(b).
"DEBT REGISTRATION STATEMENT" means Registration Statement (No.
333-2458) of the Company on Form S-1 and the prospectus included therein, as
filed with the Securities and Exchange Commission on March 15, 1996, as amended
by Amendment Nos. 1 and 2 thereto, as filed with the Securities and Exchange
Commission on May 1, 1996, and May 20, 1996, respectively, together with the
Debt Prospectus, and as each may be further amended or supplemented from time to
time, before or after the effectiveness thereof, with respect to the Debt
Offering.
"DEBT UNDERWRITING AGREEMENTS" means, collectively, the Underwriting
Agreements, each dated as of May 20, 1996, among the Company, C.F. Securities,
L.P., O Hotel Company Ltd., Smith Barney Inc., BT Securities Corporation,
Donaldson, Lufkin & Jenrette Securities Corporation and Montgomery Securities,
as representatives of underwriters named in Schedule I thereto, as each such
agreement may be amended, restated, consolidated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof,
pursuant to which the Senior Notes are proposed to be issued and sold in the
Debt Offering.
"DEFAULT RATE" means the rate of interest payable pursuant to subsection
2.2E.
"DEFERRED MAINTENANCE" means the deferred maintenance and repair
(including requirements pursuant to the Americans with Disabilities Act)
referenced as "immediate repairs" and "currently recommended repairs" in
respect of the Pool A Properties and the Harbour Island Property and the
estimated cost thereof, all as specified on Schedule 6.17A annexed hereto.
"DEFERRED MAINTENANCE ACCOUNT" means, collectively, one or more
interest-bearing accounts to be established and maintained by the Company at the
offices of the Agent located at 280 Park Avenue, New York, New York, each in the
name of "Bankers Trust Company, as Agent - Wyndham Hotel Corporation Deferred
Maintenance Account," with such additional identifying references in such name
as the Company and the Agent shall agree.
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<PAGE> 25
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced, by a negotiable certificate of
deposit.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"EFFECTIVE DATE" means the date on which this Agreement shall become
effective pursuant to subsection 9.21.
"ELIGIBLE ASSIGNEE" means (i) a Person that has entered into a
confidentiality agreement pursuant to subsection 9.24 and is (a) a commercial
bank organized under the laws of the United States of America or any state
thereof; (b) a savings and loan association or savings bank organized under the
laws of the United States of America or any state thereof; (c) a commercial bank
organized under the laws of any other country or a political subdivision
thereof; provided, however, that (x) such bank is acting through a branch or
agency located in the United States of America or (y) such bank is organized
under the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country; and (d)
any other entity which is an "accredited investor" (as defined in Regulation D
under the Securities Act) which extends credit or buys loans as one of its
principal businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies, in each case (under clauses (a) through (d)
above) that is reasonably acceptable to the Agent; and (ii) any Lender and any
Affiliate of any Lender; provided further, however, that each Eligible Assignee
under clauses (i)(a) through (i)(c) above shall have Tier 1 capital (as defined
in the regulations of its primary Federal banking regulator) of not less than
$100,000,000; provided further, however, that no Affiliate of the Company or any
other Person who, either directly or through one or more Affiliates, owns or
operates hotels as one of its primary business activities shall be an Eligible
Assignee (it being understood that the direct or indirect ownership or operation
of hotels as an activity incidental to customary lending activities (whether
pursuant to shared-appreciation loans upon the foreclosure of any lien or other
security interest or otherwise) shall not constitute a "primary business
activity" for the purposes of this definition of Eligible Assignee).
"ELIGIBLE PARTICIPANT" means a Person that has entered into a
confidentiality agreement pursuant to subsection 9.24 and is not an Affiliate of
the Company or any other Person who, either directly or indirectly, owns or
operates hotels as one of its primary business activities (it being understood
that the direct or indirect ownership or operation of hotels as an activity
incidental to customary lending activities (whether pursuant to
shared-appreciation loans upon the foreclosure of any lien or other security
interest or otherwise) shall not constitute a "primary business activity" for
the purposes of this definition of Eligible Participant).
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is, or was at any time, maintained or contributed
to by the Company, any of its Subsidiaries, or any of their respective ERISA
Affiliates.
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<PAGE> 26
"ENGINEER" means Law Engineering and Environmental Services, Inc. or
such other reputable engineer approved by the Agent licensed as such in the
state in which the applicable Property in question is located.
"ENGINEERING REPORT" means, with respect to any Property, a written
report prepared by an Engineer, describing and analyzing the physical condition
of the Improvements of such Property, describing any necessary or recommended
repairs, estimating the cost of such repairs and otherwise in form and substance
reasonably satisfactory to the Agent.
"ENVIRONMENTAL CLAIM" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any Governmental Authority or any other Person for
any damage, including personal injury (including sickness, disease or death),
tangible or intangible property damage, contribution, indemnity, indirect or
consequential damages, damage to the environment, damage to natural resources,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to the Company, any
of its Subsidiaries (including any Person who was a Subsidiary prior to the
Funding Availability Date) or any Property.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity executed and
delivered by the Company, GHALP Corp., WHI, Rose Hall GP Corp., Rose Hall GP and
Rose Hall Partnership on or before the Funding Availability Date, and thereafter
by each other Subsidiary of the Company that becomes a party thereto, in favor
of the Agent and the Lenders, in substantially the form of Exhibit XIII annexed
hereto, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"ENVIRONMENTAL LAWS" means all statutes, laws, ordinances, orders,
rules, regulations, written guidelines, writs, judgments, decrees or injunctions
and the like relating to (i) environmental matters, including those relating to
fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Hazardous Release or
threatened Hazardous Release of Hazardous Materials, (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, or the protection of human,
plant or animal health or welfare, in any manner applicable to any Loan Party or
any of its Subsidiaries or any of their properties, including the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Sections
9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Sections
1801, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections
6901, et seq.), the Federal Water Pollution Control Act ( 33 U.S.C. Sections
1251, et seq.), the Clean Air Act (42 U.S.C. Sections 7401, et seq.), the Toxic
Substances Control Act (15 U.S.C. Sections 2601, et seq.), the Solid Waste
Disposal Act (42 U.S.C. Sections 6901, et seq.), as amended by the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901, et seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Sections 136, et seq.), the
Occupational Safety and Health Act (29 U.S.C. Sections 651, et seq.) and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Sections 11001, et
seq.), each as amended or supplemented, and rules and regulations, policies and
guidelines promulgated pursuant thereto and any analogous future or present
local, state and
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<PAGE> 27
federal statutes and rules and regulations, policies and guidelines promulgated
pursuant thereto, each as in effect as of the date of determination.
"EQUITY OFFERING" means the public offering by the Company of
approximately 4,197,500 shares of Common Stock pursuant to the Equity Offering
Documents, including 547,500 shares of Common Stock that were issued and sold
pursuant to the exercise of the underwriters' overallotment option.
"EQUITY OFFERING DOCUMENTS" means, collectively, the Equity Underwriting
Agreements, the Equity Registration Statement and each of the other documents
and agreements executed in connection with the Equity Offering, as each such
document and agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"EQUITY PROSPECTUS" means the prospectus relating to the Common Stock in
the form included in the Equity Registration Statement or, if the prospectus
included in the Equity Registration Statement omits information in reliance on
Rule 430A under the Act and such information is included in prospectuses filed
with the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act, "Prospectus" means the prospectus relating to the Common Stock
in the form included in the Equity Registration Statement as supplemented by the
addition of the Rule 430A information contained in the prospectus relating to
the Common Stock filed with the Securities and Exchange Commission pursuant to
Rule 424(b).
"EQUITY REGISTRATION STATEMENT" means Registration Statement (No.
333-2214) of the Company on Form S-1 and the prospectus included therein, as
filed with the Securities Exchange Commission on March 11, 1996, as amended by
Amendment Nos. 1, 2 and 3 thereto, as filed with the Securities and Exchange
Commission on May 1, 1996, May 14, 1996 and May 20, 1996, respectively,
including the Registration Statement (No. 333-4135) of the Company pursuant to
Rule 462(b) under the Securities Act, as filed with the Securities Exchange
Commission on May 21, 1996, and together with the. Equity Prospectus, and as
each may be further amended or supplemented from time to time, before or after
the effectiveness thereof, with respect to the Equity Offering.
"EQUITY UNDERWRITING AGREEMENTS" means, collectively, the Underwriting
Agreements, each dated as of May 20, 1996, among the Company, C.F. Securities,
L.P., Wyndham Hotel Company Ltd., Smith Barney Inc., BT Securities Corporation,
Donaldson, Lufkin & Jenrette Securities Corporation and Montgomery Securities,
as representatives of underwriters named in Schedule I thereto, as each such
agreement may be amended, restated, consolidated, supplemented or otherwise
modified from time to time in accordance with the terms thereof, pursuant to
which 4,197,500 shares of Common Stock were issued and sold in the Equity
Offering, including 547,500 shares of Common Stock that were issued and sold to
cover overallotments.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
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<PAGE> 28
"ERISA AFFILIATE" means, with respect to any Person, (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Internal Revenue Code of which that Person
is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of any
Loan Party or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of such Loan Party or such Subsidiary, within the meaning of this
definition with respect to the period during which such entity was an ERISA
Affiliate of such Loan Party or such Subsidiary and with respect to liabilities
arising after such period for which such Loan Party or such Subsidiary could be
liable under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation), (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan, (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA, (iv) the
withdrawal by any Loan Party, any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan with two or more contributing sponsors or
the termination of any such Pension Plan resulting in liability pursuant to
Section 4063 or 4064 of ERISA, (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan, (vi) the imposition of liability
on any Loan Party or any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA, (vii) the withdrawal by any Loan Party
or any of its Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability therefor,
or the receipt by any Loan Party or any of its Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA,
(viii) the occurrence of an act or omission which could give rise to the
imposition on any Loan Party or any of its Subsidiaries or any of their
respective ERISA Affiliates of fines, penalties, taxes or related charges under
Chapter 43 of the Internal Revenue Code or under Section 409 or Section
502(c)(2), (i) or (1), or Section 4071 of ERISA in respect of any Employee
Benefit Plan, (ix) the assertion of a material claim (other than routine claims
for benefits) against any Employee Benefit Plan other than a Multiemployer Plan
or the assets thereof, or against an Loan Party or any of its Subsidiaries or
any of their respective ERISA
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<PAGE> 29
Affiliates in connection with any such Employee Benefit Plan, (x) receipt from
the Internal Revenue Service of notice of the failure of any Pension Plan (or
any other Employee Benefit Plan intended to be qualified under Section 401(a)
of the Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan to
qualify for exemption from taxation under Section 501(a) of the Internal
Revenue Code or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates determined
by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in subsection
8.1.
"EXCESS CASH FLOW" means, for any period, an amount equal to the
following:
(i) the sum of the following amounts for such period, without
duplication:
(a) all Property Gross Revenues and other Receipts with respect
to the Properties; plus
(b) all Management Fees and other Receipts under the
Management Agreements and the Other Management Agreements; plus
(c) any other items reported as income on the consolidated
statement of operations of the Company and its Subsidiaries, including,
without limitation, (x) interest income on the Properties' bank accounts or
otherwise earned by the Company or any of its Subsidiaries and (y) rebates
or refunds; plus
(d) Extraordinary Receipts of the Loan Parties and any of their
respective Subsidiaries; less
(ii) the sum of the following amounts for such period, without duplication,
in each case as approved in advance by the Agent:
(a) all reasonable and customary Operating Expenses for the
Properties incurred in the ordinary course of business, consistent with past
practice; provided, however, that for purposes of the calculation of Excess
Cash Flow for any period, (x) Operating Expenses shall include (1) scheduled
payments in respect of any Ground Lease and (2) only those franchise fees
then due and payable to Persons who are not Affiliates of the Company and
(y) Operating Expenses shall not include any Management Fees with respect to
the Properties;
(b) all expenses payable by Management Corp. under Management
Agreements and Other Management Agreements that Management Corp. reasonably
believes will be reimbursed timely and in full by the other parties thereto;
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<PAGE> 30
(c) a reserve for Capital Items, in an amount not to exceed
the sum of (x) 3.50% of Property Gross Revenues for each of the Properties
for such period plus (y) the aggregate additional amount, if any, required
to be paid, deposited or reserved by the Company for Capital Items or any of
its Subsidiaries in respect of the Pool B Properties and the Pool C
Properties pursuant to the Pool B Obligations or the Pool C Obligations, as
the case may be, for such period, in each case as approved by the Agent,
which approval shall not be unreasonably withheld, conditioned or delayed,
and all expenditures from such reserves (to the extent included in the
amount calculated pursuant to clause,(i) above for such period);
(d) all scheduled payments of rent, principal or interest with respect
to the Pool B Obligations, the Pool C Indebtedness and the FF&E Financing
Indebtedness;
(e) federal, state and local taxes;
(f) Permitted Junior Payments by the Loan Parties or any of their
respective Subsidiaries; and
(g) reasonable and customary sales, general and administrative expenses
of the Company and its Subsidiaries incurred in the ordinary course of
business, consistent with past practice.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXCLUDED ASSETS" means the rights of the Loan Parties under Management
Agreements and Other Management Agreements that, by their terms and in
accordance with general practice, cannot be pledged to the Agent.
"EXCUSABLE DELAY" means a delay due to acts of God, governmental
restrictions, enemy actions, war, civil commotion, fire, casualty, strikes,
shortages of supplies or labor, work stoppages or other causes beyond the
reasonable control of the Company or any of its Affiliates, but lack of funds
shall not be deemed a cause beyond the reasonable control of the Company or any
of its Affiliates.
"EXTRAORDINARY RECEIPTS" means the proceeds to any Loan Party or any of
its Subsidiaries from such items as (i) sales, exchanges or other dispositions
of the assets of any Loan Party or any of its Subsidiaries other than in the
ordinary course of business thereof, (ii) damage recoveries and casualty
insurance proceeds (including Condemnation Proceeds or Insurance Proceeds but
other than the proceeds of business interruption insurance or rental loss
insurance), (iii) income derived from Securities and other property acquired for
investment except to the extent such Securities represent Cash Equivalents,
income from Joint Ventures and interest and distributions received on account of
Investments made under 7.3(vii), (iv) condemnation awards or sales in lieu of
and under the threat of condemnation (other than
23
<PAGE> 31
awards or other payments for any Taking for temporary use), (v) debt or equity
financing or refinancing, and (vi) all other amounts of any nature paid to any
Loan Party or any of its Subsidiaries not arising out of the ordinary course of
business thereof.
"FEDERAL FUNDS EFFECTIVE RATE" means, 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, 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 Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"FF&E" means, with respect to any Property or the offices of the
Company and its Subsidiaries, any furniture, fixtures and equipment, including
any beds, lamps, bedding, tables, chairs, sofas, curtains, carpeting, smoke
detectors, mini bars, paintings, decorations, televisions, telephones, radios,
desks, dressers, towels, bathroom equipment, heating, cooling, lighting,
laundry, incinerating, loading, swimming pool, landscaping, garage and power
equipment, machinery, engines, vehicles, fire prevention, refrigerating,
ventilating and communications apparatus, carts, dollies, elevators, escalators,
kitchen appliances, restaurant equipment, computers, reservation systems,
software, cash registers, switchboards, hotel cleaning equipment or any other
items of furniture, fixtures and equipment typically used in hotel properties
(including furniture, fixtures and equipment used in guest rooms, lobbies,
common areas, front desk, back office, bars, restaurants, kitchens, laundries,
concierge, bellman, recreation, amusement, landscaping, parking and other areas
of hotels) and any replacements of all or any portion of any of the foregoing.
"FF&E FINANCING INDEBTEDNESS" means Indebtedness (other than any Loans)
incurred by the Company or any of its Subsidiaries for the financing or
refinancing of FF&E, including, without limitation, that portion of the
obligations with respect to a Capital Lease, conditional sale agreement or
similar arrangement that is classified as a liability on a balance sheet in
conformity with GAAP, and any refinancing, exchange or refunding thereof that is
permitted pursuant to subsection 7. 1 (iii).
"FORMATION" means, collectively, the transactions contemplated by the
Formation Agreement, the Hampstead Exchange Agreement and the Rose Hall Transfer
Agreement as described in the Debt Prospectus in the section entitled "The
Formation and the Financing Plan -- Formation Transactions" and as more
particularly described on Schedule 5.1F annexed hereto.
"FORMATION AGREEMENT" means the Formation Agreement dated as of March
10, 1996 among the Company and the other parties identified on the signature
pages thereof, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
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<PAGE> 32
"FORMATION DATE" means the date on which the transactions constituting
the Formation shall be consummated, or, if there shall be more than one such
date, the date of the initial closing of the Public Offerings.
"FORMATION DOCUMENTS" means, collectively, the Formation Agreement, the
Hampstead Exchange Agreement, the Rose Hall Transfer Agreement, the Registration
Rights Agreement, the Stockholders' Agreement and each other agreement or other
document giving effect to the Formation, the Confidential Offering Memorandum
dated March 8, 1996 of the Company relating to the Formation and the
transactions contemplated by the foregoing agreements, together with the
exhibits and other attachments to such Memorandum, and each opinion, agreement,
assignment, deed, instrument, material certificate or other material document
delivered in connection therewith or pursuant thereto.
"FRANCHISE AGREEMENT" means each of the franchise agreements listed on
Schedule 4.1K annexed hereto, as each such agreement may be amended, restated,
supplemented or otherwise modified or replaced from time to time in accordance
with subsection 7.17C.
"FUNDING AVAILABILITY DATE" or "F.A. Date" means the date on which each
of the conditions set forth in subsection 4.1 are satisfied.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, in each case as the same are
applicable to the circumstances as of the date of determination.
"GE OPTION" means the option of General Electric Pension Trust ("GE") to
acquire Common Stock, the exercise of which is reflected in a letter agreement
dated April 29, 1996 between GE and the Company, as such agreement may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"GEORGIA INTANGIBLE TAX" means any and all mortgage recording taxes,
transfer taxes, general intangibles taxes, intangible recording taxes and
governmental stamp and other taxes, duties, imposts, assessments or charges
(including, without limitation, all interest and penalties thereon) payable to
the Tax Commissioner of Fulton County, Georgia or any other Governmental
Authority in the State of Georgia and arising out of or in connection with the
execution, delivery, filing, recordation or registration of, or performance
under, the Georgia Mortgages or any other Loan Document or the Aggregate Taxable
Borrowings.
"GHALP" means Garden Hotel Associates L.P. (also known as Garden Hotel
Associates Limited Partnership), a Texas limited partnership.
"GHALP II" means Garden Hotel Associates Two L.P. (also known as Garden
Hotel Associates II Limited Partnership), a Texas limited partnership.
25
<PAGE> 33
"GHALP CORP." means GHALP Corporation, a Delaware corporation.
"GHALP SECURITY DEPOSIT" means the amount owed by HPTWN to GHALP Corp.
pursuant to Section 3.2 of the HPT Sale Agreement and Section 3.5 of the HPT
Leases, in each case as in effect as of the date of this Agreement.
"GOVERNMENTAL ACTS" has the meaning assigned to that term in subsection
3.5A.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state,
county, municipality or other political subdivision or branch thereof, and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any agency, board, central
bank, commission, court, department or officer thereof.
"GREYSTAR AGREEMENTS" means the agreement or agreements, if any, between
Greystar Partnership and the Company with respect to the program between
Greystar Partnership and the Company for the management of "extended-stay" hotel
properties described in the Debt Prospectus in the second paragraph in the
section entitled "Business -- Growth Strategy -- II. Additional Growth
Opportunities -- New Lodging Products", as each such agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof. Greystar Agreements do not include Other
Management Agreements with respect to such hotel properties.
"GREYSTAR PARTNERSHIP" means the partnership owned by Crow Funding
Interests. Trammell Crow Residential and Greystar Inc. described in the debt
prospectus in the second paragraph in the section entitled "Business -- Growth
Strategy -- II. Additional Growth Opportunities -- New Lodging Products".
"GROUND LEASES" means, collectively, the Pool A Ground Lease and the
Pool B Ground Leases.
"GUARANTY" means, with respect to any Person, any obligation,
contingent or otherwise, of that Person which has not been (or to the extent
that it has not been) paid or otherwise discharged with respect to any
Indebtedness, Ground Lease, other lease, dividend or other obligation of any
other Person if the primary purpose or intent thereof by the Person incurring
the Contingent Obligation is to provide assurance to the obligee of such
obligation that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof. Guaranties shall include, without limitation, (i) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (ii) the obligation to
make take-or-pay or similar payments if required regardless of non-performance
by any other party or parties to an agreement, and (iii) any liability of such
Person for the obligation of another Person through any agreement (contingent or
otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (b) to maintain
26
<PAGE> 34
the solvency or any balance sheet item, level of income or financial condition
of another Person if, in the case of any agreement described under subclauses
(a) or (b) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Guaranty shall be equal
to the least of (x) the amount of the obligation so guaranteed or otherwise
supported, (y) the amount to which such Guaranty is specifically limited and
(z) the maximum exposure under such Guaranty as reasonably calculated by the
Company and approved by the Agent in its sole discretion. Guaranties shall not
include any of the foregoing obligations to the extent that the same
constitutes Indebtedness under the definition thereof or is a Guaranty with
respect thereto. The term "Guarantee" used as a verb has a corresponding
meaning.
"HAMPSTEAD EXCHANGE AGREEMENT" means the Exchange Agreement dated as of
March 10, 1996 among Wyndham Hotel Company Ltd., the Company, Wynopt Investment
Partnership Level II, L.P., Wynopt Investment Partnership, L.P. and The
Hampstead Group L.L.C. and joined in by Bedrock Hotel Partners, L.L.C., as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof.
"HARBOUR ISLAND LEASE" means the Lease and Assignment dated as of March
1, 1988 between Lincoln Island Associates No. 1, Limited and WHI Limited
Partnership (which shall be succeeded in interest by WHI after giving effect to
the Formation as of the Formation Date), with respect to the Harbour Island
Property, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"HARBOUR ISLAND PROPERTY" means the real property (including the
leasehold created by the Harbour Island Lease), together with all Improvements
thereon and all fixtures attached thereto and all personal property used in
connection therewith, located in Tampa, Florida and known, as of the date of
this Agreement, as the Wyndham Harbour Island Hotel, as more particularly
described in Schedule 5.4A2 annexed hereto.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste".
restricted hazardous waste", "infectious waste", "toxic substances",
"pollutant", "contaminant" or any other formulations intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Laws, (ii) any oil, petroleum, petroleum fraction or petroleum
derived substance, (iii) any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil, natural
gas or geothermal resources, (iv) any flammable substances or explosives, (v)
any radioactive materials, (vi) asbestos in any form, (vii) urea formaldehyde
foam insulation, (viii) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million, (ix) pesticides, and (x) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any Persons in the vicinity of the
Properties; provided,
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<PAGE> 35
however, that Hazardous Materials shall not include any materials in a
non-hazardous form such as asphalt contained in road-surfacing materials or
hazardous materials customarily used in the operation of hotel properties and
properly stored and maintained.
"HAZARDOUS RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other receptacles containing any Hazardous Materials), or into or out of any
Property, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
"HPT" means Hospitality Properties Trust, a Maryland real estate
investment trust.
"HPT AGREEMENTS" means, collectively, the HPT Sale Agreement, the
Agreement to Lease dated as of April 1, 1996 between HPT and GHALP II (as such
agreement has been amended by First Amendment to Purchase and Sale Agreement and
Agreement to Lease dated as of April 19, 1996 among GHALP, GHALP II, HPT and
HPTWN and Second Amendment to Agreement to Lease dated as of May 2, 1996 between
GHALP II and HPTWN), the HPT Leases, the HPT Collateral Documents, the
Partnership Interest Pledge and Security Agreement dated as of May 3, 1996 from
Garden Hotel Partners LP and Garden Hotel Partners Two LP in favor of HPTWN, the
HPT Stock Pledge and the HPT Estoppel, as each such agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"HPT COLLATERAL DOCUMENTS" means, collectively, the Collateral
Assignments of Leases, Contracts and Agreements dated as of May 2, 1996 and May
3, 1996 between GHALP 11 and HPTWN II, the Assignment and Security Agreement
dated as of May 3, 1996 between GHALP II and HPTWN and the Security Agreement
dated as of May 3, 1996 between GHALP II and HPTWN, as each such agreement may
be amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"HPT ESTOPPEL" means, collectively, the Ground Lessor Estoppel
Certificates and Agreements, in each case containing terms and conditions
Satisfactory to the Agent in its sole discretion, that shall be executed and
delivered by HPTWN and acknowledged by the Company and the Agent.
"HPT LEASES" means, collectively, the Lease Agreements dated as of May
2, 1996 or May 3, 1996, as the case may be, between HPTWN and GHALP II, with
respect to the HPT Properties, as such agreements may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"HPT PROPERTIES" means, collectively, the Pool B Properties designated
as such on Schedule 1.1B annexed hereto.
"HPT SALE AGREEMENT" means the Purchase and Sale Agreement dated March
5, 1996 between GHALP and HPT, as amended by First Amendment to Purchase and
Sale Agreement
28
<PAGE> 36
and Agreement to Lease dated as of April 19, 1996 among GHALP, GHALP II, HPT
and HPTWN and by Second Amendment to Purchase and Sale Agreement dated as of
May 2, 1996 between GHALP and HPTWN, as such agreement may be further amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"HPT STOCK PLEDGE" means the Stock Pledge and Security Agreement to be
dated the date of the initial closing of the Public Offerings from the Company
for the benefit of HPTWN, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"HPTWN" means HPTWN Corporation, a Delaware corporation.
"IMPOSITIONS" means all real property taxes and assessments, of any kind
or nature whatsoever, including, without limitation, vault, water and sewer
rents, rates, charges and assessments, levies, permits, inspection and license
fees and other governmental, quasi-governmental or nongovernmental levies or
assessments such as maintenance charges, owner association dues or charges or
fees resulting from covenants, conditions and restrictions affecting the
Properties, assessments resulting from inclusion of any Property in any taxing
district or municipal or other special district, any of which are assessed or
imposed upon the Property, or become due and payable, and which create or may
create a Lien upon the Property, or any part thereof. In the event that any
penalty, interest or cost for nonpayment of any Imposition becomes due and
payable, such penalty, interest or cost shall be included within the term
"Impositions".
"IMPROVEMENTS" means all buildings, structures, fixtures, tenant
improvements and other improvements of every kind and description now or
hereafter located in or on or attached to any Land, including all building
materials, water, sanitary and storm sewers, drainage, electricity, steam, gas,
telephone and other utility facilities, parking areas, roads, driveways, walks
and other site improvements; and all additions and betterments thereto and all
renewals, substitutions and replacements thereof.
"INDEBTEDNESS" means, with respect to any Person and without
duplication, to the extent required to be shown on a balance sheet prepared in
conformity with GAAP, (i) all indebtedness for money borrowed by that Person,
(ii) that portion of obligations with respect to Capital Leases that is
classified as a liability on a balance sheet in conformity with GAAP, (iii)
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money, (iv) all obligations owed for
all or any part of the deferred purchase price of assets or services purchased
by that Person, which purchase price is fully earned (a) due more than six
months from the date of incurrence of the obligation in respect thereof or (b)
evidenced by a note or similar written instrument, (v) all indebtedness secured
by any Lien on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person, except obligations for
Impositions which are not due and payable and Liens permitted pursuant to
subsection 6.4 or 6.9, (vi) obligations under Currency Agreements and Interest
Rate Agreements and (vii) that portion of any other obligation of that Person
(other than
29
<PAGE> 37
reservation and similar deposits from customers and working capital deposits
from owners received and held in the ordinary course of business) that is
classified as a liability on a balance sheet in conformity with GAAP, which
obligation is (a) due more than six months from the date of incurrence thereof
or (b) evidenced by a note or similar written instrument.
"INDEMNIFIED PERSON" has the meaning assigned to that term in subsection
9.3.
"INDENTURE" means the Indenture dated as of May 24, 1996 among the
Company, certain Subsidiaries, as guarantors, and Bank One, Columbus, N.A., as
Trustee, pursuant to which the Company issued the Senior Notes, as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof.
"INSURANCE PROCEEDS" means all insurance proceeds, damages, claims and
rights of action and the right thereto under any insurance policies relating to
any portion of any Property.
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
required hereunder covering or applicable to any Property or any part thereof,
all requirements of the issuer of any such policy, and all orders, rules,
regulations and other requirements of the National Board of Fire Underwriters
(or any other body exercising similar functions) applicable to or affecting any
Property or any part thereof or any use of any Property or any portion thereof.
"INTELLECTUAL PROPERTY" means, as of any date of determination, all
patents, trademarks, tradenames, copyrights, technology, know-how and processes
used in or necessary for the conduct of the business of the Loan Parties and
their respective Subsidiaries as conducted on such date of determination that
are material to the business, operations, condition (financial or otherwise) or
prospects of the Loan Parties and their Subsidiaries, taken as a whole,
including any of the foregoing licensed to the Loan Parties or any of their
respective Subsidiaries by other Persons.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means each date for calculating the
Adjusted Eurodollar Rate for purposes of determining the interest rate in
respect of an Interest Period. The Interest Rate Determination Date shall be the
second Business Day prior to the first day of the related Interest Period for
any Loan.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means, with respect to any Person or any of its
Subsidiaries, as of any date of determination and without duplication, (i) any
direct or indirect purchase or other
30
<PAGE> 38
acquisition (whether or not for consideration) by such investing Person or
Subsidiary of, or of a beneficial interest in, any Securities of any other
Person, (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value by such investing Person or Subsidiary from any other
Person (other than (a) a Person with respect to which such investing Person or
Subsidiary is a Wholly Owned Subsidiary or (b) any other Wholly Owned
Subsidiary of the Person referred to in the preceding clause (a); provided
that, in the case of the Company and its Subsidiaries, such other Wholly Owned
Subsidiary is a Loan Party and has Guaranteed the Obligations), of any equity
Securities of such investing Person or Subsidiary, (iii) any direct or indirect
loan, advance (other than advances to officers, employees, consultants,
accountants, attorneys and other advisors and members of the Board of Directors
of any Person for moving, entertainment and travel expenses, drawing accounts
and similar expenditures in each case incurred in the ordinary course of
business) or capital contribution by to any other Person, including all
indebtedness and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other Person in the ordinary
course of business, (iv) any commitment or obligation (including, without
limitation, any obligation under or in connection with a Management Agreement)
to make any investment described in clauses (i) through (iii) above and (v) any
liability that is recourse to such investing Person or Subsidiary or secured by
any asset of such investing Person or Subsidiary and that arises, by law,
contract, ownership of Securities or otherwise, directly or indirectly, as the
result of or otherwise in connection with the origination, continuation or
termination of any investment described in clauses (i) through (iv) above. The
amount of any Investment, as of any date of determination, shall be equal to
(x) with respect to an Investment referred to in clause (i) or (ii) of the
preceding sentence, the remainder of (1) the sum of original cost of such
Investment plus the cost of all additions thereto as of such date of
determination, minus (2) the aggregate amount paid to such Person or Subsidiary
as a return of such Investment, provided, that (A) the calculation of the
amount referred to in this clause (2) shall exclude all fees and other amounts
(or the portion thereof) that shall constitute interest, dividends or other
amounts in respect of the return on such Investment, as determined in
accordance with GAAP, and (B) the calculation of the amount referred to in this
clause (i) shall exclude, all adjustments for increases or decreases in value,
and write-ups, write-downs or write-offs with respect to such Investment, (y)
with respect to an Investment referred to in clause (iv) or (v) of the
preceding sentence, the maximum aggregate liability for which such investing
Person or Subsidiary may become liable, by law, contract, ownership of
Securities or otherwise, with respect to such Investment as of such date of
determination, and (z) with respect to an Investment described in two or more
of clauses (i), (ii), (iii) and (iv), the sum of the amounts with respect to
such Investment, as calculated in accordance with the preceding clauses (x) and
(y), in each case as of such date of determination.
"IP CORP." means Wyndham IP Corporation, a Delaware corporation and a
Subsidiary of the Company.
"IP LICENSE AGREEMENTS" has the meaning assigned to that term in
subsection 5.21A.
"ISIS 2000" means ISIS 2000, a limited partnership to be formed by the
Crow Family Interests and the Senior Executives, as described in the Debt
Prospectus in the section entitled "Business--Customers and Marketing Central
Reservation System".
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<PAGE> 39
"ISIS 2000 AGREEMENTS" means, collectively, the Computerized
Reservations Services Agreement dated as of May 24, 1996 between the Company and
ISIS 2000 and the Service Agreement that shall be executed and delivered by ISIS
2000 and the Company, substantially in the form that shall be approved by the
Agent, which approval may be granted, withheld, conditioned or delayed in its
sole discretion, as each such agreement may be amended, restated, supplemented
or otherwise modified from time to time in accordance with the terms thereof and
hereof.
"ISSUING LENDER" means, with respect to any Letter of Credit, the Lender
which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided,
however, that in no event shall any Subsidiary of any Person be considered to be
a Joint Venture to which such Person is a party.
"LAND" means the land located in the towns, counties and states listed
on Schedule 5.4Al annexed hereto (and more particularly described in Exhibit A
to each Mortgage (other than the Mortgages with respect to the Ground Leases, in
which the applicable Land is described in Exhibit A-1 to each such Mortgage)),
Schedule 5.4A2 annexed hereto and Schedule 5.4A3 annexed hereto, together with
all strips and gores within or adjoining such property, all estate, right,
title, interest, claim or demand whatsoever of any Loan Party or any of its
Subsidiaries in the streets, roads, sidewalks, alleys, and ways adjacent thereto
(whether or not vacated and whether public or private and whether open or
proposed), all vaults or chutes adjoining such land, all of the tenements,
hereditaments, easements, reciprocal easement agreements, rights pursuant to any
trackage agreement, rights to the use of common drive entries, rights-of-way and
other rights, privileges and appurtenances thereunto belonging or in any way
pertaining thereto, all reversions, remainders, dower and right of dower,
curtesy and right of curtesy, all of the air space and right to use said air
space above such property, all transferable development rights arising therefrom
or transferred thereto, all water and water rights (whether riparian,
appropriative or otherwise, and whether or not appurtenant) and shares of stock
evidencing the same, all mineral, mining, gravel, geothermal, oil, gas,
hydrocarbon substances and other rights to produce or share in the production of
anything related to such property, all drainage, crop, timber, agricultural, and
horticultural rights with respect to such property, and all other appurtenances
appurtenant to such property, including without limitation, any now or hereafter
belonging or in any way appertaining thereto, and all claims or demands of such
Loan Party or such Subsidiary, either at law or in equity, in possession or
expectancy, now or hereafter acquired, of, in or to the same.
"LEASE" means each of the leases (other than the Ground Leases),
licenses, concession agreements, franchise agreements (other than the Franchise
Agreements) and other occupancy agreements and other agreements demising,
leasing or granting rights of possession or use or, to the extent of the
interest therein of any Loan Party or any of its Subsidiaries, any sublease,
subsublease, underletting or sublicense, which now or hereafter may affect any
Property or any part thereof or interest therein, including any agreement
relating to a loan or other advance of
32
<PAGE> 40
funds made in connection with any such lease, license, concession agreement,
franchise or other occupancy agreement and such sublease, subsublease,
underletting or sublicense, and every amendment, restatement, supplement,
consolidation or other modification of or other agreement relating to or
entered into in connection with such lease, license, concession agreement,
franchise or other occupancy agreement and such sublease, subsublease,
underletting or sublicense, and every Guaranty of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto, and any Guaranties of leasing commissions.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 9.1 and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders
for the account of the Company pursuant to subsection 3.1.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by the Company (including any
such reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B).
"LIEN" means any lien (including any lien or security title granted
pursuant to any mortgage, deed of trust or deed to secure debt), pledge,
hypothecation, assignment, security interest, charge, levy, attachment,
restraint or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement to
give any security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
"LIQUOR LICENSES" means the licenses set forth on Schedule 5.4I annexed
hereto and each other license issued by the Department of Alcoholic Beverage
Control or similar state or local agency to any Loan Party or any of its
Subsidiaries or in respect of any Property, in each case in connection with the
sale of alcoholic beverages at any Property, as such Schedule may be revised
from time to time pursuant to subsection 7.15 or 7.16.
"LIQUOR OPERATIONS SERVICING AGREEMENTS" means, collectively, the
sub-management agreements entered into between Management Corp. and each Loan
Party (or Subsidiary of a Loan Party) that is a holder of a Liquor License in
the form delivered on or before the Funding Availability Date, as any such
sub-management agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
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<PAGE> 41
"LOAN" and "LOANS" means one or more of the Revolving Loans or Swing
Line Loans or any combination thereof.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Subsidiary
Guaranty, the Notes, the Security Documents, the Environmental Indemnity, the
Letters of Credit (and any applications for, or reimbursement agreements or
other documents or certificates executed by the Company in favor of an Issuing
Lender relating to, the Letters of Credit), the Collateral Account Agreement and
any other documents entered into in connection with the Cash Management System.
"LOAN PARTIES" means, collectively, the Company, Rose Hall GP Corp.,
Rose Hall GP, Rose Hall Partnership, Management Corp., IP Corp., GHALP Corp.,
WHI and any other Subsidiary of the Company which is or becomes a party to a
Loan Document.
"LOCAL ACCOUNTS" means, collectively, the Deposit Accounts listed on
Schedule 5.23 annexed hereto as "Local Accounts" and any other Deposit Account
established with respect to one or more Properties for the purpose of receiving
Receipts pursuant to subsection 6.15.
"MAJOR RENOVATION/RESTORATION" means, as of any date of determination,
any Renovation or Restoration of a Property or a Managed Property with respect
to which more than 20% of the rooms "available for sale" at the applicable
Property or Managed Property, as the case may be, have been, are scheduled to
be, or could reasonably be expected to be, "rooms out-of-order", as determined
in accordance with the Uniform System, during any period of more than 30
consecutive days; provided that (x) a Restoration related to a casualty or
Taking and conducted pursuant to and, as of such date of determination,
satisfying the conditions of subsection 6.11F is not a Major
Renovation/Restoration and (y) the Renovation of the Rose Hall Property
conducted pursuant to and, as of such date of determination, satisfying the
conditions of subsection 6.16B is not a Major Renovation/Restoration.
"MAJOR RENOVATION/RESTORATION REMOVAL PERIOD" means (i) with respect to
any Property, Managed Property or Other Managed Property, the period commencing
on the day that a Major Renovation/Restoration shall commence with respect to
such Property, Managed Property or Other Property or (ii) with respect to any
Management Agreement, Servicing Agreement or Other Management Agreement, the
period commencing on the day that a Major Renovation/Restoration shall commence
with respect to the related Managed Property, Property or Other Managed
Property, as the case may be, and in each case terminating on the day that such
Major Renovation/Restoration shall terminate with respect to such Property,
Managed Property or Other Managed Property, as the case may be, in each case as
such dates of commencement and termination shall be reasonably determined by the
Agent based on documentation received from the Company or Management Corp. and
on such other information as the Agent shall determine to be relevant.
"MANAGED PROPERTIES" means, collectively, the real properties, together
with all Improvements thereon and all fixtures attached thereto and all personal
property used in connection therewith, that are managed by Management Corp. or
any of its Wholly Owned
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<PAGE> 42
Subsidiaries pursuant to the Management Agreements. Managed Properties do not
include Properties or Other Managed Properties.
"MANAGEMENT AGREEMENT REPORT" means a report substantially in the form
of Exhibit XIX annexed hereto delivered by the Company to the Agent pursuant to
subsection 4.1I or 6.l(iii), as such Exhibit may be amended from time to time as
may be agreed upon by the Company and the Agent.
"MANAGEMENT AGREEMENTS" means, collectively, the management agreements
and asset management agreements listed on Schedule 4.1I annexed hereto, as such
Schedule may be revised or supplemented from time to time pursuant to subsection
2.9 or 6.1(iii), as any such management agreement or asset management agreement
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms thereof and hereof.
"MANAGEMENT AMOUNT" means, as of any date of determination, the
following:
(i) with respect to each Management Agreement or Servicing Agreement
(other than a Management Agreement referred to in clause (ii) below), the
product of (a) the applicable factor set forth below with respect to the
ranking specified by the Agent for such Management Agreement or Servicing
Agreement, as the case may be, as of such date of determination in accordance
with the criteria specified in Exhibit XX annexed hereto (provided that the
Agent may waive in writing any such criteria in its sole discretion),
multiplied by (b) the Management EBITDA for such Management Agreement or
Servicing Agreement, as the case may be, for the 12 most recently completed
calendar months ending not less than 30 days before such date of
determination for which the Agent has received the financial statements with
respect to such Management Agreement or Servicing Agreement required to be
delivered pursuant to subsection 6.1(ii) or subsection 7.16A(ii), as the case
may be:
<TABLE>
<CAPTION>
PERIOD RANKING
------ -------
1 2 3 4
--- --- --- ---
<S> <C> <C> <C> <C>
F.A. Date-12/31/96 3.0 2.5 2.0 0.0
01/01/97-12/31/97 2.9 2.4 1.8 0.0
01/01/98-12/31/98 2.8 2.3 1.6 0.0
01/01/99-Maturity Date 2.7 2.2 1.4 0.0; or
</TABLE>
(ii) with respect to any Management Agreement for a Managed Property
owned or leased by the Crow Interests or their Affiliates that does not
provide, for a remaining period of at least three months from such date of
determination, for either or both of (a) the payment to the Management Corp.
upon termination without cause of a fee in an amount equal to not less than
the Approved Management Fees for the 12 most recently completed calendar
months ending not less than 30 days before such date of determination or (b)
a prohibition against the termination thereof upon the transfer of such
Managed Property, an amount equal to 50% of the amount that would be
calculated with respect thereto if such Management Agreement were subject to
clause (i) above;
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provided that, the Management Amount with respect to such Management Agreement
for such period shall be zero if, on or before such date of determination (x)
any Loan Party or any of its Subsidiaries shall have received written notice
(or any other notice pursuant to the applicable agreement) from any other party
to such Management Agreement that such Management Agreement will be canceled or
terminated before the scheduled date of expiration and such written notice (or
other notice) shall not have been rescinded or otherwise withdrawn or (y) any
Loan Party or any of its Subsidiaries shall have received written notice from
or on behalf of the transferor or transferee of the Managed Property subject to
such Management Agreement with respect to the execution of a definitive
agreement providing for the sale or other permanent disposition of such Managed
Property and such transferee shall not have agreed by written instrument
satisfactory in form and substance to the Agent to assume the obligations of
the transferor under such Management Agreement, arising after the date of
transfer; provided further, however, that (1) if a termination fee shall be
payable to the Company or Management Corp. upon the actual cancellation or
termination of a Management Agreement subject to clause (x) above as of such
date of determination or upon the closing of the sale or other permanent
disposition of a Managed Property subject to clause (y) above as of such date
of determination, then, as of such date of determination and each date of
determination thereafter (until such Management Agreement shall cease to be
subject to the preceding clause (x) or (y), as the case may be) the Management
Amount with respect to such Management Agreement shall be equal to the lesser
of (A) the termination fee that Management Corp. or any of its Wholly Owned
Subsidiaries reasonably expects, as of such date of determination, to receive
not later than 3 months following the occurrence of the event referred to in
the preceding clause (x) or (y), as the case may be, and (B) an amount equal to
50% of the Management Amount with respect to such Management Agreement if
effect were not given to the proviso and this further proviso to the definition
of Management Amount and (2) the aggregate Management Amount with respect to
all Management Agreements subject to the preceding clause (x) or (y), as the
case may be, calculated pursuant to the preceding clause (1) as of such date of
determination shall not exceed $1,000,000.
"MANAGEMENT CORP." means Wyndham Management Corporation, a Delaware
corporation and a Wholly Owned Subsidiary of the Company.
"MANAGEMENT EBITDA" means, with respect to any Management Agreement,
Servicing Agreement or Other Management Agreement, as the case may be, for any
period and as of any date of determination and calculated on the accrual basis
of accounting, whether a positive or negative number, the amount equal to the
product of the following:
(i) the aggregate amount of base, trade name and incentive fees
(collectively, "APPROVED MANAGEMENT FEES") that are payable to the manager
under such Management Agreement, Servicing Agreement or Other Management
Agreement, as the case may be, with respect to such period, as determined by
the Agent in its sole discretion and without duplication; provided that the
calculation of the amount referred to in this clause (i) shall exclude,
without duplication, (a) all such fees or other amounts (or the portion
thereof) the current payment of which shall have been subject to any actual
deferral, suspension, set-off, prohibition, pay-over, reduction, adjustment
or other interruption of any nature pursuant to any subordination provisions
in such Management
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Agreement, Servicing Agreement or Other Management Agreement, as the case may
be, or the provisions of any other agreement, instrument or other document to
which any party to such Management Agreement, Servicing Agreement or Other
Management Agreement, as the case may be, is a party or by which any of their
respective properties or assets are bound, (b) all such fees or other amounts
(or the portion thereof) that shall be subject to reduction, repayment or
adjustment in any subsequent period other than normal year-end adjustments, (c)
all such fees or other amounts (or the portion thereof) that shall constitute
payments of principal, interest, dividends or other amounts in respect of the
return of or return on any Investment or Guaranty, as determined by the Agent
in its sole discretion, (d) all such fees or other amounts (or the portion
thereof) that are payable in consideration of or otherwise in respect of the
amendment, modification, extension, expiration, cancellation or termination of
such Management Agreement, Servicing Agreement or Other Management Agreement,
as the case may be, or related agreements, (e) all such fees or other amounts
(or the portion thereof) that are payable in consideration of or otherwise in
respect of the performance of any service not directly related to the
management or operation of a hotel property, including, without limitation,
fees or other amounts payable for accounting, design, construction purchasing
and asset management services, (f) payments (whether pursuant to reimbursement,
indemnification and otherwise) of costs and expenses incurred or paid by or on
behalf of the manager in connection with the performance of any obligations or
the exercise of any rights under such Management Agreement, Servicing Agreement
or Other Management Agreement, as the case may be, or any related asset
management agreement or other agreement to the extent not taken into account in
calculating Management Expenses for such period, including, without limitation,
contributions, reimbursements and other payments in respect of accounting
administrative, tax, legal, finance, risk management and disposition services,
salaries and benefits of hotel employees, marketing programs, research
services, advertising and public relations, national and local sales and
marketing services, and centralized reservations services; provided further,
that (x) if the terms on which the Approved Management Fees are calculated with
respect to such period or any subsequent period shall have been modified as of
such date of determination, then the amount of Approved Management Fees that
shall be included in the calculation of Management EBITDA for such period for
the purpose of calculating the Management Amount with respect to such
Management Agreement, Servicing Agreement or Other Management Agreement, as the
case may be (but not for purposes of calculating any amount pursuant to
subsections 7.6D, 7.6E, 7.6F and 7.6G), as of such date of determination shall
not exceed the amount of Approved Management Fees that would have been payable
to the manager under such Management Agreement, Servicing Agreement or Other
Management Agreement, as the case may be, with respect to such period if such
terms, as so modified, had been in effect during the entire period; and (y)
Approved Management Fees with respect to such Management Agreement, Servicing
Agreement or Other Management Agreement, as the case may be, shall be included
in the calculation of Management EBITDA for such period only to the extent that
the Agent and Lenders shall have received the financial statements for such
Management Agreement or Servicing Agreement, as the case may be, for such
period required to be delivered on or before such date of determination
pursuant to subsection 6.1(ii) or 7.16A(i)(2), as the case may be; multiplied
by
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(ii) the Management Margin, which shall be determined as of such date
of determination as follows: (A) if the following clause (B) is not
applicable, such Management Margin shall be determined with respect to the
four most recently completed calendar quarters ending not less than 45 days
before such date of determination, and (B) if Total Utilization of Revolving
Commitments is not less than $50,000,000 as of such date of determination
and the Agent shall so elect by written notice to the Company, such
Management Margin shall be determined with respect to the 12 most recently
completed calendar months ending not less than 45 days before such date of
determination;
provided that:
(w) if the Addition Date with respect to such Management Agreement,
Servicing Agreement or Other Management Agreement shall have occurred on or
after the Effective Date and after the commencement of such period but
before the termination of such period:
(1) for purposes of calculating the Management Amount with
respect to such Management Agreement or Servicing Agreement, as the
case may be, as of such date of determination, Management EBITDA with
respect to such Management Agreement or Servicing Agreement, as the
case may be, for such period shall be the sum of (A) the Management
EBITDA which would have been generated for the portion of such period
commencing on the first day of such period and ending on the day before
such Addition Date if the Management Agreement or Servicing Agreement
had then been in effect, as the same shall be determined based upon the
financial statements for such period required by subsection 7.16A to be
delivered with respect to such Management Agreement or Servicing
Agreement, as the case may be, and such other information with respect
thereto that may be provided by the Loan Parties and their respective
Subsidiaries, subject to such adjustments as may be required by the
Agent in its sole discretion, plus (B) Management EBITDA with respect
to such Management Agreement or Servicing Agreement, as the case may
be, for the portion of such period commencing on such Addition Date and
ending on the last day of such period, based upon the financial
statements for such period required to be delivered on or before such
date of determination pursuant to subsection 6.1(i), subject to such
adjustments as may be required by the Agent in its sole discretion;
provided, however, that with respect to each Management Agreement or
Servicing Agreement related to a Managed Property or Property, as the
case may be, for which a Major Renovation/Restoration shall occur, or
shall be scheduled to commence, on or before the first anniversary of
the Addition Date with respect thereto, Management EBITDA with respect
to such Management Agreement or Servicing Agreement, as the case may
be, for such period shall be zero;
(2) except with respect to Management Agreements, Servicing
Agreement and Other Management Agreements effective during the 12-month
period immediately preceding the Effective Date, for purposes of
calculating any amount pursuant to subsection 7.6D, 7.6E, 7.6F and 7.6G
as of such date of
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determination, Management EBITDA with respect to such Management
Agreement or Servicing Agreement, as the case may be, Management EBITDA
for such period shall be the sum of (A) zero, for the portion of such
period commencing on the first day of such period and ending on the day
before such Addition Date (provided that with respect to any Management
Agreement, Servicing Agreement and Other Management Agreements in
effect on the Effective Date, such portion of a period shall end on the
day before the effective date of such agreement), plus (B) Management
EBITDA with respect to such Management Agreement or Servicing
Agreement, as the case may be, for the portion of such period
commencing on such Addition Date and ending on the last day of such
period, based upon the results of operations of the Loan Parties and
their respective Subsidiaries with respect thereto during such period,
as reflected in the financial statements for such period required to be
delivered on or before such date of determination pursuant to
subsection 6.1(i), subject to such adjustments as may be required by
the Agent in its sole discretion;
(x) for purposes of calculating the Management Amount with respect to
such Management Agreement, Servicing Agreement or Other Management Agreement, as
the case may be, (but not for purposes of calculating any amount pursuant to
subsection 7.6D, 7.6E, 7.6F and 7.6G) as of such date of determination,
Management EBITDA for such period shall be zero if (1) the Addition Date with
respect to such Management Agreement, Servicing Agreement or Other Management
Agreement, as the case may be, shall not have occurred on or before such date of
determination, (2) on or before such date of determination, such Management
Agreement, Servicing Agreement or Other Management Agreement, as the case may
be, shall have expired (without renewal or extension), been canceled or
otherwise terminated, (3) on or before such date of determination, the related
Managed Property, Property or Other Managed Property, as the case may be, shall
have been sold or otherwise permanently disposed of and such transferee shall
not have agreed by written instrument satisfactory in form and substance to the
Agent to assume the obligations of the transferor under such Management
Agreement, Servicing Agreement, or Other Management Agreement, as the case may
be, arising after the date of transfer, (4) to the knowledge of the Company, on
such date of determination there shall have occurred and be continuing any event
or condition which, with the giving of notice or the lapse of time or both,
would cause, or would permit (w) any party to such Management Agreement,
Servicing Agreement or Other Management Agreement, as the case may be, to cause,
the cancellation or other termination of such Management Agreement, Servicing
Agreement or Other Management Agreement, as the case may be, (x) any holder of
any Indebtedness (or a trustee on behalf of such holders) secured by such
Managed Property, Property or Other Managed Property, as the case may be, to
cause, such Indebtedness to become or be declared due and payable prior to its
stated maturity, (y) any lessor under any Ground Lease or other ground lease
affecting such Managed Property, Property or Other Managed Property as the case
may be, to cause the termination of such Ground Lease or other ground lease or
(z) any of the foregoing Persons referred to in this clause (4) or any other
Person to cause, any deferral, suspension, set-off, prohibition, pay-over,
reduction, adjustment or other interruption of any nature of any Approved
Management Fees pursuant to any
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subordination provisions in such Management Agreement, Servicing
Agreement or Other Management Agreement, as the case may be, or the
provisions of any other agreement, instrument or other document to
which any party to such Management Agreement, Servicing Agreement or
Other Management Agreement, as the case may be, is a party or by which
any of their respective properties or assets are bound or (5) if such
date of determination shall occur during a Major Renovation/Restoration
Removal Period with respect to such Management Agreement, Servicing
Agreement or Other Management Agreement, as the case may be, and such
Management EBITDA would be a positive number if effect were not given
to this clause (x);
(y) if such date of determination shall occur during a Voluntary
Removal Period, then (1) for purposes of calculating the Management
Amount with respect to such Management Agreement or Servicing
Agreement, as the case may be, as of such date of determination,
Management EBITDA with respect to such Management Agreement or
Servicing Agreement, as the case may be, shall be zero and (2) if the
Management EBITDA with respect to such Management Agreement, Servicing
Agreement or Other Management Agreement for such period would be a
positive number if effect were not given to this clause (y), for
purposes of calculating any amount pursuant to subsections 7.6D, 7.6E,
7.6F and 7.6G as of such date of determination, Management EBITDA with
respect to such Management Agreement, Servicing Agreement or Other
Management Agreement, as the case may be, shall be zero; and
(z) for purposes of calculating the Borrowing Base (but not for
purposes of calculating any amount pursuant to subsections 7.6D, 7.6E,
7.6F and 7.6G), as of such date of determination, Management EBITDA
with respect to the Commerce Property shall be zero for such period if
such date of determination shall occur before the date, if any, on
which the Company shall have acquired the superior ground lease with
respect to the Commerce Property or on which the leasehold interest
under the superior ground lease with respect to the Commerce Property
shall have been merged with the Commerce Lease, in any case on terms
satisfactory to the Agent in its sole discretion.
"MANAGEMENT FEES" means, collectively, all hotel management fees
(however characterized, including base fees, trade name fees, incentive fees,
special incentive fees, termination fees and all fees in respect of liquor
license operations) and all other fees or charges payable to the manager for the
management and operation of a hotel property, the related land and the
improvements thereof.
"MANAGEMENT INFORMATION" means, with respect to the acquisition or
effectiveness of any Additional Management Agreement or Other Management
Agreement pursuant to subsection 7.16A(i) or (ii), as the case may be, the
following information:
(i) financial statements in respect of the related Managed
Property or Other Managed Property, as the case may be, for the most
recently completed three calendar years and for the completed calendar
months after the most recently completed calendar year, in each case,
to the extent such financial statements exist and can be readily
obtained by any Loan Party or any of its Subsidiaries;
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(ii) copies of all other balance sheets and related statements of
operations and statements of cash flows of such Managed Property or
Other Managed Property, as the case may be, that are to be delivered
to any Loan Party or any of its Subsidiaries in connection with such
acquisition or effectiveness;
(iii) to the extent Renovation is then proposed for such
Additional Managed Property or Other Managed Property, as the case may
be, a preliminary project plan and a project budget for such Managed
Property or Other Managed Property, as the case may be;
(iv) to the extent then available, copies (if available) or
drafts of such Additional Management Agreement, or Other Management
Agreement, as the case may be, agreements with respect to any related
Investment or Guaranty, letters of intent or other related agreements
entered into by any Loan Party or any of its Subsidiaries in connection
with such acquisition or effectiveness (it being understood and agreed
that, to the extent such agreements or letters of intent have not been
entered into in such time, copies of such agreements and letters of
intent shall be delivered reasonably promptly after the execution
thereof);
(v) each market study with respect to such Managed Property or
Other Managed Property, as the case may be, in the possession of, or
that can readily be obtained by, any Loan Party or any of its
Subsidiaries;
(vi) a draft of the Addition Certificate with respect to such
Additional Management Agreement or Other Management Agreement, as
the case may be;
(vii) drafts of supplements to the Schedules to this Agreement
reflecting the acquisition or effectiveness of such Additional
Management Agreement or Other Management Agreement, as the case may
be; and
(viii) any other information relating to such Additional
Management Agreement or Other Management Agreement, as the case may be,
reasonably requested by the Agent.
"MANAGEMENT MARGIN" means as of any date of determination, 1.00 minus a
percentage obtained by dividing (i) the expenses of the Company and its
Consolidated Subsidiaries for any period, as reflected on the consolidated
statements of income delivered to Agent pursuant to subsection 5.3A or 6.1, as
the case may be, excluding expenses reflected as "hotel expenses" "equity
participation compensation", "reimbursement expenses", and "depreciation and
amortization", by (ii) the consolidated revenues of the Company and its
Subsidiaries for such period, as reflected on the consolidated statements of
income delivered to the Agent pursuant to subsection 5.3A or 6.1, as the case
may be, increased by Management Fees paid pursuant to Service Agreements (plus,
with respect to Servicing Agreements in effect on the Effective Date, an amount
equal to the amount paid during such period under the predecessor Management
Agreements), excluding revenues reflected as "hotel revenues" and
"reimbursements" provided however, as of any date of determination on or before
November 15, 1996 with respect
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to a period ending on a day on or before September 30, 1996, the percentage
shall be deemed to be forty-four percent (44%) and, upon any date of
determination which occurs after November 15, 1996, the percentage shall never
exceed fifty-five percent (55%).
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"MARKET EQUITY CAPITALIZATION" means, with respect to any issuer and as
of any date of determination, the product of (i) the number of shares of common
stock of such issuer outstanding as of such date multiplied by (ii) the average
of the closing bid prices of such common stock on the principal national
securities exchange on which such common stock is listed or, if such common
stock is not so listed, on NASDAQ/NMS, as the case may be, for each of the 30
consecutive trading days next preceding such date of determination (or such
shorter period during which such common stock shall have been publicly traded
until such time as it has been so traded for 30 consecutive trading days);
provided that the amount referred to in the preceding clause (ii) for the Common
Stock on the Formation Date shall be the initial offering price per share of
Common Stock pursuant to the Equity Offering.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole, and (ii) the impairment of the ability of
the Company and its Subsidiaries, taken as a whole, to perform, or of the Agent
or the Lenders to enforce, monetary Obligations or the material impairment of
the ability of any Loan Party to perform, or of the Agent or the Lenders to
enforce, non-monetary Obligations, including the obligations of any Loan Party
to perform, or of the Agent or the Lenders to enforce, any Security Document.
"MATERIAL LEASE" means each Lease either (i) demising in excess of 5,000
square feet of the Improvements with respect to any Property or (ii) generating
in excess of 10% of the Property Gross Revenues with respect to any Property or
otherwise identified as a Material Lease by the Company pursuant to subsection
4.1L.
"MATURITY DATE" means the earliest of (i) the date that is four years
from the Effective Date, (ii) the date as of which the Obligations shall have
become immediately due and payable pursuant to subsection 8.1 and (iii) the date
as of which the Obligations shall have become immediately due and payable
pursuant to subsection 2.4B(vii).
"MOODY'S" means Moody's Investors Service, Inc. or any successor to the
business thereof.
"MORTGAGE" means each Mortgage, Assignment of Rents, Security Agreement
and Fixture Filing and each Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing and each Deed to Secure Debt, Assignment of Rents,
Security Agreement and Fixture Filing executed and acknowledged by the Loan
Party thereto in favor of the Agent for the benefit of the Lenders (or, in the
case of a deed of trust, to a trustee for the benefit of the Agent and the
Lenders) in the form delivered on or before the Funding Availability Date
pursuant to subsection 4.1E(i), as each such agreement may be amended,
restated, supplemented,
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consolidated, extended or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"MORTGAGED PROPERTY" has the meaning assigned to that term in the
Mortgages.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in Section
3(37) of ERISA.
"NASDAQ/NMS" means the National Association of Securities Dealers
Automated Quotation System/National Market Securities.
"NET INSURANCE/CONDEMNATION PROCEEDS" means all Insurance Proceeds on
account of damage or destruction to any Pool A Property or any Pool B Property
or all Condemnation Proceeds in respect of any Pool A Property or any Pool B
Property, minus the reasonable cost, if any, of such recovery and of paying out
such proceeds, including reasonable attorneys' fees and costs allocable to
inspecting the Work and the plans and specifications therefor.
"NET SALES PRICE" means, with respect to any sale or other permanent
disposition by a Loan Party or any of its Subsidiaries of a Property, a
Management Agreement, Servicing Agreement, Other Management Agreement, Franchise
Agreement or other asset, the gross purchase price therefor less the sum of (i)
the amounts applied to the payment of Indebtedness or other obligations secured
by a Lien on such Property, Management Agreement, Servicing Agreement, Other
Management Agreement, Franchise Agreement or other asset (other than the
Obligations), (ii) the reasonable out-of-pocket costs and expenses incurred by
such Loan Party or Subsidiary directly in connection with such sale or other
permanent disposition, including income taxes paid or estimated to be actually
payable as a result thereof, after taking into account any available tax credits
or deductions and any tax sharing arrangements (provided that the amount of
income taxes so estimated to be actually payable shall be approved by the Agent,
which approval shall not be unreasonably withheld), and (iii) closing of
adjustments contemplated and reserved.
"NET WORTH" means, as of any date of determination, the sum of the
capital stock and additional paid-in capital plus retained earnings (or minus
accumulated deficits) of the Company and its Subsidiaries determined in
conformity with GAAP.
"NOTES" means one or more of the Revolving Notes or Swing Line Note or
any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit III annexed hereto delivered by the Company to the Agent pursuant to
subsection 2.1B with respect to a proposed borrowing hereunder.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form of Exhibit IV annexed hereto delivered by the Company to the Agent pursuant
to subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
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"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice substantially
in the form of Exhibit V annexed hereto delivered by the Company to the Agent
pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"NOTICE OF RENOVATION/RESTORATION" means a notice, substantially in
the form attached hereto as Exhibit XVII, delivered to the Agent pursuant to
subsection 6.11E, 6.12A, 7.15C or 7.16C.
"OBLIGATIONS" means, collectively, all obligations of every nature of
the Company or any of its Subsidiaries from time to time owed to the Agent or
Lenders or any of them under or in respect of the Loans and the Loan Documents,
whether for principal, interest, reimbursement of amounts drawn under Letters
of Credit, fees, commissions, expenses, indemnification or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by a person specified in
this Agreement for such purpose or, in the absence of such specification, by
any of the Chief Executive Officer, Chief Financial Officer or Chief Accounting
Officer of such corporation; provided, however, that every Officers'
Certificate with respect to the compliance with a condition precedent to the
making of the Loan hereunder shall include (i) a statement that the officer
making or giving such Officers' Certificate has read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signer, he has made or has caused
to be made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signer, such condition has been complied with.
"OMNIBUS MANAGEMENT AND LIQUOR LICENSE AGREEMENT" means the Agreement
regarding Servicing Agreements and Liquor Licenses executed and delivered by
Management Corp., the Company and each other Loan Party thereto in favor of the
Agent on or before the Funding Availability Date pursuant to subsection 4.1E(i),
and thereafter by each other Subsidiary of the Company that becomes a party
thereto, substantially in the form of Exhibit XII annexed hereto, as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof.
"OPERATING ACCOUNTS" means the accounts of the Company to be
established and maintained by the Company with the Cash Manager at its offices
in Dallas, Texas that are designated as operating accounts on Schedule 5.23
hereto.
"OPERATING EXPENSES" means, for any period and as calculated on the
accrual basis of accounting, all expenses incurred by the Company or any of its
Subsidiaries during such period in connection with the ownership, management,
operation, cleaning, maintenance, ordinary repair or leasing of any Property,
including, without duplication:
(i) costs and expenses in connection with the cleaning,
ordinary repair, maintenance, decoration and painting of such
Property;
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(ii) wages, benefits, payroll taxes, uniforms, insurance
costs and all other related expenses for employees of the Company
engaged in the management, operation, cleaning, maintenance, ordinary
repair and leasing of such Property and service to guests, customers,
Tenants, concessionaires and licensees of such Property;
(iii) the cost of all services and utilities with respect
to such Property, including all electricity, oil, gas, water, steam,
heating, ventilation, air conditioning, elevator, escalator,
landscaping, model furniture, answering services, telephone
maintenance, credit check, snow removal, trash removal and pest
extermination costs and expenses and any other energy, utility or
similar item and overtime services with respect to such Property;
(iv) the cost of building and cleaning supplies with
respect to such Property;
(v) insurance premiums required in order to maintain the
insurance policies required under this Agreement or any other Loan
Documents, FF&E Financing Indebtedness, Pool B Obligations or Pool C
Obligations, in each case with respect to such Property (which, in the
case of any policies covering multiple Properties, shall be allocated
among the Properties pro rata in proportion to the insured value of
the Properties covered by such policies);
(vi) legal, accounting, engineering and other fees, costs
and expenses incurred by or on behalf of the Company or such Subsidiary
in connection with the ownership, management, operation, maintenance,
ordinary repair and leasing of such Property, including collection
costs and expenses;
(vii) operating costs and expenses of security and security
systems provided to and/or installed and maintained with respect to
such Property;
(viii) operating costs and expenses of reservation systems,
internal telephone exchanges and key card systems with respect to such
Property;
(ix) costs and expenses of parking and valet services,
parking lot maintenance and ordinary parking lot repairs in respect of
such Property;
(x) costs and expenses of food and beverages with respect
to such Property;
(xi) real property taxes and assessments with respect to
such Property and the costs incurred in seeking to reduce such taxes
or the assessed value of such Property;
(xii) advertising, marketing and promotional costs and
expenses with respect to such Property;
(xiii) costs and expenses incurred in connection with lock
changes, storage, moving, market surveys, permits (and the application
or registration therefor) and licenses (and the application or
registration therefor) with respect to such Property;
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(xiv) maintenance and cleaning costs related to guest and
customer amenities with respect to such Property;
(xv) costs and expenses of maintaining and repairing FF&E
(including the breakage or loss of any such FF&E) with respect to such
Property;
(xvi) franchise fees due and payable with respect to such
Property;
(xvii) payments due and payable under the Ground Lease with
respect to such Property, if applicable;
(xviii) actual reserves required under the Ground Lease with
respect to such Property, if applicable;
(xix) Management Fees with respect to such Property for
such period;
(xx) tenant improvements and leasing commissions with
respect to such Property accrued during such period;
(xxi) contributions by the Company or any of its
Subsidiaries to any merchants' association, whether as dues or
advertising costs or otherwise with respect to such Property;
(xxii) costs incurred pursuant to any reciprocal easement
agreement affecting such Property;
(xxiii) refunds the Company or any of its Subsidiaries must
pay to guests, customers, Tenants, concessionaires and licensees and
other occupants of such Property;
(xxiv) reserves (other than reserves required to be
deposited in the Capital Reserve Account) for such purposes and in
such amounts as the Company and the Agent may reasonably agree upon;
(xxv) costs and expenses of maintaining operating,
repairing and servicing vehicles, including fuel and insurance
premiums; and
(xxvi) all other ongoing expenses which in accordance with
the accrual basis of accounting should be included in the Company's or
any of its Subsidiaries' annual financial statements as operating
expenses of such Property.
Notwithstanding the foregoing, Operating Expenses shall not include, without
duplication, (a) non-cash equity participation expenses, (b) Consolidated Fixed
Charges, including such items included within the definition thereof as shall
apply to any Property or Properties with respect to which such Operating
Expenses are being determined, (c) income taxes, (d) depreciation, (e)
amortization, (f) principal or Release Prices, if any, due under the Loans or
the Notes or otherwise in connection with the Obligations, (g) principal, if
any, due in respect of the Pool B
46
<PAGE> 54
Obligations, the Pool C Indebtedness, FF&E Financing Indebtedness and the
Senior Notes, or (h) any other items that are capitalized on the financial
statements of the Company or any of its Subsidiaries in conformity with GAAP or
in accordance with the Approved Capital Policy.
"OPERATING LEASE" means, with respect to any Person, lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is not accounted for as a capital lease on the balance
sheet of that Person.
"ORIGINAL ACQUISITION AGREEMENTS" means, collectively, the agreements
entered into before the Funding Availability Date by any Loan Party or any of
its Subsidiaries or any predecessor to any Loan Party or such Subsidiary in
connection with the acquisition of a Property, other than the Formation
Documents, under or with respect to which agreements the Company has any rights
or obligations as of the Funding Availability Date, as any such agreement may
be amended, restated, supplemented or otherwise modified from time to time.
"ORIGINAL ACQUISITION DOCUMENTS" means, collectively the Original
Acquisition Agreements and each certificate, opinion, agreement, assignment,
deed, instrument or other document delivered in connection therewith or
pursuant thereto.
"ORIGINAL FINANCING LETTER" means, collectively, the letter agreement
dated April 26, 1996 and the Indemnification Letter (as defined therein), in
each case, between Bankers, on the one part, and Wyndham Hotel Company Ltd. and
the Company, on the other part.
"OTHER CAPITAL RESERVE ACCOUNTS" means, collectively, accounts
required to be maintained by the Loan Parties and their respective Subsidiaries
pursuant to the terms of the Pool B Obligations and the Pool C Obligations, as
the case may be, for the deposit, reserve and disbursement of funds for Capital
Items in respect of the related Pool B Properties or Pool C Properties, as the
case may be. Other Capital Reserve Accounts are not Capital Reserve Accounts.
"OTHER MANAGED PROPERTIES" means, collectively, the real properties,
together with all Improvements and all fixtures attached thereto and all
personal property used in connection therewith, that are managed by Management
Corp. or any of its Subsidiaries pursuant to the Other Management Agreements.
Other Managed Properties do not include Properties or Managed Properties.
"OTHER MANAGEMENT AGREEMENTS" has the meaning stated in subsection
7.16A(ii), as any such management agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"PARTNERSHIP SUBSIDIARIES" means, collectively, Rose Hall Partnership
and any other Partnership Subsidiary of the Company that is or becomes a Loan
Party.
"PAYMENT DATE" means the fifteenth day of each month, beginning June
15, 1996, or, if such fifteenth day is not a Business Day, the next succeeding
Business Day.
47
<PAGE> 55
"PAYROLL SUBSIDIARIES" means the Subsidiaries listed on Schedule 1.1A
annexed hereto and each other Subsidiary formed after the Effective Date, and
operated thereafter, solely for the purpose of being the nominal employer of
individuals providing services to a Managed Property.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the Liens shown on Schedule 7.2 annexed
hereto for such Property and, with respect to any Property (including any Pool
C Property), the following types of Liens (other than any such Lien imposed
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by
ERISA):
(i) Liens for real property Taxes, assessments, vault
charges, water and sewer rents, and other Impositions the payment of
which is not, at the time, required by subsection 6.4;
(ii) the Leases in existence on the Effective Date and any
Leases entered into thereafter in accordance with the requirements of
the Loan Documents;
(iii) covenants, easements, rights-of-way, restrictions,
minor encroachments or other similar encumbrances not impairing the
marketability of such Property and not interfering, and which could
not reasonably be expected to interfere, with the use of the Property
for hotel purposes or with the ordinary conduct of the business of the
Company and its Subsidiaries;
(iv) Liens securing the Obligations;
(v) Liens that are bonded and thereby released of record
in a manner reasonably satisfactory to the Agent;
(vi) rights of guests to occupy rooms and of Tenants under
Leases;
(vii) all exceptions contained in any Title Policy approved
by the Agent with respect to the Acquisition of an Additional Pool A
Property, an Additional Pool B Property or a Pool C Property, as the
case may be.
"PERMITTED JUNIOR PAYMENTS" means payments in such amounts as
described in subsection 7.5 hereto.
"PERSON" means, collectively, natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and Governmental Authorities.
48
<PAGE> 56
"POOL A GROUND LEASE" means each of the ground leases with respect to
the Pool A Properties listed on Schedule 4.1G annexed hereto, as such Schedule
may be revised or supplemented from time to time pursuant to subsection 2.9 or
7.15A(i), together with all right, title and interest of any Loan Party, as the
case may be, in and to the leasehold estate created pursuant to each such
ground lease as each such ground lease may be amended, restated, supplemented
or otherwise modified from time to time in accordance with the terms thereof
and hereof.
"POOL A PROPERTIES" means, collectively, the hotel properties, the
Land on which they are located, the related Pool A Ground Leases and all
Improvements thereon and all fixtures attached thereto and all personal
property used in connection therewith, in each case as listed on Schedule 5.4A1
annexed hereto, as such Schedule may be revised or supplemented from time to
time pursuant to subsection 2.9 or 7.15A(i).
"POOL A PROPERTY AMOUNT" means, as of any date of determination, the
following:
(i) with respect to a Pool A Property (other than the
Rose Hall Property) listed on Schedule 5.4A1 annexed hereto as of the
Effective Date, the product of (a) the applicable factor set forth
below as of such date of determination multiplied by (b) the Property
EBITDA for such Pool A Property for the 12 most recently completed
calendar months ending not less than 30 days before such date of
determination for which the Agent has received the financial
statements with respect to such Properties required to be delivered
pursuant to subsection 6.1(i):
<TABLE>
<CAPTION>
PERIOD FACTOR
------ ------
<S> <C>
F.A. Date-12/31/96 4.25
01/01/97-12/31/97 4.00
01/01/98-12/31/98 3.75
01/01/99-Maturity Date 3.50;
</TABLE>
provided that such Pool A Property Amount shall not be greater than an
amount equal to 55% of the value thereof specified in the Appraisal
with respect to such Pool A Property most recently approved by the
Agent on or before such date of determination; or
(ii) with respect to the Rose Hall Property, the product
of (a) the applicable factor set forth below as of such date of
determination multiplied by (b) the Property EBITDA for the Rose Hall
Property for the 12 most recently completed calendar months ending not
less than 30 days before such date of determination for which the
Agent has received the financial statements with respect to such
Property required to be delivered pursuant to subsection 6.1(i):
49
<PAGE> 57
<TABLE>
<CAPTION>
PERIOD FACTOR
------ ------
<S> <C>
F.A. Date-12/31/96 3.25
01/01/97-12/31/97 3.00
01/01/98-12/31/98 2.75
01/01/99-Maturity Date 2.50;
</TABLE>
provided that such Pool A Property Amount shall not be greater than
the least of (1) the Pool A Property Amount with respect to the Rose
Hall Property as of the Funding Availability Date (without giving
effect to clause (z)(2) of the definitions of Property EBITDA), (2) an
amount equal to 40% of the value thereof specified on the Appraisal
with respect to the Rose Hall Property most recently approved by the
Agent on or before such date of determination and (3) zero during any
period in which there shall have occurred and be continuing a material
adverse change in the business, operations, condition (financial or
otherwise) or prospects of Rose Hall Partnership that shall have
resulted, or could reasonably be expected to result, from the
occurrence of events or the existence of conditions that have not, or
could not reasonably be expected to, affect other resort hotels in the
Caribbean of a type, quality and character similar to that of the Rose
Hall Property in substantially the same manner and to substantially
the same extent; or
(iii) with respect to each Additional Pool A Property
(other than an Additional Pool A Property referred to in the following
clause (iv)), the product of (a) the applicable factor specified from
time to time by the Agent, in its sole discretion, for such Additional
Pool A Property multiplied by (b) the Property EBITDA for such
Additional Pool A Property for the 12 most recently complete calendar
months ending not less than 30 days before the applicable date of
determination for which the Agent has received the financial
statements with respect to such Properties required to be delivered
pursuant to subsection 6.1(i) or 7.16A(i), as the case may be;
provided that such Pool A Property Amount shall not be greater than an
amount equal to 55% of the value thereof specified in the Appraisal
with respect to such Pool A Property most recently approved by the
Agent on or before such date of determination; or
(iv) with respect to each Additional Pool A Property for
which a Major Renovation/Restoration shall occur, or shall be
scheduled to commence, on or before the first anniversary of the
Addition Date with respect thereto, the amount that is equal to 35%
of the sum of (a) the cash purchase price therefor paid therefor by
the Company on or before such date of determination plus (b) the
actual cost of such Major Renovation Restoration paid by the Company
on or before such date of determination; provided that, as of any date
of determination after the completion of such Major Renovation/
Restoration that shall occur on or before the end of 12 complete
calendar months ending not less than 30 days before the applicable
date of determination for which the Agent has received the financial
statements with respect to such Additional Pool A Property required to
be delivered pursuant to subsection 6.l(i), such Pool A Property
Amount shall not be greater than an amount equal to 35% of the value
thereof, on an as-completed basis, specified in the Appraisal with
respect to such Additional Pool A Property as of a date not earlier
than 30 days before such date of completion.
50
<PAGE> 58
"POOL B DOCUMENTS" means, collectively, each Pool B Ground Lease,
agreement, Guaranty, instrument, promissory note or other document entered into
by any Loan Party or any of its Subsidiaries in connection with any Pool B
Obligation and set forth on Schedule 7.1(iv) annexed hereto, including,
without limitation, the HPT Agreements, the Harbour Island Lease (and, in the
circumstances referred to in the last sentence of subsection 7.15A(iv), the
Vinings Agreement and the Vinings Bond Documents), as each such Pool B Ground
Lease, agreement, Guaranty, instrument or other document may be amended,
restated, supplemented or otherwise modified from time to time), as such
Schedule may be revised from time to time pursuant to subsections 2.9,
7.15A(ii) and 7.15A(iv).
"POOL B GROUND LEASE" means each of the ground leases with respect to
the Pool B Properties listed on Schedule 4.1H annexed hereto, as such
Schedule may be revised from time to time pursuant to subsection 2.9.
"POOL B OBLIGATIONS" means, collectively, the obligations of the Loan
Parties and their respective Subsidiaries of every nature, from time to time
owed under or in respect of any Pool B Document, whether for rent, principal,
interest, fees, commissions, expenses, indemnification or otherwise.
"POOL B PROPERTIES" means, collectively, the hotel properties, the
Land on which they are located, the related Pool B Ground Leases and all
Improvements thereon and all fixtures attached thereto and all personal
property used in connection therewith, in each case as listed on Schedule 5.4A2
annexed hereto, as such Schedule may be revised or supplemented from time to
time pursuant to subsections 2.9, 7.15A(ii) and 7.15A(iv).
"POOL C DOCUMENTS" means, collectively, each agreement, Guaranty,
instrument, promissory note or other document entered into by any Loan Party or
any of its Subsidiaries in connection with any Pool C Obligations (including,
without limitation, any Pool C Indebtedness and, in the circumstances referred
to in the last sentence of subsection 7.15A(iv), the obligations of the Loan
Parties and their respective subsidiaries under or with respect to the Vinings
Agreement and the Vinings Indebtedness), as each such agreement, Guaranty,
instrument or other document may be amended, restated, supplemented or
otherwise modified from time to time pursuant to subsections 7.15(A)(iii) and
7.15A(iv).
"POOL C INDEBTEDNESS" has the meaning assigned to that term in
subsection 7.I(vii).
"POOL C OBLIGATIONS" means, collectively, the obligations of any of
the Loan Parties, any of their respective Subsidiaries and any of the Pool C
Subsidiaries, respectively, of any nature, from time to time owed in respect of
any Pool C Property, whether for principal, interest, fees, commissions,
expenses, indemnification or otherwise.
"POOL C PROPERTIES" means, collectively, the hotel properties, the
Land on which they are located and all Improvements thereon and all fixtures
attached thereto and all personal property used in connection therewith, in
each case as listed on Schedule 5.4A3 annexed hereto, as such Schedule may be
revised or supplemented from time to time pursuant to subsection 2.9,
7.15A(iii) and 7.15A(iv).
51
<PAGE> 59
"POOL C SUBSIDIARY" means any Wholly Owned Subsidiary of the Company
created pursuant to subsection 7.7(iii) to own one or more Pool C Properties.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within the applicable grace
period.
"PRIME RATE" means the rate that Bankers announces from time to time
as its prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"PROPERTIES" means, collectively, from and after the respective dates
of Acquisition, each of the Pool A Properties, the Pool B Properties and the
Pool C Properties. Properties do not include Managed Properties or Other
Managed Properties.
"PROPERTY EBITDA" means, with respect to any Property, for any period
and as of any date of determination and calculated on the accrual basis of
accounting, whether a positive or negative number, the amount equal to the
remainder of the following:
(i) all Property Gross Revenues for such period in
respect of such Property; provided that Property Gross Revenues for
such period in respect of any Property shall be included in the
calculation of Property EBITDA for such period only to the extent that
the Agent and Lenders shall have received the financial statements for
such period required to be delivered on or before such date of
determination pursuant to subsection 6.1(i) or 7.15A, as the case may
be; minus
(ii) all Operating Expenses for such period with respect
to such Property, without duplication of items excluded from the
definition of Property Gross Revenues; provided that (x) if the terms
of any expenses or other obligations with respect to which the
Operating Expenses are calculated for such period or any subsequent
period for the purpose of calculating the amount of the Borrowing Base
(but not for purposes of calculating any amount pursuant to
subsections 7.6D, 7.6E, 7.6F and 7.6G) of such date of determination
shall have been modified as of such date of determination, then the
amount of Operating Expenses that shall be included in the calculation
of Property EBITDA for such period shall not be less than the amount
of Operating Expenses that would have been calculated for such period
if such terms, as so modified, had been in effect during the entire
period, and (y) Management Fees included in the calculation of
Property EBITDA for such period with respect to such Property, shall
not be less than 5.0% of Property Gross Revenues for such period with
respect to such Property;
provided that:
(v) Property EBITDA with respect to any Property shall be
zero for such period if (1) the Addition Date with respect to such
Property shall not have occurred on or
52
<PAGE> 60
before such date of determination or (2) such Property shall have been
sold or otherwise permanently disposed of or any Loan Party or any of
its Subsidiaries shall have executed a definitive agreement with
respect to the sale or other permanent disposition of such Property,
in each case on or before such date of determination, provided that
this subclause (2) shall not be given effect upon the execution of
such agreement with respect to (A) a Pool A Property if the proposed
Net Sales Price with respect to such sale or other permanent
disposition shall be greater than the aggregate amount of principal
and interest that would be required to be paid by the Company pursuant
to paragraphs (i) and (iii) of the definition of Release Price
(without giving effect to the proviso to such paragraph (iii)) if the
closing thereof were to occur on such date of determination and the
Servicing Agreement to which such Pool A Property is subject were to
terminate on such date, as such determination shall be specified by
written notice delivered to the Agent, together with the information
used by the Company to make such determination, (B) a Pool B Property
if the proposed Net Sales Price with respect to such sale other
permanent disposition by reason of such sale or other permanent
disposition shall be greater than the aggregate amount of principal
and interest that would be required to be paid by the Company pursuant
to paragraphs (ii) and (iii) of the definition of Release Price
(without giving effect to the proviso to such paragraph (iii)) if the
closing thereof were to occur on such date of determination and the
Servicing Agreement to which such Pool B Property is subject were to
terminate on such date, as such determination shall be specified in an
Officers' Certificate delivered to the Agent, together with the
information used by the Company to make such determination, and (C) a
Pool C Property if the proposed Net Sales Price with respect to such
sale or other permanent disposition by reason of such sale or other
permanent disposition shall be greater than the aggregate amount of
principal and interest that would be required to be paid by the
Company pursuant to paragraph (iii) of the definition of Release Price
(without giving effect to the proviso to such paragraph (iii)) if the
closing thereof were to occur on such date of determination and the
Servicing Agreement to which such Pool C Property is subject were to
terminate on such date, as such determination shall be specified in an
Officers' Certificate delivered to the Agent, together with the
information used by the Company to make such determination; provided
further that, for purposes of calculating any Net Sales Price pursuant
to this clause (v), the amount thereof shall be (1) increased or
reduced, as the case may be, to give effect to all adjustments that
are reasonably likely to be made thereto, whether before or after the
closing thereof, and to give effect to all modifications thereto from
time to time before the closing thereof by reason of such sale or
other permanent disposition and (2) reduced by an amount equal to the
appropriate amount to be provided by such Loan Party or Subsidiary as
a reserve, in accordance with generally accepted accounting
principles, after such sale or other permanent disposition, including,
without limitation, liabilities related to environmental matters and
liabilities under any indemnification obligations;
(w) if the Addition Date with respect to such Property
shall have occurred after the Funding Availability Date and after the
commencement of such period but before the termination of such period:
53
<PAGE> 61
(1) for purposes of calculating the Property
Amount with respect to such Property (if such Property is a
Pool A Property) as of such date of determination, Property
EBITDA with respect to such Pool A Property for such period
shall be the sum of (A) Property EBITDA for the portion of such
period commencing on the first day of such period and ending on
the day before such Addition Date, as the same shall be
determined based upon the financial statements for such period
required by subsection 7.15A to be delivered with respect to
such Pool A Property and such other information with respect
thereto that may be provided by the Loan Parties and their
respective Subsidiaries, subject to such adjustments as may be
required by the Agent in its sole discretion, plus (B) Property
EBITDA with respect to such Pool A Property for the portion of
such period commencing on such Addition Date and ending on the
last day of such period, based upon the financial statements
for such period required to be delivered on or before such date
of determination pursuant to subsection 6.1(i), subject to such
adjustments as may be required by the Agent in order that
revenues and expenses are allocated and determined in the same
manner as for Properties owned by the Loan Parties and their
respective Subsidiaries during the entire period; provided,
however, that with respect to each Additional Pool A Property
for which a Major Renovation/Restoration shall occur, or shall
be scheduled to commence, on or before the first anniversary of
the Addition Date with respect thereto, Property EBITDA with
respect to such Additional Pool A Property for such period be
zero; and
(2) for purposes of calculating any amount
pursuant to subsections 7.6D, 7.6E, 7.6F and 7.6G as of such
date of determination, Property EBITDA with respect to such
Property for such period shall be the sum of (A) zero, for the
portion of such period commencing on the first day of such
period and ending on the day before such Addition Date, plus
(B) Property EBITDA with respect to such Property for the
portion of such period commencing on such Addition Date and
ending on the last day of such period, based upon the results
of operations of the Loan Parties and their respective
Subsidiaries with respect thereto during such period, as
reflected in the financial statements for such period required
to be delivered on or before such date of determination
pursuant to subsection 6.1(i);
(x) except as provided to the contrary in the proviso to
the preceding clause (w)(1), if such date of determination shall occur
during a Major Renovation/Restoration Removal Period with respect to
such Property and the Property EBITDA with respect to such Property
for such period is a positive number, then (1) for purposes of
calculating the Property Amount with respect to such Property (if such
Property is a Pool A Property) as of such date of determination,
Property EBITDA with respect to such Property for such period shall be
zero and (2) for purposes of calculating any amount pursuant to
subsections 7.6D, 7.6E, 7.6F and 7.6G as of such date of
determination, Property EBITDA with respect to such Property for such
period shall be equal to the product of (1) the applicable factor set
forth below as of such date of determination, as determined by
reference to the percentage amount of the rooms "available for sale"
at
54
<PAGE> 62
such Property that have been, are scheduled to be, or could reasonably
be expected to be, "rooms out-of-order", as determined in accordance
with the Uniform System, during such Major Renovation Restoration
Removal Period, multiplied by (2) the amount of Property EBITDA with
respect to such Property for such period as of such date of
determination if effect were not given to this clause (x):
<TABLE>
<CAPTION>
PERCENTAGE FACTOR
---------- ------
<S> <C>
0.00% 19.99% 1.00
20.00% 49.99% 0.75
50.00% 74.99% 0.33
75.00% 100.00% 0.00;
</TABLE>
(y) if such date of determination shall occur during a
Voluntary Removal Period, then (1) for purposes of calculating the
Property Amount with respect to such Property (if such Property is a
Pool A Property) as of such date of determination, Property EBITDA
with respect to such Pool A Property shall be zero and (2) if the
Property EBITDA with respect to such Property for such period would be
a positive number if effect were not given to this clause (y), for
purposes of calculating any amount pursuant to subsections 7.6D, 7.6E,
7.6F and 7.6G as of such date of determination, Property EBITDA with
respect to such Property shall be zero; and
(z) for purposes of calculating the Property Amount with
respect to:
(1) the Commerce Property (but not for purposes
of calculating any amount pursuant to subsections 7.6D, 7.6E,
7.6F and 7.6G) as of such date of determination, Property
EBITDA with respect to the Commerce Property shall be zero for
such period if such date of determination shall occur before
the date, if any, on which all of the following shall have
occurred: (i) the Company shall have acquired the superior
ground lease with respect to the Commerce Property or the
superior ground lease with respect to the Commerce Property
shall have been merged with the Commerce Lease, in any case on
terms satisfactory to the Agent in its sole discretion, (ii)
the Company shall have executed and delivered to the Agent
modifications to the Mortgageland the Assignment of Rents and
Leases for the Commerce Property, each in form and substance
satisfactory to the Agent in its sole discretion, reflecting
such acquisition or merger, and such modifications shall have
been duly recorded in the Los Angeles County, California land
records, (iii) the Company shall have satisfied the
requirements of subsection 4.1G with respect to the amended
ground lease for the Commerce Property in effect immediately
following the assignment or merger referred to in clause (i)
above, including, without limitation, by delivering to the
Agent an original counterpart of an estoppel certificate and
agreement reasonably satisfactory in form and substance to the
Agent, and duly executed and acknowledged by the lessor under
such ground lease (provided that such estoppel shall not
effectuate any amendment to such ground lease), (iv) the Title
Company shall have delivered to the Agent an endorsement to
the Title Policy for the Commerce Property reflecting the
acquisition or merger referred to in clause (i)
55
<PAGE> 63
above, insuring that as of a current date the Mortgage against
the Commerce Property, as modified in the manner described in
clause (ii) above, constitutes a first priority Lien against
the Commerce Property, subject only to Permitted Encumbrances,
and otherwise in form and substance satisfactory to the Agent
and (v) the Company shall have paid all of the Agent's
reasonable costs and expenses (including, without limitation,
reasonable legal fees and expenses) incurred in connection
with its review and approval of any of the matters referred to
in clauses (i) through (iv) above; and
(2) the Rose Hall Property (but not for purposes
of calculating any amount pursuant to subsections 7.6D, 7.6E,
7.6F and 7.6G) as of such date of determination, Property
EBITDA with respect to the Rose Hall Property shall be (a)
zero for such period if such date of determination shall occur
before the date, if any, on which the Company shall have
received an updated certificate of title, or other evidence
satisfactory to the Agent, evidencing registration with the
appropriate Governmental Authorities of the Mortgage with
respect to the Rose Hall Property and (b) equal to an amount
for such period that is 50% of the amount that would be
determined if effect were not given to this clause (b) if such
date of determination shall occur before the first date, if
any, on which both (i) the Agent shall have received pursuant
to the Security Agreement one or more share certificates
evidencing all the outstanding shares of capital stock of
Xerxes Limited, and (ii) the Agent shall have received
evidence reasonably satisfactory to the Agent of registration
with the appropriate Governmental Authorities of the
hypothecation of or charge or other Lien on each of (y) the
partnership interest in the Rose Hall Partnership owned by WHC
Caribbean Limited and (z) the shares of capital stock of WHC
Caribbean Limited owned by Xerxes Limited.
"PROPERTY GROSS REVENUE" means, for any period, all Receipts resulting
from the operation of such Property, including, without limitation, Rents or
other payments from guests and customers, Tenants, licensees and
concessionaires and business interruption and rental loss insurance payments;
provided that Property Gross Revenue shall be determined net of allowances in
accordance with the Uniform System and shall exclude (i) excise, sales, use,
occupancy and similar taxes and charges collected from guests or customers and
remitted to Governmental Authorities, (ii) gratuities collected for employees
of such Property, (iii) security deposits and other advance deposits, until and
unless same are forfeited to any Loan Party or Subsidiary thereof or applied
for the purpose for which collected, (iv) federal, state or municipal excise,
sales, use or similar taxes collected directly from patrons or guests or
included as part of the sales price of any goods or services, (v) interest
income on such Property's bank accounts, (vi) rebates, refunds or discounts
(including, without limitation, free or discounted accommodations) and (vii)
Extraordinary Receipts.
"PROPERTY INFORMATION" means, with respect to any Acquisition of any
Additional Pool A Property pursuant to subsection 7.15A(i), any Additional Pool
B Property pursuant to subsection 7.15A(ii), any Pool C Property pursuant to
subsection 7.15A(iii) or the Vinings Property pursuant to subsection
7.15(A)(iv), the following information:
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(i) financial statements in respect of such Property for
the most recently completed three calendar years and for the completed
calendar months after the most recently completed calendar year, in
each case, to the extent such financial statements exist and can be
readily obtained by any Loan Party or any of its Subsidiaries;
(ii) copies of all other consolidated balance sheets and
related statements of operations and statements of cash flows of such
Property that are to be delivered to any Loan Party or any of its
Subsidiaries in connection with such Acquisition;
(iii) to the extent any Renovation is then proposed for
such Property, a preliminary project plan and a project budget for
such Property which, as to a Pool A Property, shall be satisfactory in
form and substance to the Agent in its sole discretion;
(iv) (a) a comprehensive environmental audit with respect
to such Property (which shall include a Phase I environmental audit
and, if necessary or desirable in the Agent's opinion, a Phase II
environmental audit), satisfactory in form and substance to the Agent,
conducted and certified by an Approved Environmental Consultant (the
Company shall certify as of the closing date of such Acquisition that,
as to any environmental audit delivered by the Company prior to such
closing date, to the Company's knowledge, the information contained in
such audit remains true, correct and complete), (b) a reliance letter
from such Approved Environmental Consultant with respect to each such
environmental audit addressed to the Agent and Lenders, which reliance
letter shall be satisfactory in form and substance to the Agent, (c)
evidence that all required approvals from all Governmental Authorities
having jurisdiction with respect to the environmental condition of
such Property, if any, have been obtained, and (d) such other
environmental reports, inspections and investigations as the Agent
shall in its sole discretion require, prepared, in each instance, by
an Approved Environmental Consultant, which audits, approvals,
reports, inspections and investigations shall be satisfactory in form
and substance to the Agent, in its sole discretion;
(v) (a) a written Engineering Report with respect to such
Property dated not more than 90 days prior to the closing date and
prepared by an Engineer acceptable to the Agent, which Engineering
Report shall be satisfactory in form and substance to the Agent and
(b) a reliance letter from such Engineer with respect to each such
Engineering Report addressed to the Agent and Lenders, which letter
shall be in form and substance reasonably satisfactory to the Agent;
(vi) to the extent then available, copies (if available)
or drafts of the related Acquisition Agreements, all other purchase
agreements, letters of intent or other related agreements entered into
by any Loan Party or any of its Subsidiaries in connection with such
Acquisition (it being understood and agreed that, to the extent such
agreements or letters of intent have not been entered into at such
time, copies of such agreements and letters of intent shall be
delivered reasonably promptly after the execution thereof);
(vii) a market study with respect to such Property as of a
date not earlier than 90 days before the proposed date of closing of
such Acquisition and copies of all other
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appraisals and market studies with respect to such Property to the
extent such appraisals and market studies exist and can be readily
obtained by any Loan Party or any of its Subsidiaries;
(viii) a draft of the Addition Certificate with respect to
such Property;
(ix) drafts of supplements to the Schedules to this
Agreement reflecting the acquisition of such Property, the
Environmental Indemnity, the Security Agreement and the Omnibus
Management and Liquor License Agreement reflecting the acquisition of
such Property, as such items may be required to be delivered pursuant
to proviso (e)(2) to subsection 7.15A(i), proviso (i)(4) to subsection
7.15A(ii), proviso (g)(5) to subsection 7.15A(iii) or proviso (g)(4)
to subsection 7.15A(iv), as the case may be; and
(x) any other information relating to such Acquisition or
such Property reasonably requested by the Agent;
provided that Property Information (x) with respect to an Additional Pool B
Property shall exclude the information referred to in clauses (i) and (v) above
and (y) with respect to a Pool C Property (other than the Vinings Property)
shall exclude the information referred to in clause (v) above.
"PROPERTY SERVICING AGREEMENTS" means, collectively, the Servicing
Agreements entered into between Management Corp. or any of its Subsidiaries, on
the one part, and the Company and each of its Subsidiaries of the Company that
owns a fee or leasehold interest in any Property, on the other part, in the
form delivered to the Agent on or before the Funding Availability Date, as any
such Servicing Agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"PRO RATA SHARE" means, with respect to any Lender, as of any date of
determination (i) prior to the termination of the Revolving Commitments, that
Lender's Revolving Commitment and (ii) after the termination of the Revolving
Commitments, the sum of (a) the aggregate outstanding principal amount of the
Revolving Loans of that Lender, plus (b) in the event that Lender is an Issuing
Lender, the aggregate Letter of Credit Usage in respect of all Letters of
Credit issued by that Lender (in each case net of any participations purchased
by other Lenders in such Letters of Credit or any unreimbursed drawings
thereunder), plus (c) the aggregate amount of all participations purchased by
that Lender in any outstanding Letters of Credit or any unreimbursed drawings
under any Letters of Credit, plus (d) in the case of Swing Line Lender, the
aggregate outstanding principal amount of all Swing Line Loans (net of any
participations therein purchased by other Lenders), plus (e) the aggregate
amount of all participations purchased by that Lender in any outstanding Swing
Line Loans.
"PUBLIC OFFERINGS" means, collectively, the Equity Offering and the
Debt Offering.
"PUBLIC OFFERING DOCUMENTS" means, collectively, the Equity Offering
Documents and the Debt Offering Documents.
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"QUALIFIED CAPITAL STOCK" means, with respect to any Person, any
series or class of Capital Stock of that Person which may not be required to be
redeemed or repurchased, in whole or in part, by that Person or any of its
Subsidiaries, in whole or in part, at the option of the holder thereof, on or
prior to the Maturity Date, or not be convertible or exchangeable into or
exercisable for Capital Stock of the Company that is not Qualified Capital
Stock on or prior to the date that is one year and one day after the Maturity
Date; provided that Capital Stock will be deemed to be Qualified Capital Stock
if it may only be so redeemed or put solely in consideration of Qualified
Capital Stock.
"RECEIPTS" means, collectively, all cash, Cash Equivalents, checks,
notes, drafts and any items of payment or collection received, by or on behalf
of the Company or any of its Subsidiaries, or by any officers, employees or
agents of the Company or any of its Subsidiaries or other Persons acting for or
in concert with the Company or such Subsidiary to make collections on the
Company's or such Subsidiary's behalf in connection with or in any way relating
to the Company or such Subsidiary or the operation of the Company's or such
Subsidiary's business, including, without limitation, any proceeds received
from or pursuant to (i) any sales of, or loans against, accounts of the Company
or any of its Subsidiaries (other than the Loans pursuant to this Agreement or
Pool C Indebtedness), (ii) any disposition of assets (including, without
limitation, any disposition of assets permitted hereunder or consented to by
the Agent, but excluding amounts applied to the repayment of indebtedness or
other obligations secured by a Lien on the assets subject to such disposition)
or issuance or sale of equity Securities by the Company or any of its
Subsidiaries, (iii) the incurrence of Indebtedness by the Company or any of its
Subsidiaries and the issuance and sale by the Company or any of its
Subsidiaries of equity or debt Securities, in each case other than the
Obligations and other Indebtedness permitted by this Agreement, (iv) insurance
policies (other than liability insurance payable directly or indirectly to a
third party) maintained by the Company or any of its Subsidiaries, whether or
not the Agent is an additional insured or named as loss payee thereunder, (v)
the successful prosecution (including any settlement) of any claims, actions or
other litigation or proceeding by or on behalf of or against the Company or any
of its Subsidiaries and (vi) the Management Agreements (other than amounts
received by the Company or any of its Subsidiaries in respect of the Managed
Properties and other Managed Properties on behalf of, or as agent for, the
parties to the Management Agreements or Other Management Agreements other than
the Company and its Subsidiaries); it being understood and agreed that nothing
contained in this definition shall in any respect be deemed to permit any
transactions by the Company or any of its Subsidiaries otherwise restricted or
prohibited by this Agreement.
"REFERENCE LENDERS" means, collectively, the Lenders.
"REFUNDED SWING LINE LOANS" has the meaning assigned to that term in
subsection 2.1A(ii).
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement proposed to be dated as of the date of the initial closing of the
Public Offerings among the Company and the other parties identified on the
signature pages thereof, each substantially in the form thereof
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that has been approved by the Agent, together with such alterations therein as
shall be approved by the Agent, which approval may be granted, withheld,
conditioned or delayed in its sole discretion, as such agreement may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"REGISTRATION STATEMENTS" means, collectively, the Equity Registration
Statement and the Debt Registration Statement.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELATED DOCUMENTS" means, collectively, the Original Acquisition
Documents, the Acquisition Documents, the Management Agreements, the Franchise
Agreements, the IP License Agreements, the Ground Leases, the Material Leases,
the Pool B Documents, the Pool C Documents, the Senior Note Documents, the
Public Offering Documents, the Formation Documents, the GE Option, the ISIS
2000 Agreements, the CWS Agreements, the Wynright Agreements, the Greystar
Agreements and the Bedrock Investment Program Agreements.
"RELEASE" means any satisfaction, release, assignment instrument, deed
of reconveyance or similar instrument or instruments (each in recordable form
and otherwise in form reasonably satisfactory to the Company but without any
representation or warranty of the Agent or the Lenders) necessary and sufficient
to release any Collateral from the Lien of all applicable Security Documents.
"RELEASE DATE" means the date of a release of the Lien of the Security
Documents on any Property pursuant to subsection 2.9.
"RELEASE PRICE" means, as calculated as of any Release Date, the
following:
(i) with respect to any Pool A Property, the amount that
is the greatest of the following:
(a) the amount equal to 125% of the Pool A
Property Amount with respect to such Pool A Property;
(b) in the event of a sale or other permanent
disposition of such Pool A Property, the amount equal to 85%
of the Net Sales Price for such Pool A Property;
(c) the amount necessary to ensure that the Total
Utilization shall not exceed the Borrowing Base in effect as of
such date after giving effect to (x) any reduction in the
Borrowing Base required pursuant to subsections 2.4B(iii) and
7.15B and (y) each other payment made as of the Release Date
pursuant to any other provision of this definition of Release
Price; and
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(d) in the event of a casualty or Taking with
respect to such Pool A Property, the Insurance Proceeds or
Condemnation Proceeds, as the case may be, resulting
therefrom;
(ii) with respect to any Pool B Property, the amount that
is the greater of the following:
(a) the amount necessary to insure that the Total
Utilization shall not exceed the Borrowing Base in effect as
of such date after giving effect to (x) any reduction in the
Borrowing Base required pursuant to subsections 2.4B(iii) and
7.15B and (y) each other payment made as of the Release Date
pursuant to any other provision of this definition of Release
Price; and
(b) in the event of a casualty or Taking with
respect to such Pool B Property, the Insurance Proceeds or
Condemnation Proceeds, as the case may be, resulting
therefrom, net of the aggregate payments of Pool B Obligations
required to be made pursuant to the Pool B Documents in
respect of such casualty or Taking;
(iii) with respect to any Management Agreement, Servicing
Agreement, Other Management Agreement or Franchise Agreement, the
amount that is the greatest of the following:
(a) the amount equal to 100% of the Management
Amount with respect to such Management Agreement or Servicing
Agreement, as the case may be;
(b) the amount necessary to ensure that the Total
Utilization shall not exceed the Borrowing Base in effect as
of such date after giving effect to (x) any reduction in the
Borrowing Base required pursuant to subsections 2.4(B)(iii)
and 7.16B and (y) each other payment made as of the Release
Date pursuant to any other provision of this definition of
Release Price;
(c) in the event of a sale or other permanent
disposition of such Management Agreement, Servicing Agreement,
Other Management Agreement or Franchise Agreement, the amount
equal to 85% of the Net Sales Price for such Management
Agreement, Servicing Agreement, Other Management Agreement or
Franchise Agreement, as the case may be; and
(d) in the event of the expiration (without
renewal or extension), cancellation or other termination of
such Management Agreement, Servicing Agreement, Other
Management Agreement or Franchise Agreement, the aggregate
amount of termination fees and other amounts paid to the
manager (other than as reimbursement of expenses) under such
Management Agreement, Servicing Agreement, Other Management
Agreement or Franchise Agreement, as the case may be, in
connection therewith;
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provided that, for the purposes of determining the Release Price with
respect to a Management Agreement, an Other Management Agreement or a
Franchise Agreement, that shall have been terminated by Management
Corp. or any of its Wholly Owned Subsidiaries for cause in accordance
with the terms thereof or by the other party thereto, and in either
case no termination fee is payable to Management Corp. or such Wholly
Owned Subsidiary in connection therewith, the amount determined with
respect to this clause (iii) shall be zero if the Company shall have
complied with subsection 2.9C(iv) with respect to such Management
Agreement, Other Management Agreement or Franchise Agreement on or
before the date that such Release Price is otherwise due and payable;
and
(iv) with respect to any item of Collateral not subject to
clause (i), (ii) or (iii) above, the amount that is the greater of the
following:
(a) the amount necessary to ensure that the Total
Utilization shall not exceed the Borrowing Base in effect as
of such date after giving effect to (x) any reduction in the
Borrowing Base required pursuant to subsection 2.4(B)(iii) and
(y) each other payment made as of the Release Date pursuant to
any other provision of this definition of Release Price; and
(b) in the event of a sale or other permanent
disposition of such item of Collateral, the amount equal to
100% of the Net Sales Price for such item or, if the release
of the Lien on such item of Collateral shall not be effected
in connection with the sale or other permanent disposition of
such item, 100% of the aggregate amount of termination fees
and other amounts paid to the Loan Parties and their
respective Subsidiaries in connection therewith;
provided that, for the purposes of determining the Release Price with
respect to the DAB Notes or the Affiliate Notes, the amount determined
with respect to this clause (iv) shall be zero if the Company shall
have complied with subsection 2.9C(iv) with respect to such item on or
before the date that such Release Price is otherwise due and payable;
and provided further that, for purposes of determining any Release
Price, the Release Price shall be zero if no Loans are outstanding.
"RENOVATION" means the rebuilding, repair, restoration, refurbishment,
fixturing and equipping of the Improvements at a Property, a Managed Property
or an Other Managed Property. The term "Renovate" used as a verb has a
corresponding meaning.
"RENTS" means, collectively, all rents, issues, profits, royalties,
receipts, revenues, accounts receivable, security deposits and other deposits
(subject to the prior right of Tenants making such deposits) and income,
including room receipts, rack charges, vending machine receipts, food and
beverage receipts, concession fees and charges, public assembly room receipts,
fixed, additional and percentage rents, occupancy charges, operating expense
reimbursements, reimbursements for increases in taxes, sums paid by Tenants to
any Loan Party or any of its Subsidiaries to reimburse such Loan Party or such
Subsidiary for amounts originally paid or to be paid by such Loan Party or such
Subsidiary or such Loan Party's or such
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Subsidiary's agents or Affiliates for which such Tenants were liable, as, for
example, tenant improvements costs in excess of any work letter, lease takeover
costs, moving expenses and tax and operating expense pass-throughs for which a
Tenant is solely liable, parking, valet, maintenance, common area, tax,
insurance, utility and service charges and contributions, proceeds of sale of
electricity, gas, heating, air-conditioning and other utilities and services,
deficiency rents and liquidated damages, and other benefits.
"RESTORATION" means the construction, design services, labor,
materials and other indirect costs and direct costs required to repair, restore
(including demolition), replace and rebuild all or any portion of a Property or
a Managed Property (or the Improvements thereof) following the destruction,
damage, loss or Taking thereof. The term "Restore" used as a verb has a
corresponding meaning.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of the Company now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class (and cash
in lieu of fractional shares in an aggregate amount not greater than $25,000),
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any equity
Securities, now or hereafter outstanding, of the Company or any of its
Subsidiaries that are not Wholly Owned Subsidiaries, including without
limitation, the purchase of any Securities pursuant to the Stockholders'
Agreement, (iii) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any now or
hereafter outstanding, of the Company or any of its Subsidiaries that are not
Wholly Owned Subsidiaries and (iv) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement,
defeasance (including in substance or legal defeasance), sinking fund or
similar payment with respect to, any Indebtedness of the Company or any of its
Subsidiaries, including the Senior Notes, that is subordinated in right of
payment to the Obligations.
"REVOLVING COMMITMENTS" means, collectively, the commitments of the
Lenders to make Revolving Loans to the Company prior to the Revolving
Commitment Conversion Date pursuant to subsection 2.1A(i) and, on and after
the Revolving Commitment Conversion Date, to maintain such Revolving Loans
pursuant to subsection 2.1A(i).
"REVOLVING COMMITMENT CONVERSION DATE" means the date that is the
third anniversary of the Effective Date.
"REVOLVING LOANS" means, collectively, the Loans made by the Lenders
to the Company pursuant to subsection 2.1A.
"REVOLVING NOTES" means, collectively, (i) the promissory notes of the
Company issued on or before the Funding Availability Date pursuant to
subsection 2.10(i) and (ii) any promissory notes issued by the Company
pursuant to the last sentence of subsection 10.1B(i) in connection with
assignments of the Revolving Loan Commitments and Revolving Loans of any
Lenders, in each case substantially in the form of Exhibit I annexed hereto, as
they may be amended,
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restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"ROSE HALL GP" means WHC Caribbean Limited, a Jamaica corporation and
the sole general partner of Rose Hall Partnership.
"ROSE HALL GP CORP." means Xerxes Limited, a Jamaica corporation and
the sole stockholder of Rose Hall GP.
"ROSE HALL PARTNERSHIP" means Rose Hall Associates Limited
Partnership, a Texas limited partnership.
"ROSE HALL PROPERTY" means the real property (including the fee
interest of Rose Hall Partnership in the hotel property and the leasehold
interest of Rose Hall Partnership in the golf course property adjacent
thereto), together with all Improvements thereon and all fixtures attached
thereto and all personal property used in connection therewith, located at
Montego Bay, Jamaica, and known, as of the date of this Agreement, as the
Wyndham Rose Hall Resort, as more particularly described on Schedule 5.4A1
annexed hereto.
"ROSE HALL TRANSFER AGREEMENT" means the Transfer Agreement dated as
of March 14, 1996 among the Company, Bank of Nova Scotia, The Bank of Nova
Scotia Jamaica Limited and Caribbean Hotel Management Company, as such
agreement may be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.
"SECURITIES" means any stock, shares, partnership interests, interests
in limited liability companies, voting trust certificates, certificates of
interest or participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of
the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SECURITY AGREEMENT" means the Security and Pledge Agreement executed
and delivered by each Loan Party and the Agent on or before the Funding
Availability Date pursuant to subsection 4.1E(i), and thereafter by each
other Subsidiary of the Company that becomes a party thereto, in substantially
the form of Exhibit IX annexed hereto, pursuant to which such Loan Party will
pledge and grant a security interest in the Collateral described therein to
Agent for the benefit of the Agent and the Lenders, as such Security and Pledge
Agreement may be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.
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"SECURITY DOCUMENTS" means, collectively, the Mortgages, the
Assignments of Rents and Leases, the Security Agreement, the Trademark
Agreement, the Cash Management Letters, the Omnibus Management and Liquor
License Agreement, the Tenant Subordination Agreements and all deeds of trust,
deeds to secure debt, mortgages, security agreements, pledge agreements,
assignments and all other instruments or documents (including UCC-1 financing
statements, fixture filings, amendments of financing statements or similar
documents required or advisable in order to perfect or maintain the Liens
created by the Security Documents) delivered by any Person pursuant to this
Agreement or any of the other Loan Documents, whether such delivery is prior
to, contemporaneous with or after delivery of this Agreement, in order to grant
to the Agent Liens in real, personal or mixed property of that Person, and to
maintain such Liens as each of the foregoing may be amended, restated,
consolidated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof. Security Documents do not include
this Agreement or the Notes.
"SENIOR EXECUTIVES" means, collectively, James D. Carreker, Leslie V.
Bentley, Eric A. Danziger, Anne L. Raymond and Stanley M. Koonce, Jr.
"SENIOR NOTE DOCUMENTS" means, collectively, (i) the Debt Underwriting
Agreements, the Senior Notes, the Indenture, the Senior Note Subsidiary
Guaranty and each agreement, instrument, certificate, opinion, or other
document executed and delivered by or on behalf of any Loan Party or any of its
Subsidiaries in connection with the issuance and sale of the Senior Notes in
the Debt Offering and (ii) each agreement, instrument, indenture, note,
certificate, opinion or other document executed and delivered by or on behalf
of any Person in connection with the issuance of any Securities referred to in
clause (ii) or (iii) of the definition of Senior Notes; in each case, as
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"SENIOR NOTES" means, collectively, (i) the senior subordinated notes
issued by the Company pursuant to the Indenture, (ii) any Securities issued by
any Person to a holder of any of the Securities referred to in this definition
of Senior Notes pursuant to an order of decree of a court of competent
jurisdiction and (iii) any Securities issued by any Person in connection with
any refinancing, exchange or refunding of any of the securities referred to in
this definition of Senior Notes; in each case with respect to securities
referred to in this definition of Senior Notes, as such securities are amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"SENIOR NOTE SUBSIDIARY GUARANTY" means the Guaranty of the Senior
Notes effected pursuant to Article Eleven of the Indenture by each Loan Party
(other than the Company) and each other Subsidiary of the Company that becomes
a party thereto in accordance with the terms thereof and hereof, as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.
"SERVICING AGREEMENTS" means, collectively, the Property Servicing
Agreements and the Liquor Operations Servicing Agreements listed on Schedule
4.1J annexed hereto, as such Schedule may be revised or supplemented from
time to time pursuant to subsection 2.9 or
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7.16A(i), as any such agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting any corporate purposes,
including (i) workers' compensation liabilities of the Company or any of its
Subsidiaries, (ii) the obligations of third party insurers of the Company or
any of its Subsidiaries arising by virtue of the laws of any jurisdiction
requiring third party insurers, and (iii) performance, payment, deposit or
surety obligations of the Company or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry; provided that Standby Letters of Credit may not
be issued for the purpose of supporting (a) trade payables or (b) any
Indebtedness constituting "antecedent debt" (as that term is used in Section
547 of the Bankruptcy Code).
"STOCKHOLDERS' AGREEMENT" means the Stockholders' Agreement proposed
to be dated as of May 24, 1996 among the Company and each of the stockholders
listed on the signature pages thereof, each substantially in the form thereof
that has been approved by the Agent, together with such alterations therein as
shall be approved by the Agent, which approval may be granted, withheld,
conditioned or delayed in its sole discretion, as such agreement may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence
of any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"SUBSIDIARY GUARANTOR" means each Loan Party under the Subsidiary
Guaranty.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty by each Loan Party
(other than the Company) and any other Subsidiary of the Company that becomes a
party thereto, substantially in the form of Exhibit VIII annexed hereto, as
such Subsidiary Guaranty may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"SURVEY" means, with respect to any Property, a current survey map
prepared by a surveyor licensed in the state in which such Property is located,
reasonably acceptable to the Agent, containing the legal description of such
Property and conforming, and certified by such surveyor to the Agent and the
Lenders and the Title Company as conforming, to the Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys for urban survey class as adopted
by ALTA and American Congress on Surveying & Mapping (1992 version), and
showing, to the extent practicable, all matters described in "Table A/Optional
Survey
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Responsibilities and Specifications" in such Minimum Standard Detail
Requirements; provided, however, that the survey need not meet the foregoing
requirements if the Title Company has eliminated the survey exception from the
Title Policies and all other exceptions to the Title Policies based upon such
survey are acceptable. Any such survey shall contain a certification by such
surveyor to the Agent and the Lenders stating whether the Property is located
in an area having special flood hazards as identified by the Federal Emergency
Management Agency.
"SWING LINE LENDER" means Bankers, or any Person serving as a
successor Agent hereunder, in its capacity as Swing Line Lender hereunder.
"SWING LINE COMMITMENT" means the commitment of Swing Line Lender to
make Swing Line Loans to the Company pursuant to subsection 2.1A(ii).
"SWING LINE LOANS" means, collectively, the Loans made by Swing Line
Lender to the Company pursuant to subsection 2.1A(ii).
"SWING LINE NOTE" means, collectively, (i) the promissory note of the
Company issued pursuant to subsection 2.1D(ii) on or before the Funding
Availability Date and (ii) any promissory note issued by the Company to any
successor Agent and Swing Line Lender pursuant to the last sentence of
subsection 9.5B, in each case, substantially in the form of Exhibit II annexed
hereto, as it may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or any successor to the business thereof.
"TAKING" means the taking or appropriation (including by deed in lieu
of condemnation or by voluntary sale or transfer under threat of condemnation
or while legal proceedings for condemnation are pending) of any Property, or
any part thereof or interest therein, for public or quasi-public use under the
power of eminent domain, by reason of any public improvement or condemnation
proceeding, or in any other manner or any damage or injury or diminution in
value through condemnation, inverse condemnation or other exercise of the power
of eminent domain. The term "Taken" used as a verb has a correlative meaning.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, on
whomsoever and wherever imposed, levied, collected, withheld or assessed by a
Governmental Authority; provided, however, that "TAX ON THE OVERALL NET INCOME"
of a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or, in the case of
any Lender, its lending office) is located or in which that Person is deemed to
be doing business on all or part of the net income, profits or gains of that
Person (whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or
otherwise).
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"TENANT" means any Person liable by contract or otherwise to pay rent
or a percentage of income, revenue or profits pursuant to a Lease, and includes
a tenant, subtenant, lessee and sublessee.
"TENANT SUBORDINATION AGREEMENT" means any Subordination,
Non-Disturbance and Attornment Agreement executed and acknowledged by a Tenant,
the Company or any other Loan Party and the Agent, and reasonably satisfactory
in form and substance to the Agent, as each such agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"TITLE COMPANY" means (i) as of any date on or prior to the Funding
Availability Date, Chicago Title Insurance Company and (ii) as of any date
after the Funding Availability Date, such other title company as may be
selected by the Company and approved by the Agent in its reasonable discretion.
"TITLE POLICIES" means, with respect to the Pool A Properties (other
than the Rose Hall Property), the paid mortgagee policies of title insurance in
the form of a 1970 ALTA loan policy (or other form of loan policy available in
the applicable state and acceptable to the Agent) and issued by the Title
Company.
"TOTAL ADJUSTED EQUITY INTERESTS" means, with respect to a Joint
Venture or other Person in which any Loan Party or any of its Subsidiaries
shall have made an Investment or for whose benefit such Loan Party or
Subsidiary shall have become liable with respect to a Guaranty following the
Effective Date, and as of any date of determination, the sum of (i) the
aggregate fair market value of the equity Securities of such Joint Venture or
other Person outstanding as of such date of determination plus (ii) the
aggregate fair market value of all debt Investments made by such Loan Party or
Subsidiary thereof, in each case as reasonably determined by the Company and
certified to the Agent in an Officers' Certificate of the Chief Executive
Officer or the Chief Financial Officer of the Company to such effect, together
with the information utilized by the Company to make such determination;
provided that, for the purpose of calculating such amount, there shall be
included and excluded, as the case may be, such debt Investments of the Loan
Parties and their respective Subsidiaries as shall be so included or excluded,
as the case may be, with respect to such Joint Venture or other Person or
Subsidiary thereof, as of such date of determination, in accordance with the
proviso to the definition of Company's Adjusted Equity Interest.
"TOTAL MANAGEMENT EBITDA" means, for any period and as of any date of
determination, the aggregate Management EBITDA for such period in respect of
all Management Agreements and Servicing Agreements and Other Management
Agreements.
"TOTAL POOL A PROPERTY EBITDA" means, for any period and as of any
date of determination, the aggregate Property EBITDA in respect of all Pool A
Properties.
"TOTAL POOL A PROPERTY EBITDA-CAP. EX" means, for any period and as of
any date of determination, Total Pool A Property EBITDA minus Capital
Expenditures with respect to the Pool A Properties.
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"TOTAL PROPERTY EBITDA" means, for any period and as of any date of
determination, the aggregate Property EBITDA for such period with respect to
all Properties.
"TOTAL UTILIZATION" means, as of any date of determination, the sum of
the following, without duplication:
(i) the Total Utilization of Revolving Commitments; plus
(ii) the sum of Guaranties of the Loan Parties and their
respective Subsidiaries either (a) that are in existence on the
Effective Date (1) but are not specified on Schedule 5.3 annexed
hereto, as approved by the Agent, or (2) are specified on Schedule 5.3
but the maximum estimated amounts specified therefor are greater than
the corresponding maximum estimated amounts specified therefor on
Schedule 5.3 annexed hereto (provided that, with respect to each
Guaranty referred to in this subclause (2), the amount of such
Guaranty that shall be included in any calculation of Total
Utilization, shall be equal to the amount of such excess), or (b)
permitted by subsection 7.3(vi), (vii), (viii) or (ix) or subsection
7.4(ii)(a), in each case referred to in the preceding clauses (a) and
(b) which have not been paid or otherwise discharged as of such date
of determination; provided, that the Guaranties by Subsidiaries of the
Company of the Senior Notes shall not be included in the calculation
of Total Utilization; plus
(iii) the sum of (a) the excess of $4,000,000 over the
aggregate amount actually paid by or on behalf of the Rose Hall
Partnership for the Renovation of the Rose Hall Property after the
Effective Date and on or before such date of determination plus (b)
the excess of $60,000 over the sum of (x) the aggregate amount
actually paid by or on behalf of the Rose Hall Partnership on and
after the Effective Date for the remediation recommended in the
environmental audit with respect to the Rose Hall Property delivered
pursuant to subsection 4.1M or actually deposited by or on behalf of
Rose Hall Partnership in a segregated account for such purpose and not
withdrawn from such account and actually applied by or on behalf of
the Rose Hall Partnership for such purpose, in each case on or before
such date of determination, plus (y) the aggregate amount of the
indemnification obligations with respect to such remediation
expenditures owed to the Rose Hall Partnership by such Person or
Persons, pursuant to such indemnification agreement or agreements and
secured by such collateral, as in each case shall be approved by the
Agent, which approval may be withheld, conditioned or delayed in its
sole discretion; plus
(iv) the aggregate costs for the Restoration of any Pool A
Property or Pool B Property pursuant to subsection 6.11G, in each case
as specified in the Restoration Budget therefor most recently
delivered to the Agent, for which payment has not been made, as
determined by the Agent in its sole discretion; plus
(v) the aggregate amount of principal, interest and other
amounts referred to in subsection 7.1(vii)(s)(3);
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provided that the payment or discharge of such Guaranties and costs of
Restoration, and the amount of each such payment or discharge, shall be
determined by the Agent, in its sole discretion, after taking into account any
written notices and other information with respect thereto that may be provided
by the Company or its Subsidiaries to the Agent from time to time.
"TOTAL UTILIZATION OF REVOLVING COMMITMENTS" means, as of any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans (other than Revolving Loans made for the purpose of repaying
any Refunded Swing Line Loans or reimbursing the applicable Issuing Lender for
any amount drawn under any Letter of Credit but not yet so applied), plus (ii)
the Letter of Credit Usage, plus (iii) the aggregate principal amount of all
outstanding Swing Line Loans.
"TRADEMARK AGREEMENT" means the Trademark Security Agreement by the
Company, Management Corp. and IP Corp. in favor of the Agent for the benefit of
the Agent and the Lenders, in substantially the form of Exhibit X annexed
hereto, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"TRANSFER" means any conveyance, assignment, sale, mortgaging,
encumbrance, pledging, hypothecation, granting of a security interest in,
granting of options with respect to or other disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) all or any portion of any legal
or beneficial interest (i) in all or any portion of any Property, (ii) in any
right under a Management Agreement, including without limitation, the right to
receive payments of any amounts thereunder, or (iii) in any other assets of any
Loan Party or any of its Subsidiaries.
"UNDERWRITING AGREEMENTS" means, collectively, the Equity Underwriting
Agreements and the Debt Underwriting Agreements.
"UNIFORM SYSTEM" means the Uniform System of Accounts for Hotels, 8th
Revised Edition, 1986, as published by the Hotel Association of New York City,
as the same may be further revised from time to time.
"UNITED STATES OF AMERICA" means the 50 states of the United States of
America and Washington, D.C., but excluding any territories or possessions
thereof other than the Commonwealth of Puerto Rico.
"VININGS AGREEMENT" means the Sale and Purchase Agreement dated as of
March 5, 1996 between Overlook Vinings Inn and Conference Center Associates,
Ltd. and Wyndham Hotel Company, Ltd., as such agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"VININGS BOND DOCUMENTS" means, collectively, the Vinings Bonds, the
Vinings Indenture, the Loan Agreement dated as of October 1, 1985 between the
Development Authority of Cobb County (the "Authority") and Overlook Vinings Inn
and Conference Center Associates, Ltd. ("Vinings Overlook"), the Note dated
October 1, 1995, in the original
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principal amount of $9,675,000 made by Vinings Overlook payable to the order of
the Authority, and assigned by the Authority without recourse to The Citizens
and Southern National Bank (as predecessor to NationsBank, N.A. (South), a
national banking association (successor by merger to NationsBank of Georgia,
National Association, formerly known as The Citizens and Southern National
Bank), as Trustee under the Vinings Indenture, the Deed to Secure Debt from
Vinings Overlook to the Authority, The Mutual Benefit Life Insurance Company,
and the Trustee, dated as of October 1, 1985, as assigned by Memorandum of
Assignment from the Authority to the Trustee, dated as of October 1, 1985, the
Agreement Regarding Interest and Charges dated November 26, 1985 between
Vinings Overlook and the Authority, the Vinings Forbearance Agreement and all
other agreements entered into by Vinings Overlook in connection with the
Vinings Bonds, as each such agreement, instrument or other document may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"VININGS BONDS" means the $9,675,000 Development Authority of Cobb
County Industrial Development Revenue Bonds 1985 Series (Overlook Inn Project)
issued by the Development Authority of Cobb County pursuant to the Vinings
Indenture, as such securities are amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof.
"VININGS FORBEARANCE AGREEMENT" means the Forbearance Agreement
referred to in Section 2.2 of the Vinings Agreement and proposed to be entered
into by NationsBank, N.A. (South), a national banking association successor by
merger to NationsBank of Georgia, National Association, formerly known as The
Citizens and Southern National Bank), as Trustee under the Vinings Indenture,
Overlook Vinings Inn and Conference Center Associates, Ltd., and Mutual Benefit
Life Insurance Company, in liquidation, in the form of Draft No. 5 (dated
October 19, 1995) reviewed by the Agent, with such alterations therein as shall
be approved by the Agent, which approval may be granted, withheld, conditioned
or delayed in its sole discretion, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"VININGS INDEBTEDNESS" means the Indebtedness and other obligations of
the Vinings Subsidiary, if any, created or evidenced by, or otherwise, assumed
or otherwise incurred in connection with, the Vinings Bond Documents, as such
Indebtedness or other obligations may be refinanced, exchanged or refunded in
accordance with the terms thereof and hereof.
"VININGS INDENTURE" means the Trust Indenture dated as of October 1,
1985, by and between the Development Authority of Cobb County and The Citizens
and Southern National Bank (predecessor to NationsBank, N.A. (South), a
national banking association), as Trustee, as amended, restated, supplemented
or otherwise modified from time to time in accordance with the terms hereof and
thereof.
"VININGS PROPERTY" means the real property, together with all
Improvements thereon and all fixtures attached thereto and all personal
property used in connection therewith, located in Atlanta, Georgia and known,
as of the date of this Agreement, as the Vinings Wyndham Garden Hotel.
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"VININGS SUBSIDIARY" has the meaning assigned to that term in
subsection 7.15A(iv).
"VOLUNTARY REMOVAL PERIOD" means, with respect to any Property,
Managed Property, Other Managed Property, Management Agreement, Servicing
Agreement or Other Management Agreement, the period (i) commencing on the date
specified in an Officers' Certificate delivered to the Agent on or before such
date, provided that no such period may commence before the payment in full of
any amount required to be prepaid pursuant to subsection 2.4B(iv) if effect
were not given to an election duly made by the Company to defer such prepayment
pursuant to the second sentence of subsection 2.4B(iv), and (ii) terminating on
the earlier of (a) the date specified in such Officers' Certificate, which
shall be not less than 3 months after the date of such commencement, and (b)
the date on which the Company would have been required to make a prepayment
pursuant to subsection 2.4B(iv) if effect were not given to an election duly
made by the Company to defer such prepayment pursuant to the second sentence of
subsection 2.4B(iv). Except as provided in clause (ii)(b) of the preceding
sentence, the term of a Voluntary Removal Period may not be shortened, extended
or otherwise modified. The effectiveness of a Voluntary Removal Period with
respect to a condition or event specified in subsection 8.1 shall not
constitute or cause, or be deemed to constitute, a waiver by the Agent or the
Lenders of any other condition or event specified in subsection 8.1.
"WEL" means Wyndham Employees Ltd., a Texas limited partnership.
"WHI" means WH Interest, Inc., a Texas corporation.
"WHI LIMITED PARTNERSHIP" means WHI Limited Partnership, a Texas
limited partnership.
"WHOLLY OWNED" means, with respect to any Subsidiary of any Person, a
Subsidiary all of the outstanding equity Securities of which (other than any
director's qualifying shares, Investments by foreign nationals mandated by
Applicable Law or Investments by local residents mandated by Applicable Law in
connection with the issuance of a Liquor License) are owned directly or
indirectly by such Person.
"WORK" has the meaning assigned to that term in subsection 6.11F.
"WYNRIGHT" means Wynright Insurance Corporation, a Bermuda
corporation.
"WYNRIGHT AGREEMENTS" means, collectively, the Insurance Policy that
has been issued by Wynright and is in effect on the Effective Date and the
Asset Management Agreement to be executed and delivered by Wynright and the
Company, in a form that shall be approved by the Agent, which approval may be
granted, withheld, conditioned or delayed in its sole discretion, as each such
agreement may be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.
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1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT; PRO FORMA.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by the Company to the Agent for distribution to the
Lenders pursuant to subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation. Except as otherwise expressly
provided herein, calculations in connection with the definitions, covenants and
other provisions of this Agreement shall utilize accounting principles and
policies in conformity with those used to prepare the financial statements
referred to in subsection 5.3(i). For purposes of calculating the Borrowing
Base and any amount pursuant to subsection 7.6, as of any date of determination
and for any period, pro forma effect shall be given to the consummation of the
Formation, the Public Offerings and the exercise of the GE Option, and the
application of all proceeds therefrom, as if such transactions shall have been
consummated on the first day of such period.
1.3 REFERENCES TO ARTICLES, SECTIONS, EXHIBITS, SCHEDULES AND ATTACHMENTS.
All references appearing in a Loan Document to Articles, Sections,
subsections, clauses, Recitals, Exhibits, Schedules or Attachments are
references to the Articles, Sections, subsections, clauses and Recitals thereof
and to the Exhibits, Schedules or Attachments annexed to such Loan Document
unless expressly otherwise designated in such Loan Document. All references
appearing in a Loan Document to Exhibits, Schedules and Attachments are
references to such documents as initially annexed to such Loan Document or as
supplemented or revised in accordance with the terms of this Agreement or such
other Loan Document.
1.4 CAPTIONS.
All captions to any Article, Section, subsection, clause, Recital,
Exhibit, Schedule or Attachment in a Loan Document are used for convenience and
reference only and in no way define, limit or describe the scope or intent of,
or in any way affect, such Loan Document.
1.5 DRAFTER.
No inference against or in favor of any party to any Loan Document
shall be drawn from the fact that such party or its counsel has drafted any
portion of any Loan Document.
1.6 REFERENCES TO PERSONS INCLUDE PERMITTED SUCCESSORS AND ASSIGNS.
Except as otherwise specified in a Loan Document, all references in
such Loan Document to any Person, other than the Company or any of its
Affiliates, shall be deemed to include the successors and assigns of such
Person.
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1.7 REFERENCES TO APPLICABLE LAW AND CONTRACTS.
Except as otherwise specified in a Loan Document, all references in
such Loan Document to any Applicable Law or contracts specifically defined or
referred to therein, shall be deemed references to such Applicable Law or
contracts as may be amended, restated, supplemented, consolidated or otherwise
modified from time to time, or, in the case of any such contract, as the terms
thereof may be waived or modified, but only in the case of each such amendment,
waiver or modification of a contract, to the extent permitted by, and effected
in accordance with, the terms thereof and hereof and only to the extent such
amendment, waiver or modification of a contract is not prohibited by any of the
Loan Documents.
1.8 HEREIN.
The words "herein", "hereinabove", "hereinbelow", "hereof",
"hereunder" and words of similar import, when used in a Loan Document, shall
refer to such Loan Document as a whole.
1.9 INCLUDING WITHOUT LIMITATION.
The words "includes", "including" and similar terms used in any Loan
Document shall be construed as if followed by the words "without limitation".
1.10 GENDER.
Whenever the context so requires, the neuter gender includes the
masculine or feminine and the singular number includes the plural, and vice
versa.
1.11 SINGULAR AND PLURAL.
Any of the terms defined in a Loan Document may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
1.12 KNOWLEDGE.
As used in this Agreement or in any other Loan Document, the phrases
"TO THE COMPANY'S ACTUAL KNOWLEDGE", "TO THE KNOWLEDGE OF THE COMPANY" and any
variations thereof shall mean, as of any date of determination and after
inquiry that would be made by a prudent owner and manager of upscale full
service hotels, garden style hotels or resort hotels, as the case may be,
owning or managing such hotels for its own account, the actual knowledge or
awareness, as of such date, of the persons who occupy the offices of Chairman
of the Board, Chief Executive Officer, President - Wyndham Gardens Division,
President - Wyndham Hotels and Resorts Division, Executive Vice President and
Chief Financial Officer, Executive Vice President, Vice President - General
Counsel, Vice President Chief Information Officer, Vice President - Development,
Vice President - Marketing, Vice President - Human Resources, Vice President -
Corporate Controller, Vice President - Technical Services, Secretary, Treasurer,
vice presidents of operations and regional directors of operations; provided,
however, that the
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knowledge of a vice president of operations or a regional director of
operations shall be imputed to the Company only with respect to matters
affecting the region or the Properties for which such vice president or
regional director provides regional or property management services. The
Company represents and warrants that the foregoing Persons have executive and
administrative responsibility for the Company and its assets and, in the
performance of their duties in the ordinary course of business, would
customarily have knowledge of the matters referred to herein.
SECTION 2
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; LOANS; NOTES; THE REGISTER.
A. COMMITMENTS.
(i) Revolving Commitments. Subject to the terms and
conditions of this Agreement and in reliance upon the representations
and warranties of the Company herein set forth, each Lender hereby
severally agrees, subject to the limitations set forth below with
respect to the maximum amount of Loans permitted to be outstanding
from time to time, to lend to the Company from time to time during the
period from the Funding Availability Date to but excluding the
Revolving Commitment Conversion Date, an aggregate amount not
exceeding such Lender's Pro Rata Share of the aggregate amount of the
Revolving Commitments to be used for the purposes identified in
subsection 2.5A. In addition, each Lender hereby agrees to maintain as
Revolving Loans, subject to the provisions of subsection 2.4, the
Revolving Loans of such Lender outstanding on the Revolving Commitment
Conversion Date during the period from the Revolving Commitment
Conversion Date to the Maturity Date; provided that, except with
respect to Revolving Loans made pursuant to subsection 3.3B to
reimburse an Issuing Lender, no Lender shall be required to make
additional Revolving Loans on or after the Revolving Commitment
Conversion Date. The amount of such payment shall not be reduced or
increased as the result of any payment pursuant to subsection 2.4B.
The original amount of each Lender's Revolving Commitment and such
Lender's Pro Rata Share is set forth opposite its name on Schedule
2.1A annexed hereto and the aggregate original amount of the Revolving
Commitments is $100,000,000; provided, however, that the Revolving
Commitments of the Lenders shall be adjusted to give effect to any
assignments of the Revolving Commitments pursuant to subsection 9.1;
provided further, however, that the amount of the Revolving
Commitments shall be automatically reduced by the amount of any
reductions to the Revolving Commitments made pursuant to subsection
2.4B(ii).
Each Lender's Revolving Commitment shall expire on the
Maturity Date and all Loans and all other amounts owed hereunder with
respect to the Loans and the Revolving Commitments shall be paid in
full no later than the Maturity Date; provided, however, that each
Lender's Revolving Commitment shall expire immediately and without
further
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action on August 15, 1996, if the Funding Availability Date has not
occurred on or before that date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Commitments
shall be subject to the limitation that the Total Utilization (after
giving effect to any concurrent payment of the Loans made with the
proceeds of Loans) shall not exceed the lesser of the Borrowing Base
and the Revolving Commitments then in effect.
(ii) Swing Line Commitment. Subject to the terms and
conditions of this Agreement and in reliance upon the representations
and warranties of the Company herein set forth, Swing Line Lender
hereby agrees, subject to the limitations set forth below with respect
to the maximum amount of Swing Line Loans permitted to be outstanding
from time to time, to make a portion of the Revolving Commitments
available to the Company from time to time during the period from the
Funding Availability Date to but excluding the Revolving Commitment
Conversion Date by making Swing Line Loans to the Company in an
aggregate amount not exceeding the amount of the Swing Line Commitment
to be used for the purposes identified in subsection 2.5A,
notwithstanding the fact that such Swing Line Loans, when aggregated
with Swing Line Lender's outstanding Revolving Loans and Swing Line
Lender's Pro Rata Share of the Letter of Credit Usage then in effect,
may exceed Swing Line Lender's Revolving Commitment. The original
amount of the Swing Line Commitment is $10,000,000; provided that any
reduction of the Revolving Commitments made pursuant to subsection
2.4B(ii) which reduces the aggregate Revolving Commitments to an
amount less than the then current amount of the Swing Line Commitment
shall result in an automatic corresponding reduction of the Swing Line
Commitment to the amount of the Revolving Commitments, as so reduced,
without any further action on the part of the Company, the Agent or
Swing Line Lender. The Swing Line Commitment shall expire on the
Revolving Commitment Conversion Date and all Swing Line Loans and all
other amounts owed hereunder with respect to the Swing Line Loans
shall be paid in full no later than that date; provided that the Swing
Line Commitment shall expire immediately and without further action on
August 15, 1996 if the Funding Availability Date has not occurred on
or before that date. Amounts borrowed under this subsection 2.1A(ii)
may be repaid and reborrowed prior to but excluding the Revolving
Commitment Conversion Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Commitment
shall be subject to the limitation that in no event shall the Total
Utilization (after giving effect to any concurrent payment of the
Loans made with the proceeds of Loans) at any time exceed the
Revolving Commitments then in effect.
With respect to any Swing Line Loans which have not been
voluntarily prepaid by the Company pursuant to subsection 2.4B(i),
Swing Line Lender may, at any time in its sole and absolute
discretion, deliver to the Agent (with a copy to the Company), no
later than 10:00 A.M. (New York City time) on the first Business Day
in advance of the
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proposed Funding Date, a notice (which shall be deemed to be a Notice
of Borrowing given by Company) requesting the Lenders to make
Revolving Loans that are Base Rate Loans on such Funding Date in an
amount equal to the amount of such Swing Line Loans (the "REFUNDED
SWING LINE LOANS") outstanding on the date such notice is given which
Swing Line Lender requests the Lenders to prepay. Anything contained
in this Agreement to the contrary notwithstanding, (i) the proceeds of
such Revolving Loans made by the Lenders other than Swing Line Lender
shall be immediately delivered by the Agent to Swing Line Lender (and
not to Company) and applied to repay a corresponding portion of the
Refunded Swing Line Loans and (ii) on the day such Revolving Loans are
made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line
Loans shall be deemed to be paid with the proceeds of a Revolving Loan
made by Swing Line Lender, and such portion of the Swing Line Loans
deemed to be so paid shall no longer be outstanding as Swing Line
Loans and shall no longer be due under the Swing Line Note of Swing
Line Lender but shall instead constitute part of Swing Line Lender's
outstanding Revolving Loans and shall be due under the Revolving Note
of Swing Line Lender. The Company hereby authorizes the Agent and
Swing Line Lender to charge the Company's accounts with the Agent and
Swing Line Lender (up to the amount available in each such account) in
order to immediately pay Swing Line Lender the amount of the Refunded
Swing Line Loans to the extent the proceeds of such Revolving Loans
made by the Lenders, including the Revolving Loan deemed to be made by
Swing Line Lender, are not sufficient to repay in full the Refunded
Swing Line Loans. If any portion of any such amount paid (or deemed to
be paid) to Swing Line Lender should be recovered by or on behalf of
the Company from Swing Line Lender in bankruptcy, by assignment for
the benefit of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Lenders in the manner
contemplated by subsection 9.5.
If for any reason (a) Revolving Loans are not made upon the
request of Swing Line Lender as provided in the immediately preceding
paragraph in an amount sufficient to repay any amounts owed to Swing
Line Lender in respect of any outstanding Swing Line Loans or (b) the
Revolving Commitments are terminated at a time when any Swing Line
Loans are outstanding, each Lender shall be deemed to, and hereby
agrees to, have purchased a participation in such outstanding Swing
Line Loans in an amount equal to its Pro Rata Share (calculated, in
the case of the foregoing clause (b), immediately prior to such
termination of the Revolving Commitments) of the unpaid amount of such
Swing Line Loans together with accrued interest thereon. Upon one
Business Day's notice from Swing Line Lender, each Lender shall
deliver to Swing Line Lender an amount equal to its respective
participation in same day funds at the office of Swing Line Lender
located at 21 Bankers Trust Plaza, New York, New York. In order to
further evidence such participation (and without prejudice to the
effectiveness of the participation provisions set forth above), each
Lender agrees to enter into a separate participation agreement at the
request of Swing Line Lender in form and substance reasonably
satisfactory to Swing Line Lender. In the event any Lender fails to
make available to Swing Line Lender the amount of such Lender's
participation as provided in this paragraph, Swing Line Lender shall
be entitled to recover such amount on demand from such Lender together
with interest thereon at the rate customarily used by Swing Line
Lender for the correction of
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errors among banks for three Business Days and thereafter at the Base
Rate. In the event Swing Line Lender receives a payment of any amount
in which other Lenders have purchased participations as provided in
this paragraph, Swing Line Lender shall promptly distribute to each
such other Lender its Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding,
each Lender's obligation to make Revolving Loans for the purpose of
repaying any Refunded Swing Line Loans pursuant to the second
preceding paragraph and each Lender's obligation to purchase a
participation in any unpaid Swing Line Loans pursuant to the
immediately preceding paragraph shall be absolute and unconditional
and shall not be affected by any circumstance, including without
limitation (a) any setoff, counterclaim, recoupment, defense or other
right which such Lender may have against Swing Line Lender, the
Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event
of Default; (c) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
the Company or any of its Subsidiaries; (d) any breach of this
Agreement or any other Loan Document by any party thereto; or (e) any
other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided that such obligations of
each Lender are subject to the condition that (y) Swing Line Lender
believed in good faith that all conditions under Section 4 to the
making of the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, as the case may be, were satisfied at the time such
Refunded Swing Line Loans or unpaid Swing Line Loans were made or (z)
the satisfaction of any such condition not satisfied had been waived
in accordance with subsection 9.6 prior to or at the time such
Refunded Swing Line Loans or other unpaid Swing Line Loans were made.
B. BORROWING MECHANICS. Loans made on any Funding Date (other
than Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it or Revolving Loans made pursuant to a request by Swing Line
Lender pursuant to subsection 2.1A(ii) for the purpose of repaying any
Refunded Swing Line Loans) shall be in an aggregate minimum amount of $500,000.
The Company shall be permitted to borrow Revolving Loans pursuant to this
subsection 2.1B only twice during any calendar month; provided that such
limitation shall not apply to Swing Line Loans. Whenever the Company desires
that the Lenders make Revolving Loans, it shall deliver to the Agent a Notice
of Borrowing no later than 10:00 A.M. (New York time) at least three Business
Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate
Loan) or at least one Business Day in advance of the proposed Funding Date (in
the case of a Base Rate Loan). Whenever the Company desires that Swing Line
Lender make a Swing Line Loan, it shall deliver to Agent a Notice of Borrowing
no later than 12:00 Noon (New York City time) on the proposed Funding Date.
Each Notice of Borrowing shall contain the information specified in
the form attached hereto as Exhibit III. If any of the proceeds of such Loan is
to be applied to the Renovation or Restoration of any Property, together with
such Notice of Borrowing there shall be delivered the lien waivers and search
report referred to in subsection 4.2A(ii).
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If none of the proceeds of the requested Loan is to be applied to the
Renovation or Restoration of any Property, the Company may give the Agent
telephonic notice by the required time of any proposed Loan under this
subsection 2.1B in lieu of delivering the Notice of Borrowing; provided,
however, that such telephonic notice shall be promptly confrmed in writing by
delivery of a Notice of Borrowing to the Agent on or before the applicable
Funding Date. Neither the Agent nor any Lender shall incur any liability to
the Company in acting upon any telephonic notice referred to above that the
Agent believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of the Company or for otherwise
acting in good faith under this subsection 2.1B, and upon funding of Loans by
the Lenders in accordance with this Agreement pursuant to any such telephonic
notice the Company shall have effected Loans hereunder.
The Company shall notify the Agent prior to the funding of any Loans
in the event that any of the matters to which the Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by the Company of the
proceeds of any Loans shall constitute a re-certification by the Company, as
of the applicable Funding Date, as to the matters to which the Company is
required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B and 2.6C, a Notice of
Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and the Company shall be bound to make a borrowing in accordance therewith.
C. DISBURSEMENT OF FUNDS. All Revolving Loans under this
Agreement shall be made by the Lenders simultaneously and proportionately to
their respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Revolving Loan requested hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of a default by
any other Lender in that other Lender's obligation to make a Revolving Loan
requested hereunder. After receipt by the Agent of a Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof), the Agent
shall promptly notify (and, if the Notice of Borrowing is received by the Agent
by 10:00 A.M. (New York time) on any day, on any event by the end of such day)
each Lender or Swing Line Lender, as the case may be, of the proposed
borrowing. Each Lender shall make the amount of its Revolving Loan available to
the Agent, in same day funds, at the office of the Agent located at One Bankers
Trust Plaza, New York, New York, not later than 12:00 Noon (New York time) on
the applicable Funding Date and Swing Line Lender shall make the amount of its
Swing Line Loan available to the Agent not later than 2:00 P.M. (New York City
time) on the applicable Funding Date, in each case in same day funds in
Dollars. Except as provided in subsection 2.1A(ii) or subsection 3.3B with
respect to Revolving Loans used to repay Refunded Swing Line Loans or to
reimburse any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it, upon satisfaction or waiver of the conditions precedent
specified in subsections 4.1 (in the case of Loans made on the Funding
Availability Date) and 4.2 (in the case of all Loans), the Agent shall make the
proceeds of such Loans available to the Company on the applicable Funding Date
by causing an amount of same day
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funds equal to the proceeds of all such Loans received by the Agent from the
Lenders to be transferred to the Operating Account.
Unless the Agent shall have been notified by any Lender prior to the
Funding Date for any Loans that such Lender does not intend to make available
to the Agent the amount of such Lender's Loan requested on such Funding Date,
the Agent may assume that such Lender has made such amount available to the
Agent on such Funding Date and the Agent may, in its sole discretion, but shall
not be obligated to, make available to the Company a corresponding amount on
such Funding Date. If such corresponding amount is not in fact made available
to the Agent by such Lender, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to the
Agent, at the Federal Funds Effective Rate for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon the Agent's demand therefor, the Agent shall promptly
notify the Company and the Company shall immediately pay such corresponding
amount to the Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to the Agent, at the rate
payable under this Agreement for Base Rate Loans. Nothing in this subsection
2.lC shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that the Company may have
against any Lender as a result of any default by such Lender hereunder.
D. THE REGISTER.
(i) The Agent shall maintain, at its address referred to
in subsection 9.8, a register for the recordation of the names and
addresses of the Lenders and the Commitment and Loans of each Lender
from time to time (the "REGISTER"). The Company, the Agent and the
Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(ii) The Agent shall record in the Register the Revolving
Commitment and the Revolving Loans from time to time of each Lender,
the Swing Line Loan Commitment and the Swing Line Loans from time to
time of Swing Line Lender, and each repayment or prepayment in respect
of the principal amount of the Revolving Loans of each Lender or the
Swing Line Loans of Swing Line Lender. Any such recordation shall be
conclusive and binding on the Company and each Lender, absent manifest
error; provided, however, that failure to make any such recordation,
or any error in such recordation, shall not affect the Company's
Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records
(including any promissory note described in subsection 2.1D(iv)) the
amount of each Loan made by it and each payment in respect thereof.
Any such recordation shall be conclusive and binding on the Company,
absent manifest error; provided, however, that failure to make any
such recordation, or any error in such recordation, shall not affect
the Company's Obligations
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in respect of the applicable Loans; provided further, however, that in
the event of any inconsistency between the Register and any Lender's
records, the recordations in the Register shall govern.
(iv) Any Lender may, by notice to the Agent and the
Company, request that all or part of the principal amount of the
Company's Loans from such Lender hereunder be evidenced by a Note.
Within three Business Days of the Company's receipt of such notice,
the Company shall execute and deliver to the Agent for delivery to the
appropriate Lender a Note in the principal amount(s) of such Loans, in
the form of Exhibit I attached hereto, payable to the notifying Lender
or, if so specified in such notice, any Person who is an assignee of
such Lender pursuant to subsection 9.1 hereof. If the foreclosure or
other enforcement of any Mortgage or any other Security Document
requires the presentation of a Note evidencing the Obligations secured
by such Security Document and the Company fails or refuses to comply
with a request for such Note, then a copy of this Agreement may be
presented in lieu of such a Note.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections
2.2E, 2.6 and 2.7, each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through the Maturity Date at a rate
determined by reference to the Adjusted Eurodollar Rate or the Base Rate, as
the case may be. The applicable basis for determining the rate of interest with
respect to any Loan shall be selected by the Company initially at the time a
Notice of Borrowing is given with respect to such Loan pursuant to subsection
2.1B. The basis for determining the interest rate with respect to any Loan
shall be changed from time to time in accordance with subsection 2.2D. Subject
to the provisions of subsection 2.7, each Swing Line Loan shall bear interest
on the unpaid principal amount thereof from the date made through maturity
(whether by acceleration or otherwise) at a rate determined by reference to the
Base Rate.
Subject to the provisions of subsections 2.2E, 2.4B(iv) and 2.7, the
Revolving Loans shall bear interest through the Maturity Date as follows:
(i) if a Base Rate Loan, then at a rate equal to the sum
of the Base Rate plus the Applicable Base Rate Margin; and
(ii) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line
Loans shall bear interest through maturity at a per annum rate equal to the sum
of the Base Rate Plus 1.0%.
B. INTEREST PERIODS. In connection with each Eurodollar Rate
Loan, the Company shall, pursuant to the applicable Notice of Borrowing or
Notice of Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be at the Company's option either a one, two, three or six month period;
provided, however, that:
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(i) the initial Interest Period for any Eurodollar Rate
Loan shall commence on the Funding Date in respect of such Loan;
(ii) each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, however, that, if any Interest
Period would otherwise expire on a day that 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;
(iv) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Loans shall extend beyond the Maturity Date;
(vi) there shall be no more than five (5) Interest Periods
outstanding at any time;
(vii) in the event the Company shall fail to specify an
Interest Period for a Eurodollar Rate Loan in the applicable Notice of
Borrowing or Notice of Continuation, the Company shall be deemed to
have selected an Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection
2.2E, interest on the Loans shall be payable monthly in arrears on and to each
Payment Date, upon any prepayment of the Loans (to the extent accrued on the
amount being prepaid) and at the Maturity Date.
D. CONVERSION/CONTINUATION. Subject to the provisions of
subsections 2.2E and 2.6, the Company shall have the option (i) to convert at
any time all or any part of its outstanding Revolving Loans equal to $500,000
and integral multiples of $500,000 in excess of that amount from Loans bearing
interest at a rate determined by reference to one basis to Loans bearing
interest at a rate determined by reference to an alternative basis or (ii) upon
the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to
continue all or any portion of such Loan equal to $500,000 and integral
multiples of $500,000 in excess of that amount as a Eurodollar Rate Loan;
provided, however, that a Eurodollar Rate Loan may be converted into a Base
Rate Loan only on the expiration date of an Interest Period applicable thereto;
and provided further that no Loan may be made as or converted into a Base Rate
Loan during the period from December 24 of any year to and including January 7
of the immediately succeeding year.
The Company shall deliver a Notice of Conversion/Continuation to Agent
no later than 10:00 A.M. (New York City time) at least one Business Day in
advance of the proposed conversion date in the case of a conversion to a Base
Rate Loan and at least three Business Days
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in advance of the proposed conversion/continuation date in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan. A Notice of
Conversion/Continuation shall contain the information indicated on the form
thereof attached hereto as Exhibit IV. In lieu of delivering the
above-described Notice of Conversion/Continuation, the Company may give Agent
telephonic notice by the required time of any proposed conversion/continuation
under this subsection 2.2D; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Conversion/Continuation to the
Agent on or before the proposed conversion/ continuation date.
Neither the Agent nor any Lender shall incur any liability to the
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of the Company or for otherwise acting in
good faith under this subsection 2.2D, and upon continuation of the applicable
basis for determining the interest rate with respect to any Loans in accordance
with this Agreement pursuant to any such telephonic notice the Company shall
have effected a continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.2E, 2.6B and 2.6C, a
Notice of Continuation for continuation of a Eurodollar Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and Company shall be bound to effect
a continuation in accordance therewith.
E. DEFAULT RATE INTEREST. During the continuation of any Event of
Default, the outstanding principal amount of all Loans and, to the extent
permitted by applicable law, any interest payments thereon not paid when due
and any fees and other amounts then due and payable hereunder, shall thereafter
bear interest (including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy or insolvency laws) payable upon
demand at a rate that is 3.0% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 3.0% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided, however, that, in the case of Eurodollar Rate Loans, if such
Event of Default is continuing, upon the expiration of the Interest Period in
effect at the time any such increase in interest rate is effective, such
Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 3.0% per annum
in excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans. Payment or acceptance of the increased rates of interest provided
for in this subsection 2.2E is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or otherwise prejudice or
limit any rights or remedies of the Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be
computed (i) in the case of Base Rate Loans, on the basis of a 365-day or
366-day year, as the case may be, and (ii) in the case of Eurodollar Rate
Loans, on the basis of a 360-day year, in each case for the actual number of
days elapsed in the period during which it accrues. In computing interest on
any Loan, the date of the making of such Loan or the first day of an Interest
Period applicable to such Loan shall be included, and the date of payment of
such Loan or the expiration date of an
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Interest Period applicable to such Loan shall be excluded; provided, however,
that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
2.3 FEES.
A. FACILITY FEES. On the Effective Date, the Company shall pay
the Agent (in addition to any facility fees previously paid to the Agent), for
distribution to each Lender in proportion to that Lender's Pro Rata Share, a
non-refundable facility fee equal to 0.625% of the aggregate amount of the
Commitments in effect on the date of such effectiveness, prior to the initial
funding of any Loans.
B. COMMITMENT FEES. The Company agrees to pay to the Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Effective Date to and
excluding the Revolving Commitment Conversion Date, equal to (i) the average of
the daily unused portion of the Commitments (other than the Swing Line
Commitment), taking into consideration any reductions thereof in accordance
with Section 2.4B(ii), multiplied by (ii) 0.375% per annum, such commitment
fees to be calculated on the basis of a 360-day year and the actual number of
days elapsed and to be payable quarterly in arrears on the last day of each
calendar quarter, commencing with the first such date to occur after the
Effective Date, and on the Revolving Commitment Conversion Date. Anything
contained in this Agreement to the contrary notwithstanding, for purposes of
calculating the commitment fees payable by the Company pursuant to this
subsection 2.3B, the "unused portion of the Commitments," as of any date of
determination, shall be an amount equal to the aggregate amount of Revolving
Commitments as of such date minus the sum of (i) the aggregate principal amount
of all outstanding Revolving Loans on such date plus (ii) the aggregate face
amount of outstanding Letters of Credit. The commitment fee shall be payable as
provided in this subsection notwithstanding that the amount available to be
borrowed hereunder may be less than the amount of the Commitments due to the
operation of the Borrowing Base.
2.4 REPAYMENTS AND PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF THE LOANS; MAXIMUM MATURITY OF REVOLVING
LOANS.
(i) Scheduled Payments. On each of the first, fourth and
seventh Payment Dates next following the third anniversary of the
Effective Date, the Company shall make a principal payment in the
amount equal to 6 2/3% of the amount of the Total Utilization of
Revolving Commitments on the Revolving Commitment Conversion Date. The
amounts of the payments required by the preceding sentence shall not
be increased or decreased by the occurrence or amounts of prepayments
pursuant to subsection 2.4B or otherwise; provided that voluntary
prepayments made after the Revolving Commitment Conversion Date
pursuant to subsection 2.4B(i) shall be applied against the scheduled
payments required pursuant to this subsection 2.4A(i) in order of
maturity. The Loans and all other Obligations shall be paid in full by
the Company no later than the Maturity Date.
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(ii) Maximum Maturity of Revolving Loans. Notwithstanding
anything to the contrary contained in this Agreement, each Revolving
Loan and Swing Line Loan shall be repaid no later than the date that
is 35 months after the Funding Date of such Loan; provided that,
subject to the terms and conditions contained in this Agreement
(including, without limitation, subsection 4.2) such Loans may be
repaid with the proceeds of other Revolving Loans and Swing Line
Loans.
B. PREPAYMENTS AND REDUCTIONS IN COMMITMENTS.
(i) Voluntary Prepayments. The Company may, without
prepayment charge or penalty, upon written or telephonic notice to the
Agent on or prior to 12:00 Noon (New York City time) on the date of
prepayment, which notice, if telephonic, shall be promptly confirmed
in writing, at any time and from time to time prepay any Swing Line
Loan on any Business Day in whole or in part in an aggregate minimum
amount of $500,000 and integral multiples of $100,000 in excess of
that amount. The Company may, without prepayment charge or penalty
(except as provided in Section 2.6D), upon not less than one Business
Day's prior written or telephonic notice, in the case of Base Rate
Loans, and upon not less than three Business Days' prior written or
telephonic notice in the case of Eurodollar Rate Loans, in each case
confirmed in writing to the Agent (which notice the Agent will
promptly transmit by telefacsimile or telephone to each Lender), at
any time and from time to time prepay any Loans on any Business Day in
whole or in part in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount (or, if less,
the total amount of all outstanding Loans); provided, however, that in
the event a Eurodollar Rate Loan is prepaid on a day other than the
last day of the Interest Period applicable thereto, such prepayment
shall be accompanied by the payment of any amounts payable under
subsection 2.6D. Notice of prepayment having been given as aforesaid,
the principal amount of the Loans specified in such notice shall
become due and payable on the prepayment date specified therein;
provided, however, that any such notice given in connection with a
proposed sale or other disposition of a Property pursuant to
subsection 7.15B may be withdrawn by the Company (and the Loans shall
not become so due and payable) in the event such proposed sale or
other disposition fails to be consummated on the proposed prepayment
date; provided further, however, that in the case of any such
withdrawal, the Company shall promptly pay all amounts then due to the
Lenders pursuant to subsection 2.6D. Any such voluntary prepayment
shall be applied as specified in subsection 2.4B(vii). Amounts prepaid
pursuant to this subsection 2.4B(i) may be reborrowed pursuant to
subsection 2.1A.
(ii) Voluntary Reductions of Commitments. The Company may,
upon not less than three Business Days' prior written or telephonic
notice confirmed in writing to the Agent (which notice the Agent will
promptly transmit by telegram, telex or telephone to each Lender), at
any time and from time to time terminate in whole or permanently
reduce in part, without premium or penalty, the Commitments in an
amount up to the amount by which the Commitments exceed the Total
Utilization; provided, however, that any such partial reduction of the
Commitments shall be in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount. The
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Company's notice to the Agent shall designate the date (which shall be
a Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the
Commitments shall be effective on the date specified in the Company's
notice and shall reduce the Commitment of each Lender in the same
proportion as its Pro Rata Share.
(iii) Reductions in Borrowing Base Due to Casualty,
Condemnation or Disposition of Pool A Property or Termination of
Management Agreement or Servicing Agreement. If there shall occur (a) a
casualty or Taking with respect to any Pool A Property (or any portion
thereof) or a sale or other permanent disposition of such Pool A
Property, with respect to which occurrence a prepayment is required to
be made pursuant to subsection 6.11E or 7.15B, as the case may be,
then the Borrowing Base shall be reduced by an amount equal to the
Pool A Property Amount with respect to such Pool A Property; or (b)
the expiration (without renewal or extension), cancellation or other
termination of a Management Agreement or a Servicing Agreement, with
respect to which occurrence a prepayment is required to be made
pursuant to subsection 7.16B, then the Borrowing Base shall be reduced
by an amount equal to the Management Amount with respect to such
Management Agreement or Servicing Agreement, as the case may be.
(iv) Prepayments Due to Borrowing Base. If at any time the
Total Utilization exceeds the Borrowing Base then in effect, as
demonstrated by a Borrowing Base Certificate delivered (or required to
be delivered) pursuant to subsection 6.1(iv) or (xxvi), the Company
shall prepay the Loans (or, if no Loans are then outstanding, deposit
Cash to be held pursuant to the terms of the Collateral Account
Agreement with respect to Letters of Credit then outstanding, whether
or not any beneficiary under any such Letter of Credit shall have
presented, or shall be entitled at such time to present, the drafts or
other documents or certificates required to draw under such Letter of
Credit) in an amount equal to such excess not later than 5 Business
Days after the date that such Borrowing Base Certificate shall have
been delivered (or, if such Borrowing Base Certificate shall not have
been delivered timely or at all, on the last day that such Borrowing
Base Certificate is permitted by subsection 6.1(iv) to be
delivered). However, notwithstanding anything in the foregoing to the
contrary, if a prepayment (or such cash collateralization) is required
pursuant to this subsection 2.4(B)(iv) on or before December 31, 1996,
then the Company shall either (a) make such prepayment (or such cash
collateralization) when due or (b) notify the Agent by Officers'
Certificate that it intends to defer such prepayment (or such cash
collateralization) for a three-month period commencing on such due
date, which Officers' Certificate shall confirm that all Voluntary
Removal Periods then in effect are terminated as of such due date. In
the event the Company elects to so defer such prepayment (or such cash
collaration), then if and so long as the Total Utilization exceeds the
Borrowing Base, (1) the Loans shall bear interest at a rate that is
0.50% per annum in excess of the interest rate otherwise applicable to
the Loans hereunder pursuant to subsection 2.2A, (2) the fee payable
on outstanding Letters of Credit Pursuant to subsection 3.2(i)(b)
shall be 0.50% per annum in excess of the fee otherwise payable
pursuant to such subsection, (3) all Excess Cash Flow thereafter, as
determined within 30 days after the end of each month,
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shall be applied to prepay the Loans (or so cash collateralize the
Letters of Credit) until the Total Utilization does not exceed the
Borrowing Base then in effect and (4) the Company shall not be
required to make any prepayments (or such cash collateralization)
pursuant to the first sentence of this subsection 2.4(iv). If on the
last day of such three-month period the Total Utilization exceeds the
Borrowing Base then in effect, then the Company shall prepay the Loans
(or so cash collateralize the Letters of Credit) on such day in an
amount equal to such excess. Any mandatory prepayments pursuant to
this subsection 2.4B(iv) shall be applied as specified in subsection
2.4B(vii).
(v) Prepayment from Sales of Pool C Properties and
Designation of Other Management Agreements.
(a) If there shall occur any sale or other
permanent disposition of any Pool C Property, the Company
shall prepay the Loans, not later than the first Business Day
following the date of receipt of any Cash Proceeds therefrom,
in an amount equal to the lesser of (1) the Net Sales Price of
such Pool C Property and (2) the aggregate amount of the
Investments made by the Loan Parties and their respective
Subsidiaries (including, without limitation, other Pool C
Subsidiaries) in such Pool C Subsidiary.
(b) If the Company elects to designate a
Management Agreement as an Other Management Agreement as
provided in subsection 7.19F, the Company shall prepay the
Loans as provided in subsection 7.19F.
(vi) Acceleration Due to Reduction of the Facility Amount.
If at any time the aggregate amount of the Revolving Commitments is
less than $10,000,000, whether due to a prepayment or reduction in the
Commitments or otherwise, (a) the Commitments shall be automatically
terminated, (b) the Loans outstanding and all other Obligations of the
Company shall become immediately due and payable and (c) the Company
shall be required to deposit in Cash to be held pursuant to the terms
of the Collateral Account Agreement an amount equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding (whether or not any beneficiary under any such Letter of
Credit shall have presented, or shall be entitled at such time to
present, the drafts or other documents or certificates required to
draw under such Letter of Credit).
(vii) Application of Prepayments. Each prepayment of the
Loans shall be applied first to Base Rate Loans to the full extent
thereof before application to Eurodollar Rate Loans, in each case in a
manner which minimizes the amount of any payments required to be made
by the Company pursuant to subsection 2.6D. Each prepayment of the
Loans shall be applied first to Swing Line Loans to the full extent
thereof before application to Revolving Loans.
C. APPLICATION OF PAYMENTS TO PRINCIPAL AND INTEREST. All
payments in respect of the principal amount of the Loans shall include payment
of accrued interest on the principal
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amount being repaid or prepaid, and all such payments shall be applied to the
payment of unpaid interest before application to principal.
D. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by the
Company of principal, interest, fees and other Obligations hereunder
and under the Notes and the other Loan Documents owed to Agent or any
Lender shall be made in same day funds and without defense, setoff or
counterclaim, free of any restriction or condition, and delivered to
the Agent not later than 2:00 P.M. (New York time) on the date due at
its office located at One Bankers Trust Plaza, New York, New York, for
the account of the Lenders; funds received by the Agent after that
time on such due date shall be deemed to have been paid by the Company
on the next succeeding Business Day. During the occurrence of an
Event of Default or Potential Event of Default, the Company hereby
authorizes the Agent to instruct the Cash Manager to charge its
accounts with the Cash Manager (including the Concentration Account
and the Operating Account) in order to cause timely payment to be made
to the Agent of all principal, interest, fees and expenses due
hereunder or under the Notes or the other Loan Documents (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding Loans to
which such payments relate, in each case proportionately to the
Lenders' respective Pro Rata Shares. The Agent shall promptly
distribute to each Lender, at its primary address set forth below its
name on the appropriate signature page hereof or at such other address
as such Lender may request, its Pro Rata Share of all such payments
received by the Agent and the facility fees and commitment fees of
such Lender when received by the Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4D(ii),
if, pursuant to the provisions of subsection 2.6C, any Affected Lender
makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar
Rate Loans, the Agent shall give effect thereto in apportioning
payments received thereafter.
(iii) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder.
(iv) Notation of Payment. Each Lender agrees that before
disposing of the Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has
been paid; provided, however, that the failure to make (or any error
in the making of) a notation of any Loan made under such Note shall
not limit or otherwise affect the obligations of the Company hereunder
or under such Note with respect to any Loan or any payments of
principal or interest on such Note.
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(v) Distribution to Lenders. Any payment received by the
Agent for distribution to the Lenders that is received by 2:00 P.M.
(New York time) on any day shall be paid to the Lenders by the end of
such day and, if such amounts are not paid to the Lenders on such
date, shall bear interest until paid to the Lenders at the Federal
Funds Effective Rate for three Business Days and thereafter at the
Base Rate.
2.5 USE OF PROCEEDS.
A. LOANS. Subject to the other provisions of this Agreement, the
proceeds of the Loans shall be applied by the Company for the general corporate
purposes of the Company and its Subsidiaries, which may include (i) the
reimbursement of Issuing Lender of any amounts drawn under any Letter of
Credit, (ii) the acquisition, ownership, renovation, restoration, management,
operation and disposition of upscale full service hotels, garden style hotels
and resort hotels located in the United States of America, (iii) the provision
of Investments in Joint Ventures formed to acquire such hotels, (iv) the
acquisition, extension, renewal or modification of Management Agreements,
Servicing Agreements and Other Management Agreements and the provision of
Investments in, and Guaranties of Indebtedness or other obligations of, any
payments to owners of Managed Properties, Additional Managed Properties and
Other Managed Properties and lessors of Pool B Properties, and (v) repayment of
any portion of any other Loan, including Swing Line Loans.
B. LETTERS OF CREDIT. Subject to subsections 2.5C, 7.3 and 7.4,
the Letters of Credit shall be issued for the purposes set forth in the
definitions of Commercial Letter of Credit and such other general corporate
purposes as may, in any instance, be approved in advance, in "writing, by the
Agent.
C. RESTRICTIONS ON USE OF PROCEEDS. Notwithstanding anything to
the contrary contained in this Agreement or the other Loan Documents:
(i) if and so long as the sum of (a) Total Utilization of
Revolving Commitments, plus (b) the amount of Guaranties permitted by
subsection 7.4(ii)(a) plus (c) the aggregate amount of the Investments
in the Pool C Subsidiaries permitted by subsection 7.3(ii), in each
case to the extent that such amounts referred to in the preceding
clauses (a) and (b) shall have been used, issued, incurred or made for
or in connection with the Renovation or Restoration of the Properties
which have not been completed on the date of determination, shall
exceed $15,000,000, then, without the prior written approval of the
Agent, which may be granted, withheld, conditioned or delayed in its
sole discretion, the Loan Parties shall not, and shall cause their
respective Subsidiaries not to, apply any proceeds of any Loans or
procure the issuance of any Letter of Credit in connection with the
Major Renovation/Restoration of any Property; and
(ii) if and so long as the Total Utilization shall exceed
the Borrowing Base, then, without the prior written approval of the
Agent, which may be granted, withheld, conditioned or delayed in its
sole discretion, and subject to subsection 2.4(iv), the Loan Parties
shall not, and shall cause their respective Subsidiaries not to, apply
the proceeds
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of any Loan or procure the issuance of any Letter of Credit for any
purpose other than (a) paying or otherwise discharging any of the
Guaranties permitted by subsections 7.3 (v), (vi), (vii) and (viii)
and subsection 7.4(ii)(a), (b) paying or otherwise discharging any of
the Contingent Obligations set forth on Schedule 5.3 annexed hereto or
Contingent Obligations otherwise permitted hereunder or (c) paying or
reimbursing costs in respect of the Major Renovation/Restoration of
Properties conducted pursuant to subsection 6.11G, in each case in
an aggregate amount not greater than the amount with respect thereto
that shall have been included in such determination of the Total
Utilization.
D. MARGIN REGULATIONS. No portion of the proceeds of any
borrowing under this Agreement shall be used by any Loan Party or any of its
Subsidiaries in any manner that might cause the borrowing to violate Regulation
G, Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to the Eurodollar Rate Loans
as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as
practicable after 10:00 A.M. (New York time) on each Interest Rate
Determination Date, the Agent shall determine (which determination shall,
absent manifest error, be final, conclusive and binding upon all parties) the
interest rate that shall apply to the Eurodollar Rate Loans for which an
interest rate is then being determined for the applicable Interest Period and
shall promptly give notice thereof (in writing or by telephone confirmed in
writing) to the Company and each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event
that the Agent shall have determined in good faith (which determination shall
absent manifest error be final and conclusive and binding upon all parties
hereto but shall be made only after consultation with the Company), on any
Interest Rate Determination Date with respect to any Eurodollar Rate Loans,
that by reason of circumstances affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of
Adjusted Eurodollar Rate, the Agent shall on such date give notice (by
telefacsimile or by telephone confirmed in writing) to the Company and each
Lender of such determination, whereupon (i) no Loans may be made as, or
converted to Eurodollar Rate Loans until such time as the Agent notifies the
Company and the Lenders that the circumstances giving rise to such notice no
longer exist and (ii) any Notice of Borrowing or Notice of Continuation given
by the Company with respect to the Loans in respect of which such determination
was made shall be deemed to contain a request that such Loans be made as or
converted to Base Rate Loans.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In
the event that on any date any Lender shall have determined in good faith
(which determination shall be final and conclusive and binding upon all parties
hereto but shall be made only after consultation with the Company and the
Agent) that the making, maintaining or continuation of its Eurodollar Rate
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Loans (i) has become unlawful as a result of compliance by such Lender in good
faith with any law, treaty, governmental rule, regulation, guideline or order
(or would conflict with any such treaty, governmental rule, regulation,
guideline or order not having the force of law even though the failure to
comply therewith would not be unlawful) or (ii) has become impracticable, or
would cause such Lender material hardship, as a result of contingencies
occurring after the date of this Agreement which materially and adversely
affect the interbank Eurodollar market, or the position of such Lender in that
market, then, and in any such event, such Lender shall be an "Affected Lender"
and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to the Company and the Agent of such determination (which
notice the Agent shall promptly transmit to each other Lender). Thereafter (a)
the obligation of the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn
by the Affected Lender (which withdrawal shall be promptly accomplished by such
Affected Lender by notice to the Agent and the Company as soon as the
circumstances causing such Affected Lender to be so classified no longer
exist), (b) to the extent such determination by the Affected Lender relates to
a Eurodollar Rate Loan then being requested by the Company to be made or
continued hereunder, the Affected Lender shall make such Loan as, or convert
such Loan to, as applicable, a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans") shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Except as provided in the
immediately preceding sentence, nothing in this subsection 2.6C shall affect
the obligation of any Lender other than an Affected Lender to make or maintain
Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the
terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST
PERIODS. The Company shall compensate each Lender, upon written request by that
Lender (which request shall set forth the basis for requesting such amounts),
for all reasonable losses, expenses and liabilities (including any interest
paid by that Lender to lenders of funds borrowed by it to make or carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender or events described in 2.6C above with respect to such Lender) a
borrowing or continuation of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a Notice of Continuance, as
applicable, or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on the date specified
therefor, (ii) if any prepayment or conversion of any of its Eurodollar Rate
Loans occurs on a date that is not the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment (including any prepayment
pursuant to subsection 2.4B(i)) or other principal payment of any of its
Eurodollar Rate Loans is not made by the Company on any date specified in a
notice of prepayment given by the Company or (iv) as a consequence of any other
default by the Company in the repayment of its Eurodollar Rate Loans when
required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
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F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender located in the United
States of America; provided, however, that each Lender may fund each of its
Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions
shall be utilized only for the purposes of calculating amounts payable under
this subsection 2.6 and under subsection 2.7A.
G. REPLACEMENT OF AFFECTED LENDER. If any Lender becomes an
Affected Lender as a result of circumstances applicable only to such Lender, the
Company shall have the right for a period of 60 days following the date such
Lender becomes an Affected Lender to request that the Affected Lender assign its
Commitment and outstanding Obligations to a proposed lender designated by the
Company and reasonably satisfactory to the Agent and, within 10 business Days
of such request, the Affected Lender shall, upon payment in cash to the
Affected Lender of all of such Lender's Obligations and at the Company's
expense, promptly take all actions reasonably necessary to consummate such
assignment; provided that at any time prior to the consummation of any such
assignment, the Agent may (but shall have no obligation to) designate a
proposed lender in substitution for the proposed lender designated by the
Company, in which event, the applicable Affected Lender shall, upon payment in
cash to such Affected Lender of all of such Lender's Obligations promptly take
all actions reasonably necessary to consummate the proposed assignment.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender shall in good faith
determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a Governmental Authority, in each case that becomes
effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other Governmental Authority or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any Tax on the overall net
income of such Lender or any franchise or doing business tax) with
respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
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(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities
in or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such
Lender (other than any such reserve or other requirements with respect
to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect
to a Tax matter) on or affecting such Lender (or its applicable
lending office) or its obligations hereunder or the interbank
Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining Loans hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending office)
with respect thereto; then, in any such case, the Company shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the Company (with a copy to the Agent)
a written statement within 120 days of such Lender obtaining knowledge of the
occurrence of any event resulting in such Lender's right to receive
compensation hereunder, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by
the Company under this Agreement and the other Loan Documents shall be
paid free and clear of and (except to the extent required by law)
without any deduction or withholding on account of any Tax (excluding
in the case of each Lender and the Agent, Taxes imposed on its income,
and franchise and similar Taxes imposed on it, by a jurisdiction under
the laws of which such Lender is organized or in which its principal
executive office is located or in which its applicable lending office
for funding or booking its Loans hereunder is located) imposed,
levied, collected, withheld or assessed by or within the United States
of America or any political subdivision in or of the United States of
America or any other jurisdiction from or to which a payment is made
by or on behalf of the Company or by any federation or organization of
which the United States of America or any such jurisdiction is a
member at the time of payment.
(ii) Grossing-up of Payments. If the Company or any other
Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by the Company to
the Agent or any Lender under any of the Loan Documents:
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(a) the Company shall notify the Agent of any
such requirement or any change in any such requirement as soon
as the Company becomes aware of it;
(b) the Company shall pay any such Tax before the
date on which penalties attach thereto, such payment to be
made (if the liability to pay is imposed on the Company) for
its own account or (if that liability is imposed on the Agent
or such Lender, as the case may be) on behalf of and in the
name of the Agent or such Lender;
(c) the sum payable by the Company in respect of
which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure
that, after the making of that deduction, withholding or
payment, the Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from
which it is required by law to make any deduction or
withholding, and within 30 days after the due date of payment
of any Tax which it is required by clause (b) above to pay,
the Company shall deliver to the Agent evidence satisfactory
to the other affected parties of such deduction, withholding
or payment and of the remittance thereof to the relevant
taxing or other authority;
provided, however, that no such additional amount shall be required to
be paid to any Lender under clause (c) above except to the extent
that any change after the date hereof (in the case of each Lender
listed on the signature pages hereof) or after the date such Lender
became a Lender pursuant to subsection 8.1 (in the case of each other
Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the
rate of such deduction, withholding or payment from that in effect at
the date of this Agreement (in the case of each Lender listed on the
signature pages hereof) or at the date such Lender became a Lender
pursuant to subsection 8.1 (in the case of each other Lender) as the
case may be, in respect of payments to such Lender.
(iii) U.S. Tax Certificates. Each Lender that is organized
under the laws of any jurisdiction other than the United States of
America or any state or other political subdivision thereof shall
deliver to the Agent for transmission to the Company, on or prior to
the Funding Availability Date (in the case of each Lender listed on
the signature pages hereof) or on the date it becomes a Lender
pursuant to subsection 8.1 (in the case of each other Lender), and at
such other times as may be necessary in the determination of the
Company or the Agent (each in the reasonable exercise of its
discretion), such certificates, documents or other evidence, properly
completed and duly executed by such Lender (including Internal Revenue
Service Form 1001 or Form 4224 or any other certificate or statement
of exemption required by Treasury Regulations Section 1.14414(a) or
Section 1.1441-6(c) or any successor thereto) to establish that such
Lender is not subject to deduction or withholding of United States
federal income tax under
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Section 1441 or 1442 of the Internal Revenue Code or otherwise (or
under any comparable provisions of any successor statute) with respect
to any payments to such Lender of principal, interest, fees or other
amounts payable under any of the Loan Documents. The Company shall not
be required to pay any additional amount to any Lender under clause
(c) or perform with respect thereto under clause (d) of subsection
2.7B(ii) if such Lender shall have failed to satisfy the requirements
of the immediately preceding sentence; provided, however, that if such
Lender shall have satisfied such requirements on the Funding
Availability Date (in the case of each Lender listed on the signature
pages hereof) or on the date it becomes a Lender (in the case of each
other Lender), nothing in this subsection 2.7B(iii) shall relieve
Company of its obligation to pay any additional amounts pursuant to
clause (c) or perform with respect thereto under clause (d) of
subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the
fact that such Lender is not subject to withholding as described in
the immediately preceding sentence.
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have
reasonably determined that the adoption, effectiveness, phase-in or
applicability (after the date of this Agreement) of any law, rule or regulation
(or any provision thereof) regarding capital adequacy, or any change therein or
in the interpretation or administration thereof by any Governmental Authority,
including any central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by any Lender (or its applicable
lending office) with any guideline, request or directive regarding capital
adequacy (whether or not having the force of law (after the date of this
Agreement)) of any such Governmental Authority, has or would have the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such
Lender's Loans or Commitment or Letters of Credit or participations herein or
other obligations hereunder with respect to the Loans or the Letters of Credit
to a level below that which such Lender or such controlling corporation could
have achieved but for such adoption, effectiveness, phase-in, applicability,
change or compliance (taking into consideration the policies of such Lender or
such controlling corporation with regard to capital adequacy), often from time
to time, within five Business Days after receipt by the Company from such
Lender of the statement referred to in the next sentence, the Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction within
120 days of such Lender obtaining knowledge of the occurrence of any event
resulting in such Lender's right to receive compensation hereunder. Such Lender
shall deliver to the Company (with a copy to the Agent) a written statement,
setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
2.8 OBLIGATION OF THE LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the Loans becomes aware of the
occurrence of an event or the
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existence of a condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender to receive payments under subsection
2.7, it will, to the extent not inconsistent with the internal policies of such
Lender and any applicable legal or regulatory restrictions, use reasonable
efforts (i) to make, fund or maintain the Commitment of such Lender or the
affected Loans of such Lender through another lending office of such Lender, or
(ii) take such other measures as such Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender pursuant to subsection 2.7 would be
materially reduced and if, as determined by such Lender in its reasonable
judgment, the making, funding or maintaining of such Commitment or Loans
through such other lending office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect such
Commitment or Loans or the interests of such Lender; provided, however, that
such Lender will not be obligated to utilize such other lending office pursuant
to this subsection 2.8 unless the Company agrees to pay all incremental
expenses incurred by such Lender as a result of utilizing such other lending
office as described in clause (i) above. A certificate as to the amount of any
such expenses payable by the Company pursuant to this subsection 2.8 (setting
forth in reasonable detail the basis for requesting such amount) submitted by
such Lender to the Company (with a copy to the Agent) shall be conclusive
absent manifest error.
2.9 RELEASES OF POOL A PROPERTIES, POOL B PROPERTIES, MANAGEMENT
AGREEMENTS AND SERVICING AGREEMENTS.
A. POOL A PROPERTIES. At any time and from time to time after the
Funding Availability Date, in connection with the sale or other permanent
disposition of any Pool A Property or mandatory prepayments made pursuant to
subsection 2.4B(iv) or otherwise (but not mandatory prepayments made pursuant
to subsection 7.19F), the Company may obtain a Release of the Lien of the
Security Documents in respect of all, but except as provided below not a
portion of, such Pool A Property, subject to the following terms and conditions
on the applicable Release Date:
(i) the Company shall have delivered written notice to
the Agent (a) not less than 30 days prior to the proposed Release Date
specifying the proposed Release Date and such Pool A Property and (b)
not less than 5 days prior to the actual Release Date specifying such
actual Release Date and such Pool A Property;
(ii) no Event of Default or Potential Event of Default
shall have occurred and be continuing as of the date of the delivery
of the notice pursuant to clause (i) above (other than an Event of
Default or Potential Event of Default that pertains solely to the Pool
A Property or portion thereof which is the subject of such Release or
which is cured by such Release) and no Event of Default or Potential
Event of Default shall be continuing as of the Release Date after
giving effect to such Release;
(iii) concurrently with such Release, the Borrowing Base
shall be reduced by an amount equal to the Pool A Property Amount with
respect to such Pool A Property in effect immediately prior to giving
effect to such Release;
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(iv) the Company shall concurrently prepay the Loans in an
amount equal to the Release Price in respect of such Pool A Property;
(v) the Company shall have delivered to the Agent for
distribution to the Lenders an Officers' Certificate dated the Release
Date, certifying as to the matters referred to in clause (ii) above
and a Borrowing Base Certificate setting forth in reasonable detail
the computation of the Borrowing Base as of the Release Date and
giving effect to such Release;
(vi) the Company, at its sole cost and expense, shall have
(a) with respect to any partial Release of the Lien of the Security
Documents in respect of such Pool A Property (other than the Rose Hall
Property), delivered to the Agent one or more endorsements to the
Title Policy in respect of such Pool A Property delivered to the Agent
on the date hereof and, to the extent generally available in each
state, insuring that, after giving effect to such partial Release and
with respect to the portion of such Pool A Property which is not being
Released, the Liens created by the applicable Mortgage and insured
under the such Title Policy are in full force and effect and
unaffected by such partial Release, (b) prepared any and all documents
and instruments necessary to effect such Release, all of which shall
be reasonably satisfactory in form and substance to the Agent, and (c)
paid all reasonable costs and expenses incurred by the Agent and its
counsel in connection with the review, execution and delivery of the
release documents; and
(vii) all other proceedings taken or to be taken in
connection with such Release and all documents incidental thereto
shall be reasonably satisfactory in form and substance to the Agent
and the Agent's counsel, the Agent and such counsel shall have
received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request and counsel for the
Agent shall have received such documents and evidence that such
counsel shall reasonably require in order to establish compliance with
the conditions set forth in this subsection.
The Company may obtain a Release of the Lien of the Security Documents in
respect of a portion of any Pool A Property, if title to such portion has been
permanently Taken, by complying with the foregoing terms and conditions on the
applicable Release Date.
B. POOL B PROPERTIES. At any time and from time to time after the
Funding Availability Date, in connection with the sale or other permanent
disposition of any Pool B Property or mandatory prepayments made pursuant to
subsection 2.4B(iv) or otherwise, the Company may obtain a Release of the Lien
of the Security Documents in respect of all, but except as provided below not a
portion of, such Pool B Property subject to the following terms and conditions
on the applicable Release Date:
(i) the Company shall have delivered written notice to
the Agent (a) not less than 30 days prior to the proposed Release Date
specifying the proposed Release Date and such Pool B Property and (b)
not less than 5 days prior to the actual Release Date specifying such
actual Release Date and such Pool B Property;
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(ii) no Event of Default or Potential Event of Default
shall have occurred and be continuing as of the date of the delivery
of the notice pursuant to clause (i) above (other than an Event of
Default or Potential Event of Default that pertains solely to the Pool
B Property or portion thereof which is the subject of such Release or
which is cured by such Release) and no Event of Default or Potential
Event of Default shall be continuing as of the Release Date after
giving effect to such Release;
(iii) the Company shall have prepaid the Loans in an amount
equal to the Release Price in respect of such Pool B Property;
(iv) the Company shall have delivered to the Agent an
Officers' Certificate dated the Release Date, certifying as to the
matters referred to in clause (ii) above;
(v) the Company, at its sole cost and expense, shall have
(a) prepared any and all documents and instruments necessary to effect
such Release, all of which shall be reasonably satisfactory in form
and substance to the Agent, and (b) paid all reasonable costs and
expenses incurred by the Agent and its counsel in connection with the
review, execution and delivery of the release documents; and
(vi) all other proceedings taken or to be taken in
connection with such Release and all documents incidental thereto
shall be reasonably satisfactory in form and substance to the Agent
and the Agent's counsel, the Agent and such counsel shall have
received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request and counsel for the
Agent shall have received such documents and evidence that such
counsel shall reasonably require in order to establish compliance with
the conditions set forth in this subsection.
The Company may obtain a Release of the Lien of the Security Documents in
respect of a portion of any Pool B Property, if title to such portion has been
permanently Taken, by complying with the foregoing terms and conditions on the
applicable Release Date.
C. MANAGEMENT AGREEMENTS, SERVICING AGREEMENTS, OTHER MANAGEMENT
AGREEMENTS, FRANCHISE AGREEMENTS AND OTHER COLLATERAL. At any time and from
time to time after the Funding Availability Date, in connection with the sale
or other permanent disposition of any Management Agreement, Servicing
Agreement, Other Management Agreement, Franchise Agreement or other item of
Collateral that is not subject to subsection 2.9A or 2.9B (including, without
limitation, the final payment of any obligation included in the Collateral) or
mandatory prepayments made pursuant to subsection 2.4B(iv) or otherwise, the
Company may obtain a Release of the Lien of the Security Documents in respect
of such Management Agreement, Servicing Agreement, Other Management Agreements,
Franchise Agreement or other item of Collateral that is not subject to
subsection 2.9A or 2.9B, as the case may be, subject to the following terms and
conditions on the applicable Release Date:
(i) the Company shall have delivered written notice to
the Agent (a) not less than 30 days prior to the proposed Release Date
specifying the proposed Release Date and such Management Agreement,
Servicing Agreement, Other Management Agreement,
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Franchise Agreement or other item of Collateral to the extent
practical and (b) not less than 5 days prior to the actual Release
Date specifying such actual Release Date and such Management
Agreement, Other Management Agreement, Servicing Agreement, Other
Management Agreement, Franchise Agreement or other item of Collateral
as the case may be;
(ii) no Event of Default or Potential Event of Default
shall have occurred and be continuing as of the date of the delivery
of the notice pursuant to clause (i) above (other than an Event of
Default or Potential Event of Default that pertains solely to the
Management Agreement, Servicing Agreement, Other Management Agreement,
Franchise Agreement or other item of Collateral which is the subject
of such Release or which is cured by such Release) and no Event of
Default or Potential Event of Default shall be continuing as of the
Release Date after giving effect to such Release;
(iii) in the case of a Management Agreement or Servicing
Agreement, the Company shall have prepaid the loans in an amount equal
to the Release Price in respect of such Management Agreement, Other
Management Agreement, Franchise Agreement or other item of Collateral
as the case may be;
(iv) the Company shall have delivered to the Agent (a) an
Officers' Certificate dated the Release Date, certifying as to the
matters referred to in clause (ii) above, and (b) if the amount of the
Release Price payable by the Company pursuant to clause (iii) above
shall have been reduced pursuant to the proviso to clause (iii) or the
proviso to clause (iv) in the definition of Release Price by reason of
the Company's compliance with this subsection 2.9C(iv), a Borrowing
Base Certificate, in reasonable detail satisfactory to the Agent and
together with the financial statements and other information utilized
by the Company to calculate the Borrowing Base, and certified by the
Chief Executive Officer or Chief Financial Officer of the Company,
calculated as of the Release Date, and demonstrating that Total
Utilization does not exceed the Borrowing Base and that, without
giving effect to the limitations in subsection 2. 1 with respect to
the frequency and minimum amounts of borrowings, the Company would
then be entitled to make a borrowing in an amount not less than $1.00;
(v) the Company, at its sole cost and expense, shall have
(a) prepared any and all documents and instruments necessary to effect
such Release, all of which shall be reasonably satisfactory in form
and substance to the Agent, and (b) paid all reasonable costs and
expenses incurred by the Agent and its counsel in connection with the
review, execution and delivery of the release documents; and
(vi) all other proceedings taken or to be taken in
connection with such Release and all documents incidental thereto
shall be reasonably satisfactory in form and substance to the Agent
and the Agent's counsel, the Agent and such counsel shall have
received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request and counsel for the
Agent shall have received such documents and evidence that such
counsel shall reasonably require in order to establish compliance with
the conditions set forth in this subsection.
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D. EFFECT OF RELEASE. Upon any Release of any Pool A Property,
Pool B Property, Management Agreement, Servicing Agreement, Other Management
Agreement, Franchise Agreement or other item of Collateral in accordance with
this subsection 2.9, such Property shall cease to be a Mortgaged Property or
other item of Collateral for the purposes of this Agreement (other than for
purposes of any indemnity contained herein or in any of the other Loan
Documents to the extent such indemnification applies to such Property,
Management Agreement, Servicing Agreement, Other Management Agreement,
Franchise Agreement or other item of Collateral prior to giving effect to such
Release, including subsections 5.2G and 6.8 (to the extent such subsections
apply to such Property, Management Agreement, Servicing Agreement, Other
Management Agreement, Franchise Agreement or other item of Collateral and
incorporate the Environmental Indemnity) and subsection 9.3).
E. REVISED SCHEDULES. The Company shall deliver to the Agent
revised Schedules to this Agreement, the Environmental Indemnity, the Security
Agreement and the Omnibus Management and Liquor License Agreement, as
applicable, reflecting the Release of any Property, Management Agreement,
Servicing Agreement, Other Management Agreement, Franchise Agreement or other
item of Collateral pursuant to this subsection 2.9, which Schedules shall be
reasonably satisfactory to the Agent, as follows: (i) with respect to the
Release of a Pool A Property or Pool B Property, on or prior to the
effectiveness of the Release thereof and (ii) with respect to the Release of a
Pool C Property, Management Agreement, Servicing Agreement, Other Management
Agreement, Franchise Agreement or other item of Collateral, on or before the
next to occur of (A) the last day of the calendar month immediately following
the calendar month during which such Release shall have occurred and (B) the
next date on which a Notice of Borrowing shall be delivered.
SECTION 3
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to the Company requesting that
the Lenders make Revolving Loans pursuant to subsection 2.1A(i) and that Swing
Line Lender make Swing Line Loans pursuant to subsection 2.lA(ii), the Company
may request, in accordance with the provisions of this subsection 3.1, from
time to time during the period from the Funding Availability Date to but
excluding the Revolving Commitment Conversion Date that one or more Lenders
issue Letters of Credit for the account of the Company for the purposes
specified in the definitions of Commercial Letters of Credit and Standby
Letters of Credit and such other general corporate purposes as may, in any
instance, be approved in advance, in writing, by the Agent. Subject to the
terms and conditions of this Agreement and in reliance upon the representations
and warranties of the Company herein set forth, any one or more Lenders may,
but (except as provided in subsection 3.1B(ii)) shall not be obligated to,
issue such Letters of Credit in accordance with the provisions of this
subsection 3.1; provided that the Company shall not request that any Lender
issue (and no Lender shall issue):
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(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Commitments would exceed
the lesser of Revolving Commitments then in effect and the Borrowing
Base;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $15,000,000;
(iii) any Standby Letter of Credit having an expiration
date later than the earlier of (a) the Maturity Date and (b) the date
which is one year from the date of issuance of such Standby Letter of
Credit; provided that the immediately preceding clause (b) shall not
prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive
periods not to exceed one year each unless such Issuing Lender elects
not to extend for any such additional period; and provided further,
that such Issuing Lender shall elect not to extend such Standby Letter
of Credit if it has knowledge that an Event of Default has occurred
and is continuing (and has not been waived in accordance with
subsection 9.6) at the time such Issuing Lender must elect whether or
not to allow such extension;
(iv) any Commercial Letter of Credit having an expiration
date (a) later than the earlier of (x) the date which is 30 days prior
to the Maturity Date and (y) the date which is 180 days from the date
of issuance of such Commercial Letter of Credit or (b) that is
otherwise unacceptable to the applicable Issuing Lender in its
reasonable discretion; or
(v) any Letter of Credit denominated in a currency other
than Dollars.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever the Company desires the
issuance of a Letter of Credit, it shall deliver to Agent a Notice of
Issuance of Letter of Credit substantially in the form of Exhibit V
annexed hereto no later than 12:00 Noon (New York City time) at least
three Business Days (in the case of Standby Letters of Credit) or five
Business Days (in the case of Commercial Letters of Credit), or in
each case such shorter period as may be agreed to by the Issuing
Lender in any particular instance, in advance of the proposed date of
issuance. Each Notice of Issuance of Letter of Credit shall contain
the information indicated on the form thereof attached hereto as
Exhibit V; provided that the Issuing Lender, in its reasonable
discretion, may require changes in the text of the proposed Letter of
Credit or any such documents; and provided further, that no Letter of
Credit shall require payment against a conforming draft to be made
thereunder on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Lender to which such
draft is required to be presented is located) that such draft is
presented if such presentation is made after 10:00 A.M. (in the time
zone of such office of the Issuing Lender) on such business day.
The Company shall notify the applicable Issuing Lender (and
Agent, if Agent is not such Issuing Lender) prior to the issuance of
any Letter of Credit in the event that
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any of the matters to which Company is required to certify in the
applicable Notice of Issuance of Letter of Credit is no longer true
and correct as of the proposed date of issuance of such Letter of
Credit, and upon the issuance of any Letter of Credit Company shall be
deemed to have re-certified, as of the date of such issuance, as to
the matters to which the Company is required to certify in the
applicable Notice of Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by
Agent of a Notice of Issuance of Letter of Credit pursuant to
subsection 3.1B(i) requesting the issuance of a Letter of Credit, in
the event the Agent elects to issue such Letter of Credit, the Agent
shall promptly so notify the Company, and the Agent shall be the
Issuing Lender with respect thereto. In the event that the Agent, in
its sole discretion, elects not to issue such Letter of Credit, the
Agent shall promptly so notify the Company, whereupon the Company may
request any other Lender to issue such Letter of Credit by delivering
to such Lender a copy of the applicable Notice of Issuance of Letter
of Credit. Any Lender so requested to issue such Letter of Credit
shall promptly notify the Company and the Agent whether or not, in its
sole discretion, it has elected to issue such Letter of Credit, and
any such Lender which so elects to issue such Letter of Credit shall
be the Issuing Lender with respect thereto. In the event that at least
two other Lenders shall have declined to issue such Letter of Credit,
notwithstanding the prior election of the Agent not to issue such
Letter of Credit, the Agent shall be obligated to issue such Letter of
Credit and shall be the Issuing Lender with respect thereto,
notwithstanding the fact that the Letter of Credit Usage with respect
to such Letter of Credit and with respect to all other Letters of
Credit issued by the Agent, when aggregated with Agent's outstanding
Revolving Loans and Swing Line Loans, may exceed the Agent's Revolving
Commitment then in effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or
waiver (in accordance with subsection 9.6) of the conditions set forth
in subsection 4.3, the Issuing Lender shall issue the requested Letter
of Credit in accordance with the Issuing Lender's standard operating
procedures.
(iv) Notification to Lenders. Upon the issuance or
amendment of any Standby Letter of Credit, the applicable Issuing
Lender shall promptly notify the Agent and each other Lender of such
issuance or amendment, which notice shall be accompanied by a copy of
such Standby Letter of Credit or amendment. Promptly after receipt of
such notice (or, if the Agent is the Issuing Lender, together with
such notice), the Agent shall notify each Lender of the amount of such
Lender's respective participation in such Standby Letter of Credit,
determined in accordance with subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of
each month ending after the Funding Availability Date, so long as any
Commercial Letter of Credit shall have been outstanding during such
month, each Issuing Lender shall deliver to each other Lender a report
setting forth for such month the daily aggregate amount available to
be drawn under the Commercial Letters of Credit issued by such Issuing
Lender that were outstanding during such month.
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C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
The Company agrees to pay the following amounts with respect to
Letters of Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a
fronting fee, if any, payable directly to the applicable Issuing
Lender (other than Bankers) for its own account, equal to the amount
specified by written agreement between the Company and such Issuing
Lender, and (b) a letter of credit fee, payable to Agent for the
account of Lenders, equal to 2.00% per annum of the daily amount
available to be drawn under such Standby Letter of Credit, each such
fronting fee or letter of credit fee to be payable in arrears on and
to (but excluding) each March 15, June 15, September 15 and December
15 of each year and computed on the basis of a 360-day year for the
actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a)
a fronting fee, payable directly to the applicable Issuing Lender
(other than Bankers) for its own account, equal to the amount
specified by written agreement between the Borrower and such Issuing
Lender and (b) a letter of credit fee, payable to the Agent for the
account of Lenders, equal to 1.75% per annum of the daily amount
available to be drawn under such Commercial Letter of Credit, each
such fronting fee or letter of credit fee to be payable in arrears on
and to (but excluding) each March 15, June 15, September 15 and
December 15 of each year and computed on the basis of a 360-day year
for the actual number of days elapsed; and
(iii) with respect to the issuance, amendment or transfer
of each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clauses (i) and (ii)
above), documentary and processing charges payable directly to the
applicable Issuing Lender for its own account in accordance with such
Issuing Lender's standard schedule for such charges in effect at the
time of such issuance, amendment, transfer or payment, as the case may
be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by the Agent of any amount described in
clause (i)(b) or (ii)(b) of this subsection 3.2, the Agent shall distribute to
each Lender its Pro Rata Share of such amount.
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3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine
the documents delivered under such Letter of Credit with reasonable care so as
to ascertain whether they appear on their face to be in accordance with the
terms and conditions of such Letter of Credit.
B. REIMBURSEMENT BY THE COMPANY OF AMOUNTS PAID UNDER LETTERS OF
CREDIT. In the event an Issuing Lender has determined to honor a drawing under
a Letter of Credit issued by it, such Issuing Lender shall immediately notify
the Company and the Agent, and the Company shall reimburse such Issuing Lender
on or before the Business Day immediately following the date on which such
drawing is honored (the "Reimbursement Date") in an amount in Dollars and in
same day funds equal to the amount of such honored drawing; provided that,
anything contained in this Agreement to the contrary notwithstanding, (i)
unless the Company shall have notified the Agent and such Issuing Lender prior
to 10:00 A.M. (New York City time) on the date such drawing is honored that
Company intends to reimburse such Issuing Lender for the amount of such honored
drawing with funds other than the proceeds of Revolving Loans, the Company
shall be deemed to have given a timely Notice of Borrowing to the Agent
requesting Lenders to make Revolving Loans that are Base Rate Loans on the
Reimbursement Date in an amount in Dollars equal to the amount of such honored
drawing and (ii) subject to satisfaction or waiver of the conditions specified
in subsection 4.2B, the Lenders shall, on the Reimbursement Date, make
Revolving Loans that are Base Rate Loans in the amount of such honored drawing,
the proceeds of which shall be applied directly by the Agent to reimburse such
Issuing Lender for the amount of such honored drawing; and provided further
that if for any reason proceeds of Revolving Loans are not received by such
Issuing Lender on the Reimbursement Date in an amount equal to the amount of
such honored drawing, the Company shall reimburse such Issuing Lender, on
demand, in an amount in same day funds equal to the excess of the amount of
such honored drawing over the aggregate amount of such Revolving Loans, if any,
which are so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Lender from its obligation to make Revolving Loans on the terms and
conditions set forth in this Agreement, and the Company shall retain any and
all rights it may have against any Lender resulting from the failure of such
Lender to make such Revolving Loans under this subsection 3.3B.
C. PAYMENT BY THE LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER
LETTERS OF CREDIT.
(i) Payment by the Lenders. In the event that the Company
shall fail for any reason to reimburse any Issuing Lender as provided
in subsection 3.3B in an amount equal to the amount of any drawing
honored by such Issuing Lender under a Letter of Credit issued by it,
such Issuing Lender shall promptly notify each other Lender of the
unreimbursed amount of such honored drawing and of such other Lender's
respective participation therein based on such Lender's Pro Rata
Share. Each Lender shall make available to such Issuing Lender an
amount equal to its respective participation, in Dollars and in same
day funds, at the office of such Issuing Lender specified in such
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notice, not later than 12:00 Noon (New York City time) on the first
business day (under the laws of the jurisdiction in which such office
of such Issuing Lender is located) after the date notified by such
Issuing Lender. In the event that any Lender fails to make available
to such Issuing Lender on such business day the amount of such
Lender's participation in such Letter of Credit as provided in this
subsection 3.3C, such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon at
the rate customarily used by such Issuing Lender for the correction
of errors among banks for three Business Days and thereafter at the
Base Rate. Nothing in this subsection 3.3C shall be deemed to
prejudice the right of any Lender to recover from any Issuing Lender
any amounts made available by such Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by
the final judgment of a court of competent jurisdiction that the
payment with respect to a Letter of Credit by such Issuing Lender in
respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received
From the Company. In the event any Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or
any portion of any drawing honored by such Issuing Lender under a
Letter of Credit issued by it, such Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such honored drawing such other
Lender's Pro Rata Share of all payments subsequently received by such
Issuing Lender from the Company in reimbursement of such honored
drawing when such payments are received. Any such distribution shall
be made to a Lender at its primary address set forth below its name on
the appropriate signature page hereof or at such other address as such
Lender may request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. The Company agrees to
pay to each Issuing Lender, with respect to drawings honored under any
Letters of Credit issued by it, interest on the amount paid by such
Issuing Lender in respect of each such honored drawing from the date
such drawing is honored to but excluding the date such amount is
reimbursed by the Company (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate
equal to (a) for the period from the date such drawing is honored to
but excluding the Reimbursement Date, the rate then in effect under
this Agreement with respect to Revolving Loans that are Base Rate
Loans and (b) thereafter, a rate which is 2% per annum in excess of
the rate of interest otherwise payable under this Agreement with
respect to Revolving Loans that are Base Rate Loans. Interest payable
pursuant to this subsection 3.3D(i) shall be computed on the basis of
a 360-day year for the actual number of days elapsed in the period
during which it accrues and shall be payable on demand or, if no
demand is made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i)
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with respect to a drawing honored under a Letter of Credit issued by
it, (a) such Issuing Lender shall distribute to each other Lender, out
of the interest received by such Issuing Lender in respect of the
period from the date such drawing is honored to but excluding the date
on which such Issuing Lender is reimbursed for the amount of such
drawing (including any such reimbursement out of the proceeds of
Revolving Loans pursuant to subsection 3.3B), the amount that such
other Lender would have been entitled to receive in respect of the
letter of credit fee that would have been payable in respect of such
Letter of Credit for such period pursuant to subsection 3.2 if no
drawing had been honored under such Letter of Credit, and (b) in the
event such Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of such honored
drawing, such Issuing Lender shall distribute to each other Lender
which has paid all amounts payable by it under subsection 3.3C(i) with
respect to such honored drawing such other Lender's Pro Rata Share of
any interest received by such Issuing Lender in respect of that
portion of such honored drawing so reimbursed by other Lenders for the
period from the date on which such Issuing Lender was so reimbursed by
other Lenders to but excluding the date on which such portion of such
honored drawing is reimbursed by the Company. Any such distribution
shall be made to a Lender at its primary address set forth below its
name on the appropriate signature page hereof or at such other address
as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of the Company to reimburse each Issuing Lender
for drawings honored under the Letters of Credit issued by it and to repay any
Revolving Loans made by the Lenders pursuant to subsection 3.3B and the
obligations of Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit;
(ii) the existence of any claim, set-off, defense or other
right which the Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), any Issuing Lender or
other Lender or any other Person or, in the case of a Lender, against
the Company, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction
(including any underlying transaction between the Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit
was procured);
(iii) any draft or 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;
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(iv) payment by the applicable Issuing Lender under any
Letter of Credit against presentation of a draft or other document
which does not substantially comply with the terms of such Letter of
Credit;
(v) any adverse change in the business, operation,
properties, assets, condition (financial or otherwise) or prospects of
the Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential
Event of Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, the Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all losses, claims,
damages, liabilities, costs or expenses (including the reasonable fees, charges
and disbursements of counsel and the allocated costs and expenses of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the bad faith or recklessness of such
Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between the Company and
any Issuing Lender, the Company assumes all risks of the acts and omissions of,
or misuse of the Letters of Credit issued by such Issuing Lender by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, such Issuing Lender shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assign or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits
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thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of any
such Letter of Credit to comply fully with any conditions required in order to
draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, telefacsimile,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v)
errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of such Issuing Lender, including without
limitation any Governmental Acts, and none of the above shall affect or impair,
or prevent the vesting of, any of such Issuing Lender's rights or powers
hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to the Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, the Company shall retain any and all rights it may have against any
Issuing Lender for any liability arising solely out of the gross negligence or
willful misconduct of such Issuing Lender, as determined by a final judgment of
a court of competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Lender shall in good faith determine (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental
rule, regulation or order), or any determination of a court or governmental
authority, in each case that becomes effective after the date hereof, or
compliance by any Issuing Lender or Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force
of law):
(i) subjects such Issuing Lender or Lender (or its
applicable lending or letter of credit office) to any additional Tax
(other than any Tax on the overall net income of such Issuing Lender
or Lender) with respect to the issuing or maintaining of any letters
of Credit or the purchasing or maintaining of any participations
therein or any other obligations under this Section 3, whether
directly or by such being imposed on or suffered by any particular
Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including without imitation any marginal, emergency, supplemental,
special or other reserve), special
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deposit, compulsory loan, FDIC insurance or similar requirement in
respect of any Letters of Credit issued by any Issuing Lender or
participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect
to a Tax matter) on or affecting such Issuing Lender or Lender (or its
applicable lending or letter of credit office) regarding this Section
3 or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender
or Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, the Company shall promptly pay to such Issuing
Lender or Lender, upon receipt of the statement referred to in the next
sentence, such additional amount or amounts as may be necessary to compensate
such Issuing Lender or Lender for any such increased cost or reduction in
amounts received or receivable hereunder. Such Issuing Lender or Lender shall
deliver to the Company a written statement within 120 days of such Lender
obtaining knowledge of the occurrence of any event resulting in such Lender's
right to receive compensation hereunder, setting forth in reasonable detail the
basis for calculating the additional amounts owed to such Issuing Lender or
Lender under this subsection 3.6, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
SECTION 4
CONDITIONS PRECEDENT
4.1 CONDITIONS TO EFFECTIVENESS OF COMMITMENTS.
The effectiveness of the Commitments of the Lenders is conditioned
upon the prior or concurrent satisfaction, at the expense of the Company, of
the conditions specified in subsection 4.2 and in this subsection 4.1, in each
case as determined by the Agent:
A. CORPORATE DOCUMENTS. Each Loan Party (other than any
Partnership Subsidiary) shall deliver or cause to be delivered to the Agent
(with sufficient originally executed copies for each Lender and the Agent's
counsel) the following, each unless otherwise noted dated the Funding
Availability Date:
(i) executed originals of this Agreement, the Subsidiary
Guaranty, the Security Agreement, a Revolving Note in favor of each
Lender, the Swing Line Note in favor of Swing Line Lender and each
other Loan Document to which it is a party;
(ii) except with respect to the Payroll Subsidiaries,
certified copies of its Certificate of Incorporation, together with
(a) a good standing certificate (including verification, where
generally available, of tax good standing) from the Secretary of State
(or similar official) of its jurisdiction of incorporation and each
other state in which a Property owned or leased by such Loan Party is
located), each dated a recent date prior
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to the Funding Availability Date and (b) a telegram from each such
Secretary of State (or similar official) or on-line verification from
the official database certifying as to the foregoing matters and dated
the Funding Availability Date;
(iii) except with respect to the Payroll Subsidiaries,
copies of its Bylaws, certified as of the Funding Availability Date by
its corporate secretary or an assistant secretary;
(iv) resolutions of its Board of Directors approving
and authorizing (a) the execution, delivery and performance of each
Loan Document and Related Document to which it is a party, (b) the
consummation of the Formation and (c) in the case of the Company, the
issuance of the Common Stock pursuant to the Equity Offering Documents
and the issuance of the Senior Notes pursuant to the Debt Offering
Documents, in each case certified as of the Funding Availability Date
by its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment; and
(v) signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is a
party.
B. PARTNERSHIP DOCUMENTS. Each Partnership Subsidiary shall
deliver to the Agent (with sufficient originally executed copies for each
Lender and the Agent's counsel) the following, each unless otherwise noted
dated the Funding Availability Date:
(i) executed originals of the Subsidiary Guaranty, the
Security Agreement and each other Loan Document to which it is a
party;
(ii) a conformed copy of the partnership agreement,
certified by each general partner of such partnership as of the
Funding Availability Date as being in full force and effect without
modification or amendment;
(iii) (a) its Certificate of Limited Partnership and
Statements of Partnership, certified by the Secretary of State (or
similar official) of its jurisdiction of formation and a certificate
of existence or good standing, as the case may be, from the Secretary
of State (or similar official) of such jurisdiction, each dated as of
a recent date prior to the Funding Availability Date, and (b) a good
standing certificate or certificate of existence, as the case may be,
from the Secretary of State (or similar official) of each state or
other jurisdiction in which a Property owned or leased by such entity
is located;
(iv) all documents of such Partnership Subsidiary and its
partners approving or authorizing (a) the execution, delivery and
performance of the Subsidiary Guaranty and any other Loan Documents to
which it is a party, and (b) the consummation of the Formation, each
certified as of the Funding Availability Date by the general partner
of such Partnership Subsidiary or other Loan Party; and
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(v) signature and incumbency certificate of the Person(s)
executing, on behalf of such partnership, any Loan Documents to which
such Partnership Subsidiary is a party.
C. FINANCIAL STATEMENTS; CERTIFICATES. The Company shall have
delivered to the Agent an Officers' Certificate of the Chief Executive Officer
or the Chief Financial Officer of the Company certifying as to the following:
(i) the delivery to the Agent of the financial statements
referred to in subsection 5.3 on or before the Funding Availability
Date;
(ii) as of the Funding Availability Date and for the year
ending December 31, 1995:
(a) the sum of the Property EBITDA in respect of
the Pool A Properties (other than the Rose Hall Property)
minus an amount equal to 3.50% of Property Gross Revenues from
such Pool A Properties for such period, was equal to or
greater than $5,500,000;
(b) Property EBITDA for the Rose Hall Property
minus 3.50% of Property Gross Revenues from the Rose Hall
Property for such period, was equal to or greater than
$4,000,000; and,
(c) the sum of Management EBITDA for such period
was equal to or greater than $8,000,000;
(iii) after giving effect to the Public Offerings:
(a) the Company has a minimum Market Equity
Capitalization of not less than $250,000,000; and
(b) each of the ratios of (1) Consolidated Total
Indebtedness to (2) the sum of Market Equity Capitalization
and Consolidated Total Indebtedness and (3) the sum of
Consolidated Total Indebtedness and Adjusted Stockholders'
Equity, respectively, expressed as a percentage, is not
greater than 50%.
(iv) since December 31, 1995, no Material Adverse Effect
has occurred; and
(v) the delivery to the Agent of a Borrowing Base
Certificate reasonably satisfactory to the Agent, together with a
calculation of the Borrowing Base attached thereto in a form
reasonably satisfactory to the Company and the Agent and a Compliance
Certificate reasonably satisfactory to the Agent, together with a
calculation testing compliance with financial and monetary covenants
attached thereto in a form reasonably satisfactory to the Company and
the Agent, each as of the Funding Availability Date and which shall be
attached thereto.
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D. NO MATERIAL ADVERSE EFFECT. Since December 31, 1995, in the
sole opinion of the Agent, no condition or event has occurred that has had or
could reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect.
E. SECURITY INTERESTS. The Company shall have taken or caused to
be taken all such actions as may be necessary or reasonably requested by the
Agent to give the Agent a valid, enforceable and perfected first priority Lien
on or first priority security interest in the Collateral as of the Funding
Availability Date, subject only to Liens permitted pursuant to subsection 7.2A,
it being understood by each Lender that perfection against Persons other than
the Company of such Lien on the Rents may in certain jurisdictions require the
Agent to have possession of the Rents. Such actions shall include the
following:
(i) the delivery to the Agent of fully executed and
acknowledged counterparts of the Mortgage, the Assignment of Rents and
Leases, the Omnibus Management and Liquor License Agreement, the
Security Agreement, the Trademark Agreement and all other Security
Documents with respect to the Pool A Properties, the Pool B Properties,
the Management Agreements and the other Collateral as of the Funding
Availability Date, and the delivery of evidence satisfactory to the
Agent that counterparts of the Mortgage, the Assignment of Rents and
Leases and all other of such documents the Agent desires to have
recorded have been or will be recorded in all places necessary or
desirable to create and maintain (a) valid and enforceable first
priority Liens on the fee simple or leasehold interests of the Company,
as applicable, in the Pool A Properties and Pool B Properties in favor
of the Agent, as mortgagee (or as beneficiary in those jurisdictions
where the Lien is granted to a trustee for the benefit of the Agent),
(b) valid and enforceable first priority Liens on the Rents and Leases
in favor of the Agent, (c) valid and enforceable first priority Liens
in all fixtures at the Pool A Properties and Pool B Properties, in
favor of the Agent, as secured party and (d) valid and enforceable
first priority Liens in all other items of Collateral as of the Funding
Availability Date in favor of the Agent;
(ii) (a) the delivery to the Agent for filing pursuant to
the Security Documents of properly executed financing statements under
the Uniform Commercial Code (or any equivalent or similar
legislation), or any other documents required to be filed by other
Applicable Laws, satisfactory in form and substance to the Agent in
each jurisdiction as may be necessary (in the Agent's reasonable
judgment) effectively to perfect and maintain the security interests
in the Collateral created by such Security Documents and (b) the
delivery of evidence that such financing statements or other documents
will have been or will be recorded in all places necessary or
desirable, in the reasonable judgment of the Agent, to create and
maintain valid and enforceable first priority Liens on the Collateral
in favor of the Agent, subject only to Liens permitted pursuant to
subsection 7.2A;
(iii) the delivery to the Agent of a title report or
commitment (together with copies of all documents listed therein as
exceptions to title) dated not more than 90 days prior to the Funding
Availability Date with respect to each Pool A Property (other than the
Rose Hall Property) and pro forma Title Policies dated not more than 30
days prior
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to the Funding Availability Date with respect to each such Pool A
Property, each reasonably satisfactory in form and substance to the
Agent;
(iv) the delivery to the Agent of an opinion of counsel in
each state or other jurisdiction in which each Pool A Property or Pool
B Property is located, dated the Funding Availability Date, addressed
to the Agent and the Lenders and in form and substance reasonably
satisfactory to the Agent;
(v) the delivery to the Agent of the Title Policies or
marked title commitments insuring fee simple title to each of the Pool
A Properties (other than the Rose Hall Property) vested in the Company
(or, as to those Pool A Properties, if any, in which the Company holds
a leasehold estate, insuring fee simple title to such Property vested
in the landlord and such leasehold estate vested in the Company) and
insuring the first priority of the Liens created under the Mortgages
in an aggregate amount not less than $88,854,000 with respect to the
Pool A Properties, in each case subject only to Permitted
Encumbrances, and such other title exceptions as are satisfactory to
the Agent. Such Title Policies shall be reinsured with title insurance
companies acceptable to the Agent in amounts as required by the Agent
subject to facultative reinsurance agreements in form satisfactory to
the Agent. Such Title Policies shall also contain such endorsements
and affirmative insurance provisions as the Agent may reasonably
require and to the extent the same are available in the applicable
jurisdiction, including "comprehensive" endorsements, revolving credit
endorsements, affirmative insurance against mechanic's liens, survey
exceptions, violations of covenants, conditions and restrictions,
encroachments, gap insurance, contiguity endorsements, tie-in
endorsements, access endorsements, "Last-dollar" endorsements, survey
endorsements, contingent loss/first loss endorsements, variable rate
mortgage endorsements, leasehold endorsement for Pool A Properties
that are leaseholds, and any other endorsements reasonably required by
the Agent to address issues raised by the Agent's due diligence or as
a matter of Applicable Law. In addition, the Company shall have paid
to the Title Company or to the appropriate Governmental Authority all
expenses and premiums of the Title Company in connection with the
issuance of such Title Policies or in connection with any Loan
hereunder and an amount equal to the recording and stamp taxes
(including mortgage recording, intangible and similar taxes) payable
in connection with recording each Mortgage and the Assignment of Rents
and Leases in the appropriate county land offices or in connection
with any Loans hereunder;
(vi) the delivery to the Title Company of such
certificates and affidavits as the Title Company may reasonably
require in connection with the issuance of the Title Policies;
(vii) the delivery to the Agent of a Survey with respect to
each of the Pool A Properties and the Pool B Properties, dated or
re-dated to within 120 days prior to the Funding Availability Date,
which Surveys shall be reasonably satisfactory in form and substance
to the Agent;
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(viii) the delivery to the Agent of a letter from the
applicable zoning authority with respect to each of the Pool A
Properties and the Pool B Properties and reasonably satisfactory to
the Agent stating that all Improvements on each such Property have
been constructed and are being used and operated in full compliance
with (a) all applicable zoning, subdivision, environmental and other
Applicable Laws of all Governmental Authorities or quasi-governmental
authorities having jurisdiction with respect to each such Property,
and (b) all building permits issued in respect of each such Property
and the certificate of occupancy (if available) for each such
Property;
(ix) the delivery to the Agent pursuant to the Security
Agreement of the stock certificates (which certificates shall be
accompanied by irrevocable undated stock powers duly endorsed in blank
and irrevocable proxies, all satisfactory in form and substance to the
Agent) and promissory notes or other instruments, including the DAB
Notes, the shares of Common Stock pledged to the Company by the
obligors as security for the payment thereof and the Affiliate Notes
(in each case duly endorsed to the order of the Agent, as secured
party), representing the capital stock, promissory notes and other
instruments to be pledged on the Funding Availability Date pursuant to
the Security Agreement;
(x) the delivery to the Agent (i) of the Trademark
Agreement, in a form suitable for filing with the United States
Trademark and Patent Office, (ii) of the Trademark Security Agreement
in a form suitable for filing with the Canadian Trademark Office,
(iii) Trademark Agreement in a form suitable for filing with the Trade
Marks Department of the Registrar of Companies in Jamaica for
registration in relation to the Jamaican trademarks and the Registrar
of Companies in Jamaica for registration as a charge in the charges
register of IP Corp.;
(xi) the delivery to the Agent of Cash Management Letters
for each financial institution at which a Deposit Account is located
pursuant to the Cash Management System, which Cash Management Letters
and the Cash Management System shall be in form and substance
reasonably satisfactory to the Agent; and
(xii) the delivery to the Agent of evidence satisfactory to
the Agent that all other filings, recordings and other actions the
Agent deems necessary or advisable to establish, perfect and preserve
the Liens granted to the Agent in the Collateral as of the Funding
Availability Date shall have been made.
F. CASUALTY, FLOOD INSURANCE AND WORKERS' COMPENSATION. The
Company shall have delivered to the Agent (i) duplicate originals or true and
complete copies of each policy or other evidence of insurance required by this
Agreement evidencing (a) the issuance of such policies, (b) that the Company is
not then in default in the payment of any premium and (c) coverage which meets
all of the requirements set forth in this Agreement; (ii) an Officers'
Certificate dated the Funding Availability Date to the effect that the
insurance coverage required by this Agreement is in full force and effect, that
all monthly premiums therefor have been paid and that the amount of each limit
of property insurance provided for in the policies of insurance delivered to
the Agent which evidence such coverage are sufficient to cover all cost of
replacing
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the property and Improvements covered thereby; and (iii) evidence satisfactory
to the Agent that the Company is insured for workers' compensation liability
with a maximum deductible of $500,000.
To the extent permitted by law, the Company hereby irrevocably waives,
releases and discharges any and all rights of action, demands and other claims
of any kind or nature against the Agent and the Lenders arising from any
failure of the Agent or the Lenders to comply with the National Flood Insurance
Act of 1968 (42 U.S.C. Sections 4001, et seq.), the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, including any
failure of the Agent or the Lenders to provide the Company with written
notification within ten days prior to the Funding Availability Date whether any
Pool A Property or Pool B Property is in a special flood hazard area or whether
federal disaster relief assistance will be available in the event of flood
damage to any Pool A Property or Pool B Property.
G. POOL A GROUND LEASES; LANDLORD ESTOPPEL CERTIFICATES. The
Company shall have delivered to the Agent executed or conformed, certified
copies of each of the Pool A Ground Leases and all amendments thereto entered
into on or prior to the Funding Availability Date, as listed on Schedule 4.1G
annexed hereto, which Pool A Ground Leases shall be satisfactory in form and
substance to the Agent, in its sole discretion; the Pool A Ground Leases, as so
amended, shall be in full force and effect and no term or condition thereof
shall have been further amended or modified, or waived after the execution
thereof; and no Person shall have failed in any material respect to perform any
material obligation or covenant or satisfy any material condition required by
the Pool A Ground Leases to be performed or complied with on or before the
Funding Availability Date.
H. POOL B DOCUMENTS; LANDLORD AND LENDER ESTOPPEL CERTIFICATES.
The Company shall have delivered to the Agent (i) executed or conformed,
certified copies of each of the Pool B Documents (including, without limitation,
the Pool B Ground Leases) and all amendments thereto entered into on or prior to
the Funding Availability Date, as listed on Schedule 4.1H annexed hereto, which
documents shall be satisfactory in form and substance to the Agent, in its sole
discretion; such documents, as so amended, shall be in full force and effect and
no term or condition thereof shall have been further amended or modified, or
waived after the execution thereof; and no Person shall have failed in any
material respect to perform any material obligation or covenant or satisfy any
material condition required thereunder to be performed or complied with on or
before the Funding Availability Date; and (ii) original counterparts of estoppel
certificates and consent agreements with respect to each of the Pool B
Obligations specified on Schedule 4.1H, satisfactory in form and substance to
the Agent, and duly executed by the lessor under the Ground Lease with respect
to the related Pool B Property or by each lender with respect to the Pool B
Properties specified on such schedule, as the case may be.
I. MANAGEMENT AGREEMENTS; OWNER AND LENDER ESTOPPEL CERTIFICATES.
The Company shall have delivered to the Agent (i) executed or conformed,
certified copies of each of the Management Agreements and all amendments
thereto entered into on or before the Funding Availability Date, as listed on
Schedule 4.1I annexed hereto, which Management Agreements shall be reasonably
satisfactory in form and substance to the Agent; the Management
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Agreements, as so amended, shall be in full force and effect and no term or
condition thereof shall have been further amended or modified, or waived after
the execution thereof; and no Person shall have failed in any material respect
to perform any material obligation or covenant or satisfy any material
condition required by the Management Agreements to be performed or complied
with on or before the Funding Availability Date; (ii) original counterparts of
estoppel certificates and consent agreements with respect to each Management
Agreement specified on Schedule 4.1I having ranking 1, 2 or 3, satisfactory in
form and substance to the Agent, and duly executed by each owner of the related
Managed Property or by each lender with respect to the Managed Properties
specified on such schedule, as the case may be; (iii) an Officers' Certificate
of the Company (a) listing each operating deficit guaranty and each contract
with any owner of a Property regarding the provision of FF&E at a fixed cost to
which any Loan Party is a party on the Funding Availability Date and (b)
attaching copies (certified as true, correct and complete) of each such
guaranty and contract.
J. SERVICING AGREEMENTS. On or before the Funding Availability
Date, the Company shall have delivered to the Agent executed or conformed,
certified copies of the Property Servicing Agreement with respect to each
Property and, if a Liquor License exists with respect to such Property, the
Liquor Operation Service Agreement with respect to such Property, in each case
with all amendments thereto entered into on or before the Funding Availability
Date, as listed on Schedule 4.1J annexed hereto, which Servicing Agreements
shall be satisfactory in form and substance to the Agent, in its sole
discretion; the Servicing Agreements, as so amended, shall be in full force and
effect and no term or condition thereof shall have been further amended or
modified, or waived after the execution thereof; and no Person shall have
failed in any material respect to perform any material obligation or covenant
or satisfy any material condition required by the Servicing Agreements to be
performed or complied with on or before the Funding Availability Date.
K. FRANCHISE AGREEMENTS. The Company shall have delivered to the
Agent executed or conformed, certified copies of each of the Franchise
Agreements and all amendments thereto entered into on or before the Funding
Availability Date, as listed on Schedule 4.1K annexed hereto, which Franchise
Agreements shall be satisfactory in form and substance to the Agent; the
Franchise Agreements, as so amended, shall be in full force and effect and no
term or condition thereof shall have been further amended or modified, or
waived after the execution thereof; and no Person shall have failed in any
material respect to perform any material obligation or covenant or satisfy any
material condition required by the Franchise Agreements to be performed or
complied with on or before the Funding Availability Date.
L. MATERIAL LEASES; TENANT ESTOPPEL CERTIFICATES. The Company
shall have delivered to the Agent (i) executed or conformed, certified copies
of each Material Lease with respect to each Property and all amendments thereto
entered into on or before the Funding Availability Date, as listed on Schedule
4.1L annexed hereto, which Material Leases shall be reasonably satisfactory
in form and substance to the Agent; the Material Leases, as so amended, shall
be in full force and effect and no term or condition thereof shall have been
further amended or modified, or waived after the execution thereof; and no
Person shall have failed in any material respect to perform any material
obligation or covenant or satisfy any material condition required by the
Material Leases to be performed or complied with on or before the Funding
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Availability Date; and (ii) original counterparts of estoppel certificates with
respect to each of the Material Leases specified on Schedule 4.1L, reasonably
satisfactory in form and substance to the Agent, duly executed and delivered by
each Tenant party to such Material Lease.
M. ENVIRONMENTAL AUDITS. The Company shall have delivered to the
Agent evidence satisfactory to the Agent, in its sole discretion, that (i)
there are no material pending or threatened claims, suits, actions or
proceedings arising out of or relating to the existence of any Hazardous
Materials at, in, on, from, around or under any of the Pool A Properties and
Pool B Properties; (ii) each such Property is in compliance in all material
respects with all applicable Environmental Laws with respect to such Property;
and (iii) no Hazardous Materials exist at, in, on, from, around or under any
such Property, except in compliance in all material respects with applicable
Environmental Laws and all other Hazardous Materials have been removed from
each Property to the extent required by Applicable Law. Such evidence shall
include (a) a comprehensive environmental audit (which shall include a Phase I
environmental audit and, if necessary or desirable in the Agent's opinion, a
Phase II environmental audit), satisfactory in form and substance to the Agent,
conducted and certified by an Approved Environmental Consultant (the Company
shall certify as of the Funding Availability Date that, as to any environmental
audit delivered by the Company prior to the Funding Availability Date, to the
Company's knowledge, the information contained in such audit remains true,
correct and complete), (b) a reliance letter from such Approved Environmental
Consultant with respect to each such environmental audit addressed to the Agent
and Lenders, which reliance letter shall be satisfactory in form and substance
to the Agent, (c) certification that all required approvals from all
Governmental Authorities having jurisdiction with respect to the environmental
condition of the Pool A Properties and the Pool B Properties, if any, have been
obtained, and (d) such other environmental reports, inspections and
investigations as the Agent shall in its sole discretion require, prepared, in
each instance, by an Approved Environmental Consultant, which approvals,
reports, inspections and investigations shall be satisfactory in form and
substance to the Agent, in its sole discretion. On or before the Funding
Availability Date, the Company shall have delivered to the Agent evidence
satisfactory to the Agent, in its sole discretion, that the Company has
complied (or has made arrangements to comply) with the recommendations and
suggestions of all environmental consultant(s) referred to above.
N. ENGINEERING REPORTS. The Company shall have delivered to the
Agent (i) a written Engineering Report with respect to each Property dated not
more than 45 days prior to the Funding Availability Date and prepared by an
Engineer acceptable to the Agent, which Engineering Report shall contain repair
recommendations for the first five years, and shall in all other respects be
satisfactory in form and substance to the Agent; and (ii) a reliance letter
from such Engineer with respect to each such Engineering Report addressed to
the Agent and Lenders, which letter shall be in form and substance reasonably
satisfactory to the Agent.
O. APPRAISALS. The Agent shall have received (i) an Appraisal of
each Pool A Property dated not more than 60 days prior to the Funding
Availability Date and prepared by an Appraiser designated by the Agent, which
Appraisal shall be satisfactory in form and substance to the Agent; and (ii)
copies of all appraisals, market studies, and similar information with respect
to each of the Pool A Properties and Pool B Properties in the possession or
under control of the Company or any of its Subsidiaries.
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P. OPINIONS OF THE COMPANY'S COUNSEL; AUDITOR'S LETTER. On the
Funding Availability Date the Company shall have delivered to the Agent, its
counsel and the Lenders (i) executed copies of each of the favorable written
opinions of Locke Purnell Rain Harrell (A Professional Corporation), counsel
for the Company, substantially in the form of Exhibit XV annexed hereto, with
such changes as the Agent may approve and dated the Funding Availability Date;
(ii) executed copies of a letter addressed to Coopers & Lybrand, independent
accountants for the Company, as to such matters as the Agent and its counsel
may reasonably request, satisfactory in form and substance to the Agent; (iii)
executed copies of a reliance letter from Locke Purnell Rain Harrell (A
Professional Corporation), counsel to Company, and each other counsel to the
Company delivering an opinion in connection with the issuance of the Common
Stock in the Equity Offering, in each case addressed to the Agent and Lenders
and satisfactory in form and substance to the Agent and stating that the Agent
and Lenders may rely on such opinions as if they were original addressees
thereof, and in each case attaching an executed original thereof; (iv) executed
copies of a reliance letter from Locke Purnell Rain Harrell (A Professional
Corporation), counsel to the Company, and each other counsel to the Company
delivering an opinion in connection with the Debt Offering, in each case
addressed to the Agent and Lenders and satisfactory in form and substance to
the Agent stating that the Agent and Lenders may rely on such opinions as if
they were original addressees thereof, and in each case attaching an executed
original thereof; and (v) evidence satisfactory to the Agent that the Company
has requested such counsel and auditor to deliver such opinions and letter to
the Agent and its counsel and the Lenders.
Q. OPINION OF AGENT'S COUNSEL. The Lenders shall have received
executed copies of the favorable written opinion of O'Melveny & Myers, counsel
to the Agent, dated as of the Funding Availability Date.
R. APPROVED CAPITAL POLICY. The Company shall have delivered to
the Agent a copy of the Company's stated policy for the capitalization of
expenditures on the financial statements of the Company and its Subsidiaries,
which stated policy shall be reasonably acceptable to the Agent.
S. FORMATION DOCUMENTS; FORMATION; PAYMENT OF CERTAIN
INDEBTEDNESS. The Company shall have delivered to the Agent (i) an executed or
conformed, certified copy of each of the Formation Documents entered into on or
prior to the Formation Date, which documents shall be satisfactory in form and
substance to the Agent; such documents, as so amended, shall be in full force
and effect and no term or condition thereof shall have been further amended or
modified, or waived after the execution thereof; and no Person shall have
failed in any material respect to perform any material obligation or covenant
or satisfy any material obligation or covenant or satisfy any material
condition required thereunder to be performed or complied with on or before the
Funding Availability Date; (ii) a copy of each agreement, legal opinion,
accountant's letter, certificate and each other document or instrument
delivered in connection with the formation of the Company and the Formation;
(iii) an Officers' Certificate of the Company certifying that, as of the
Funding Availability Date, each transaction constituting the Formation has been
duly authorized by all necessary action of the Loan Parties, the applicable
current and former Subsidiaries of the Loan Parties and all other Persons and
has been consummated in accordance with, and is enforceable pursuant to, all
Applicable Laws;
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(iv) evidence satisfactory to the Agent that the proceeds of the Public
Offerings have been applied to refinance all outstanding Indebtedness secured
by the Pool A Properties or ownership interests therein as set forth on
Schedule 4.1S annexed hereto and, upon such refinancing, any commitments to
lend in connection with such Indebtedness shall terminate or shall have
terminated; and (v) the Company shall have caused the holders of such
Indebtedness to deliver properly executed termination statements under the
Uniform Commercial Code and any and all releases of mortgages and subordination
agreements benefitting such Persons. On or before the Funding Availability
Date, each of the transactions constituting the Formation shall have been
consummated in accordance with all Applicable Laws.
T. ISIS 2000 AGREEMENTS; CWS AGREEMENTS; WYNRIGHT AGREEMENTS;
GREYSTAR AGREEMENTS. The Company shall have delivered to the Agent a certified
copy of the Computerized Reservations Services Agreement dated as of May 24,
1996 between the Company and ISIS 2000, with all amendments thereto entered
into on or before the Funding Availability Date, which, agreements and
amendments shall be satisfactory in form and substance to the Agent, in its
sole discretion; such agreement as so amended, shall be in full force and
effect and no term or condition thereof shall have been further amended or
modified, or waived after the execution thereof; and no Person shall have
failed in any material respect to perform any material obligation or covenant
or satisfy any material condition required by such agreement to be performed or
complied with on or before the Funding Availability Date.
U. EQUITY OFFERING; GE OPTION. The Company shall have delivered
to the Agent (i) evidence satisfactory to the Agent that the Equity Offering
shall have been consummated pursuant to the Equity Offering Documents; (ii)
executed or conformed, certified copies of each of the Equity Offering
Documents and all satisfactory in form and substance to the Agent, which
documents shall be in full force and effect; (iii) evidence satisfactory to the
Agent that the exercise of the GE Option, and the issuance of shares of Common
Stock pursuant thereto, shall have been consummated pursuant to the GE Option;
(iv) evidence satisfactory to the Agent that, after giving effect to the
Formation, the Public Offerings and the issuance, sale and delivery of shares
of Common Stock pursuant to the GE Option, the Market Equity Capitalization of
the Company is not less than $250,000,000; and (v) evidence satisfactory to the
Agent that, after giving effect to the Formation, the Equity Offering and the
issuance, sale and delivery of shares of Common Stock pursuant to the GE
Option, Bedrock, the Crow Interests and the Senior Executives beneficially and
of record own not less than the numbers of shares of Common Stock set forth on
Schedule 4.1U annexed hereto, which shall not be less than 11.4%, 47.2% and
13.3%, respectively, of the equity Securities of the Company then outstanding
and shall not include any equity Securities of the Company beneficially or of
record owned by WEL; provided, however, that shares of Common Stock may be
pledged by the Senior Executives to the Company to secure the payment of the
DAB Notes, as more particularly indicated on Schedule 4.1U annexed hereto.
All other matters with respect to the Equity Offering and the exercise of the
GE Option shall be satisfactory to the Agent.
V. DEBT OFFERING. The Company shall have delivered to the Agent
(i) evidence satisfactory to the Agent that the Debt Offering shall have been
consummated pursuant to the Debt Offering Documents; (ii) the Agent and Lenders
shall have received executed or conformed, certified copies of each of the
Debt Offering Documents, all satisfactory in form and
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substance to the Agent, which documents shall be in full force and effect; and
(iii) evidence satisfactory to the Agent that the Company shall have issued not
less than $100,000,000 in aggregate principal amount of Senior Notes pursuant
to the Indenture. No Person shall have failed in any material respect to
perform any material obligation or covenant or satisfy any material condition
required by the Debt Offering Documents to be performed or complied with on or
before the Funding Availability Date. All other matters with respect to the
Debt Offering shall be satisfactory to the Agent.
W. NO ADVERSE LITIGATION. There shall not be pending or, to the
knowledge of the Company, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any of its Subsidiaries or any property of the Company or any of its
Subsidiaries that has not been disclosed by the Company in writing pursuant to
subsection 4.5 prior to the execution of this Agreement and that is reasonably
likely to have a Material Adverse Effect, and there shall have occurred no
development not so disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in the
opinion of the Agent, is reasonably likely to have a Material Adverse Effect;
and no injunction or other restraining order shall have been issued and no
hearing to cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the transactions contemplated by this Agreement
or the making of the Loans hereunder.
X. ORIGINAL ACQUISITION DOCUMENTS. The Company shall have
delivered to the Agent executed certified copies of each of the Original
Acquisition Agreements and all amendments thereto in effect on the Funding
Availability Date.
Y. PAYMENT OF FEES AND EXPENSES. The Company shall have paid to
the Agent, for distribution (as appropriate) to the Lenders and the Agent, the
fees payable pursuant to subsection 2.3 and the expenses payable pursuant to
subsection 9.2.
Z. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby
and all documents incidental thereto and the Formation not previously found
acceptable by the Agent and its counsel shall be reasonably satisfactory in
form and substance to the Agent and such counsel, and the Agent and such
counsel shall have received all such counterpart originals or certified copies
of such documents as the Agent may reasonably request.
AA. OTHER DOCUMENTS. Each Loan Party shall have delivered to the
Agent such other information and documents as the Agent may reasonably request.
4.2 CONDITIONS TO ALL LOANS.
The obligations of the Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
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A. NOTICE OF BORROWING. The Agent shall have received before that
Funding Date, in accordance with the provisions of subsection 2.1B, (i) an
originally executed Notice of Borrowing, in each case signed by the chief
executive officer, the chief financial officer or the treasurer of the Company
or by any executive officer of the Company designated by any of the
above-described officers on behalf of the Company in a writing delivered to the
Agent and (ii) if any of the proceeds of such Loan are to be applied to the
Restoration or Renovation of any Property, waivers of lien satisfactory to the
Agent covering that part of the Renovation or Restoration for which payment or
reimbursement is being requested and by a search prepared by the Title Company
satisfactory to the Agent establishing that there has not been filed with
respect to such Property any mechanics' or other lien or instrument for the
retention of title in respect of any part of the Renovation or Restoration not
discharged of record or bonded to the reasonable satisfaction of the Agent and
evidencing the continued priority of the Mortgage and Assignment of Rents and
Leases on such Property.
B. OTHER CONDITIONS PRECEDENT. As of that Funding Date:
(i) the representations and warranties of the Loan
Parties as contained herein and in the other Loan Documents shall be
true and correct in all material respects on and as of that Funding
Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate
to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on and as of
such earlier date;
(ii) no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
such Notice of Borrowing that would constitute an Event of Default or
a Potential Event of Default, including a breach or violation of
Section 4.3 of the Indenture with respect to the consummation of such
borrowing;
(iii) each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before
that Funding Date;
(iv) no order, judgment or decree of any arbitrator or
Governmental Authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it on that Funding Date;
(v) the making of the Loans requested on such Funding
Date shall not violate any law including, without limitation,
Regulation G, Regulation T, Regulation U or Regulation X of the Board
of Governors of the Federal Reserve System;
(vi) there shall not be pending or, to the knowledge of
the Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Company of its
Subsidiaries that has not been disclosed by the Company in writing
pursuant to subsection 5.5 or 6.1(xvi) prior to the making of such
Loans and that would be reasonably likely to have a Material Adverse
Effect, and there shall have
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occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so disclosed,
that, in either event, in the opinion of the Agent, would be
reasonably likely to have a Material Adverse Effect; and no injunction
or other restraining order shall have been issued and no hearing to
cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding
seeking to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans hereunder;
(vii) after giving effect to the proposed borrowing, the
Borrowing Base shall not be less than the Total Utilization of
Revolving Commitments and the Company shall have delivered to the
Agent the Borrowing Base Certificate for the most recent calendar
month as required pursuant to subsection 6.1(ii); and
(viii) since December 31, 1995, no condition or event shall
have occurred that has had or could reasonably be expected, either
individually or in the aggregate, (i) to have a material adverse
effect upon the business, operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, taken as
a whole, or (ii) to impair the ability of the Company and its
Subsidiaries, taken as a whole, to perform, or of the Agent or the
Lenders to enforce, monetary Obligations or materially impair the
ability of any Loan Party to perform, or of the Agent or the Lenders
to enforce, non-monetary Obligations, including the obligations of any
Loan Party to perform, or of the Agent or the Lenders to enforce, any
Security Document.
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not
the applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. INITIAL LOANS. On or before the date of issuance of the
initial Letter of Credit pursuant to this Agreement, the conditions set forth
in subsection 4.1 for the making of the initial Loans shall have been
satisfied.
B. NOTICE OF ISSUANCE OF LETTER OF CREDIT. On or before the date
of issuance of such Letter of Credit, Agent shall have received, in accordance
with the provisions of subsection 3.1B(i), an originally executed Notice of
Issuance of Letter of Credit, in each case signed by the chief executive
officer, the chief financial officer or the treasurer of Company or by any
executive officer of Company designated by any of the above-described officers
on behalf of Company in a writing delivered to Agent, together with all other
information specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
C. OTHER CONDITIONS PRECEDENT. On the date of issuance of such
Letter of Credit, all conditions precedent described in subsection 4.2B shall
be satisfied to the same extent as if
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the issuance of such Letter of Credit were the making of a Loan and the date of
issuance of such Letter of Credit were a Funding Date.
SECTION 5
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans, to induce Issuing Lenders to issue Letters of
Credit and to induce other Lenders to purchase participations therein, the
Company represents and warrants to the Agent and the Lenders that the following
statements in this Section 5 are true, correct and complete on the Effective
Date, on the Funding Availability Date, on each Funding Date and on the date of
issuance of each Letter of Credit.
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party and each of its
Subsidiaries (other than any Partnership Subsidiary) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (which jurisdiction is set forth on Schedule 5.1A
annexed hereto). Each such Loan Party and each such Subsidiary has the
requisite corporate power and authority to own and operate its properties
(including the Properties identified as being owned or leased by such Loan
Party or such Subsidiary on Schedule 5.4A1, Schedule 5.4A2 and Schedule 5.4A3
annexed hereto), to carry on its business as now conducted and as proposed to
be conducted, to enter into the Loan Documents and the Related Documents to
which it is a party, to carry out the transactions contemplated thereby and, in
the case of the Company, to issue and pay the Notes and the Senior Notes
pursuant to the Senior Note Documents. Each Partnership Subsidiary is a limited
partnership duly formed and validly existing under the laws of its jurisdiction
of organization (which jurisdiction is set forth on Schedule 5.1A) and each
Partnership Subsidiary has all requisite partnership power and authority to own
and operate its properties (including the Properties identified on Schedule
5.4A1, Schedule 5.4A2 and Schedule 5.4A3 as being owned or leased by such
Partnership Subsidiary), to carry on its business as now conducted and proposed
to be conducted, to enter into each Loan Document and Related Document to which
it is a party and to carry out the transactions contemplated thereby. The books
and records of each Loan Party and each of its Subsidiaries reflect the
properties and assets purported to be owned by such Loan Party or Subsidiary,
as applicable.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party and each of
its Subsidiaries is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing has not had and could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
The jurisdictions in which each Loan Party and each of its Subsidiaries owns
property or otherwise conducts business as of the Funding Availability Date are
set forth on Schedule 5.1B annexed hereto.
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C. CONDUCT OF BUSINESS. The Company and each of its Subsidiaries
are engaged only in the businesses permitted to be engaged in by them pursuant
to subsection 7.14.
D. SUBSIDIARIES. The capital stock of each of the Subsidiaries
(other than any Partnership Subsidiary) is duly authorized, validly issued and
fully paid and nonassessable. All of the Subsidiaries of each Loan Party are
identified on Schedule 5.1A annexed hereto, as Schedule 5.1A may be
supplemented from time to time pursuant to subsection 7.7(iii). The capital
stock of each Person identified on Schedule 5.1A (as so supplemented) is not
Margin Stock. Schedule 5.1A correctly sets forth the ownership interests in
each Loan Party (other than the Company) and each of its Subsidiaries, as
Schedule 5.1A may be supplemented from time to time pursuant to the
provisions of subsection 7.7(iii). Each Subsidiary of the Company is a Wholly
Owned Subsidiary.
E. ACQUISITIONS. Each Pool B Subsidiary or Pool C Subsidiary, as
the case may be, shall have the corporate power to consummate each Acquisition
to be consummated by it upon the consummation thereof, on the terms set forth
in any applicable Acquisition Agreement or other operative agreement. Upon the
consummation of any Acquisition, such Acquisition shall have been duly
authorized by all necessary action of such Pool B Subsidiary or Pool C
Subsidiary, as the case may be.
F. FORMATION. Schedule 5.1F annexed hereto specifies (i) each of
the transactions constituting the Formation, (ii) each of the parties to each
such transaction, (iii) each registration or filing with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority or
any other Person that is required or proposed to be made, taken or obtained, as
the case may be, in connection therewith the absence of which could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect and (iv) the respective dates on which such transactions are proposed to
be effected and such filings, registrations, consents, approvals, notices and
other actions are proposed to be made, taken or obtained, as the case may be,
in connection therewith. Each of the transactions constituting the Formation
has been duly authorized by all necessary corporate or partnership action of
the Company and the applicable current and former Subsidiaries of the Loan
Parties and other Persons. As of the Funding Availability Date, each of the
transactions constituting the Formation shall have been consummated in
accordance with, and shall be effective under, all Applicable Laws.
G. PUBLIC OFFERINGS; GE OPTION. Each of the transactions
constituting the issuance, sale and delivery of up to 4,197,500 shares of
Common Stock in the Equity Offering pursuant to the Equity Offering Documents,
the issuance, sale and delivery of the Senior Notes in the Debt Offering
pursuant to the Debt Offering Documents and the payment thereof pursuant to the
terms thereof and of the Indenture and the issuance, sale and delivery of
approximately 504,032 shares of Common Stock pursuant to the GE Option has been
duly authorized by all necessary action of the Company. As of the Funding
Availability Date, each of such transactions shall have been consummated in
accordance with, and shall be effective under, all Applicable Laws.
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5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and
performance of this Agreement and the other Loan Documents and the Related
Documents to which each Loan Party is a party and the issuance, delivery and
payment of the Notes have been duly authorized by all necessary corporate or
partnership action on the part of each Loan Party, as the case may be.
B. NO CONFLICT. The execution, delivery and performance by each
Loan Party of each Loan Document and each Related Document to which it is a
party and the consummation of the transactions contemplated hereby and thereby,
the consummation of the transactions constituting the Formation, the issuance,
sale and delivery by the Company of 15,316,767 shares of Common Stock in the
Formation pursuant to the Formation Documents, the issuance, sale and delivery
by the Company of up to 4,197,500 shares of Common Stock in the Equity Offering
pursuant to the Equity Offering Documents, the issuance, sale and delivery by
the Company of the Senior Notes in the Debt Offering pursuant to the Debt
Offering Documents and the payment thereof pursuant to the terms thereof and of
the Indenture, the issuance, sale and delivery of up to 504,032 shares of
Common Stock pursuant to the GE Option and the consummation of each Acquisition
and the other transactions contemplated by this Agreement, the other Loan
Documents and the Related Documents do not and will not (i) violate any
provision of law applicable to any Loan Party or any of its Subsidiaries, the
Certificate of Incorporation or Bylaws or partnership agreement of any Loan
Party or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on any Loan Party or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any material Contractual
Obligation of any Loan Party, which default, individually or in the aggregate,
could have a Material Adverse Effect, (iii) result in or require the creation
or imposition of any Lien upon any of the properties or assets of any Loan
Party or any of its Subsidiaries (other than Liens securing the Obligations),
or (iv) require any approval of stockholders or any approval or consent of any
Person under any material Contractual Obligation of any Loan Party the absence
of which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, other than approvals or consents which
will be or have been obtained on or before the Funding Availability Date (or,
in the case of an Acquisition, on or before the date such Acquisition is
consummated) and disclosed in writing to the Agent and the Lenders.
C. GOVERNMENTAL CONSENTS. Except as set forth on Schedules 5.1F
and 5.2C annexed hereto, the execution, delivery and performance by each Loan
Party of each Loan Document and each Related Document to which it is a party,
the consummation of each of the transactions constituting the Formation, the
issuance, sale and delivery by the Company of 15,316,767 shares of Common Stock
in the Formation pursuant to the Formation Documents, the issuance, sale and
delivery by the Company of up to 4,197,500 shares of Common Stock in the Equity
Offering pursuant to the Equity Offering Documents, the issuance, sale and
delivery by the Company of the Senior Notes in the Debt Offering pursuant to
the Debt Offering Documents and the payment thereof in accordance with the
terms thereof and of the Indenture, the issuance, sale and delivery by the
Company of up to 504,032 shares of Common Stock pursuant to the GE Option and
the consummation of each Acquisition and the other transactions contemplated by
this Agreement, the other Loan Documents and the Related Documents do not
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and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any Governmental Authority, except for (i)
such of the foregoing which will have been made or obtained on or before the
Funding Availability Date (or, in the case of any Related Document relating to
an Acquisition, on or before the date of the closing of such Acquisition), (ii)
such of the foregoing which, if not made or obtained, could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect and (iii) the recordings and filings required to perfect the Liens
granted pursuant to the Security Documents. As of the Funding Availability
Date, all consents or approvals from or notices to or filings with any federal,
state, or other (domestic or foreign) regulatory authorities required to be
obtained on or before such date in connection with the documents or
transactions described or referred to in the preceding sentence will have been
accomplished in all material respects in compliance in all material respects
with all Applicable Laws except for those referred to in clause (ii) above.
None of the transactions constituting the Formation, the issuance, sale and
delivery of such shares of Common Stock in the Formation pursuant to the
Formation Documents, the issuance, sale and delivery of such shares of Common
Stock in the Equity Offering pursuant to the Equity Offering Documents, the
issuance, sale and delivery of the Senior Notes in the Debt Offering pursuant
to the Debt Offering Documents, the issuance, sale and delivery of such shares
of Common Stock pursuant to the GE Option or the consummation of the other
transactions contemplated by this Agreement, the other Loan Documents and the
Related Documents violates any Applicable Law or regulation in any respect,
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
D. BINDING OBLIGATION. This Agreement is, and the other Loan
Documents when executed and delivered hereunder will be, the legally valid and
binding obligations of the applicable Loan Parties, enforceable against the
applicable Loan Parties in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally, and by general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or law) and subject to other qualifications,
exceptions and assumptions such as are set forth in the various legal opinions
delivered to the Agent in connection with such documents or other documents.
E. VALID ISSUANCE OF COMMON STOCK. All the issued and outstanding
Common Stock is duly and validly issued, fully paid and nonassessable. No other
Securities of the Company are issued and outstanding, and no Person has any
rights to acquire Securities of the Company other than shares of Common Stock
pursuant to the Formation, the Equity Offering, the GE Option, the 1996
Long-Term Incentive Plan and the Non-Employee Directors Retainer Stock Plan, as
the case may be, and the Senior Notes pursuant to the Debt Offering. The
issuance and sale of such shares of Common Stock or Senior Notes, as the case
may be, upon issuance and sale, will either (i) have been registered under
applicable federal and qualified under state securities laws or (ii) be exempt
therefrom.
F. NEW YORK STOCK EXCHANGE LISTING; NASDAQ/NMS. All outstanding
shares of each class of Capital Stock of the Company shall at all times be duly
listed on the New York Stock Exchange, Inc. or on NASDAQ/NMS. The Company shall
timely file all reports required
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to be filed by it with the New York Stock Exchange, Inc. or by the National
Association of Securities Dealers, Inc., as the case may be, and the Securities
and Exchange Commission.
G. RELATED DOCUMENTS; REPRESENTATIONS AND WARRANTIES IN OTHER
LOAN DOCUMENTS. Each Related Document to which any Loan Party or any of its
Subsidiaries is a party is in full force and effect and no term or condition
thereof has been amended or modified in any material respect except as in
accordance with this Agreement. Each Related Document is the legally valid and
binding obligation of such parties, enforceable against such parties in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally, and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or law) and subject
to other qualifications, exceptions and assumptions such as are set forth in
the various legal opinions delivered to Agent in connection with such documents
or other documents, except to the extent that the lack of enforceability could
not reasonably be expected, with or individually or in the aggregate, to result
in a Material Adverse Effect. Each Loan Party has delivered to the Agent
complete and correct copies of all Related Documents to which such Loan Party
or any of its Subsidiaries is a party (including in each case all exhibits and
schedules thereto), as amended, modified or waived to date, and of all material
notices or other material writings delivered to or by such Loan Party or such
Subsidiary in connection therewith.
5.3 FINANCIAL CONDITION; CONTINGENT OBLIGATIONS.
A. FINANCIAL CONDITION. The Company has heretofore delivered to
the Agent, at the Agent's request, the following financial statements and
information: (i) the audited consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 1995 and the related consolidated statements of
income, stockholders' equity and cash flows of the Company and its Subsidiaries
for such calendar year, (ii) the unaudited statements of Property Gross
Revenues and Operating Expenses for each of the Pool A Properties and the Pool
B Properties for the calendar year ended December 31, 1993, December 31, 1994
and December 31, 1995, respectively, and (iii) the financial statements of the
Company and its Subsidiaries required to be delivered to the Agent pursuant to
subsections 6.1(i), (ii), (iii), (v), (vi) and (vii). The statements referred
to in clause (i) of the preceding sentence were prepared in conformity with
GAAP and fairly present, in all material respects, the financial position of
the Company and its Subsidiaries as at the date thereof and the results of
operations of the Company and its Subsidiaries for the period then ended,
subject to changes resulting from audit and normal year end adjustments. The
Company and its Subsidiaries do not (and will not following the initial
extension of credit hereunder) have any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing financial
statements, the notes thereto or Schedule 5.3C annexed hereto or permitted
pursuant to subsection 7.4 and which in any such case is material in relation
to the business, operations, properties, assets, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries.
B. CONTINGENT OBLIGATIONS. After giving effect to the Formation,
the Loan Parties and their respective Subsidiaries will not be directly or
indirectly liable with respect to any Contingent Obligations other than as set
forth on Schedule 5.3C annexed hereto or, with respect
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to such Contingent Obligations, in amounts greater than the respective maximum
estimated amounts specified thereon. Schedule 5.3C sets forth all Investments
made by the Loan Parties and their respective Subsidiaries and all Guaranties
with respect to which the Loan Parties and their respective Subsidiaries are
liable as of the Funding Availability Date, including all such Investments and
Guaranties that would be subject to subsections 7.3 and 7.4 if the same were
made or incurred on or after the Effective Date.
5.4 PROPERTIES; DAB NOTES AND AFFILIATE NOTES; AGREEMENTS; LICENSES.
A. TITLE TO PROPERTIES; LIENS. Each of Schedule 5.4Al, Schedule
5.4A2 and Schedule 5.4A3 correctly sets forth the interest of each Loan Party
and each of its Subsidiaries in each of the Pool A Properties, Pool B
Properties and Pool C Properties, respectively, in each case after giving
effect to the Formation. There are no outstanding options, rights of first
refusal, rights of first offer or similar rights to purchase or otherwise
acquire such fee interest or leasehold interest, as the case may be, in any
such Property, other than options and rights owned by Loan Party or Subsidiary
thereof, as applicable. After giving effect to the Formation, such Loan Party
or Subsidiary thereof, as applicable, will have good and marketable fee simple
title to, or a valid leasehold interest in, the Properties and good title to
the remainder of the Collateral purported to be owned by it, free and clear of
all Liens, in each case except Permitted Encumbrances and Liens permitted
pursuant to subsection 7.2A. All material fixtures, furnishings, attachments
and equipment necessary for the operation, use and occupancy of each such
Property have been installed or incorporated into such Property and, after
giving effect to the Formation, each Loan Party or Subsidiary thereof, as
applicable, will be the sole owner of all of the same, free and clear of all
chattel mortgages, conditional vendor's liens and other liens, and security
interests other than (i) Permitted Encumbrances and Liens permitted pursuant to
subsection 7.2A, and (ii) in respect of each Pool C Property, Liens securing
any related Pool C Indebtedness. Except as heretofore disclosed in writing by
the Company to the Agent, no tax liens have been filed against the Company or
any of its Subsidiaries and/or any of their respective properties, including
any Property, other than Liens for non-delinquent real property taxes.
B. DAB NOTES AND AFFILIATE NOTES. After giving effect to the
Formation, the Company will be a purchaser of each of the DAB Notes and the
Affiliate Notes for value and good faith and without notice of any adverse
claim, and the Company will be the sole owner of all the DAB Notes and the
Affiliate Notes free of any adverse claim or restriction on transfer imposed by
any obligor with respect to any of the DAB Notes and the Affiliate Notes.
Schedule 5.4B sets forth a true and complete list of each of the DAB Notes and
Affiliate Notes that will be outstanding on the Funding Availability Date.
C. POOL A GROUND LEASES. Each of the Pool A Ground Leases and all
amendments thereto that have been or will be entered into on or prior to the
Funding Availability Date are listed on Schedule 4.1G annexed hereto. After
giving effect to the Formation, the Pool A Ground Leases, as so amended, will
be in full force and effect and no term or condition thereof will have been
further amended or modified, or waived after the execution thereof except in
accordance with this Agreement; and no Person will have failed in any respect
to perform any obligation or covenant or satisfy any condition required by the
Pool A Ground Leases to be
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performed or complied with on or before the Funding Availability Date except
where failure to so comply will not then have had and could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
D. POOL B DOCUMENTS. Each of the Pool B Documents and all
amendments thereto that have been or will be entered into on or prior to the
Funding Availability Date are listed on Schedule 4.1H annexed hereto. After
giving effect to the Formation, such documents, as so amended, will be in full
force and effect and no term or condition thereof will have been further
amended or modified, or waived after the execution thereof except in accordance
with this Agreement, and no Person will have failed in any respect to perform
any obligation or covenant or satisfy any condition required thereunder to be
performed or complied with on or before the Funding Availability Date except
where failure to so comply will not then have had and could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
E. MANAGEMENT AGREEMENTS. Each of the Management Agreements and
all amendments thereto that have been or will be entered into on or before the
Funding Availability Date are listed on Schedule 4.1I annexed hereto. After
giving effect to the Formation, the Management Agreements, as so amended, will
be in full force and effect and no term or condition thereof will have been
further amended or modified, or waived after the execution thereof except in
accordance with this Agreement; and no Person will have failed in any respect
to perform any obligation or covenant or satisfy any condition required by the
Management Agreements to be performed or complied with on or before the Funding
Availability Date except where failure to so comply will not then have had and
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. No party to a Management Agreement is in
default on the Funding Availability Date in its obligations to pay Management
Fees in accordance with the provisions of such Management Agreement.
F. SERVICING AGREEMENTS. The Property Servicing Agreement with
respect to each Property and, if a Liquor License exists with respect to such
Property, the Liquor Operation Service Agreement with respect to such Property,
in each case with all amendments thereto that have been or will be entered into
on or before the Funding Availability Date, are listed on Schedule 4.1J
annexed hereto. After giving effect to the Formation, the Servicing Agreements,
as so amended, will be in full force and effect and no term or condition
thereof will have been further amended or modified, or waived after the
execution thereof except in accordance with this Agreement; and no Person will
have failed in any respect to perform any obligation or covenant or satisfy any
condition required by the Servicing Agreements to be performed or complied with
on or before the Funding Availability Date except where failure to so comply
will not then have had and could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
G. FRANCHISE AGREEMENTS. Each of the Franchise Agreements and all
amendments thereto entered into on or before the Funding Availability Date are
listed on Schedule 4.1K annexed hereto. After giving effect to the Formation,
the Franchise Agreements, as so amended, will be in full force and effect and
no term or condition thereof will have been further amended or modified, or
waived after the execution thereof except in accordance with this
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Agreement; provided, however, that the Company and its Subsidiaries may
continue to extend and renew on existing terms any such Franchise Agreement on
a month-to-month basis and no Person will have failed in any respect to perform
any obligation or covenant or satisfy any condition required by the Franchise
Agreements to be performed or complied with on or before the Funding
Availability Date except where failure to so comply will not then have had and
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
H. MATERIAL LEASES. Each Material Lease with respect to each
Property and all amendments thereto that have been or shall be entered into on
or before the Funding Availability Date are listed on Schedule 4.lL annexed
hereto. After giving effect to the Formation, the Material Leases, as so
amended, shall be in full force and effect and no term or condition thereof
will have been further amended or modified, or waived after the execution
thereof except in accordance with this Agreement; and no Person will have
failed in any respect to perform any obligation or covenant or satisfy any
condition required by the Material Leases to be performed or complied with on or
before the Funding Availability Date except where failure to so comply will not
then have had and could not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.
I. LIQUOR LICENSES. Each Liquor License issued in connection with
each Property is set forth on Schedule 5.4I annexed hereto, each such Liquor
License is validly issued and in full force and effect and the holder of each
such Liquor License is a party to the Omnibus Management and Liquor License
Agreement. The holder of each Liquor License has the legal right to utilize
each such Liquor License in connection with the operation of any restaurant,
bar or other alcoholic beverage service located at the applicable Property. All
cash and other revenues and receipts from the operation of any owner of a
Liquor License of an alcoholic beverage service at any Property are collected
either by the licensee thereof or Management Corp. and are then deposited
directly into Deposit Accounts subject to the Cash Management System.
5.5 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 5.5 annexed hereto, as amended or
supplemented from time to time with the consent of the Agent, there is no
action, suit, proceeding, arbitration or governmental investigation (whether or
not purportedly on behalf of the Company or any of its Subsidiaries) at law or
in equity or before or by any Governmental Authority, or to the knowledge of
the Company, changes to Applicable Law, pending or, to the knowledge of the
Company, threatened against or affecting any Loan Party or any of its
Subsidiaries, any Property or any other property of the Company or any of its
Subsidiaries that has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. No Loan Party nor
any of its Subsidiaries is (i) in violation of any Applicable Law that has had,
or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect or (ii) subject to or in default with
respect to any Applicable Law that has had, or could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect. To
the knowledge of the Company, there are no pending or threatened actions, suits
or proceedings to revoke, attack, invalidate, rescind or modify the zoning
affecting
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any Property or any Authorizations heretofore issued with respect to any
Property or asserting that such Authorizations or the zoning affecting any
Property or any other property of any Loan Party or any of its Subsidiaries do
not permit the continued use of such Property or property as contemplated by
the Loan Documents. Except as set forth on Schedule 5.5, to the knowledge of
the Company, no Person has asserted any claimed violation of Applicable Laws
arising from the operation, use or occupancy of the Properties which has not
been cured which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
5.6 TAXES.
A. PAYMENT OF TAXES. Except to the extent permitted by subsection
6.4 and as set forth on the financial statements delivered pursuant to
subsections 4.1C and 5.3, all federal, state and material local Tax returns
and reports relating to any Loan Party or any of its Subsidiaries or the
Properties required to be filed have been timely filed, and all Taxes,
Impositions, assessments, fees and other governmental charges upon any Loan
Party or any of its Subsidiaries or upon the Properties which are due and
payable have been paid prior to delinquency. The Company does not know of any
proposed Tax assessment against any Loan Party or any of its Subsidiaries or
the Properties that could reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect. Neither any Loan Party nor any
of its Subsidiaries (i) has executed or filed with the Internal Revenue Service
or any other Governmental Authority any agreement or other document extending,
or having the effect of extending, the period for assessment or collection of
any Taxes, assessments, fees or other governmental charges or (ii) has any
obligation under any written Tax sharing agreement or agreement regarding
payments in lieu of Taxes.
B. CHARACTERIZATION OF FORMATION FOR FEDERAL INCOME TAX PURPOSES.
The transactions contemplated by the Formation Agreement, the Hampstead
Exchange Agreement and the Rose Hall Transfer Agreement collectively qualify as
a contribution of property for shares under Section 351 of the Internal Revenue
Code. Each Loan Party and each of its Subsidiaries shall report the
transactions contemplated by the Formation Agreement, the Hampstead Exchange
Agreement and the Rose Hall Transfer Agreement consistently with the provisions
of such section and the Treasury Regulations promulgated thereunder. There is
no plan or intention of the Company to issue additional shares of Common Stock
or shares of a stock of a different class of Capital Stock of the Company, such
that the parties receiving shares of Common Stock pursuant to the Formation
Agreement or the Hampstead Exchange Agreement or the Equity Offering would no
longer satisfy the control requirement of Sections 351(a) and 368(c) of the
Internal Revenue Code.
C. TAX CLASSIFICATION OF PREDECESSOR ENTITIES. With respect to
each Existing Entity (as defined in the Formation Agreement) that is a
partnership, for the period of its existence, such entity was properly
classified as a partnership for federal income tax purposes, or, if it was not,
the lack of such classification could not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect. With respect to
each Existing Entity that has elected to be treated as an S corporation for
federal income tax purposes, such corporation made a valid S corporation
election under Section 1362 of the Internal Revenue Code and at all times
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during the period of its existence satisfied the eligibility criteria under the
Internal Revenue Code for such treatment. Each of the Existing Entities paid
all income taxes to which it was subject, except where the failure to so pay
would not have a Material Adverse Effect.
5.7 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
No Loan Party nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any Contractual Obligation, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
Except as disclosed on Schedule 5.7, no Loan Party nor any of its Subsidiaries
is a party to or otherwise subject to any agreement or instrument (other than
the Loan Documents and the HPT Agreements), any charge or other internal
restriction or any Contractual Obligation which by its terms or effect (i)
prohibits or restricts such Loan Party or Subsidiary from acquiring, loaning or
disposing of any Property or other asset, or any interest therein, or acquiring
or entering into, or providing any services under any Management Agreement or
other management agreement or (ii) otherwise restricts the conduct by such Loan
Party or any of its Subsidiaries of any business, except in each case where the
consequences, direct or indirect, of any violation thereof could not reasonably
be expected to have, either individually or in the aggregate, a Material
Adverse Effect. No Loan Party nor any of its Subsidiaries is a party to or is
otherwise subject to any agreement or instrument, any charter or other internal
restriction or any Contractual Obligation which has had, or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
5.8 GOVERNMENTAL REGULATION; SECURITIES ACTIVITIES.
No Loan Party nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act or the Investment Company Act of 1940 or under any
other federal or state statute or regulation which could limit its ability to
incur Indebtedness or which could otherwise render all or any portion of the
Obligations unenforceable. No Loan Party nor Any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
5.9 EMPLOYEE BENEFIT PLANS.
A. ERISA. Each Loan Party, each of its Subsidiaries and each of
their respective ERISA Affiliates are in compliance in all material respects
with all applicable provisions and requirements of ERISA and the regulations
and published interpretations thereunder with respect to each Employee Benefit
Plan, and have performed in all material respects their respective obligations
under each Employee Benefit Plan. The sponsor of each Employee Benefit Plan
which is intended to qualify under Section 401(a) of the Internal Revenue Code
has received a determination letter from the Internal Revenue Service
concluding that such Employee Benefit Plan is so qualified, or has timely
filed (or will timely file) an application for a determination
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letter with the IRS for such employee benefit plan and has not received an
unfavorable determination, and to the knowledge of each Loan Party, each of its
Subsidiaries and each of their respective ERISA Affiliates, no event has
occurred, amendment been adopted or action been taken that would cause such
Employee Benefit Plan to lose its qualified status.
B. ERISA EVENT. No ERISA Event has had or which could reasonably
be expected to result in liability in excess of $100,000 has occurred or is
reasonably expected to occur.
C. HEALTH AND WELFARE BENEFITS. Except to the extent required
under Section 4980B of the Internal Revenue Code, no Employee Benefit Plan
provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of any Loan Party, any of its
Subsidiaries or any of their respective ERISA Affiliates.
D. UNFUNDED BENEFIT LIABILITIES. As of the most recent valuation
date for any Pension Plan, the amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities), does not exceed
$1,000,000.
E. POTENTIAL WITHDRAWAL LIABILITY. As of the most recent
valuation date for each Multiemployer Plan for which the actuarial report is
available, the potential liability of the Loan Parties, their Subsidiaries and
their respective ERISA Affiliates for a complete withdrawal from such
Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $1,000,000.
5.10 CERTAIN FEES.
No broker's or finder's fee or commission will be payable by any Loan
Party or any of its Subsidiaries with respect to this Agreement or the offer,
issue and sale of the Common Stock and the Senior Notes pursuant to the Public
Offerings or any of the transactions contemplated hereby or thereby (other than
the fees payable pursuant to this Agreement and the underwriters' discounts
with respect to the Public Offerings), and the Company hereby indemnities the
Agent and the Lenders against, and agrees that it will hold the Agent and the
Lenders harmless from, any claim, demand or liability for any such broker's or
finder's fees or commissions payable by the Company alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.11 SOLVENCY.
As of the date of this Agreement, and after giving effect to the
Formation and the consummation of the other transactions contemplated by this
Agreement, the other Loan Documents and the Related Documents, as of the
Funding Availability Date, with respect to each Loan Party and each of its
Subsidiaries, (i) (a) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of
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such Person and (z) not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such person; (b) such Person's capital is (or
will be, as the case may be), not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and (c) such Person
does not intend to incur, or believe (nor should it reasonably believe) that it
will incur, debts beyond its ability to pay such debts as they become due; and
(ii) such Person is (or will be, as the case may be), "solvent" within the
meaning given that term and similar terms under Applicable Laws relating to
fraudulent transfers and conveyances. For purposes of clause (i) of the
preceding sentence, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
5.12 DISCLOSURE.
No representation or warranty of any Loan Party contained in this
Agreement, the other Loan Documents and the Related Documents to which it is a
party or in any other document, certificate or written statement furnished to
the Agent or the Lenders by or on behalf of any Loan Party for use in
connection with the transactions contemplated by the Loan Documents and the
Related Documents (as from time to time superseded by subsequent materials
furnished to the Agent) contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact (known to such
Loan Party, in the case of any document not furnished by it) necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances in which the same were made or will be made, as the case may
be. The projections and pro forma financial information contained in such
materials (as from time to time superseded by subsequent materials furnished to
the Agent) are based or will be based upon good faith estimates and assumptions
believed to be reasonable at the time made, it being recognized by the Agent
and the Lenders that such projections as to future events are not to be viewed
as facts and that actual results during the period or periods covered by any
such projections may differ materially from the projected results. There is no
fact known to the Company (other than matters of a general economic nature)
that has had, or could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect and that has not been disclosed in
any of the Loan Documents and the Related Documents to which any Loan Party is
a party as of the date hereof or in such other documents, certificates and
statements furnished to the Lenders for use in connection with the transactions
contemplated hereby.
5.13 LIENS ON THE COLLATERAL.
A. GENERAL. The provisions of this Agreement and the Security
Documents are effective to create and maintain, upon proper filing or recording
or taking of possession, as applicable, in favor of the Agent on behalf of the
Lenders valid and legally enforceable Liens on all of the Pool A Properties,
all of the Pool B Properties and all of the remainder of the Collateral and,
when all necessary and appropriate recordings and filings have been effected in
all necessary and appropriate public offices, and payment is made of any
applicable mortgage recording, intangible and/or similar taxes, this Agreement
and the Security Documents will
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constitute perfected Liens on all of such Properties and all of the remainder
of the Collateral prior and superior to all other Liens except Permitted
Encumbrances and Liens permitted pursuant to subsection 7.2; provided, however,
that the perfection against Persons other than the Company of such a Lien on
the Rents in respect of such Properties may in certain jurisdictions require
the Agent to have possession of such Rents and/or control of such Properties.
B. MORTGAGES. Each Mortgage upon execution and delivery of such
Mortgage by the applicable Loan Party will be a valid and enforceable first
priority Lien on the Pool A Property or Pool B Property that such Mortgage
purports to encumber, and such Mortgage, when such Mortgage is recorded in the
real property records of the county in which such Property encumbered by such
Mortgage is located and upon payment of any applicable mortgage recording,
intangible and/or similar taxes, will be a perfected, valid and enforceable
first priority Lien on such Property in favor of the Agent, which Property will
then be free and clear of all Liens having priority over the first Lien of such
Mortgage, except for Permitted Encumbrances (which shall include, in the case
of each Pool B Property other than the Harbour Island Property, certain first
priority Liens in favor of HPTWN more particularly described in Section 8.25 of
the Mortgages affecting such Pool B Properties).
C. ASSIGNMENTS OF RENTS AND LEASES. Each Assignment of Rents and
Leases, upon execution and recordation of such Assignment of Rents and Leases
in the real property records of the county in which the Pool A Property or Pool
B Property affected by such Assignment of Rents and Leases is located and upon
payment of any applicable recording or intangible taxes, will be, (i) as to
each Pool A Property and the Harbour Island Property, a perfected, valid and
enforceable first priority present assignment of or Lien on the Leases
affecting such Property and of the Rents of and from such Property, and (ii) as
to each Pool B Property (other than the Harbour Island Property), a perfected,
valid and enforceable second priority present assignment of the Leases
affecting such Property and of the Rents of and from such Property (subject and
subordinate only to the first Lien of a certain Collateral Assignment of
Leases, Contracts and Agreements dated as of May 3, 1996 in favor of HPTWN);
which Properties will then otherwise be free and clear of all Liens having
priority over the Assignment of Rents and Leases, except for Permitted
Encumbrances. As of the Funding Availability Date, the Company represents that
upon recordation of each Assignment of Rents and Leases the Agent has taken all
actions necessary to obtain, and as of the Funding Availability Date the Agent
has, a valid and perfected first priority (or, to the extent described in the
immediately preceding sentence, second priority) assignment of or Lien on the
Rents from the Pool A Properties and the Pool B Properties and of all security
for the Leases affecting such Properties, including cash or securities
deposited as security under such Leases subject to the prior right of the
Tenants making such deposits; provided, however, that the perfection against
Persons other than the Company of such a Lien on the Rents in respect of such
Properties may in certain jurisdictions require the Agent to have possession of
such Rents and/or control of such Properties.
D. MECHANICS' LIENS. Except as being contested in accordance with
the provisions of subsection 6.9, no rights of mechanics, contractors,
subcontractors, materialmen or suppliers are outstanding that under law could
give rise to any mechanics' liens affecting any Property. Except as being
contested in accordance with the provisions of subsection 6.9, the cost of all
completed work that has been performed at or about any Property has been paid
in full, no work
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is currently being performed at or about any Property for which the Company or
any of its Subsidiaries or such Property is or could under any circumstance
become liable.
E. FILINGS AND RECORDINGS. All filings (including all financing
statements and all assignments of financing statements under the Uniform
Commercial Code) have been delivered to the Agent for filing in each public
office in which such filings and recordings are required or advisable to
perfect the Liens on each of the Pool A Properties, the Pool B Properties and
the other Collateral granted by the Loan Parties pursuant to the Security
Documents and, except for the filing of continuation statements with respect to
such financing statements as may be required or advisable to be filed at
periodic intervals, no periodic refiling or periodic recording is presently
required to protect and preserve such Liens and security interests.
5.14 ZONING; AUTHORIZATIONS.
A. ZONING. Except as set forth on Schedule 5.14A annexed hereto,
the use and operation by each Loan Party or any of its Subsidiaries, as
applicable, of each Property as a commercial hotel with related uses, separate
and apart from any other properties, constitutes a legal use under applicable
zoning regulations (as the same may be modified by special use permits or the
granting of variances) and complies in all material respects with all
Applicable Laws and all applicable Insurance Requirements, and does not violate
any Authorizations or other material approvals, material restrictions of record
or any material agreement affecting any Property (or any portion thereof) to
which such Loan Party or such Subsidiary is a party or by which such Loan
Party, such Subsidiary or such Property (or portion thereof) is bound, except
where the consequences, direct or indirect, of any violation thereof has not
had and could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule 5.14A,
neither the zoning nor any right of access to or use of any Property is to any
extent dependent upon or related to any real property other than such Property.
B. AUTHORIZATIONS. Except as set forth with respect to the
temporary liquor licenses on Schedule I-A to the Omnibus Management and Liquor
License Agreement, there have been issued in respect of each Property all
Authorizations necessary to own, operate, use and occupy such Property in the
manner operated by the Loan Parties and their respective Subsidiaries, and
their respective predecessors in interest, as of the Effective Date and
contemplated by the Loan Parties and their respective Subsidiaries to be
operated on and after the Formation Date (including any required permits
relating to Hazardous Materials), other than any such Authorizations which, if
not obtained, could not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect. To the knowledge of the Company,
there have been issued in respect of each Property all Authorizations necessary
or required to own, operate, use and occupy such Property in the manner
currently operated by the Tenants under any Material Lease and contemplated to
be operated by the Tenants on and after the Funding Availability Date
(including any required permits relating to Hazardous Materials), other than
any such Authorizations which, if not obtained, could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. Each such Authorization is in full force and effect, and no Loan Party
nor any of its Subsidiaries nor, to
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the knowledge of the Company, any prior owner thereof, has received any notice
of violation or revocation thereof.
5.15 PHYSICAL CONDITION; ENCROACHMENT; CAPITAL EXPENDITURES.
A. PHYSICAL CONDITION; ENCROACHMENT. Except as disclosed on the
Engineering Reports delivered pursuant to subsection 4.IL, or 7.15A(i), (ii)
or (iii), each Property is free of structural defects and is in good repair
(normal wear and tear excepted) and all building systems contained therein and
all other material items of Collateral are in good working order subject to
ordinary wear and tear, except as disclosed in the Engineering Reports, and is
free and clear of any damage that would affect materially and adversely the
value of such Property or the use of such Property for its intended purposes.
To the knowledge of the Company, other than as described in the Title Policy
and in any Survey, no Improvement at any Property encroaches upon any building
line, setback line, side yard line or any recorded or visible easement.
B. CAPITAL EXPENDITURES. Schedule 5.15B annexed hereto, as
supplemented from time to time by a written notice delivered to the Agent, sets
forth a complete and accurate list of the capital expenditure or similar
reserves required in respect of any Property pursuant to a Ground Lease, any
agreement pursuant to which any of the Loan Parties and their respective
Subsidiaries shall have incurred or may incur any Indebtedness or any other
agreement, instrument or other document.
5.16 INSURANCE.
All insurance required to be maintained by the Loan Parties and their
respective Subsidiaries pursuant to this Agreement or any other Loan Document
is in full force and effect in accordance with the terms thereof. As to each
Property located in an area identified by the Federal Emergency Management
Agency as having special flood hazards, if flood insurance is available, a
flood insurance policy is in effect. All premiums have been paid with respect
to each insurance policy required to be maintained by the Company and its
Subsidiaries pursuant to this Agreement or any other Loan Document. Schedule
5.16 annexed hereto contains a complete and accurate description of all
policies of insurance that will be in effect as of the Formation Date.
5.17 LEASES.
There is no default or event which with notice or lapse of time or
both would constitute a default under any of the provisions of any Material
Lease affecting any Property that has had, or could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect. No
litigation is currently pending or has been threatened by any Tenant in
connection with any Material Lease affecting any Property that has had, or
could reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect. All Material Leases and other Leases material to the
operation of the Properties as hotels are in full force and effect, except to
the extent such failure could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
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5.18 ENVIRONMENTAL REPORTS; ENGINEERING REPORTS; APPRAISALS;
MARKET STUDIES.
To the knowledge of the Company, the Company has delivered to the
Agent and the Lenders correct and complete copies of all environmental audits,
engineering reports, appraisals and market studies with respect to each
Property that any Loan Party or any of its Subsidiaries has in its possession.
5.19 NO CONDEMNATION OR CASUALTY.
No condemnation or other like proceedings (including relocation of any
roadways abutting any Property or change in grade of such roadways or denial of
access to any Property) that has had, or could reasonably be expected to result
in, a Material Adverse Effect, are pending and served nor, to the knowledge of
the Company, threatened against any Property in any manner whatsoever. No
casualty has occurred to any Property that has had or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
5.20 UTILITIES AND ACCESS.
To the extent necessary for the full utilization of each Property in
accordance with its current use, telephone services, gas, steam, electric
power, storm sewers, sanitary sewers and water facilities and all other utility
services are available to each Property, are adequate to serve each such
Property, exist at the boundaries of the Land and are not subject to any
conditions, other than normal charges to the utility supplier, which would
limit the use of such utilities. All streets and easements necessary for the
occupancy and operation of each Property are available to the boundaries of the
Land. All necessary rights-of-way for all roads, which are sufficient to permit
each Property to be utilized fully for its current use, have been completed and
are serviceable, and, to the knowledge of the Company, all public rights-of-way
through or adjacent to the Properties have been acquired and dedicated and
accepted for maintenance and public use by the applicable Governmental
Authorities.
5.21 INTELLECTUAL PROPERTY.
A. OWNERSHIP; IP LICENSE AGREEMENTS. The Loan Parties and their
respective Subsidiaries own, or are licensed to use or otherwise have the
lawful right to use, the Intellectual Property and except as set forth on
Schedule 5.21A annexed hereto, all such Intellectual Property is fully
protected and duly and properly registered, filed or issued in the appropriate
office and jurisdictions for such registrations, filing or issuances, except
where the lack of the lawful right to use such Intellectual Property could not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect. All registered Intellectual Property and all pending
applications and the jurisdictions in which such Intellectual Property is
registered or will be registered on or before the Funding Availability Date,
and in each case the Loan Party holding rights therein, are identified in
Schedule 5.21A annexed hereto. Each of the license agreements (together with
any such agreements entered into after the Funding Availability Date, the "IP
LICENSE AGREEMENTS") pursuant to which any Loan Party or any of its
Subsidiaries has rights or will have rights on or before the Funding
Availability Date to use any material
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Intellectual Property as of the Funding Availability Date is identified in
Schedule 5.21A. Each Loan Party and each of its Subsidiaries is in compliance
with the material terms of each IP License Agreement to which it is a party and
each such IP License Agreement is in full force and effect, except where the
failure to be in compliance or the failure to be in full force and effect (i)
has not had and could not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect or (ii) result in an Event of
Default hereunder.
B. NO ADVERSE CLAIMS. Except as disclosed in the Registration
Statements, (i) no claim has been asserted by any Person with respect to the
use of any such Intellectual Property, or challenging or questioning the
validity or effectiveness of any such Intellectual Property and the Company
does not know of any valid basis for any such claim which, in either case, has
had or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect; and (ii) the use of such Intellectual
Property by each Loan Party and each of its Subsidiaries does not infringe on
the rights of any Person, subject to such claims and infringements as do not,
in the aggregate, give rise to any liability on the part of any Loan Party or
any of its Subsidiaries that has had or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. The
consummation of the transactions contemplated by this Agreement will not in any
manner or to any extent impair the ownership of (or the license to use, as the
case may be) any of such Intellectual Property by any Loan Party or any of its
Subsidiaries.
5.22 WETLANDS.
To the knowledge of the Company and except as disclosed on Schedule
5.22 annexed hereto, none of the Improvements on any Property are constructed
on land designated by any Governmental Authority having land use jurisdiction
as wetlands.
5.23 CASH MANAGEMENT SYSTEM.
The summary of the Cash Management System attached hereto as Schedule
5.23 is accurate and complete in all material respects, after giving effect to
the Formation, and does not omit to state any material fact necessary to make
the statements set forth therein not misleading. No Loan Party nor any of its
Subsidiaries owns any Deposit Account which is not described in Schedule 5.23
or otherwise permitted pursuant to subsection 6.15. After the Funding
Availability Date, there will be no change to the Cash Management System (other
than as permitted by subsection 6.15) except such changes as have been
disclosed to the Agent in writing and approved by the Agent in writing. A Cash
Management Letter covering each Local Account or Concentration Account included
in the Cash Management System has been delivered to the Agent.
5.24 LABOR MATTERS.
There are no strikes or other labor disputes against any Loan Party or
any of its Subsidiaries, pending or, to the knowledge of the Company,
threatened that have had or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. Hours worked by
and payments made by any Loan Party or any of its Subsidiaries to
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their respective employees are not in violation of the Fair Labor Standards Act
or any other applicable law dealing with such matters, except to the extent
such violation could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
5.25 EMPLOYMENT AND LABOR AGREEMENTS.
Except as disclosed on Schedule 5.25 annexed hereto, there are no
employment agreements covering management employees of any Loan Party or any of
its Subsidiaries and there are no collective labor agreements covering any
employees of any Loan Party or any of its Subsidiaries. Each Loan Party and
each of its Subsidiaries is in compliance with the terms and conditions of all
such collective bargaining agreements except where failure to so comply has not
had and could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse EFFECT.
5.26 AFFILIATES.
A. AGREEMENTS WITH AFFILIATES. As of the Funding Availability
Date, each of the ISIS 2000 Agreements and the Wynright Agreements will be in
full force and effect and no Person shall have failed in any material respect
to perform any material obligation or covenant or satisfy any material
condition required by such agreements to be performed or complied with on or
before the Funding Availability Date.
B. AFFILIATE INTERESTS. Set forth on Schedule 5.26B annexed
hereto are the equity and debt interests of Bedrock, the Crow Interests and the
Senior Executives, respectively, in (i) each of the Managed Properties or the
respective owners thereof as of the Effective Date and (ii) Persons that
provided goods or services with respect to any of the Properties or to the
respective owners thereof having a purchase price or value of more than $60,000
during the 12 most recently completed calendar months ending before the
Effective Date.
SECTION 6
COMPANY'S AFFIRMATIVE COVENANTS
The Company covenants and agrees that, from and after the Effective
Date and so long thereafter as the Commitments hereunder shall remain in effect
and until payment in full of the Loans and the other Obligations and the
cancellation or expiration of all Letters of Credit, the Company shall perform
and shall cause each of its Subsidiaries to perform all covenants in this
Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
The Company shall maintain and cause each of its Subsidiaries to
maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated and
consolidating financial statements in conformity with GAAP. The Company shall
deliver to the Agent:
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(i) Monthly Property Operating Statements: as soon as
available and in any event within 30 days after the end of each
calendar month of each calendar year, commencing with respect to the
calendar month ending May 31, 1996, a statement of Property Gross
Revenues and Operating Expenses and any other expenses with respect to
each Property separately, in each case for the 12 month period ending
on the last day of such calendar month, in reasonable detail
satisfactory to the Agent and certified by the Chief Executive
Officer, Chief Financial Officer or Chief Accounting Officer of the
Company stating that (x) such statements of Property Gross Revenues
and Operating Expenses and other expenses fairly present, in all
material respects, the results of operations of the Properties
indicated for the periods indicated and (y) all Operating Expenses and
any other expenses with respect to each Property which have become due
and payable as of the last day of the calendar month next preceding
the delivery of such income statement have been fully paid or
recognized by the Company or any of its Subsidiaries;
(ii) Monthly Management Statements: as soon as available
and in any event within 30 days after the end of each calendar month
of each calendar year, commencing with respect to the calendar month
ending April 30, 1996, a statement of Approved Management Fees and
other Management Fees, in each case for the 12 month period ending on
the last day of such calendar month, in reasonable detail satisfactory
to the Agent and certified by the Chief Executive Officer, the Chief
Financial Officer or Chief Accounting Officer of the Company stating
that such statements of Approved Management Fees and other Management
Fees fairly present, in all material respects, such information for
the periods indicated;
(iii) Management Agreement Reports: as soon as available
and in any event (a) within 30 days after the end of each calendar
month of each calendar year, commencing with respect to the calendar
month ending May 31, 1996, a Management Agreement Report certified by
the Chief Executive Officer, the Chief Financial Officer or Chief
Accounting Officer of the Company as of the last day of such calendar
month, together with the information utilized by the Company to
prepare such Management Agreement Report with respect to any
information which has changed in any material respect from information
previously provided to the Agent as to such Management Agreement and
which information is not otherwise set forth on a Borrowing Base
Certificate, (b) within 5 days after the delivery of a written notice
pursuant to subsection 7.16C(i) (but in no event later than the
occurrence of effectiveness of the event or condition required to be
specified in such written notice), a Management Agreement Report
pertaining to the subject Management Agreement certified by the Chief
Executive Officer, Chief Financial Officer or the Chief Accounting
Officer of the Company as of the date of the occurrence or
effectiveness of the event or condition specified therein, together
with the information used by the Company to prepare such Management
Agreement Report, (c) within 5 days after the delivery of a Notice of
Renovation/ Restoration pursuant to subsection 7.16C(ii) (but in no
event later than the commencement of any Major Renovation/Restoration),
a Management Agreement Report pertaining to the subject Management
Agreement certified by the Chief Executive Officer, Chief Financial
Officer or the Chief Accounting Officer of the Company with
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respect to the Management Agreements as of the date of commencement of
any related Major Renovation/Restoration, together with the
information utilized by the Company to prepare such Management
Agreement Report, (d) within 5 days after the expiration (without
renewal or extension), cancellation or termination of a Management
Agreement, a Management Agreement Report pertaining to the subject
Management Agreement certified by the Chief Executive Officer, Chief
Financial Officer or Chief Accounting Officer of the Company with
respect to the Management Agreements as of such date of expiration,
cancellation or termination, and (e) promptly and in any event within
5 Business Days of obtaining knowledge that any estimate contained in
a previously delivered Management Agreement Report was incorrect or
incomplete in any material respect, a revised Management Agreement
Report, together with a schedule (certified by the Chief Executive
Officer, Chief Financial Officer or Chief Accounting Officer of the
Company) showing the effect of such revised estimate on the
calculation of the Borrowing Base;
(iv) Borrowing Base Certificates: from and after the
Funding Availability Date, as soon as available and in any event (a)
within 30 days after the end of each calendar month of each calendar
year, a Borrowing Base Certificate, in the form attached hereto as
Exhibit VII and together with the financial statements and other
information utilized by the Company to calculate the Borrowing Base,
and certified by the Chief Executive Officer, Chief Financial Officer
or Chief Accounting Officer of the Company, calculated as of the last
day of such calendar month, (b) within 5 days after the delivery of a
written notice pursuant to subsection 2.9A(v), 7.15B or 7.16B (but in
no event later than the occurrence or effectiveness of the event or
condition required to be specified in such written notice), a
Borrowing Base Certificate calculated as of the date of the occurrence
or effectiveness of the event or condition specified therein, and
together with the financial statements and other information used by
the Company to calculate the Borrowing Base, (c) within 5 days after
the delivery of a Notice of Renovation/ Restoration pursuant to
subsection 6.11A, 6.11C, 6.12A, 7.15C or 7.16C (but in no event later
than the commencement of a Major Renovation/Restoration), a Borrowing
Base Certificate calculated as of the date of commencement of any
related Major Renovation/Restoration, and together with the financial
statements and other information used by the Company to calculate the
Borrowing Base, (d) within 5 days after a casualty or Taking with
respect to, or the Release of, any Pool A Property (or any portion
thereof) or after the expiration (without renewal or extension),
cancellation or other termination of a Management Agreement, a
Borrowing Base Certificate calculated as of the date of such casualty,
Taking, Release, expiration, cancellation or other termination, as the
case may be, and together with the financial statements and other
information used by the Company to calculate the Borrowing Base, and
(e) upon written request from the Agent or at the option of the
Company, a Borrowing Base Certificate calculated as of the date
requested by the Agent in such request or selected by the Company, as
the case may be, in reasonable detail satisfactory to the Agent and
together with the financial statements and other information used by
the Company to calculate the Borrowing Base, provided that, unless an
Event of Default shall then be continuing, the Company shall not be
required to deliver a Borrowing Base Certificate pursuant to this
clause (e) more frequently than once each calendar month;
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(v) Monthly Financial Statements of the Company and Its
Subsidiaries: as soon as available and in any event within 30 days
after the end of each calendar month of each calendar year, commencing
with respect to the calendar month ending April 30, 1996, (a) the
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such calendar month and the related consolidated statements
of income, stockholders' equity and cash flows of the Company and its
Subsidiaries for such calendar month and for the 12 months ending on
the last day of such calendar month and certified by the Chief
Executive Officer, the Chief Financial Officer or Chief Accounting
Officer of the Company stating that they fairly present, in all
material respects, the, financial condition of the Company and its
Subsidiaries as at the date indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments; provided
that financial statements shall not be required to be delivered
pursuant to this subdivision (vi) unless, as of the last required date
of delivery of such financial statements, the Management Margin shall
be determined in accordance with clause (ii)(B) of the definition of
Management EBITDA;
(vi) Quarterly Financial Statements of the Company and Its
Subsidiaries: as soon as available and in any event within 45 days
after the end of each calendar quarter of each calendar year,
commencing with respect to the calendar quarter ending March 31, 1996,
(a) the consolidated balance sheet of the Company and its Subsidiaries
as at the end of such calendar quarter and the related consolidated
statements of income, stockholders' equity and cash flows of the
Company and its Subsidiaries for such calendar quarter and for the
period from the beginning of the then current calendar year to the end
of such calendar quarter, setting forth in each case in comparative
form the corresponding figures for the corresponding periods of the
previous year and the corresponding figures from the plan and
financial forecast for the current year delivered pursuant to this
subsection, and (b) the consolidating financial statements of the
Company and its Subsidiaries (including balance sheets and income
statements segmenting any Subsidiaries of the Company or groups of
Subsidiaries of the Company, as requested by the Agent in its
reasonable discretion) together with any adjustments and/or
eliminations needed to reconcile such Subsidiary financial statements
to the consolidated financial statements of the Company, all in
reasonable detail (it being understood and agreed that, to the extent
the Company's quarterly report filed on Form 10-Q with the Securities
and Exchange Commission for such period contains the foregoing
information, such quarterly report shall be deemed to comply with the
foregoing requirements) and certified by the Chief Executive Officer,
the Chief Financial Officer or Chief Accounting Officer of the Company
stating that they fairly present, in all material respects, the
financial condition of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash
flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments;
(vii) Year-End Financial Statements: as soon as available
and in any event within 90 days after the end of each calendar year,
commencing with respect to the calendar year ending December 31, 1996,
(a) the consolidated balance sheet of the Company and its Subsidiaries
as at the end of such calendar year and the related consolidated
statements of income, stockholders' equity and cash flows of the
Company
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and its Subsidiaries for such calendar year, setting forth in each
case in comparative form the corresponding figures for the previous
calendar year and the corresponding figures from the plan and
financial forecast delivered pursuant to this subsection for the
calendar year covered by such consolidated financial statements, (b)
the consolidated balance sheets of each Property, (c) the
consolidating financial statements of the Company and its Subsidiaries
(including balance sheets and income statements segmenting any
Subsidiaries of the Company or groups of Subsidiaries of the Company,
as requested by the Agent in its reasonable discretion) together with
any adjustments and/or eliminations needed to reconcile such
Subsidiary financial statements to the consolidated financial
statements of the Company, all of the foregoing in reasonable detail
(it being understood and agreed that, to the extent the Company's
annual report filed on Form 10-K with the Securities and Exchange
Commission for such period contains the foregoing information, such
annual report shall be deemed to comply with the foregoing
requirements) and certified by the Chief Executive Officer or Chief
Financial Officer of the Company stating that they present fairly, in
all material respects, the financial condition of the Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, and (d) in
the case of the consolidated financial statements referred to in
clause (a), a report thereon of Coopers & Lybrand or other independent
accountants of recognized national standing selected by the Company
and reasonably satisfactory to the Agent, which report shall be
unqualified, shall express no doubts about the ability of the Company
and its Subsidiaries to continue as a going concern and shall state
that such consolidated financial statements fairly present, in all
material respects, the financial position of the Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that
the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(viii) Officers' and Compliance Certificates: together with
each delivery of financial statements of the Company and its
Subsidiaries pursuant to subdivisions (i), (ii), (v), (vi), and (vii)
above, (a) an Officers' Certificate of the Company stating that the
signer has reviewed the terms of this Agreement and has made, or
caused to be made under his or her supervision, a review in reasonable
detail of the transactions and condition of the Company and its
Subsidiaries and the Collateral during the accounting period covered
by such financial statements and states that such review has not
disclosed the existence during or at the end of such accounting
period, and that the signer does not have knowledge of the existence
as at the date of such Officers' Certificate, of any condition or
event that constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance during and at the end of the applicable accounting
periods with the covenants set forth in Section 6;
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(ix) Accountants' Certification: together with each
delivery of financial statements of the Company pursuant to
subdivision (vii) above, a written statement by Coopers & Lybrand or
other independent accountants of recognized national standing selected
by the Company and reasonably satisfactory to the Agent giving the
report thereon (a) stating in substance that their audit examination
has included a review of the terms of this Agreement and the other
Loan Documents as they relate to accounting matters, and (b) stating
whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default or Potential Event of
Default has come to their attention and, if such a condition or event
has come to their attention, specifying the nature and period of
existence thereof; provided, however, that such accountants shall not
be liable by reason of any failure to obtain knowledge of any such
Event of Default or Potential Event of Default that would not be
disclosed in the course of their audit examination;
(x) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of
all reports submitted to the Company by Coopers & Lybrand or any other
independent accountants in connection with each annual, interim or
special audit of the consolidated financial statements of the Company
and its Subsidiaries made by such accountants, including any comment
letter submitted by such accountants to management in connection with
their annual audit;
(xi) Reconciliation Statements: if, as a result of any
change in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of the Company
and its Subsidiaries delivered pursuant to subdivisions (v), (vi) or
(vii) of this subsection 6.1 differ in any material respect from the
consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (v), (vi) or
(vii) of this subsection 6.1 following such change, consolidated
financial statements of the Company and its Subsidiaries for (1) the
current calendar year to the effective date of such change and (2) the
two full calendar years immediately preceding the calendar year in
which such change is made, in each case prepared on a pro forma basis
as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to
subdivision (v), (vi) or (vii) of this subsection 6.1 following such
change, a written statement of the Chief Accounting Officer, Chief
Financial Officer, or Chief Executive Officer of the Company setting
forth the differences which would have resulted in the calculation of
the covenants set forth in Section 6 if such financial statements had
been prepared without giving effect to such change;
(xii) Evidence of Insurance: together with the delivery of
the statements pursuant to subsection 6.1(i) above, evidence
reasonably satisfactory to the Agent that the monthly premiums with
respect to the insurance required to be maintained pursuant to
subsection 6.10 have been paid for the current month;
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(xiii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by the
Company to its security holders, (b) all regular and periodic reports
and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by the Company with the New York
Stock Exchange, Inc., NASDAQ/NMS, any other securities exchange or
with the Securities and Exchange Commission or any Governmental
Authority or private regulatory authority, and (c) all press releases
and other statements made available generally by the Company or any of
its Subsidiaries to the public or to the securityholders of the
Company;
(xiv) Events of Default, etc.: promptly upon the Company
obtaining knowledge (a) of any condition or event that constitutes an
Event of Default or Potential Event of Default, or becoming aware that
the Agent or any Lender has given any notice or taken any other action
with respect to a claimed Event of Default or Potential Event of
Default, (b) that any Person has given any notice to the Company or
taken any other action with respect to a claimed default or event or
condition of the type referred to in subsection 8.1B, 8.1C, 8.1D,
8.1E, 8.1F, 8.1H or 8.1I (c) of any condition or event that
constitutes or may (upon the giving or receiving of notice or the
lapse of time, later, or otherwise) a default, a potential event of
default, an event of default (in each case, as defined in the
agreement or instrument creating, evidencing or governing any such
Indebtedness) under or with respect to any Indebtedness (other than
the Indebtedness hereunder), any Pool B Obligation or any Related
Document, or becoming aware that any agent, trustee, lender or
security holder with respect thereto has given any notice or taken any
other action with respect to such condition or event, (d) of any
condition or event that would be required to be disclosed in a current
report filed by the Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4, and 6 of such Form as in effect on the
date hereof) if the Company were required to file such reports under
the Exchange Act, (e) that there has commenced, or is intended to be
commenced, a Major Renovation/Restoration of any Property, Managed
Property or Other Managed Property with respect to which a Notice of
Renovation/Restoration shall not previously have been delivered to the
Agent or (f) of the occurrence of any event or change that has had, or
could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, an Officers' Certificate
specifying the nature and period of existence of such condition, event
or change, or specifying the notice given or action taken by any such
Person and the nature of such claimed Event of Default, Potential
Event of Default, default, event or condition, and what action the
Company has taken, is taking and proposes to take with respect
thereto;
(xv) Indenture: concurrently with their delivery to or
receipt from the Trustee or any holder of the Senior Notes, copies of
all notices, certificates and other documents delivered by the Company
or any of its Subsidiaries to, or received by the Company or any of
its Subsidiaries from, the Trustee or such Holder, as the case may be,
pursuant to the Indenture or the Senior Notes, including, without
limitation, notices, certificates and other documents delivered to the
Trustee pursuant to Sections 3.2, 3.4, 4.9, 4.12, 4.16, 4.17, 8.2,
8.3, 9.1, 9.2, 10.2 and 10.3 of the Indenture and notices received
from the Trustee pursuant to Sections 6.2 and 7.5 of the Indenture;
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(xvi) Litigation or Other Proceedings: (a) promptly upon
the Company obtaining knowledge of (x) the institution of any action,
suit, proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration against or affecting the
Company or any of its Subsidiaries, or any property of the Company or
such Subsidiary (collectively, "Proceedings") not previously disclosed
in writing by the Company to the Lenders or (y) any material
development in any Proceeding that, in any case:
(1) if adversely determined, could reasonably be
expected to have, either individually or in the aggregate, a
Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to the Company to enable the Agent and its
counsel to evaluate such matters; and (b) within 20 days after the end
of each calendar quarter of the Company, a schedule of all Proceedings
involving an alleged liability of, or claims against or affecting, the
Company and its Subsidiaries equal to or greater than $1,000,000
individually or $5,000,000 in the aggregate, and promptly after
request by the Agent, such other information as may be reasonably
requested by the Agent to enable the Agent and its counsel to evaluate
any of such Proceedings;
(xvii) ERISA Events and Notices: (a) promptly upon becoming
aware of the occurrence of or forthcoming occurrence of any ERISA
Event, a written notice specifying the nature thereof, what action the
Company or any of its Subsidiaries or any of their respective ERISA
Affiliates has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto; and (b) with reasonable promptness, copies of (x)
each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) filed by the Company or any of its ERISA Affiliates with
the Internal Revenue Service with respect to each Pension Plan; (y)
all notices received by the Company or any of its ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (z)
copies of such other documents or governmental reports or filings
relating to any Employee Benefit Plan as the Agent shall reasonably
request;
(xviii) Financial Plans: as soon as practicable and in any
event no later than November 30 of each year, projected financial
statements for each Property for the three next succeeding calendar
years setting forth in detail each line item appearing in the form of
financial statement set forth in Schedule 6.1 annexed hereto, together
with an explanation of the assumptions on which such forecasts are
based, and such other information and projections as the Agent may
reasonably request for any Property, all the Properties or the Company
or any of its Subsidiaries;
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(xix) Insurance: as soon as practicable and in any event by
the last day of each calendar year, a report in form and substance
reasonably satisfactory to the Agent outlining all material insurance
coverage maintained as of the date of such report by the Company and
its Subsidiaries or, in lieu thereof, copies of such policies, and a
report as to all material insurance coverage planned to be maintained
by the Company and its Subsidiaries in the next succeeding calendar
year to the extent varying from the description of that delivered or
described;
(xx) Environmental Audits and Reports: as soon as
practicable following receipt thereof, copies of all environmental
audits and reports, whether prepared by personnel of the Company or
any of its Subsidiaries or by independent consultants, with respect to
material environmental matters at any Property or which relate to an
Environmental Claim which could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect;
(xxi) Board of Directors: with reasonable promptness,
written notice of any change in the Board of Directors of the Company;
(xxii) Ownership by Bedrock, the Crow Interests and the
Senior Executives: with reasonable promptness, written notice of any
change in the ownership of equity Securities of the Company by
Bedrock, the Crow Interests or the Senior Executives;
(xxiii) Change in Name or Chief Place of Business: (a)
notification of any change in any Loan Party's name, identity or
corporate structure within 30 days of such change and (b) 30 days'
prior written notice of any change in any Loan Party's executive
office or chief place of business;
(xxiv) UCC Search Report: as soon as practicable after the
date of delivery to the Agent of any UCC financing statement executed
by any Loan Party pursuant to subsection 4.1D(ii) or 6.9A, copies of
completed UCC searches evidencing the proper filing, recording and
indexing of all such UCC financing statements and listing all other
effective financing statements that name such Loan Party as debtor,
together with copies of all such other financing statements not
previously delivered to the Agent by or on behalf of the Company or
such Loan Party;
(xxv) Approved Capital Policy: promptly upon any change in
the Approved Capital Policy, written notice of such change; and
(xxvi) Other Information: with reasonable promptness, (a)
information and other data revised to correct any erroneous
information and other data previously delivered by the Company to the
Agent pursuant to this subsection 6.1 or included in any statement,
report or certificate previously delivered by the Company to the Agent
pursuant to this subsection 6.1, together with such statement, report
or certificate that shall have been revised to reflect such revised
information and data, and (b) such other information and data with
respect to the Loan Parties and their respective Subsidiaries, the
Properties (separately and for all Properties), the Ground Leases and
Leases, the Management
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Agreements, the other Collateral and the other assets and liabilities
of the Loan Parties and their respective Subsidiaries, all in form
reasonably satisfactory to the Agent, as from time to time may be
reasonably requested by the Agent.
6.2 COMMON STOCK.
The Company shall (i) cause the Common Stock, and each class of
preferred stock of the Company permitted by subsection 7.19B, to be duly listed
on the New York Stock Exchange, Inc. or NASDAQ/NMS and (ii) file timely all
reports required to be filed by the Company with the New York Stock Exchange,
Inc. or the National Association of Securities Dealers, Inc., as the case may
be, and the Securities and Exchange Commission.
6.3 CORPORATE EXISTENCE; CORPORATE SEPARATENESS ETC.
A. CORPORATE EXISTENCE. Except as permitted pursuant to
subsection 7.7, each Loan Party shall, and shall cause each of its Subsidiaries
to, at all times preserve and keep in full force and effect its corporate or
partnership existence and all Authorizations, rights and franchises material to
its business.
B. FINANCIAL MATTERS. The Company shall cause each of its
Subsidiaries to (i) maintain financial statements, payroll records, accounting
records and other corporate records and other documents separate from each
other and any other Person; (ii) maintain its own bank accounts in its own name
(or, in the case of the Company, in the names of its Subsidiaries), separate
from each other and any other Person; (iii) pay its own expenses and other
liabilities from its own assets and incur (or endeavor to incur) obligations to
other Persons based solely upon its own assets and creditworthiness and not
upon the creditworthiness of each other or any other Person; and (iv) file its
own tax returns or, if part of a consolidated group, join in the consolidated
tax return of such group as a separate member thereof.
C. CORPORATE FORMALITIES. The Company shall take all actions
reasonably necessary to keep the Company and its Subsidiaries separate from
Bedrock and the Crow Interests and their respective Affiliates, including,
without limitation, (i) the taking of action under the direction of the Board
of Directors of the Company and, if so required by the Certificate of
Incorporation or the Bylaws of the Company or by law, the approval or consent
of the stockholders of the Company; (ii) the preparation of corporate minutes
for or other appropriate evidence of each significant transaction engaged in by
the Company; and (iii) the observance of separate approval procedures for the
adoption of resolutions by the Board of Directors of the Company, on the one
part, and of Bedrock and the Crow Interests and their respective Affiliates, on
the other part.
D. INDEPENDENT BUSINESS. The Company shall manage the business of
the Company and its Subsidiaries independently from the business of Bedrock and
the Crow Interests and their respective Affiliates and any other Person and in
accordance with the best interest of the Company; provided that Management
Corp. may manage hotels owned by Bedrock and the Crow Interests, respectively,
and by their respective Affiliates pursuant to Management Agreements or Other
Management Agreements. The Company shall conduct the administrative
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activities of the Company and its Subsidiaries separately from the
administrative activities of Bedrock and the Crow Interests and their
respective Affiliates and any other Person; provided the Company may enter into
asset management services agreements with either Bedrock or Crow Interests
pursuant to which it may provide certain administrative services. Any moneys
earned by the Company or its Subsidiaries on their assets or proceeds of the
sale of any of their assets shall be deposited in bank accounts separate from
any of the assets of any other Person, and no assets of the Company and its
Subsidiaries shall become commingled with assets of such Persons. The Company
shall use reasonable efforts to correct any known misunderstanding or
misrepresentation regarding the independence of the Company and its
Subsidiaries from Bedrock and the Crow Interests and their respective
Affiliates.
E. BUSINESS DEALINGS. The Company shall hold itself out, and
shall continue to hold itself out, to the public and to its creditors as a
legal entity, separate and distinct from all other entities, and shall continue
to take all steps reasonably necessary to avoid (i) misleading any other Person
as to the identity of the entity with which such Person is transacting business
or (ii) implying that the Company is, directly or indirectly, absolutely or
contingently, responsible for the Indebtedness or other obligations of Bedrock
or the Crow Interests and their respective Affiliates or any other Person.
6.4 TAXES AND CLAIMS; TAX CONSOLIDATION.
A. TAXES AND CLAIMS. Each Loan Party shall, and shall cause each
of its Subsidiaries to, pay or discharge or cause to be paid or discharged all
Taxes and Impositions imposed upon any Loan Party or any of its Subsidiaries,
or payable by any Loan Party or any of its Subsidiaries with respect to any
Property or other assets or in respect of any of the franchises, business,
income or other property of any Loan Party or any of its Subsidiaries before
the same shall become delinquent and before any penalty accrues thereon, and
will pay, discharge or otherwise satisfy or cause to be paid, discharged or
otherwise satisfied at or before maturity or before they become delinquent, all
Indebtedness, obligations and other claims (including claims for labor,
supplies, materials and services that, if unpaid, might become a Lien on the
property of any Loan Party or any of its Subsidiaries) of any Loan Party and
its Subsidiaries; provided, however, that if, by law, any such Imposition is
payable, or may at the option of the taxpayer be paid, in installments, the
Company or such other party may pay the same or cause it to be paid, together
with any accrued interest on the unpaid balance of such Imposition, in
installments as the same become due and before any fine, penalty, interest or
cost may be added thereto for the nonpayment of any such installment and
interest; provided further, however, that no such charge or claim needs to be
paid if (i) such charge or claim is being diligently contested in good faith by
appropriate proceedings, (ii) reserves consistent with GAAP or otherwise
consented to by the Agent shall have been made therefor by such Loan Party or
such Subsidiary, (iii) none of the Collateral is in jeopardy of being sold,
forfeited or lost during or as a result of such contest, (iv) none of any Loan
Party, or any of its Subsidiaries, the Agent or any Lender could become subject
to any civil fine or penalty not adequately reserved against (in the case of
any Loan Party or Subsidiary thereof) or criminal fine or penalty, in each case
as a result of non-payment of such charge or claim and (v) such contest has not
had and could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Upon written request by the Agent, each
Loan Party shall, and shall cause each of its
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Subsidiaries to, deliver to the Agent all receipts evidencing the payment of
all such Taxes, Impositions, assessments, levies, permits, fees, rents and
other public charges imposed upon or in respect of or assessed against any Loan
Party, any of its Subsidiaries or any of their respective properties or assets
except for those being paid or contested as described in the provisos above.
B. TAX CONSOLIDATION. Each Loan Party will not, and will not
permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person other than the Company and its
Subsidiaries.
6.5 MAINTENANCE OF PROPERTIES; REPAIR; ALTERATION.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
(i) maintain or cause to be maintained each Property and all other items of
Collateral in a manner consistent for hotel properties and related property,
and other property and assets constituting the Collateral, in each case of the
same quality and character, and shall keep or cause to be kept every part
thereof in good condition and repair, reasonable wear and tear excepted, and
make all reasonably necessary repairs, renewals or replacements thereto as may
be reasonably necessary to conduct the business of such Loan Party and its
Subsidiaries; (ii) not remove, demolish or structurally alter, or permit or
suffer the removal, demolition or structural alteration of, any of the
Improvements except as expressly permitted hereunder or in connection with a
Renovation or Restoration with the prior written consent of the Agent; (iii)
complete promptly and in a good and workmanlike manner any Improvements which
may be now or hereafter constructed on any Property and, subject to subsection
6.11, promptly restore in like manner any portion of the Improvements which may
be damaged or destroyed thereon from any cause whatsoever, and pay when due all
claims for labor performed and materials furnished therefor (subject to the
right to contest the amount of validity thereof in good faith); (iv) comply in
all material respects with all Applicable Laws, applicable Insurance
Requirements and all covenants, conditions and restrictions now or hereafter
affecting any Property or other item of Collateral or any part thereof or
requiring any alterations or improvements; and (v) not commit, or permit, any
waste of the Collateral (provided that demolition or other work in connection
with renovation, expansion or repair shall not be considered waste); (vi) not
remove any item of the Collateral (other than in accordance with subsection 2.9
or otherwise in the ordinary course of business) without replacing it with a
comparable item of equal or greater quality, value and usefulness, except that
such Loan Party or Subsidiary thereof, as applicable, may sell or dispose of in
the ordinary course of business any property which is obsolete or no longer
useful in its business; provided, however, that the determination of
obsolescence or uselessness of any material property shall be determined by the
senior management of such Loan Party or such Subsidiary.
6.6 INSPECTION; LENDERS' MEETING; APPRAISALS.
A. INSPECTION AND LENDER MEETING. Each Loan Party shall, and
shall cause each of its Subsidiaries to, permit any authorized representatives
designated by the Agent to visit and inspect any Property, including its and
their financial and accounting records, tenant leasing files and other
management books and records, and to make copies and take extracts therefrom,
and to discuss its and their affairs, operations, finances and accounts with
its and their officers,
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property managers and independent accountants (provided that any Loan Party or
any such Subsidiary may, if it so chooses, be present at or participate in any
such discussion), all upon reasonable notice and at such reasonable times
during normal business hours, with as little disruption of such party's
business and operations as is reasonably practical, and as often as may be
reasonably requested. Without in any way limiting the foregoing, the Company
will, upon the request of the Agent, participate in a meeting with the Agent
and the Lenders once during each calendar year to be held at the Company's
corporate offices (or such other location as may be agreed to by the Company
and the Agent) at such time as may be agreed to by the Company and the Agent.
B. APPRAISALS. If the Agent shall advise the Company by written
notice that the Agent believes that the value of one or more Pool A Properties
has been adversely affected, for any reason, since the date of the most recent
Appraisal thereof, promptly thereafter the Loan Parties shall, or shall cause
each of their respective Subsidiaries to, at their expense, cause the
preparation and delivery to the Agent of an Appraisal of each such Pool A
Property dated not more than 30 days prior to the date of such delivery, which
Appraisal shall be prepared by an Appraiser designated by the Agent and shall
be satisfactory in form and substance to the Agent; provided that the Company
shall not be required to pay the expense of more than one such Appraisal of any
such Pool A Property during any period of 12 consecutive months commencing
after the Funding Availability Date. If any Loan Party or any of its
Subsidiaries obtains an appraisal of one or more of the Pool A Properties
other than pursuant to this subsection, the Company shall deliver a copy of
such appraisal to the Agent promptly upon the completion thereof and the Agent
may elect, in its sole discretion and subject to Applicable Laws, to treat such
appraisal as an "Appraisal." In the event that the Agent obtains an Appraisal
of one or more of the Pool A Properties, the Agent shall deliver a copy of such
Appraisal to the Company upon the completion thereof.
6.7 COMPLIANCE WITH LAWS, AUTHORIZATIONS, ETC.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
comply with the requirements of all Applicable Laws, noncompliance with which
could reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect. Each Loan Party shall, and shall cause each of its
Subsidiaries to, keep all Authorizations which are from time to time required
for the use and operation of each Property in full force and effect except
where the failure to keep such Authorizations in effect would not individually
or in the aggregate materially and adversely affect any Property, individually,
or all Properties, collectively.
6.8 PERFORMANCE OF LOAN DOCUMENTS AND RELATED DOCUMENTS.
A. LOAN DOCUMENTS. Each Loan Party shall, and shall cause each of
its Subsidiaries to, observe and perform, or cause to be observed and
performed, all its covenants, agreements, conditions and requirements contained
in each of the Loan Documents to which it is or will be a party in accordance
with the terms thereof and will maintain the validity and effectiveness of such
Loan Documents.
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B. RELATED DOCUMENTS. Each Loan Party shall, and shall cause each
of its Subsidiaries to, observe and perform, or cause to be observed and
performed, all its material covenants, agreements, conditions and requirements
contained in each of the Related Documents to which it is a party in accordance
with the terms thereof and will maintain the validity and effectiveness of such
Related Documents, the violation or invalidity of which could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. Each Loan Party shall take no action, nor permit any action to be
taken, which will release any party to the Related Documents from any of such
party's obligations or liabilities thereunder, or will result in the
termination, modification or amendment, or will materially impair the validity
or effectiveness, of any Related Document except as expressly provided for
herein and therein, which release, invalidity or ineffectiveness could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. The Company shall give the Agent written notice of any
default by any party to any Related Document promptly after such default
becomes known to the Company if such default could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.
C. ENFORCEMENT. At the request of the Agent and also following
the occurrence of a breach or default under any Related Document to which any
Loan Party or any of its Subsidiaries is a party, such Loan Party or such
Subsidiary, as applicable, will, at its expense but subject to the direction
and control of the Agent, take such action, or at the Agent's request furnish
funds sufficient to enable the Agent to take such action, as the Agent may
reasonably request in connection with enforcing such Related Document.
6.9 PAYMENT OF LIENS.
A. REMOVAL BY LOAN PARTIES. In the event that, notwithstanding
the covenants contained in subsection 7.2, a Lien not otherwise permitted under
subsection 7.2 may encumber any Property or other item of Collateral or any
portion thereof, the Company shall promptly discharge or cause to be discharged
by payment to the lienor or lien claimant or promptly secure removal by bonding
or deposit with the county clerk or otherwise or, at the Agent's option,
promptly obtain insurance against, any such Lien or mechanics' or materialmen's
claims of lien filed or otherwise asserted against any Property or any other
item of Collateral or any portion thereof within 30 days after the date of
notice thereof. The Company shall exhibit to the Agent upon request all
receipts or other satisfactory evidence of payment, bonding, deposit of taxes,
assessments, Liens or any other item which may cause any such Lien to be filed
against any Property or other item of Collateral of any Loan Party or any of
its Subsidiaries. Each Loan Party and each of its Subsidiaries shall fully
preserve the Lien and the priority of each of the Mortgages and the other
Security Documents without cost or expense to the Agent or the Lenders.
B. REMOVAL BY THE AGENT. If any Loan Party or any of its
Subsidiaries fails to promptly discharge, remove or bond off any such Lien or
mechanics' or materialmen's claim of lien as described above within 30 days
after the receipt of notice thereof, then the Agent may, but shall not be
required to, procure the release and discharge of such Lien, mechanics' or
materialmen's claim of lien and any judgment or decree thereon, and in
furtherance thereof may, in its sole discretion, effect any settlement or
compromise with the lienor or lien claimant or post
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any bond or furnish any security or indemnity as the Agent, in its sole
discretion, may elect. In settling, compromising or arranging for the discharge
of any Liens under this subsection, the Agent shall not be required to
establish or confirm the validity or amount of the Lien. The Company agrees
that all costs and expenses expended or otherwise incurred pursuant to this
subsection 6.9 (including reasonable attorneys' fees and disbursements) by the
Agent shall be paid by the Company in accordance with the terms hereof.
C. TITLE SEARCHES. In the event that the Agent reasonably
believes that a Lien not otherwise permitted under subsection 7.2 may encumber
any Property or Collateral or any portion thereof, the Agent may, at the
expense of the applicable Loan Party or Subsidiary thereof, obtain an updated
title and/or lien search regarding such Property or Collateral.
6.10 INSURANCE.
A. RISKS TO BE INSURED. With respect to each Property, each Loan
Party shall procure or cause to be procured, and each Loan Party shall maintain
or cause to be maintained continuously in effect, insurance coverage issued by
an insurer (i) authorized to issue such insurance in all applicable
jurisdictions, (ii) rated "A" (or its equivalent) or better by Alfred M. Best
Company, Inc., (iii) with a financial size rating of VIII (or its equivalent)
or better, by Alfred M. Best Company, Inc., and (iv) otherwise satisfactory to
the Agent; provided, however, that the requirements set forth in clauses (ii)
and (iii) above with respect to any Property shall be subject to any
requirements of any related Ground Lease or any requirements of any mortgage or
deed of trust securing any related Pool C Indebtedness; provided further,
however, that (1) each insurer of the Company's umbrella liability insurance
policies as of the Funding Availability Date (and any renewal thereof by such
insurers), may be rated "A-" (or its equivalent) by Alfred M. Best Company,
Inc.; it being understood and agreed that such carrier(s) shall comply with the
requirement set forth in clause (ii) above, and (2) as of the Funding
Availability Date, the insurers of the Company's earthquake, flood and wind
insurance policies (and any renewals thereof by such insurers, respectively)
may be rated "A-" (or its equivalent) by Alfred M. Best Company, Inc. and have
a financial size rating of "VI" (or its equivalent) by Alfred M. Best Company,
Inc.; it being understood and agreed that, in the event the Company procures
any earthquake, flood or wind insurance from a carrier other than the carrier
providing such insurance on the Funding Availability Date, such carrier shall
comply with the requirements set forth in clauses (ii) and (iii) above unless
otherwise approved by the Agent. Each Loan Party shall pay, and shall cause
each of its Subsidiaries to pay, in a timely manner all premiums due in
connection therewith. All insurance policies shall be issued by insurers doing
business as admitted licensed carriers in the state where such Property is
located, and shall be authorized and licensed to issue insurance in such state
unless otherwise approved by the Agent in its sole discretion. The insurance to
be procured and maintained by the Company is the following:
(i) Casualty. The Company shall keep, or shall cause its
Subsidiaries to keep, each Property insured for the benefit of the
Agent, in each case, as follows:
(a) All Risk of Physical Loss. Insurance with
respect to the Improvements now or hereafter located on the
Properties and any alterations or
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additions thereto and the furniture, fixtures and equipment
against any peril included within the classification "All
Risks of Physical Loss" with extended coverage (including
fire, lightning, windstorm, sprinkler, hail, explosion, riot,
riot attending a strike, civil commotion, vandalism, malicious
mischief, terrorist acts, aircraft, vehicle and smoke) in an
amount equal to the full insurable value of such Improvements
and such furniture, fixtures and equipment. The term "full
insurable value" shall mean the actual replacement cost of
such Improvements and such furniture, fixtures and equipment
(without taking into account any depreciation, and exclusive
of excavations, footings and foundations, landscaping and
paving) determined every five years by an insurer upon the
request of the Agent, a recognized independent insurance
broker or an appraiser selected (and approved by the Agent)
and paid by the applicable Loan Party or its Subsidiary;
provided, however, that such amount shall be sufficient to
prevent such Loan Party or such Subsidiary from becoming a
co-insurer, and the policy shall contain a stated value
endorsement to that effect.
(b) Builder's Risk. During any period of
construction of Improvements and any repair, restoration,
Renovation or replacement thereof, a standard builder's all
risk policy (completed value non-reporting form) or equivalent
coverage under the policy described in subclause (i)(a) above
for an amount at least equal to the full insurable value of
the work to be performed and equipment, supplies and materials
to be furnished, as shall be reasonably approved by the Agent
for such purpose, the coverage of which shall include the
hazards described in subsection 6.1OA(i)(a) and building
collapse; provided, however, that such policy may be obtained
by a contractor if it names the Agent and the Company as
additional named insureds and if it otherwise complies with
this Agreement. Such policy shall contain a stated value
endorsement so that no co-insurance provision shall be
applicable to any loss thereunder. Such policy shall contain
the provision that "permission is hereby granted to complete
and/or occupy" upon the earlier to occur of substantial
completion of any discrete increment of the work or a Tenant
taking occupancy of any Property (or portion thereof) as to
which work was being performed.
(c) Flood. Insurance against damage or loss by
flood as to any Property that is located in an area now or
subsequently designated as an area having special flood
hazards and in which flood insurance has been made available
under the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973, or the National Flood
Insurance Reform Act of 1994, as such Acts may be amended,
modified, supplemented or replaced from time to time, on such
basis and not less than such amounts as shall be reasonably
approved by the Agent, but not less than the amount required
by law. If any Loan Party or any of its Subsidiaries fails to
obtain flood insurance as required, the Agent may purchase
such flood insurance, and the Company shall pay all premiums
and other costs and expenses incurred by the Agent.
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(d) Boilers. Broad form boiler and machinery
insurance (without exclusion for explosion) covering all
boilers, boiler tanks, heating and air conditioning equipment,
pressure vessels, auxiliary piping and similar apparatus,
machinery and equipment located in, on or about each Property
insuring against damage or loss from boilers, boiler tanks,
heating and air conditioning equipment, pressure vessels,
auxiliary piping and similar apparatus, machinery and
equipment and insurance against loss of occupancy or use
arising from any such breakdown in such amounts as are
generally available at reasonable premiums and are generally
required by institutional lenders for properties comparable to
the Properties.
(e) Business Interruption or Rental Income
Insurance. Business interruption and/or loss of rental value
or use and occupancy insurance insuring against business
interruption at and against loss of rental income from each
Property due to any of the hazards listed in subsection
6.10A(i)(a) above in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds for a period not
less than one year of loss.
(f) Earthquake Insurance. With respect to any
Property located in California or other area at high risk for
earthquakes, as reasonably determined by the Agent, and at the
reasonable discretion of the Agent, earthquake insurance on
such basis and in such amounts as shall be reasonably required
by the Agent.
(ii) Workers' Compensation. Each Loan Party shall
maintain, and shall cause each of its Subsidiaries to maintain, for
itself and for each Property at which such Loan Party or such
Subsidiary maintains employees, statutory workers' compensation
insurance (to the extent the risks to be covered thereby are not
already covered by other policies of insurance maintained by such Loan
Party or such Subsidiary), in statutory amounts as required by law,
except in those states where such Loan Party elects to not subscribe
to the workers' compensation statute. If the applicable Loan Party
elects to not subscribe to the workers' compensation statute, such
Loan Party shall have a benefit program and employees' legal liability
coverage to respond to claims that would otherwise be covered by a
standard policy of workers' compensation.
(iii) Liability. The Company shall procure and maintain:
(a) Comprehensive General Liability Insurance.
Comprehensive general liability insurance, on an occurrence
basis in the amount of $1,000,000 per occurrence per Property
and $3,000,000 in the aggregate per Property covering each
Loan Party, each of its Subsidiaries and the Agent against
claims for bodily injury, death and property damage (including
claims and legal liability to the extent insurable imposed
upon the Agent and all court costs and attorneys' fees and
expenses), arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of each
Property or occurring in, upon or about or resulting from each
Property, or any drive, sidewalk, curb or passageway adjacent
thereto (to the extent insurable), which insurance shall
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include blanket contractual liability coverage which insures
contractual liability (to the extent insurable) under the
indemnification set forth in subsection 9.3 of this Agreement
(but such coverage or the amount thereof shall in no way limit
such indemnification), garage liability (if applicable),
products liability (if applicable) and elevator liability (if
applicable) coverage and during any period of construction of
any Improvements, owner's and contractor's protective
liability coverage, including completed operations liability
coverage.
(b) Employer's Liability. Employer's liability
insurance on such basis and in such amounts as shall be
reasonably required by the Agent.
(c) General Liability and Property Damage.
Commercial general liability and property damage insurance on
an occurrence basis in connection with any Renovation being
performed at any Property, to be carried by any contractor or
construction manager or by any Person, including any Loan
Party or any of its Subsidiaries, performing a similar
function, including "Builders Risk" coverage in the amount of
$1,000,000 per occurrence and $3,000,000 in the aggregate.
(d) Liquor Liability and Dram Shop Insurance.
Liquor liability and dram shop insurance on such basis and in
such amounts as shall be reasonably required by the Agent.
(iv) Additional Insurance. Each Loan Party shall procure
and maintain, and shall cause each of its Subsidiaries to procure and
maintain, such other insurance with respect to the Properties against
loss or damage of the kinds from time to time customarily insured
against and in such amounts as are generally available at reasonable
premiums and are generally required by institutional lenders for
properties comparable to the Properties.
B. POLICY PROVISIONS. Each policy of insurance maintained in
respect of any Loan Party, any of its Subsidiaries and/or any Property pursuant
to this subsection 6.10 shall (a) in the case of each category of public
liability insurance, name such Loan Party or such Subsidiary, as the case may
be, as insured and name the Agent (for the benefit of the Lenders) as an
additional insured, and in the case of all other insurance required under this
Agreement (other than any such policy maintained solely in respect of one or
more Pool B Properties and Pool C Properties), name the Agent (for the benefit
of the Lenders) as an additional insured or as a loss payee, as Agent shall
require; (b) except in the case of public liability insurance and workers'
compensation insurance, provide that all proceeds thereunder shall be payable
to the Agent pursuant to a standard first mortgagee endorsement, without
contribution, that all losses with respect to each Property shall be paid
directly to the Agent, without contribution by any similar insurance carried by
the Agent and that adjustment and settlement of any material loss shall be
subject to the reasonable approval of the Agent; (c) include effective waivers
by the insurer of all rights of subrogation against any loss payee, additional
insured or named insured; (d) permit the Agent to pay the premiums and continue
any insurance upon failure of such Loan Party or such Subsidiary, as the case
may be, to pay premiums when due, upon the insolvency of such
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Loan Party or such Subsidiary, as the case may be, or through foreclosure; (e)
to the extent such provisions are reasonably obtainable, provide that such
insurance shall not be impaired or invalidated by virtue of (1) any act,
failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by such Loan Party or such Subsidiary, as
applicable, the Company, the Agent, the Lenders or any other named insured,
additional insured or loss payee, except for the willful misconduct of the
Agent or the Lenders knowingly in violation of the conditions of such policy,
(2) the occupation or use of such Property for purposes more hazardous than
permitted by the terms of the policy, (3) any foreclosure or other proceeding
or notice of sale relating to such Property or (4) any change in the possession
of such Property without a change in the identity of the holder of actual title
to such Property (provided that with respect to items (3) and (4) any notice
requirements of the applicable policies are satisfied); (f) be subject to a
deductible, if any, not greater than $100,000 (or, with respect to coverage for
wind damage or earthquake damage, such greater amount as shall not exceed 2% or
5%, respectively, of the affected Property's agreed value); (g) contain an
endorsement providing that none of the Agent, the Lenders or such Loan Party or
such Subsidiary, as applicable, shall be, or shall be deemed to be, a
co-insurer with respect to any risk insured by such policy; and (h) provide
that if all or any part of such policy shall be canceled or terminated, or
shall expire, the insurer will forthwith give notice thereof to each named
insured, additional insured and loss payee and that no cancellation,
termination, expiration, reduction in amount of, or material change (other than
an increase) in, coverage thereof shall be effective until at least 30 days (or
10 days in the case of non-payment for premiums) after receipt by each named
insured, additional insured and loss payee of written notice thereof; provided,
however, that the requirements set forth in this subsection 6.10B with respect
to any Property shall be subject to any requirements of any Ground Lease
affecting such Property or any requirements of any mortgage or deed of trust
securing any related Pool C Indebtedness. Nothing contained herein shall be
construed to prevent the Company from satisfying the provisions of this
subsection 6.10 through the use of so-called blanket, manuscripted or loss
limit policies.
C. INCREASES IN COVERAGE. The policy limits of any policy of
insurance required hereunder shall be increased from time to time to reflect
what a reasonable prudent owner of land and improvements similar in type and
locality to each Property would carry.
D. PAYMENT OF PROCEEDS. If any such insurance proceeds required
to be paid to the Agent are instead made payable to the Company or any Loan
Party or Subsidiary thereof, the Company hereby appoints the Agent as its
attorney-in-fact, irrevocably and coupled with an interest, to endorse and/or
transfer any such payment to the Agent.
E. DELIVERY OF COUNTERPART POLICIES; EVIDENCE. Each Loan Party
shall deliver, and shall cause each of its Subsidiaries to deliver, to the
Agent on or before the Funding Availability Date valid evidence acceptable to
the Agent for the policies of insurance required by this Agreement or any other
Loan Document to be carried evidencing (i) the issuance of such policies, (ii)
the payment of all premiums payable for the period ending not earlier than the
first anniversary of the Funding Availability Date and (iii) coverage which
meets all of the requirements set forth in this Agreement. At each time after
the Funding Availability Date that any Loan Party or any of its Subsidiaries is
required by this Agreement or by any Security Document or any other Loan
Document to deliver evidence of insurance, such Loan Party shall
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deliver, or shall cause such Subsidiary to deliver, such evidence of valid
policies of insurance acceptable to the Agent evidencing (a) the issuance of
the policies of insurance required by this Agreement or other Loan Document to
be carried, (b) the payment of all premiums then due to the applicable insurer,
(c) coverage which meets all of the requirements set forth in this Agreement or
other Loan Document, and (d) that the required policies are in full force and
effect.
F. REPLACEMENT OR RENEWAL POLICIES. Not less than 20 days prior
to the expiration, termination or cancellation of any insurance policy which
any Loan Party or any of its Subsidiaries is required to maintain hereunder,
such Loan Party shall obtain, or shall cause such Subsidiary to obtain, a
replacement or renewal policy or policies (or a binding commitment for such
replacement or renewal policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the previous
policy, and shall deliver to the Agent a valid binder in respect of such policy
or policies in the same form and containing the same information as the
expiring policy or policies required to be delivered by each Loan Party and its
Subsidiaries pursuant to subsection 6.10E or a copy of the binding commitment
for such policy complying with all the requirements of this subsection,
followed by a certified true copy of the policy or policies when issued.
G. MATERIAL CHANGE IN POLICY. Each Loan Party shall deliver, and
shall cause each of its Subsidiaries to deliver, to the Agent concurrently with
each material change in any insurance policy covering any part of the
Properties required to be maintained by each Loan Party and its Subsidiaries
hereunder, a valid binder or policy endorsement with respect to such changed
insurance policy certified by the insurance company issuing such policy, in the
same form and containing the same information as the original evidence of
insurance required to be delivered by each Loan Party and its Subsidiaries
pursuant to subsection 6.10E.
H. SEPARATE INSURANCE. Each Loan Party will not take out, nor
will it permit any of its Subsidiaries to take out, separate insurance
concurrent in form or contributing in the event of loss with that required to
be maintained pursuant to this subsection unless such insurance complies with
all of the requirements of this subsection.
6.11 CASUALTY AND CONDEMNATION; RESTORATION.
A. NOTICE OF CASUALTY. Upon the occurrence of any damage to or
loss or destruction of all or any portion of any Property, whether or not
covered by insurance, which will cost (or may reasonably be expected to cost)
more than $100,000 to Restore, as determined by the Company and so certified in
an Officers' Certificate delivered to the Agent, (i) the Company shall promptly
deliver to the Agent written notice of the same which shall, among other
things, describe such casualty, and (ii) as soon as practicable but in any
event prior to the commencement of Restoration of such Property, the Company
shall deliver to the Agent a Notice of Renovation/Restoration in the form
attached hereto as Exhibit XVII.
B. INSURANCE PROCEEDS. All Insurance Proceeds in respect of a
Pool A Property or a Pool B Property (other than Insurance Proceeds
attributable to insurance required pursuant to subsection 6.10A(ii) and (iii))
and the right thereto are hereby irrevocably assigned and pledged
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by each Loan Party to the Agent for the benefit of the Lenders, and the Agent
on behalf of the Lenders is authorized, at its option, to collect and receive
all of the same and to give proper receipts and acquittances therefor;
provided, however, that such assignment and pledge with respect to any such
Property is subject to any requirements of any Ground Lease affecting such
Property; provided further, however, that such Loan Party shall have the right
to cause the Agent to apply Insurance Proceeds in accordance with subsections
6.11E and 6.11F. Each Loan Party agrees to execute and to cause each of its
Subsidiaries to execute such further assignments and pledges of any Insurance
Proceeds in respect of Pool A Properties and Pool B Properties as the Agent may
reasonably require and shall otherwise cooperate with the Agent in obtaining
for the Agent and the Lenders the benefit of any Insurance Proceeds lawfully or
equitably payable in respect of any such Property, subject to the provisos
above. If, prior to the receipt by the Agent of such Insurance Proceeds, any
Pool A Property or Pool B Property shall have been transferred upon foreclosure
of the applicable Mortgage (or by deed in lieu thereof), the Agent shall have
the right to receive such Insurance Proceeds to the extent (x) such Insurance
Proceeds are attributable to a casualty occurring prior to foreclosure or
delivery of any deed in lieu thereof and (y) of any deficiency found to be due
upon such sale, with legal interest thereon, and reasonable counsel fees, costs
and disbursements incurred by the Agent in connection with the collection of
such Insurance Proceeds. The Agent may, but shall not be obligated to, make
proof of loss if not made promptly by the applicable Loan Party or Subsidiary
thereof. During the continuance of an Event of Default (but not otherwise), the
Agent is hereby authorized and empowered by the Company to settle, adjust or
compromise any claims for damage, destruction or loss thereunder, with or
without the consent of any Loan Party or any of its Subsidiaries (and the
Company hereby irrevocably appoints and constitutes the Agent as the Company's
lawful attorney-in-fact, coupled with an interest and with full power of
substitution, for such purpose). In no event shall any Loan Party or any of its
Subsidiaries settle, adjust or compromise any claim for Insurance Proceeds in
respect of any Pool A Property or Pool B Property in excess of $100,000 without
the prior written consent of the Agent, which shall not be unreasonably
withheld, conditioned or delayed; provided, however, that this provision shall
not restrict the right of the lessor under any applicable Ground Lease (1) to
settle, adjust or compromise any claim for Insurance Proceeds to the extent
such lessor is granted the power to do so under such Ground Lease or (2) to
approve any settlement, adjustment or compromise of any claim for Insurance
Proceeds to the extent the approval of such lessor is required under such
Ground Lease. Subject to the requirements of any Ground Lease affecting any
Pool A Property or Pool B Property, each insurance company concerned is hereby
authorized and directed to make payment of all Insurance Proceeds in respect of
each of the Pool A Properties and Pool B Properties payable by it directly to
the Agent. If any Loan Party or any of its Subsidiaries receives any Insurance
Proceeds resulting from such casualty in respect of any Pool A Property or Pool
B Property, such Loan Party shall (subject to the requirements of any Ground
Lease affecting such Property) promptly endorse and transfer, or cause such
Subsidiary to endorse and transfer, such Insurance Proceeds to the Agent and
each Loan Party covenants that until so paid over to the Agent, such Loan Party
or such Subsidiary, as applicable, shall hold such Insurance Proceeds in trust
for the benefit of the Agent and shall not commingle such Insurance Proceeds
with any other funds or assets of such Loan Party or Subsidiary or any other
Person.
C. NOTICE OF CONDEMNATION; NEGOTIATION AND SETTLEMENT OF CLAIMS.
The Loan Parties shall, and shall cause their respective Subsidiaries to,
promptly deliver written notice to
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the Agent upon obtaining knowledge of the institution, or the proposed
institution, of any bona fide action or proceeding for the Taking of all or any
portion of any Property. The Agent shall have the right to participate in any
negotiation, action or proceeding relating to any such action or proceeding
affecting any Pool A Property or Pool B Property, and no settlement or
compromise of any claim in connection with any such action or proceeding shall
be made without the consent of the Agent, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that this
provision shall not restrict the right of the lessor under any applicable
Ground Lease (1) to settle or compromise any such claim to the extent such
lessor is granted the power to do so under such Ground Lease or (2) to approve
any settlement or compromise of any such claim to the extent the approval of
such lessor is required under such Ground Lease. Upon the occurrence of any
Taking with respect to a Property which will cost (or may reasonably be
expected to cost) more than $100,000 to Restore, as determined by the Company
and so certified in an Officers' Certificate delivered to the Agent, as soon as
practicable thereafter but in any event prior to the commencement of any
Restoration of such Property, the Company shall deliver to the Agent a Notice
of Renovation/Restoration in the form attached hereto as Exhibit XVII.
D. CONDEMNATION PROCEEDS. All Condemnation Proceeds in respect of
each of the Pool A Properties and Pool B Properties and the right thereto are
hereby irrevocably assigned and pledged by each Loan Party to the Agent for the
benefit of the Lenders, and the Agent on behalf of the Lenders is authorized,
at its option, to collect and receive all such Condemnation Proceeds and to
give proper receipts and acquittances therefor; provided, however, that such
assignment and pledge with respect to any such Property is subject to any
requirements of any Ground Lease affecting such Property; provided further,
however, that such Loan Party shall have the right to cause the Agent to apply
Condemnation Proceeds in accordance with subsections 6.11E and 6.11F. Each
Loan Party agrees to execute, and to cause each of its Subsidiaries to execute,
such further assignments of any Condemnation Proceeds in respect of any Pool A
Property or Pool B Property as the Agent may reasonably require and shall
otherwise cooperate with the Agent in obtaining for the Agent and the Lenders
the benefit of any Condemnation Proceeds lawfully or equitably payable in
respect of such Property, subject to the provisos above. If, prior to the
receipt by the Agent of such Condemnation Proceeds, the portion of the Pool A
Property or Pool B Property, as the case may be, subject to such action or
proceeding shall have been sold on foreclosure of the applicable Mortgage (or
by deed in lieu thereof), the Agent shall have the right to receive such
Condemnation Proceeds to the extent (x) such Condemnation Proceeds are
attributable to a Taking occurring prior to foreclosure or delivery of any deed
in lieu thereof and (y) of any deficiency found to be due upon such sale, with
legal interest thereon, and reasonable counsel fees, costs and disbursements
incurred by the Agent in connection with the collection of such Condemnation
Proceeds. The Agent may, but shall not be obligated to, make proof of loss if
not made promptly by the applicable Loan Party or Subsidiary thereof. Upon the
occurrence and during the continuance of an Event of Default (but not
otherwise), the Agent is hereby authorized and empowered by each Loan Party to
settle, adjust or compromise any claims for Condemnation Proceeds with or
without the consent of such Loan Party or any of its Subsidiaries (and the
Company hereby irrevocably appoints and constitutes the Agent as the Company's
lawful attorney-in-fact, coupled with an interest and with full power of
substitution, for such purpose). In no event shall any Loan Party or any of its
Subsidiaries settle, adjust or compromise any claim for Condemnation Proceeds
in respect of any
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Pool A Property or Pool B Property without the prior written consent of the
Agent, which shall not be unreasonably withheld, conditioned or delayed;
provided, however, that this provision shall not restrict the right of the
lessor under any applicable Ground Lease (1) to settle or compromise any claim
for Condemnation Proceeds to the extent such lessor is granted the power to do
so under such Ground Lease or (2) to approve any settlement or compromise of
any claim for Condemnation Proceeds to the extent the approval of such lessor
is required under such Ground Lease. Subject to the requirements of any Ground
Lease affecting any Pool A Property or Pool B Property, each condemnor
concerned is hereby authorized and directed to make payment of all Condemnation
Proceeds in respect of each of the Pool A Properties and Pool B Properties
payable by it directly to the Agent. If any Loan Party or any of its
Subsidiaries receives any Condemnation Proceeds resulting from such
condemnation in respect of any Pool A Property or Pool B Property, such Loan
Party or such Subsidiary shall (subject to the requirements of any Ground Lease
affecting such Property) promptly endorse and transfer such Condemnation
Proceeds to the Agent and each Loan Party covenants that until so paid over to
the Agent, such Loan Party or Subsidiary, as the case may be, shall hold such
Condemnation Proceeds in trust for the benefit of the Agent and shall not
commingle such Condemnation Proceeds with any other funds or assets of such
Loan Party or Subsidiary or any other Person.
E. REDUCTION OF BORROWING BASE; PAYMENT OF RELEASE PRICE. In the
event of any casualty or Taking with respect to a Pool A Property, a Pool B
Property or a Pool C Property, which will cost (or may reasonably be expected
to cost) more than $100,000 to Restore, as determined by the Company and so
certified in an Officers' Certificate delivered to the Agent, the Company shall
elect by written notice delivered to the Agent as soon as practicable
thereafter, but in any event before the earlier of (x) 10 days after the
occurrence of such casualty or Taking and (y) the commencement of the
Restoration of such Property, either:
(i) to reduce the Borrowing Base as provided in
subsection 2.4B(iii), if applicable, prepay the Loans in an amount
equal to the Release Price with respect to such Property and Restore
such Property pursuant to subsection 6.11G; or
(ii) if all the following conditions shall be satisfied,
to Restore such Property pursuant to subsection 6.11F:
(a) the Maturity Date shall then not have
occurred;
(b) no Potential Event of Default (other than any
Potential Event of Default caused solely by an event or
condition with respect to another Property) or Event of
Default shall have occurred and be continuing or would be
caused by such Restoration;
(c) the Company is in compliance in all respects
with the provisions of subsection 6.11F;
(d) the Agent shall have determined, in its
reasonable discretion, that Restoration of such Property is,
under the circumstances then existing, physically and
economically feasible and can be completed in accordance with
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subsection 6.11F on or before a date not less than six months
prior to the Maturity Date;
(e) the Loan Parties and their respective
Subsidiaries shall have business interruption insurance
complying with subsection 6.10 in an amount at least equal to
the reduction in Property EBITDA with respect to such
Property, if any, which the Company reasonably expects to
suffer during the period of Restoration;
(f) the Loan Parties and their respective
Subsidiaries shall have complied with all notice and other
requirements under any Ground Lease affecting such Property
that must be satisfied in respect of such Restoration, the
Restoration is permitted under the terms of such Ground Lease,
the Ground Lease remains in full force and effect; and
(g) either (1) the Net Insurance/Condemnation
Proceeds shall be sufficient to complete the costs of such
Restoration, as determined by the Agent in its reasonable
discretion, or (2) the Loan Parties and their respective
Subsidiaries shall have provided, at the Company's option, a
cash deposit or a letter of credit satisfactory to the Agent
(other than a Letter of Credit), in its reasonable discretion
(or other collateral reasonably satisfactory to the Agent),
for the amount of any shortfall in the amount of Net
Insurance/Condemnation Proceeds necessary to cover the costs
to complete such Restoration.
If the Loan Parties and their respective Subsidiaries shall fail to satisfy the
conditions set forth in clause (ii) of the preceding sentence or in subsection
6.11F with respect to the related Property, or shall fail to diligently and
continuously prosecute the Work to completion (other than as a result of
Excusable Delay), as determined by the Agent, in its reasonable discretion,
then, subject to the requirements of any Ground Lease affecting such Property,
the Borrowing Base shall be reduced as provided in subsection 2.4B(iii), the
Company shall prepay the Loans in an amount equal to the Release Price with
respect to such Property and the Agent shall apply any or all remaining
Insurance Proceeds or Condemnation Proceeds, as applicable, towards such
prepayment, and execute and deliver a Release with respect to such Property.
F. RESTORATION WITH NET INSURANCE/CONDEMNATION PROCEEDS. In the
event of any casualty or Taking with respect to a Pool A Property, a Pool B
Property or a Pool C Property, which will cost (or may reasonably be expected
to cost) more than $100,000 to Restore, as determined by the Company and so
certified in an Officers' Certificate delivered to the Agent, if any of the
Loan Parties and their respective Subsidiaries elects to Restore a Pool A
Property, a Pool B Property or a Pool C Property pursuant to this subsection
6.11F and the conditions set forth in clause (ii) of the first sentence of
subsection 6.11E are satisfied, all Net Insurance/Condemnation Proceeds shall
be held by the Agent (subject to the requirements of any Ground Lease affecting
such Property) in an interest-bearing account at the Agent, with all interest
to be held therein until completion and final inspection of the Work, and shall
be applied by the Agent to the payment of the cost of Restoring such Property
so damaged or destroyed or of the portion or portions of such Property not so
Taken (the "WORK") and shall be paid out from time
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to time to the Company as the Work progresses, subject to retainage as
reasonably determined by the Agent and otherwise in accordance with any
conditions reasonably imposed by the Agent but subject to each of the following
conditions:
(i) Subject to Excusable Delays, the Company shall
promptly (and in any event within 90 days after the applicable
casualty or Taking) commence, or cause the commencement of,
Restoration of such Property.
(ii) If the Work is structural or if the cost of the Work,
as estimated by the Company, shall exceed (a) with respect to a Pool A
Property, the lesser of 10% of the Pool A Property Amount with respect
to such Property and $500,000 and (b) with respect to a Pool B
Property or a Pool C Subsidiary, $500,000, the Work shall be in the
charge of an architect or Engineer (who may be an employee or
Affiliate of the Company only if the cost of the Work does not exceed
the amount specified with respect to such Property pursuant to the
preceding clause (a) or (b), as the case may be), and before any Loan
Party or any of its Subsidiaries commences any Work, other than
temporary work to protect property or prevent interference with
business, the Agent shall have approved the plans and specifications
and the general contract for the Work to be submitted by such Loan
Party or such Subsidiary. Such plans and specifications shall provide
for such Work that, upon completion thereof, the Improvements shall
(x) be in compliance in all material respects with all legal
requirements such that all representations or warranties of the Loan
Parties relating to the compliance of such Property with Applicable
Laws in this Agreement or any of the other Loan Documents would then
be true and correct, and (y) be at least equal in value and general
utility to the Improvements which were on such Property prior to the
damage, destruction or Taking. Such plans and specifications shall be
accompanied by (1) a signed estimate of the Company, or, if an
architect or Engineer is required to supervise the Work, such
architect or Engineer, stating the estimated cost of completing the
Work, which estimate shall bear the architect's or Engineer's seal if
not made by the Company and (2) to the extent necessary at such stage
of the Work, certified copies of all Authorizations required in
connection with the commencement and performance of the Work.
(iii) Each request for payment shall be made on seven days'
prior notice to the Agent and shall be accompanied by paid invoices
and by a certificate to be made by such architect or Engineer, if one
be required under clause (ii) above, otherwise by an Officers'
Certificate of the Company, stating (a) that all of the Work completed
has been done in substantial compliance with the approved plans and
specifications, if any be required under said clause (ii) above, (b)
that the sum requested is justly required to reimburse any of the Loan
Parties and their respective Subsidiaries for payments made by the
applicable Loan Party or Subsidiary thereof to, or is justly due to,
the contractor, subcontractors, materialmen, laborers, engineers,
architects or other Persons rendering services or materials for the
Work (giving a brief description of such services and materials), and
that when added to all sums previously paid out by the Agent does not
exceed the cost of the Work done to the date of such certificate, and
(c) that either (x) the amount of such proceeds remaining in the hands
of the Agent, or (y) the amount of such funds, plus funds in the hands
of the applicable Loan Party or Subsidiary thereof
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from other sources irrevocably committed to the completion of the Work
in a manner reasonably satisfactory to the Agent (including delivery
of such funds to the Agent for application to pay the costs of the
Restoration), will be sufficient on completion of the Work to pay for
the same in full (giving in such reasonable detail as the Agent may
require an estimate of the cost of such completion). The Agent may
require that any such statements be independently verified by an
inspector approved by the Agent.
(iv) Each request shall be accompanied by waivers of lien
satisfactory to the Agent covering that part of the Work for which
payment or reimbursement has been made and by a search prepared by the
Title Company reasonably satisfactory to the Agent establishing that
there has not been filed with respect to such Property any mechanics'
or other lien or instrument for the retention of title in respect of
any part of the Work not discharged of record or bonded to the
reasonable satisfaction of the Agent and evidencing the continued
priority of the Mortgage and Assignment of Rents and Leases on such
Property.
(v) The available Insurance Proceeds or Condemnation
Proceeds which are paid or will be payable by the insurance company
(together with any cash, irrevocable letter of credit, payment or
performance bond or United States government obligation assigned to
the Agent as collateral, in each case acceptable to the Agent as to
amount, obligor and maturity) are, in the reasonable judgment of the
Agent, sufficient to pay in full the costs of the Restoration.
(vi) There shall be no Event of Default or Potential Event
of Default (other than any Potential Event of Default caused solely by
an event or condition with respect to another Property).
(vii) The request for any payment after the Work has been
completed shall be accompanied by (a) a copy of any certificate or
certificates required by law to render occupancy of the improvements
being rebuilt, repaired or restored legal; and (b) final lien waivers
for all labor, materials and supplies from all contractors,
subcontractors and materialmen.
(viii) After commencing the Work, the Company shall, subject
to Excusable Delays, perform, or shall cause the applicable Loan Party
or Subsidiary thereof to perform, the Work diligently and in good
faith in a good and workmanlike manner to completion in accordance
with the approved plans and specifications, if any.
(ix) The Agent shall have received "agreements to
complete" of the general contractor, any independent architects or
Engineers, and such subcontractors as the Agent reasonably deems
necessary or desirable, which agreements to complete shall be in form
and substance reasonably satisfactory to the Agent.
(x) The Company shall have obtained and maintained, or
shall have caused the applicable Loan Party or Subsidiary thereof to
obtain and maintain, completed value
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builders' risk (all risk) insurance with an insurer reasonably
satisfactory to the Agent, and with loss payable to the Agent.
All costs and expenses of any Restoration, including, without
limitation, any Work, Engineer's fees, architect's fees or contractors fees and
the cost and expenses of complying with this subsection 6.11F, shall be for
the account of the Company. Upon completion of the Work and payment in full
therefor, the Agent will return to the Company the amount of any unspent
Insurance Proceeds or Condemnation Proceeds then or thereafter in the hands of
the Agent on account of the casualty or Taking that necessitated such Work,
together with all undisbursed accrued interest thereon. Nothing in this
subsection shall prevent the Agent from applying at any time all or any part of
the Insurance Proceeds or Condemnation Proceeds to the curing of any Event of
Default under this Agreement or any other Loan Document.
G. OTHER RESTORATIONS. In the event of any casualty or Taking
with respect to a Property, which will cost (or may reasonably be expected to
cost) more than $100,000 to Restore, as determined by the Company and so
certified in an Officers' Certificate delivered to the Agent, and either (x)
the Company or any of its Subsidiaries elects to Restore a Property pursuant to
subsection 6.11F but the conditions set forth in clause (ii) of the first
sentence of subsection 6.11E are not satisfied or (y) the Company or any of
its Subsidiaries elects to Restore any Property pursuant to this subsection
6.11G, the Company shall:
(i) prepay the Loans in the amount of the sum of (a) the
aggregate Insurance Proceeds or Condemnation Proceeds, as the case may
be, plus (b) if such Restoration constitutes a Major
Renovation/Restoration, the additional amount that may be required to
be paid pursuant to subsection 2.3B(iv) after taking into account any
required recalculation of the Borrowing Base; and
(ii) together with the delivery of the Notice of
Renovation/Restoration pursuant to subsection 6.11A or 6.11C,
deliver to the Agent the following: (a) a project budget (as revised
and supplemented from time to time in accordance with this subsection
6.11G, the "RESTORATION BUDGET") satisfactory in form to the Agent and
setting forth, among other things, the aggregate costs for such
Restoration, and the aggregate cost for each line item in such budget;
(b) an estimated time schedule for such Restoration, reasonably
satisfactory in form to the Agent and setting forth, among other
things, the projected completion date; (c) the final plans and
specifications for the Restoration (as revised and supplemented from
time to time in accordance with this subsection 6.11G, the
"RESTORATION PLANS") which, with respect to any Pool A Property or
Pool B Property, shall provide for the restoration of the related
Improvements such that, upon completion thereof, the Improvements
shall (x) be in compliance in all material respects with all legal
requirements such that all representations or warranties of the Loan
Parties relating to the compliance of such Property with Applicable
Laws in this Agreement or any of the other Loan Documents would then
be true and correct, and (y) be at least equal in value and general
utility to the Improvements which were on such Property prior to the
related damage, destruction or Taking, as the case may be; and (d) all
such other information or materials with respect to the Restoration
that the Agent may reasonably request.
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If the Company or any applicable Subsidiary materially changes the scope of the
intended Restoration, materially revises the Restoration Budget (including the
estimated amounts contained therein), or materially revises or modifies the
Restoration Plans, the Company shall promptly deliver to the Agent a supplement
to the Restoration Budget or Restoration Plans or a revised Restoration Budget
or revised Restoration Plans, as applicable, which, with respect to any Pool A
Property or Pool B Property, shall be reasonably satisfactory in form and
substance to the Agent. Subject to Excusable Delays, the Company shall, and
shall cause each applicable Subsidiary to, commence such Restoration as soon as
practicable, and in any event within 90 days of the applicable casualty or
Taking, and complete the Restoration promptly, in a good and workmanlike manner
and in accordance with the Restoration Plans. Upon completion of the
Restoration, the Company shall promptly deliver to the Agent a Completion
Certificate with respect thereto. All costs and expenses of any Restoration,
including, without limitation, the cost and expenses of complying with this
subsection 6.11G, shall be for the account of the Company. If the Agent
determines at any time that the Company is not in compliance with the
provisions of this subsection 6.11G or that the Property cannot be Restored as
contemplated by this subsection 6.11G, the Agent shall provide the Company
written notice of such determination and, within 10 Business Days after
delivery of such notice, the Company shall prepay the Loans (net of any prior
prepayments made by the Company in respect of such casualty or Taking pursuant
to this subsection) and the Borrowing Base shall be reduced as provided in
subsection 6.11E.
6.12 RENOVATIONS.
A. NOTICE OF RENOVATION; RENOVATION PLANS. If the Company or any
of its Subsidiaries intends to Renovate any Property, the cost of which will
exceed (or may reasonably be expected to exceed) $100,000, as determined by the
Company and as so certified in an Officers' Certificate delivered to the Agent,
the Company shall, prior to the commencement of any such Renovation, deliver to
the Agent the following: (i) a Notice of Renovation/Restoration with respect
thereto, in the form of Exhibit XVII attached hereto; (ii) a project budget (as
revised and supplemented from time to time in accordance with this subsection
6.12A, the "RENOVATION BUDGET") reasonably satisfactory in form to the Agent
and setting forth, among other things, the aggregate costs for such Renovation,
and the aggregate cost for each line item in such budget; (iii) an estimated
time schedule for such Renovation, reasonably satisfactory in form to the Agent
and setting forth, among other things, the projected completion date, the
number of rooms that will be unavailable for business as a result of such
Renovation and the duration of such unavailability; (iv) the final plans and
specifications for the Renovation (as revised and supplemented from time to
time in accordance with this subsection 6.12A, the "RENOVATION PLANS") which,
with respect to any Pool A Property or Pool B Property, shall be reasonably
satisfactory in form and substance to the Agent; and (v) all such other
information or materials with respect to the Renovation that the Agent may
reasonably request. In the event the Company, or any applicable Subsidiary
changes the scope of the intended Renovation, materially revises the Renovation
Budget (including the estimated amounts contained therein), or materially
revises or modifies the Renovation Plans, the Company shall promptly deliver to
the Agent a supplement to the Renovation Budget or Renovation Plans or a
revised Renovation Budget or revised Renovation Plans, as applicable, which
with respect to any Pool A Property or Pool B Property, shall be reasonably
satisfactory in form and substance to the Agent.
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B. CONDUCT OF RENOVATION; COSTS. Subject to Excusable Delays, the
Company shall, or shall cause its Subsidiaries to, complete the Renovation
promptly, in a good and workmanlike manner and in accordance with the
Renovation Plans. All costs and expenses of any Renovation, including, without
limitation, the cost and expenses of complying with this subsection 6.12, shall
be for the account of the Company.
C. COMPLETION CERTIFICATE. Upon completion of the Renovation, the
Company shall promptly deliver to the Agent a Completion Certificate with
respect thereto, together with all final Lien waivers in form and substance
reasonably satisfactory to the Agent.
6.13 BRUNDAGE CLAUSE.
In the event of the enactment of or change in (including a change in
interpretation of) any Applicable Law (i) deducting or allowing any Loan Party
or any of its Subsidiaries to deduct from the value of any Property for the
purpose of taxation any Lien thereon, (ii) subjecting any Lender to any tax in
respect of, or changing the basis of taxation in respect of, the Mortgages, or
the manner of collection of such taxes (other than Taxes on net income,
franchise taxes and doing business taxes), or (iii) for the taxation of
mortgages or debts secured by mortgages or in the means of collection of any
such tax, in each such case, so as to affect any Lender or the Notes or the
Mortgages or any other Loan Document, and the result is to increase the taxes
imposed upon or the cost to any Lender of maintaining the Loans, or to reduce
the amount of any payments receivable under the Notes, the Mortgages or any
other Loan Document, or to invalidate the Lien created by any Security
Document, then, in any such event, the Company shall, within ten Business Days
of receipt of a request therefor, accompanied by documentation verifying the
nature, amount and due date, pay to such Lender additional amounts to
compensate for such increased costs or reduced amounts; provided, however, that
if any Lender makes such a request, or if the Lien created by any Security
Document may be invalidated, then the Company shall have the right, and, in the
case of such invalidation, shall have the obligation, to reduce the Commitments
and prepay the Loans, in accordance with the provisions of this Agreement and
the Notes; provided further, however, that if any such payment or reimbursement
shall be unlawful or would constitute usury or render the Loans wholly or
partially usurious under Applicable Law, then the Agent may, in its sole
discretion, declare the Loans so affected immediately due and payable (without
premium or penalty) and/or require the Company to pay or reimburse the Lenders
for payment of the lawful and non-usurious portion thereof not less than 180
days after notice of such declaration.
6.14 INTEREST RATE PROTECTION.
If at any time the aggregate principal amount of the Indebtedness of
the Loan Parties and their respective Subsidiaries bearing interest or
requiring other payments (other than principal payments) to be made based on a
rate that is not fixed through maturity exceeds the sum of (i) an amount equal
to 50% of all Indebtedness of the Loan Parties and their respective
Subsidiaries plus (ii) the aggregate notional amount of principal that is
subject to interest rate protection then maintained by the Loan Parties and
their respective Subsidiaries provided under an interest rate protection
agreement obtained pursuant to this subsection 6.14 or otherwise on terms and
with counterparties approved by the Agent, which approval shall not be
unreasonably
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withheld, conditioned or delayed (the amount of such excess being referred to
as "EXCESS FLOATING RATE DEBT"), then, within five Business Days from the day
such excess occurs, the Loan Parties and their respective Subsidiaries shall
obtain and thereafter shall maintain (until such time as no such Excess
Floating Rate Debt is outstanding) interest rate protection through the
Maturity Date in a notional amount at least equal to the Excess Floating Rate
Debt as in effect from time to time and on terms and with counterparties
approved by the Agent, which approval shall not be unreasonably withheld,
conditioned or delayed.
6.15 CASH MANAGEMENT SYSTEM; AGENT RIGHTS; APPLICATION OF CASH FLOW;
DEPOSITORY ACCOUNT NAMES.
A. CASH MANAGEMENT SYSTEM. Each Loan Party shall, and shall cause
each of its Subsidiaries to, maintain the Cash Management System as described
in Schedule 5.23; provided, however, that each Loan Party may open and close
Local Accounts and make other changes to the Cash Management System in the
ordinary course of business upon prior written notice to the Agent as long as
(i) no Event of Default (or event subject to subsection 8.1A that would be an
Event of Default with the lapse of time) has occurred and is continuing or
would result therefrom, (ii) such changes, either individually or in the
aggregate are not adverse to either the Agent or any Lender (in its capacity as
a Lender) or impair any rights, priority or perfection of the Agent under the
Security Documents, (iii) in the case of any closing of any Local Account, a
replacement Local Account satisfactory to the Agent is opened by such Loan
Party or such Subsidiary, as the case may be, and a Cash Management Letter is
entered into with respect to such replacement Local Account prior to the
closing of such Local Account and (iv) all Receipts of each Loan Party continue
to be collected and distributed pursuant to procedures subject to Cash
Management Letters at all times, except as described on Schedule 5.23.
B. AGENT RIGHTS. All funds on deposit in the Local Accounts of
each Loan Party and each of its Subsidiaries shall be transferred on a daily
basis to the Concentration Account, and each Loan Party agrees to perform and
comply and to cause each of their respective Subsidiaries to perform and comply
with the following covenants and agreements:
(i) Receipts shall be received and held by the Company
and such Subsidiary and any of their respective officers, employees,
agents, managers or other Persons acting for or in concert with the
Company or such Subsidiary to make collections for or on behalf of the
Company or such Subsidiary (collectively, "COLLECTING AGENTS"), in
trust for the Agent as Collateral. Notwithstanding any other provision
of this Agreement or any other Loan Document, except as described on
Schedule 5.23, all Receipts shall be deposited daily into the Local
Accounts subject to the Cash Management System. On a daily basis,
except as described on Schedule 5.23, each Loan Party, or any
Collecting Agent, shall deposit or shall cause to be deposited, all
Receipts into the Concentration Account or the Local Accounts subject
to Cash Management Letters on or before the first Business Day
following receipt thereof by the accounting office of the Company or
such Subsidiary, as applicable, and as soon as practical in the case
of Receipts received in any other manner.
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(ii) As long as no Event of Default (or event subject to
subsection 8.1A that would be an Event of Default with the lapse of
time) shall have occurred and be continuing, the Company may request
that the Agent instruct the Cash Manager to either apply Receipts on
deposit in the Concentration Account to pay Obligations or transfer
such Receipts to accounts designated by the Company in such amounts as
the Company may require, in each case by delivering such a request to
the Agent. As long as no Event of Default (or event subject to
subsection 8.1A that would be an Event of Default with the lapse of
time) shall have occurred and be continuing, upon receipt by the Agent
of such a request, the Agent shall instruct the Cash Manager to apply
the Receipts on deposit in accordance with such request; provided that
the Agent may instruct the Cash Manager to automatically apply
Receipts on deposit in the Concentration Account in accordance with
the Company's instructions unless the Agent notifies the Cash Manager
that an Event of Default (or event subject to subsection 8.1A that
would be an Event of Default with the lapse of time) has occurred and
is continuing, subject to the availability of funds on deposit in the
Concentration Account.
(iii) As long as no Event of Default (or event subject to
subsection 8.1A that would be an Event of Default with the lapse of
time), the Company may instruct the Cash Manager to invest in Cash
Equivalents in accordance with the Company's instructions all or any
part of amounts from time to time on deposit in the Concentration
Account, other than amounts necessary to effectuate a request by the
Company as provided for in subsection 6.15B(ii) with respect to the
use of Receipts and the Agent shall authorize the Cash Manager to
follow the Company's instructions as long as no Event of Default (or
event subject to subsection 8.1A that would be an Event of Default
with the lapse of time) shall exist.
(iv) During the continuance of an Event of Default without
the need of any further action by Loan Parties, each Loan Party
irrevocably makes, constitutes and appoints the Agent, and all Persons
designated by Agent for that purpose (including the Cash Manager), at
any time, as such Loan Party's true and lawful attorney-in-fact to
endorse such Loan Party's name on any checks, notes, drafts or any
other form of payment relating to Collateral or Receipts or proceeds
of Collateral or Receipts that come into the Agent's or the Cash
Manager's possession or under the Cash Manager's or the Agent's
control; provided, however, that such appointment by such Loan Party
of the Agent as such Loan Party's attorney-in-fact shall in no case
impose upon the Agent or any such Person any obligation or duty to
take any actions on behalf of such Loan Party or any fiduciary
obligations with respect to such Loan Party.
C. APPLICATION OF CASH FLOW. Notwithstanding anything herein to
the contrary, each Loan Party shall, and shall cause each of its Subsidiaries
to, pay the following from funds provided in the Operating Accounts or
otherwise:
(i) all Operating Expenses for the Properties;
(ii) all scheduled payments of rent, principal or interest
with respect to the Pool B Obligations, the Pool C Indebtedness and
the FF&E Financing Indebtedness;
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(iii) federal, state and local taxes;
(iv) so long as no Event of Default or Potential Event of
Default has occurred and is continuing, Permitted Junior Payments; and
(v) to the extent not applied pursuant to subsection
6.15B above to pay Obligations, all Obligations then due;
it being understood and agreed that, during the continuance of an Event of
Default (or event subject to subsection 8.1A that would be an Event of Default
with the lapse of time) the Agent may, in its sole discretion in accordance
with subsection 6.15B(iii), apply funds on deposit in the Local Accounts and
other Receipts received by the Agent, (i) to the payment of the foregoing
expenses and/or (ii) to the payment of the Obligations. In the event that the
Agent determines, during the continuance of an Event of Default (or event
subject to subsection 8.1A that would be an Event of Default with the lapse of
time), to apply funds or Receipts to the payment of the foregoing expenses,
promptly after being notified of such determination by the Agent, the Company
shall deliver to the Agent (x) within five Business Days of the first day of
each calendar month during the continuance of an Event of Default, a budget
setting forth the estimated Operating Expenses and other amounts set forth
above for such calendar month (y) within three Business Days of the date on
which the Company desires a disbursement to be made, but not more frequently
than once in any calendar week, a written request for disbursements with
respect to Operating Expenses and amounts set forth above for such calendar
week and (z) such other budgets and related information as the Agent may
reasonably request. Upon receipt of any such request for disbursements, the
Agent may, in its sole discretion, instruct the Cash Manager to transfer funds
on deposit in the Concentration Account to the Operating Accounts to be applied
to the payment of amounts set forth in such request for disbursements and
approved by the Agent.
D. NAMES ON DEPOSIT ACCOUNTS. The Company shall cause each Local
Account listed on Schedule 5.23 annexed hereto in respect of a Pool A Property
or Pool B Property to be changed to the extent necessary so that such Local
Account is, at all times on and after the Formation Date, maintained by and in
the name of the Company or any of its Wholly Owned Subsidiaries.
E. CASH MANAGEMENT LETTER. Notwithstanding anything in this
Agreement or in any of the other Loan Documents to the contrary, including any
Cash Management Letter, except during the continuation of an Event of Default
(or event subject to subsection 8.1A that would be an Event of Default with the
lapse of time), the Agent shall not withdraw any funds from, close or take any
other actions in connection with any Deposit Account (other than cause such
funds to be transferred to the Concentration Account) pursuant to any Cash
Management Letter without the Company's prior written consent or written
joinder. During the continuation of an Event of Default (or event subject to
subsection 8.1A that would be an Event of Default with the lapse of time), the
Agent shall have the same rights with respect to any Local Account as are
expressly provided in this Agreement with respect to the Concentration Account
during the continuance of an Event of Default (or event subject to subsection
8.1A that would be an Event of Default with the lapse of time).
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F. JAMAICA CASH MANAGEMENT LETTER. Notwithstanding anything to
the contrary contained in this Agreement or any Cash Management Letter, the
Agent shall not send a notice to The Bank of Nova Scotia blocking withdrawals
or transfers by the Company from account number 102170052 (or account
established in replacement thereof) unless an Event of Default (or default
under subsection 8.1A that would be an Event of Default with the lapse of
time) has occurred and is continuing. If such Event of Default or default, as
the case may be, is cured during any applicable grace period or waived by the
Agent, the Agent shall, upon the written request of the Company, promptly send
a notice to The Bank of Nova Scotia rescinding the prior notice.
G. AUTOMATED CLEARINGHOUSE TRANSFERS. Notwithstanding anything to
the contrary contained in this Agreement or any Cash Management Letter, the
Agent shall not send notices to any institution maintaining a Local Account
which would require daily wire transfers from such Local Account to the
Concentration Account until either a Loan has been made or a Letter of Credit
has been issued. It is understood and agreed that until a notice is sent to the
applicable institution as provided in this subsection 6.15G, the Company may
initiate automated clearinghouse transfers from such Local Account to the
Concentration Account.
6.16 CAPITAL EXPENDITURES.
A. CAPITAL RESERVE ACCOUNT. On the thirtieth day of each calendar
month, commencing on the first such day to occur after the Funding Availability
Date, the Company shall do the following:
(i) deposit or cause to be deposited into the Capital
Reserve Account an amount equal to the remainder, which shall not be
less than zero, of (a) 3.50% of Property Gross Revenues for each of
the Properties for the immediately preceding calendar month minus (b)
if such Property is a Pool B Property or a Pool C Property, the
aggregate amount, if any, that shall then have been deposited with
respect to such Property in Other Capital Reserve Accounts pursuant to
the requirements of the related Pool B Obligation or Pool C Obligation
for such calendar month; and
(ii) deliver to the Agent an Officers' Certificate with
respect to (a) the allocation of such amount among the Properties,
which allocation shall reflect the amounts determined with respect to
the Properties pursuant to the preceding clause (i), (b) the
allocation of the resulting balance in the Capital Reserve Account
among the Properties, which allocation shall reflect the allocation of
all deposits in the Capital Reserve Account pursuant to this
subsection 6.16A and all transfers therefrom pursuant to this
subsection 6.16A and (c) the deposits in and withdrawals from each of
the Other Capital Reserve Accounts during the preceding calendar month
and the respective closing balances thereof.
On the thirtieth day after the end of each calendar year, the Company
shall deliver to the Agent an Officers' Certificate summarizing amounts
withdrawn from the Capital Reserve Account during the preceding year and the
application of such proceeds.
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So long as no Event of Default or Potential Event of Default has
occurred and is continuing, upon the Company's written request and not more
frequently than once each month, the Agent shall transfer funds to the Company
then on deposit in the Capital Reserve Account for the payment of costs of
Capital Items or for the deposit of funds into Other Capital Reserve Accounts,
in each case in amounts not greater than the amount of funds then required by
the terms of the related Pool B Obligation or Pool C Obligation, as the case
may be, to be so deposited; provided, however, that the aggregate amount of
such funds applied towards Capital Items from the Capital Reserve Accounts in
respect of any Property shall not exceed the aggregate amount of funds
deposited in the Capital Reserve Account in respect of such Property. Together
with each such request, the Company shall deliver to the Agent copies of bills
and other documentation as may be reasonably required by the Agent to establish
that such Capital Items or such deposits in such Other Capital Reserve
Accounts, as the case may be, are then due.
B. RENOVATION AND REMEDIATION OF ROSE HALL PROPERTY.
(i) Rose Hall Partnership shall undertake and complete,
in accordance with the preliminary budget and time schedule set forth
on Schedule 6.16B annexed hereto, as such Schedule shall be updated
monthly by the Company and delivered to the Agent, in each case
subject to the approval of the Agent, which approval shall not be
unreasonably withheld, conditioned or delayed, (a) the Renovation of
the Rose Hall Property and (b) the remediation of the Rose Hall
Property and implementation of monitoring programs in accordance with
the recommendations and suggestions specified in the Report of
Environmental Site Assessment dated April 1996 for the Rose Hall
Property that shall have been approved in writing by the Agent, which
approval may be granted, withheld, conditioned or delayed in its
sole discretion. By June 30, 1996, the Company shall deliver a final
budget and time schedule for the Renovation and remediation of the
Rose Hall Property, which budget and time schedule shall be reasonably
satisfactory to the Agent. Each of the Company and Rose Hall
Partnership shall promptly provide the Agent with copies of all
monitoring data and reports that it receives from time to time in
connection with the monitoring programs implemented in accordance with
clause (b) of the preceding sentence.
(ii) Rose Hall Partnership shall, on or prior to August
31, 1996, take whatever actions are necessary to cause the Rose Hall
Property to be connected to the public water system and to obtain all
permits and licenses necessary to enable the Rose Hall Property to use
the public water system.
6.17 DEFERRED MAINTENANCE.
A. DEFERRED MAINTENANCE ACCOUNT. So long as no Event of Default
or Potential Event of Default has occurred and is continuing upon the Company's
written request and not more frequently than once each month, the Agent shall
transfer funds to the Company then on deposit in the Deferred Maintenance
Account for the payment of costs and expenses paid or incurred by any of the
Loan Parties and their respective Subsidiaries in connection with the
completion of Deferred Maintenance; provided, however, that the aggregate
amount of funds applied towards Deferred Maintenance in respect of any Property
shall not exceed the aggregate
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amount of funds deposited in the Deferred Maintenance Account in respect of
such Property. Together with such request, the Company shall deliver to the
Agent (i) an Officers' Certificate of the Company, reasonably satisfactory to
the Agent, certifying as to (a) the completion of the Deferred Maintenance
described therein, (b) the amount budgeted therefor on Schedule 6.17A annexed
hereto and (c) the actual amount of the costs and expenses therefor incurred or
paid by the Loan Parties and their respective Subsidiaries, and (ii) copies of
bills and other documentation as may be reasonably requested by the Agent to
establish that payments in respect of the related Deferred Maintenance have
been made or are then due, as the case may be.
B. COMPLETION. On December 31, 1996 the Company shall deposit in
the Deferred Maintenance Account an aggregate amount equal to the sum of the
respective amounts set forth on Schedule 6.17A with respect to each applicable
Property minus the aggregate expenditures for Deferred Maintenance during the
period from the Effective Date to December 31, 1996 with respect to each such
Property. Notwithstanding anything to the contrary contained in this subsection
6.17, at any time and from time to time after the Effective Date, the Company
may propose in writing revisions to the form and substance of Schedule 6.17A,
and such revisions shall be effective to the extent approved in writing by the
Agent, which approval shall not be unreasonably withheld, delayed or
conditioned; provided that the Company shall make by December 31, 1996 all
repairs described as "immediate repairs" and "currently recommended repairs" in
the Engineering Reports delivered pursuant to subsection 4.1N or it shall
deposit in the Deferred Maintenance Account as provided in the preceding
sentence all amounts allocated as of the Effective Date on Schedule 6.17A in
respect of the repairs not completed by December 31, 1996.
6.18 MANAGEMENT OF PROPERTIES; SERVICING AGREEMENTS.
The Company shall, or shall cause Management Corp. or any of the
Wholly Owned Subsidiaries of Management Corp. to, (i) manage and operate each
of the Properties pursuant to Servicing Agreements in a commercially reasonable
and prudent manner and (ii) maintain worker's compensation insurance as
required by Governmental Authorities. No Person other than the Company,
Management Corp. or such Wholly Owned Subsidiary shall have substantial
authority over the management and operation of any Property.
6.19 INTELLECTUAL PROPERTY.
The Company shall cause each Subsidiary (other than any Pool C
Subsidiary) owning, licensed to use or otherwise having the lawful right to use
any Intellectual Property to execute and deliver the Trademark Agreement for
the purposes of becoming bound thereby, and the Company shall deliver
supplements to the Schedules to this Agreement, the Security Agreement and the
Trademark Agreement, which Schedules shall be reasonably acceptable to the
Agent.
6.20 FURTHER ASSURANCES.
A. ASSURANCES. Without expense or cost to the Agent or the
Lenders, each Loan Party shall, and shall cause each of its Subsidiaries to,
from time to time hereafter execute, acknowledge, file, record, do and deliver
all and any further acts, deeds, conveyances,
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mortgages, deeds of trust, deeds to secure debt, security agreements,
hypothecations, pledges, charges, assignments, financing statements and
continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as the Agent may from time to time reasonably
require and which do not involve a material expansion of the Company's
obligations or liabilities hereunder in order to carry out more effectively the
purposes of this Agreement or the other Loan Documents, including to subject
any Pool A Property, Pool B Property or other items of Collateral, intended to
now or hereafter be covered, to the Liens created by the Security Documents, to
perfect and maintain such Liens, and to assure, convey, assign, transfer and
confirm unto the Agent the property and rights hereby conveyed and assigned or
intended to now or hereafter be conveyed or assigned or which any Loan Party or
any such Subsidiary may be or may hereafter become bound to convey or to assign
to the Agent or for carrying out the intention of or facilitating the
performance of the terms of this Agreement, or any other Loan Documents or for
filing, registering or recording this Agreement or any other Loan Documents.
Without limiting the foregoing, the Company shall, and shall cause each other
Loan Party to, deliver to Agent, promptly upon receipt thereof, all instruments
received by the Company or any such Loan Party after the Effective Date and
take all actions and execute all documents necessary or reasonably requested by
the Agent to perfect the Agent's security interest in any such instrument or
any other Investment acquired by the Company or any other Loan Party. Promptly
upon request or, in an emergency, upon demand, each Loan Party shall execute
and deliver, and hereby authorizes the Agent to execute and file in the name of
such Loan Party, to the extent the Agent may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments to
evidence more effectively the Lien hereof upon the Collateral.
B. FILING AND RECORDING OBLIGATIONS. Each Loan Party shall pay
all filing, registration and recording fees and all expenses incident to the
execution and acknowledgement of any Mortgage or other Loan Document, including
any instrument of further assurance described in subsection 6.21A, and shall
pay all mortgage recording taxes, transfer taxes, general intangibles taxes and
governmental stamp and other taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution, delivery, filing, recording
or registration of any Mortgage or other Loan Document, including any
instrument of further assurance described in subsection 6.21A, or by reason of
its interest in, or measured by amounts payable under, the Notes, the Mortgages
or any other Loan Document, including any instrument of further assurance
described in subsection 6.21A (including all Georgia Intangible Tax, but
excluding income, franchise and doing business taxes), and shall pay all stamp
taxes and other taxes required to be paid on the Notes or any other Loan
Document; provided, however, that such Loan Party may contest in good faith and
through appropriate proceedings, any such taxes, duties, imposts, assessments
and charges; provided further, however, that such Loan Party shall pay all such
taxes, duties, imposts and charges when due to the appropriate taxing authority
during the pendency of any such proceedings if required to do so to stay
enforcement thereof. If any Loan Party fails to make any of the payments
described in the preceding sentence within 10 days after notice thereof from
the Agent (or such shorter period as is necessary to protect the loss of or
diminution in value of any Collateral by reason of tax foreclosure or
otherwise, as determined by the Agent, in its sole discretion) accompanied by
documentation verifying the nature and amount of such payments, the Agent may
(but shall not be obligated to) pay the amount due and such Loan Party shall
reimburse all amounts in accordance with the terms
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hereof. If Applicable Law prohibits any Loan Party from paying such taxes,
charges, filing, registration and recording fees, excises, levies, stamp taxes
or other taxes, then the Agent may declare the Pool A Property Amount with
respect to the applicable Pool A Property in accordance with the terms of this
Agreement to be immediately due and payable without premium or penalty not less
than 30 days after such declaration.
C. COSTS OF DEFENDING AND UPHOLDING THE LIEN. The Agent may, upon
at least five days' prior notice to the Company, (i) appear in and defend any
action or proceeding, in the name and on behalf of the Agent, the Lenders, any
Loan Party or any of its Subsidiaries, in which the Agent or any Lender is
named or which the Agent in its sole discretion determines is reasonably likely
to materially adversely affect any Pool A Property, any Pool B Property, any
Management Agreement or other Collateral, any Mortgage, the Lien thereof or any
other Loan Document and (ii) institute any action or proceeding which the Agent
reasonably determines should be instituted to protect the interest or rights of
the Agent and the Lenders in any Pool A Property, any Pool B Property, any
Management Amount or other Collateral or under this Agreement or any other Loan
Document. The Company agrees that all reasonable costs and expenses expended or
otherwise incurred pursuant to this subsection (including reasonable attorneys'
fees and disbursements) by the Agent shall be paid by the Company or reimbursed
to the Agent, as the case may be, promptly after demand.
D. COSTS OF ENFORCEMENT. The Company agrees to bear and shall pay
or reimburse the Agent and the Lenders in accordance with the terms of
subsection 8.2 for all reasonable sums, costs and expenses incurred by the
Agent and the Lenders (including reasonable attorneys' fees and the expenses
and fees of any receiver or similar official) of or incidental to the
collection of any of the Obligations, any foreclosure (or Transfer in lieu of
foreclosure) of this Agreement, any Mortgage or any other Loan Document or any
sale of all or any portion of any Pool A Property, any Pool B Property, all or
any interests under the Management Agreements or all or any portion of the
other Collateral.
E. FURNISHING OF DOCUMENTS. The Company shall, at its sole cost
and expense, furnish to the Agent all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
Appraisals (but only to the extent required to be paid by the Company pursuant
to subsection 6.6B), title and other insurance reports and agreements, and each
and every other document, certificate, agreement and instrument required to be
furnished pursuant to the terms of the Loan Documents.
F. WYNDHAM HOTELS & RESORTS (MANAGEMENT) LTD. The Loan Parties
shall not permit Wyndham Hotels & Resorts (Management), Ltd. to own any assets
or conduct any operations unless the Company, at its expense, shall have (i)
prepared and delivered to the Agent for filing in the appropriate offices such
instruments and taken such other action, as in each case may be necessary or
appropriate, in the reasonable determination of the Agent, to perfect under the
laws of such other jurisdiction a first priority security interest in favor of
the Agent or the Lenders, as the Agent shall determine, in the capital shares
of Wyndham Hotels & Resorts (Management), Ltd. and (ii) caused to be prepared
and delivered to the Agent an opinion of counsel or other evidence with respect
to the perfection of such security interest, which counsel and opinion or other
evidence shall be reasonably satisfactory to the Agent.
SECTION 7
COMPANY'S NEGATIVE COVENANTS
The Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of the Loans and the
other Obligations and the cancellation or expiration of all Letters of Credit,
the Company shall perform and shall cause each of its Subsidiaries to perform
all covenants in this Section 7.
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7.1 INDEBTEDNESS.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create, incur, assume,
Guarantee, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) the Loan Parties and their respective Subsidiaries
may become and remain liable with respect to the Obligations;
(ii) the Loan Parties and their respective Subsidiaries
may become and remain liable with respect to (a) the Senior Notes
pursuant to the Indenture and (b) with the prior written approval of
the Agent, which approval may be granted, withheld, conditioned or
delayed in its sole discretion, any refinancing, exchange or refunding
of the Senior Notes; provided, however, that in no event shall the
Indebtedness for which the Loan Parties and their respective
Subsidiaries may become and remain liable pursuant to the preceding
clause (b) shall (x) have an aggregate principal amount greater than
the principal amount of the Senior Notes so refinanced, exchanged or
refunded or (y) have terms that are more burdensome either to the Loan
Parties and their respective Subsidiaries or to the rights and
obligations of the Agent and Lenders hereunder and under the other
Loan Documents in any material respect, as determined by the Agent in
its sole discretion.
(iii) the Loan Parties and their respective Subsidiaries
may become and remain liable with respect to FF&E Financing
Indebtedness in aggregate principal amounts at any time outstanding
not to exceed (a) $5,000,000 in the aggregate, (b) $600,000 with
respect to each Property that is an upscale full service hotel or a
resort hotel and (c) $300,000 for each Property that is a garden style
hotel, or in each case such lesser amount as shall be permitted under
the Pool B Documents or the Pool C Documents with respect to each of
the Pool B Properties and the Pool C Properties, as the case may be;
provided that all FF&E Financing Indebtedness shall be secured solely
by the FF&E financed with such FF&E Indebtedness;
(iv) the Loan Parties and their respective Subsidiaries
may become and remain liable with respect to Indebtedness in respect
of the Pool B Obligations indicated on Schedule 7.1(iv) annexed hereto
as being owed thereby;
(v) the Loan Parties and their respective Subsidiaries
may become and remain liable with respect to Indebtedness in respect
of the Letters of Credit;
(vi) the Loan Parties and their respective Subsidiaries
may become and remain liable with respect to Interest Rate Agreements
required pursuant to subsection 6.14 or otherwise approved by the
Agent, which approval shall not be unreasonably withheld, conditioned
or delayed;
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(vii) so long as at the time of incurrence thereof no Event
of Default or Potential Event of Default has occurred and is
continuing or would be caused thereby, each Pool C Subsidiary may
incur and remain liable with respect to Indebtedness to Persons in
connection with the Acquisition or ownership of a Pool C Property, and
may refinance, exchange or refund the same (as so incurred,
refinanced, exchanged or refunded, "POOL C INDEBTEDNESS"), in each
case as incurred, refinanced, exchanged or refunded on terms and
conditions approved in writing by the Agent, which approval shall not
be unreasonably withheld, conditioned or delayed; provided, however,
that (r) the aggregate outstanding principal amount of any such Pool C
Indebtedness shall not at any time exceed 50% of the sum of the
aggregate cash purchase price of such Pool C Property plus the
aggregate amount of expenditures actually made by such Pool C
Subsidiary in connection with the Renovation of such Pool C Property,
(s) such Pool C Indebtedness of any Pool C Subsidiary shall not
require the scheduled payment of principal, interest and other amounts
during any period that in the aggregate exceeds an amount equal to 50%
of the Property EBITDA for such period with respect to such Pool C
Property, provided that this clause (s) shall not be given effect with
respect to any Pool C Property during the period from the commencement
of a Renovation with respect thereto to the last day of 12 complete
calendar months after the completion of such Renovation if and so long
as the Pool C Subsidiary either, at the written election made by the
Company or such Pool C Subsidiary and delivered to the Agent before
the date of such commencement, (1) shall have deposited and maintained
funds in a segregated account in an amount not less than the aggregate
amount of interest that shall be required to be paid during the
remainder of the period with respect to which this clause (s) shall
not be given effect, (2) in the absence of a default under such Pool C
Indebtedness, have the unrestricted right to add to the principal
amount thereof the aggregate amount of such interest or to make one or
more additional borrowings thereunder to pay the aggregate amount of
such interest, or (3) shall have directed the Agent by Officers'
Certificate to include an amount equal to such aggregate amount of
interest in clause (iv) of the definition of Total Utilization during
the remainder of the period with respect to which this clause (s) will
not be given effect, (t) such Pool C Indebtedness shall be
non-recourse to any Loan Party or any of its Subsidiaries (other than
for any Guaranties provided with respect to customary carve-outs for
environmental and "bad deed" indemnities), provided that such Pool C
Indebtedness may be recourse to any Pool C Subsidiary so long as such
Pool C Indebtedness is secured by first priority Liens on all material
assets (including all the capital stock of its Subsidiaries and all
such Subsidiaries' assets) owned by each such Pool C Subsidiary (which
Pool C Subsidiary shall have no other material assets or
Indebtedness), (u) such Pool C Indebtedness shall not be secured by
(1) the assets of any Loan Party or any of its Subsidiaries (other
than the Pool C Subsidiary that is the obligor with respect thereto,
in accordance with the preceding clause (t)) or (2) the Transfer of or
Lien on any Intellectual Property, (v) so long as (1) such Pool C
Indebtedness has not been accelerated, (2) a receiver has not been
appointed with respect to the related Pool C Property or (3) no other
remedy is being exercised with respect to any collateral securing, or
other property subject to, such Pool C Indebtedness, such financing
does not preclude or limit the distribution of Excess Cash Flow (after
reserves for Capital Items) to the Company for the purposes set forth
herein, (w) a Potential Event of Default or an Event of Default or a
default or event of default under the Senior Notes
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shall not constitute a default or event of default thereunder, (x)
after giving affect to such transaction, the Company is in compliance
with all of the provisions set forth herein and the other Loan
Documents, (y) the Company shall have delivered to the Agent any
Officers' Certificate demonstrating compliance with the provisions of
this subsection 7.1 (vii) by any Pool C Subsidiary in connection with
such Acquisition, and (z) the Company shall provide Bankers with a
request for proposal regarding the provision of such Pool C
Indebtedness and will consider Bankers' proposal, if any, in
accordance with the Company's usual practice;
(viii) so long as at the time of assumption or incurrence
thereof no Event of Default has occurred and is continuing or would be
caused thereby, the Vinings Subsidiary may assume or incur and remain
liable with respect to Indebtedness to Persons other than the Company
and its Wholly Owned Subsidiaries in connection with the Acquisition
or ownership of the Vinings Property, and may refinance, exchange or
refund the same (as so assumed, incurred, refinanced, exchanged or
refunded, "VININGS INDEBTEDNESS"), in each case assumed, incurred,
refinanced, exchanged or refunded on terms, and conditions approved in
writing by the Agent, which approval shall not be unreasonably
withheld, conditioned or delayed; provided that (x) without the
approval of the Agent, the Vinings Subsidiary may assume the
Indebtedness of the seller of the Vinings Property under or with
respect to the Vinings Bond Documents in a principal amount not
greater than $9,675,000, (y) the Vinings Subsidiary shall not
refinance, exchange or refund any amount of such Indebtedness so
assumed, or amend or otherwise modify any of the terms thereof,
without the prior written approval of the Agent, which approval may be
withheld, conditioned or delayed in its sole discretion, provided,
however, that (1) without the approval of the Agent, the Vinings
Subsidiary may refinance, exchange or refund such Indebtedness, or
amend or otherwise modify any of the terms thereof, if, after giving
effect to such refinancing, exchange, refund, amendment or other
modifications, the principal amount of such Indebtedness and all other
Indebtedness of the Vinings Subsidiary shall not exceed 50% of the
value of the Vinings Property specified in an Appraisal of the Vinings
Property dated as of a date not more than 60 days before the
effectiveness of such refinancing, exchange, refunding, amendment or
other modification and approved by the Agent in its sole discretion
and (2) all Indebtedness assumed or incurred by the Vinings Subsidiary
at any time shall be non-recourse to the Company or any of its other
Subsidiaries (other than for any Guaranties provided with respect to
customary carve-outs for environmental and "bad deed" indemnities) and
shall not be secured by (1) the assets of any Loan Party or any of its
Subsidiaries (other than the Vinings Subsidiary) or (2) the Transfer
of or Lien on any Intellectual Property;
(ix) the Loan Parties and their respective Subsidiaries
may become and remain liable with respect to the Indebtedness that
consists of Contingent Obligations otherwise permitted by subsection
7.4, subject to the terms and conditions thereof; and
(x) other Indebtedness in an aggregate principal amount
not to exceed $250,000 at any time.
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7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. The Loan Parties shall not, and shall
not permit any of their respective Subsidiaries to, directly or indirectly,
create, incur, assume or permit to exist any Lien on or with respect to any
property or asset of any kind (including any document or instrument in respect
of goods, furniture, fixtures, equipment or accounts receivable) of the Company
or any of its Subsidiaries, whether now owned or hereafter acquired, or any
income or profits therefrom, or file or permit the filing of, or permit to
remain in effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the Uniform
Commercial Code of any State or under any similar recording or notice statute,
except:
(i) Permitted Encumbrances;
(ii) Liens granted to secure FF&E Financing Indebtedness
as permitted by subsections 7.1(iii); provided, however, that such
Liens encumber only the assets purchased, financed or refinanced with
such FF&E Financing Indebtedness;
(iii) Liens granted or assumed by a Pool B Subsidiary to
secure the Pool B Obligations owed by the Pool B Subsidiary; provided,
however, that such Liens encumber only the assets purchased, financed
or refinanced with, or leased or otherwise used pursuant to the terms
of, such Pool B Obligations; and
(iv) Liens granted by a Pool C Subsidiary to secure Pool C
Indebtedness owed by the Pool C Subsidiary, as permitted by subsection
7.1 (vii); provided, however, that, other than with respect to Liens
specifically permitted by subsection 7.1(vii), such Liens encumber
only the Property purchased, financed or refinanced with such Pool C
Indebtedness;
(v) a Lien granted to Bank One, Texas, N.A., against a
deposit account balance in the amount of $2,637,045 to collateralize a
letter of credit issued in connection with the refurbishment of the
Wyndham Hotel at Los Angeles Airport, as such deposit account balance
may from time to time be reduced in connection with reductions in the
face amount of such letter of credit;
(vi) Liens granted by the Company to HPTWN to secure the
obligations of GHALP Corp. under the HPT Leases pursuant to the HPT
Stock Pledge covering all issued and outstanding stock of GHALP Corp.,
which Liens shall at all times remain junior, subject and subordinate
to the Liens against such stock granted to the Agent and the Lenders,
as more particularly set forth in the HPT Estoppel; and
(vii) Liens against certain Tenant's Personal Property, the
FF&E Reserve, Total Hotel Sales, the Retained Funds and related
Records (as such capitalized terms are defined in the HPT Leases) and
Liens against the Assigned Leases, the Contracts, the Agreements and
the other Collateral (as such capitalized terms are defined in the HPT
Collateral Documents) granted to HPTWN pursuant to the HPT Collateral
Documents
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to secure the obligations of GHALP Corp. under the HPT Leases; which
Liens shall at all times be subject to the Lien priority provisions
contained in the HPT Estoppel;
provided, however, that this covenant shall not be breached by any involuntary
Lien, claimed or assumed, so long as the provisions of subsection 6.9 are being
complied with.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If any Loan Party or any
of its Subsidiaries shall create or assume any Lien upon any of its properties
or assets, whether now owned or hereafter acquired, other than Liens excepted
by the provisions of subsection 7.2A or which are the subject of subsection
6.9 so long as the Company is in compliance with the provisions thereof, the
Company shall make or cause to be made effective provision whereby the
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness secured thereby as long as any such Indebtedness shall be so
secured; provided, however, that, notwithstanding the foregoing, this covenant
shall not be construed as a consent by the Agent or any Lender to the creation
or assumption of any such Lien not permitted by the provisions of subsection
7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to (i)
specific property encumbered to secure payment of particular Indebtedness or to
be sold pursuant to an executed agreement with respect to a sale or other
disposition of assets permitted hereunder, (ii) specific property subject to a
Ground Lease, (iii) Other Management Agreements (to the extent that the terms
thereof prohibit the assignment of rights thereunder, but not any other rights
or interests and otherwise consistent with industry practices) as security for
the Obligations or otherwise and (iv) any other agreement entered into in the
ordinary course of business which by its terms restricts the assignment of
rights thereunder (but not any other rights or interests and otherwise
consistent with industry practices) as security for the Obligations or
otherwise, the Loan Parties shall not and shall not permit any of their
respective Subsidiaries to, directly or indirectly, enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties
or assets (including, without limitation, any interest in, or right to receive
payments under, any of the Other Management Agreements), whether now owned or
hereafter acquired except to the extent that Liens to secure the Obligations
are excluded therefrom.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO THE COMPANY OR
OTHER SUBSIDIARIES. Except as provided in this Agreement, the Pool B Documents
(with respect to the related Pool B Subsidiaries) and the Pool C Documents
(with respect to the related Pool C Subsidiaries), the Loan Parties shall not,
and shall not permit any of their respective Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
such Subsidiary to (i) pay dividends or make any other distributions on any of
such Subsidiary's capital stock owned by the Company or any other Subsidiary of
the Company, (ii) repay or prepay any Indebtedness owed by such Subsidiary to
the Company or any other Subsidiary of the Company, (iii) make loans or
advances to the Company or any other Subsidiary of the Company, or (iv)
transfer any of its property or assets to the Company or any other Subsidiary
of the Company, except for specific property encumbered to secure the payment
of particular Indebtedness permitted hereunder.
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7.3 INVESTMENTS, GUARANTIES AND CERTAIN PAYMENTS.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, make any Investment in any
Person, including any Affiliate or Joint Venture, or, in each case for the
purpose of or otherwise in connection with securing, extending, renewing or
modifying any Management Agreement or Other Management Agreement, become liable
for, any Guaranty for the benefit of any Person, including any Affiliate or
Joint Venture, or make any payment to such Person, except as follows:
(i) each Loan Party and its Subsidiaries may make
Investments in Cash Equivalents;
(ii) each Loan Party and its Subsidiaries may make equity
or debt Investments in the Company or any of its Wholly Owned
Subsidiaries for the purposes set forth in subsection 7.14; provided
that, as of any date of determination, (a) except to the extent
provided to the contrary in subsection 7.3(viii), the aggregate amount
of such Investments by the Company and its Subsidiaries in any Pool B
Subsidiary (other than an Investment not to exceed $1,150,000 in GHALP
made on or before the Effective Date for reserves for Capital Items)
shall not exceed the aggregate amount of dividends and other
distributions made by such Pool B Subsidiary to the Company and its
other Wholly Owned Subsidiaries (other than other Pool B Subsidiaries
and Pool C Subsidiaries) plus, with respect to GHALP and WHI, an
amount not greater than $250,000 in the aggregate during the period
from the Effective Date to December 31, 1996 and (b) the aggregate
amount of Investments in the Pool C Subsidiaries for the Major
Renovation/Restoration of Pool C Properties shall not exceed the
amount by which $15,000,000 is greater than the sum of (1) the Total
Utilization of Revolving Commitments as of such date of determination
plus (2) the amount of the Guaranties permitted by subsection
7.4(ii)(a) as of such date of determination, in each case to the
extent that such amounts referred to in the preceding clauses (1) and
(2) shall have been used, issued or incurred for or in connection with
the Major Renovation/Restoration of the Properties which have not been
completed on or before such date of determination;
(iii) the Company may acquire the DAB Notes and the
Affiliate Notes and may acquire the collateral securing any Affiliate
Notes and/or DAB Notes upon a foreclosure;
(iv) GHALP Corp. may acquire the rights to the Retained
Funds under and as defined in the HPT Sale Agreement;
(v) subject to subsection 7.1OB(viii), until December 31,
1996, so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company may (a) make equity or debt
Investments in ISIS 2000 in an aggregate amount not to exceed $750,000
at any time and (b) become liable with respect to Guaranties of
Indebtedness or other obligations of ISIS 2000 in an aggregate
principal amount not to exceed $3,500,000 at any time;
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(vi) so long as No Event of Default or Potential Event of
Default is continuing, each Loan Party and its Subsidiaries may,
subject to subsection 7.10, (a) make equity or debt Investments in one
or more Joint Ventures (other than ISIS 2000, CWS and Wynright) and
(b) become liable with respect to Guaranties of Indebtedness or other
obligations of such Joint Ventures; provided that (1) the sole purpose
of each such Joint Venture is to acquire, renovate, restore, manage,
operate and dispose of Managed Properties or Other Managed Properties
that are upscale full service hotels, garden style hotels and resort
hotels located in the United States of America; (2) Management Corp.
or any of its Wholly Owned Subsidiaries shall have entered into an
Additional Management Agreement or an Other Management Agreement with
such Joint Venture or a Wholly Owned Subsidiary thereof that owns or
leases such Managed Property or Other Managed Property, as the case
may be, pursuant to subsection 7.16A(i); (3) the aggregate amount of
such Investments in and Guaranties for the benefit of such Joint
Venture and its Wholly Owned Subsidiaries shall not at any time exceed
the lesser of (x) $20,000,000 and (y) the amount by which the
aggregate amount of outstanding Investments, outstanding Guaranties
and payments made by the Loan Parties and their respective
Subsidiaries permitted by subsections 7.3(vii)(3) and 7.3(viii) is
less than $50,000,000, (4) the aggregate amount of such Guaranties for
the benefit of such Joint Venture and its Wholly Owned Subsidiaries
shall not at any time exceed the amount by which the aggregate amount
of outstanding Guaranties of the Loan Parties and their respective
Subsidiaries permitted by subsections 7.3(vi), (vii) and (ix) and
subsection 7.4(ii)(a) is less than $25,000,000; (5) as of the date of
each such Investment in each such Joint Venture after the Effective
Date and at all times thereafter, the Company's Adjusted Equity
Interest therein shall be equal to or greater than 20% and less than
or equal to 49% of the Total Adjusted Equity Interests of such Joint
Venture, provided that (X) the Company's Adjusted Equity Interest in
such Joint Venture may be less than 20% of the Total Adjusted Equity
Interests of such Joint Venture as of any date of determination to the
extent that such deficiency has resulted from an increase in the
outstanding amount of equity Securities of such Joint Venture owned by
Persons other than the Loan Parties and their respective Subsidiaries
and Affiliates and such increase was not reasonably foreseen by the
Company on the date of the most recent investment in such Joint
Venture by the Loan Parties and their respective Subsidiaries and (Y)
the Company's Adjusted Equity Interest in such Joint Venture may be
greater than 49% of the Total Adjusted Equity Interests of such Joint
Venture as of any date of determination to the extent that such excess
has resulted from the breach by any Person (other than the Loan
Parties and their respective Subsidiaries and Affiliates) of an
obligation to make an additional equity Investment in such Joint
Venture after the date of the most recent Investment therein by the
Loan Parties and their respective Subsidiaries; (6) the greater of (1)
the undepreciated book value of properties and other assets owned or
leased by such Joint Ventures or their respective Wholly Owned
Subsidiaries and (2) the fair market value of such properties and
other assets, in each case determined as of the respective dates of
acquisition thereof, shall not exceed $145,000,000 at any time, as
reasonably determined by the Company and certified to the Agent in an
Officers' Certificate of the Chief Executive Officer or the Chief
Financial Officer of the Company to such effect, together with the
information utilized by the Company to make such determination; and
(7) assuming for the purpose of this clause (7) that the principal
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amount of any obligation so Guaranteed is Indebtedness of such Joint
Venture and its Subsidiaries, the sum of (A) the aggregate principal
amount of the Indebtedness of such Joint Venture and its Subsidiaries
plus (B) the purchase price of any equity Securities issued by such
Joint Venture and its Subsidiaries that are preferred in right or
priority of payment (including any mandatory redemption or redemption
at the option of the holder) to any such equity or debt Investment
(other than a priority right to receive a preferred return on
investment of up to 25% per annum) shall not exceed 60% of the amount
determined in accordance with the preceding clause (6) from time to
time, as determined by the Company and certified to the Agent in an
Officers' Certificate of the Chief Executive Officer or the Chief
Financial Officer of the Company to such effect, together with the
information utilized by the Company to make such determination,
provided that this clause (7) shall not be given effect with respect
to Investments made by the Loan Parties and their respective
Subsidiaries to, or Guaranties made by the Loan Parties and their
respective Subsidiaries for the benefit of, Joint Ventures formed
pursuant to the Bedrock Investment Program Agreements to acquire,
renovate, restore, manage, operate and dispose of Managed Properties
or Other Managed Properties that are upscale full service hotels,
garden style hotels and resort hotels located in the United States of
America;
(vii) so long as no Event of Default or Potential Event of
Default is continuing, if the Company shall have determined that
making such Investment, becoming liable with respect to such Guaranty
or making such payment, in each case pursuant to this subsection
7.3(vii), is necessary to secure one or more Additional Management
Agreements pursuant to subsection 7.16A(i) or Other Management
Agreements pursuant to subsection 7.16A(ii), or to secure an
extension, renewal or modification thereof, the Company and its
Subsidiaries may, subject to subsection 7.10, (a) make equity or debt
Investments in one or more Persons (other than ISIS 2000, CWS and
Wynright) owning or leasing the related Managed Properties or Other
Managed Properties, as the case may be, (b) become liable with respect
to Guaranties of Indebtedness or other obligations of such Persons and
(c) make payments to such Persons or their respective Affiliates;
provided that (1) the sole purpose of each such Person shall be to
acquire, own, renovate, operate and dispose of a Managed Property or
Other Managed Properties, as the case may be, that is an upscale full
service hotel, a garden style hotel or a resort hotel; (2) Management
Corp. or one of its Wholly Owned Subsidiaries shall have entered into
an Additional Management Agreement with such Person with respect to
such Managed Property pursuant to subsection 7.16(i) or an Other
Management Agreement with such Person with respect to such Other
Managed Property pursuant to subsection 7.16(ii), as the case may be
(or an extension, renewal or modification thereof, as the case may
be); (3) if the aggregate amount of outstanding Investments,
outstanding Guaranties and payments made by the Loan Parties and their
respective Subsidiaries, in each case as permitted by subsections
7.3(vi), (vii) and (viii), does not (and after giving effect to any
proposed additional Investment, Guaranty or payment pursuant to this
subsection 7.3(vii) would not) exceed $50,000,000, then (A) the Person
in which or for whose benefit each such additional Investment,
Guaranty or payment shall be made, shall not be an Affiliate of more
than 4 other Affiliated Owners, and the aggregate amount of such
Investments in, Guaranties for the benefit of and payments to such 5
or fewer Affiliated
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Owners shall not exceed $7,500,000 at any time, (B) if the Managed
Property or Other Managed Property, as the case may be, is an upscale
full service hotel or a resort hotel, the aggregate amount of such
Investments in, Guaranties for the benefit of and payments to the
Person in which or for whose benefit such additional Investment,
Guaranty or payment shall be made, shall not exceed $5,000,000 at any
time and (C) if the Managed Property or Other Managed Property, as the
case may be, is a garden style hotel, the aggregate amount of such
outstanding Investments in, outstanding Guaranties for the benefit of
and payments to the Person in which or for whose benefit such
additional Investment, Guaranty or payment shall be made, shall not
exceed $2,000,000 at any time; (4) if the aggregate amount of
outstanding Investments, outstanding Guaranties and payments made by
the Loan Parties and their respective Subsidiaries, in each case as
permitted by subsections 7.3(vi), (vii) and (viii), then exceeds (or
after giving effect to any proposed additional Investment, Guaranty or
payment pursuant to this subsection 7.3(vi) would exceed) $50,000,000,
then (A) the Person in which or for whose benefit such additional
Investment, Guaranty or payment shall be made, shall not be an
Affiliate of more than two other Affiliated Owners, and the aggregate
amount of such Investments in, Guaranties for the benefit of and
payments to such 3 or fewer Affiliated Owners shall not exceed
$2,500,000 at any time, (B) if the Managed Property or Other Managed
Property, as the case may be, is an upscale full service hotel or a
resort hotel, the aggregate amount of such outstanding Investments in,
outstanding Guaranties for the benefit of and payments to the Person
in which or for whose benefit such additional Investment, Guaranty or
payment shall be made, shall not exceed $2,000,000 at any time and (C)
if the Managed Property or Other Managed Property, as the case may be,
is a garden style hotel, the aggregate amount of such outstanding
Investments in, outstanding Guaranties for the benefit of and payments
to the Person in which or for whose benefit such additional
Investment, Guaranty or payment shall be made, shall not exceed
$500,000 at any time; (5) the aggregate amount of outstanding
Guaranties made by the Loan Parties and their respective Subsidiaries
pursuant to subsections 7.3(vi), (vii) and (ix) and subsection
7.4(ii)(a) shall not exceed $25,000,000 at any time; and (6) as of the
date of each such Investment and at all times thereafter, the
Company's Adjusted Equity Interest in the Person in which or for whose
benefit such additional Investment, Guaranty or payment shall be made
shall be less than 20% of the Total Adjusted Equity Interests of such
Person, provided that the Company's Adjusted Equity Interest in such
Person may be greater than 20% of the Total Adjusted Equity Interests
of such Person as of any date of determination to the extent that such
excess has resulted from the breach by any Person (other than the Loan
Parties and their respective Subsidiaries and Affiliates) of an
obligation to make an additional equity investment of such entity
after the date of the most recent investment therein by the Loan
Parties and their respective subsidiaries; and certified to the Agent
in a certificate of the Chief Executive Officer or the Chief Financial
Officer of the Company to such effect, together with the information
utilized by the Company to make such determination;
(viii) so long as no Event of Default or Potential Event of
Default is continuing, if the Company shall have determined that
making such Investment or payment permitted by this subsection
7.3(viii) is necessary to secure an Additional Management Agreement
with respect to an Additional Pool B Property that is an upscale full
service hotel, garden
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style hotel or resort hotel located in the United States of America,
or to secure an extension, renewal or modification of such Additional
Management Agreement, the Loan Parties and their respective
Subsidiaries may, subject to subsection 7.10, (a) make equity or debt
Investments in the Pool B Subsidiary that shall lease such Additional
Pool B Property and (b) make payments to the lessor of such Additional
Pool B Property or its Affiliates on behalf of, or for the benefit of,
such Pool B Subsidiary, provided that (1) the Loan Parties and their
respective Subsidiaries shall comply with subsection 7.15A(ii); (2)
the aggregate amount of the outstanding Investments, outstanding
Guaranties and payments made by the Loan Parties and their respective
Subsidiaries, in each case as permitted by subsections 7.3(vi), (vii)
and (viii), does not (and after giving effect to such additional
investment pursuant to this subsection 7.3(viii) would not) exceed
$50,000,000; (3) the sum of (A) the aggregate amount of outstanding
Investments, outstanding Guaranties and payments made by the Loan
Parties and their respective Subsidiaries in, to or for the benefit of
the lessor of such Additional Pool B Property and its Affiliates
(which lessor and its Affiliates together shall not number more than 5
Affiliated Owners) pursuant to subsections 7.3(vi) and (vii) and (vii)
plus (B) the aggregate amount of outstanding Investments in Pool B
Subsidiaries that shall have leased Pool B Properties directly or
indirectly from such lessor and its Affiliates (which lessor and its
Affiliates together shall not number more than 5 Affiliated Owners),
shall not exceed $7,500,000 at any time; (4) if such Additional Pool B
Property is an upscale full service hotel or a resort hotel, such
investment shall not exceed $5,000,000; (5) if such Additional Pool B
Property is a garden style hotel, such investment shall not exceed
$2,500,000; (6) the aggregate amount of payments to all lessors with
respect to Additional Pool B Properties and their respective
Affiliates pursuant to this subsection 7.3(viii) shall not exceed
$5,000,000 in the aggregate; and
(ix) without limiting the provisions of subsection 7.4(v),
Investments, Guaranties and payments made by the Loan Parties and
their respective Subsidiaries pursuant to, and in amounts not greater
than the maximum estimated amounts of, the respective contingent
liabilities and obligations specified on Schedule 5.3 annexed hereto;
(x) the Company and its Subsidiaries may become liable
with respect to such Guaranties as the Agent shall have approved in
writing, which approval may be granted, withheld, conditioned or
delayed in its sole discretion; and
(xi) the Company may make Investments in its Subsidiaries
at the times and to the extent necessary or reasonably desirable to
comply with the provisions of subsection 6.17;
provided that (x) for purposes of clauses (vi), (vii) and (viii) above, (1) the
amount of the Investment in and payments to HPTWN pursuant to the HPT Sale
Agreements shall be deemed to be zero, (2) HPTWN shall be deemed to be an
Affiliate Owner with respect to any Affiliate thereof that is an Affiliate
Owner and (3) at least 30 days before the proposed closing date of the
acquisition by any Affiliate Owner of a fee or leasehold interest in any real
property, the Company, at its expense, shall deliver to the Agent copies of the
documents set forth in subsection 4.1M, mutatis mutandis, with respect to such
real property, in each case subject to
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the satisfaction of the Agent specified in subsection 4.1M, (y) except as
provided to the contrary in subsection 7.4(v)(b), Investments, Guaranties and
payments made by the Loan Parties and their respective Subsidiaries pursuant
to, and in amounts not greater than the maximum estimated amounts of, the
respective contingent liabilities and obligations specified on Schedule 5.3
annexed hereto, shall not be subject to subsections 7.3(vi), (vii) and (viii)
above and (z) the Company and its Subsidiaries shall not enter into, make or
become liable with respect to any Investment, Guaranty or payment referred to
in this subsection 7.3 if the Company or any of its Subsidiaries shall become
(or may reasonably be expected to become), by law, contract, ownership of
Securities or otherwise, directly or indirectly, obligated or liable to pay to
any Person any amount in addition to the maximum amount thereof specified in an
Officers' Certificate delivered to the Agent not later than the date of such
Investment, Guaranty or payment, as the case may be, or have any other
liability for the assets, liabilities or operations of any other Person.
For the purpose of this subsection 7.3 and without limiting any other
method of making an Investment, the Company and its Subsidiaries shall be
deemed to make an Investment in each Investment owned by a Person at the time
such Person becomes a Subsidiary of the Company or any of its Subsidiaries.
7.4 CONTINGENT OBLIGATIONS.
The Loan Parties shall not and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create or become liable
with respect to any Contingent Obligation, except that, so long as no Event of
Default or Potential Event of Default has occurred and is continuing:
(i) the Company and its Subsidiaries may become liable
with respect to Contingent Obligations in respect of Letters of
Credit;
(ii) the Company and its Subsidiaries may become liable
with respect to indemnification agreements and Guaranties (whether now
existing or hereafter entered into) with respect to (a) performance,
surety and similar bonds or guaranties of completion provided in the
ordinary course of business consistent with past practices in respect
of the Restoration or Renovation of any Property, but excluding any
such bonds with respect to any hotel property that is not then a
Property, in an aggregate amount not at any time exceeding the amount
by which $15,000,000 is greater than the sum of (1) the aggregate
principal amount of Loans, plus (2) the amount of all Letters of
Credit plus (3) the aggregate amount of Investments in Pool C
Subsidiaries, in each case to the extent that such amounts referred to
in the preceding clauses (1), (2) and (3) shall have been used, issued
or made for or in connection with the Renovation or Restoration of the
Properties, (b) other performance, surety and appeal bonds provided in
the ordinary course of business consistent with past practices or
contemplated by subsection 6.9, (c) with respect to indemnification or
contribution obligations in respect of agreements providing for
indemnification, adjustment of purchase price or similar obligations
or for Guaranties or letters of credit, surety bonds and performance
bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in any
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case incurred in connection with the Transfer of a business, asset or
Subsidiary (other than Guaranties of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition) in a
principal amount not to exceed the gross proceeds actually received by
the Company or any Subsidiary in connection with such Transfer, (d)
environmental and "bad-deed" indemnification obligations, (e)
indemnification and contribution obligations pursuant to the Formation
Documents and the Public Offering Documents and (f) other ordinary
course indemnification obligations in connection with Indebtedness,
Management Agreements, Servicing Agreements, Other Management
Agreements, service contracts, Leases, partnership, agreements,
Franchise Agreements, leases, licensing agreements and Ground Leases
in each case on customary terms consistent with industry practice and
to the extent that such Indebtedness or agreements are permitted by
this Agreement;
(iii) the Company and its Subsidiaries may become liable
with respect to the Guaranties permitted by subsections 7.3(v), (vi),
(vii), (viii), (ix) and (x);
(iv) the Company and its Subsidiaries may become liable to
make Investments and payments, in each case with respect to Guaranties
permitted by, and in accordance with the terms of, subsection 7.3(v),
(vi), (vii), (viii), (ix) and (x);
(v) such of the Company and its Subsidiaries as are
specified on Schedule 5.3 annexed hereto may be liable (a) with
respect to the Contingent Obligations set forth on such Schedule, in
each case in the aggregate amount not greater than the maximum
estimated amount specified thereon with respect to such Contingent
Liability and (b) with respect to modifications to any such Guaranty
either (1) that do not increase either the maximum possible amount, or
the maximum estimated amount thereof, or both, in each case as
specified on each list, add any obligors with respect thereto or
increase, decrease or otherwise vary the liabilities of the existing
obligors with respect thereto or (2) that increase either the maximum
possible amount or the maximum estimated amount thereof, or both, in
each case as specified on such list, add any obligors with respect
thereto or increase, decrease or otherwise vary the liabilities of the
existing obligors, provided that, with respect to the modification of
a Guaranty subject to the preceding clause (2), (A) if such Guaranty
shall have been made, or such modification thereof is being made, to
secure a Management Agreement or Other Management Agreement or an
extension, renewal or modification thereof, or otherwise shall have
been made in connection therewith, then for all purposes of
subsections 7.3 (vi), (vii) and (viii), (x) the modification shall be
deemed to be a Guaranty subject to the restrictions of such clauses,
(y) an amount equal to the greater increase referred to in the
preceding clause (2) shall be included in the calculation of amounts
referred to in subsections 7.3 (vi), (vii) and (viii) (including,
without limitation, in clause (4) to the proviso to subsection 7.3(vi)
and in clause (5) to the proviso to subsection 7.3(vi)) and (z) the
Person for whose benefit such Guaranty or modification shall have been
made shall be deemed to be an Affiliated Owner and (B) if such Guaranty
shall not have been made, and such modification thereof is not
proposed to be made, to secure a Management Agreement, Additional
Management Agreement or Other Management Agreement or an extension,
renewal or modification thereof, or otherwise shall not have been made
and is not being proposed to be made in
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connection therewith, then (x) the Company and its Subsidiaries shall
not effect such modification without the prior written approval of the
Agent, which approval shall not be unreasonably withheld, conditioned
or delayed, and (y) for purposes of subsections 7.3 (vi) and (vii), an
amount equal to the amount of the greater increase referred to in the
preceding clause (2) shall be included in the calculation of amounts
referred to in clause (4) in the proviso to subsection 7.3(vi) and in
clause (5) to the proviso to subsection 7.3(vii);
(vi) the Subsidiaries of the Company may become liable.
with respect to a Guaranty of the Senior Notes pursuant to the Senior
Note Subsidiary Guaranty; and
(vii) other Contingent Obligations in an aggregate amount
not to exceed $100,000 at any time.
7.5 RESTRICTED JUNIOR PAYMENTS.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, declare, order, pay, make,
give or publish notice or fix a date in respect of or set apart any sum for any
Restricted Junior Payment, enter into an agreement or make any commitment to
effect any of the foregoing or take any other similar action in furtherance of
or otherwise in connection with the foregoing; provided, however, that the Loan
Parties may make any of the following payments (the "PERMITTED JUNIOR
PAYMENTS"): (i) the Company may acquire shares of Common Stock pledged to
secure payment of one or more of the DAB Notes in connection with the
foreclosure of such pledge or the exercise of other remedies with respect
thereto and (ii) so long as no Event of Default or Potential Event of Default
has occurred and is continuing or would result therefrom, (a) the Company may
make scheduled payments of interest on account of the Senior Notes pursuant to
the terms thereof as in effect on the date of the initial closing of the Debt
Offering and (b) unless and until the aggregate consideration paid therefor by
the Loan Parties and their respective Subsidiaries after the Effective Date
shall exceed $200,000 in any period of 12 consecutive calendar months
commencing on the Effective Date or on any anniversary thereof, as the case may
be, with amounts unused in any such 12-month period being available for such
purpose in any subsequent 12-month period, the Loan Parties and their
respective Subsidiaries may purchase, redeem, acquire, cancel or otherwise
retire for value shares of Capital Stock of the Company, options on any such
shares or related stock appreciation rights or similar Securities held by
officers and employees of the Loan Parties and their respective Subsidiaries or
former officers and employees thereof (or their estates or beneficiaries under
their estates), upon death, disability, retirement, severance or termination of
employment or pursuant to any agreement or plan under which such Shares of
Capital Stock, options or related rights were issued, (iii) during the
continuance of a Potential Event of Default or Event of Default, the Agent may
permit the Company to make payments on account of the Senior Notes pursuant to
subsection 6.15, which permission may be granted, withheld, conditioned or
delayed in the Agent's sole discretion.
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7.6 FINANCIAL COVENANTS.
A. MINIMUM NET WORTH. The Company shall not permit at any time
the Net Worth of the Company and its Subsidiaries to be less than $55,000,000;
provided that compliance with this subsection 7.6A shall be calculated in the
Compliance Certificate each fiscal quarter (or, as provided in subsection 7.6D,
on the last day of the calendar month).
B. MINIMUM MARKET EQUITY CAPITALIZATION. The Company shall not
permit at any time its Market Equity Capitalization to be less than the lesser
of (i) 50% of the Market Equity Capitalization of the Company as of the date of
the initial pricing under the Public Offerings and (ii) an amount equal to the
Market Equity Capitalization of the Company as of such date of determination
that bears the same percentage relationship to the Market Equity Capitalization
of the Company as of the Funding Availability Date as the percentage
relationship that the aggregate Market Capitalization of the Comparable
Companies as of such date of determination bears to the aggregate Market Equity
Capitalization of such Comparable Companies as of the Funding Availability
Date; provided that compliance with this subsection 7.6B shall be determined in
the Compliance Certificate each fiscal quarter (or, as provided in subsection
7.6D, on the last day of the calendar month). For the purposes of this
subsection 7.6B, the term "Comparable Companies" means Persons that own or
operate hotels as one of their primary business activities and have common
stock listed on a national securities exchange or admitted for trading on
NASDAQ/NMS, as such Persons shall be selected from time to time by the Agent
and approved by the Company, which approval shall not be unreasonably withheld,
conditioned or delayed.
C. MAXIMUM CONSOLIDATED TOTAL INDEBTEDNESS. The Company shall
not permit at any time Consolidated Total Indebtedness to exceed the lesser of
(i) 50% of the sum of (a) Consolidated Total Indebtedness plus (b) the Market
Equity Capitalization of the Company and (ii) 50% of the sum of Consolidated
Total Indebtedness and Adjusted Stockholders' Equity provided that, as of any
date of determination, the preceding clause (i) shall not be given effect if
the aggregate Market Equity Capitalization of the Comparable Companies as of
such date is less than 50% of the Market Equity Capitalization of such
Comparable Companies as of the date of the initial closing under the Public
Offerings; provided that compliance with this subsection 7.6C shall be
calculated in the Compliance Certificate each fiscal quarter (or, as provided
in subsection 7.6D, on the last day of the calendar month).
D. MINIMUM FIXED CHARGE RATIO. As of the last day of any calendar
quarter (or, if and so long as the Total Utilization of Revolving Commitments
shall then be equal to or greater than $50,000,000 and if the Agent shall then
so elect, on the last day of the calendar month) ending during any of the
periods set forth below, the Company shall not permit the ratio of (i) the sum
of (a) Consolidated EBITDA plus (b) the amount calculated pursuant to clause
(viii) of the definition of Consolidated Fixed Charges for such period plus (c)
one-third of the rental expense attributable to Operating Leases with respect
to real property and one-third of the rental expense attributable to Operating
Leases with respect to personal property with an initial term, including any
renewals at the option of either party, in excess of one year to (ii) the sum
of Consolidated Fixed Charges, to be less than the correlative ratio indicated
for the periods set forth below (such amounts to be determined with reference
to the preceding 12-month period
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<PAGE> 198
ending on such last day and to be adjusted to the extent required by the
respective provisos to the definitions of Property EBITDA and Management
EBITDA):
<TABLE>
<CAPTION>
MINIMUM
FIXED CHARGE
PERIOD COVERAGE RATIO
---------------------- --------------
<S> <C>
F.A. Date-06/30/96 1.75 to 1.00
07/01/96-12/31/96 1.85 to 1.00
01/01/97-12/31/97 2.25 to 1.00
01/01/98-12/31/98 2.50 to 1.00
01/01/99-12/31/99 2.75 to 1.00
01/01/00-Maturity Date 3.00 to 1.00
</TABLE>
E. MINIMUM FIXED CHARGE RATIO (EXCLUDING CAPITAL EXPENDITURES).
As of the last day of the calendar quarter (or, as so provided in subsection
7.6D, on the last day of the calendar month) ending during any of the periods
set forth below, the Company shall not permit the ratio of (i) the sum (a) of
Consolidated EBITDA-Cap Ex plus (b) the amount calculated pursuant to clause
(viii) of the definition of Consolidated Fixed Charges for such period plus (c)
one-third of the rental expense attributable to Operating Leases with respect
to real property and one-third of the rental expense attributable to Operating
Leases with respect to personal property with an initial term, including any
renewals at the option of either party, in excess of one year to (ii)
Consolidated Fixed Charges, to be less than the correlative ratio indicated for
the periods set forth below (such amounts to be determined with reference to
the preceding 12-month period ending on such last day and to be adjusted to the
extent required by the respective provisos to the definitions of Property
EBITDA and Management EBITDA):
<TABLE>
<CAPTION>
MINIMUM
FIXED CHARGE
PERIOD COVERAGE RATIO
---------------------- --------------
<S> <C>
F.A. Date-06/30/96 1.50 to 1.00
07/01/96-12/31/96 1.60 to 1.00
01/01/97-12/31/97 2.00 to 1.00
01/01/98-12/31/98 2.25 to 1.00
01/01/99-12/31/99 2.50 to 1.00
01/01/00-Maturity Date 2.75 to 1.00
</TABLE>
F. MAXIMUM TOTAL DEBT LEVERAGE RATIO. As of the last day of the
calendar quarter (or, as so provided in subsection 7.6D, on the last day of the
calendar month) ending during any of the periods set forth below, the Company
shall not permit the ratio of (i) Consolidated Total Indebtedness to (ii) the
sum of Consolidated EBITDA plus the amount calculated pursuant to clause (viii)
of the definition of Consolidated Fixed Charges for such period to exceed the
correlative ratio indicated for the periods set forth below (Consolidated Total
Indebtedness to be determined as of such last day, Consolidated EBITDA to be
determined with reference to the
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<PAGE> 199
preceding 12-month period ending on such day and each to be adjusted to the
extent required by the respective provisos to the definitions of Property
EBITDA and Management EBITDA):
<TABLE>
<CAPTION>
MAXIMUM
LEVERAGE
PERIOD RATIO
------------------ ------------
<S> <C>
F.A. Date-06/30/96 5.50 to 1.00
07/01/96-12/31/96 5.50 to 1.00
01/01/97-12/31/97 5.00 to 1.00
01/01/98-12/31/98 4.50 to 1.00
01/01/99-12/31/99 4.00 to 1.00
01/01/00-Maturity Date 3.50 to 1.00
</TABLE>
G. MAXIMUM TOTAL DEBT LEVERAGE RATIO (EXCLUDING CAPITAL
EXPENDITURES). As of the last day of the calendar quarter (or, as so provided
in subsection 7.6D, on the last day of the calendar month) ending during any of
the periods set forth below, the Company shall not permit the ratio of (i)
Consolidated Total Indebtedness to (ii) the sum of Consolidated EBITDA-Cap Ex
plus the amount calculated pursuant to clause (viii) of the definition of
Consolidated Fixed Charges for such period to exceed the correlative ratio
indicated for the periods set forth below (Consolidated Total Indebtedness to
be determined as of such last day, Consolidated EBITDA-Cap Ex to be determined
with reference to the preceding 12-month period ending on such day and each to
be adjusted to the extent required by the respective provisos to the
definitions of Property EBITDA and Management EBITDA):
<TABLE>
<CAPTION>
MAXIMUM
LEVERAGE
PERIOD RATIO
------------------ ------------
<S> <C>
F.A. Date-06/30/96 6.55 to 1.00
07/01/96-12/31/96 6.45 to 1.00
01/01/97-12/31/97 5.75 to 1.00
01/01/98-12/31/98 5.25 to 1.00
01/01/99-12/31/99 4.75 to 1.00
01/01/00-Maturity Date 4.25 to 1.00
</TABLE>
7.7 FUNDAMENTAL CHANGES.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, alter the corporate, capital or legal structure of
any Loan Party or any of its Subsidiaries, to incorporate or otherwise organize
any Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or make or permit any Transfer or acquire by purchase or
otherwise, directly or indirectly, all or substantially all the business,
property or fixed assets of, or stock or other evidence of beneficial ownership
of, any Person, make any Acquisition, acquire or enter into any management
agreement or other agreement with respect to the management or operation of a
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hotel property or Transfer any Property or Management Agreement, except that,
from time to time after the Funding Availability Date:
(i) the Loan Parties and their Subsidiaries may lease
space in Improvements and may sell or otherwise dispose of in the
ordinary course of business any property which is obsolete or no
longer useful in accordance with subsection 6.5(vi);
(ii) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would be caused thereby,
with the prior approval of the Agent, which approval may be granted,
withheld, conditioned or delayed in the Agent's sole discretion, any
Wholly Owned Subsidiary of the Company may be merged with or into the
Company or any Wholly Owned Subsidiary Guarantor, or be liquidated,
wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to the
Company or any Wholly Owned Subsidiary Guarantor; provided however,
that, in the case of such a merger, the Company or such Wholly Owned
Subsidiary Guarantor shall be the continuing or surviving corporation;
(iii) the Company and any Subsidiary (other than a Pool A
Subsidiary or a Pool B Subsidiary) may create one or more Subsidiaries
(including, without limitation, Pool B Subsidiaries and Pool C
Subsidiaries); provided that (a) each such Subsidiary shall be Wholly
Owned Subsidiary of the Company and (b) the legal and tax structure of
each such Subsidiary shall be approved by the Agent, which approval
shall not be unreasonably withheld, conditioned or delayed, provided
that, with respect to the restrictions on the tax and legal structure
of a Pool B Subsidiary or a Pool C Subsidiary, such structure may
include features intended by the Company to make one or more of the
Pool B Subsidiaries and the Pool C Subsidiaries "bankruptcy-remote";
(iv) the Loan Parties and their respective Subsidiaries
may make Acquisitions to the extent permitted by, and in accordance
with, subsection 7.15A;
(v) the Loan Parties and their respective Subsidiaries
may Transfer Properties to the extent permitted by, and in accordance
with, subsection 7.15B;
(vi) the Loan Parties and their respective Subsidiaries
may acquire or enter into Management Agreements, Servicing Agreements
and Other Management Agreements with respect to hotel properties to
the extent permitted by, and in accordance with, subsection 6.18 or
7.16A;
(vii) the Loan Parties and their respective Subsidiaries
may Transfer Management Agreements, Servicing Agreements and Other
Management Agreements to the extent permitted by, and in accordance
with, subsection 7.16B; and
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(viii) the Loan Parties and their respective Subsidiaries
may dissolve one or more Pool C Subsidiaries, Pool B Subsidiaries,
Subsidiaries of Management Corp. and "payroll" Subsidiaries upon the
Transfer of the assets to which they relate.
7.8 ZONING AND CONTRACT CHANGES AND COMPLIANCE.
The Loan Parties shall not and shall not permit any of their
respective Subsidiaries to initiate or consent to any zoning reclassification
of any property or seek any material variance under any existing zoning
ordinance or use or permit the use of any Property in any manner that could
result in such use becoming a non-conforming use (other than a non-conforming
use permissible under automatic grandfathering provisions) under any zoning
ordinance or any other applicable land use law, rule or regulation. The Loan
Parties shall not and shall not permit any of their respective Subsidiaries to
initiate or consent to any change in any laws, requirements of Governmental
Authorities or obligations created by private contracts and Material Leases
which now or hereafter could reasonably be likely to materially and adversely
affect the ownership, occupancy, use or operation of any Property without the
prior written consent of the Agent; provided, however, that this covenant shall
not apply to emergency situations in which any Loan Party or such Subsidiary
exercises its prudent judgment and notifies the Agent promptly thereafter of
such emergency and the actions taken in response thereto.
7.9 NO JOINT ASSESSMENT; SEPARATE LOTS.
The Loan Parties shall not suffer, permit or initiate, and shall not
permit any of their respective Subsidiaries to suffer, permit or initiate, the
joint assessment of any Property (i) with any other real property constituting
a separate tax lot (other than another Property) and (ii) with any portion of
any Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any Taxes which may be levied against any such
personal property shall be assessed or levied or charged to any Property as a
single lien. Each Property is comprised of one or more parcels, each of which,
to the knowledge of the Company, constitutes a separate tax lot (except with
respect to any lot constituting another Property) and none of which constitutes
a portion of any other tax lot.
7.10 TRANSACTIONS WITH AFFILIATED PERSONS.
A. RESTRICTIONS GENERALLY. The Loan Parties shall not, and shall
not permit any of their respective Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including, without limitations
the purchase, sale, lease or exchange of any property, the rendering of any
service or the making of any Investment or Guaranty, or the amendment,
restatement, supplement or other change of, or waiver or failure to enforce any
obligations under any agreement) with Bedrock, the Crow Interests, any holder
of 5% or more of any class of equity Securities of the Company or any Affiliate
of any of the foregoing or of the Company unless (1) the terms thereof are not
less favorable to such Loan Party or Subsidiary, as the case may be, than those
that might be obtained in a comparable transaction at the time on an arms-length
basis from Persons who are not such a holder or Affiliate and (2) if the value
of such transaction or series of related transactions has an aggregate value of
$500,000 or more, a majority of the members of the Board of Directors of the
Company who are not officers,
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<PAGE> 202
employees, partners, beneficiaries, principals or holders of 5% or more of any
class of equity Securities of the Company, Bedrock or the Crow Interests or any
of their respective Affiliates shall have made a determination to the effect
referred to in the preceding clause (1) (whether prior to the following the
inception of the transaction); provided, however, that this subsection 7.10A
shall not apply to (i) any transaction between the Company and any of its
Wholly Owned Subsidiaries or between any of its Wholly Owned Subsidiaries, (ii)
reasonable and customary fees paid to members of the Boards of Directors of the
Company and its Subsidiaries, (iii) reasonable compensation payable or paid to
senior management personnel of the Company, (iv) so long as no Event of Default
or Potential Event of Default has occurred and is continuing, any transaction
between Management Corp. and any of its Wholly Owned Subsidiaries, on the one
part, and any Affiliate of Bedrock or the Crow Interests, on the other part,
pursuant to an asset management agreement with respect to a Managed Property
that requires the other party to pay to Management Corp. or such Wholly Owned
Subsidiary a reimbursement (or make similar payments measured by or
attributable to the cost (direct or allocated) of providing a good or service),
in lieu of the payment of a fee, as consideration for providing a good or
service to such other party pursuant to such asset management agreement and (v)
so long as no Event of Default or (or event subject to subsection 8.1A that
would be an Event of Default upon the lapse of time) has occurred and is
continuing, any transaction described in Schedule 7.10A annexed hereto.
B. SPECIFIC RESTRICTIONS. Without limiting the generality of
subsection 7.10A, except as provided to the contrary below, without the prior
written approval of the Agent, which approval may not be unreasonably withheld,
conditioned or delayed, the Loan Parties shall not, and shall not permit any of
their respective Subsidiaries to, do any of the following, directly or
indirectly:
(i) become or remain liable with respect to any FF&E
Financing Indebtedness or Pool C Indebtedness owed to Bedrock, the
Crow Interests, holders of 5% or more of any class of equity
Securities of the Company or any of Affiliate of any of the foregoing;
or
(ii) acquire, directly or indirectly, any fee or leasehold
or other interest in any Additional Pool A Property, Additional Pool B
Property or Pool C Property from Bedrock, the Crow Interests, holders
of 5% or more of any class of equity Securities of the Company or any
Affiliate of any of the foregoing;
(iii) Transfer, directly or indirectly, any Property,
Management Agreement or Servicing Agreement to Bedrock, the Crow
Interests, holders of 5% or more of any class of equity Securities of
the Company or any of their respective Affiliates;
(iv) make Investments in or Guaranties for the benefit of
Bedrock, the Crow Interests, holders of 5% or more of any class of
equity Securities of the Company or any Affiliate of any of the
foregoing, whether pursuant to subsection 7.3 or otherwise; provided
that, without the prior approval of the Agent, the Loan Parties and
their respective Subsidiaries (a) may make the Investments and
Guaranties referred to in subsection 7.3(v) and (b) enter into
management agreements with Bedrock pursuant to
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the Bedrock Investment Program Agreements on terms substantially
identical to the management agreements in effect on the Effective Date
pursuant to the Bedrock Investment Program Agreements and (c) may
enter into management agreements with the Crow Interests on terms no
less favorable than the management agreements with the Crow Interests
in effect on the Effective Date, provided that neither the Company nor
any of its Subsidiaries may make equity or debt Investments, become
liable with respect to Guaranties of Indebtedness or other obligations
or make payments to any Person in connection with such management
agreement;
(v) enter into any agreement or other arrangement with,
or acquire goods or services from or provide goods or services to,
ISIS 2000; provided that (x) the Company may (A) enter into the ISIS
2000 Agreements in the respective forms approved by the Agent, which
approval may be granted, withheld, conditioned or delayed in its sole
discretion, and (B) enter into such amendments, restatements,
supplements or other modifications thereof as the Agent shall have
approved in writing, which approval shall not be unreasonably
withheld, conditioned or delayed, (y) the Company shall exercise its
rights thereunder and enforce the obligations of ISIS 2000 thereunder
in the manner and to the extent that the Company would exercise such
rights and enforce such obligations under the ISIS 2000 Agreements if
the other parties thereto were not Affiliates of Bedrock, the Crow
Interests or any holder of 5% or more of any class of equity
Securities of the Company and (z) the Company shall advise the Agent
in writing, reasonably in advance of the action contemplated by the
Company to be taken, with respect to any determination by the Company
to waive, surrender or fail to exercise any material right of the
Company under any ISIS 2000 Agreement or to waive, surrender or fail
to enforce any material obligation of ISIS 2000 thereunder;
(vi) enter into any agreement or other arrangement with,
or acquire goods or services from or provide goods or services to,
CWS; provided that (x) the Company may (A) enter into the CWS
Agreements in the respective forms approved by the Agent, which
approval may be granted, withheld, conditioned or delayed in its sole
discretion, and (B) enter into such amendments, restatements,
supplements or other modifications thereof as the Agent shall have
approved in writing, which approval shall not be unreasonably
withheld, conditioned or delayed, (y) the Company shall exercise its
rights thereunder and enforce the obligations of CWS thereunder in the
manner and to the extent that the Company would exercise such rights
and enforce such obligations under the CWS Agreements if the other
parties thereto were not Affiliates of Bedrock, the Crow Interests or
any holder of 5% or more of any class of equity Securities of the
Company and (z) the Company shall advise the Agent in writing,
reasonably in advance of the action contemplated by the Company to be
taken, with respect to any determination by the Company to waive,
surrender or fail to exercise any material right of the Company under
any CWS Agreement or to waive, surrender or fail to enforce any
material obligation of CWS thereunder;
(vii) enter into any agreement or other arrangement with,
or acquire goods or services from or provide goods or services to,
Wynright; provided that (x) the Company may (A) enter into the
Wynright Agreements in the respective forms approved by the
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Agent, which approval may be granted, withheld, conditioned or delayed
in its sole discretion, and (B) enter into such amendments,
restatements, supplements or other modifications thereof as the Agent
shall have approved in writing, which approval shall not be
unreasonably withheld, conditioned or delayed, (y) the Company shall
exercise its rights thereunder and enforce the obligations of Wynright
thereunder in the manner and to the extent that the Company would
exercise such rights and enforce such obligations under the Wynright
Agreements if the other parties thereto were not Affiliates of
Bedrock, the Crow Interests or any holder of 5% or more of any class
of equity Securities of the Company and (z) the Company shall advise
the Agent in writing, reasonably in advance of the action contemplated
by the Company to be taken, with respect to any determination by the
Company to waive, surrender or fail to exercise any material right of
the Company under any Wynright Agreement or to waive, surrender or
fail to enforce any material obligation of Wynright thereunder;
(viii) enter into any agreement or other arrangement with,
or acquire goods or services from or provide goods or services to,
Greystar Partnership or its Affiliates; provided that (x) the Company
may (A) enter into the Greystar Agreements on terms consistent with
the description thereof in the Debt Prospectus in the second paragraph
in the section entitled "Growth Strategy -- II. Additional Growth
Opportunities -- New Lodging Products" and enter into Other Management
Agreements with Greystar Partnership or its Affiliates and (B) enter
into such amendments, restatements, supplements or other modifications
thereof as shall be consistent with such description, (y) the Company
shall exercise its rights thereunder and enforce the obligations of
Greystar Partnership thereunder in the manner and to the extent that
the Company would exercise such rights and enforce such obligations
under the Greystar Agreements if the other parties thereto were not
Affiliates of Bedrock, the Crow Interests or any holder of 5% or more
of any class of equity Securities of the Company and (z) the Company
shall advise the Agent in writing, reasonably in advance of the action
contemplated by the Company to be taken, with respect to any
determination by the Company to amend, modify, waive, surrender or
fail to exercise any material right of the Company under any Greystar
Agreement or to amend, modify, waive, surrender or fail to enforce any
material obligation of Greystar Partnership thereunder.
7.11 SALES AND LEASE-BACKS.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, enter into any arrangement
with any Person providing for the leasing by any Loan Party or any of its
Subsidiaries of any real or tangible personal property, which property has been
or is to be sold or transferred by any Loan Party or any of its Subsidiaries to
such Person in contemplation of such leasing, unless (i) the Loan Parties and
their respective Subsidiaries shall comply with the conditions set forth in
subsection 7.15A(ii) with respect thereto, (ii) the Company would not be in
default, as of the date of such leasing, of any of paragraphs C, D, E, F and G
of subsection 7.6 if Consolidated Total Indebtedness were to increase by an
amount equal to the Attributable Indebtedness with respect to such sale and
leaseback arrangement, (iii) the gross proceeds of any such sale are at least
equal to the fair market value of such property (including the fair market
value of the related leasehold interest), (iv) the
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Company or such Subsidiary shall apply the cash proceeds of such sale as
required by subsections 2.4B and 2.9 and (v) the aggregate amount of
Attributable Indebtedness with respect to all sale and lease-back transactions
permitted by this subsection 7.11 does not exceed $75,000,000 at any time. A
sale and lease-back transaction with respect to a Property permitted by this
subsection 7.11 shall be deemed to be a sale or other permanent disposition of
such Property for all purposes of this Agreement.
7.12 SALE OR DISCOUNT OF RECEIVABLES.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable. Nothing in this subsection 7.12 shall be
construed to permit anything not permitted by any other provision of any Loan
Document.
7.13 TRANSFER OF SUBSIDIARY STOCK.
Except as expressly permitted pursuant to subsection 7.7(ii), the HPT
Agreements and the Loan Documents, the Loan Parties shall not, and shall not
permit any of their respective Subsidiaries to directly or indirectly Transfer
any shares of capital stock or other equity Securities of any of its
Subsidiaries, except to qualify directors if required by Applicable Laws or
permit Investments by foreign nationals mandated by Applicable Law.
7.14 CONDUCT OF BUSINESS.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, do the following:
(i) engage in any business other than (a) the
acquisition, ownership, renovation, restoration, management, operation
and disposition of Properties, Managed Properties and Other Managed
Properties that are upscale full service hotels, garden style hotels
and resort hotels located in the United States of America and
Properties and Managed Properties that are upscale full service
hotels, garden style hotels and resort hotels in other jurisdictions
on the Effective Date; (b) the management of Other Managed Properties
that are upscale full service hotels, garden style hotels and resort
hotels in Canada and the Caribbean; (c) the management of Other
Managed Properties that are (1) extended stay hotels located in the
United States of America, (2) not operated under the service marks
"Wyndham" or "Wyndham Garden" or any similar brand, (3) owned or
leased by Greystar Partnership and managed by Management Corp. or its
Wholly Owned Subsidiaries pursuant to the Greystar Agreements and (4)
managed pursuant to Other Management Agreements that have terms
substantially the same as these in the form of Other Management
Agreement to which hotels referred to in the preceding clause (b) are
subject; and (d) any business that is ancillary, in purpose and
extent, to any business referred to in the preceding clauses (a), (b)
and (c);
(ii) enter into any Material Lease or other agreement, or
take any other action, that would materially change the business
conducted at any Property, including any such
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Material Lease, agreement or other action, that would convert or
reposition any Property into any hotel other than an upscale full
service hotel, garden style hotel or resort hotel; or
(iii) make any Investment in, Guaranty for the benefit of
or make any payment to the Person owning or leasing any Other Managed
Property referred to in clause (i)(b) or (i)(c) above (other than
payments of revenues generated by the Other Managed Property).
7.15 PROPERTIES.
A. ACQUISITION OF PROPERTIES. The Loan Parties shall not, and
shall not permit any of their respective Subsidiaries to, make an Acquisition
of a fee or leasehold interest in any hotel property after the Formation Date,
except that, from time to time:
(i) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would be caused thereby,
without the approval of the Agent (except as provided to the contrary
in subsection 7.10 and this subsection 7.15A(i)), the Company or a
Wholly-Owned Subsidiary thereof may make Acquisitions of the fee
interests or leasehold interests in additional Pool A Properties;
provided that, in any event, (a) each additional Pool A Property (an
"ADDITIONAL POOL A PROPERTY") subject to such Acquisition shall
include the entire fee interest or leasehold interest, as the case may
be, in an upscale full service hotel, garden style hotel or resort
hotel, as the case may be, located in the United States of America and
otherwise be of a type, quality and character consistent with the
Company's business plan and strategy, as described in the Debt
Prospectus in the section entitled "Business -- Growth Strategy -- I.
Primary Growth Opportunities" or, if not consistent, as approved by
the Agent, which approval may be granted, withheld, conditioned or
delayed in its sole discretion; (b) the fair market value of such
Additional Pool A Property (as reasonably determined by the Company,
which determination shall be evidenced by an Officers' Certificate
delivered to the Agent) shall be equal to or greater than the purchase
price for such Property; (c) all Investments and Guaranties to be made
by the Company and its Subsidiaries in connection with the proposed
Acquisition shall be permitted pursuant to subsections 7.3 and 7.4;
(d) on or before such closing date, Management Corp. or any of its
Wholly Owned Subsidiaries shall have entered into a Property Servicing
Agreement (which, prior to the Addition Date for such Additional Pool
A Property, shall be considered an Other Management Agreement) with
the Company and, if a Liquor License exists with respect to such
Additional Pool A Property or is required thereafter, the holders
thereof shall have entered into a Liquor Operation Servicing
Agreement, in each case substantially in the form delivered on or
before the Funding Availability Date pursuant to subsection 4.1J or in
such other form as may be reasonably acceptable to the Agent, which
shall provide for Management Fees in amounts and on other terms
substantially similar to those obtained in the initial Servicing
Agreements or, if different, on terms satisfactory to the Agent; (e)
on or before such closing date, the Company, at its expense, shall
deliver to the Agent (1) an Officers' Certificate of the Company
setting forth a schedule of insurance with respect to each of the
insurance policies required pursuant to subsection
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6.10, and the Agent shall be satisfied that such insurance policies
comply with the requirements of Section 6.10, and each such insurance
policy shall name the Agent on behalf of the Lenders, as loss payee,
(2) supplements to the Schedules to this Agreement, the Environmental
Indemnity, the Security Agreement, the Omnibus Management and Liquor
License Agreement and, if so required by the Agent, the Trademark
Agreement reflecting the acquisition of such Additional Pool A
Property, which Schedules shall be reasonably acceptable to the Agent,
(3) if such Pool A Property is being acquired by a Wholly-Owned
Subsidiary of the Company, originally executed counterparts to the
Environmental Indemnity, the Security Agreement, the Omnibus
Management and Liquor License Agreement and the Subsidiary Guaranty,
together with such other Security Documents as the Agent may require
which do not enlarge the scope of any party's obligations as compared
to similar Security Documents previously executed, (4) each of the
other documents and satisfy each of the other conditions set forth in
paragraphs E, F, G, J(i), M and N(i) (provided that Agent shall not be
required to approve such Engineering Report) of subsection 4.1,
mutatis mutandis, with respect to such Additional Pool A Property, in
each case subject to the satisfaction of the Agent specified in such
subsections, (5) executed or certified, conformed copies of the
related Acquisition Agreements, Pool A Ground Lease, if any, and such
other documents, certificates and opinions executed and delivered by
or on behalf of the Company and any of its Subsidiaries as the Agent
may reasonably request, and (7) payment pursuant to subsection 9.2 of
the reasonable expenses incurred by the Agent in connection with the
matters subject to this subsection 7.15A(i); (f) at least 30 days
before the proposed Addition Date with respect to such Additional Pool
A Property, the Company, at its expense, shall deliver to the Agent
the Property Information with respect to such Additional Pool A
Property, which Property Information shall be satisfactory in form and
substance to the Agent, in its sole discretion; (g) on or before the
proposed Addition Date with respect to such Additional Pool A
Property, the Company, at its expense, shall deliver to the Agent (1)
a statement of Property Gross Revenues and Operating Expenses and any
other expenses with respect to such Additional Pool A Property for the
12 most recently completed calendar months ending not less than 30
days before such Addition Date, in reasonable detail satisfactory to
the Agent and certified by the Chief Executive Officer, the Chief
Financial Officer or Chief Accounting Officer of the Company to the
effect provided in subsection 6.1(i), mutatis mutandis, (2) an
Addition Certificate in reasonable detail satisfactory to the Agent
and together with the financial statements and other information used
by the Company to calculate the Borrowing Base and certified by the
Chief Executive Officer, Chief Financial Officer or Chief Accounting
Officer of the Company, (3) payment pursuant to subsection 9.2 of the
reasonable expenses incurred by the Agent in connection with the
matters subject to this subsection 7.15A(iii) and not previously paid
pursuant to clause (e)(7) above, (4) an Appraisal with respect to such
Additional Pool A Property, which Appraisal shall be satisfactory in
form and substance to the Agent and shall indicate that the fair
market value of such additional Pool A Property is equal to or greater
than the purchase price for such Property, and (5) each of the other
documents set forth in paragraphs K, L, and N (provided that, without
limiting any other consent or approval rights, the Engineering Report
and related reliance letter shall be satisfactory in form and
substance to the Agent) of subsection 4.1, and (6) projections of
property Gross Revenues for 5 years for such Additional Pool A
Property;
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(h) the Addition Date with respect to such Additional Pool A Property
shall not occur without the prior written approval of the Agent, which
approval may be granted, withheld, conditioned or delayed in the
Agent's sole discretion;
(ii) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would be caused thereby,
without the approval of the Agent (except as provided to the contrary
in subsection 7.10 and this subsection 7.15A(ii)), any of the Pool B
Subsidiaries may make Acquisitions of leasehold interests in
additional Pool B Properties (each, an "ADDITIONAL POOL B PROPERTY");
provided that, in any event, (a) each additional Pool B Property
subject to such Acquisition shall include the entire leasehold
interest in an upscale full service hotel, garden style hotel or
resort hotel, as the case may be, located in the United States of
America and otherwise be of a type, quality and character consistent
with the Company's business plan and strategy, as described in the
Debt Prospectus in the section entitled "Business -- Growth Strategy --
I. Primary Growth Opportunities" or, if not consistent, as approved
by the Agent, which approval may be granted, withheld, conditioned or
delayed in its sole discretion; (b) either (1) the Acquisition of such
leasehold interest shall be made in a sale and leaseback transaction
permitted by subsection 7.11 and the aggregate amount of Attributable
Indebtedness with respect to all leasehold interests so acquired in
such sale and leaseback transactions shall not exceed $75,000,000 or
(2) the Company or Management Corp. shall have determined that such
Acquisition is necessary to secure an Additional Management Agreement
with respect to such Additional Pool B Property and the aggregate fair
market value of the Additional Pool B Properties leased by Pool B
Subsidiaries pursuant to this subsection 7.15A(ii), in each case
determined as of the respective dates of acquisition thereof, shall
not exceed $75,000,000, as reasonably determined by the Company and
certified to the Agent in an Officers' Certificate of the Chief
Executive Officer, the Chief Financial Officer or Chief Accounting
Officer of the Company to such effect, together with the information
utilized by the Company to make such determination; (c) no more than
30 days after the proposed closing date of each such Acquisition, the
Company, at its expense, shall deliver to the Agent (I) the Property
Information with respect to such Additional Pool B Property that has
not previously been delivered and (II) a statement of Property Gross
Revenues and Operating Expenses and any other expenses with respect to
such Additional Pool B Property for the 12 most recently completed
calendar months ending not less than 30 days before such closing date,
in reasonable detail satisfactory to the Agent and certified by the
Chief Executive Officer, the Chief Financial Officer or Chief
Accounting Officer of the Company to the effect provided in subsection
6.1(i), mutatis mutandis; (d) the terms and conditions of the Pool B
Obligations of the Loan Parties and their respective Subsidiaries,
including such Pool B Subsidiary, under the related Pool B Ground
Lease and the other related Pool B Documents (including, without
limitation, provisions with respect to cure rights and obligations
with respect to Capital Items) shall be approved by the Agent, which
approval shall not be unreasonably withheld, conditioned or delayed;
(e) all Indebtedness and other obligations incurred by such Pool B
Subsidiary at any time, whether under such Pool B Documents or
otherwise (including, without limitation, lease payments), shall not
be recourse to any of the Loan Parties or any of their respective
Subsidiaries (other than such Pool B Subsidiary) and shall otherwise
be approved by the Agent, which approval
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shall not be unreasonably withheld, delayed or conditioned; (f) the
lessor of such Additional Pool B Property shall not be affiliated with
more than 4 Affiliated Owners, and all Investments by the Loan Parties
and their respective Subsidiaries in such Pool B Subsidiary shall be
permitted by subsection 7.3(ii) or (viii); (g) the Loan Parties and
their respective Subsidiaries shall not make any Guaranties for the
benefit of any such Pool B Subsidiary; (h) on or before such closing
date, Management Corp. or any of its Wholly Owned Subsidiaries shall
have entered into a Property Servicing Agreement with such Subsidiary
and in the event a Liquor License exists with respect to such
Additional Pool B Property or is acquired thereafter, the holders
thereof shall have entered into a Liquor Operation Servicing
Agreement, in each case substantially in the form delivered on the
Funding Availability Date pursuant to subsection 4.1J or in such other
form as may be reasonably acceptable to the Agent, which shall provide
for Management Fees in amounts and on other terms substantially
similar to those obtained in the Servicing Agreements which relate to
the initial Pool B Properties or, if different, on terms satisfactory
to the Agent; (i) on or before such closing date, the Company, at its
expense, shall deliver to the Agent (1) an Officers' Certificate of
the Company setting forth a schedule of insurance with respect to each
of the insurance policies required pursuant to any Pool B Document
with respect to such Additional Pool B Property or subsection 6.10,
and to the extent not conforming to the provisions governing such
insurance as specified in subsection 6.10, the Agent shall be
satisfied with the nature and scope of such insurance policies and
each such insurance policy shall name the holder of any applicable
beneficiary of any related Pool B Obligation (if and so long as any
shall be outstanding) or the Agent on behalf of the Lenders, as loss
payee, (2) an Addition Certificate, in reasonable detail satisfactory
to the Agent, (3) supplements to the Schedules to this Agreement, the
Environmental Indemnity, the Security Agreement, the Omnibus
Management and Liquor License Agreement and, if so required by the
Agent, the Trademark Agreement reflecting the acquisition of such
Additional Pool B Property, which Schedules shall be reasonably
acceptable to the Agent, (4) originally executed counterparts to the
Environmental Indemnity, the Security Agreement, the Omnibus
Management and Liquor License Agreement and the Subsidiary Guaranty,
together with such other Security Documents as the Agent may require
which do not enlarge the scope of any party's obligations as compared
to similar Security Documents previously executed, (5) executed or
certified, conformed copies of the related Acquisition Agreements and
such other documents, certificates and opinions executed and delivered
by or on behalf of the Company and any of its Subsidiaries as the
Agent may reasonably request, (6) copies of each of the documents set
forth in paragraphs E, F, H, J, K, L and M of subsection 4.1, mutatis
mutandis, with respect to such Additional Pool B Property, in each
case subject to the satisfaction of the Agent specified in such
subsections, (7) payment pursuant to subsection 9.2 of the expenses
incurred by the Agent in connection with the matters subject to this
subsection 7.15A(ii), and (8) any other information relating to such
Acquisition or such Additional Pool B Property as is reasonably
requested by the Agent; and (j) within 45 days after the applicable
Addition Date, the Company, at its expense, shall deliver to the Agent
an Appraisal with respect to such Additional Pool B Property;
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(iii) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would be caused thereby,
without the approval of the Agent (except as provided to the contrary
in subsection 7.10 and this subsection 7.15(A)(iii)), any of the Pool
C Subsidiaries may make Acquisitions of Pool C Properties; provided,
however, that (a) each Pool C Property subject to such Acquisition
shall include the entire fee interest in an upscale full service
hotel, garden style hotel or resort hotel, as the case may be, located
in the United States of America and otherwise be of a type, quality
and character consistent with the Company's business plan and
strategy, as described in the Debt Prospectus in the section entitled
"Business -- Growth Strategy -- I. Primary Growth Opportunities" or,
if not consistent, as approved by the Agent, which approval may be
granted, withheld, conditioned or delayed in its sole discretion; (b)
after giving effect to such Acquisition, the greater of (x) the
aggregate undepreciated book value of the Pool C Properties and all
other properties and other assets (including, without limitation,
additions and improvements thereto and FF&E provided that the
aggregate cost of FF&E installed at any Pool C Property in a period of
12 complete calendar months that is less than 5.0% of the Gross
Property Revenues from such Pool C Property shall be excluded from the
calculation of any amount referred to in this clause (b)) then owned
or leased by the Company and the Pool C Subsidiaries in connection
therewith and (y) the aggregate fair market value of such Pool C
Properties and such other properties and assets (including, without
limitation, such additions, improvements and FF&E), in each case of
the respective dates of acquisition thereof, shall not exceed
$75,000,000, as reasonably determined by the Company and certified to
the Agent in an Officers' Certificate of the Chief Executive Officer,
the Chief Financial Officer or the Chief Accounting Officer of the
Company to such effect, together with the information utilized by the
Company to make such determination; (c) no more than 30 days after the
proposed closing date of each such Acquisition, the Company, at its
expense, shall deliver to the Agent (I) the Property Information with
respect to such Pool C Property that has not previously been delivered
and (II) a statement of Property Gross Revenues and Operating Expenses
and any other expenses with respect to such Pool C Property for the 12
most recently completed calendar months ending not less than 30 days
before such closing date, in reasonable detail satisfactory to the
Agent and certified by the Chief Executive Officer, the Chief
Financial Officer or Chief Accounting Officer of the Company to the
effect provided in subsection 6.1(i), mutatis mutandis; (d) the Loan
Parties and their respective Subsidiaries, including each such Pool C
Subsidiary, shall not assume or otherwise become liable for any
liabilities or other obligations secured by or otherwise relating to
any such Pool C Property except those incurred in the ordinary course
of business (which liabilities and obligations shall not include
Indebtedness); (e) all Indebtedness assumed or incurred by such Pool C
Subsidiary at any time shall be Pool C Indebtedness permitted by
subsection 7.1 (vii); (f) all Investments and Guaranties to be made by
the Company and its other Subsidiaries in each such Pool C Subsidiary
shall be permitted by subsections 7.3(ii) and 7.4; (g) on or before
such closing date, Management Corp. shall have entered into a Property
Servicing Agreement with the Company or such Pool C Subsidiary, as the
case may be, and in the event a Liquor License exists with respect to
such Pool C Property or is acquired thereafter, the holders thereof
shall have entered into a Liquor Operation Servicing Agreement, in
each case substantially in the form delivered on the Funding
Availability Date pursuant to
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subsection 4.1J or in such other form as may be reasonably acceptable
to the Agent, which shall provide for Management Fees in amounts and
on other terms substantially similar to those obtained in the
Servicing Agreements that related to the initial Pool A Properties or,
if different, on terms satisfactory to the Agent; and (h) on or before
such closing date, the Company, at its expense, shall deliver to the
Agent (1) an Officers' Certificate of the Company setting forth a
schedule of insurance with respect to each of the insurance policies
required pursuant to any applicable Pool C Document or subsection
6.10, and to the extent not conforming to the provisions governing
such insurance as specified in subsection 6.10, the Agent shall be
satisfied with the nature and scope of such insurance policies and
each such insurance policy shall name the holder of any applicable
beneficiary of any related Pool C Obligation (if and so long as any
shall be outstanding) or the Agent on behalf of the Lenders, as loss
payee, (2) an Addition Certificate, in reasonable detail satisfactory
to the Agent, (3) supplements to the Schedules to this Agreement and,
if the Company shall be required pursuant to the following clause (4)
to execute and deliver counterparts to the Environmental Indemnity and
the Subsidiary Guaranty, Schedules thereto, reflecting the acquisition
of such Pool C Property, which Schedules shall be reasonably
acceptable to the Agent, (4) originally executed counterparts to the
Environmental Indemnity and the Subsidiary Guaranty, if permitted by
the provider of the Pool C Indebtedness, (5) executed or certified,
conformed copies of the related Acquisition Agreements and such other
documents, certificates and opinions executed and delivered by or on
behalf of the Company and any of its Subsidiaries as the Agent may
reasonably request and (6) copies of each of the documents set forth
in paragraphs F, J, L (excluding clause (iii)) and M of subsection
4.1, mutatis mutandis, with respect to such Pool C Property, in each
case subject to the satisfaction of the Agent specified in such
subsections, (7) payment pursuant to subsection 9.2 of the expenses
incurred by the Agent in connection with the matters subject to this
subsection 7.15A(iii), and (8) any other information relating to such
Acquisition or such Additional Pool C Property as is reasonably
requested by the Agent; and
(iv) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would be caused thereby,
without the approval of the Agent (except as provided to the contrary
in subsection 7.10 and this subsection 7.15(A)(iii)), a Wholly Owned
Subsidiary of the Company (the "VININGS SUBSIDIARY") may make an
Acquisition of the Vinings Property; provided, however, that (a) the
Vinings Property shall include the entire fee interest in an upscale
full service hotel, garden style hotel or resort hotel, as the case
may be, located in the United States of America and otherwise be of a
type, quality and character consistent with the Company's business
plan and strategy, as described in the Debt Prospectus in the section
entitled "Business -- Growth Strategy -- I. Primary Growth
Opportunities" or, if not consistent, as approved by the Agent, which
approval may be granted, withheld, conditioned or delayed in its sole
discretion; (b) after giving effect to such Acquisition, the greater
of (x) the aggregate undepreciated book value of the Pool C
Properties, the Vinings Property and all other properties and other
assets (including, without limitation, additions and improvements
thereto and FF&E), provided that the aggregate cost of FF&E installed
at any Pool C Property or the Vinings Property in a period of 12
complete calendar months ending not less than 30 days before the date
of determination that is less than 5.0% of the Gross
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Property Revenues from such Pool C Property or the Vinings Property
for such period shall be excluded from the calculation of any amount
referred to in this clause (b)) then owned or leased by the Company,
the Pool C Subsidiaries and the Vinings Subsidiary in connection
therewith and (y) the aggregate fair market value of such Pool C
Properties, the Vinings Property and such other properties and assets
(including, without limitation, such additions, improvements and
FF&E), in each case as of the respective dates of acquisition thereof,
shall not exceed $75,000,000, as reasonably determined by the Company
and certified to the Agent in an Officers' Certificate of the Chief
Executive Officer, the Chief Financial Officer or the Chief Accounting
Officer of the Company to such effect, together with the information
utilized by the Company to make such determination; (c) no more than
30 days after to the proposed closing date of such Acquisition, the
Company, at its expense, shall deliver to the Agent (I) the Property
Information with respect to the Vinings Property that has not
previously been delivered and (II) a statement of Property Gross
Revenues and Operating Expenses and any other expenses with respect to
the Vinings Property for the 12 most recently completed calendar
months ending not less than 30 days before such closing date, in
reasonable detail satisfactory to the Agent and certified by the Chief
Executive Officer, the Chief Financial Officer or Chief Accounting
Officer of the Company to the effect provided in subsection 6.1(i),
mutatis mutandis; (d) the Indebtedness assumed by the Vinings
Subsidiary in connection with the Acquisition of the Vinings Property
shall be permitted by subsection 7.1(viii); (e) all Investments and
Guaranties to be made by the Company and its other Subsidiaries in the
Vinings Subsidiary shall be permitted by subsections 7.3(ii) and 7.4;
(f) on or before such closing date, Management Corp. shall have
entered into a Property Servicing Agreement with the Vinings
Subsidiary, and in the event a Liquor License exists with respect to
the Vinings Property or is acquired thereafter, the holders thereof
shall have entered into a Liquor Operation Servicing Agreement, in
each case substantially in the form delivered on the Funding
Availability Date pursuant to subsection 4.1J or in such other form as
may be reasonably acceptable to the Agent, which shall provide for
Management Fees in amounts and on other terms substantially similar to
those obtained in the Servicing Agreements that related to the initial
Pool A Properties or, if different, on terms satisfactory to the
Agent; and (g) on or before such closing date, the Company, at its
expense, shall deliver to the Agent (1) an Officers' Certificate of
the Company setting forth a schedule of insurance with respect to each
of the insurance policies required pursuant to any applicable Vinings
Bond Document or subsection 6.10, and to the extent not conforming to
the provisions governing such insurance as specified in subsection
6.10, the Agent shall be satisfied with the nature and scope of such
insurance policies and each such insurance policy shall name the
holder of any applicable beneficiary of any related obligation under
the Vinings Bond Documents (if and so long as any shall be
outstanding) or the Agent on behalf of the Lenders, as loss payee, (2)
an Addition Certificate, in reasonable detail satisfactory to the
Agent, (3) supplements to the Schedules to this Agreement and, if the
Company shall be required pursuant to the following clause (4) to
execute and deliver counterparts to the Environmental Indemnity and
the Subsidiary Guaranty, Schedules thereto, reflecting the acquisition
of the Vinings Property, which Schedules shall be acceptable to the
Agent, (4) originally executed counterparts to the Environmental
Indemnity and the Subsidiary Guaranty to the extent permitted by the
Vinings Bond Documents,
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(5) executed or certified, conformed copies of the related Acquisition
Agreements and such other documents, certificates and opinions
executed and delivered by or on behalf of the Company and any of its
Subsidiaries as the Agent may reasonably request, (6) copies of each
of the documents set forth in paragraphs F, J, L (excluding clause
(iii)) and M of subsection 4.1, mutatis mutandis, with respect to the
Vinings Property, in each case subject to the satisfaction of the
Agent specified in such subsections, (7) payment pursuant to
subsection 9.2 of the expenses incurred by the Agent in connection
with the matters subject to this subsection 7.15A(iv), and (8) any
other information relating to such Acquisition or the Vinings Property
as is reasonably requested by the Agent. The Vinings Subsidiary shall
be deemed to be a Pool C Subsidiary and the Vinings Property shall be
deemed to be a Pool C Property for all purposes of this Agreement,
including, without limitation, for purposes of the application to the
Vinings Subsidiary and the other Pool C Subsidiaries of the
restrictions set forth in clause (b) in the proviso to subsection
7.15A(iii), but excluding the application to the Vinings Subsidiary of
the restrictions set forth in subsection 7.1(vii) and in clause (e)
in the proviso to subsection 7.15A(iii); provided that, the Vinings
Subsidiary shall be deemed to be a Pool B Subsidiary and the Vinings
Property shall be deemed to be a Pool B Property if and so long as (w)
the Lenders shall elect, in their sole discretion, to provide a Letter
of Credit as the sole credit enhancement for the payment of the
Vinings Bonds, (x) the Vinings Subsidiary shall execute and record a
Mortgage on the Vinings Property that is junior or subordinate in
priority only to the lien of the mortgage securing the payment of the
Vinings Bonds pursuant to the Vinings Indenture and to such other
liens and encumbrances as shall be approved by the Agent in its sole
discretion, such Mortgage shall secure a portion of the Facility that
shall be acceptable to the Agent in its sole discretion and such
Mortgage shall be cross-defaulted with the Mortgages on the Pool A
Properties and the Pool B Properties, (y) the Trustee under the
Vinings Indenture, as the first lienholder, and the Agent shall have
entered into an intercreditor agreement in form and substance
acceptable to the Agent in its sole discretion, and (z) the other
agreements, instruments and other documents evidencing or effecting
such amendment or refinancing, and all other matters in connection
therewith, shall be acceptable to the Agent in its sole discretion.
B. TRANSFER OF PROPERTIES. The Loan Parties shall not, and shall
not permit any of their respective Subsidiaries to, Transfer any Property;
provided that, subject to subsection 7.10B, (i) the Loan Parties and their
respective Subsidiaries may create, incur, assume or permit to exist Liens in
accordance with subsection 6.4, 6.9 or 7.2, and (ii) each Loan Party and each
of its Subsidiaries may sell or otherwise permanently dispose of any Property
if (a) each such sale or other permanent disposition of such Property is made
on an arms-length basis for the fair market value of such Property, (b) not
less than 100% of the consideration received by such Loan Party or Subsidiary
in any such transaction (net of any Pool B Obligations or Pool C Indebtedness
forgiven or paid in connection therewith) shall be Cash and shall be received
on the date of such sale or other permanent disposition, (c) with respect to
any Pool A Property, the Borrowing Base shall be reduced as provided in
subsection 2.4B(iii) and (d) with respect to any Pool A Property or Pool B
Property, the Company complies with the provisions set forth in subsection 2.9
with respect to such Property, including the payment of any Release Price
required thereby.
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C. NOTICES WITH RESPECT TO PROPERTIES. The Company shall deliver,
or shall cause to be delivered, the following written notices to the Agent:
(i) promptly after the Company's acquiring actual
knowledge of the same, an Officers' Certificate with respect to the
occurrence or effectiveness of any event or condition that could
reasonably be expected to cause the Property Amount or Property EBITDA
with respect to any Property, as of any date of determination
thereafter, to be reduced as of such later date of determination or
for any period pursuant to the provisos contained in the definitions
of Property Amount and Property EBITDA, respectively; and
(ii) at least 20 days prior to the commencement of any
Major Renovation/Restoration of any Property, a Notice of
Renovation/Restoration with respect thereto and upon the completion of
such Major Renovation/Restoration, a Completion Certificate with
respect thereto.
7.16 MANAGEMENT AGREEMENTS, SERVICING AGREEMENTS AND OTHER MANAGEMENT
AGREEMENTS.
A. EXECUTION OF MANAGEMENT AGREEMENTS, SERVICING AGREEMENTS AND
OTHER MANAGEMENT AGREEMENTS. The Loan Parties shall not, and shall not permit
any of their respective Subsidiaries to, enter into or otherwise become
obligated with respect to, any agreement regarding the management or operation
of any hotel property after the Funding Availability Date, except that, from
time to time:
(i) with the prior written approval of the Agent, which
approval may be granted, withheld, conditioned or delayed in the
Agent's sole discretion, Management Corp. or any of its Wholly Owned
Subsidiaries may acquire or enter into proposed Management Agreements
with respect to the management and operation of hotel properties, the
related land and the improvements thereof (each an "Additional
Management Agreement"); provided that, in any event, (a) each proposed
Managed Property shall be an upscale full service hotel, garden style
hotel or resort hotel, as the case may be, located in the United
States of America and otherwise be of a type, quality and character
consistent with the Company's business plan and strategy, as described
in the Debt Prospectus in the section entitled "Business -- Growth
Strategy -- I. Primary Growth Opportunities" or, if not as so
described, as approved by the Agent, which approval may be granted,
withheld, conditioned or delayed in its sole discretion; (b) at least
30 days before the proposed date of each such closing or the proposed
effective date of such Additional Management Agreement, the Company,
at its expense, shall deliver to the Agent a copy of such Additional
Management Agreement with respect to the proposed Managed Property;
(c) each Investment in, Guaranty for the benefit of or payment to any
Person that may be required to be made by the Loan Parties and their
respective Subsidiaries pursuant to the terms of or in connection with
the Additional Management Agreement shall be permitted under
subsection 7.3(vi), (vii) or (viii); provided, however, that the Loan
Parties and their respective Subsidiaries shall not at any time make
any Investment in, become liable with respect to any Guaranty for the
benefit of or make any payment to any Person owning or leasing the
Other Managed Property
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or otherwise in connection with such Other Management Agreement,
pursuant to subsections 7.3(vii) and (viii) or otherwise, unless and
until the Company, at its expense, shall have delivered to the Agent
copies of each of the documents set forth in subsection 4.1M, mutatis
mutandis, with respect to such Additional Management Agreement, in
each case subject to the satisfaction of the Agent specified in
subsection 4.1M; and (d) on or before such closing date or effective
date, the Company, at its expense, shall deliver to the Agent (1)
execution or conformed copies of the Additional Management Agreement,
including any amendments, modifications and supplements thereto and
all other documents delivered therewith as of such closing date or
effective date, as the case may be, which documents shall be
satisfactory in form and substance to the Agent, in its sole
discretion, (2) a statement of Approved Management Fees and other
Management Fees with respect to such Additional Management Agreement,
for the 12 month period ending on the last day of the most recently
completed calendar month ending not less than 30 days before such
closing date or effective date, as the case may be, in reasonable
detail satisfactory to the Agent and certified by the Chief Executive
Officer, the Chief Financial Officer or Chief Accounting Officer of
the Company to the effect provided in subsection 6.1(ii), mutatis
mutandis, (3) an Addition Certificate, (4) supplements to the
Schedules to this Agreement, the Security Agreement and the Omnibus
Management and Liquor License Agreement, which schedules shall be
acceptable to the Agent and (5) payment pursuant to subsection 9.2 of
the expenses incurred by the Agent in connection with the matters
subject to this subsection 7.16A(i);
(ii) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would be caused thereby,
without the approval of the Agent (except as provided to the contrary
in subsections 7.10 and 7.16D and this subsection 7.16A(ii)),
Management Corp. or any of its Wholly Owned Subsidiaries may enter
into management agreements (other than Management Agreements and
Servicing Agreements) with respect to the management and operation of
hotel properties, the related land and the improvements thereof (each
an "Other Management Agreement"); provided, however, that (a) each
hotel property subject to such Other Management Agreement shall be
either (1) an upscale full service hotel, garden style hotel or resort
hotel located in the United States of America, Canada or the Caribbean
or (2) an extended stay hotel in the United States of America that is
owned or leased by the (Greystar Partnership and managed, under a
service mark other than "Wyndham" or "Wyndham Garden" (or any other
brand under which any of the Properties or Managed Properties are
operated from time to time) pursuant to the Greystar Agreements and an
Other Management Agreement that has terms substantially the same as
those in the form of Other Management Agreement to which hotels
referred to in the preceding clause (1) are subject, and in either
case the related Other Managed Property shall be of a type, quality
and character consistent with the Company's business plan and
strategy, as described in the Debt Prospectus in the section entitled
"Business -- Growth Strategy -- I. Primary Growth Opportunities" or,
if not consistent, as approved by the Agent, which approval may be
granted, withheld, conditioned or delayed in its sole discretion; (b)
each Investment in, Guaranty for the benefit of or payment to any
Person owning or leasing the related Other Managed Property that may
be required to be made by the Loan Parties and their respective
Subsidiaries for the purpose of or otherwise in connection with
securing, extending,
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renewing or modifying such Other Management Agreement shall be
permitted under subsection 7.3(vi) or (vii), provided, however, that
the Loan Parties and their respective Subsidiaries shall not at any
time make any Investment in, become liable with respect to any
Guaranty for the benefit of or make any payment to any Person owning
or leasing the Other Managed Property or otherwise in connection with
such Other Management Agreement, pursuant to subsections 7.3(vii) and
(viii) or otherwise, (1) if such Other Managed Hotel is not an upscale
full service hotel, garden style hotel or resort hotel located in the
United States of America and (2) unless and until the Company, at its
expense, shall have delivered to the Agent prior to the applicable
closing or effective date copies of each of the documents set forth in
subsection 4.1M, mutatis mutandis, with respect to such Other
Management Agreement, in each case subject to the satisfaction of the
Agent specified in subsection 4.1M; (c) such Other Management
Agreement shall not constitute, have the form of or contain provisions
creating a leasehold interest in any Other Managed Property or other
real or personal property; (d) on or before such effective date, the
Company, at its expense, shall deliver to the Agent (1) an Addition
Certificate, (2) supplements to the Schedules to this Agreement and
the Security Agreement, which schedules shall be reasonably acceptable
to the Agent, and (3) payment pursuant to subsection 9.2 of the
reasonable expenses incurred by the Agent in connection with the
matters subject to this subsection 7.16A(ii); and (e) by the end of
the calendar month following the month in which such closing date or
effective date occurs, and from time to time thereafter as the same
becomes available, the Company at its expense, shall deliver to the
Agent, such portion of the Management Information as shall not
previously have been delivered by the Company to the Agent; and
(iii) Management Corp. and any of its Wholly Owned
Subsidiaries shall enter into Servicing Agreements with respect to the
management and operation of the Properties as contemplated by
subsection 4.1J or pursuant to subsection 7.15A.
B. TRANSFER OR TERMINATION OF MANAGEMENT AGREEMENTS, SERVICING
AGREEMENTS AND OTHER MANAGEMENT AGREEMENTS. The Loan Parties shall not, and
shall not permit any of their respective Subsidiaries to, Transfer any
Management Agreement, Servicing Agreement or Other Management Agreement;
provided that, subject to subsection 7.10, (i) the Loan Parties and their
respective Subsidiaries may create, incur, assume or permit to exist Liens in
accordance with subsection 7.2 and subsection 6.9; (ii) Management Corp. and
each of its Wholly Owned Subsidiaries may sell or otherwise permanently dispose
of any Management Agreement or Servicing Agreement if (a) each such sale or
other permanent disposition of such Management Agreement or Servicing
Agreement, as the case may be, is made on an arms-length basis for the fair
market value of such Management Agreement or Servicing Agreement, as the case
may be, (b) not less than 100% of the consideration received by such Loan Party
or Subsidiary in any such transaction shall be Cash and shall be received on
the date of such sale or permanent disposition, (c) the Borrowing Base shall be
reduced as provided in subsection 2.4B(iii) and (d) the Company complies with
the provisions set forth in subsection 2.9 with respect to such Management
Agreement or Servicing Agreement, as the case may be, including the payment of
any Release Price required thereby; and (iii) Management Corp. and each of its
Wholly Owned Subsidiaries may sell or otherwise permanently dispose of an Other
Management Agreement. Upon the expiration (without renewal or extension),
cancellation or other
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termination of any Management Agreement, Servicing Agreement or Other
Management Agreement, as the case may be, the Borrowing Base shall be reduced
in accordance with the provisions of subsection 2.4B(iii), and the Company
shall pay the amounts, if any, that may be required to be paid pursuant to
subsection 2.4B(iii) or 2.4B(iv) after taking into account any required
reduction or recalculation of the Borrowing Base.
C. NOTICES WITH RESPECT TO MANAGEMENT AGREEMENTS, SERVICING
AGREEMENTS AND OTHER MANAGEMENT AGREEMENTS. The Company shall deliver, or
shall cause to be delivered, the following written notices to the Agent:
(i) promptly after the Company's acquiring actual
knowledge of the same, a written notice with respect to the occurrence
or effectiveness of any event or condition that could reasonably be
expected to cause the Management Amount or Management EBITDA with
respect to any Management Agreement, Servicing Agreement or Other
Management Agreement, as of any date of determination thereafter, to
be reduced as of such date of determination or for any period pursuant
to the provisos contained in the definition of Management Amount or
Management EBITDA, as the case may be; and
(ii) at least 20 days prior to the commencement of any
Major Renovation/Restoration of any Managed Property or Other Managed
Property, a Notice of Renovation/Restoration with respect thereto and
upon the completion of such Major Renovation/Restoration, a Completion
Certificate with respect thereto.
D. CERTAIN INVESTMENTS, GUARANTIES AND PAYMENTS. Except as
permitted by subsections 7.3(vi), (vii), (viii) and (x), the Loan Parties shall
not, and shall not permit any of their respective Subsidiaries to, make any
Investments in, become liable with respect to any Guaranties for the benefit of
or make any other payment to any Person, including any Affiliate or any Joint
Venture, for the purpose of or otherwise in connection with securing,
extending, renewing or modifying any Management Agreement, Servicing Agreement
or Other Management Agreement.
7.17 INTELLECTUAL PROPERTY; FRANCHISE AGREEMENTS; OTHER JURISDICTIONS.
A. INTELLECTUAL PROPERTY. Except as provided to the contrary in
subsection 7.17B, the Loan Parties shall not, and shall not permit any of their
respective Subsidiaries, to Transfer any Intellectual Property unless the
Company shall have determined that the Intellectual Property so Transferred is
no longer material to the business, operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries.
B. FRANCHISE AGREEMENTS. The Loan Parties shall not, and shall
not permit any of their respective Subsidiaries to, enter into or otherwise
become obligated with respect to, any franchise agreement, license agreement or
similar agreement with respect to the operation of any hotel property as a
"Wyndham" or "Wyndham Garden" hotel (each an "ADDITIONAL FRANCHISE AGREEMENT"),
except that, from time to time after the Funding Availability Date, without the
prior approval of the Agent, but subject to subsection 7.10A, IP Corp. may
enter into Franchise Agreements and Management Corp. may enter into Management
Agreements, Servicing
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Agreements, Other Management Agreements and sublicenses of licenses from IP
Corp. pursuant to which they grant rights in Intellectual Property; provided,
however, that (i) each hotel property subject to each such Additional Franchise
Agreement shall be of a type, quality and character consistent with the
Company's business plan and strategy as described in the Debt Prospectus in the
section entitled "Business -- Growth Strategy -- II. Additional Growth
Opportunities" or, if not consistent, as approved by the Agent in its sole
discretion, (ii) the Loan Parties and their respective Subsidiaries may not
make any Investment in, or become liable with respect to any Guaranty for the
benefit of, or make any payment to any Person owning or leasing the hotel
property subject to such Additional Franchise Agreement or otherwise in
connection with such Additional Franchise Agreement, and (iii) such Additional
Franchise Agreement shall not constitute, have the form of or contain
provisions creating a leasehold interest in any real or personal property.
C. OTHER JURISDICTIONS. The Loan Parties shall not, and shall not
permit any of their respective Subsidiaries to acquire any Property, as
permitted by subsection 7.15A, secure any Additional Management Agreement or
Other Management Agreement with respect to any Managed Property or Other
Managed Property, as permitted by subsection 7.16A, or enter into any
Additional Franchise Agreement with respect to any Property, Managed Property,
Other Managed Property or other hotel property, as permitted by subsection
7.17B, if such Property, Managed Property, Other Managed Property or other
hotel property is located in any jurisdiction other than the United States of
America, unless the Company, at its expense, shall have (i) prepared and
delivered to the Agent for filing in the appropriate offices such instruments
as may be necessary or appropriate, in the reasonable determination of the
Agent, to perfect under the laws of such other jurisdiction a first priority
security interest in favor of the Agent or the Lenders, as the Agent shall
determine, in the Intellectual Property of the Loan Parties and their
respective Subsidiaries that may be used or useful in the ownership, management
or operation of such Property, Managed Property, Other Managed Property or
other hotel or hospitality property and (ii) caused to be prepared and
delivered to the Agent an opinion of counsel with respect to the perfection of
such security interest, which counsel and opinion shall be reasonably
satisfactory to the Agent.
7.18 MATERIAL LEASES.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, (i) enter into any Lease other than Leases
incidental to the operation of the Properties as hotels or (ii) enter into any
Material Lease or any advanced booking of more than 51% of the rooms at any
Property for a period in excess of 30 days without the prior written approval
of the Agent, which approval shall not be unreasonably withheld, conditioned or
delayed; it being understood and agreed that if after the Effective Date any
Loan Party or any of its Subsidiaries enters into a Material Lease or any such
advanced booking, the Agent may require that the Tenant thereunder enter into a
Tenant Subordination Agreement reasonably satisfactory in form and substance to
the Agent. In the event any Lease necessary to the operation of any Property as
a hotel is terminated, the applicable Loan Party or Subsidiary thereof shall
replace such Lease with a suitable comparable Lease within a reasonable period
of time following such termination.
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7.19 AMENDMENTS OF CREDIT AGREEMENT, OTHER INDEBTEDNESS, OBLIGATIONS,
CERTAIN DOCUMENTS.
A. CREDIT AGREEMENT. Without the prior written approval of the
Agent, which approval may granted, withheld, conditioned or delayed in its sole
discretion, the Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, enter into any agreement prohibiting or restricting
the ability of any of the Loan Parties and any of their respective Subsidiaries
to amend or otherwise modify this Agreement or any other Loan Document.
B. COMPANY PREFERRED STOCK AND OTHER STOCK. Without the prior
written approval of the Agent, which approval may be granted, withheld,
conditioned or delayed in its sole discretion, the Company shall not amend,
restate, supplement or otherwise change its articles of incorporation if the
effect of such amendment, restatement, supplement or change is to provide for
the issuance of any preferred stock of the Company or the filing of any
certificate of designation with respect thereto, except that the Company may
amend, restate, supplement or change its certificate of incorporation to
provide for the issuance of non-cumulative preferred stock; provided, however,
that (i) the certificate of incorporation of the Company, as so amended,
restated, supplemented or changed, and any prospectus, certificate of
designation or other document delivered in connection with such issuance shall
be in form and substance reasonably satisfactory to the Agent, (ii) such
preferred stock shall be Qualified Capital Stock and (iii) such preferred
stock shall be subordinate in right and time of payment to the Obligations.
C. ORGANIZATION DOCUMENTS. Without the prior written approval of
the Agent, which approval may be granted, withheld, conditioned or delayed in
its sole discretion except as expressly permitted hereunder, the Loan Parties
shall not, and shall not permit any of their respective Subsidiaries to, amend
or otherwise modify their respective charters or partnership agreements in any
material respect except in connection with an activity permitted by subsection
7.7(viii).
D. OTHER INDEBTEDNESS. Without the prior written approval of the
Agent, which approval be granted, withheld, conditioned or delayed in its sole
discretion, the Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, (i) amend, restate, supplement or otherwise change
the terms of, or waive or fail to enforce any provision of, any Senior Note
Document or any Pool C Indebtedness in any material respect, (ii) except as
provided to the contrary in subclause (x) of and proviso (1) to subsection
7.1(viii), amend, restate, supplement or otherwise change the terms of, or waive
any provision of, any of the Vinings Bond Documents in any material respect, or
(iii) pay or prepay any principal amount of the Senior Notes or defease, or make
any payments the effect of which is to defease the Senior Notes in whole or in
part (whether pursuant to the defeasance provisions of the Indenture or
otherwise).
E. POOL A GROUND LEASES; POOL B GROUND LEASES; OTHER POOL B
DOCUMENTS. Without the prior written approval of the Agent, which approval may
be granted, withheld, conditioned or delayed in its sole discretion, the Loan
Parties shall not, and shall not permit any of their respective Subsidiaries
to, (i) amend, restate, supplement or otherwise change, or waive
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or fail to enforce any provision of, any of the Pool A Ground Leases, the Pool
B Ground Leases and the other Pool B Documents in any material respect or (ii)
exercise any option or other right under or with respect to any Pool B
Obligation or Pool C Obligation (other than to request advances and elect
interest rate options under the Pool C Indebtedness to the extent permitted by
subsection 7.1(vii)) if the result of such exercise is, or may reasonably be
expected to be, an increase in the amount of rent, principal, interest or any
other payment required to be made by such Loan Party or Subsidiary to the
holder of such Pool B Obligation or Pool C Obligation, as the case may be.
F. MANAGEMENT AGREEMENTS. Without the prior written approval of
the Agent, which approval may not be unreasonably withheld, conditioned or
delayed, the Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, amend, restate, supplement or otherwise change, or
waive or fail to enforce any provision of, any of the Management Agreements and
the Additional Management Agreements (but not Other Management Agreements) in
any material respect unless either (1) the Agent shall have given its prior
written approval of such action, which approval shall not be unreasonably
withheld, conditioned or delayed, or (2) the Company shall have (A) prepaid the
Loans in an amount equal to the Release Price in respect of such Management
Agreement or Additional Management Agreement and (B) elected by written notice
delivered to the Agent in advance of taking such action to designate such
Management Agreement or Additional Management Agreement as an "Other Management
Agreement" for all purposes of this Agreement, effective as of the later of the
date of delivery of such notice and the date of the prepayment referred to in
the preceding clause (A).
G. OMNIBUS MANAGEMENT AND LIQUOR LICENSE AGREEMENT; SERVICING
AGREEMENTS. Without the prior written approval of the Agent, which approval may
be granted, withheld, conditioned or delayed in its sole discretion, the Loan
Parties shall not, and shall not permit any of their respective Subsidiaries
to, amend, restate, supplement or otherwise change, or waive or fail to enforce
any provision of, the Omnibus Management and Liquor License Agreement or any
Servicing Agreement in any material respect.
H. AFFILIATE AGREEMENTS. Without the prior written approval of
the Agent, which approval may be granted, withheld, conditioned or delayed in
its sole discretion, and subject to subsection 7.10B, the Loan Parties shall
not, and shall not permit any of their respective Subsidiaries to, amend,
restate, supplement or otherwise change, or waive or fail to enforce any
provision of, any of the ISIS 2000 Agreements, the CWS Agreements and the
Wynright Agreements in any material respect.
7.20 FISCAL YEAR.
The Company shall not change its fiscal year-end from December 31.
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SECTION 8
EVENTS OF DEFAULT; REMEDIES
8.1 EVENTS OF DEFAULT.
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
A. FAILURE TO MAKE PAYMENTS WHEN DUE. Failure to pay any
installment of principal of any Loan, any reimbursement obligation in respect
of a Letter of Credit or any Release Price when due, whether at stated
maturity, by acceleration in accordance with the provisions of the applicable
Loan Document, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or failure to pay interest or any other amount due under this
Agreement (including any other amounts owed in respect of the Letters of
Credit) within five days after the date due; or
B. DEFAULT ON SENIOR NOTES. Failure of the Company to pay when
due any principal of or interest on or any other amount payable in respect of
the Senior Notes, in each case beyond the end of any grace period provided
therefor; or
C. DEFAULT IN OTHER AGREEMENTS. (i) Failure of any Loan Party or
any of its Subsidiaries to pay when due any principal of or interest on any
Indebtedness (other than Indebtedness referred to in subsection 8.1A or 8.1B,
but including, without limitation, any Indebtedness included in the Pool B
Obligations and any Pool C Indebtedness), in each case beyond the end of any
grace period provided therefor (which shall not exceed 5 days); or (ii)
occurrence of any other event or condition (other than an event or condition
expressly described in another subsection of this 8.1) which, with the giving
of notice or the lapse of time or both, with respect to (a) any Indebtedness
(including, without limitation, the Senior Notes, any Indebtedness included in
the Pool B Obligations and any Pool C Indebtedness) or any Contingent
Obligation or (b) any loan agreement, mortgage, indenture or other agreement
relating to such Indebtedness or Contingent Obligation(s), would cause, or
would permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due and
payable (upon the giving or receiving of notice, lapse of time, both, or
otherwise) prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be, in each case beyond the end of any
cure period therefor (without any extension thereof); provided that, with
respect to Pool C Indebtedness, either (x) such Indebtedness shall consist of
two or more independent obligations secured by two or more Pool C Properties
that shall not be cross-defaulted or cross-collateralized or (y) the principal
amount of such Indebtedness, together with the aggregate principal amount of
other Indebtedness of the Loan Parties and their respective Subsidiaries that
is cross-defaulted or cross-collateralized or both with such Indebtedness,
shall be greater in the aggregate than the lesser of (1) $7,500,000 and (2) an
amount equal to 50% of the minimum aggregate principal amount of any
Non-Recourse Indebtedness (as defined in the Indenture) of the Loan Parties and
their respective Subsidiaries, the default in the payment of which, or the
acceleration of the maturity of which, accelerates, or permits the holders of
the Notes to cause the acceleration of, the maturity of all or any portion of
the Notes; provided further, that, for purposes of calculating any amount
pursuant to
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this clause (y), the principal amount of the Vinings Indebtedness shall be zero
if and so long as no Person shall have the right, by law, contract, ownership
of Securities or otherwise, and whether upon or without regard to the giving of
notice or the lapse of time or both (it being agreed that, for purposes of this
further proviso, the election by the parties to the Vinings Forbearance
Agreement to effect one or more forbearance periods in the Vinings Forbearance
Agreement shall not be deemed to be the "giving of notice" or the "lapse of
time"), (A) to exercise any default remedy under the Vinings Bond Documents,
(B) to take any other action to enforce against any other Person the obligation
to pay any principal amount of, interest on or other amount in respect of the
Vinings Bond Documents or any other Indebtedness or other obligations created
or evidenced thereby or (C) to exercise any right to foreclose, draw or
otherwise realize on any letter of credit, Guaranty, other credit enhancement,
mortgage, pledge or other security for the Vinings Bond Documents or any such
other Indebtedness or other obligations; or
D. BREACH OF CERTAIN COVENANTS. Failure of the Company to perform
or comply with any term or condition contained in subsection 2.5, 6.14, 6.15,
6.16A, 7.1, 7.3, 7.5, 7.6, 7.10, 7.11, 7.14 and 7.19F; or
E. DEFAULT UNDER SUBSECTION 7.2. Any Loan Party or any of its
Subsidiaries shall default in the performance of or compliance with the terms
and conditions of subsection 7.2 (other than any such default which is caused
by the imposition of a Lien created or evidenced by an agreement, instrument or
other document signed by or filed at the direction of any Loan Party or any of
its Subsidiaries), and such default shall not have been remedied or waived on
or before the 30th day after the earlier of (i) such Loan Party's or such
Subsidiary's obtaining knowledge of such default or (ii) receipt by such Loan
Party or such Subsidiary of notice from the Agent of such default; provided,
however, that if such default cannot be cured solely by the payment of money
and the cure of such default requires a period in excess of 30 days, and if
such Loan Party or such Subsidiary, as applicable, is diligently and
continuously prosecuting such cure, then such default shall not be an Event of
Default unless such Loan Party or such Subsidiary fails to cure such default
before the later of (x) the 90th day after such Loan Party or such Subsidiary
obtains knowledge or notice thereof, as the case may be, and (y) the last day
of a Voluntary Removal Period relating to a Property if (1) such default shall
have occurred only with respect to such Property (and not also with respect to
any other Property) and (2) such Voluntary Removal Period shall have commenced
on or before the 90th day after such Loan Party or such Subsidiary obtains
knowledge or notice thereof, as the case may be; and provided further that so
long as any Lien is the subject of a bond, deposit or insurance so that the
subject Property or portion thereof cannot be foreclosed on or otherwise
forfeited, no Event of Default shall exist with respect to such Lien; or
F. BREACH OF WARRANTY. Any representation, warranty,
certification or other statement of any Loan Party or any of its Subsidiaries
made in this Agreement or in any other Loan Document or in any Related Document
to which such Loan Party or such Subsidiary is a party or in any statement or
certificate at any time given in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material respect on the
date as of which made and such default shall not have been remedied or waived
within 30 days after the earlier of (i) such Loan Party's or such Subsidiary's
obtaining knowledge of such default and
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(ii) receipt by such Loan Party or such Subsidiary of notice from the Agent of
such default; provided, however, that if such default cannot be cured solely by
the payment of money and the cure of such default requires a period in excess
of 30 days, and if such Loan Party or such Subsidiary, as applicable, is
diligently and continuously prosecuting such cure, then such default shall not
be an Event of Default unless such Loan Party or such Subsidiary fails to cure
such default within 90 days, after such Loan Party or such Subsidiary obtain
knowledge or notice thereof, as the case may be; or
G. INVALIDITY OF LOAN DOCUMENT; FAILURE OF SECURITY; REPUDIATION
OF OBLIGATIONS. At any time after the execution and delivery thereof, (i) any
Loan Document (other than a Security Document) or any material provision
thereof shall cease to be in full force and effect (other than in accordance
with its terms) or shall be declared null and void; (ii) any Security Document
or any material provision thereof shall cease to be in full force and effect
(other than by reason of a release of Collateral thereunder in accordance with
the terms hereof or thereof or any other termination of such Security Document
in accordance with the terms hereof or thereof) or shall be declared null and
void, or the Agent shall not have or shall cease to have a valid and perfected
first priority Lien or security interest in any Collateral purported to be
covered, in each case for any reason other than the failure of the Agent to
take any action within its control; (iii) any Loan Party shall contest in
writing the validity or enforceability of any Loan Document in writing or deny
in writing that it has any further liability, including with respect to future
advances by the Lenders, under any Loan Document to which it is a party; or
(iv) the Trustee or any holder of the Senior Notes or representative or agent
thereof shall contest the validity or enforceability of Article Ten or Section
11.2 of the Indenture; or
H. POOL A GROUND LEASES. (i) Failure by any Loan Party or any of
its Subsidiaries to pay when due any monetary obligation contained in any Pool
A Ground Lease, in each case beyond the end of any grace period provided
therefor; (ii) occurrence of any other event or condition which, with the
giving of notice or lapse of time or both, would cause, or would permit the
landlord under any Pool A Ground Lease to cause, a cancellation or termination,
as against any Loan Party or any of its Subsidiaries party thereto, of such
Pool A Ground Lease; (iii) election by any Loan Party or any of its
Subsidiaries party to a Pool A Ground Lease to terminate such Pool A Ground
Lease in accordance with the terms thereof or to reject such Pool A Ground
Lease in any bankruptcy proceeding; or (iv) failure by any Loan Party or any of
its Subsidiaries to permit the Agent and/or its representatives at all
reasonable times upon reasonable prior written notice to make investigation or
examination concerning such Loan Party's or such Subsidiary's performance and
observance of the terms, covenants and conditions of a Pool A Ground Lease; or
I. POOL B OBLIGATIONS. (i) Failure by any Loan Party or any of
its Subsidiaries to pay when due any monetary obligation contained in any Pool
B Document (other than the principal of or interest on any Indebtedness
included in the Pool B Obligations, as the case may be), in each case beyond
the end of any grace period provided therefor; (ii) the occurrence of any event
or condition which, with the giving of notice or lapse of time or both, would
cause, or would permit the holder or holders of the related Pool B Obligation,
as the case may be (including, without limitation, a landlord under any related
Pool B Ground Lease), to cause, (a) such Pool B Obligation to become or be
declared due and payable (upon the giving or
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receiving of notice, lapse of time, both, or otherwise) prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may
be, or (b) a cancellation or termination, as against any Loan Party or any of
its Subsidiaries party thereto, of such Pool B Ground Lease; (iii) election by
any Loan Party or any of its Subsidiaries party to a Pool B Ground Lease to
terminate such Pool B Ground Lease in accordance with the terms thereof or
reject such Ground Lease in any bankruptcy proceeding; or (iv) failure by any
Loan Party or any of its Subsidiaries to permit the Agent and/or its
representatives at all reasonable times upon reasonable prior written notice to
make investigation or examination concerning such Loan Party's or such
Subsidiary's performance and observance of the terms, covenants and conditions
of the Pool B Documents; or
J. PROHIBITED TRANSFERS. If any Loan Party attempts to assign its
rights under this Agreement or any other Loan Document or any interest herein
or therein; or
K. OTHER DEFAULTS UNDER LOAN DOCUMENTS OR RELATED DOCUMENTS. Any
Loan Party or any of its Subsidiaries shall default in the performance of or
compliance with any term contained in this Agreement or any other Loan Document
or any material term of any Related Document to which such Loan Party or such
Subsidiary is a party (other than Related Documents pertaining to Pool C
Obligations) if the default thereunder could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, other than any
such term in this Agreement, other Loan Document or Related Document that is
referred to in any other clause of this subsection 8.1, and such default shall
not have been remedied or waived within 30 days after the earlier of (i) such
Loan Party's or such Subsidiary's obtaining knowledge of such default or (ii)
receipt by such Loan Party or such Subsidiary of notice from the Agent of such
default; provided, however, that if such default cannot be cured solely by the
payment of money and the cure of such default requires a period in excess of 30
days, and if such Loan Party or such Subsidiary is diligently and continuously
prosecuting such cure, then such default shall not be an Event of Default
unless such Loan Party or such Subsidiary fails to cure such default before the
90th day after any Loan Party or any of its Subsidiaries obtains knowledge or
notice thereof, as the case may be; or
L. INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of any Loan Party or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against any Loan Party or any of its Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over any Loan Party or any of
its Subsidiaries, or over all or a substantial part of its property, shall have
been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of any Loan Party or any of its
Subsidiaries for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property
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of any Loan Party or any of its Subsidiaries, and any such event described in
this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
M. VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) Any
Loan Party or any of its Subsidiaries shall have an order for relief entered
with respect to it or commence a voluntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or any Loan Party or any of its Subsidiaries shall make
any assignment for the benefit of creditors; or (ii) any Loan Party or any of
its Subsidiaries shall be unable, or shall fail generally, or shall admit in
writing its inability, to pay its debts as such debts become due; or the Board
of Directors of any Loan Party or any of its Subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize any action to
approve any of the actions referred to in clause (i) above or this clause (ii);
or
N. JUDGMENTS AND ATTACHMENTS. Any money judgment, writ or warrant
of attachment or similar process involving individually or in the aggregate at
any time an amount in excess of $1,000,000 (in either case not adequately
covered by insurance as to which a solvent and unaffiliated insurance company
has acknowledged coverage) shall be entered or filed against the Company or any
of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in
any event later than five days prior to the date of any proposed sale
thereunder); or
O. DISSOLUTION. Any order, judgment or decree shall be entered
against any Loan Party or any of its Subsidiaries decreeing the dissolution or
split up of such Loan Party or that Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or
P. EMPLOYEE BENEFIT PLANS. There shall occur one or more ERISA
Events which individually or in the aggregate results in or could reasonably be
expected to result in liability of the Company, any of its Subsidiaries or any
of their respective ERISA Affiliates in excess of $1,000,000 during the term of
this Agreement; or there shall exist an amount of unfunded benefit liabilities
(as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate
for all Pension Plans, which exceeds $1,000,000; or
Q. MATERIAL ADVERSE EFFECT. Any event or change shall occur that
has caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect; or
R. CONTINGENT OBLIGATIONS. Payments by the Loan Parties or any
of their Subsidiaries with respect to any of the Contingent Obligations set
forth on Schedule 5.3 annexed hereto in an aggregate amount greater than the
maximum estimated amount specified on Schedule 5.3 with respect thereto except
to the extent such excess amount is permitted pursuant to subsection 7.4(v); or
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S. CHANGE IN CONTROL. (i) Either Bedrock, the Crow Interests or
the Senior Executives, collectively (the "LARGER GROUP"), or the Senior
Executives, collectively (the "SMALLER GROUP"), shall Transfer, or otherwise
cease for any reason to maintain, beneficial or record ownership of 50% or more
of the numbers of shares of Common Stock owned by them, respectively, after
giving effect to the Formation as of the Formation Date (excluding equity
Securities of the Company beneficially or of record owned by WEL), as each such
number may be adjusted by reason of stock splits, reverse stock splits,
reclassifications and similar transactions or events affecting all shares of
Common Stock or all shares of any other class of Capital Stock of the Company;
provided, however, that (a) the pledge of shares of Common Stock (prior to the
foreclosure thereof) by Bedrock, the Crow Interests or the Senior Executives to
secure the payment of indebtedness owed by the members of the Larger Group or
the Smaller Group, as the case may be, shall not be deemed to be a Transfer or
other cessation of beneficial ownership of such shares by the respective
pledgors thereof if, as of the date of determination, the aggregate principal
amount of the indebtedness owned by members of the Larger Group or the Smaller
Group, as the case may be, and so secured by pledges of such shares shall not
be greater than an amount equal to 50% of the product obtained by multiplying
the number of shares of Common Stock owned beneficially and of record by the
members of the Larger Group or the Smaller Group, as the case may be, by the
average of the closing bid prices of the Common Stock on the principal national
securities exchange on which the Common Stock is listed or, if the Common Stock
is not so listed, on NASDAQ/NMS, as the case may be, for each of the 30
consecutive trading days next preceding such date of determination (or such
shorter period during which the Common Stock shall have been publicly traded
until such time as it has been so traded for 30 consecutive trading days); and
(b) if Donald J. McNamara, Robert A. Whitman and Daniel A. Decker, or any of
them, shall cease at any time to control the business and affairs of Bedrock,
including the voting and disposition of the equity Securities of the Company
owned beneficially or of record by Bedrock then for purposes of this clause (i)
Bedrock shall be deemed to have ceased owning any shares of Common Stock; (ii)
any "person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable), other than Bedrock,
the Crow Interests and the Senior Executives and the Affiliates of each of the
foregoing), is or becomes the "beneficial owner" (as such term is used in Rule
14d-3 promulgated pursuant to the Exchange Act), directly or indirectly, of
more then 35% of the total voting power in the aggregate of all classes of
Capital Stock of the Company then outstanding normally entitled to vote in
elections of directors; (iii) a majority of the board of directors of the
Company shall not consist of nominees of Bedrock or the Crow Interests; or
(iii) there shall occur a Change of Control (within the meaning of the
Indenture); or
T. EMPLOYMENT OF JAMES A. CARREKER, LESLIE V. BENTLEY AND ERIC A.
DANZIGER. The lapse of 30 days after any two or more of James A. Carreker,
Leslie V. Bentley and Eric A. Danziger cease to be employed by the Company by
reason of death or disability; or
U. OWNERSHIP OF SUBSIDIARIES. The Company shall cease to own,
directly or indirectly, all the equity Securities of Management Corp. and its
other Subsidiaries, subject to the provisions of subsection 7.7(ii);
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THEN (i) upon the occurrence of any Event of Default described in subsection
8.1L or 8.1M, each of (a) the unpaid principal amount of and accrued interest
on the Loans, (b) an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without notice,
presentment, demand, protest or other requirements of any kind, all of which
are hereby expressly waived by the Company and the obligations of each Lender
to make any Loan, the obligation of Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) during the continuance of any other Event of Default, the
Agent may, in its sole discretion, by written notice to the Company, declare
all or any portion of the amounts described in clauses (a) through (c) above to
be, and the same shall forthwith become, immediately due and payable and the
obligation of each Lender to make any Loan, the obligation of Agent to issue
any Letter of Credit and the right of any Lender to issue any Letter of Credit
hereunder shall thereupon terminate; provided that the foregoing shall not
affect in any way the obligations of Lenders under subsection 3.3C(i) or the
obligations of Lenders to purchase participations in any unpaid Swing Line
Loans as provided in subsection 2.1A(ii).
Any amounts described in clause (b) above, when received by
Agent, shall be held by Agent pursuant to the terms of the Collateral Account
Agreement and shall be applied as therein provided.
The occurrence of any condition or event may constitute an
Event of Default (or a Potential Event of Default) under more than one
provision of this subsection 8.1.
8.2 CERTAIN REMEDIES.
A. During the continuance of an Event of Default, all or any one
or more of the rights, powers, privileges and other remedies available to the
Agent or the Lenders against the Company under this Agreement, the Notes, the
Mortgages, the Security Documents or any of the other Loan Documents, or at law
or in equity, may be exercised by the Agent, acting in its own sole discretion
at any time and from time to time, whether or not all or any portion of the
Obligations shall be declared due and payable, and whether or not the Agent
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to any Property or all or any portion of the Mortgaged Property. Any
such actions taken by the Agent shall be cumulative and concurrent and may be
pursued independently, singly, successively, together or otherwise, at such
time and in such order as the Agent in its sole discretion may determine, to
the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of the Agent or the Lenders permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
B. In the event of the foreclosure or other action by the Agent
to enforce its remedies in connection with one or more of the Pool A
Properties, the Ground Leases, the Pool B Properties, the Management
Agreements or any other Collateral or all or any portion of the
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Mortgaged Property, whether such foreclosure (or other remedy) yields net
proceeds in an amount less than, equal to or more than the Pool A Property
Amount with respect to such Property or Mortgaged Property, the Agent shall
apply all net proceeds received to repay the Obligations, the Obligations shall
be reduced to the extent of such net proceeds and the remaining portion of the
Obligations shall remain outstanding and secured by the Mortgages and the other
Loan Documents, it being understood and agreed by the Company that the Company
is liable for the repayment of the Obligations and that any "excess"
foreclosure proceeds are part of the cross-collateralized and cross-defaulted
security granted to the Agent on behalf of the Lenders pursuant to the
Mortgages; provided, however, that, if the Agent so elects, the Loans and the
Notes shall be deemed to have been accelerated only to the extent of the net
proceeds actually received by the Lenders with respect to any individual
Property (or, in the event that the Agent on behalf of the Lenders is the
purchaser of such Property by Credit Bid at a foreclosure sale, the Loans and
the Notes shall be deemed to have been accelerated only at such time as the
Agent subsequently disposes of such Property and then only to the extent of the
amount of such Credit Bid) and applied in reduction of the Obligations in
accordance with the provisions of this Agreement and the Notes, after payment
by the Company of all transaction costs and expenses and costs of enforcement.
C. It is intended that the Liens of the Mortgages shall each be
construed and treated as a separate, distinct Lien for the purpose of securing
the entire Obligations secured thereby in the same manner as though each
Property was mortgaged and transferred to the Agent on behalf of the Lenders by
a separate and distinct mortgage and security agreement, so that if it should
at any time appear or be held that any Mortgage fails to mortgage, and transfer
to the Agent on behalf of the Lenders a Lien upon and the title to any
Property, or any part thereof, as against creditors of the Company other than
the Lenders or otherwise, such failure shall not operate to affect in any way
the transfer of the other Properties or Mortgaged Property or any part thereof
to the Agent on behalf of the Lenders; but nothing contained herein or in the
Mortgages shall be construed as requiring the Agent on behalf of the Lenders to
resort to any Property for the satisfaction of the Obligations secured thereby
in preference or priority to any other Mortgaged Property thereby conveyed, but
the Agent, acting in its sole discretion may seek satisfaction out of all of
the Mortgaged Property or any part thereof.
D. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default the Agent is
hereby authorized by the Company at any time or from time to time, without
notice to the Company or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by the Agent to or for the
credit or the account of the Company against and on account of the obligations
and liabilities of the Company to the Agent under this Agreement and the Notes,
including all claims of any nature or description arising out of or connected
with this Agreement or any other Loan Document, irrespective of whether or not
(i) the Agent shall have made any demand hereunder or (ii) the principal of or
the interest on the Loan or any other amounts due hereunder shall have become
due and payable pursuant to subsection 8.1 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
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E. During the continuance of an Event of Default, the Agent, in
its sole discretion, shall have the right, to the extent permitted by law, to
impound and take possession of books, records, notes, and other documents
evidencing the Company's Deposit Accounts, accounts receivable and other claims
for payment of money (including Rents) arising in connection with the
Properties, to give notice to the obligors thereunder of the Agent's interest
therein, and to make direct collections on such Deposit Accounts, accounts
receivable and claims.
F. During the occurrence of an Event of Default and upon the
occurrence and during the continuance of a default in the payment of any
principal or interest of any Indebtedness owed or alleged to be owed by the
Company or any Subsidiary, and following the initiation of any proceeding or
the taking of any other action to collect the payment thereof by the Person
entitled to such payment, the Agent may, in its sole discretion, advance either
to such Person or to the Company, for payment to such Person, all or any
portion of the amount of such payment, whether or not the existence of such
obligation or amount thereof shall be disputed by the Company or such
Subsidiary. Each such advance, to the extent not paid out of Excess Cash Flow,
shall deemed a Loan hereunder and shall be subject to the provisions of this
Agreement.
G. The rights, powers and remedies of the Agent and the Lenders
under this Agreement shall be cumulative and not exclusive of any other right,
power or remedy which the Agent or the Lenders may have against the Company
pursuant to this Agreement or the other Loan Documents executed by or with
respect to the Company, or existing at law or in equity or otherwise. The
rights, powers and remedies of the Agent and the Lenders may be pursued singly,
concurrently or otherwise, at such time and in such order as the Agent, acting
in its own sole discretion, may determine. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may
be deemed expedient. A waiver of any Event of Default or Potential Event of
Default with respect to the Company shall not be construed to be a waiver of
any subsequent Event of Default or Potential Event of Default by the Company or
to impair any remedy, right or power consequent thereon.
SECTION 9
MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Each Lender shall have the right at any time to (i)
sell, assign, transfer or negotiate to any Eligible Assignee (provided that
such Eligible Assignee complies with the requirements of subsection 2.7B(iii)
as of the date it becomes a Lender hereunder, to the extent applicable), or
(ii) sell to any Eligible Participant participations to any Person in, all or
any part of its Commitment or any Loan or Loans made by it or its Letters of
Credit or participations therein or any other interest herein or in any other
Obligations owed to it; provided, however, that (w) no such sale, assignment,
transfer or participation shall, without the consent of the Company, require
the Company to file a registration statement with the Securities and Exchange
Commission or apply to qualify such sale, assignment, transfer or participation
under the
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securities laws of any state, (x) no such sale, assignment, transfer or
participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a
corresponding interest in the Revolving Loan Commitment and the Revolving
Loans of the Lender effecting such sale, assignment, transfer or participation,
(y) no such sale, assignment or transfer of an interest in the Revolving Loan
Commitment of such Lender shall be made in an amount less than $5,000,000 (or,
if less, the aggregate amount of the Revolving Loan Commitment of such Lender)
and (z) unless Bankers shall be removed as Agent, Bankers shall not make any
such sale, assignment or transfer if, after giving effect thereto, the
Revolving Loan Commitment of Bankers would be less than $15,000,000. In the
case of any assignment authorized under this subsection 9.1, (i) the Agent
shall notify the Company of the effective date of such assignment, (ii) as of
such effective date, the assignee shall be a party hereto and, to the extent
that an interest hereunder have been assigned to it, shall have the rights and
obligations of a Lender hereunder and (iii) the assigning Lender shall, to the
extent that its rights and obligations hereunder have been assigned by it,
relinquish its rights and be released from its obligations under this
Agreement. In the event of an assignment hereunder, the Commitments shall be
modified to reflect the Commitments of such assignee. Except with respect to
the portion of the Loans and Commitments assigned pursuant to this subsection
9.1, no Lender shall, as between the Company and such Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or any granting of participations in, all or any part of its
Commitment or the Loans, the Letters of Credit or participations therein, or
other Obligations owed to such Lender.
B. PARTICIPATIONS. The Company and each Lender hereby acknowledge
and agree that, solely for purposes of subsections 2.6, 2.7, and 9.5, (i) any
participation will give rise to a direct obligation of the Company to the
participant and (ii) the participant shall be considered to be a "Lender".
C. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 9.1, any Lender may assign and pledge all or any portion of its
Loans and the other Obligations owed to such Lender to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any operating circular issued by such Federal
Reserve Bank. No Lender shall, as between the Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge.
D. INFORMATION. Each Lender may furnish any information
concerning the Company and its Subsidiaries in the possession of that Lender
from time to time to assignees and participants (including prospective
assignees and participants who have executed a confidentiality agreement
substantially in the form attached as Exhibit XXI hereto and otherwise meeting
the criteria of an Eligible Assignee or Eligible Participant, as the case may
be); provided that the Agent has notified the Company that such Person is an
assignee or participant (or prospective assignee or participant, as the case
may be.
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9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to pay promptly, and, with respect to the
expenses referred to in clauses (iv) and (v) below, on or before the date of
the initial closing of the Public Offerings, (i) all the costs of furnishing
all opinions of counsel for the Company and the other Loan Parties (including
any opinions reasonably requested by the Agent) as to any legal matters arising
hereunder and of each Loan Party's performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including with respect to
confirming compliance with environmental, insurance and solvency requirements
and with respect to the Security Documents and the Liens created pursuant
thereto; (ii) actual costs and expenses of creating, perfecting and maintaining
Liens in favor of the Agent for the benefit of the Lenders pursuant to any Loan
Document, including filing and recording fees and expenses, mortgage recording
taxes, intangible taxes and transfer and stamp taxes, title searches, title
insurance premiums, UCC searches and UCC filing charges; (iii) all the
reasonable out-of-pocket expenses incurred by the Agent and payable to
auditors, accountants, architects, engineers or appraisers and any
environmental or other consultants, advisors and agents employed or retained by
the Agent or its counsel (but excluding the fees of counsel for the Agent) in
connection with performing due diligence, including obtaining and reviewing any
Appraisals, any environmental audits or reports, market surveys, title reports,
surveys and similar information; (iv) up to $20,000 in the aggregate of
out-of-pocket expenses incurred by the Agent and its Affiliates for travel in
connection with the negotiation, preparation and execution of the Loan
Documents, the syndication of the Loans and due diligence; (v) all the
reasonable fees, expenses and disbursements of counsel for the Agent and its
Affiliates in connection with the negotiation, preparation and execution of the
Loan Documents, the closing and syndication of the Loans and due diligence;
provided that (x) if the Funding Availability Date hereof occurs on or before
the fifth Business Day after the date of the initial closing of the Public
Offerings (the "TARGET DATE") the fees of O'Melveny & Myers for such purposes
shall not exceed $515,000 (plus additional fees for legal services after April
26, 1996 that are attributable to the proposed Acquisition and refinancing of
the Vinings Property) and (y) if the Funding Availability Date hereof occurs
after the Target Date the fees of O'Melveny & Myers for such purposes will be
the amount referred to in clause (x) plus all reasonable fees incurred after
the Target Date; (vi) all reasonable expenses incurred by the Agent, including,
without limitation, the reasonable fees, expenses and disbursements of counsel
for the Agent (including allocated costs of internal counsel) in connection
with (a) the administration of the Loan Documents and any consents, amendments,
waivers or other modifications thereto, (b) any Acquisition, any acquisition or
addition of a Management Agreement or Other Management Agreement, and any
Transfer or release of any Property, Management Agreement, Servicing Agreement
or Other Management Agreement or any proposal with respect to any of the
foregoing and (c) the preparation or review of other documents or matters
requested by any Loan Party; and (vii) after the occurrence of an Event of
Default, all costs and expenses, including reasonable attorneys' fees and costs
of settlement, incurred by the Agent and the Lenders in enforcing any
Obligations of or in collecting any payments due from the Company hereunder or
under the other Loan Documents by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings. Anything in this
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Agreement to the contrary notwithstanding, the Company shall not be liable for
the payment of expenses incurred or payable by the Agent and its Affiliates in
the performance of the activities referred to in clauses (iv) and (v) of the
preceding sentence in excess of the amounts specified therein with respect to
the periods, if any, specified therein. Provisions contained in this Agreement
or in any of the other Loan Documents requiring the Company to pay or reimburse
any costs or expenses, which are modified by the term "reasonable", shall
require the Company to pay the costs or expenses that are "reasonably" incurred
and that are in a "reasonable" amount. Except as expressly provided to the
contrary in this Agreement or any other Loan Document, such costs or expenses
that are payable after the Effective Date shall be payable by the Company
within five Business Days after the Company's receipt of written demand from
the Agent to pay same, accompanied by documentation in reasonable detail
sufficient to verify the nature and amount.
9.3 INDEMNITY.
A. INDEMNITY. In addition to the payment of expenses as required
by subsection 9.2, whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to defend, indemnified and hold harmless the
Agent, Lenders and Bankers and their respective Affiliates and Persons deemed
to be "controlling persons" thereof within the meaning of the Securities Act or
the Exchange Act and the respective directors, officers, employees, agents,
attorneys and representatives of the foregoing (collectively, "INDEMNIFIED
PERSONS" and individually, an "INDEMNIFIED PERSON"), to the full extent lawful,
from and against any and all losses, claims, damages, liabilities, costs and
expenses or other obligations of any kind or nature whatsoever incurred by each
such Indemnified Person (including fees, charges and disbursements of counsel
and the allocated costs and expenses of internal counsel for such Indemnified
Person) which are related to, arise out of or result from (a) any untrue
statements or alleged untrue statements or omissions or alleged omissions to
state therein a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each
case made or, to the extent contemplated by the Loan Documents, to be made, by
or on behalf of any Loan Party or any of its Affiliates, (x) in the
representations and warranties of the Loan Parties contained in the Loan
Documents, (y) in or pursuant to the Original Financing Letter, the Loan
Documents or the Related Documents or (z) otherwise in connection with the
Original Financing Letter, the Loan Documents or the Related Documents, (b)
information provided by or on behalf of any Loan Party or any of their
Affiliates for use in connection with any syndication, assignment or
participation of any portion of the Commitments, the Loans, the Notes, the
other Loan Documents or the Obligations, or in connection with the Original
Financing Letter, any Loan Document or any Related Document or any transactions
contemplated hereby or thereby, (c) the transactions contemplated by the Loan
Documents (including the Lenders' agreements to make the Loans or the use or
intended use of the proceeds thereof) or any enforcement of any of the Loan
Documents (including any sale of, collection from, or other realization upon
any of the Collateral or the enforcement of the Subsidiary Guaranty), (d) any
actions taken or omitted to be taken by an Indemnified Person with the consent
of the Company or in conformity with the instructions of the Company, or (e)
any other transactions contemplated by the Original Financing Letter, the Loan
Documents or the Related Documents, and the Company will reimburse each
Indemnified Person for all reasonable costs and expenses, including fees and
disbursements of both outside and internal counsel for such
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Indemnified Person, as they are incurred, in connection with investigating,
preparing for, or defending any formal or informal claim, action, suit,
investigation, inquiry or other proceeding, whether or not in connection with
pending or threatening litigation, caused by or arising out of or in connection
with the foregoing, whether or not such Indemnified Person is named as a party
thereto and whether or not any liability results therefrom. The Company shall
not, however, be responsible for any losses, claims, damages, liabilities,
costs or expenses pursuant to clauses (c), (d) or (e) of the preceding sentence
which have resulted primarily from the gross negligence or willful misconduct
of such Indemnified Person as determined by a final judgment of a court of
competent jurisdiction. Neither the Agent nor any other Indemnified Person
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to any of the Loan Parties and their respective Affiliates or any
director, officer, employee, agent or representative of any of the foregoing,
or any other person, for or in connection with the foregoing, or otherwise
arising out of or in any way relating to the matters contemplated by the
Original Financing Letter, the Loan Documents, the Related Documents or any
commitment to lend except for such liability for losses, claims, damages,
liabilities, costs or expenses of any Indemnified Person pursuant to clauses
(c), (d) or (e) of the preceding sentence to the extent they are determined to
have resulted primarily from the gross negligence or willful misconduct of such
Indemnified Person as determined by a final judgment of a court of competent
jurisdiction and in no event shall the Agent or any other Indemnified Person be
responsible for or liable to any of the Loan Parties or any of their respective
Affiliates or any other Person for consequential, punitive or exemplary
damages. The Company further agrees that the Loan Parties shall not, nor shall
they permit their respective Subsidiaries to, without the prior written consent
of the Agent and Bankers, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit, investigation,
inquiry or other proceeding in respect of which indemnification is actually
sought hereunder unless such settlement, compromise or consent includes an
unconditional release of the Agent and each other Indemnified Person hereunder
from all liability arising out of such claim, action, suit, investigation,
inquiry or other proceeding.
B. PROCEDURE. If any action, suit, investigation, inquiry or
other proceeding is commenced, as to which an Indemnified Person proposes to
demand indemnification hereunder, such Indemnified Person shall notify the
Company with reasonable promptness; provided, however, that any failure by
such Indemnified Person to notify the Company shall not relieve the Company or
any of its Affiliates from its obligations hereunder (except to the extent that
the Company or such Affiliate is prejudiced by such failure to so promptly
notify). The Company shall be entitled to assume the defense of any such
action, suit, investigation, inquiry or other proceeding, including the
employment of counsel reasonably satisfactory to the Indemnified Person and the
payment of all reasonable fees and expenses incurred in connection therewith.
The Indemnified Person shall have the right to employ separate counsel in any
such action, suit, investigation, inquiry or other proceeding, or to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Person unless (i) the Company has
agreed to pay such fees and expenses, (ii) the Company shall have failed
promptly upon written demand therefor to assume the defense of such action,
suit, investigation, inquiry or other proceeding, and employ counsel reasonably
satisfactory to the Indemnified Person in connection therewith or (iii) such
Indemnified Person shall have been advised by counsel that there exists actual
or potential conflicting interests between the Company and such Indemnified
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Person, including situations in which one or more legal defenses may be
available to such Indemnified Person that are different from or additional to
those available to the Company, in which case, if such Indemnified Person
notifies the Company in writing that it elects to employ separate counsel at
the expense of the Company, the Company shall not have the right to assume the
defense of such action or proceeding on behalf of such Indemnified Person;
provided, however, that the Company shall not, in connection with any one such
action, suit, investigation, inquiry or other proceeding or separate but
substantially similar or related actions, suits, investigations, inquiries or
other proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all such Indemnified Persons (in
addition to local counsel), which firm shall be designated in writing by the
Agent.
C. CONTRIBUTION. In order to provide for just and equitable
contribution with respect to matters subject to subsection 9.3A, if a claim for
indemnification is made pursuant to these provisions but is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification is not available for any reason (except, with respect
to indemnification sought solely pursuant to subsection 9.3A, for the reasons
specified in the second sentence of subsection 9.3A), even though the express
provisions hereof provide for indemnification in such case, or is insufficient
to hold an Indemnified Party harmless, then the Company, on the one hand, and
the Agent, the Lenders or Bankers, on the other hand, shall contribute to such
loss, claim, damage, liability, cost or expense for which such indemnification
or reimbursement is held unavailable or is insufficient in such proportion as
is appropriate to reflect the relative benefits to the Loan Parties and their
respective Affiliates, on the one hand, and the Agent, Lenders or Bankers, on
the other hand, in connection with the transactions described in the Original
Financing Letter, the Loan Documents and the Related Documents, as well as any
other equitable considerations. The parties agree that for the purpose of this
subsection 9.3C, the relative benefits to the Loan Parties and their respective
Affiliates, on the one hand, and the Agent, Lenders and Bankers, on the other
hand shall be deemed to be in the same proportion as the proceeds received or
to be received by the Loan Parties from the Loan Documents bears to the fees
paid or to be paid to the Agent, Lenders and Bankers under the Loan Documents.
Notwithstanding the foregoing, the Agent, Lenders and Bankers shall not be
required to contribute under this subsection 9.3C any amount in excess of the
amount of fees actually received by the Agent, Lenders and Bankers,
respectively, in respect of the Loan Documents. The Company, Agent, Bankers and
the Lenders agree that it would not be just and equitable if contribution
pursuant to this subsection 9.3C were determined by pro rata allocation or by
any other method which does not take into account the equitable considerations
referred to in this subsection 9.3C.
D. NO LIMITATION. The foregoing rights to indemnity and
contribution shall be in addition to any rights that any Indemnified Person and
Loan Parties may have at common law or otherwise and shall remain in full force
and effect following the completion or any termination of the transactions
contemplated by the Original Financing Letter, the Loan Documents and the
Related Documents. In no event shall the Agent, the Lenders, or Bankers be
responsible or liable to any person for consequential damages which may be
alleged as a result of the Original Financing Letter, the Loan Documents and
the Related Documents or any transaction contemplated thereby.
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E. INDEPENDENCE OF INDEMNITY. The Company acknowledges and agrees
that the provisions of this subsection 9.3 are separate from and in addition to
the provisions contained in the Original Financing Letter and contained in the
Environmental Indemnity.
9.4 NO JOINT VENTURE OR PARTNERSHIP.
The Lenders and the Company acknowledge and agree that the
relationship created hereunder or under the other Loan Documents is that of
creditor/debtor. The Company acknowledges and agrees that (a) the Company
through its directors, officers and employees, is a knowledgeable and
sophisticated business practitioner with particular expertise and broad
experience in the area of real estate acquisition and finance; (b) the Lenders
individually and collectively, do not owe, and have expressly disclaimed, any
fiduciary or special obligation to the Company and/or any of the Company's
partners, agents, or representatives; and (c) nothing contained in this
Agreement or any other Loan Document shall affect the relationship between the
Lenders and the Company as that of creditor/debtor hereunder and under the
other Loan Documents. Nothing herein or therein is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy relationship between
the Company, any other Loan Party or Subsidiary thereof and the Lenders nor to
grant the Agent or the Lenders any interest in the Mortgaged Property other
than that of mortgagee or lender.
9.5 RATABLE SHARING.
The Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with this Agreement), by realization upon security,
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to that Lender hereunder
or under the other Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to
such Lender) which is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify the Agent and
each other Lender of the receipt of such payment and (ii) apply a portion of
such payment to purchase participations (which it shall be deemed to have
purchased from each seller of a participation simultaneously upon the receipt
by such seller of its portion of such payment) in the Aggregate Amounts Due to
the other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them;
provided, however, that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender
upon the bankruptcy or reorganization of the Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. The Company expressly consents
to the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by the
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Company to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
9.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document or consent to any departure by any
Loan Party therefrom, shall in any event be effective without the written
concurrence of the Agent. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No
notice to or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances.
Any amendment, modification, termination, waiver or consent effected in
accordance with this subsection 9.6 shall be binding upon each Lender at the
time outstanding, each future Lender and, if signed by the Company, on the
Company.
9.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid the occurrence of
an Event of Default or Potential Event of Default if such action is taken or
condition exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed, or sent by telefacsimile or courier service
and shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex; provided, however, that
notices to the Agent and the Company shall not be effective until received. For
the purposes hereof, the address of each party hereto shall be as set forth
under such party's name on the signature pages hereof or (i) as to the Company
and the Agent, such other address as shall be designated by such Person in a
written notice delivered to the other parties hereto and (ii) as to each other
party, such other address as shall be designated by such party in a written
notice delivered to the Agent.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. Except as provided in subsection 9.9B below, all
representations, warranties and agreements made herein shall survive the
execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder and shall terminate upon
indefeasible payment in full of the Obligations and the expiration or
termination of all Commitments and Letters of Credit, notwithstanding anything
in this Agreement or implied by law to the contrary.
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B. Notwithstanding anything in this Agreement or implied by law
to the contrary, the agreements of the Company set forth in subsections 2.6,
2.7, 3.5A, 3.6, 5.2G (to the extent it incorporates the Environmental
Indemnity), 6.8 (to the extent it incorporates the Environmental Indemnity),
9.2, 9.3 and 9.5 shall survive the payment in full of the Obligations, the
cancellation or expiration of the Letters of Credit and the reimbursement of
any amounts drawn thereunder, and the termination of this Agreement.
9.10 AGENT'S DISCRETION.
Whenever pursuant to this Agreement or any other Loan Document the
Agent exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to the Agent, the decision of the
Agent to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of the Agent. The Company
acknowledges and agrees that, notwithstanding anything in this Agreement to the
contrary, certain decisions to be made by the Agent under this Agreement may be
subject to or determined by the further decision by the Lenders or a percentage
of the Lenders.
9.11 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF THE LENDERS' RIGHTS.
The obligations of the Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitment of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no
action taken by the Lenders pursuant hereto or thereto, shall be deemed to
constitute the Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not
be necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
9.12 REMEDIES OF THE COMPANY.
In the event that a claim or adjudication is made that the Agent or
any Lender or their respective agents has acted unreasonably or unreasonably
delayed acting in any case where by law or under this Agreement, the Notes, the
Mortgages or the other Loan Documents, the Agent, such Lender or such agent, as
the case may be, has an obligation to act reasonably or promptly, the Company
agrees that none of the Agent, such Lender or such agents, shall be liable for
any monetary damages, and the Company's sole remedies shall be limited to
commencing an action seeking injunctive relief or declaratory judgement. The
parties hereto agree that any action or proceeding to determine whether the
Agent or any Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
9.13 MARSHALLING; PAYMENTS SET ASIDE.
Neither the Agent nor any Lenders shall be under any obligation to
marshal any assets in favor of the Company, any other Loan Party or any other
party or against or in payment of any or all of the Obligations. To the extent
that the Company or any other Loan Party makes
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a payment or payments to the Lenders or the Agent (or to the Agent for the
benefit of the Lenders), or the Agent or the Lenders enforce any security
interests or the Agent exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, any other state or federal law, common law or any equitable
cause of action, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.
9.14 MAXIMUM AMOUNT.
A. It is the intention of the Company and the Lenders to conform
strictly to the usury and similar laws relating to interest from time to time
in force, and all agreements between the Loan Parties and their respective
Subsidiaries and the Lenders, whether now existing or hereafter arising and
whether oral or written, are hereby expressly limited so that in no contingency
or event whatsoever, whether by acceleration of maturity hereof or otherwise,
shall the amount paid or agreed to be paid in the aggregate to the Lenders as
interest (whether or not designated as interest, and including any amount
otherwise designated but deemed to constitute interest by a court of competent
jurisdiction) hereunder or under the other Loan Documents or in any other
agreement given to secure the indebtedness of the Company to the Lenders, or in
any other document evidencing, securing or pertaining to the indebtedness
evidenced hereby, exceed the maximum amount permissible under applicable usury
or such other laws (the "Maximum Amount"). If under any circumstances
whatsoever fulfillment of any provision hereof, or any of the other Loan
Documents, at the time performance of such provision shall be due, shall
involve exceeding the Maximum Amount, then, ipso facto, the obligation to be
fulfilled shall be reduced to the Maximum Amount. For the purposes of
calculating the actual amount of interest paid and/or payable hereunder in
respect of laws pertaining to usury or such other laws, all sums paid or agreed
to be paid to the holder hereof for the use, forbearance or detention of the
indebtedness of the Company evidenced hereby, outstanding from time to time
shall, to the extent permitted by Applicable Law, be amortized, pro-rated,
allocated and spread from the date of disbursement of the proceeds of the Notes
until payment in full of all of such indebtedness, so that the actual rate of
interest on account of such indebtedness is uniform through the term hereof.
The terms and provisions of this subsection shall control and supersede every
other provision of all agreements between the Company or any endorser of the
Notes and the Lenders.
B. If under any circumstances any Lender shall ever receive an
amount which would exceed the Maximum Amount, such amount shall be deemed a
payment in reduction of the principal amount of the Loans and shall be treated
as a voluntary prepayment under subsection 2.4B(i) and shall be so applied in
accordance with subsection 2.4 hereof or if such excessive interest exceeds the
unpaid balance of the Loans and any other indebtedness of the Company in favor
of such Lender, the excess shall be deemed to have been a payment made by
mistake and shall be refunded to the Company.
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9.15 SEVERABILITY.
In case any provision in or obligation under this Agreement or any
Note or any other Loan Document shall be invalid, illegal or unenforceable in
any jurisdiction or under any set of circumstances, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction or under any other set of
circumstances, shall not in any way be affected or impaired thereby.
9.16 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
9.17 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
9.18 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Agent and the Lenders (it being
understood that the Lenders' rights of assignment are subject to subsection
9.1). Neither the Company's rights or obligations hereunder nor any interest
therein may be assigned or delegated by the Company.
9.19 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING
AND DELIVERING THIS AGREEMENT, THE COMPANY, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
232
<PAGE> 240
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 9.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE AGENT RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 9.19
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
9.20 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED HEREBY AND THEREBY. The
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each party hereto acknowledges that
this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement and
the other Loan Documents, and that each will continue to rely on this waiver in
their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SUBSECTION 9.20 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
233
<PAGE> 241
9.21 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by the Company and
the Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
9.22 MATERIAL INDUCEMENT.
The Company acknowledges that its representations, warranties,
covenants and agreements contained in this Agreement and the other Loan
Documents, including its covenants and agreements to pay Release Prices, are
material inducements to the Lenders to enter into this Agreement and to make
the Loans and issue the Letters of Credit, that the Lenders have already relied
on such representations, warranties, covenants and agreements in entering into
this Agreement and agreeing to make the Loans (notwithstanding any
investigation heretofore or hereafter made by or on behalf of the Lenders), and
that the Lenders will continue to rely on such representations, warranties,
covenants and agreements in their future dealings with the Company. The Company
understands that the Release Prices are designed to afford to the Lenders a
predictable return on their investment in the Loans, that the Release Prices
will be required to be paid by the Company in connection with all voluntary and
involuntary prepayments of the principal amount of the Loans and reductions in
the Commitments (except as specifically set forth to the contrary in subsection
2.4B), and that the payment of the Release Prices in connection with
involuntary prepayments beyond the Company's control (such as upon the
occurrence of a casualty or a Taking) will be required. The Company agrees that
its representations, warranties, covenants and agreements contained in this
Agreement and the other Loan Documents, including its covenants and agreements
to pay Release Prices, are reasonable in purpose and scope. The Company
represents and warrants that it has reviewed this Agreement and the other Loan
Documents with its legal counsel and that it knowingly and voluntarily is
entering into this Agreement and the other Loan Documents following
consultation with legal counsel.
9.23 ENTIRE AGREEMENT.
This Agreement is evidence of the indebtedness incurred pursuant
hereto and, taken together with all of the other Loan Documents and all
certificates and other documents delivered to the Agent and the Lenders
hereunder and thereunder, embodies the entire agreement and supersede all prior
agreements, written and oral, relating to the subject matter hereof.
234
<PAGE> 242
9.24 CONFIDENTIALITY.
Each Lender and the Agent, severally and not jointly, agrees to
exercise commercially reasonable efforts to keep any non-public information
delivered or made available to such Lender or the Agent pursuant to the Loan
Documents, which any Loan Party or its authorized representative has identified
as confidential information, confidential from any Person other than Persons
employed by or retained by such Lender or the Agent who are or are expected to
become engaged in evaluating, approving, structuring or administering the
Revolving Loans, Letters of Credit and other extensions of credit or
Obligations hereunder; provided that nothing herein shall prevent any Lender or
the Agent from disclosing such information to any bona fide Eligible Assignee,
transferee or Eligible Participant that has delivered to the Company an
agreement in the form attached hereto as Exhibit XXI (with such changes therein
as shall be approved by the Company, which approval shall not be unreasonably
withheld, conditioned or delayed) in connection with the contemplated
assignment or transfer of any Commitments, Revolving Loans, Letters of Credit
or other extensions of credit or Obligations hereunder or participation therein
or as required or requested by any Governmental Authority or representative
thereof or pursuant to legal process or in connection with the exercise of any
remedy under the Loan Documents.
9.25 RELIANCE BY THE COMPANY.
The Company shall be entitled to rely on all written approvals and
consents received from the Agent as being that also of the Lenders, without
obtaining separate acknowledgement of same, and shall be required to deal only
with the Agent, all except as otherwise expressly provided in this Agreement or
in such approval or consent.
[Remainder of page intentionally left blank.]
235
<PAGE> 243
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
Notice Address:
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael Silverman
S-1
<PAGE> 244
AGENT:
BANKERS TRUST COMPANY,
as Agent
By: /s/ GARRETT W. THELANDER
-----------------------------
Name: Garrett W. Thelander
Title: Vice President
Notice Address:
Bankers Trust Company
280 Park Avenue, 23W
New York, New York 10017
Attention: Garrett Thelander
LENDERS:
BANKERS TRUST COMPANY,
as a Lender
By: /s/ GARRETT W. THELANDER
-----------------------------
Name: Garrett W. Thelander
Title: Vice President
Notice Address:
Bankers Trust Company
280 Park Avenue, 23W
New York, New York 10017
Attention: Garrett Thelander
S-2
<PAGE> 245
DRESDNER BANK AG, New York and Grand
Cayman Branches
By: /s/ JOHANNES BOECKMANN
-----------------------------
Name: Johannes Boeckmann
Title: Vice President
By: /s/ RICHARD W. CONROY
-----------------------------
Name: Richard W. Conroy
Title: Vice President
Notice Address:
Dresdner Bank AG
75 Wall Street, 29th Floor
New York, New York 10005
Attention: Richard Conroy
All notices should go to each of
the following persons:
Richard W. Conroy
Vice President
Tel: (212) 429-2206
Fax: (212) 429-2129
Andrew K. Mittag
Vice President
Tel: (212) 429-2198
Fax: (212) 429-2129
Johannes Boeckmann
Vice President
Tel: (212) 429-2479
Fax: (212) 429-2129
S-3
<PAGE> 246
BANK ONE, TEXAS N.A.
By: /s/ GINA A. NORRIS
-----------------------------
Name: Gina A. Norris
Title: Vice President
Notice Address:
Bank One, Texas N.A.
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attention: Gina Norris
S-4
<PAGE> 247
THE BANK OF NOVA SCOTIA
By: /s/ [ILLEGIBLE]
-----------------------------
Name: [ILLEGIBLE]
Title: OFFICE HEAD, REAL
ESTATE BANKING
Notice Address:
The Bank of Nova Scotia
580 California Street
P.0. Box 3716
San Francisco, California
94104
Attention: Paul Stiplosek
S-5
<PAGE> 248
FIRST NATIONAL BANK OF COMMERCE
By: /s/ NEMESIO VISO
-----------------------------
Name: NEMESIO VISO
Title: Assistant Vice
President
Notice Address:
First National Bank of
Commerce
210 Barron Street, Suite 751
New Orleans, Louisiana 70112
Attention: Brian Otis
S-6
<PAGE> 249
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ YUTAKA ENDO
-----------------------------
Name: YUTAKA ENDO
Title: SENIOR VICE PRESIDENT
Notice Address:
The Industrial Bank of Japan
Trust Company
245 Park Avenue
New York, New York 10167
Attention: Kimio Kanai
S-7
<PAGE> 250
SWING LINE NOTE
WYNDHAM HOTEL CORPORATION
$10,000,000.00 New York, New York
May 29, 1996
FOR VALUE RECEIVED, WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), promises to pay to the order of BANKERS TRUST COMPANY
("PAYEE"), on or before the Maturity Date, the lesser of (x) Ten Million
Dollars and no cents ($10,000,000.00) and (y) the unpaid principal amount of
all advances made by Payee to the Company as Swing Line Loans under the Credit
Agreement referred to below.
The Company also promises to pay interest on the unpaid principal
amount hereof, from the Closing Date until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of that
certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996 by
and among the Company, the financial institutions listed therein as Lenders,
and Bankers Trust Company, as Agent (said Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is the Company's "Swing Line Note" and is issued pursuant to
and entitled to the benefits of the Credit Agreement, to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Swing Line Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of the Agent located at One Bankers Trust Plaza, New York, New York
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until notified in
writing of the assignment or transfer of this Note in accordance with the terms
of the Credit Agreement, the Company and the Agent shall be entitled to deem
and treat Payee as the owner and holder of this Note and the Loans evidenced
hereby. Each of the Payee and any subsequent permitted assignee of this Note
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall
<PAGE> 251
not limit or otherwise affect the obligations of the Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory and optional prepayment as provided
in the Credit Agreement.
This Note is secured by certain assets pursuant to the Mortgages and
the other Security Documents.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
During the continuance of any Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 9.1 and 9.18 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and, except as expressly provided in
the Credit Agreement, notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
[Balance of page intentionally left blank.]
2
<PAGE> 252
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
3
<PAGE> 253
TRANSACTIONS
ON NOTE
<TABLE>
<CAPTION>
OUTSTANDING
TYPE OF AMOUNT OF AMOUNT OF PRINCIPAL
LOAN MADE LOAN MADE PRINCIPAL PAID BALANCE NOTATION
DATE THIS DATE THIS DATE THIS DATE THIS DATE MADE BY
- ---- --------- --------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 254
REVOLVING NOTE
WYNDHAM HOTEL CORPORATION
$20,000,000.00 New York, New York
May 29, 1996
FOR VALUE RECEIVED, WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), promises to pay to the order of THE BANK OF NOVA SCOTIA
("PAYEE") or its registered assigns, on or before the Maturity Date, the lesser
of (x) Twenty Million Dollars and no cents ($20,000,000.00) and (y) the unpaid
principal amount of all advances made by Payee to the Company as Revolving Loans
under the Credit Agreement referred to below.
The Company also promises to pay interest on the unpaid principal
amount hereof, from the Closing Date until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of that
certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996 by
and among the Company, the financial institutions listed therein as Lenders,
and Bankers Trust Company, as Agent (said Credit Agreement, as it may be
amended, restated supplemented or otherwise modified from time to time, being
the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is the Company's "Revolving Notes" in the aggregate
principal amount of $100,000,000 and is issued pursuant to
and entitled to the benefits of the Credit Agreement, to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Revolving Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of the Agent located at One Bankers Trust Plaza, New York, New York
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until notified in
writing of the assignment or transfer of this Note in accordance with the terms
of the Credit Agreement, the Company and the Agent shall be entitled to deem
and treat Payee as the owner and holder of this Note and the Loans evidenced
hereby. Each of the Payee and any subsequent permitted assignee of this Note
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall
<PAGE> 255
not limit or otherwise affect the obligations of the Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory and optional prepayment as provided
in the Credit Agreement.
This Note is secured by certain assets pursuant to the Mortgages and
the other Security Documents.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
During the continuance of any Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 9.1 and 9.18 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and, except as expressly provided in
the Credit Agreement, notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
[Balance of page intentionally left blank.]
2
<PAGE> 256
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
3
<PAGE> 257
TRANSACTIONS
ON NOTE
<TABLE>
<CAPTION>
OUTSTANDING
TYPE OF AMOUNT OF AMOUNT OF PRINCIPAL
LOAN MADE LOAN MADE PRINCIPAL PAID BALANCE NOTATION
DATE THIS DATE THIS DATE THIS DATE THIS DATE MADE BY
- ---- --------- --------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 258
REVOLVING NOTE
WYNDHAM HOTEL CORPORATION
$15,000,000.00 New York, New York
May 29, 1996
FOR VALUE RECEIVED, WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), promises to pay to the order of DRESDNER BANK AG ("PAYEE"), on
or before the Maturity Date, the lesser of (x) Ten Million Dollars and no cents
($10,000,000.00) and (y) the unpaid principal amount of all advances made by
Payee to the Company as Revolving Loans under the Credit Agreement referred to
below.
The Company also promises to pay interest on the unpaid principal
amount hereof, from the Closing Date until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of that
certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996 by
and among the Company, the financial institutions listed therein as Lenders,
and Bankers Trust Company, as Agent (said Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is the Company's "Revolving Notes" in the aggregate
principal amount of $100,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Revolving Loans
evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of the Agent located at One Bankers Trust Plaza, New York, New York
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until notified in
writing of the assignment or transfer of this Note in accordance with the terms
of the Credit Agreement, the Company and the Agent shall be entitled to deem
and treat Payee as the owner and holder of this Note and the Loans evidenced
hereby. Each of the Payee and any subsequent permitted assignee of this Note
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall
<PAGE> 259
not limit or otherwise affect the obligations of the Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory and optional prepayment as provided
in the Credit Agreement.
This Note is secured by certain assets pursuant to the Mortgages and
the other Security Documents.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
During the continuance of any Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 9.1 and 9.18 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and, except as expressly provided in
the Credit Agreement, notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
[Balance of page intentionally left blank.]
2
<PAGE> 260
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
3
<PAGE> 261
TRANSACTIONS
ON NOTE
<TABLE>
<CAPTION>
OUTSTANDING
TYPE OF AMOUNT OF AMOUNT OF PRINCIPAL
LOAN MADE LOAN MADE PRINCIPAL PAID BALANCE NOTATION
DATE THIS DATE THIS DATE THIS DATE THIS DATE MADE BY
- ---- --------- --------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 262
REVOLVING NOTE
WYNDHAM HOTEL CORPORATION
$20,000,000.00 New York, New York
May 29, 1996
FOR VALUE RECEIVED, WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), promises to pay to the order of BANK ONE, TEXAS N.A. ("PAYEE"),
or its registered assigns on or before the Maturity Date, the lesser of (x) Ten
Million Dollars and no cents ($20,000,000.00) and (y) the unpaid principal
amount of all advances made by Payee to the Company as Revolving Loans under
the Credit Agreement referred to below.
The Company also promises to pay interest on the unpaid principal
amount hereof, from the Closing Date until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of that
certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996 by
and among the Company, the financial institutions listed therein as Lenders,
and Bankers Trust Company, as Agent (said Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the "Credit Agreement", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is the Company's "Revolving Notes" in the aggregate
principal amount of $100,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Revolving Loans
evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of the Agent located at One Bankers Trust Plaza, New York, New York
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until notified in
writing of the assignment or transfer of this Note in accordance with the terms
of the Credit Agreement, the Company and the Agent shall be entitled to deem
and treat Payee as the owner and holder of this Note and the Loans evidenced
hereby. Each of the Payee and any subsequent permitted assignee of this Note
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall
<PAGE> 263
not limit or otherwise affect the obligations of the Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory and optional prepayment as provided
in the Credit Agreement.
This Note is secured by certain assets pursuant to the Mortgages and
the other Security Documents.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
During the continuance of any Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 9.1 and 9.18 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and, except as expressly provided in
the Credit Agreement, notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
[Balance of page intentionally left blank.]
2
<PAGE> 264
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
3
<PAGE> 265
TRANSACTIONS
ON NOTE
<TABLE>
<CAPTION>
OUTSTANDING
TYPE OF AMOUNT OF AMOUNT OF PRINCIPAL
LOAN MADE LOAN MADE PRINCIPAL PAID BALANCE NOTATION
DATE THIS DATE THIS DATE THIS DATE THIS DATE MADE BY
- ---- --------- --------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 266
REVOLVING NOTE
WYNDHAM HOTEL CORPORATION
$25,000,000.00 New York, New York
May 29, 1996
FOR VALUE RECEIVED, WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), promises to pay to the order of BANKERS TRUST COMPANY ("PAYEE")
or its registered assigns, on or before the Maturity Date, the lesser of (x)
Twenty-Five Million Dollars and no cents ($25,000,000.00) and (y) the unpaid
principal amount of all advances made by Payee to the Company as Revolving Loans
under the Credit Agreement referred to below.
The Company also promises to pay interest on the unpaid principal
amount hereof, from the Closing Date until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of that
certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996 by
and among the Company, the financial institutions listed therein as Lenders,
and Bankers Trust Company, as Agent (said Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is one of the Company's "Revolving Notes" in the aggregate
principal amount of $100,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Revolving Loans
evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of the Agent located at One Bankers Trust Plaza, New York, New York
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until notified in
writing of the assignment or transfer of this Note in accordance with the terms
of the Credit Agreement, the Company and the Agent shall be entitled to deem
and treat Payee as the owner and holder of this Note and the Loans evidenced
hereby. Each of the Payee and any subsequent permitted assignee of this Note
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall
<PAGE> 267
not limit or otherwise affect the obligations of the Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory and optional prepayment as provided
in the Credit Agreement.
This Note is secured by certain assets pursuant to the Mortgages and
the other Security Documents.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
During the continuance of any Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 9.1 and 9.18 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment. protest, demand and, except as expressly provided in
the Credit Agreement, notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
[Balance of page intentionally left blank.]
2
<PAGE> 268
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
3
<PAGE> 269
TRANSACTIONS
ON NOTE
<TABLE>
<CAPTION>
OUTSTANDING
TYPE OF AMOUNT OF AMOUNT OF PRINCIPAL
LOAN MADE LOAN MADE PRINCIPAL PAID BALANCE NOTATION
DATE THIS DATE THIS DATE THIS DATE THIS DATE MADE BY
- ---- --------- --------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 270
REVOLVING NOTE
WYNDHAM HOTEL CORPORATION
$10,000,000.00 New York, New York
May 29, 1996
FOR VALUE RECEIVED, WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), promises to pay to the order of INDUSTRIAL BANK OF JAPAN, LTD
("PAYEE"), on or before the Maturity Date, the lesser of (x) Ten Million
Dollars and no cents ($10,000,000.00) and (y) the unpaid principal amount of
all advances made by Payee to the Company as Swing Line Loans under the Credit
Agreement referred to below.
The Company also promises to pay interest on the unpaid principal
amount hereof, from the Closing Date until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of that
certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996 by
and among the Company, the financial institutions listed therein as Lenders,
and Bankers Trust Company, as Agent (said Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the "Credit Agreement", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is one of the Company's "Revolving Notes" in the aggregate
principal amount of $100,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Revolving Loans
evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of the Agent located at One Bankers Trust Plaza, New York, New York
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until notified in
writing of the assignment or transfer of this Note in accordance with the terms
of the Credit Agreement, the Company and the Agent shall be entitled to deem
and treat Payee as the owner and holder of this Note and the Loans evidenced
hereby. Each of the Payee and any subsequent permitted assignee of this Note
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall
<PAGE> 271
not limit or otherwise affect the obligations of the Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory and optional prepayment as provided
in the Credit Agreement.
This Note is secured by certain assets pursuant to the Mortgages and
the other Security Documents.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
During the continuance of any Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 9.1 and 9.18 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment. protest, demand and, except as expressly provided in
the Credit Agreement, notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
[Balance of page intentionally left blank.]
2
<PAGE> 272
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
3
<PAGE> 273
TRANSACTIONS
ON NOTE
<TABLE>
<CAPTION>
OUTSTANDING
TYPE OF AMOUNT OF AMOUNT OF PRINCIPAL
LOAN MADE LOAN MADE PRINCIPAL PAID BALANCE NOTATION
DATE THIS DATE THIS DATE THIS DATE THIS DATE MADE BY
- ---- --------- --------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 274
REVOLVING NOTE
WYNDHAM HOTEL CORPORATION
$10,000,000.00 New York, New York
May 29, 1996
FOR VALUE RECEIVED, WYNDHAM HOTEL CORPORATION, a Delaware corporation
(the "COMPANY"), promises to pay to the order of FIRST NATIONAL BANK OF COMMERCE
("PAYEE"), or its registered assigns, on or before the Maturity Date, the lesser
of (x) Ten Million Dollars and no cents ($10,000,000.00) and (y) the unpaid
principal amount of all advances made by Payee to the Company as Revolving Loans
under the Credit Agreement referred to below.
The Company also promises to pay interest on the unpaid principal
amount hereof, from the Closing Date until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of that
certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996 by
and among the Company, the financial institutions listed therein as Lenders,
and Bankers Trust Company, as Agent (said Credit Agreement, as it may be
amended, restated supplemented or otherwise modified from time to time, being
the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is one of the Company's "Revolving Note" in the aggregate
principal amount of $100,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Revolving Loans
evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of the Agent located at One Bankers Trust Plaza, New York, New York
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until notified in
writing of the assignment or transfer of this Note in accordance with the terms
of the Credit Agreement, the Company and the Agent shall be entitled to deem
and treat Payee as the owner and holder of this Note and the Loans evidenced
hereby. Each of the Payee and any subsequent permitted assignee of this Note
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall
<PAGE> 275
not limit or otherwise affect the obligations of the Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory and optional prepayment as provided
in the Credit Agreement.
This Note is secured by certain assets pursuant to the Mortgages and
the other Security Documents.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
During the continuance of any Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 9.1 and 9.18 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and, except as expressly provided in
the Credit Agreement, notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
[Balance of page intentionally left blank.]
2
<PAGE> 276
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: Michael R. Silverman
Title: Authorized Signatory
3
<PAGE> 277
TRANSACTIONS
ON NOTE
<TABLE>
<CAPTION>
OUTSTANDING
TYPE OF AMOUNT OF AMOUNT OF PRINCIPAL
LOAN MADE LOAN MADE PRINCIPAL PAID BALANCE NOTATION
DATE THIS DATE THIS DATE THIS DATE THIS DATE MADE BY
- ---- --------- --------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 278
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly appointed authorized signatory of
Wyndham Hotel Corporation, a Delaware corporation (the "Company");
(2) I have reviewed the terms of that certain Senior
Secured Revolving Credit Agreement dated as of May 29, 1996, as
amended, restated, supplemented or otherwise modified to the date
hereof (said Credit Agreement, as so amended, restated, supplemented
or otherwise modified, being the "CREDIT AGREEMENT", the terms defined
therein and not otherwise defined in this Certificate (including
Attachment No. 1 annexed hereto and made a part hereof) being used in
this Certificate as therein defined), by and among the Company, the
financial institutions listed therein as Lenders, and Bankers Trust
Company, as the Agent, and the terms of the other Loan Documents, and
I have made, or have caused to be made under my supervision, a review
in reasonable detail of the transactions and condition of the Company
and its Subsidiaries during the accounting period covered by the
attached financial statements; and
(3) The examination described in paragraph (2) above did
not disclose, and I have no knowledge of, the existence of any
condition or event which constitutes an Event of Default or Potential
Event of Default during or at the end of the accounting period covered
by the attached financial statements or as of the date of this
Certificate.
The foregoing certifications, together with the computations set forth
in Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this 31st day of May, 1996 pursuant to subsection 6.1(viii) of the
Credit Agreement.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-----------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
<PAGE> 279
BORROWING BASE CERTIFICATE
I, the undersigned, authorized signatory of Wyndham Hotel Corporation
(the "COMPANY"), do hereby certify that the figures attached hereto are true
and correct as of May 31, 1996 and have been calculated in accordance with the
Senior Secured Revolving Credit Agreement dated as of May 29, 1996 entered into
by and among the Company, the Lenders named therein and Bankers Trust Company,
as Agent, as amended, restated, supplemented or otherwise modified from time to
time (the "Credit Agreement"). Capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
<PAGE> 280
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY, is entered into as of May 29, 1996, by EACH
OF THE SUBSIDIARIES LISTED ON ANNEX A HERETO (each a "GUARANTOR" and
collectively, "GUARANTORS") in favor of and for the benefit of BANKERS TRUST
COMPANY, as agent for and representative of (in such capacity herein called the
"GUARANTIED PARTY") the financial institutions ("LENDERS") party to the Credit
Agreement referred to below, and for the benefit of the Beneficiaries (as
hereinafter defined). For Jamaican law purposes, this Subsidiary Guaranty is
collateral to the Mortgage under Registration of Titles Act dated as of May 29,
1996 from Rose Hall Associates Limited Partnership to Guarantied Party.
RECITALS
A. Wyndham Hotel Corporation, a Delaware corporation, (the
"COMPANY"), has entered into that certain Senior Secured Revolving Credit
Agreement dated as of May 29, 1996 with the Guarantied Party and the Lenders
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "CREDIT AGREEMENT";
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined).
B. A portion of the proceeds of the Loans may be advanced by the
Company, or at the Company's direction, to the Guarantors or otherwise used by
the Company on behalf of the Guarantors and thus the Guarantied Obligations
(as hereinafter defined) are being incurred for and will inure to the benefit
of the Guarantors (which benefits are hereby acknowledged).
C. It is a condition precedent to the initial extensions of
credit under the Credit Agreement that the Company's obligations thereunder be
guarantied by the Guarantors.
D. The Guarantors are willing irrevocably and unconditionally to
guaranty such obligations of the Company as hereinafter provided.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and in order to induce the Lenders and the Guarantied Party to enter into the
Credit Agreement and to make Loans and other extensions of credit thereunder,
the Guarantors hereby agree as follows:
<PAGE> 281
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
As used in this Guaranty, the following terms shall have the following
meanings unless the context otherwise requires:
"BENEFICIARIES" means the Guarantied Party and the Lenders.
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term
in subsection 2.1.
"GUARANTY" means this Subsidiary Guaranty dated as of May 29,
1996, as it may be amended, restated, supplemented or otherwise
modified from time to time.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means
payment in full of the Guarantied Obligations, including without
limitation all principal, interest, costs, fees and expenses
(including, without limitation, reasonable legal fees and expenses) of
the Beneficiaries as required by the terms of the Loan Documents.
1.2 INTERPRETATION.
(a) References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Guaranty unless otherwise
specifically provided.
(b) In the event of any conflict or inconsistency between the
terms, conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of
this Guaranty shall prevail.
SECTION 2.
THE GUARANTY
2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS.
Subject to the provisions of subsection 2.2(a), Guarantors jointly and
severally hereby irrevocably and unconditionally guaranty, as primary obligors
and not merely as sureties, the due and punctual payment in full of all
Guarantied Obligations when the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a) or any successor provision). The term "GUARANTIED OBLIGATIONS" is used
herein in its most comprehensive sense and includes:
2
<PAGE> 282
(a) any and all Obligations of the Company, in each case
now or hereafter made, incurred or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not due, and
however arising under or in connection with the Credit Agreement and
the other Loan Documents, including those arising under successive
borrowing transactions under the Credit Agreement which shall either
continue the Obligations of the Company or from time to time renew
them after they have been satisfied and including interest which, but
for the filing of a petition in bankruptcy with respect to the
Company, would have accrued on any Guarantied Obligations, whether or
not a claim is allowed or allowable against the Company for such
interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS.
(a) Anything contained in this Guaranty to the contrary
notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is
determined by a court of competent jurisdiction to be applicable to the
obligations of any Guarantor under this Guaranty, such obligations of such
Guarantor hereunder shall be limited to a maximum aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11
of the United States Code or any applicable provisions of comparable state law
(collectively, the "FRAUDULENT TRANSFER LAWS"), in each case after giving
effect to all other liabilities of such Guarantor, contingent or otherwise,
that are relevant under the Fraudulent Transfer Laws (specifically excluding,
however, (x) any liabilities of such Guarantor in respect of intercompany
indebtedness to the Company or other affiliates of the Company to the extent
that such indebtedness would be discharged in an amount equal to the amount
paid by such Guarantor hereunder and (y) under any guaranty of indebtedness
subordinate in right and time of payment to the Guarantied Obligations which
guaranty contains a limitation as to maximum amount similar to that set forth
in this subsection 2.2(a), pursuant to which the liability of such Guarantor
hereunder is included in the liabilities taken into account in determining such
maximum amount) and after giving effect as assets to the value (as determined
under the applicable provisions of the Fraudulent Transfer Laws) of any rights
to subrogation, reimbursement, indemnification or contribution of such
Guarantor pursuant to applicable law or pursuant to the terms of any agreement
(including without limitation any such right of contribution under subsection
2.2(b)).
(b) The Guarantors under this Guaranty, together desire to
allocate among themselves (collectively, the "CONTRIBUTING GUARANTORS"), in a
fair and equitable manner, their obligations arising under this Guaranty.
Accordingly, in the event any payment or distribution is made on any date by
any Guarantor under this Guaranty (a "FUNDING GUARANTOR") that exceeds its Fair
Share (as defined below) as of such date, that Funding Guarantor shall be
entitled to a contribution from each of the other Contributing Guarantors in
the amount of such other Contributing Guarantor's Fair Share Shortfall (as
defined below) as of such date, with the result that all such contributions
will cause each Contributing Guarantor's Aggregate Payments (as defined below)
to equal its Fair Share as of such date. "FAIR SHARE" means, with respect to a
Contributing
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Guarantor as of any date of determination, an amount equal to (i) the ratio of
(x) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts
with respect to all Contributing Guarantors multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty in respect of the obligations guarantied. "FAIR SHARE
SHORTFALL" means, with respect to a Contributing Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Contributing
Guarantor over the Aggregate Payments of such Contributing Guarantor. "ADJUSTED
MAXIMUM AMOUNT" means, with respect to a Contributing Guarantor as of any date
of determination, the maximum aggregate amount of the obligations of such
Contributing Guarantor under this Guaranty, determined as of such date, in the
case of any Guarantor, in accordance with subsection 2.2(a); provided, however,
that, solely for purposes of calculating the "Adjusted Maximum Amount" with
respect to any Contributing Guarantor for purposes of this subsection 2.2(b),
any assets or liabilities of such Contributing Guarantor arising by virtue of
any rights to subrogation, reimbursement or indemnification or any rights to or
obligations of contribution hereunder shall not be considered as assets or
liabilities of such Contributing Guarantor. "AGGREGATE PAYMENTS" means, with
respect to a Contributing Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on or
before such date by such Contributing Guarantor in respect of this Guaranty
(including, without limitation, in respect of this subsection 2.2(b)) minus
(ii) the aggregate amount of all payments received on or before such date by
such Contributing Guarantor from the other Contributing Guarantors as
contributions under this subsection 2.2(b). The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The
allocation among Contributing Guarantors of their obligations as set forth in
this subsection 2.2(b) shall not be construed in any way to limit the liability
of any Contributing Guarantor hereunder.
2.3 PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS.
Subject to the provisions of subsection 2.2(a), the Guarantors hereby
jointly and severally agree, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or in
equity against any Guarantor by virtue hereof, that upon the failure of the
Company to pay any of the Guarantied Obligations when and as the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, in accordance with the terms of the Loan
Documents (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a) or any successor provision), the Guarantors will upon demand pay, or
cause to be paid, in cash, to the Guarantied Party for the ratable benefit of
the Beneficiaries, an amount equal to the sum of the unpaid principal amount of
all Guarantied Obligations then due as aforesaid, accrued and unpaid interest
on such Guarantied Obligations (including, without limitation, interest which,
but for the filing of a petition in bankruptcy with respect to the Company,
would have accrued on such Guarantied Obligations, whether or not a claim is
allowed against the Company for such interest in the related bankruptcy
proceeding) and all other Guarantied Obligations then owed to the Beneficiaries
as aforesaid. All such
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payments shall be applied promptly from time to time by the Guarantied Party as
provided in subsection 2.4D of the Credit Agreement.
2.4 LIABILITY OF GUARANTORS ABSOLUTE.
Each Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Guarantied Obligations. In furtherance
of the foregoing and without limiting the generality thereof, each Guarantor
agrees as follows:
(a) This Guaranty is a guaranty of payment when due and
not of collectibility.
(b) The Guarantied Party may enforce this Guaranty upon
the occurrence and during the continuance of any Event of Default
under the Credit Agreement notwithstanding the existence of any
dispute between the Company and any Beneficiary with respect to the
existence of such Event of Default.
(c) The obligations of each Guarantor hereunder are
independent of the obligations of the Company under the Loan Documents
and the obligations of any other guarantor (including any other
Guarantor) of the obligations of the Company under the Loan Documents,
and a separate action or actions may be brought and prosecuted against
such Guarantor whether or not any action is brought against the
Company or any of such other guarantors and whether or not the Company
is joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not all,
of the Guarantied Obligations shall in no way limit, affect, modify or
abridge any Guarantor's liability for any portion of the Guarantied
Obligations which has not been paid. Without limiting the generality
of the foregoing, if Guarantied Party is awarded a judgment in any
suit brought to enforce any Guarantor's covenant to pay a portion of
the Guarantied Obligations, such judgment shall not be deemed to
release such Guarantor from its covenant to pay the portion of the
Guarantied Obligations that is not the subject of such suit, and such
judgment shall not, except to the extent satisfied by such Guarantor,
limit, affect, modify or abridge any other Guarantor's liability
hereunder in respect of the Guarantied Obligations.
(e) The Guarantied Party, upon such terms as it deems
appropriate, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any
reduction, limitation, impairment, discharge or termination of any
Guarantor's liability hereunder, from time to time may (i) renew,
extend, accelerate, increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (ii) settle, compromise, release or discharge, or accept
or refuse any offer of performance with respect to, or substitutions
for, the Guarantied Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other
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guaranties of the Guarantied Obligations and take and hold security
for the payment of this Guaranty or the Guarantied Obligations; (iv)
release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration,
any security for payment of the Guarantied Obligations, any other
guaranties of the Guarantied Obligations, or any other obligation of
any Person (including any other Guarantor) with respect to the
Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of such Beneficiary in respect of
this Guaranty or the Guarantied Obligations and direct the order or
manner of sale thereof, or exercise any other right or remedy that the
Guarantied Party may have against any such security, in each case as
the Guarantied Party in its discretion may determine consistent with
the Credit Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to
impair or extinguish any right of reimbursement or subrogation or
other right or remedy of any Guarantor against the Company or any
security for the Guarantied Obligations, and (vi) exercise any other
rights available to it under the Loan Documents.
(f) This Guaranty and the obligations of the Guarantors
hereunder shall be valid and enforceable and shall not be subject to
any reduction, limitation, impairment, discharge or termination for
any reason (other than payment in full of the Guarantied Obligations),
including without limitation the occurrence of any of the following,
whether or not any Guarantor shall have had notice or knowledge of any
of them: (i) any failure or omission to assert or enforce or agreement
or election not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Loan Documents, at law, in equity or
otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations; (ii) any rescission,
waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including without limitation
provisions relating to events of default) of the Credit Agreement, any
of the other Loan Documents or any agreement or instrument executed
pursuant thereto, or of any other guaranty or security for the
Guarantied Obligations, in each case whether or not in accordance with
the terms of the Credit Agreement or such Loan Document or any
agreement relating to such other guaranty or security; (iii) the
Credit Agreement, or any agreement thereunder, at any time being found
to be illegal, invalid or unenforceable with respect to the Company;
(iv) the application of payments received from any source (other than
payments received pursuant to this Subsidiary Guaranty or the other
Loan Documents or from the proceeds of any security for the Guarantied
Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guarantied Obligations) to
the payment of indebtedness other than the Guarantied Obligations,
even though any Beneficiary might have elected to apply such payment
to any part or all of the Guarantied Obligations; (v) any
Beneficiary's consent to the change, reorganization or termination of
the corporate structure or existence of the Company or any of its
Subsidiaries and to any
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corresponding restructuring of the Guarantied Obligations; (vi) any
failure to perfect or continue perfection of a security interest in
any collateral which secures any of the Guarantied Obligations; (vii)
any defenses, set-offs or counterclaims of the Company that the
Company may assert under the Credit Agreement that are not independent
defenses, set-offs or counterclaims of the applicable Guarantor under
this Guaranty; and (viii) any other act or thing or omission, or delay
to do any other act or thing, which may or might in any manner or to
any extent vary the risk of any Guarantor as an obligor in respect of
the Guarantied Obligations.
2.5 WAIVERS BY GUARANTORS.
Each Guarantor hereby waives, for the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition
of payment or performance by such Guarantor, to (i) proceed against
the Company, any other guarantor (including any other Guarantor) of
the Guarantied Obligations or any other Person, (ii) proceed against
or exhaust any security held from the Company, any such other
guarantor or any other Person, (iii) proceed against or have resort to
any balance of any deposit account or credit on the books of any
Beneficiary in favor of the Company or any other Person, or (iv)
pursue any other remedy in the power of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack
of authority or any disability or other defense of the Company that
the Company may assert under the Credit Agreement that is not an
independent defense of the applicable Guarantor under this Guaranty;
(c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger
in amount nor in other respects more burdensome than that of the
principal;
(d) any defense based upon any Beneficiary's errors or
omissions in the administration of the Guarantied Obligations, except
behavior which amounts to, willful misconduct or gross negligence;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of the Company's
Obligations (other than payment in full), (ii) the benefit of any
statute of limitations affecting such Guarantor's liability hereunder
or the enforcement hereof, and (iii) promptness, diligence and any
requirement that any Beneficiary protect, secure, perfect or insure
any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty,
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notices of default under the Credit Agreement or any agreement or
instrument related thereto, notices of any renewal, extension or
modification of the Guarantied Obligations or any agreement related
thereto, notices of any extension of credit to the Company and notices
of any of the matters referred to in subsection 2.4 and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors
or sureties, or which may conflict with the terms of this Guaranty.
2.6 GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
Each Guarantor hereby waives, until the Guarantied Obligations shall
have been indefeasibly paid in full, each Letter of Credit shall have expired
or been cancelled and the Commitments shall have been terminated, any claim,
right or remedy, direct or indirect, that such Guarantor now has or may
hereafter have against the Company or any of its assets in connection with this
Guaranty or the performance by such Guarantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract,
by statute, under common law or otherwise and including without limitation (a)
any right of subrogation, reimbursement or indemnification that such Guarantor
now has or may hereafter have against the Company, (b) any right to enforce, or
to participate in, any claim, right or remedy that any Beneficiary now has or
may hereafter have against the Company, and (c) any benefit of, and any right
to participate in, any collateral or security now or hereafter held by or on
behalf of any Beneficiary. In addition, until the Guarantied Obligations shall
have been indefeasibly paid in full and the Commitments shall have terminated,
each Guarantor shall withhold exercise of any right of contribution such
Guarantor may have against any other guarantor (including any other Guarantor)
of the Guarantied Obligations (including without limitation any such right of
contribution under subsection 2.2(b) as contemplated by subsection 2.2(b)).
Each Guarantor further agrees that, to the extent the waiver or agreement to
withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent Jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
the Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against the
Company, to all right, title and interest any Beneficiary may have in any such
collateral or security, and to any right any Beneficiary may have against such
other guarantor. If any amount shall be paid to any Guarantor on account of any
such subrogation, reimbursement, indemnification or contribution rights at any
time when all Guarantied Obligations shall not have been paid in full, such
amount shall be held in trust for Guarantied Party on behalf of the
Beneficiaries and shall forthwith be paid over to Guarantied Party for the
benefit of the Beneficiaries to be credited and applied against the Guarantied
Obligations, whether matured or unmatured, in accordance with the terms hereof.
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2.7 SUBORDINATION OF OTHER OBLIGATIONS.
Any indebtedness of the Company now or hereafter held by any Guarantor
is hereby subordinated in right of payment to the Guarantied Obligations, and
any such indebtedness of the Company to such Guarantor collected or received by
such Guarantor after an Event of Default has occurred and is continuing shall
be held in trust for the Guarantied Party on behalf of the Beneficiaries and
shall forthwith be paid over to the Guarantied Party for the benefit of the
Beneficiaries to be credited and applied against the Guarantied Obligations but
without affecting, impairing or limiting in any manner the liability of such
Guarantor under any other provision of this Guaranty.
2.8 EXPENSES.
The Guarantors jointly and severally agree to pay, or cause to be
paid, on demand, and to save the Beneficiaries harmless against liability for,
any and all reasonable costs and expenses (including reasonable fees and
disbursements of counsel and reasonable allocated costs of internal counsel)
incurred or expended by any Beneficiary in connection with the enforcement of
or preservation of any rights under this Guaranty.
2.9 CONTINUING GUARANTY.
This Guaranty is a continuing guaranty and shall remain in effect
until all of the Guarantied Obligations shall have been paid in full, each of
the Letters of Credit shall have expired or been cancelled, and the Commitments
shall have terminated. Each Guarantor hereby irrevocably waives any right to
revoke this Guaranty as to future transactions giving rise to any Guarantied
Obligations.
2.10 AUTHORITY OF GUARANTORS OR THE COMPANY.
It is not necessary for any Beneficiary to inquire into the capacity
or powers of any Guarantor or the Company or the officers, directors or any
agents acting or purporting to act on behalf of any of them.
2.11 FINANCIAL CONDITION OF THE COMPANY.
Any Loans or other extensions of credit may be granted to the Company
or continued from time to time without notice to or authorization from any
Guarantor regardless of the financial or other condition of the Company at the
time of any such grant or continuation. No Beneficiary shall have any
obligation to disclose or discuss with any Guarantor its assessment, or any
Guarantor's assessment, of the financial condition of the Company. Each
Guarantor has adequate means to obtain information from the Company on a
continuing basis concerning the financial condition of the Company and its
ability to perform its obligations under the Loan Documents, and each Guarantor
assumes the responsibility for being and keeping informed of the financial
condition of the Company and of all circumstances bearing upon the risk of
nonpayment of the Guarantied Obligations. Each Guarantor hereby waives and
relinquishes any
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duty on the part of any Beneficiary to disclose any matter, fact or thing
relating to the business, operations or conditions of the Company now known or
hereafter known by any Beneficiary.
2.12 RIGHTS CUMULATIVE.
The rights, powers and remedies given to the Guarantied Party by this
Guaranty are cumulative and shall be in addition to and independent of all
rights, powers and remedies given to the Guarantied Party by virtue of any
statute or rule of law or in any of the other Loan Documents, or any agreement
between any Guarantor and any Beneficiary or Beneficiaries or between the
Company and any Beneficiary or Beneficiaries. Any forbearance or failure to
exercise, and any delay by the Guarantied Party in exercising, any right, power
or remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
2.13 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY.
(a) So long as any Guarantied Obligations remain outstanding or
any Commitment remains in effect, no Guarantor shall, without the prior written
consent of the Guarantied Party commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency proceedings of or
against the Company. The obligations of the Guarantors under this Guaranty
shall not be reduced, limited, impaired, discharged, deferred, suspended or
terminated by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of the Company or by any defense which the Company may have by
reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on
any portion of the Guarantied Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on such portion of the Guarantied Obligations if said proceedings had
not been commenced, whether or not a claim for such interest is allowed or
allowable in any such proceeding) shall be included in the Guarantied
Obligations because it is the intention of the Guarantors and the Beneficiaries
that the Guarantied Obligations which are guarantied by the Guarantors pursuant
to this Guaranty should be determined without regard to any rule of law or
order which may relieve the Company of any portion of such Guarantied
Obligations. The Guarantors will permit any trustee in bankruptcy, receiver,
debtor in possession, assignee for the benefit of creditors or similar person
to pay the Guarantied Party, or allow the claim of the Guarantied Party in
respect of, any such interest accruing after the date on which such proceeding
is commenced.
(c) In the event that all or any portion of the Guarantied
Obligations are paid by the Company, the obligations of the Guarantors
hereunder shall continue and remain in full force and effect or be reinstated,
as the case may be, in the event that all or any part of such payment(s) are
rescinded or recovered directly or indirectly from any Beneficiary as a
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preference, fraudulent transfer or otherwise, and any such payments which are
so rescinded or recovered shall constitute Guarantied Obligations for all
purposes under this Guaranty.
2.14 NOTICE OF EVENTS.
As soon as any Guarantor obtains knowledge thereof, such Guarantor
shall give the Guarantied Party written notice of any condition or event which
has resulted in (a) a material adverse change in the financial condition of any
Guarantor or the Company, which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or (b) a breach of
or noncompliance in any material respect with any term, condition or covenant
contained herein or in the Credit Agreement, any other Loan Document or any
other document delivered pursuant hereto or thereto.
2.15 SET OFF.
In addition to any other rights the Guarantied Party may have under
law or in equity, if any amount shall at any time be due and owing by any
Guarantor to the Guarantied Party for the benefit of any Beneficiary under this
Guaranty, the Guarantied Party is authorized at any time or from time to time,
without notice (any such notice being hereby expressly waived), to set off and
to appropriate and to apply any and all deposits (general or special, including
but not limited to indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness of the Guarantied Party owing
to such Guarantor and any other property of such Guarantor held by the
Guarantied Party to or for the credit or the account of such Guarantor against
and on account of the Guarantied Obligations and liabilities of such Guarantor
to the Guarantied Party under this Guaranty; provided that the Guarantied Party
shall use its best efforts to give such Guarantor notice of any such set-off
promptly after such action, but shall incur no liability to such Guarantor or
any other Person for failure to give (or any delay in giving) such notice.
SECTION 3.
MISCELLANEOUS
3.1 SURVIVAL OF WARRANTIES.
All agreements, representations and warranties made herein shall
survive the execution and delivery of this Guaranty and the other Loan
Documents and any increase in the Commitments under the Credit Agreement.
3.2 NOTICES.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or courier service and shall be deemed to have been given when
delivered in person or by courier service or upon receipt of telefacsimile or
telex. For the purposes hereof, the address of each party hereto shall
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be as set forth below in this Section 3.2. The Notice Address for each
Guarantor shall be c/o Wyndham Hotel Corporation, 2001 Bryan Street, Suite
2300, Dallas, Texas 75201, Attention: Chief Financial Officer or such other
address as shall be designated by the applicable party in a written notice
delivered to the Guarantied Party. The Notice Address for each Beneficiary
shall be as set forth in subsection 9.8 of the Credit Agreement.
3.3 SEVERABILITY.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
3.4 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of
this Guaranty, and no consent to any departure by any Guarantor therefrom,
shall in any event be effective without the written concurrence of the
Guarantied Party and, in the case of any such amendment or modification, each
Guarantor against whom enforcement of such amendment or modification is sought.
Any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which it was given.
3.5 HEADINGS.
Section and subsection headings in this Guaranty are included herein
for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
3.6 APPLICABLE LAW.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE GUARANTORS AND
BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
3.7 SUCCESSORS AND ASSIGNS.
This Guaranty is a continuing guaranty and shall be binding upon each
Guarantor and its respective successors and assigns. This Guaranty shall inure
to the benefit of the Beneficiaries and their respective successors and
assigns. No Guarantor shall assign this Guaranty or any of the rights or
obligations of such Guarantor hereunder without the prior written consent of
the Guarantied Party. Subject to the provisions of subsection 9.1 of the Credit
Agreement, any Beneficiary may, without notice or consent, assign its interest
in this Guaranty in whole or in
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part. The terms and provisions of this Guaranty shall inure to the benefit of
any such transferee or assignee of any Loan, and in the event of such transfer
or assignment, the rights and privileges herein conferred upon such Beneficiary
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof and the Credit Agreement.
3.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF
OR RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND
CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR,
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SUBSECTION 3.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST SUCH GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
3.9 WAIVER OF TRIAL BY JURY.
EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH
BENEFICIARY HEREBY AGREES TO WAIVE ITS RESPECTIVE
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RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS GUARANTY. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law
and statutory claims. Each Guarantor and, by its acceptance of the benefits
hereof, each Beneficiary, (i) acknowledges that this waiver is a material
inducement for such Guarantor and Beneficiaries to enter into a business
relationship, that such Guarantor and Beneficiaries have already relied on this
waiver in entering into this Guaranty or accepting the benefits thereof, as the
case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY THE GUARANTEED PARTY AND EACH
GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this
Guaranty may be filed as a written consent to a trial by the court.
3.10 NO OTHER WRITING.
This writing is intended by the Guarantors and Beneficiaries as the
final expression of this Guaranty and is also intended as a complete and
exclusive statement of the terms of their agreement with respect to the matters
covered hereby. No course of dealing, course of performance or trade usage, and
no parol evidence of any nature, shall be used to supplement or modify any
terms of this Guaranty. There are no conditions to the full effectiveness of
this Guaranty.
3.11 FURTHER ASSURANCES.
At any time or from time to time, upon the request of the Guarantied Party, the
Guarantors shall execute and deliver such further documents and do such other
acts and things as the Guarantied Party may reasonably request in order to
effect fully the purposes of this Guaranty.
3.12 ADDITIONAL GUARANTORS.
The initial Guarantors hereunder shall be such of the Subsidiaries of
the Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of the Company may
become parties hereto, as additional Guarantors (each an "ADDITIONAL
GUARANTOR"), by executing a counterpart of this Guaranty. Upon delivery of any
such counterpart to the Agent, notice of which is hereby waived by the
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor
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expressly agrees that its obligations arising hereunder shall not be affected
or diminished by the addition or release of any other Guarantor hereunder, nor
by any election of the Agent not to cause any Subsidiary of the Company to
become an Additional Guarantor hereunder. This Guaranty shall be fully
effective as to any Guarantor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Guarantor
hereunder.
3.13 COUNTERPARTS; EFFECTIVENESS.
This Guaranty may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original for all purposes; but
all such counterparts together shall constitute but one and the same
instrument. This Guaranty shall become effective as to each Guarantor upon the
execution of a counterpart substantially in the form attached as Annex B hereto
hereof by such Guarantor (whether or not a counterpart hereof shall have been
executed by any other Guarantor) and receipt by Guarantied Party of written or
telephonic notification of such execution and authorization of delivery
thereof.
3.14 GUARANTIED PARTY AS AGENT.
(a) The Guarantied Party has been appointed to act as the
Guarantied Party hereunder by the Lenders. Guarantied Party shall be
obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action, solely in accordance with this Guaranty and the
Credit Agreement and Guarantors may rely on such actions of Guarantied Party as
being those authorized by Beneficiaries.
(b) The Guarantied Party shall at all times be the same Person
that is the Agent under the Credit Agreement. Upon the acceptance of any
appointment as Agent by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Guarantied Party under this Guaranty, and the
retiring or removed Guarantied Party under this Guaranty shall promptly (i)
transfer to such successor Guarantied Party all sums held hereunder, together
with all records and other documents necessary or appropriate in connection
with the performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate
in connection with the assignment to such successor Guarantied Party of the
rights created hereunder, whereupon such retiring or removed Guarantied Party
shall be discharged from its duties and obligations under this Guaranty. After
any retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
3.15 CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS.
Notwithstanding anything to the contrary contained in this Guaranty,
(i) no Guarantor waives any of its respective rights under the Loan Documents
to which such Guarantor is a party
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and (ii) the Secured Party's exercise of remedies against the Collateral (as
defined in the Security Agreement) shall be subject to the provisions of
Section 8.1 of the Credit Agreement regarding the exercise of remedies against
Collateral.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
EACH OF THE SUBSIDIARIES LISTED ON
ANNEX A HERETO
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
ROSE HALL ASSOCIATES LIMITED PARTNERSHIP,
a Texas limited partnership
By: WHC CARIBBEAN LIMITED,
a Jamaican corporation
By: /s/ MICHAEL R. SILVERMAN
-------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
S-1
<PAGE> 297
SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") is dated as of
May 29, 1996 and entered into by and between WYNDHAM HOTEL CORPORATION, a
Delaware corporation (the "COMPANY"), EACH OF THE SUBSIDIARIES LISTED ON ANNEX
A HERETO (together with the Company, each a "GRANTOR" and collectively, the
"GRANTORS"), and BANKERS TRUST COMPANY, as agent for and representative of (in
such capacity herein called "SECURED PARTY") the financial institutions
("LENDERS") party to the Credit Agreement referred to below.
RECITALS
1. Each Grantor is the legal and beneficial owner of the shares
of stock (the "PLEDGED SHARES") described in Part A of Schedule I annexed
hereto and issued by the corporations named therein.
2. The Secured Party and Lenders have entered into a Senior
Secured Revolving Credit Agreement dated as of May 29, 1996 (said Credit
Agreement, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the "CREDIT AGREEMENT", the terms defined
therein and not otherwise defined herein being used herein as therein defined
and Section I thereof being incorporated herein) with the Company pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Company.
3. Each Grantor (other than the Company) has executed and
delivered that certain Subsidiary Guaranty dated as of May 29, 1996 (said
Subsidiary Guaranty, as it may hereafter be amended, restated, supplemented or
otherwise modified from time to time, being the "GUARANTY") in favor of the
Secured Party for the benefit of Lenders, pursuant to which such Grantor has
guarantied the prompt payment and performance when due of all obligations of
the Company under the Credit Agreement and the other Loan Documents.
4. It is a condition precedent to the initial extensions of
credit by the Lenders under the Credit Agreement that the Grantors shall have
granted the security interests and undertaken the obligations contemplated by
this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Loans and other extensions of credit under the
Credit Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with the
Secured Party as follows:
<PAGE> 298
SECTION 1. GRANT OF SECURITY.
Each Grantor hereby assigns to the Secured Party, and hereby grants to
the Secured Party a security interest in, all of such Grantor's right, title
and interest in and to each and every item set forth on Annex B annexed hereto,
in each case whether now or hereafter existing or in which such Grantor now has
or hereafter acquires an interest and wherever the same may be located.
SECTION 2. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral is collateral security for,
the prompt payment or performance in full when due in accordance with the terms
of the Credit Agreement and other Loan Documents, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a) or any successor provision), of all Obligations and Guarantied
Obligations (as defined in the Guaranty) of each Grantor and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
any Grantor, would accrue on such obligations, whether or not a claim is allowed
or allowable against any Grantor for such interest in the related bankruptcy
proceeding), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from the Secured Party or any Lender as a preference, fraudulent
transfer or otherwise and all obligations of every nature of each Grantor now or
hereafter existing under this Agreement (all such obligations of the Grantors
being the "SECURED OBLIGATIONS").
SECTION 3. EACH GRANTOR REMAINS LIABLE.
(a) Anything contained herein to the contrary notwithstanding,
except with respect to obligations first incurred by Secured Party or any other
Person after Secured Party or such other Person has become the owner thereof by
foreclosure or other exercise of remedies, (a) each Grantor shall remain liable
under any contracts and agreements included in the Collateral, to the extent
set forth therein, to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed, (b) the exercise by
the Secured Party of any of its rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) the Secured Party shall not have any
obligation or liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
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(b) Notwithstanding any of the foregoing, this Agreement shall not
in any way be deemed to obligate the Secured Party, any Lender or any purchaser
at a foreclosure sale under this Agreement to assume any Grantor's obligations,
duties, expenses or liabilities under any Partnership Agreement (as hereinafter
defined), (including without limitation any Grantor's obligations as a general
partner for the debts and obligations of a Partnership (as hereinafter defined)
and to manage the business and affairs of any Partnership) or under any and all
other agreements now existing or hereafter drafted or executed (collectively,
the "GRANTOR OBLIGATIONS") unless the Secured Party, any Lender or any such
purchaser otherwise expressly agrees to assume any or all of said Grantor
Obligations in writing. In the event of foreclosure by the Secured Party, each
Grantor shall remain bound and obligated to perform its Grantor Obligations
arising during or otherwise related to its ownership of the subject Collateral,
and the Secured Party nor any Lender shall be deemed to have assumed any of
such Grantor Obligations except as provided in the preceding sentence. Without
limiting the generality of the foregoing, neither the grant of the security
interest in the Collateral in favor of the Secured Party as provided herein nor
the exercise by the Secured Party of any of its rights hereunder nor any action
by the Secured Party in connection with a foreclosure on the Collateral shall
be deemed to constitute the Secured Party or any Lender a partner of any
Partnership; provided however, that in the event the Secured Party or any
purchaser of Collateral at a foreclosure sale elects to become a substituted
general partner of any Partnership in place of any Grantor, the Secured Party
or such purchaser, as the case may be, shall adopt in writing the applicable
Partnership Agreement and agree to be bound by the terms and provisions
thereof.
SECTION 4. THE DEPOSIT ACCOUNTS; CASH MANAGEMENT SYSTEM.
(a) Each Grantor hereby agrees to instruct all obligors with
respect to all accounts, accounts receivable or other rights to payment of any
nature owned or hereafter acquired by such Grantor ("ACCOUNTS") to make all
payments with respect to Accounts to a Deposit Account included in the Cash
Management System except as otherwise set forth on Schedule 5.23 of the Credit
Agreement.
(b) Each Grantor hereby acknowledges, and hereby agrees and
covenants to comply with, the provisions of the Credit Agreement specifically
applicable to it and the Cash Management System and its respective obligations
under the Cash Management Letters, including, without limitation, subsections
5.23 and 6.15 of the Credit Agreement.
(c) The Secured Party may exercise dominion and control over, and
refuse to permit further withdrawals (whether of money, securities, instruments
or other property) from any Deposit Accounts included in the Cash Management
System or maintained with the Secured Party constituting part of the Collateral
as provided in subsection 6.15 of the Credit Agreement and the Cash Management
Letters (subject, specifically, to Section 6.15E of the Credit Agreement).
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SECTION 5. REPRESENTATIONS AND WARRANTIES.
Each Grantor represents and warrants, with respect to and for itself
only, as follows:
(a) Credit Agreement Representations. Each of the
representations and warranties set forth in Section 5 of the Credit
Agreement and Section 6 of the Environmental Indemnity are true,
correct and complete to the extent specifically applicable to such
Grantor and the Collateral of such Grantor therein and each such
representation and warranty is hereby incorporated herein by this
reference.
(b) Ownership of Collateral. Except for the security
interest created by this Agreement and the other Loan Documents, each
Grantor owns the portion of the Collateral owned by it free and clear
of any Lien other than Liens permitted pursuant to subsections 7.2A
and 6.9 of the Credit Agreement. Except as may have been filed in
favor of the Secured Party relating to this Agreement and the other
Loan Documents, the Liens permitted by subsections 7.2A and 6.9 of the
Credit Agreement and financing statement filings or other recordings
permitted by the terms of the Credit Agreement, no effective financing
statement or other instrument similar in effect covering all or any
part of such Grantor's Collateral is on file in any filing or
recording office other than financing statements for which executed
termination statements have been delivered to the Secured Party.
(c) Location of Equipment and Inventory. All of the
Equipment and Inventory is, as of the date hereof, located at the
places specified in Schedule II annexed hereto.
(d) Office Locations; Other Names. The chief place of
business, the chief executive office and the office where each Grantor
keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts is, and has been for the four
month period preceding the date hereof, located at the places
specified opposite such Grantor's name on Schedule III annexed hereto.
Each Grantor has not in the past done, and does not now do, business
under any other name (including any tradename or fictitious business
name) except as set forth opposite such Grantor's name on Schedule IV
annexed hereto.
(e) Delivery of Certain Collateral. All notes and other
instruments (excluding checks) comprising any and all items of
Collateral have been delivered to the Secured Party duly endorsed and
accompanied by duly executed instruments of transfer or assignment in
blank.
(f) Governmental Authorizations. Other than the filing of
UCC-1 financing statements, all of which have been executed and
delivered to the Secured Party, and the filing with the United States
Patent and Trademark Office of the Trademark Assignment, and excluding
federal filings with respect to patents and copyrights, no
authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for
either (i) the grant by such Grantor of the security
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<PAGE> 301
interest granted hereby or for the execution, delivery or performance
of this Agreement by such Grantor or (ii) the perfection of or the
exercise by the Secured Party of its rights and remedies hereunder
(except as may have been taken by or at the direction of such
Grantor).
(g) Perfection. The security interests in the Collateral
granted to the Secured Party for the benefit of the Lenders hereunder
constitute valid security interests in the Collateral. Upon (i) the
filing of UCC-1 financing statements naming each Grantor as "debtor",
naming the Secured Party as "secured party" and describing the
Collateral in which a security interest can be perfected by filing in
the filing offices set forth on Schedule V annexed hereto, (ii) the
filing of the Trademark Assignment in the United States Patent and
Trademark Office, (iii) the Secured Party taking possession of any
instruments included in the Collateral and certificated securities
evidencing the Pledged Shares, and (iv) the registration of the
security interest of Secured Party hereunder on the books and records
of the Partnerships, the security interests in such Collateral granted
to the Secured Party for the benefit of the Lenders will constitute
perfected security interests therein prior to all other Liens other
than Liens granted hereunder and under the other Loan Documents and
Liens permitted by subsections 6.9 and 7.2A of the Credit Agreement.
(h) Due Authorization, etc. of Pledged Shares. All of the
Pledged Shares have been duly authorized and validly issued and are
fully paid and non-assessable.
(i) Description of Pledged Shares. The Pledged Shares
constitute all of the issued and outstanding shares of stock of each
issuer thereof, and there are no outstanding warrants, options or
other rights to purchase, or other agreements outstanding with respect
to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Shares.
(j) Margin Regulations. The pledge of the Pledged Shares
pursuant to this Agreement does not violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
(k) Partnership Interests. No interests of any Grantor as
a limited partner or a general partner in any Partnership is evidenced
by one or more "certificates of interest" or any other certificates or
instruments however designated or titled. Schedule VI annexed hereto
correctly sets forth all of the partnership interests of each Grantor
as of the Closing Date.
(l) Partnership Agreements. Each Partnership Agreement, a
true and complete copy of which has been furnished to the Secured
Party, is in full force and effect and has not been amended or
modified except as disclosed in writing to the Secured Party. No
default by any Grantor exists under any Partnership Agreement and no
event has occurred or exists which, with notice or lapse of time or
both, would constitute a default by any Grantor thereunder.
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SECTION 6. SPECIAL PROVISIONS RELATING TO PLEDGED COLLATERAL.
All certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of the Secured Party
pursuant hereto and shall be in suitable form for transfer by delivery or, as
applicable, shall be accompanied by the applicable Grantor's endorsement, where
necessary, or duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Secured Party. During the
continuation of an Event of Default, the Secured Party shall have the right,
without notice to any Grantor, to transfer to or to register in the name of the
Secured Party or any of its nominees any or all of the Pledged Collateral,
subject only to the revocable rights specified in Section 9(a). In addition,
the Secured Party shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 7. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary,
or that the Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, each Grantor will, with respect to the Collateral owned by it:
(i) mark conspicuously each item of chattel paper included in the Accounts,
each Related Contract and, at the request of the Secured Party, each of its
records pertaining to the Collateral, with a legend, in form and substance
reasonably satisfactory to the Secured Party, indicating that such Collateral
is subject to the security interest granted hereby, (ii) at the request of the
Secured Party, deliver and pledge to the Secured Party hereunder all promissory
notes and other instruments (including checks) and all original counterparts of
chattel paper constituting Collateral, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to the Secured Party, (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary, or as the Secured Party may
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) at the request of the Secured Party,
promptly after the acquisition by such Grantor of any item of Equipment which
is covered by a certificate of title under a statute of any jurisdiction under
the law of which indication of a security interest on such certificate is
required as a condition of perfection thereof, execute and file with the
registrar of motor vehicles or other appropriate authority in such jurisdiction
an application or other document requesting the notation or other indication of
the security interest created hereunder on such certificate of title, (v)
within 30 days after the end of each calendar quarter, deliver to the Secured
Party copies of all such applications or other documents filed during such
calendar quarter and copies of all such certificates of title issued during
such calendar quarter indicating the security interest created hereunder in the
items of Equipment covered thereby, (vi) at any
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reasonable time, upon request by the Secured Party, exhibit the Collateral to
and allow inspection of the Collateral by the Secured Party, or persons
designated by the Secured Party, and (vii) at the Secured Party's request,
appear in and defend any action or proceeding which the Secured Party, in its
sole discretion, reasonably determines is reasonably likely to materially
adversely affect such Grantor's title to or the Secured Party's security
interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes the Secured Party to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral owned by it without the signature of such
Grantor. Each Grantor agrees that a carbon, photographic or other reproduction
of this Agreement or of a financing statement signed by such Grantor shall be
sufficient as a financing statement and may be filed as a financing statement in
any and all jurisdictions.
(c) Each Grantor will furnish to the Secured Party from time to
time upon request statements and schedules further identifying and describing
the Collateral owned by it and such other reports in connection with the
Collateral owned by it as the Secured Party may reasonably request, all in
reasonable detail.
(d) Each Grantor further agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder
as provided in Section 8(f), promptly (and in any event within ten days)
deliver to the Secured Party a Pledge Amendment, duly executed by such Grantor,
in substantially the form of Schedule VII annexed hereto (a "PLEDGE
AMENDMENT"), in respect of the additional Pledged Shares to be pledged pursuant
to this Agreement. Each Grantor hereby authorizes the Secured Party to attach
each Pledge Amendment to this Agreement and agrees that all Pledged Shares
listed on any Pledge Amendment delivered to the Secured Party shall for all
purposes hereunder be considered Pledged Collateral; provided, however, that
the failure of any Grantor to execute a Pledge Amendment with respect to any
additional Pledged Shares pledged pursuant to this Agreement shall not impair
the security interest of the Secured Party therein or otherwise adversely
affect the rights and remedies of the Secured Party hereunder with respect
thereto.
(e) Upon request by Secured Party, each Grantor, at its own
expense, shall deliver to the applicable Partnership an order, satisfactory in
form and substance to Secured Party, requesting that the pledge of such
Grantor's interest as a partner in such Partnership be registered on the books
of such Partnership.
SECTION 8. CERTAIN COVENANTS OF THE GRANTORS.
Each Grantor shall, with respect to the Collateral owned by it:
(a) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral, except where such use or violation could not
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reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(b) notify the Secured Party of any change in such
Grantor's name, identity or corporate structure within 30 days of such
change;
(c) give the Secured Party 30 days' prior written notice
of any change in such Grantor's chief place of business, chief
executive office or the office where such Grantor keeps its records
regarding the Accounts and all originals of all chattel paper that
evidence Accounts;
(d) if the Secured Party gives value to enable such
Grantor to acquire rights in or the use of any Collateral, use such
value for such purposes;
(e) pay promptly prior to delinquency, all property and
other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and
supplies) against, the Collateral, except to the extent the validity,
applicability or amount thereof is being contested in good faith;
provided, however, that such Grantor shall in any event pay such
taxes, assessments, charges, levies or claims not later than five days
prior to the date of any proposed sale under any judgement, writ or
warrant of attachment entered or filed against such Grantor or any of
the Collateral as a result of the failure to make such payment;
(f) (i) cause each issuer of Pledged Shares not to issue
any stock or other securities in addition to or in substitution for
the Pledged Shares issued by such issuer, except to such Grantor, (ii)
pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other
securities of each issuer of Pledged Shares and all partnership
interests evidenced by a certificate or other instrument, and (iii)
pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock of, or any
partnership interest in, any Person that, after the date of this
Agreement, becomes, as a result of any occurrence, a direct Subsidiary
of such Grantor;
(g) promptly notify the Secured Party of any event of
which such Grantor becomes aware causing loss or depreciation in the
value of the Pledged Collateral (other than as a result of ordinary
wear or tear or customary depreciation resulting from the passage of
time) that could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; and
(h) promptly deliver to the Secured Party any material
written notices received by it with respect to the Pledged Collateral.
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SECTION 9. VOTING RIGHTS, DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Each Grantor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement; provided,
however, that such Grantor shall not exercise or refrain from
exercising any such right if the Secured Party shall have notified
such Grantor that, in the Secured Party's judgment, such action would
have a material adverse effect on the value of the Pledged Collateral
or any part thereof; and provided, further, that such Grantor shall
give the Secured Party at least five Business Days' prior written
notice of the manner in which it intends to exercise, or the reasons
for refraining from exercising, any such right. It is understood,
however, that neither (A) the voting by such Grantor of any Pledged
Shares for or such Grantor's consent to the election of directors at a
regularly scheduled annual or other meeting of stockholders or with
respect to incidental matters at any such meeting nor (B) such
Grantor's consent to or approval of any action otherwise permitted
under this Agreement and the Credit Agreement shall be deemed
inconsistent with the terms of this Agreement or the Credit Agreement
within the meaning of this Section 9(a)(i), and no notice of any such
voting or consent need be given to the Secured Party;
(ii) Each Grantor shall be entitled to receive and retain,
and to utilize free and clear of the Lien of this Agreement, any and
all dividends and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(A) dividends and interest paid or payable other
than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus
or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed
in respect of principal or in redemption of or in exchange for
any Pledged Collateral,
shall be, and shall forthwith be delivered to the Secured Party to
hold as, Pledged Collateral and shall, if received by such Grantor, be
received in trust for the benefit of the Secured Party, be segregated
from the other property or funds of such Grantor and be forthwith
delivered to the Secured Party as Pledged Collateral in the same form
as so received (with all necessary endorsements); and
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(iii) the Secured Party shall promptly execute and deliver
(or cause to be executed and delivered) to such Grantor all such
proxies, dividend payment orders and other instruments as such Grantor
may from time to time reasonably request for the purpose of enabling
such Grantor to exercise the voting and other consensual rights which
it is entitled to exercise pursuant to paragraph (i) above and to
receive the dividends, principal or interest payments which it is
authorized to receive and retain pursuant to paragraph (ii) above.
(b) During the continuation of an Event of Default:
(i) upon written notice from the Secured Party to such
Grantor, all rights of such Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 9(a)(i) shall cease, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have
the sole right to exercise such voting and other consensual rights;
(ii) all rights of such Grantor to receive the dividends
and interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 9(a)(ii) shall cease, and all
such rights shall thereupon become vested in the Secured Party who
shall thereupon have the sole right to receive and hold as Pledged
Collateral such dividends and interest payments;
(iii) all dividends, principal and interest payments which
are received by such Grantor contrary to the provisions of paragraph
(ii) of this Section 9(b) shall be received in trust for the benefit
of the Secured Party, shall be segregated from other funds of such
Grantor and shall forthwith be paid over to the Secured Party as
Pledged Collateral in the same form as so received (with any necessary
endorsements); and
(iv) all rights of such Grantor to receive any and all
payments under or in connection with the Partnership Agreements,
including but not limited to the profits, dividends, and other
distributions which it would otherwise be authorized to receive and
retain pursuant hereto, shall cease, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have
the sole right to receive and hold such payments as Collateral.
(c) In order to permit the Secured Party to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant to
Section 9(b)(i) and to receive all dividends and other distributions which it
may be entitled to receive under Section 9(a)(ii) or Section 9(b)(ii), (i) such
Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to the Secured Party all such proxies, dividend payment orders and
other instruments as the Secured Party may from time to time reasonably request
in order to give effect to the rights granted hereunder (and subject to the
limitations hereunder) and (ii) without limiting the effect of the immediately
preceding clause (i), such Grantor hereby grants to the Secured Party an
IRREVOCABLE proxy to vote the Pledged Shares and to exercise all other rights,
powers, privileges and remedies to which a holder of the Pledged Shares would
be entitled (including,
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without limitation, giving or withholding written consents of shareholders,
calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record books of the issuer
thereof) by any other Person (including the issuer of the Pledged Shares or any
officer or agent thereof), during the continuance of an Event of Default and
upon written notice to such Grantor pursuant to Section 9.2(b)(i), and which
proxy shall only terminate upon the payment in full of the Secured Obligations,
the expiration or cancellation of each Letter of Credit and the termination of
the Commitments.
SECTION 10. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Each Grantor shall with respect to Collateral owned by it:
(a) keep the Equipment and Inventory at the places
therefor specified on Schedule II annexed hereto or, upon 30 days'
prior written notice to the Secured Party, at such other places in
jurisdictions where all action that may be necessary or desirable, or
that the Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted
hereby, or to enable the Secured Party to exercise and enforce its
rights and remedies hereunder, with respect to such Equipment and
Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in
the same condition, repair and working order as when new, ordinary
wear and tear excepted and subject to replacement as Grantor may
reasonably determine to be advisable, and in accordance with such
Grantor's past practices, and shall forthwith make or cause to be made
all repairs, replacements and other improvements in connection
therewith that are necessary to such end, and shall promptly furnish
to the Secured Party a statement respecting any material loss or
damage to any material item of the Equipment;
(c) keep correct and accurate records of the Inventory;
and
(d) if any Inventory is in possession or control of any
of such Grantor's agents or processors and upon the occurrence and
during the continuance of an Event of Default, instruct such agent or
processor to hold all such Inventory for the account of the Secured
Party and subject to the instructions of the Secured Party during the
continuance of an Event of Default.
SECTION 11. INSURANCE.
Each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory owned by it in accordance with the terms
of the Credit Agreement.
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SECTION 12. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED CONTRACTS.
(a) Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts owned by it, and all originals of all chattel
paper that evidence such Accounts, at the location therefor specified in
Section 5 or, upon 30 days' prior written notice to the Secured Party, at such
other location in a jurisdiction where all action that may be necessary, or
that the Secured Party may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby, or to enable
the Secured Party to exercise and enforce its rights and remedies hereunder,
with respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and chattel paper and will permit
representatives of the Secured Party upon reasonable notice and at reasonable
times during normal business hours to inspect and make abstracts from such
records and chattel paper, and such Grantor agrees to render to the Secured
Party, at such Grantor's cost and expense, such clerical and other assistance
as may be reasonably requested with regard thereto. Promptly upon the request
of the Secured Party, each Grantor shall deliver to the Secured Party complete
and correct copies of each such Related Contract.
(b) Each Grantor shall, for not less than 5 years from the date on
which such Account arose, maintain (i) complete records of each Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all material documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under its Accounts and Related Contracts and deposit
such amounts into the Cash Management System as provided in Section 4 above. In
connection with such collections, each Grantor may take (and upon the
occurrence and during the continuation of an Event of Default at the Secured
Party's direction, shall take) such action as such Grantor or, during the
continuation of an Event of Default, the Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that the Secured Party shall have the right at any
time, during the continuation of an Event of Default and upon written notice to
such Grantor of its Intention to do so, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Secured
Party and to direct such account debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the Secured
Party, to notify each Person maintaining a lockbox or similar arrangement to
which account debtors or obligors under any Accounts have been directed to make
payment to remit all amounts representing collections on checks and other
payment items from time to time sent to or deposited in such lockbox or other
arrangement directly to the Secured Party and, upon such notification and at
the expense of such Grantor, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done. After receipt by
Grantor of the notice from the Secured Party referred to in the proviso to the
preceding sentence, (i) all amounts and proceeds (including checks and other
instruments) received by such Grantor in respect of the Accounts and the
Related Contracts owned by it shall
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be received in trust for the benefit of the Secured Party hereunder and shall
be forthwith paid over or delivered to the Secured Party in the same form as so
received (with any necessary endorsement) to be held in the Cash Management
System and applied as provided by Section 21, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any such Account, or
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
SECTION 13. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED AGREEMENTS AND
PARTNERSHIP AGREEMENTS.
(a) Each Grantor shall at its expense with respect to the
Collateral owned by it:
(i) in accordance with Grantor's reasonable business
judgment, perform and observe all terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements in full force and effect (subject to any termination by
Grantor for cause), enforce the Assigned Agreements in accordance with
their terms;
(ii) furnish to the Secured Party, promptly upon receipt
thereof, copies of all material notices, requests and other documents
received by such Grantor under or pursuant to the Assigned Agreements,
and from time to time (A) furnish to the Secured Party such
information and reports regarding the Assigned Agreements as the
Secured Party may reasonably request and (B) during the continuation
of an Event of Default, at the request of the Secured Party, make to
any other Person party to any Assigned Agreement such demands and
requests for information and reports or for action as such Grantor is
entitled to make under such Assigned Agreement;
(iii) perform and comply in all material respects with all
terms and provisions of each Partnership Agreement required to be
performed or complied with by it;
(iv) maintain each Partnership Agreement in full force and
effect;
(v) enforce each Partnership Agreement in accordance
with its terms; and
(vi) take all such action in connection with the foregoing
as from time to time may be reasonably requested by the Secured Party.
(b) Each Grantor shall not with respect to the Collateral owned by
it:
(i) except for cause thereunder in the exercise of
Grantor's reasonable business judgment, cancel or terminate any of the
Assigned Agreements or consent to or accept any cancellation or
termination thereof, unless such Grantor reasonably determines to
replace such Assigned Agreement with a comparable agreement or
contract and such replacement contract or agreement is included as an
Assigned Agreement hereunder;
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(ii) amend or otherwise modify the Assigned Agreements in
any material respect or give any consent, waiver or approval
thereunder other than as permitted pursuant to the Credit Agreement;
(iii) waive any material default under or material breach
of the Assigned Agreements other than as permitted pursuant to the
Credit Agreement;
(iv) take any other action in connection with the Assigned
Agreements that would impair in any material respect the value of the
interest or rights of such Grantor thereunder or that would impair in
any material respect the interest or rights of the Secured Party;
(v) cancel or terminate any Partnership Agreement or
consent to or accept any cancellation or termination thereof;
(vi) except as expressly permitted by the Credit Agreement
sell, assign (by operation of law or otherwise) or otherwise dispose
of any part of its partnership interest;
(vii) amend, supplement or otherwise modify any Partnership
Agreement (as in effect on the date hereof) in any material respect
except as otherwise permitted pursuant to the Credit Agreement;
(viii) waive any material default under or material breach
of any Partnership Agreement or waive, fail to enforce, forgive or
release any material right, interest or entitlement of any kind,
howsoever arising, under or in respect of any Partnership Agreement or
vary or agree to the variation in any respect of any of the material
provisions of any Partnership Agreement or of the performance of any
other Person under any Partnership Agreement; or
(ix) petition, request or take any other legal or
administrative action which seeks, or may reasonably be expected, to
rescind, terminate or suspend any Partnership Agreement or to amend or
modify any Partnership Agreement in any material respect; provided,
however, that a Partnership Agreement may be terminated and the
applicable Partnership dissolved if all of the assets of such
Partnership are transferred to the Persons holding the partnership
interests in such Partnership.
SECTION 14. SPECIAL PROVISIONS RELATING TO THE CASH MANAGEMENT SYSTEM.
(a) Pursuant to the Credit Agreement, the Secured Party has
established with the Cash Manager, at its office at _____________________, in
the name of the Secured Party and under the sole dominion and control of the
Secured Party, the Concentration Account. Funds on deposit from time to time In
the Concentration Account shall be applied by Secured Party as set
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forth in subsection 6.15 and Schedule 5.23 of the Credit Agreement. Cash held
by Secured Party in the Concentration Account shall not be invested and
reinvested except as provided in subsection 6.15 of the Credit Agreement.
(b) As long as no Event of Default (or event subject to subsection
8.1A that would be an Event of Default with the lapse of time) exists, any
funds on deposit in the Concentration Account may, at the Company's option, be
deposited and held in Cash Equivalents as provided in subsection 6.15 of the
Credit Agreement.
(c) The Secured Party is hereby authorized to sell, and shall
sell, all or any designated part of securities constituting part of the
Collateral held in the Concentration Account (i) so long as no Event of Default
(or event subject to subsection 8.1A that would be an Event of Default with
the lapse of time) shall then exist, upon receipt of appropriate written
instructions from the applicable Grantor or (ii) in any event if such sale is
necessary to permit the Secured Party to perform its duties hereunder.
The Secured Party shall have no responsibility for any loss resulting from a
fluctuation in interest rates or the sale or disposition by it in accordance
with the provisions of this subsection (c) or by the Cash Manager or any other
Person of any Cash Equivalent prior to the maturity date or otherwise. Any
interest received in respect of securities constituting part of the Collateral
held in the Concentration Account and the net proceeds of the sale or payment
of any such securities shall be held in the Concentration Account by the
Secured Party pending investment thereof pursuant to Section 14(b).
(d) The Concentration Account shall be subject to such applicable
laws and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or governmental authority
as may now or hereafter be in effect.
SECTION 15. LICENSE OF PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
Each Grantor hereby assigns, transfers and conveys to the Secured
Party, effective during the continuation of any Event of Default, the
nonexclusive right and license to use all trademarks, tradenames, copyrights,
patents or technical processes owned or used by such Grantor that relate to the
Collateral owned by such Grantor and any other collateral granted by such
Grantor as security for the Secured Obligations, together with any goodwill
associated therewith, all to the extent necessary to enable the Secured Party
to use, possess and realize on the Collateral and to enable any successor or
assign to enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of all successors, assigns and transferees of the Secured
Party and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu
of foreclosure or otherwise. Such right and license is granted free of charge,
without requirement that any monetary payment whatsoever be made to such
Grantor.
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SECTION 16. TRANSFERS AND OTHER LIENS.
Each Grantor shall not, with respect to the Collateral owned by it:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the
Credit Agreement or by any other Loan Document;
(b) except for the security interest created by this
Agreement and any other Loan Document, create or suffer to exist any
Lien upon or with respect to any of the Collateral to secure the
indebtedness or other obligations of any Person other than Liens
permitted under subsections 6.9 and 7.2A of the Credit Agreement or by
any other Loan Document; or
(c) permit any issuer of Pledged Shares to merge or
consolidate unless all the outstanding capital stock of the surviving
or resulting corporation is, upon such merger or consolidation,
pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other
constituent corporation.
In the event a Grantor desires to obtain a Release of any
Collateral as permitted under subsection 2.9 of the Credit Agreement,
then the Secured Party shall release the Collateral that is the
subject of the Release to the applicable Grantor free and clear of the
Lien and security interest under this Agreement upon the satisfaction
of the conditions set forth in subsection 2.9 of the Credit Agreement
with respect to such Collateral; provided, however, that, as a
condition precedent to such Release, the Secured Party shall have
received the Release Price specified in such subsection 2.9.
In the event any Collateral is sold in a sale which is
permitted pursuant to the Credit Agreement but is not subject to the
provisions of subsection 2.9 of the Credit Agreement, the Secured
Party shall release the Collateral that is the subject of such sale
free and clear of the Lien and security interest under this Agreement
concurrently with the consummation of such sale; provided, however,
that as a condition precedent to such release, the Secured Party shall
have received evidence satisfactory to it that arrangements have been
made for the delivery to the Secured Party of all proceeds from such
sale required to be delivered to the Secured Party or to be applied to
prepay the Secured Obligations under the Credit Agreement.
SECTION 17. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints the Secured Party as such
Grantor's attorneyin-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Secured Party or otherwise, from
time to time in the Secured Party's discretion to take any action and to
execute any instrument that the Secured Party may deem necessary to accomplish
the purposes of this Agreement, including without limitation:
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(a) after Grantor's failure to do so within 10 days of a
request from Secured Party (provided that, if an Event of Default then
exists, Secured Party shall not be required to make any such request),
to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Secured Party as required by Section 11;
(b) during the continuance of an Event of Default, to ask
for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral owned by such Grantor;
(c) during the continuance of an Event of Default, to
receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b)
above;
(d) during the continuance of an Event of Default, to
file any claims or take any action or institute any proceedings that
the Secured Party may reasonably deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Secured Party with respect to any of the Collateral;
(e) after Grantor's failure to do so as required by the
Loan Documents (and, provided no Event of Default then exists, after
10 days notice from Secured Party), but subject to Grantor's rights to
contest the applicability, amount or validity of same as provided in
the Credit Agreement, to pay or discharge taxes or Liens (other than
Liens permitted under this Agreement or the Credit Agreement) levied
or placed upon or, if such amount is not disputed and is currently due
and payable, threatened against the Collateral owned by such Grantor,
any such payments so made by the Secured Party to become obligations
of such Grantor to the Secured Party, due and payable immediately
without demand;
(f) during the continuance of any Event of Default, to
sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral;
(g) during the continuance of an Event of Default, to
receive, endorse and collect any instruments made payable to such
Grantor representing any dividend, principal or interest payment or
other distribution in respect of the Pledged Collateral owned by such
Grantor or any part thereof and to give full discharge for the same;
and
(h) upon the occurrence and during the continuation of an
Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral
owned by such Grantor as fully and completely as though the Secured
Party were the absolute owner thereof for all purposes, and to do, at
the Secured Party's option and such Grantor's expense, at any time or
from time to time, all acts and things that the Secured Party deems
necessary to protect, preserve or realize upon the
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Collateral and the Secured Party's security interest therein in order
to effect the intent of this Agreement, all as fully and effectively
as such Grantor might do.
SECTION 18. SECURED PARTY MAY PERFORM.
If any Grantor fails to perform any agreement contained herein as
herein provided, the Secured Party may during the continuance of an Event of
Default or if no Event of Default then exists and such failure is reasonably
related to maintaining the value of the Collateral, upon Grantor's failure to
do so after 10 days notice from Secured Party requiring such action, itself
perform, or cause performance of, such agreement, and the reasonable expenses
of the Secured Party incurred in connection therewith shall be payable by such
Grantor under Section 22.
SECTION 19. STANDARD OF CARE.
The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property and Secured Party's actions do not constitute gross negligence or
willful misconduct.
SECTION 20. REMEDIES.
(a) If any Event of Default shall have occurred and be continuing,
the Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party upon default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Collateral), and also may (a) require
any Grantor to, and each Grantor hereby agrees that it will at its expense and
upon request of the Secured Party forthwith, assemble all or part of the
Collateral owned by it as directed by the Secured Party and make it available
to the Secured Party at a place to be designated by the Secured Party that is
reasonably convenient to both parties, (b) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent the Secured Party reasonably deems
appropriate, (d) take possession of any Grantor's premises or place custodians
in exclusive control thereof, remain on such premises and use the same and any
of such Grantor's equipment for the purpose of completing any work in process,
taking any actions
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described in the preceding clause (c) and collecting any Secured Obligation,
and (e) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of the
Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as the Secured Party may deem commercially reasonable. The Secured Party
or any Lender may be the purchaser of any or all of the Collateral at any such
sale and the Secured Party, as agent for and representative of Lenders (but not
any Lender or Lenders in its or their respective individual capacities) shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by the Secured Party at such
sale. Each purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of any Grantor, and each Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to such Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Each Grantor hereby waives any claims against the Secured Party arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if the Secured Party accepts the first offer received and
does not offer such Collateral to more than one offeree. If the proceeds of any
sale or other disposition of the Collateral are insufficient to pay all the
Secured Obligations, such Grantor shall be liable for the deficiency and the
reasonable fees of any attorneys employed by the Secured Party to collect such
deficiency.
(b) Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws, the Secured Party may be compelled, with respect to any sale of all or
any part of the Pledged Collateral conducted without prior registration or
qualification of such Pledged Collateral under the Securities Act and/or such
state securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. Such Grantor
acknowledges that any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances, such Grantor agrees that any such private sale shall be deemed
to have been made in a commercially reasonable manner and that the Secured
Party shall have no obligation to engage in public sales and no obligation to
delay the sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it.
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(c) If the Secured Party determines to exercise its right to sell
any or all of the Pledged Collateral, upon written request, each Grantor shall
and shall cause each issuer of any Pledged Shares to be sold hereunder from
time to time to furnish to the Secured Party all such information as the
Secured Party may request in order to determine the number of shares and other
instruments included in the Pledged Collateral which may be sold by the Secured
Party in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.
SECTION 21. APPLICATION OF PROCEEDS.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by the Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied as
provided in subsection 2.4D of the Credit Agreement.
SECTION 22. INDEMNITY AND EXPENSES.
(a) The Grantors jointly and severally agree to indemnify the
Secured Party and each Lender from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except to the extent such claims,
losses or liabilities result primarily from the Secured Party's or such
Lender's gross negligence, or willful misconduct as finally determined by a
court of competent jurisdiction.
(b) The Grantors jointly and severally agree to pay to the Secured
Party upon demand the amount of any and all reasonable costs and expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents, that the Secured Party may incur in connection with (i) the
amendment or modification of, or any waiver or consent under, this Agreement,
(ii) the custody, preservation, inspection, use or operation of, release of or
addition to, the perfection of any security interest in, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Secured Party hereunder, or
(iv) the failure by any Grantor to perform or observe any of the provisions
hereof.
(c) The obligations of the Grantors under this Section 22 shall
survive the termination of this Agreement and the discharge of the Grantors'
other obligations under the Loan Documents.
SECTION 23. CONTINUING SECURITY INTEREST, TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the expiration or cancellation of each Letter
of Credit and the cancellation or termination of the
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Commitments, (b) be binding upon each Grantor, its successors and assigns, and
(c) inure, together with the rights and remedies of the Secured Party
hereunder, to the benefit of the Secured Party and its successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 9.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Lenders herein or otherwise. Upon the payment in
full of all Secured Obligations, the expiration or cancellation of each Letter
of Credit and the cancellation or termination of the Commitments, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor without the necessity of further action or documentation.
Upon any such termination the Secured Party will, at such Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
SECTION 24. SECURED PARTY AS AGENT.
(a) The Secured Party has been appointed to act as Secured Party
hereunder by Lenders. The Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, consents or approvals, to
exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution
of Collateral), solely in accordance with this Agreement and the Credit
Agreement, and Grantors shall have no obligation to independently confirm the
authority of Secured Party to act hereunder on behalf of all of the Lenders.
(b) The Secured Party shall at all times be the same Person that
is the Agent under the Credit Agreement. Upon the acceptance of any
appointment as Agent by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was the Secured
Party hereunder.
SECTION 25. AMENDMENTS; ETC.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by any Grantor therefrom, shall
in any event be effective unless
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the same shall be in writing and signed by the Secured Party and, in the case
of any such amendment or modification, by each Grantor. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 26. NOTICES.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or courier service and shall be deemed to have been given when
delivered in person or by courier service upon receipt of telefacsimile or
telex. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 27. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 28. SEVERABILITY.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 29. HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 30. GOVERNING LAW; TERMS.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
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ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT
TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the Uniform Commercial Code in the State of New
York are used herein as therein defined.
SECTION 31. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 26;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GRANTOR IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE SECURED PARTY RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 31
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
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ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 32. WAIVER OF JURY TRIAL.
EACH GRANTOR AND THE SECURED PARTY HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Each Grantor and the Secured Party each acknowledge that
this waiver is a material inducement for such Grantor and the Secured Party to
enter into a business relationship, that such Grantor and the Secured Party have
already relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Each Grantor
and the Secured Party further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 32
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 33. ADDITIONAL GRANTORS.
The initial Grantors hereunder shall be the Company and such of the
Subsidiaries of the Company as are signatories hereto on the date hereof. From
time to time subsequent to the date hereof, additional Subsidiaries of the
Company may become parties hereto, as additional Grantors, by executing a
counterpart of this Agreement substantially in the form of Annex C attached
hereto. Upon delivery of any such counterpart to the Secured Party, notice of
which is hereby waived by Grantors, each such additional Grantor shall be as
fully a party hereto as if such Grantor were an original signatory hereof. Each
Grantor expressly agrees that its joint and several obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Grantor hereunder, nor by any election of the Agent not to cause any
Subsidiary of the Company to become an additional Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.
SECTION 34. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed
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<PAGE> 321
an original, but all such counterparts together shall constitute but one and
the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
SECTION 35. RELEASES.
(a) In the event that any Collateral is Released in any
transaction permitted under the Credit Agreement, Secured Party shall release
such Collateral to the applicable Grantor free and clear of the Lien and
security interest under this Agreement concurrently upon Secured Party's
receipt of (i) all amounts required to be paid to Secured Party in accordance
with the provisions of the Loan Documents as a result of such transaction and
(ii) an Officers' Certificate from the applicable Grantor certifying the
aggregate amount required to be paid to Secured Party in accordance with the
provisions of the Loan Documents as a result of such transaction and setting
forth a calculation of the Net Sales Price. Upon any such release of
Collateral, Secured Party shall, at the expense of the applicable Grantor,
execute and deliver all releases and terminations, and take such other actions
as are, in each case, reasonably requested by the applicable Grantor in writing
to give effect to such release, provided that each such release or termination
shall be reasonably satisfactory in form and substance to Secured Party and the
applicable Grantor.
(b) Notwithstanding anything in this Section 35 or elsewhere in
this Agreement to the contrary, to the extent that any of the Collateral
pertains solely to a Premises (as defined in any Mortgage), which Premises is
released from the Lien by a Release pertaining to such Premises, executed by
Secured Party, such portion of the Collateral shall be deemed to be also
released from the Lien and security interests and other provisions of this
Agreement automatically, without further action or documentation by or from any
party (other than the Release of such Premises executed by Secured Party as
referenced above) being necessary; provided, however, that upon the written
request of the applicable Grantor, Secured Party shall take the actions and
execute the documents required pursuant to paragraph (a) above.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each Grantor and the Secured Party have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
SECURED PARTY: BANKERS TRUST COMPANY,
as Secured Party
By: /s/ GARRETT W. THELANDER
----------------------------------------
Name: Garrett W. Thelander
Title: Vice President
Notice Address:
Bankers Trust Company
280 Park Avenue, 23 West
New York, New York 10017
Attention: Garrett Thelander
GRANTORS: WYNDHAM HOTEL CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
----------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Chief Financial Officer
S-1
<PAGE> 323
EACH OF THE ENTITIES LISTED ON
ANNEX A HERETO
By: /s/ MICHAEL R. SILVERMAN
----------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Chief Financial Officer
ROSE HALL ASSOCIATES LIMITED
PARTNERSHIP, a Texas limited partnership
By: WHC CARIBBEAN LIMITED,
a Jamaican corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Rose Hall Associates Limited Partnership
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Chief Financial Officer
S-2
<PAGE> 324
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "AGREEMENT") is dated as of
May 29, 1996 and entered into by and between WYNDHAM HOTEL CORPORATION, a
Delaware corporation (the "COMPANY"), WYNDHAM IP CORPORATION, a Delaware
corporation ("IP CORP"), WYNDHAM MANAGEMENT CORPORATION, a Delaware corporation
(together with the Company and IP Corp, each a "GRANTOR" and collectively, the
"GRANTORS"), and BANKERS TRUST COMPANY, as agent for and representative of (in
such capacity herein called the "SECURED PARTY") the financial institutions
("LENDERS") party to the Credit Agreement (as hereinafter defined). For
Jamaican law purposes, this Agreement is collateral to the Mortgage under
Registration of Titles Act dated as of May 29, 1996 from Rose Hall Associates
Limited Partnership to Secured Party.
RECITALS
A. The Secured Party, Lenders and the Company have entered into
that certain Senior Secured Revolving Credit Agreement dated as of May 29, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "CREDIT AGREEMENT", the
terms defined therein and not otherwise defined herein being used herein as
therein defined and Section 1 thereof being incorporated herein) pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Company.
B. The Grantors own and use in their business, and will in the
future adopt and so use, various intangible assets, including trademarks,
service marks, designs, logos, indicia, tradenames, corporate names, company
names, business names, fictitious business names, trade styles and/or other
source and/or business identifiers and applications pertaining thereto
(collectively, the "TRADEMARKS").
C. Each Grantor desires to assign to the Secured Party as
security for the Secured Obligations (hereinafter defined) a lien on and
security interest in all of such Grantor's existing and future Trademarks, and
all of their rights and interests in all registrations that have been or may
hereafter be issued or applied for thereon in the United States and any state
thereof and in Canada, Jamaica and other foreign countries (the
"REGISTRATIONS"), all common law and other rights in and to the Trademarks in
the United States and any state thereof and in foreign countries (the
"TRADEMARK RIGHTS"), all goodwill of such Grantor's business symbolized by the
Trademarks and associated therewith, including without limitation the documents
and things described in Section l(b) (the "ASSOCIATED GOODWILL"), and all
proceeds of the Trademarks, the Registrations, the Trademark Rights and the
Associated Goodwill, and each Grantor agrees to assign and create a secured and
protected interest in each of their respective rights and
<PAGE> 325
interests in the Trademarks, the Registrations, the Trademark Rights, the
Associated Goodwill and all the proceeds thereof as provided herein.
D. Pursuant to the Subsidiary Guaranty, each Grantor (other than
the Company) has guarantied all of the obligations of the Company under the
Credit Agreement.
E. Pursuant to the Security Agreement, the Grantors and certain
other Subsidiaries of the Company have assigned to the Secured Party a lien on
and security interest in, among other assets, the Grantors' equipment,
inventory, accounts and general intangibles relating to the products and
services sold or delivered under or in connection with the Trademarks such
that, during the continuation of an Event of Default, the Secured Party would
be able to exercise its remedies consistent with the Security Agreement, this
Agreement and applicable law to foreclose upon the businesses of the Grantors
and such other Subsidiaries and use the Trademarks, the Registrations and the
Trademark Rights in conjunction with the continued operation of such
businesses, maintaining substantially the same product and service
specifications and quality as maintained by the Grantors, and benefit from the
Associated Goodwill.
F. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that each Grantor shall have
granted the security interests and undertaken the obligations contemplated by
this Agreement.
NOW THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each Grantor hereby agrees with the Secured
Party as follows:
SECTION 1. ASSIGNMENT OF SECURITY.
As security for the Secured Obligations, each Grantor hereby charges,
assigns and grants to the Secured Party a security interest in, all of such
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which such Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "COLLATERAL"):
(a) each of the Trademarks and rights and interests in
Trademarks that are presently, or in the future may be, owned, held
(whether pursuant to a license or otherwise) or used by such Grantor,
in whole or in part (including, without limitation, the Trademarks
specifically identified in Schedule I annexed hereto, as the same may
be amended pursuant hereto from time to time), and including all
Trademark Rights with respect thereto and all federal, state and
foreign Registrations therefor heretofore or hereafter granted or
applied for, the right (but not the obligation) to register claims
under any state or federal trademark law or regulation or any
trademark law or regulation of any foreign country and to apply for,
renew and extend the Trademarks, Registrations and Trademark Rights,
the right (but not the obligation) to sue or bring opposition or
cancellation proceedings in the name of such Grantor or in the name of
the Secured Party
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<PAGE> 326
or otherwise for past, present and future infringements of the
Trademarks, Registrations or Trademark Rights and all rights (but not
obligations) corresponding thereto in the United States and any
foreign country, and the Associated Goodwill; it being understood that
the rights and interests included herein shall include, without
limitation, all rights and interests pursuant to licensing or other
contracts in favor of such Grantor pertaining to any Trademarks,
Registrations or Trademark Rights presently or in the future owned,
held or used by third parties but, in the case of third parties which
are not Affiliates of such Grantor, only to the extent permitted by
such licensing or other contracts or otherwise permitted by applicable
law and, if not so permitted under any such contracts and applicable
law, only with the consent of such third parties;
(b) the following documents and things in such Grantor's
possession, or subject to such Grantor's right to possession, related
to (y) the production, sale and delivery by such Grantor, or by any
Affiliate, licensee or subcontractor of such Grantor, of products or
services sold or delivered by or under the authority of such Grantor
in connection with the Trademarks, Registrations or Trademark Rights
(which products and services shall, for purposes of this Agreement, be
deemed to include, without limitation, products and services sold or
delivered pursuant to merchandising operations utilizing any
Trademarks, Registrations or Trademark Rights); or (z) any retail or
other merchandising operations conducted under the name of or in
connection with the Trademarks, Registrations or Trademark Rights by
such Grantor or any Affiliate, licensee or subcontractor of such
Grantor:
(i) all lists and ancillary documents that
identify and describe any of such Grantor's customers, or
those of its Affiliates, licensees or subcontractors, for
products sold and services delivered under or in connection
with the Trademarks or Trademark Rights, including without
limitation any lists and ancillary documents that contain a
customer's name and address, the name and address of any of
its warehouses, branches or other places of business, the
identity of the Person or Persons having the principal
responsibility on a customer's behalf for ordering products or
services of the kind supplied by such Grantor, or the credit,
payment, discount, delivery or other sale terms applicable to
such customer, together with information setting forth the
total purchases, by brand, product, service, style, size or
other criteria, and the patterns of such purchases;
(ii) all product and service specification
documents and production and quality control manuals used in
the manufacture or delivery of products and services sold or
delivered under or in connection with the Trademarks or
Trademark Rights;
(iii) all documents which reveal the name and
address of any source of supply, and any terms of purchase and
delivery, for any and all materials, components and services
used in the production of products and services sold or
delivered under or in connection with the Trademarks or
Trademark Rights; and
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<PAGE> 327
(iv) all documents constituting or concerning the
then current or proposed advertising and promotion by such
Grantor or its Affiliates, licensees or subcontractors of
products and services sold or delivered under or in connection
with the Trademarks or Trademark Rights including, without
limitation, all documents which reveal the media used or to be
used and the cost for all such advertising conducted within
the described period or planned for such products and
services;
(c) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data
processing software that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon;
(d) to the extent not included in any other paragraphs of
this Section 1, all general intangibles relating to the Collateral;
and
(e) all proceeds, products, rents and profits (including
without limitation license royalties and proceeds of infringement
suits) of or from any and all of the foregoing Collateral and, to the
extent not otherwise included, all payments under insurance (whether
or not the Secured Party is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is
receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
SECTION 2. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral is collateral security for,
the prompt payment or performance in full when due in accordance with the terms
of the Credit Agreement and other Loan Documents, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including the payment of amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a) or any successor provision thereto), of all Obligations and
Guarantied Obligations (as defined in the Guaranty) and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to a
Grantor, would accrue on such obligations, whether or not a claim is allowed or
allowable against such Grantor for such interest in the related bankruptcy
proceeding), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party or any Lender as a preference,
fraudulent transfer or otherwise (all such obligations and liabilities being
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<PAGE> 328
the "UNDERLYING DEBT"), and all obligations of every nature of any Grantor now
or hereafter existing under this Agreement (all such obligations of the
Grantors, together with the Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. THE GRANTORS REMAIN LIABLE.
Anything contained herein to the contrary notwithstanding, except with
respect to obligations first incurred by Secured Party or any other Person
after Secured Party or such other Person has become the owner thereof by
foreclosure or other exercise of remedies, (a) each Grantor shall remain liable
under any contracts and agreements included in the Collateral, to the extent
set forth therein, to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed, (b) the exercise by
the Secured Party of any of its rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) the Secured Party shall not have any
obligation or liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each Grantor represents and warrants as follows:
(a) Description of Collateral. A true and complete list
of all Trademark Registrations owned, held (whether pursuant to a
license or otherwise) or used by such Grantor, in whole or in part, as
of the date of this Agreement is set forth in Schedule I annexed
hereto. Each Trademark Registration designated as of the date hereof
on Schedule I as material, any other Trademarks, Registrations and
Trademark Rights that use or incorporate the name "WYNDHAM" or other
identifiers or symbols derived from or associated with the name
"WYNDHAM" hereafter arising or otherwise owned, held or used by such
Grantor which are material to any of Grantors' business or operations
and any other Trademarks, Registrations or Trademark Rights hereafter
arising or otherwise owned, held or used by such Grantor that are
material to the operations of any one or more of the Properties are
referred to herein as a "MATERIAL TRADEMARK PROPERTY"; provided that
nothing herein contained shall serve as a recognition or denial of the
status of any matter as a trademark as to any Person (other than the
Lenders) not a party to this Agreement and, except for the Lenders,
there shall be no third party beneficiary hereof. Any use by any
licensees of Grantors of any of Trademarks, Registrations and
Trademark Rights shall be with the authority and under the control of
Grantors.
(b) Validity and Enforceability of Collateral. Each
Material Trademark PropertY is valid, subsisting and enforceable in
the Jurisdictions indicated on Schedule I
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annexed hereto, except where any failure to be so could not reasonably
be expected to cause, individually or in the aggregate, a Material
Adverse Effect. Except as disclosed on Schedule 5.5 to the Credit
Agreement, such Grantor is not aware as of the date hereof of any
pending or threatened claim by any third party that any Material
Trademark Property is invalid or unenforceable or that the use of any
Material Trademark Property violates the rights of any third person or
of any basis for any such claim and there is no such pending or
threatened claim whether or not arising prior to or after the date
hereof that could reasonably be expected to have a Material Adverse
Effect.
(c) Ownership of Collateral. Except for the security
interest assigned and created by this Agreement and the other Loan
Documents, and as disclosed on Schedule 7.2 to the Credit Agreement,
such Grantor (as indicated on Schedule I hereto) is the sole legal and
beneficial owner of the entire right, title and interest in and to
each Material Trademark Property owned by it free and clear of any
Lien subject only to Liens of mechanics, materialmen, attorneys and
other similar liens imposed by law in the ordinary course of business
in connection with the establishment, creation or application for
Registration of any Trademarks, Registrations or Trademark Rights for
sums not yet delinquent or being contested in good faith (such Liens
are referred to herein as "PERMITTED TRADEMARK LIENS"), except where
any failure to be so owned could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as
disclosed on Schedule 7.2 to the Credit Agreement and such as may have
been filed in favor of the Secured Party relating to this Agreement,
no effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or
recording office in the United States Patent and Trademark Office.
(d) Office Locations; Other Names. The chief place of
business, the chief executive office and the office where such Grantor
keeps its records regarding the Collateral is at the location
specified in the Security Agreement.
(e) Governmental Authorizations. Except with respect to
jurisdictions other than the United States, Canada and Jamaica
(Grantors making no representations concerning same), no
authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for
either (i) the assignment by such Grantor of the security interest
hereby, (ii) the execution, delivery or performance of this Agreement
by such Grantor, or (iii) except for the filings and recordings
described in Section 4(f) below, the perfection of the Secured Party's
rights and remedies hereunder (except as may have been taken by or at
the direction of such Grantor).
(f) Perfection. Except with respect to jurisdictions
other than the United States, Canada and Jamaica (Grantors making no
representations concerning same), this Agreement, together with the
filing of a financing statement describing the Collateral with the
Secretary of State of the State of Texas and the recording of this
Agreement with the United States Patent and Trademark Office and the
Canadian Trademarks Office
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and the filing of this Agreement with the Trademarks Department of the
Registrar of Companies in Jamaica for registration in relation to the
Jamaican trademarks and the Registrar of Companies in Jamaica for
registration as a charge in the charges register of IP Corp., which
have been made, assigns and creates a valid, perfected first priority
security interest in the Collateral subject only to Permitted
Trademark Liens, securing the payment of the Secured Obligations, and
all filings and other actions necessary or reasonably requested by the
Agent to perfect and protect such security interest have been duly
made or taken.
SECTION 5. FURTHER ASSURANCES; NEW TRADEMARKS, REGISTRATIONS AND TRADEMARK
RIGHTS; CERTAIN INSPECTION RIGHTS.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary,
or that the Secured Party may reasonably request, in order to perfect and
protect any security interest assigned or purported to be assigned hereby or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, the Grantor will: (i) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as the Secured Party may reasonably request,
in order to perfect and preserve the security interests granted or purported to
be granted hereby, (ii) use commercially reasonable efforts to obtain any
necessary consents of third parties to the assignment and perfection of a
security interest to the Secured Party with respect to any Collateral; provided
that such efforts shall not require such Grantor to make any payments to such
third parties to obtain such consent, (iii) at any reasonable time, upon
request by the Secured Party, exhibit the Collateral to and allow inspection of
the Collateral by the Secured Party, or persons designated by the Secured
Party, and (iv) at the Secured Party's request, appear in and defend any action
or proceeding that may affect such Grantor's title to or the Secured Party's
security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes the Secured Party to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of such Grantor.
Each Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by such Grantor shall be
sufficient as a financing statement and may be filed as a financing statement
in any and all jurisdictions.
(c) Each Grantor hereby authorizes the Secured Party to modify
this Agreement without obtaining such Grantor's approval of or signature to
such modification by amending Schedule I annexed hereto to include reference to
any right, title or interest in any existing Trademark, Registration or
Trademark Right or any Trademark, Registration or Trademark Right acquired or
developed by such Grantor after the execution hereof or to delete any reference
to any right, title or interest in any Trademark, Registration or Trademark
Right in which such Grantor no longer has or claims any right, title or
interest.
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(d) Each Grantor will furnish to the Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Secured Party
may reasonably request, all in reasonable detail.
(e) If such Grantor shall obtain rights to any new Trademarks,
Registrations or Trademark Rights, the provisions of this Agreement shall
automatically apply thereto. Each Grantor shall promptly notify the Secured
Party in writing of any rights to any new Trademarks or Trademark Rights
acquired by such Grantor after the date hereof and of any Registrations issued
or applications for Registration made after the date hereof which notice shall
state whether such Trademark, Registration or Trademark Right constitutes a
Material Trademark Property. Concurrently with the filing of an application for
Registration for any Trademark, such Grantor shall execute, deliver and record
in all places where this Agreement is recorded an appropriate Trademark
Security Agreement, substantially in the form hereof, with appropriate
insertions, or an amendment to this Agreement, in form and substance reasonably
satisfactory to the Secured Party, pursuant to which such Grantor shall assign
a security interest to the extent of its interest in such Registration as
provided herein to the Secured Party unless so doing would, in the reasonable
judgment of such Grantor, after due inquiry, result in the grant of a
Registration in the name of the Secured Party, in which event such Grantor
shall give written notice to the Secured Party as soon as reasonably
practicable and the filing shall instead be undertaken as soon as practicable
but in no case later than immediately following the grant of the Registration.
(f) Each Grantor hereby grants to the Secured Party and its
employees, representatives and agents the right to visit such Grantor's and any
of its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection with the manufacture, production,
inspection, storage or sale of products and services sold or delivered under
any of the Trademarks, Registrations or Trademark Rights (or which were so
utilized during the prior six month period), and to inspect the quality control
and all other records relating thereto upon reasonable notice to such Grantor,
during normal business hours, and as often as may be reasonably requested.
SECTION 6. CERTAIN COVENANTS OF THE GRANTORS.
Each Grantor shall:
(a) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral except to the extent that such use or uses
could not reasonably be expected to have a Material Adverse Effect;
(b) pay promptly prior to delinquency all property and
other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and
supplies) against, the Collateral, except to the extent the validity,
applicability or amount thereof is being contested in good faith;
provided,
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however, that such Grantor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five days prior
to the date of any proposed sale under any judgement, writ or warrant
of attachment entered or filed against such Grantor or any of the
Collateral as a result of the failure to make such payment;
(c) not sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral, except for licenses
granted in the ordinary course of business and as permitted by the
Credit Agreement or the other Loan Documents;
(d) except for Permitted Trademark Liens and the security
interest assigned and created by this Agreement or the other Loan
Documents, not create or suffer to exist any Lien upon or with respect
to any of the Collateral to secure the indebtedness or other
obligations of any Person;
(e) keep reasonable records respecting the Collateral and
at all times make available upon request at least one complete set of
its records concerning substantially all of the Trademarks,
Registrations and Trademark Rights at its chief executive office or
principal place of business or at the office of its legal counsel;
(f) not permit the inclusion in any contract to which it
becomes a party of any provision that would conflict with this
Agreement in any material respect or impair or prevent the assignment
and creation of a security interest in such Grantor's rights and
interests in any property included within the definitions of any
Trademarks, Registrations, Trademark Rights and Associated Goodwill;
(g) take all steps reasonably necessary to protect the
secrecy of any trade secrets relating to the products and services
sold or delivered under or in connection with the Trademarks and
Trademark Rights;
(h) use proper statutory notice in connection with its
use of each Material Trademark Property to the extent reasonably
necessary for the protection of each Material Trademark Property;
(i) use consistent standards of high quality (which may
be consistent with such Grantor's past practices) in the manufacture,
sale and delivery of products and services sold or delivered under or
in connection with the Trademarks, Registrations and Trademark Rights,
including, to the extent applicable, in the operation and maintenance
of its merchandising operations; and
(j) upon obtaining knowledge (as described in the Credit
Agreement) thereof, promptly notify the Secured Party in writing of
any event that could reasonably be expected to materially and
adversely affect the value of the Collateral or any portion thereof,
the ability of such Grantor or the Secured Party to dispose of the
Collateral or any portion thereof, or the rights and remedies of the
Secured Party in relation thereto,
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including without limitation the levy of any legal process against the
Collateral or any portion thereof.
SECTION 7. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL.
Except as otherwise provided in this Section 7, each Grantor shall
continue to collect, at its own expense, and be entitled to use, all amounts
due or to become due to such Grantor in respect of the Collateral or any
portion thereof. In connection with such collections, each Grantor may take
(and, at the Secured Party's direction during the continuance of any Event of
Default, shall take) such action as such Grantor or the Secured Party may deem
necessary or advisable to enforce collection of such amounts; provided,
however, that the Secured Party shall have the right at any time, during the
continuation of an Event of Default and upon written notice to the applicable
Grantor of its intention to do so, to notify the obligors with respect to any
such amounts of the existence of the security interest assigned, created,
hereby, and to direct such obligors to make payment of all such amounts
directly to the Secured Party, and, upon such notification and at the expense
of such Grantor, to enforce collection of any such amounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done. After receipt by any Grantor
of the notice from the Secured Party referred to in the proviso to the
preceding sentence during the continuance of any Event of Default, (i) all
amounts and proceeds (including checks and other instruments) received by such
Grantor in respect of amounts due to such Grantor in respect of the Collateral
or any portion thereof shall be received in trust for the benefit of the
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to the Secured Party in the same
form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 14, and (ii) such Grantor shall
not adjust, settle or compromise the amount or payment of any such amount or
release wholly or partly any obligor with respect thereto or allow any credit
or discount thereon.
SECTION 8. TRADEMARK APPLICATIONS AND LITIGATION.
(a) Each Grantor shall have the duty diligently, through counsel
reasonably acceptable to the Secured Party, to prosecute any trademark
application relating to any of its Material Trademark Property that is pending
as of the date of this Agreement, to make federal application on any existing
or future registerable but unregistered Material Trademark Property (whenever
it is commercially reasonable in the reasonable judgment of the Grantor to do
so) owned by it, and to file and prosecute opposition and cancellation
proceedings, renew Material Trademark Property and do any and all acts which
are necessary or that Secured Party may reasonably request to preserve and
maintain all of such Grantor's rights in all Material Trademark Property, as
long as, in such Grantor's reasonable judgment, it is commercially advantageous
to do so; provided that in no event shall any failure to take actions as
provided in this Section 8(a) result in a Material Adverse Effect. Any expenses
incurred in connection therewith shall be borne solely by the Grantors. No
Grantor shall abandon any Material Trademark Property unless it
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is, in such Grantor's reasonable judgment, commercially advantageous to do so;
provided that in no event shall any such abandonment result in a Material
Adverse Effect.
(b) Except as provided in Section 8(d), each Grantor shall have
the right to commence and prosecute in its own name, as real party in interest,
for its own benefit and at its own expense, such suits, proceedings or other
actions for infringement, unfair competition, dilution or other damage as are
in its reasonable business judgment necessary to protect the Collateral. The
Secured Party shall provide, at the Grantors' expense, all reasonable and
necessary cooperation in connection with any such suit, proceeding or action
including, without limitation, joining as a necessary party.
(c) Each Grantor shall promptly, following its becoming aware
thereof, notify the Secured Party of the institution of, or of any adverse
determination in, any proceeding (whether in the United States Patent and
Trademark Office or any federal, state, local or foreign court) described in
Section 8(a) or 8(b) or regarding such Grantor's claim of ownership in or right
to use any of the Trademarks, Registrations or Trademark Rights, its right to
register the same, or its right to keep and maintain such Registration. Each
Grantor shall provide to the Secured Party any information with respect thereto
reasonably requested by the Secured Party.
(d) Anything contained herein to the contrary notwithstanding,
during the continuation of an Event of Default, the Secured Party shall have
the right (but not the obligation) to bring suit, in the name of any Grantor,
the Secured Party or otherwise, to enforce any Trademark, Registration,
Trademark Right, Associated Goodwill and any license thereunder, in which event
such Grantor shall, at the request of the Secured Party, do any and all lawful
acts and execute any and all documents reasonably required by the Secured Party
in aid of such enforcement and such Grantor shall promptly, upon demand,
reimburse and indemnify the Secured Party as provided in Section 15 in
connection with the exercise of its rights under this Section 8. To the extent
that the Secured Party shall elect not to bring suit to enforce any Trademark,
Registration, Trademark Right, Associated Goodwill or any license thereunder as
provided in this Section 8(d), each Grantor agrees to use all reasonable
measures, whether by action, suit, proceeding or otherwise, to prevent the
infringement of any of the Trademarks, Registrations, Trademark Rights or
Associated Goodwill by others and for that purpose agrees to diligently
maintain any action, suit or proceeding against any Person so infringing
necessary to prevent such infringement.
SECTION 9. NON-DISTURBANCE AGREEMENTS, ETC.
If and to the extent that any Grantor is permitted to license the
Collateral, the Secured Party shall enter into a non-disturbance agreement or
other similar arrangement, at such Grantor's request and expense, with such
Grantor and any licensee of any Collateral permitted hereunder in form and
substance reasonably satisfactory to the Secured Party and such Grantor
pursuant to which (a) the Secured Party shall agree not to disturb or interfere
with such licensee's rights under its license agreement with such Grantor so
long as such licensee is not in default thereunder and (b) such licensee shall
acknowledge and agree that the Collateral
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licensed to it is subject to the security interest assigned and created in
favor of the Secured Party by this Agreement and the other terms of this
Agreement and the other Loan Documents to which such Grantor is a party.
SECTION 10. THE SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints the Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Secured Party or otherwise, from
time to time in the Secured Party's discretion to take any action and to
execute any instrument that the Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement, including without limitation:
(a) during the continuance of an Event of Default, to
endorse such Grantor's name on all applications, documents, papers and
instruments necessary for the Secured Party in the use or maintenance
of the Collateral;
(b) during the continuance of an Event of Default, to ask
for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) during the continuance of an Event of Default, to
receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) during the continuance of an Event of Default, to
file any claims or take any action or institute any proceedings that
the Secured Party may reasonably deem necessary for the collection of
any of the Collateral or otherwise to enforce the rights of the
Secured Party with respect to any of the Collateral;
(e) after Grantor's failure to do so as required by the
Loan Documents (and, provided no Event of Default then exists, after
ten (10) days notice from Secured Party), but subject to Grantor's
rights to contest the applicability, amount or validity of same as
provided in the Credit Agreement, to pay or discharge taxes or Liens
(other than Liens permitted under this Agreement or the Credit
Agreement) levied or placed upon or, if such amount is not disputed
and is currently due and payable, threatened against the Collateral
owned by such Grantor, any such payments so made by the Secured Party
to become obligations of such Grantor to the Secured Party, due and
payable immediately without demand;
(f) during the continuation of an Event of Default, (i)
to execute and deliver any of the assignments or documents requested
by the Secured Party pursuant to Section 13, (ii) to grant or issue an
exclusive or non-exclusive license to the Collateral or any portion
thereof to any Person, and (iii) otherwise generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and
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completely as though the Secured Party were the absolute owner thereof
for all purposes, and to do, at the Secured Party's option and the
Grantors' expense, at any time or from time to time, all acts and
things that the Secured Party reasonably deems necessary to protect,
preserve or realize upon the Collateral and the Secured Party's
security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
SECTION 11. THE SECURED PARTY MAY PERFORM.
If any Grantor fails to perform any agreement contained herein as
herein provided, the Secured Party may during the continuance of an Event of
Default or if no Event of Default then exists and such failure is reasonably
related to maintaining the value of the Collateral, upon Grantor's failure to
do so after 10 days notice from Secured Party requiring such action, itself
perform, or cause performance of, such agreement, and the reasonable expenses
of the Secured Party incurred in connection therewith shall be payable by such
Grantor under Section 22.
SECTION 12. STANDARD OF CARE.
The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property and Secured Party's actions do not constitute gross negligence or
willful misconduct.
SECTION 13. REMEDIES.
If any Event of Default shall have occurred and be continuing:
(a) The Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in
effect in any relevant jurisdiction (the "CODE") (whether or not the
Code applies to the affected Collateral), and also may (i) require
each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Secured Party forthwith, assemble all
or part of the Collateral as directed by the Secured Party and make it
available to the Secured Party at a place to be designated by the
Secured Party that is reasonably convenient to both parties, (ii)
enter onto the property where any Collateral
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is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store the
Collateral or otherwise prepare the Collateral for disposition in any
manner to the extent the Secured Party reasonably deems appropriate,
(iv) take possession of the Grantors' premises or place custodians in
exclusive control thereof, remain on such premises and use the same
for the purpose of taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation, (v) exercise any
and all rights and remedies of each Grantor under or in connection
with the contracts related to the Collateral or otherwise in respect
of the Collateral, including without limitation any and all rights of
any Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, such contracts, and (vi)
without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any
of the Secured Party's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices
and upon such other terms as the Secured Party may deem commercially
reasonable. The Secured Party or any Lender may be the purchaser of
any or all of the Collateral at any such sale and the Secured Party,
as agent for and representative of Lenders (but not any Lender or
Lenders in its or their respective individual capacities), shall be
entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at
any such public sale, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral
payable by the Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or
right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future
have under any rule of law or statute now existing or hereafter
enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten days' notice to such Grantor of the
time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned. Each Grantor hereby waives any claims against the Secured
Party arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the
Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Collateral are insufficient to pay all the
Secured Obligations, each Grantor shall be liable for the deficiency
and the reasonable fees of any attorneys employed by the Secured Party
to collect such deficiency.
(b) Upon written demand from the Secured Party, each
Grantor shall execute and deliver to the Secured Party an assignment
or assignments of the Trademarks, Registrations, Trademark Rights and
the Associated Goodwill and such other documents reasonably requested
by the Secured Party. Each Grantor agrees that such an assignment
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and/or recording shall be applied to reduce the Secured Obligations
outstanding only to the extent that the Secured Party receives cash
proceeds in respect of the sale of, or other realization upon, the
Collateral.
(c) Within five Business Days after written notice from
the Secured Party, each Grantor shall make available to the Secured
Party, to the extent within such Grantor's power and authority, such
personnel in such Grantor's employ on the date of such Event of
Default as the Secured Party may reasonably designate, by name, title
or job responsibility, to permit such Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services
sold or delivered by such Grantor under or in connection with the
Trademarks, Registrations and Trademark Rights, such persons to be
available to perform their prior functions on the Secured Party's
behalf and to be compensated by the Secured Party at such Grantor's
expense on a per diem, pro-rata basis consistent with the salary and
benefit structure applicable to each as of the date of such Event of
Default until the completion of the exercise of Secured Party's
remedies.
SECTION 14. APPLICATION OF PROCEEDS.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by the Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied as
provided in subsection 2.4D of the Credit Agreement.
SECTION 15. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees to indemnify the Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
primarily from the Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Each Grantor shall pay to the Secured Party upon demand the
amount of any and all reasonable costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that the
Secured Party may incur in connection with (i) the amendment or modification
of, or any waiver or consent under, this Agreement, (ii) the custody,
preservation, use or operation of, release of or addition to, the perfection of
any security interest in, or the sale of, collection from, or other realization
upon, any of the Collateral, (iii) the exercise or enforcement of any of the
rights of the Secured Party hereunder, or (iv) the failure by any Grantor to
perform or observe any of the provisions hereof.
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SECTION 16. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall assign and create a continuing security interest
in the Collateral and shall (a) remain in full force and effect until the
payment in full of the Secured Obligations, the expiration or cancellation of
each Letter of Credit, the cancellation or termination of the Commitments, (b)
be binding upon each Grantor, its successors and assigns, and (c) inure,
together with the rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to the
provisions of subsection 9.1 of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the expiration or cancellation of each Letter of Credit, and the
cancellation or termination of the Commitments, the security interest assigned
hereby shall automatically terminate and all rights to the Collateral shall
revert to the applicable Grantor without the necessity of further action or
documentation by any party. Upon any such termination the Secured Party will,
at the Grantors' expense, execute and deliver to the Grantors such documents as
the Grantors shall reasonably request to evidence such termination, including
without limitation UCC-3 financing statement terminations and other recordable
releases reasonably satisfactory in form and substance to the Secured Party.
SECTION 17. THE SECURED PARTY AS AGENT.
(a) The Secured Party has been appointed to act as the Secured
Party hereunder by Lenders. The Secured Party shall be obligated, and shall
have the right hereunder, to make demands, to give notices, consents or
approvals, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including, without limitation, the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Agreement and Grantors shall have no obligation to independently confirm
the authority of Secured Party to act hereunder on behalf of all of the
Lenders.
(b) The Secured Party shall at all times be the same Person that
is Agent under the Credit Agreement. Upon the acceptance of any appointment as
Agent by a successor Agent, that successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as the Secured Party,
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the provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was the
Secured Party hereunder.
SECTION 18. AMENDMENTS, ETC.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by any Grantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Secured Party and, in the case of any such amendment or modification, by the
Grantors. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
SECTION 19. NOTICES.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or courier service and shall be deemed to have been given when
delivered in person or by courier service or upon receipt of telefacsimile or
telex. For the purposes hereof, the address of the Secured Party shall be as
set forth under the Secured Party's name on the applicable signature page
hereto, each Grantor shall be: c/o Wyndham Hotel Corporation, 2001 Bryan
Street, Suite 2300, Dallas, Texas 75201, Attention: Chief Financial Officer,
or, as to any party, such other address as shall be designated by such party in
a written notice delivered to the other party hereto.
SECTION 20. SEVERABILITY.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 21. HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 22. GOVERNING LAW, TERMS.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF
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NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 23. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Grantors and the Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
GRANTORS: WYNDHAM IP CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
WYNDHAM HOTEL CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
---------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
WYNDHAM MANAGEMENT CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
---------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
S-1
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SECURED PARTY: BANKERS TRUST COMPANY,
as Secured Party
By: /s/ GARRET W. THELANDER
---------------------------------
Name: Garret W. Thelander
Title: Vice President
S-2
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AGREEMENT REGARDING SERVICING AGREEMENTS AND LIQUOR LICENSES
This AGREEMENT REGARDING SERVICING AGREEMENTS AND LIQUOR LICENSES
(this "AGREEMENT") is dated as of May 29, 1996 and entered into among WYNDHAM
HOTEL CORPORATION, a Delaware corporation ("COMPANY"), THE OTHER OBLIGORS
LISTED ON THE SIGNATURE PAGES HERETO (together with Company, each an "OBLIGOR"
and collectively, the "OBLIGORS"), and BANKERS TRUST COMPANY, as agent for the
financial institutions (the "LENDERS") party to the Credit Agreement referred
to below (in such capacity, the "AGENT").
RECITALS
A. Contemporaneously herewith, Company, the Agent and the Lenders
have entered into that certain Senior Secured Revolving Credit Agreement dated
as of May 23, 1996 (as it may hereafter be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time, the "CREDIT
AGREEMENT"; terms used but not otherwise defined herein shall have the
respective meanings assigned thereto in the Credit Agreement), pursuant to
which the Lenders have made commitments to extend certain loans to Company (the
loans pursuant to the Credit Agreement, the "LOANS"). The proceeds of the Loans
shall be used for the benefit of the Obligors and the making of the Loans is of
substantial and material benefit to each Obligor.
B. The Loans shall be secured by, among other things, the
Security Documents relating to the Collateral, including but not limited to
certain of the Liquor Licenses (to the extent permitted by Applicable Law),
Property Servicing Agreements and Liquor Operations Servicing Agreements (as
each of the foregoing terms is defined below) referred to herein.
C. Pursuant to the Credit Agreement and in connection with the
transactions contemplated thereby, the Company and the other Obligors have
agreed to enter into certain agreements regarding the management and operation
of the Properties and the sale and consumption of alcoholic beverages thereon
and to assign to the Agent on behalf of the Lenders (to the extent permitted by
Applicable Law) all of their respective right, title and interest in and to
such agreements and all liquor licenses, liquor inventory and other
entitlements relating thereto as security for the Loans.
NOW, THEREFORE, with reference to the foregoing Recitals (which are
incorporated herein by this reference), and for other valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Obligors, to the
extent of their respective interests in such agreements, licenses, assets and
rights, represent, warrant, covenant and agree with the Agent as follows:
<PAGE> 345
SECTION 1.
MANAGEMENT AND LIQUOR OPERATIONS
In connection with the transactions contemplated by the Credit
Agreement, the Company and the other Obligors intend to: (i) cause certain
Liquor Licenses relating to the Properties to be transferred to or obtained by
WHCMB, Inc. ("BEVERAGE CO."), a Delaware corporation and a wholly owned
subsidiary of Company, and to otherwise transfer the Liquor Licenses in
accordance with Schedule 1-A annexed hereto; (ii) cause the Licensees to enter
into sub-management agreements (each consented to by the owner of the applicable
Property) with Wyndham Management Corporation ("MANAGEMENT CO."), a Delaware
corporation and a wholly owned subsidiary of Company, relative to certain
business activities at the Properties (which business activities shall include
(x) obtaining, holding and timely replacing the Liquor Licenses, (y) providing
alcoholic beverages for sale and consumption on the applicable Property and (z)
performing all obligations by Licensee to be performed under the applicable
Liquor Operations Servicing Agreement) (such business activities with respect
to a particular Property, collectively, "Licensee's Business"); and (iii) cause
the owners of the respective Properties to enter into management agreements
with Management Co. relating to the operation and management of the Properties
(except with respect to the management and operation of the respective
Licensee's Businesses). In furtherance thereof, the Company and each Obligor
hereby represents, warrants, covenants and agrees as follows:
SECTION 1.1. PLEDGE OF SHARES.
As provided in that certain Pledge and Security Agreement dated as of
even date herewith among the grantors listed on the signature pages thereof and
the Agent (as it may hereafter be amended, restated, supplemented, renewed,
replaced or otherwise modified from time to time, the "SECURITY AGREEMENT"),
100% of the shares of the stock of each Obligor (other than Company, GHMB, Inc.
and MTMB, Inc.) have been pledged to the Agent as security for the Loans. As
provided in this Agreement, 100% of the shares of stock of GHMB, Inc. and MTMB,
Inc. are being pledged to the Agent as security for the Loans.
SECTION 1.2. LIQUOR LICENSES.
As of the Closing Date, certain Obligors hold the liquor licenses as
described on Schedule 1-A annexed hereto (collectively, together with all other
similar licenses described on Schedule 1 and issued by the Department of
Alcoholic Beverage Control or a similar state or local agency to any Obligor in
connection with the sale of alcoholic beverages, the "LIQUOR LICENSES") for the
respective Properties (each Obligor that holds any such Liquor License, a
"LICENSEE"). With respect to Liquor Licenses for certain Properties located as
noted on Schedule 1-A annexed hereto, applications have been filed for the
transfer of such Liquor Licenses from the existing holders thereof (which prior
holders are listed on Schedule 1-A) to Beverage Co. With respect to the Liquor
Licensees for certain Properties as noted on Schedule 1-A, applications have
been filed to replace the existing Liquor Licenses (which are held by the
respective parties listed on Schedule 1-A) with new Liquor Licenses (which are
to be held by Beverage Co.).
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SECTION 1.3. SERVICING AGREEMENTS.
A. LIQUOR OPERATIONS SERVICING AGREEMENTS. As of the Closing
Date, Licensees and Management Co. shall enter into the sub-management
agreements listed on Schedule 2 annexed hereto (as such sub-management
agreements may hereafter be amended, restated, supplemented, renewed, replaced
or otherwise modified from time to time, the "LIQUOR OPERATIONS SERVICING
AGREEMENTS"), pursuant to which the respective Licensees shall collect all
revenues and pay all expenses arising from the operation of the applicable
Licensee's Business, and shall otherwise perform all obligations arising from
the operation of the applicable Licensee's Business.
B. PROPERTY SERVICING AGREEMENTS. As of the Closing Date, the
owners of fee or ground leasehold estates, as the case may be, of the
Properties and Management Co. shall enter into the management agreements listed
on Schedule 3 annexed hereto (collectively, as such management agreements may
hereafter be amended, restated, supplemented, renewed, replaced or otherwise
modified from time to time, the "PROPERTY SERVICING AGREEMENTS"; the Property
Servicing Agreements, collectively with the Liquor Operations Servicing
Agreements, are referred to herein as the "SERVICING AGREEMENTS") pursuant to
which Management Co., on behalf of the respective owners, shall collect all
revenues and pay all expenses of the respective owners arising from the use and
operation of the respective Properties, and shall otherwise perform on behalf
of the owners the respective obligations of such owners arising from the use
and operation of the respective Properties.
SECTION 1.4. CASH MANAGEMENT SYSTEM.
In connection with its obligations under the Servicing Agreements,
each Obligor shall comply with and be bound by the system of cash management
set forth in (i) Section 6.15 of the Credit Agreement and Schedule 5.23 to the
Credit Agreement, (ii) Sections 4 and 14 of the Security Agreement and (iii)
the Cash Management Letters ((i) through (iii), collectively, the "CASH
MANAGEMENT SYSTEM").
SECTION 2.
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. LIQUOR LICENSES.
A. EXISTING LIQUOR LICENSES. Each Obligor, for itself and itself
only, to the extent of its interest in the Liquor Licenses (if any), hereby
represents and warrants to the Agent that (i) the information regarding the
Liquor Licenses set forth on Schedule 1-A annexed hereto is true and correct as
of the date hereof, (ii) except for any local agent set forth on Schedule 1-A,
the Licensees shown on Schedule 1-A are the sole holders of the Liquor
Licenses, and no other Person has any right, claim or title to or interest in
the Liquor Licenses or any rights thereunder, except for applicable
Governmental Authorities, (iii) no Licensee has encumbered, pledged or
otherwise assigned its interest in the Liquor Licenses or any of its rights
thereunder (except for
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<PAGE> 347
Liens in favor of the Agent pursuant to the Loan Documents and Liens permitted
pursuant to the Credit Agreement) and (iv) each Licensee that is a natural
person is an employee of or an independent contractor for a Loan Party.
B. TEMPORARY LIQUOR LICENSES. Each Obligor, for itself and itself
only, to the extent of its interest in the Liquor Licenses (if any), hereby
represents and warrants to the Agent that (i) such Obligor has applied or will
apply for all temporary Liquor Licenses required by Applicable Law and by all
applicable Governmental Authorities for the uninterrupted operation of
Licensee's Business (as noted on Schedule 1-A), (ii) such Obligor knows of no
reason why any such application should be denied by any applicable Governmental
Authority or pursuant to Applicable Law and (iii) both prior to and following
the issuance of all such temporary Liquor Licenses, the operation of Licensee's
Business shall comply with Applicable Law to the extent that temporary Liquor
Licenses are required by Applicable Law for the operation of Licensee's
Business.
C. PERMANENT LIQUOR LICENSES. Each Obligor, for itself and itself
only, to the extent of its interest in the Liquor Licenses (if any), hereby
represents and warrants to the Agent that (i) Obligor has applied for all
permanent Liquor Licenses required by Applicable Law and by all applicable
Governmental Authorities for the uninterrupted operation of Licensee's Business
(as noted on Schedule 1-A), (ii) Obligor knows of no reason why any such
applications should be denied by any applicable Governmental Authority or
pursuant to Applicable Law and (iii) both prior to and following issuance of
all such permanent Liquor Licenses, the operation of Licensee's Business shall
comply with Applicable Law to the extent that permanent Liquor Licenses are
required by Applicable Law for the operation of Licensee's Business.
D. REPRESENTATIONS AND COVENANTS REGARDING GHMB, INC. AND MTMB,
INC. Company, GHMB, Inc. and MTMB, Inc. hereby represent, warrant, covenant
and agree with the Agent that:
(i) GHMB, Inc. currently is, and at all times shall be, a
Texas corporation, whose sole shareholder is Leslie V. Bentley;
provided, however, that all shares of GHMB, Inc. may be transferred to
Beverage Co., and Agent consents to such transfer;
(ii) MTMB, Inc. currently is, and at all times shall be, a
Wisconsin corporation, whose sole shareholder is Eric A. Danziger;
provided, however, that all shares of MTMB, Inc. may be transferred to
Beverage Co., and Agent consents to such transfer; and
(iii) the Liens granted to the Agent herein and in any
other Loan Documents to which GHMB, Inc. or MTMB, Inc., respectively,
is a party, include Liens upon all material assets of GHMB, Inc. and
MTMB, Inc.
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SECTION 2.2. LIQUOR OPERATIONS SERVICING AGREEMENTS.
Each Obligor, for itself and itself only, to the extent of its
interest in the Liquor Operations Servicing Agreements (if any), hereby
represents and warrants to the Agent that (i) the Liquor Operations Servicing
Agreements are in full force and effect and have not been modified, (ii)
Obligor has not encumbered, pledged or otherwise assigned its interest in the
Liquor Operations Servicing Agreements or any of its rights thereunder (except
for Liens in favor of the Agent pursuant to the Loan Documents and Liens
permitted pursuant to the Credit Agreement) and (iii) pursuant to the Liquor
Operations Servicing Agreements, the respective Licensees are authorized to
collect all sums due to such Licensee, pay all sums owed by such Licensee, and
perform all obligations by such Licensee to be performed as necessary or
appropriate for the management and operation of the applicable Licensee's
Businesses.
SECTION 2.3. PROPERTY SERVICING AGREEMENTS.
Each Obligor, for itself and itself only, to the extent of its
interest in the Property Servicing Agreements (if any), hereby represents and
warrants to the Agent that (i) the Property Servicing Agreements are in full
force and effect and have not been modified, (ii) Obligor has not encumbered,
pledged or otherwise assigned its interest in the Property Servicing Agreements
or any of its rights thereunder (except for Liens in favor of the Agent
pursuant to the Loan Documents and Liens permitted pursuant to the Credit
Agreement) and (iii) pursuant to the Property Servicing Agreements, Management
Co. is authorized to collect all sums due to the respective property owners,
pay all sums owed by the respective property owners, and perform all
obligations by the respective property owners to be performed as necessary or
appropriate for the management and operation of the respective Properties
(except with respect to the respective Licensee's Businesses, the operations of
which are subject to the Liquor Operations Servicing Agreements as described in
Section 2.2 above).
SECTION 3.
GRANT OF SECURITY INTERESTS
SECTION 3.1. SECURITY INTEREST IN SERVICING AGREEMENTS AND LIQUOR LICENSES.
Each Obligor hereby absolutely and unconditionally assigns, sells,
transfers and conveys to the Agent, and hereby grants the Agent a security
interest in, all of such Obligor's right, title and interest in and to the
Servicing Agreements and (at the times and to the extent the granting of the
Security Interest is permitted by Applicable Law) the Liquor Licenses, whether
now existing or hereafter entered into or acquired, to further secure the
payment and performance of the Obligations. The Agent shall have all rights
granted to the secured party in the Security Agreement. Each Obligor, for
itself and itself only, to the extent of such Obligor's interest in the
Servicing Agreements and the Liquor Licenses (if any), agrees to comply with
and be bound by the applicable provisions of the Security Agreement.
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SECTION 3.2. ACKNOWLEDGMENT OF PLEDGE OF STOCK OR PARTNERSHIP INTEREST.
The Obligors and the Agent acknowledge that, pursuant to the Security
Agreement, the Agent has received a pledge of the shares of stock or
partnership interests, as applicable, of certain Obligors, as more fully as set
forth in Section 1.1 above.
SECTION 3.3. ACKNOWLEDGMENT OF LIENS ON LIQUOR COLLATERAL.
The Obligors and the Agent acknowledge that, to the extent permitted
by Applicable Law, and as provided in the Security Agreement and the
Assignments of Rents, the Obligors have granted the Agent Liens on the
Servicing Agreements, the other Collateral relating to the Licensees'
Businesses (including inventory consisting of liquor, wine, beer and other
alcoholic beverages) and (at the times and to the extent the granting of a Lien
is permitted by Applicable Law) the Liquor Licenses (collectively, the "LIQUOR
COLLATERAL").
SECTION 3.4. PROVISIONS APPLICABLE WITH RESPECT TO GHMB, INC. AND MTMB, INC..
A. PLEDGE OF SHARES. Each of the holders and owners of the
Pledged Share Collateral (defined below) hereby absolutely and unconditionally
pledges, assigns, sells, transfers and conveys to the Agent, and hereby grants
the Agent a security interest in, all of such Obligor's right, title and
interest in and to the shares of stock (the "PLEDGED SHARES") described in
Schedule 4 annexed hereto and issued by GHMB, Inc. and MTMB, Inc., respectively
(such Pledged Shares, together with all Pledged Collateral (as defined in the
Security Agreement) relating to such Pledged Shares, collectively, the "PLEDGED
SHARE COLLATERAL"), to further secure the payment and performance of the
Obligations. The Agent shall have all rights granted to the secured party in
the Security Agreement. Each of the holders and owners of the Pledged Share
Collateral, for itself and itself only, to the extent of such Person's interest
in the Pledged Shares, (i) makes all of the applicable representations and
warranties contained in the Security Agreement, and (ii) agrees to comply with
and be bound by the applicable provisions of the Security Agreement.
B. CERTAIN WAIVERS. Each of the holders and owners of the Pledged
Share Collateral hereby makes the waivers provided in Section 2.5 of that
certain Subsidiary Guaranty dated as of even date herewith among the grantors
listed on the signature pages thereof and the Agent.
C. NON-RECOURSE. Notwithstanding anything to the contrary set
forth in this Agreement or any other Loan Document, neither Leslie V. Bentley
or Eric A. Danziger (individually and collectively, the "EXCULPATED PARTIES")
shall have any obligation or liability under this Agreement or any other Loan
Document due to the fact that such Exculpated Party is a party to this
Agreement, beyond such Exculpated Party's then interest, if any, in the Liquor
Collateral, and the Agent and the Lenders shall look exclusively to such
interest of such Exculpated Party, if any, in such Liquor Collateral for the
payment and discharge of any such obligation or liability imposed upon such
Exculpated Party. If the Agent or any Lender obtains a judgment against an
Exculpated Party with respect to this Agreement or any other Loan
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Document due to the fact that such Exculpated Party is a party to this
Agreement, then the Agent or such Lender, as the case may be, shall look solely
to the interest of such Exculpated Party, if any, in the Liquor Collateral to
collect such judgment and the Agent and the Lenders shall not collect or
attempt to collect any such judgment out of any other assets.
SECTION 4.
SUBORDINATION OF SERVICING AGREEMENTS
SECTION 4.1. CERTAIN DEFINED TERMS.
All obligations, indebtedness and liabilities of any Obligor that is a
party to this Agreement howsoever created, arising or evidenced, now or
hereafter created, due or to become due, are hereafter called "LIABILITIES".
The Obligations are hereinafter called the "SENIOR LIABILITIES". All
Liabilities of any Obligor to any other Obligor in connection with the
Servicing Agreements are hereinafter called the "SUBORDINATE LIABILITIES."
SECTION 4.2. SUBORDINATION OF SERVICING AGREEMENTS; THE AGENT'S RIGHT TO
TERMINATE.
The Servicing Agreements shall be, and shall at all times remain,
subject and subordinate in each and every respect to the Mortgages, the
respective Liens thereof and all advances made under the Loan Documents. Upon
the occurrence and during the continuance of an Event of Default, the Agent
may, at its sole discretion, elect to terminate any or all of the Servicing
Agreements upon 10 days' prior written notice to the applicable Obligor or
Obligors. Upon any such termination, any successor manager(s) and successor
servicing agreement(s) shall in all respects be acceptable to the Agent in its
sole discretion.
SECTION 4.3. SUBORDINATION OF PAYMENT.
A. IN GENERAL. Each Obligor agrees that the Subordinate
Liabilities are expressly subordinate and junior in right of payment to the
Senior Liabilities. "SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT" shall mean
that:
(i) at all times unless and until the Senior Liabilities
shall have been paid in full in cash and satisfied, no Obligor shall,
without the express prior written consent of the Agent, take, demand
or receive from any other Obligor, and no Obligor will make, give or
permit, directly or indirectly, by set-off, redemption, purchase or
any other manner, any payment, prepayment or security for the whole or
any part of the Subordinate Liabilities; provided, that the Obligors
may make and receive scheduled payments on the Subordinate Liabilities
in accordance with the terms thereof, so long as no Event of Default
shall have occurred under the Credit Agreement and then be continuing
or would occur as a result of, or after giving effect to, such payment;
and
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(ii) until the Senior Liabilities shall have been paid in
full in cash, no Obligor shall, without the prior written consent of
the Agent: (a) enforce or take any action to enforce or collect the
Subordinate Liabilities or any portion thereof against any other
Obligor or against the assets of any other Obligor, or (b) enforce any
Lien or security interest securing the Subordinate Liabilities, or (c)
exercise any of its claims, rights, remedies or powers in respect of
the Subordinate Liabilities; provided, that the Obligors may enforce
their respective rights and exercise the remedies described in this
clause (ii), so long as no Event of Default shall have occurred under
the Credit Agreement and then be continuing or would occur as a result
of, or after giving effect to, such enforcement or exercise of
remedies.
B. DISSOLUTION OR BANKRUPTCY. In the event of any dissolution,
winding up, liquidation, readjustment, reorganization or other similar
proceedings relating to any Obligor or to its creditors, as such, or to its
properties (whether voluntary or involuntary, partial or complete, and whether
in bankruptcy, insolvency or receivership, or upon an assignment for the
benefit of creditors, or any other marshalling of the assets and liabilities of
such Obligor, or any sale of all or substantially all of the assets of such
Obligor, or otherwise), the Senior Liabilities shall first be paid in full in
cash before any Obligor shall be entitled to receive or retain any payment or
distribution in respect of the Subordinate Liabilities of any kind or
character, whether in cash, property or securities which, but for the
subordination provisions herein, would otherwise be payable or deliverable to
such Obligor.
SECTION 5.
COVENANTS
SECTION 5.1. LIQUOR LICENSES AND LICENSEES' BUSINESSES.
A. APPLICATIONS FOR LIQUOR LICENSES. Each Obligor, for itself and
itself only, to the extent of its interest in the Liquor Licenses (if any),
hereby covenants and agrees with the Agent that such Obligor shall (i)
diligently pursue to completion all applications for temporary and permanent
Liquor Licenses set forth on Schedule 1-A or otherwise required by any
Governmental Authority or by Applicable Law, and (ii) notify the Agent
immediately upon receipt of any such Liquor License or denial of such Obligor's
application therefor.
B. INDIVIDUAL LICENSEES. Each Obligor, for itself and itself
only, to the extent of its interest in the Liquor Licenses (if any), hereby
covenants and agrees that, during the term of the Loan, to the extent that
Applicable Law requires a local agent for the Liquor Licenses, such Obligor
shall cause an individual to act as local agent in compliance with Applicable
Law and such local agent shall at all times be an employee of or an independent
contractor for a Loan Party.
C. LIMITATION ON ASSETS AND LIABILITIES. Each Licensee hereby
covenants and agrees with the Agent that such Licensee shall have no assets and
no liabilities other than those
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occurring in the ordinary course of Licensee's Business, the Liquor Licenses,
inventory consisting of alcoholic beverages, and the Liquor Operations
Servicing Agreements.
D. INSURANCE. Each Obligor, for itself and itself only, to the
extent of its interest in the Liquor Licenses and Licensee's Business (if any),
hereby covenants and agrees that, during the term of the Loan, Management Co.
and Company shall be named as additional insureds under all liability insurance
policies held by such Obligor with respect to Licensee's Business. Each
Obligor, for itself and itself only, to the extent of its interest in the
Servicing Agreements (if any), hereby covenants and agrees that, during the
term of the Loan, the manager under the Servicing Agreements shall maintain
insurance as required by the Credit Agreement.
SECTION 5.2. ROLE OF MANAGEMENT CO. PURSUANT TO THE PROPERTY SERVICING
AGREEMENTS.
Each Obligor, for itself and itself only, to the extent of its
interest in the Property Servicing Agreements (if any), hereby covenants and
agrees that, during the term of the Loans:
(i) Management Co. shall manage the Properties pursuant
to the respective Property Servicing Agreements;
(ii) Management Co. shall have sole responsibility for the
management and operation of the respective Properties on behalf of the
respective owners of such Properties (except for matters governed by
the Liquor Operations Servicing Agreements) and all moneys pursuant to
the operation of the Properties (except for matters governed by the
Liquor Operations Servicing Agreements) shall be handled solely by
Management Co. on behalf of the respective owners of such Properties,
and the respective owners of the Properties shall not separately
collect, dispose of or otherwise handle any such moneys; and
(iii) in furtherance of the management and operation of the
Properties by Management Co.: (a) Management Co. shall be an account
party on each account held by the owner (or ground lessee) of the
applicable Property with respect to such Property, with full power and
authority to deposit and withdraw funds from such account(s) on behalf
of such owner (or ground lessee) and (b) each Obligor shall comply
with the Cash Management System (including Management Co.'s
obligations to collect all revenues and deposit such revenues into the
accounts subject to the Cash Management System) as provided in the
Credit Agreement and the other Loan Documents.
SECTION 5.3. ROLE OF LICENSEES PURSUANT TO THE LIQUOR OPERATIONS SERVICING
AGREEMENTS.
Each Licensee, to the extent of its interest in the Liquor Operations
Servicing Agreements (if any) hereby covenants and agrees that, during the term
of the Loans:
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(i) such Licensee shall manage the Licensees' Businesses
pursuant to the respective Liquor Operations Servicing Agreements;
(ii) such Licensee shall have sole responsibility for the
management and operation of each Licensee's Business (including
without limitation responsibility for collection and payment of all
moneys collectible or payable in connection with the operation of such
Licensee's Business), except as otherwise required pursuant to
Applicable Law;
(iii) all moneys pursuant to the operation of each
Licensee's Business shall be handled solely by such Licensee; and
(iv) in furtherance of the management and operation of
each applicable Licensee's Business by such Licensee, such Licensee
shall comply with the Cash Management System (including such
Licensee's obligations to collect all revenues and deposit such
revenues into the accounts subject to the Cash Management System) as
provided in the Credit Agreement and the other Loan Documents.
SECTION 5.4. CERTAIN COVENANTS OF OBLIGORS.
A. THE SERVICING AGREEMENTS. Each Obligor, for itself and itself
only, to the extent of its interest in the respective Servicing Agreements (if
any), agrees that during the respective terms of the Servicing Agreements,
without the Agent's prior written consent, which consent may be withheld in the
Agent's sole discretion, such Obligor shall not:
(i) pay or accept payment of, as applicable, any payment
due to any other party to the Servicing Agreements more than one (1)
month in advance;
(ii) enter into any agreement amending, modifying or
terminating the Servicing Agreements, except as otherwise required
pursuant to Applicable Law;
(iii) cancel, terminate or surrender, except at the normal
expiration of the respective terms thereof, the Servicing Agreements;
(iv) except as permitted under the other Loan Documents,
assign or sublet any portion of the Properties;
(v) except as permitted under the other Loan Documents,
encumber, pledge, assign or otherwise create a Lien on its interest in
the Servicing Agreements;
(vi) except as permitted under the other Loan Documents,
subordinate or consent to the subordination of the Servicing
Agreements to any Lien; or
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(vii) take any other action in connection with the
Servicing Agreements that would impair the value of the interest or
rights of such Obligor thereunder or that would impair the interest or
rights of the Agent therein.
B. THE LIQUOR LICENSES AND LICENSEE'S BUSINESS. Each Obligor, for
itself and itself only, to the extent of its interest in the Liquor Licenses or
any Licensee's Business (if any), agrees that, during the term of the Loan:
(i) it shall not hereafter encumber, pledge, assign or
otherwise create a Lien on its interest in the Liquor Licenses or any
rights thereunder (except for Liens in favor of the Agent pursuant to
the Loan Documents and Liens permitted pursuant to the Credit
Agreement);
(ii) it shall do all acts necessary to extend, renew,
replace or otherwise keep in effect the Liquor Licenses; and
(iii) except for temporary cessation of a Licensee's
Business at a Property in connection with (y) an approved Renovation
of, casualty to or condemnation of such Property or (z) requirements
of Applicable Law or a Governmental Authority, it shall not
discontinue or materially alter, in whole or in part, operation of any
Licensee's Business without the prior written consent of the Agent
(which consent shall not be unreasonably withheld, conditioned or
delayed).
SECTION 5.5. WAIVER OF RIGHT TO TERMINATE THE SERVICING AGREEMENTS.
Each Obligor hereby waives the provisions of any Applicable Law which
may give or purport to give it any right or election to terminate or modify or
avoid its obligations under the Servicing Agreements by reason of any
foreclosure or other proceeding regarding enforcement of security interests in
the Collateral (including without limitation the Servicing Agreements). Without
limiting the generality of the foregoing, in the event of bankruptcy of any
party other than the applicable Obligor under the Servicing Agreements and the
rejection by such party or its trustee in bankruptcy of any such Servicing
Agreements, Obligor shall not terminate any Servicing Agreements without the
prior written consent of the Agent.
SECTION 5.6. RIGHTS OF SUCCESSOR OWNER WITH RESPECT TO SERVICING AGREEMENTS.
A. CONTINUATION OF SERVICING AGREEMENTS. The Successor Owner,
immediately upon acquiring title to any Property, shall have the right, upon
written notice to Management Co. or the applicable Licensee, as the case may
be, within sixty days after acquiring title: (i) to cause Management Co. to
continue its management of such Property in accordance with the terms of the
applicable Property Servicing Agreement and (ii) to cause the applicable
Licensee to continue its management of the applicable Licensee's Business in
accordance with the terms of the applicable Liquor Operations Servicing
Agreement.
11
<PAGE> 355
B. ELECTION OF SUCCESSOR MANAGER. The Successor Owner,
immediately upon acquiring title to any Property, may assume or may cause a
third party acceptable to such Successor Owner to assume the obligations of the
manager (the "PRIOR MANAGER") under the applicable Servicing Agreement (the
Agent or any such third party appointed by the Agent to act as manager, the
"SUCCESSOR MANAGER"), but (i) without any liability for any act or omission of
the Prior Manager prior to the date of acquisition, (ii) without being subject
to any offsets or advances which any Obligor may have had against any other
Obligor, and (iii) without being bound by any agreement or modification of any
of the Servicing Agreements entered into in violation of the terms of this
Agreement.
SECTION 5.7. CHANGES IN MATTERS SET FORTH IN THE SCHEDULES HERETO.
Any changes to the matters set forth in the schedules annexed hereto
shall be satisfactory to the Agent in its sole discretion, except for
corrections of bona fide errors that would not otherwise constitute a default
under this Agreement or any other Loan Document and changes required to
accurately reflect changes in circumstances that occur but that are not in
violation of this Agreement or any other Loan Document.
SECTION 6.
MISCELLANEOUS
SECTION 6.1. GOVERNMENTAL APPROVALS.
To the extent required by Applicable Law, the consummation of the
transactions contemplated herein shall be subject to the approval of the
Governmental Authorities that regulate the transfer of liquor licenses, if any.
Notwithstanding anything in this Agreement to the contrary, all agreements and
covenants contained in this Agreement are (i) subject to all provisions,
requirements, limitations and restrictions of Applicable Law and are subject to
the interests of Governmental Authorities in the Liquor Licenses, as may be
required under Applicable Law, (ii) expressly limited to the extent necessary
to be consistent with and not in violation of Applicable Law and (iii) not to
be interpreted or construed as requiring any party to this Agreement to take
any action that would be in violation of Applicable Law.
SECTION 6.2. FURTHER ASSURANCES.
Each Obligor hereby covenants and agrees to cooperate with the Agent
in obtaining any and all approvals of any Governmental Authority that may be
required in connection with the Agent's Liens on the Liquor Licenses and the
Servicing Agreements provided for herein. Without limiting the generality of
the foregoing, each Obligor agrees to execute, deliver, file and record such
additional documents as may be requested by the Agent to facilitate the
enforcement of the Agent's Liens on the Liquor Licenses and the Servicing
Agreements.
12
<PAGE> 356
SECTION 6.3. LIABILITY OF SUCCESSOR OWNER AND THE AGENT.
A. LIABILITY OF SUCCESSOR OWNER. Anything herein or in the
Servicing Agreements to the contrary notwithstanding, in the event that any
Successor Owner shall acquire fee or leasehold title to any Property (or any
portion thereof), such Successor Owner shall not in any way or to any extent
be:
(i) liable to any Obligor for any act or omission or
negligence of any prior owner of the fee or leasehold interest in the
applicable Property (each, a "PRIOR OWNER") or any matter occurring
prior to the time the Successor Owner has succeeded to the interest of
the Prior Owner;
(ii) subject to any counterclaim, defense, credit or
offset, which theretofore shall have accrued to any Obligor against
any Prior Owner;
(iii) liable for the commencement or completion of any
construction or any contribution toward construction or installation
of any Improvements, or any portion thereof, required to be done prior
to the date on which the Successor Owner takes title to the Property
or any expansion or Renovation of existing Improvements to the extent
that the obligation to make such expansion or Renovation arose prior
to the time the Successor Owner takes title to the Property;
(iv) bound by any previous modification or amendment of
the Servicing Agreements unless such modification or amendment shall
have been previously made in accordance with the provisions of this
Agreement or approved in writing by the Agent or the Successor Owner;
(v) bound by any prepayment of rent made more than one
(1) month in advance of the due date thereof or for any deposit,
rental security or any other sums deposited under the Servicing
Agreements with any Prior Owner unless such sums are actually received
by the Successor Owner; or
(vi) obligated to repair or replace the Property or any
part thereof in the event of damage thereto or condemnation thereof.
B. LIABILITY OF THE AGENT. Anything herein or in the Servicing
Agreements to the contrary notwithstanding, in the event that the Agent shall
acquire title to any Property or any Obligor's interest in any Servicing
Agreement, the Agent shall have no obligation, nor incur any liability, beyond
the Agent's then interest, if any, in the applicable Property or Servicing
Agreement, as the case may be, and the Obligors shall look exclusively to such
interest of the Agent, if any, in such Property or Servicing Agreement for the
payment and discharge of any obligations imposed upon the Agent hereunder and
under the Servicing Agreements and shall not collect or attempt to collect any
judgment out of any other assets of Agent. Each Obligor agrees that with
respect to any money judgment which may be obtained or secured by such Obligor
against the Agent, such Obligor shall look solely to the estate or interest
owned by the
13
<PAGE> 357
Agent in the respective Properties or Servicing Agreements, and such Obligor
will not collect or attempt to collect any such judgment out of any other
assets of the Agent.
SECTION 6.4. APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
APPLICABLE LAW REQUIRES THAT THE CREATION OR PERFECTION OF THE ASSIGNMENT OR
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL (INCLUDING WITHOUT LIMITATION THE LIQUOR LICENSES AND THE
SERVICING AGREEMENTS) ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK, OR TO THE EXTENT THAT THE LAWS OF THE JURISDICTION IN WHICH
A LIQUOR LICENSE IS ISSUED SHALL GOVERN MATTERS RELATING TO THE APPLICATION
FOR, ADMINISTRATION OF AND RENEWAL OF SUCH LIQUOR LICENSE.
SECTION 6.5. NOTICES.
Any communications between the parties hereto and any notices or
requests provided herein to be given may be given by mailing the same, postage
prepaid, or by telex, facsimile transmission or cable to each such party at its
address set forth in the Credit Agreement, on the signature pages hereof or to
such other addresses as each such party may in writing hereafter indicate. Any
notice, request or demand to or upon the parties hereto shall not be effective
until received.
SECTION 6.6. NO JOINT VENTURE OR PARTNERSHIP.
The provisions set forth in Section 9.4 of the Credit Agreement are
incorporated herein by this reference and shall apply with the same force and
effect as if the terms of such section was set forth herein in full.
SECTION 6.7. AMENDMENTS AND WAIVERS.
The provisions set forth in Section 9.6 of the Credit Agreement are
incorporated herein by this reference and shall apply with the same force and
effect as if the terms of such section was set forth herein in full.
14
<PAGE> 358
SECTION 6.8. SEVERABILITY.
The provisions set forth in Section 9.15 of the Credit Agreement are
incorporated herein by this reference and shall apply with the same force and
effect as if the terms of such section was set forth herein in full.
SECTION 6.9. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OBLIGOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH OBLIGOR, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO SUCH OBLIGOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SUBSECTION 8.8 OF THE CREDIT AGREEMENT;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH OBLIGOR IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE AGENT RETAIN THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO BRING
PROCEEDINGS AGAINST SUCH OBLIGOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 6.9
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
15
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SECTION 6.10. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED THEREBY. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each party hereto acknowledges that
this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement and
the other Loan Documents, and that each will continue to rely on this waiver in
their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 6.10 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE UNDER THE CREDIT AGREEMENT. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.
SECTION 6.11. ENTIRE AGREEMENT.
The provisions set forth in Section 9.23 of the Credit Agreement are
incorporated herein by this reference and shall apply with the same force and
effect as if the terms of such section was set forth herein in full.
SECTION 6.12. COUNTERPARTS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
16
<PAGE> 360
SECTION 6.13. ADDITIONAL OBLIGORS.
The initial Obligors hereunder shall be Company and such of the
Subsidiaries of Company as are signatories hereto on the date hereof. From time
to time subsequent to the date hereof, additional Subsidiaries of Company may
become parties hereto, as additional Obligors, by executing a counterpart of
this Agreement substantially in the form of Exhibit A attached hereto. Upon
delivery of any such counterpart to the Agent, notice of which is hereby waived
by Obligors, each such additional Obligor shall be as fully a party hereto as
if such Obligor were an original signatory hereof. Each Obligor expressly
agrees that its joint and several obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Obligor
hereunder, not by any election of the Agent not to cause any Subsidiary of
Company to become an additional Obligor hereunder. This Agreement shall be
fully effective as to any Obligor that is or becomes a party hereto regardless
of whether any other Person becomes or fails to become or ceases to be an
Obligor hereunder.
SECTION 6.14. RELEASES.
Notwithstanding anything in this Agreement to the contrary, to
the extent that any portion of the Liquor Collateral relates solely to or has
continuously been used at a particular Property, the Liens encumbering and the
other provisions hereof pertaining to such portion of the Liquor Collateral
pursuant to this Agreement shall be deemed to be automatically released
contemporaneously with the Agent's execution and delivery of a release of the
Mortgage encumbering the Property to which such portion of the Liquor
Collateral relates or at which such portion of the Liquor Collateral has been
continuously used, without further action or further documentation by or from
any party; provided, however, that the applicable Obligors shall be entitled to
receive from the Agent, at the sole cost and expense of such Obligors, such
additional release documentation as is reasonably requested by such Obligors
for the purpose of evidencing the release of the applicable portion of the
Liquor Collateral as provided in this Section 6.14.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]
17
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IN WITNESS WHEREOF, each Obligor and the Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
AGENT: BANKERS TRUST COMPANY,
a New York banking corporation,
as Agent
By: /s/ GARRETT E. THELANDER
------------------------------------
Name: Garrett E. Thelander
Title: Vice President
Notice Address:
Bankers Trust Company
280 Park Avenue
New York, New York 10017
Attention: Real Estate Investment Banking
Fax: (212) 454-1733
OBLIGORS: WYNDHAM HOTEL CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
S-1
<PAGE> 362
GHALP CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
GHALP Corporation
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
WHCMB, INC.,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
WHCMB, Inc.
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 23OO
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
S-2
<PAGE> 363
WYNDHAM MANAGEMENT CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Wyndham Management Corporation
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
GHMB, INC.,
a Texas corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
GHMB, Inc.
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
S-3
<PAGE> 364
MTMB, INC.,
a Wisconsin corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
MTMB, Inc.
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
WH INTEREST, INC.,
a Texas corporation
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
WH Interest, Inc.
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
S-4
<PAGE> 365
ROSE HALL ASSOCIATES LIMITED PARTNERSHIP,
a Texas limited partnership
By: WHC CARIBBEAN LIMITED,
a Jamaica corporation,
its General Partner
By: /s/ MICHAEL R. SILVERMAN
------------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Rose Hall Associates Limited Partnership
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
-----------------------------------------
LESLIE V. BENTLEY
Notice Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-5
<PAGE> 366
ROSE HALL ASSOCIATES LIMITED PARTNERSHIP,
a Texas limited partnership
By: WHC CARIBBEAN LIMITED,
a Jamaica corporation,
its General Partner
By: /s/ ANNE L. RAYMOND
--------------------------------
Name: Anne L. Raymond
Title: Vice President
Notice Address:
Rose Hall Associates Limited Partnership
c/o Wyndham Hotel Corporation
2001 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: General Counsel
Fax: (214) 978-4567
/s/ LESLIE V. BENTLEY
-----------------------------------------
LESLIE V. BENTLEY
Notice Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-6
<PAGE> 367
ENVIRONMENTAL INDEMNITY
This ENVIRONMENTAL INDEMNITY (this "INDEMNITY") is dated as of May 29,
1996 and by and from WYNDHAM HOTEL CORPORATION, a Delaware corporation (the
"COMPANY" or the "INDEMNITOR"), whose address is 2001 Bryan Street, Suite 2300,
Dallas, Texas 75201, WYNDHAM MANAGEMENT CORPORATION, a Delaware corporation,
GHALP CORPORATION, a Delaware corporation, ROSE HALL ASSOCIATES LIMITED
PARTNERSHIP, a Texas limited partnership, WHC CARIBBEAN LIMITED, a Jamaica
corporation, XERXES LIMITED, a Jamaica corporation, WH INTEREST, INC., a Texas
corporation, and WHC VININGS CORPORATION, a Delaware corporation (collectively,
the "SUBSIDIARY OWNERS") to and for the benefit of BANKERS TRUST COMPANY, a New
York corporation ("BANKERS"), whose address is 280 Park Avenue, New York, New
York, as agent for the Lenders (defined below) (the "AGENT") and for the
benefit of the Indemnified Parties.
R E C I T A L S
A. The Indemnitor is the owner in fee of certain real property,
as more particularly described in Schedule 1.1A to the Credit Agreement as in
effect on the date hereof referred to below and incorporated herein by this
reference, as such Schedule may be supplemented from time to time pursuant to
subsection 7.15(A)(i) of the Credit Agreement (as of any date under this
Indemnity, each real property then or at any time previously listed on such
Schedule, a "POOL A PROPERTY," and collectively, the "POOL A PROPERTIES" as of
such date).
B. The Indemnitor or a Subsidiary thereof is the owner of a
leasehold interest in certain other real property, as more particularly
described in Schedule 1.1B to the Credit Agreement as in effect on the date
hereof referred to below and incorporated herein by this reference, as such
Schedule may be supplemented from time to time pursuant to subsection
7.15(A)(ii) of the Credit Agreement (as of any date under this Indemnity, each
real property then or at any time previously listed on such Schedule, a "POOL B
PROPERTY," and collectively, the "POOL B PROPERTIES" as of such date).
C. The Indemnitor or a Subsidiary thereof is or will hereafter be
the owner of certain other real property, as more particularly described in
Schedule 1.1C to the Credit Agreement, as such Schedule may be supplemented
from time to time pursuant to subsection 7.15(A)(iii) of the Credit Agreement
(as of any date under this Indemnity, each real property then or at any time
previously listed on such Schedule, a "NEW PROPERTY," and collectively, the
"NEW PROPERTIES" as of such date; collectively with the Pool A Properties as of
such date and the Pool B Properties as of such date, the "PROPERTIES" as of
such date; it being understood and agreed that Indemnitor's indemnification
obligations hereunder with respect to any Property shall survive any transfer
of such Property in accordance with Section 2 below).
D. The Indemnitor has entered into that certain Credit Agreement
dated as of even date herewith (as amended, restated or supplemented or
otherwise modified from time to time,
<PAGE> 368
the "CREDIT AGREEMENT") by and among the Indemnitor, the financial institutions
listed on the signature pages thereof (the "LENDERS") and the Agent.
E. Pursuant to the Subsidiary Guaranty, the Subsidiary Owners
have guarantied the Obligations of the Company under the Credit Agreement and
the other Loan Documents.
F. The Loans are evidenced by those certain Revolving Notes,
executed by the Indemnitor and payable to the order of the Lenders in the
aggregate principal amount of up to One Hundred Million Dollars ($100,000,000)
and that certain Swing Line Note executed by the Indemnitor and payable to the
order of the Swing Line Lender in the principal amount of up to Ten Million
Dollars ($10,000,000) (collectively, the "NOTES"), and secured by the
Mortgages.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Indemnitor and the Subsidiary
Owners agree as follows:
SECTION 1. CERTAIN DEFINED TERMS.
Capitalized terms used herein without definition have the meaning
ascribed to such terms in the Credit Agreement. The following terms used in
this Indemnity and the other Loan Documents shall have the following meaning:
"REMEDIATION COSTS" means the costs and expenses directly
associated with any removal, remediation, clean-up, containment,
disposal and treatment (any such activity, a "REMEDIATION") of any
Hazardous Materials on, in, under or affecting any of the Properties.
"CORRECTIVE WORK" means all of the following, whether required
by any Governmental Authority or voluntarily undertaken:
(i) any activities in connection with the
investigation, monitoring of site conditions or Remediation of
any Hazardous Materials on, in, under or affecting any of the
Properties, or restoration of the Properties after completion
of the above-referenced activities;
(ii) any activities required to take necessary
precautions (including activities in connection with
containment) to protect against the release of Hazardous
Materials on, in, onto, under or affecting any of the
Properties; or from any of the Properties into the air, any
body of water, any other public domain or property or any
surrounding areas; and
(iii) any activities engaged in to comply, in
connection with all or any portion of any Property including
operations conducted thereon or any surrounding areas, with
all applicable Environmental Laws.
"COST-EFFECTIVE REMEDIATION" means a Remediation that:
2
<PAGE> 369
(i) if performed under the supervision
of any Governmental Authority, (A) will remediate the Property
at issue such that the value of such Property will not be
materially reduced, (B) is performed in a manner that is, in
the professional judgment of the Indemnified Party's
environmental consultant, the most cost-effective form of
Remediation that the Governmental Authority will allow after
reasonable negotiation, and (C) is consistent, in the
professional judgment of the Indemnified Party's environmental
consultant, with industry practices for the type of Hazardous
Materials subject to the Remediation; or
(ii) if performed other than under the
supervision of a Governmental Authority, (A) will remediate
the Property at issue such that the value of such Property
will not be materially reduced, (B) is performed in a manner
that is, in the professional judgment of the Indemnified
Party's environmental consultant, a reasonably cost-effective
form of Remediation that is consistent with Environmental Laws
and any written requirements of the appropriate Governmental
Authority, and (C) is consistent, in the professional judgment
of the Indemnified Party's environmental consultant, with
industry practices for the type of Hazardous Materials subject
to the Remediation.
"ENVIRONMENTAL EXPENSES" means all of the following: (a) costs
incurred in connection with the investigation, inspection, monitoring,
studying, sampling, testing, clean-up, containment, remediation and/or
removal of all Hazardous Materials and the costs of restoration
(including costs incurred in investigating, inspecting, monitoring,
studying, sampling or testing for the suspected or alleged presence of
Hazardous Materials), costs incurred to mitigate damages, closure
costs, costs incurred for restoration, and all other costs of
responding to any Environmental Problem; (b) costs incurred to cure,
remediate or otherwise address any violations of Environmental Laws;
(c) damages for personal injury or death, property loss, or other loss
resulting from any Environmental Problem; (d) civil and criminal
judgments, fines and penalties resulting from any Environmental
Problem; (e) costs incurred to remove any Liens imposed by law or
otherwise in favor of the Federal or any state or local government or
governmental agency or authority in connection with any Environmental
Problem; (f) attorneys' (which shall be reasonable), accountants',
engineers', consultants', and experts' fees and disbursements,
administrative costs, forum costs and other out-of-pocket expenses
(including any such fees, disbursements, costs and expenses incurred
as a result of the suspected or alleged presence of Hazardous
Materials or the assertion of groundless, false, or fraudulent claims,
demands or proceedings) incurred in connection with any Environmental
Problem; (g) diminution in the market value of any Property or any
portion thereof resulting from any Environmental Problem; (h) damages
for injury to, destruction of, or loss of, natural resources; (i)
consequential and punitive damages suffered or incurred by third
parties resulting from any Environmental Problem; (j) sums paid and any
other liability to any Governmental Authority or any other Person for
any costs or expenses described above (including costs incurred in
investigating, inspecting, monitoring, studying, sampling or testing
for the suspected or alleged presence of Hazardous Materials); (k)
sums paid in satisfaction of judgments resulting from any
3
<PAGE> 370
Environmental Problem; (l) settlement costs resulting from any
Environmental Problem; (m) costs incurred in response to any
Environmental Claim; and (n) all other costs and expenses of any kind
or nature, whether similar or dissimilar to the foregoing, resulting
from any Environmental Problem.
"ENVIRONMENTAL PROBLEM" means any of the following:
(i) the presence of any Hazardous Materials on,
in, under, or above all or any portion of any Property or any
surrounding areas, other than any materials in a non-hazardous
form such as asphalt contained in road-surfacing materials or
hazardous materials customarily used in the operation of hotel
properties and properly stored and maintained; or
(ii) the release or threatened release, including
any Hazardous Release, of any Hazardous Materials from or onto
any Property or any portion thereof; or
(iii) the violation or threatened violation of any
Environmental Law with respect to any Property or any portion
thereof; or
(iv) the failure or threatened failure to obtain
or to abide by the terms or conditions of any permit or
approval required under any Environmental Law with respect to
any Property or any portion thereof; or
(v) the release of any Hazardous Materials from
an offsite waste disposal facility directly or indirectly used
by the Indemnitor or any of its Subsidiaries in connection
with any Property or with respect to which the Indemnitor or
any of its Subsidiaries may be liable; or
(vi) any Environmental Claim in respect of any
Property.
A condition described above shall be deemed to be an Environmental
Problem regardless of whether or not any Governmental Authority has
taken any action in connection with such condition.
SECTION 2. INDEMNITY.
The Indemnitor agrees to defend (with counsel reasonably acceptable to
the Agent), indemnify, pay and hold the Agent, each Lender, Bankers and their
respective Affiliates and Persons deemed to be "controlling persons" thereof
within the meaning of the Securities Act or the Exchange Act and each of their
respective officers, directors, employees, agents, attorneys and representatives
of the foregoing (each of the foregoing, an "INDEMNIFIED PARTY") harmless from
and against any and all Environmental Expenses, whether based on any Federal,
state or foreign laws, statutes, rules or regulations (including Environmental
Laws), on common law or equitable cause or on contract or otherwise
(collectively, the "INDEMNIFIED EXPENSES")
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that may or might at any time (including after (a) the repayment of the Loans
or any portion thereof, (b) the foreclosure of any Mortgage, (c) the exercise
of power of sale under any Mortgage, (d) the acceptance by the Agent (or a
nominee of the Agent) of a deed to any Property or portion thereof in lieu of
foreclosure of the Mortgage with respect to such Property, (e) the commencement
of any case under the Bankruptcy Code, (f) the voluntary or involuntary
transfer of any Property, or (g) the exercise by the Agent of any remedy set
forth in the Loan Documents) be imposed upon, incurred by, or asserted or
awarded against, any Indemnified Party in connection, directly or indirectly,
with any Environmental Problem, regardless of whether such Environmental
Problem, except as provided in Section 10 below, arises before or after the
date hereof or before or after repayment of the Loans or any portion thereof or
arises in connection with or as a result of any failure by the Indemnitor to
perform timely and in full its agreements under Sections 7, 8 and 9 below.
Except as set forth in Section 10 below, the foregoing indemnity shall survive
any conveyance of any Property, or any portion thereof, by foreclosure of any
Mortgage, by exercise of power of sale under any Mortgage, by deed in lieu of
foreclosure, in connection with a plan of reorganization filed under Chapter 11
of the Bankruptcy Code, or by reason of any remedy set forth in the Loan
Documents. The foregoing agreement to indemnify shall apply regardless of
whether or not any Environmental Problem is the fault of the Indemnitor or any
other Person, and regardless of whether or not any Environmental Problem is
disclosed in any environmental report, assessment or audit (including
Environmental Audit as defined below) performed for, or on behalf of, the
Lenders in connection with the Loans or whether or not any Indemnified Party
has actual or constructive knowledge of such Environmental Problem from any
other source; provided, however, that the foregoing agreement to indemnify
shall be subject to the provisions of Section 10 below, and the Indemnitor
shall have no obligation hereunder to defend, indemnify or hold harmless any
Indemnified Party from and against any Indemnified Expenses to the extent such
Indemnified Expenses result directly or indirectly from the gross negligence or
willful misconduct of such Indemnified Party. The Indemnitor acknowledges and
agrees that the provisions of this Section 2 are separate from and in addition
to the provisions contained in the Original Financing Letter and contained in
the Credit Agreement. Notwithstanding any provision of this Indemnity to the
contrary, tile scope of this Indemnity shall not include any consequential
damages suffered by an Indemnified Party except to the extent expressly
provided in clause (g) of the definition of "Environmental Expenses" above.
SECTION 3. CONDUCT OF LITIGATION.
If Indemnitor is required hereunder to defend any Indemnified Party in
any action or proceeding, Indemnitor shall retain legal counsel and the
Indemnified Parties shall have the reasonable right of approval with respect to
any legal counsel retained by Indemnitor and with respect to any strategies and
business decisions directing the course of litigation and settlement efforts.
The Indemnitor shall cause such legal counsel to acknowledge in writing to each
Indemnified Party that such legal counsel is representing each Indemnified Party
in connection with such action. If an Indemnified Party shall determine, in its
good faith judgment, that its interests and the interests of the Indemnitor or
any other Indemnified Party in any action or proceeding conflict so as to
require, consistent with applicable standards of professional responsibility,
the retention of separate counsel for such Indemnified Party, then such
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Indemnified Party may, with the Agent's prior written consent, which consent
shall not be unreasonably withheld, retain separate counsel and the Indemnitor
shall pay the costs, disbursements and reasonable fees of such separate
counsel. In all other cases, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, the Indemnitor shall not be required to engage
separate legal counsel for such Indemnified Parties. The Indemnitor may settle
any action or proceeding covered hereby only with the Indemnified Party's prior
written consent, which shall not be unreasonably withheld or delayed.
SECTION 4. INTEREST ON INDEMNIFICATION OBLIGATIONS.
All amounts payable to any Indemnified Party hereunder shall be paid
within ten days of written demand therefor, which demand shall be accompanied
by a statement setting forth in reasonable detail the nature and amount of each
item of Indemnified Expenses, and shall include interest thereon at the rate
applicable to the Note from the date on which such amounts were incurred to the
date paid.
SECTION 5. INDEMNITY GIVEN TO PROTECT THE AGENT AND LENDERS.
This Indemnity is given solely to protect the Agent, Lenders and the
other Indemnified Parties and not as additional security for, or as a means of
repayment of, the Obligations and is entirely independent of the Loans and the
Letters of Credit, and shall not be measured or affected by any amounts at any
time owing under the Loan Documents, the sufficiency or insufficiency of any
Collateral (including any Property) given to the Agent to secure payment and
performance of any Obligations, or the consideration given by the Agent or any
other Person to acquire any Property or any portion thereof.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
In order to induce the Agent and Lenders to enter into the Credit
Agreement and to make the extensions of Credit thereunder, the Indemnitor
hereby represents and warrants to the Agent and the Lenders that, "to its
knowledge," as such phrase is defined in Section 30 below, the following
statements are true and correct as of the Closing Date and as of each Funding
Date, except as expressly otherwise set forth on Schedule I attached hereto and
made a part hereof, as such Schedule may be supplemented in connection with the
acquisition of any New Property or any additional Pool A Property pursuant to
the Credit Agreement:
(i) the operations of the Indemnitor (including all
operations and conditions at or in the Properties, or any portion
thereof) comply in all material respects with all Environmental Laws;
(ii) the Indemnitor has obtained all Authorizations under
Environmental Laws necessary to its respective operations, and all
such Authorizations are in full force
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and effect, and the Indemnitor is in compliance with all material
terms and conditions of such Authorizations;
(iii) none of the Indemnitor, any predecessor of the
Indemnitor, nor any prior owner of any Property, has received (a) any
written notice or claim to the effect that it is or may be liable to
any Person as a result of or in connection with any Hazardous
Materials or (b) any letter or written request for information under
Section 104 of the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. Section 9604) or comparable state laws,
and none of the operations of the Indemnitor is the subject of any
notice, investigation or inquiry of any Governmental Authority
relating to or in connection with any Hazardous Materials at any
Property (or portion thereof) or at any other location;
(iv) none of the operations of the Indemnitor at or with
respect to any Property is subject to any judicial or administrative
proceeding alleging the violation of or material liability under any
Environmental Laws;
(v) none of the Indemnitor, any predecessor of the
Indemnitor, nor any prior owner of any Property, nor any Property or
any portion thereof is subject to any outstanding written order or
agreement with any Governmental Authority or private party relating to
any Environmental Claims;
(vi) neither the Indemnitor nor any predecessor of the
Indemnitor or prior owner of any Property has filed any notice under
any Environmental Law indicating past or present treatment or
Hazardous Release of Hazardous Materials at any Property (or portion
thereof), and none of the Indemnitor's operations at, or with respect
to any Property, involves the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R.
Parts 260-270 or any state equivalent;
(vii) no Hazardous Materials exist on, in, at, under or about
any Property or portion thereof in a manner or in an amount which
violates any Environmental Laws, or which requires cleanup or
corrective action of any kind under any Environmental Laws and the
Indemnitor has not filed any notice or report of a Hazardous Release
of any Hazardous Materials;
(viii) neither the Indemnitor nor any predecessor of the
Indemnitor or prior owner of any Property has disposed of any
Hazardous Materials in a manner that has a reasonable possibility of
giving rise to an Environmental Claim;
(ix) no underground storage tanks or surface impoundments
are on, in, at, under or about any Property or portion thereof;
(x) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Property or portion thereof and which remains
outstanding or of record on the Closing Date; and
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(xi) there is no Corrective Work required with respect to
any Property under any Environmental Law or that is necessary to
return such Property to a standard of environmental condition which
presents no significant risk to safety, health, or the environment.
If any representation or warranty contained in this Section 6 becomes untrue or
incorrect, such event shall not be an Event of Default if it could not,
individually or in the aggregate with other such events, have a Material
Adverse Effect (as such term is defined in the Credit Agreement) and the
Indemnitor immediately undertakes whatever remedial and corrective action may
be required to cause such representation or warranty to become true and
correct. The Indemnitor shall complete such remedial and corrective action
within 30 days after obtaining actual knowledge (as such phrase is defined in
Section 30 below) that such representation or warranty has become untrue or
incorrect or, if such action requires more than 30 days to complete, the
Indemnitor shall, prior to the end of such 30 day period, provide the Agent
with a written estimate of the time period needed to complete such remedial and
corrective action and shall proceed diligently and continuously to complete
such remedial and corrective action. Failure to complete such remedial and
corrective action within said 30 day period (or, if the written estimate
referred to in the immediately preceding sentence is given within said 30 day
period, failure to diligently and continuously complete such remedial and
corrective action) shall constitute an Event of Default.
SECTION 7. ENVIRONMENTAL DISCLOSURE AND INSPECTION.
The Indemnitor covenants and agrees that:
(a) The Indemnitor shall exercise all due diligence in
order to comply with all Environmental Laws and to cause such
compliance by (i) all Tenants under any Leases affecting any portion
of any Property and (ii) all other Persons on or occupying any portion
of any Property.
(b) At any time from and after the occurrence of any
event or transaction that the Agent in good faith believes could have
resulted in an Environmental Problem at any of the Properties or from
and after receipt of any reasonably credible allegation that an
Environmental Problem exists at any of the Properties or in the event
the Agent reasonably believes that the Indemnitor has breached any
representation, warranty, or covenant in Section 6 or this Section 7,
or that there has been a material violation of Environmental Laws at
any Property or by the Indemnitor at or about any Property, or after
the occurrence and during the continuance of any Event of Default, or
in connection with any refinancing of the Loans, the Agent may retain,
at the Indemnitor's expense, an independent professional consultant to
prepare any Phase 1, Phase II or other environmental assessment or
audit or any report relating to Hazardous Materials for the Agent and
to conduct its own investigation of the presence of Hazardous
Materials at any Property, and the Indemnitor agrees to use its best
efforts from time to time to obtain permission for the Agent's
professional consultant to conduct its own investigation of any
Property (or portion thereof) that shall have been previously owned,
leased, operated,
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or used for waste disposal by the Indemnitor. Additionally, at any
time the Agent may retain, at the Indemnitor's expense, an independent
professional consultant to review any Phase I, Phase II or other
environmental assessment or audit or any report relating to Hazardous
Materials prepared by or for the Indemnitor. The Indemnitor hereby
grants to the Agent and its agents, employees, consultants and
contractors the right from time to time when any of the circumstances
described in the first sentence of this subsection 7(b) exists, to
enter into or upon any Property to perform such tests on such Property
as are reasonably necessary to conduct such an investigation. Any such
investigation of any Property shall be conducted, unless otherwise
agreed to by the Indemnitor and the Agent, during normal business
hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at such Property or to
cause any material damage or loss to any property at such Property.
The Indemnitor and the Agent hereby acknowledge and agree that any
report of any investigation conducted at the request of the Agent
pursuant to this subsection 7(b) will be obtained and shall be used by
the Agent for the purposes of the Agent's internal credit decisions,
to monitor and police the Loans, and to protect the Agent's security
interests, if any, created by the Loan Documents. No such
environmental audit or assessment or report shall be given or the
contents thereof communicated to any Governmental Authority or any
other Person (other than any Indemnified Party and any other potential
lenders to Indemnitor and their participants and assigns, and each of
their respective officers, directors, employees, agents, attorneys and
representatives, each of whom shall agree not to give any such audit
or assessment or report, or communicate the contents thereof, to any
Governmental Authority or any Person other than the aforementioned
Person) without the prior written consent of the Indemnitor unless the
Agent concludes that delivery of such environmental audit or
assessment or report or disclosure of the contents thereof is required
by Applicable Laws or by bank regulatory authorities or in connection
with litigation or other proceedings or the Agent is otherwise
required to do so. Notwithstanding any provision of this or any other
Loan Document to the contrary, except in emergency situations, or
after the occurrence of an Event of Default, the Agent shall perform
or require subsurface or invasive testing only (i) if such testing has
been expressly required by a Governmental Authority or is required by
Environmental Laws, (ii) if the Agent believes that an
Environmental Problem may exist based on an investigation of a
Property conducted in a manner consistent with commercially acceptable
standards, and an environmental consultant has stated that a
subsurface or invasive investigation would be necessary to further
assess or investigate evidence of such Environmental Problem, or (iii)
as provided in the definition of "Property Information" in Section 1.1
of the Credit Agreement.
(c) The Indemnitor shall promptly advise the Agent in
writing and in reasonable detail with respect to the operations of the
Indemnitor or any Property, of (i) any Hazardous Release of any
Hazardous Materials required to be reported to any Governmental
Authority under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims or
with respect to any Hazardous Release of Hazardous Materials required
to be reported to any Governmental Authority, (iii) any material
Corrective Work undertaken by the Indemnitor or any other
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Person in response to (x) the presence, storage, use, disposal,
transportation or Hazardous Release of any Hazardous Materials at, in,
on, under, from or about any Property, or (y) any Environmental Claim,
(iv) the Indemnitor's discovery of any occurrence or condition on any
real property adjoining or in the vicinity of any Property that could
cause such Property or any part thereof to be entered by Hazardous
Materials or to be subject to any restrictions on the ownership,
occupancy, transferability or use thereof or subject to any Lien or
claim under any Environmental Laws, (v) any request for information
from any Governmental Authority that suggests such Governmental
Authority is investigating whether the Indemnitor may be potentially
responsible for a Hazardous Release of Hazardous Materials and (vi)
any material Environmental Problem of which the Indemnitor becomes
aware.
(d) The Indemnitor shall, at its own expense, provide
copies of such documents or information as the Agent may reasonably
request in relation to any matters disclosed pursuant to this Section
7.
SECTION 8. REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
The Indemnitor shall promptly take any and all necessary Corrective
Work in connection with the presence, storage, use, disposal, transportation or
Hazardous Release of any Hazardous Materials at, in, on, under, from or about
any Property in order to comply with all applicable Environmental Laws and
Governmental Authorizations or that is necessary to return such Property to a
standard of environmental condition which presents no significant risk to
safety, health, or the environment. The failure of the Indemnitor to comply
with the immediately preceding sentence shall not be an Event of Default if the
matter for which the Indemnitor has failed to perform Corrective Work could
not, individually or in the aggregate with other such matters, have a Material
Adverse Effect and the Indemnitor immediately undertakes and completes such
Corrective Work within 30 days after obtaining actual knowledge (as such phrase
is defined in Section 30 below) of the necessity therefor or, if such
Corrective Work requires more than 30 days to complete, the Indemnitor, prior
to the end of such 30 day period, provides the Agent with a written estimate of
the time period needed to complete such Corrective Work and proceeds diligently
and continuously to complete such Corrective Work. In the event the Indemnitor
undertakes any Corrective Work with respect to any Hazardous Materials on,
under or about any Property, the Indemnitor shall conduct and complete such
Corrective Work in compliance with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all Governmental
Authorities except when, and only to the extent that, the Indemnitor's
liability for such presence, storage, use, disposal, transportation or
Hazardous Release of any Hazardous Materials is being contested in good faith
by the Indemnitor.
SECTION 9. REMEDIES.
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Without limiting any of the obligations of the Indemnitor or any of
the rights of the Agent hereunder, if any Environmental Problem shall occur,
the Agent shall have the right (but not the obligation), in the Agent's
discretion:
(a) by notice to the Indemnitor, to direct and require
the Indemnitor to take appropriate action to correct, ameliorate or
remediate the Environmental Problem, in which event the Indemnitor
shall promptly take such action at the sole cost and expense of the
Indemnitor; provided, however, that without limiting the generality of
the foregoing, the Indemnitor shall not be required hereunder to
perform any Remediation other than a Cost-Effective Remediation;
and/or
(b) if the Indemnitor fails to respond timely to the
direction described in subsection 9(a) or if an Event of Default has
occurred and is continuing, to itself take appropriate action (in
compliance with all applicable Environmental Laws and applicable
directions and orders of Governmental Authorities) to correct,
ameliorate or remediate the Environmental Problem, in which event the
Indemnitor shall cooperate fully with the Agent and shall indemnify
the Agent for all costs and expenses incurred in taking such action in
accordance with the foregoing provisions of this Indemnity; provided,
however, that notwithstanding any provision of this Agreement or any
other Loan Document to the contrary, the obligations of the
Indemnitor to indemnify or reimburse an Indemnified Party for
Remediation Costs (and without limiting the obligations of the
Indemnitor for categories of costs and expenses other than Remediation
Costs) shall extend only to Remediation Costs for a Cost-Effective
Remediation; and/or
(c) to exercise any other rights or remedies that the
Agent may have under the Loan Documents, at law, in equity or
otherwise.
The Indemnitor hereby grants the Agent and its employees and agents an
irrevocable and nonexclusive license, subject to the rights of Tenants pursuant
to their respective Leases, at any time during the period that the Indemnitor
or a Subsidiary or affiliate thereof owns or is otherwise in possession or
control of the respective Properties, to enter the Properties to investigate,
inspect, monitor, study, sample and test the Properties and, subject to
subsections 7(b) and 9(b) above, to correct, ameliorate or remediate any
Environmental Problem (but the Agent shall have no obligation to do so). The
Agent shall have all of the rights, remedies and options described herein
whether or not action to correct, ameliorate or remediate an Environmental
Problem shall have been ordered by any court, governmental authority, or other
Person.
SECTION 10. POST-FORECLOSURE MATTERS.
If any Property, or any portion thereof, is conveyed by foreclosure of
any Mortgage, exercise of power of sale under any Mortgage, deed in lieu of
foreclosure, in connection with a plan of reorganization filed under Chapter 11
of the Bankruptcy Code, or by reason of any other remedy set forth in the Loan
Documents, and the Indemnitor or the applicable Subsidiary Owner is no longer
in possession of such Property, then the indemnity provided for under this
Indemnity shall not apply to any Environmental Problem in respect of such
Property or portion
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thereof (a) that is based on an event that occurs solely after the date of such
conveyance (the "CONVEYANCE DATE"), and (b) that is in no way resulting from
any state of facts or condition that existed on or before the Conveyance Date.
Notwithstanding the foregoing, the indemnity provided hereunder shall
nonetheless continue to apply (i) to any Environmental Problem (A) in respect
of any portion of any Property not so conveyed, or (B) that results, in whole
or in part, from the acts or omissions of the Indemnitor, or the acts or
omissions prior to the Conveyance Date by any other Person; and (ii) to
Indemnified Expenses incurred after the Conveyance Date that arise from any
Environmental Problem in existence on or before the Conveyance Date. For
purposes of this Section 10, a condition in existence, and resulting from the
acts or omissions of the Indemnitor, on or before the Conveyance Date shall be
deemed to be an Environmental Problem on or before such date even if the
condition becomes an Environmental Problem as a result of a change in
Environmental Laws that becomes effective after such date.
SECTION 11. INSURANCE COVERAGE.
The Indemnitor shall, at the Agent's request from time to time,
promptly provide the Agent with copies of any general liability, environmental
impairment, and other insurance policies held by the Indemnitor that may cover
any obligations hereunder. Without limiting in any manner the obligations of
the Indemnitor hereunder or the Agent's remedies hereunder, the Indemnitor
shall, at the Agent's request, diligently pursue any claims under such policies
for sums payable to the Agent hereunder and, at the Agent's request, if
permitted under such policies, assign any such claims to the Agent.
SECTION 12. INDEMNITOR'S RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
In connection with any Environmental Problem with respect to which any
Indemnified Party has incurred Indemnified Expenses which have not been paid or
otherwise discharged by the Indemnitor, the Indemnitor shall withhold exercise
of (a) any claim, right or remedy, direct or indirect, that the Indemnitor now
has or may hereafter have against any of its Subsidiaries or any such
Subsidiary's assets in connection with this Indemnity or the performance by the
Indemnitor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute, under common law or
otherwise and including (i) any right of subrogation, reimbursement or
indemnification that the Indemnitor now has or may hereafter have against such
Subsidiary, (ii) any right to enforce, or to participate in, any claim, right
or remedy that the Agent now has or may hereafter have against such Subsidiary,
and (iii) any benefit of, and any right to participate in, any collateral or
security now or hereafter held by the Agent, and (b) any right of contribution
that the Indemnitor may have against any other Person (including such
Subsidiary). The Indemnitor further agrees that, to the extent the waiver of
its rights of subrogation, reimbursement, indemnification and contribution as
set forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement,
indemnification the Indemnitor may have against any of its Subsidiaries or
against any collateral or security, and any rights of contribution the
Indemnitor may have against any such other Person, shall be junior and
subordinate to any rights the Agent may have against such Subsidiary, to all
right, title and interest the Agent may have in any such
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collateral or security, and to any right the Agent may have against such other
Person. The Agent may use, sell or dispose of any item of collateral or
security as it sees fit without regard to any subrogation rights the Indemnitor
may have, and upon any such disposition or sale, any rights of subrogation the
Indemnitor may have shall terminate. If any amount shall be paid to the
Indemnitor on account of any such subrogation, reimbursement or indemnification
rights at any time, such amount shall be held in trust for the Agent and shall
forthwith be paid over to the Agent to be credited and applied against the
obligations of the Indemnitor hereunder, whether matured or unmatured, in such
order as the Agent, in its discretion, may determine.
SECTION 13. SET OFF.
In addition to any other rights that the Agent may have at law or in
equity, if any amount shall at any time be due and owing by the Indemnitor to
the Agent under this Indemnity, the Agent is authorized at any time or from
time to time, without notice (any such notice being hereby expressly waived),
to set off and to appropriate and to apply any and all indebtedness of the
Agent owing to the Indemnitor and any other property of the Indemnitor held by
the Agent to or for the credit or the account of the Indemnitor against and on
account of the obligations and liabilities of the Indemnitor to the Agent under
this Indemnity.
SECTION 14. FURTHER ASSURANCES.
The Indemnitor without expense or cost to the Agent, shall from time
to time hereafter execute, acknowledge, file, record, do and deliver (or cause
to be cone and delivered) all and any further acts, deeds, conveyances,
mortgages, deeds of trust, deeds to secure debt, security agreements, pledges,
assignments, financing statements and continuations thereof, notices of
assignment, transfers, certificates, assurances and other instruments as the
Agent may from time to time reasonably require in order to carry out more
effectively the purposes of this Indemnity or any other Loan Document and to
subject any Property or other items of Collateral, intended now or hereafter to
be covered, to the Liens and security interests created by the Security
Documents, to perfect and maintain such Liens and security interests, and to
assure, convey, assign, transfer and confirm unto the Agent the property and
rights hereby conveyed and assigned or intended now or hereafter to be conveyed
or assigned or which the Indemnitor may be or may hereafter become bound to
convey or to assign to the Agent or for carrying out the intention of or
facilitating the performance of the terms of this Indemnity or any other Loan
Document or for filing, registering or recording this Indemnity or any other
Loan Document. At the request of the Agent, and at its own expense, the
Indemnitor shall execute and deliver, and hereby authorizes the Agent to
execute and file in the name of the Indemnitor, to the extent the Agent may
lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments to evidence more effectively the Lien and
security interest hereof upon the Collateral.
SECTION 15. NOTICES.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or courier service and
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shall be deemed to have been given when delivered in person or by courier
service upon receipt of telefacsimile or telex. For the purposes hereof, (a)
the address of the Indemnitor and each Subsidiary Owner shall be as set forth
under its respective name on the signature pages hereof or, as to any such
party, such other address as shall be designated in a written notice delivered
by such party to the Agent, and (b) the address of the Agent shall be as set
forth under the Agent's name on the signature pages to the Credit Agreement or
such other address as shall be designated by the Agent in a written notice
delivered by Agent to the Indemnitor.
SECTION 16. NO MORTGAGEE-IN-POSSESSION.
Nothing herein contained, no entry by the Agent upon any Property (or
any portion thereof) under the terms of this Indemnity and no action caused by
the Agent with respect to the obligations of the Indemnitor hereunder shall
make the Agent a "mortgagee-in-possession" except insofar as the Agent elects
by giving written notice thereof to the Indemnitor.
SECTION 17. NON-WAIVER BY THE AGENT.
The rights, powers and remedies of the Agent and the other Indemnified
Parties under this Indemnity shall be cumulative and not exclusive of any other
right, power or remedy which the Agent and the other Indemnified Parties may
have against the Indemnitor pursuant to this Indemnity or the other Loan
Documents executed by or with respect to the Indemnitor, or existing at law or
in equity or otherwise. Such rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as such Indemnified
Party may determine in such Indemnified Party's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as
a waiver thereof, but any such remedy, right or power may be exercised from
time to time and as often as may be deemed expedient. A waiver of any Event of
Default or Potential Event of Default with respect to the Indemnitor shall not
be construed to be a waiver of any subsequent Event of Default or Potential
Event of Default by the Indemnitor or to impair any remedy, right or power
consequent thereon. The exercise by the Agent of any of its rights pursuant to
this Indemnity, including the performance by the Agent of any or all of the
obligations of the Indemnitor hereunder in accordance with subsection 9(b),
shall not be considered a waiver by the Agent of any Event of Default or
Potential Event of Default.
SECTION 18. AGENT'S DISCRETION.
Whenever pursuant to this Indemnity, the Agent exercises any right
given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to the Agent, the decision of the Agent to approve or disapprove
or to decide whether arrangements or terms are satisfactory or not satisfactory
shall (except as is otherwise specifically herein provided) be in the sole
discretion of the Agent. In the event that a claim or adjudication is made that
the Agent has acted unreasonably or unreasonably delayed acting in any case
where by law or under this Indemnity or the Loan Documents, it has an
obligation to act reasonably or promptly, the Agent
14
<PAGE> 381
shall not be liable for any monetary damages, and the Indemnitor's remedies
shall be limited to injunctive relief or declaratory judgment.
SECTION 19. WAIVER OF NOTICE.
Neither the Indemnitor nor any Subsidiary Owner shall be entitled to
any notices hereunder of any nature whatsoever from the Agent except with
respect to matters for which this Indemnity specifically and expressly provides
for the giving of notice by the Agent to the Indemnitor or the applicable
Subsidiary Owner, and the Indemnitor and each Subsidiary Owner hereby expressly
waives the right to receive any notice from the Agent with respect to any
matter for which this Indemnity does not specifically and expressly provide for
the giving of notice by the Agent to the Indemnitor or the applicable
Subsidiary Owner.
SECTION 20. AMENDMENTS AND WAIVERS.
No amendment, modification, termination, discharge or waiver of any
provision of this Indemnity, or consent to any departure by the Indemnitor or
any Subsidiary Owner therefrom, shall in any event be effective without the
written concurrence of the Agent. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given.
No notice to or demand on the Indemnitor or any Subsidiary Owner in any case
shall entitle the Indemnitor or any Subsidiary Owner to any other or further
notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection shall be binding upon the Indemnitor and each Subsidiary Owner.
SECTION 21. HEADINGS.
Section and subsection headings in this Indemnity are included herein
for convenience of reference only and shall not constitute a part of this
Indemnity for any other purpose or be given any substantive effect.
SECTION 22. SINGULAR AND PLURAL.
Any of the terms defined in this Indemnity may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
SECTION 23. REFERENCES TO ARTICLES, SECTIONS AND EXHIBITS.
All references appearing in this Indemnity to Articles, Sections,
subsections, clauses, Recitals, Exhibits, Schedules or Attachments are
references to the Articles, Sections, subsections, clauses and Recitals thereof
and to the Exhibits, Schedules or Attachments annexed to such Indemnity, as the
case may be, unless expressly otherwise designated in such Indemnity as the
case may be.
SECTION 24. CAPTIONS.
15
<PAGE> 382
All captions to any Article, Section, subsection, clause, Recital,
Exhibit, Schedule or Attachment in this Indemnity are used for convenience and
reference only and in no way define, limit or describe the scope or intent of,
or in any way affect, such Indemnity.
SECTION 25. DRAFTER.
No inference against or in favor of any party to this Indemnity shall
be drawn from the fact that such party has drafted any portion of this
Indemnity.
SECTION 26. REFERENCES TO APPLICABLE LAW AND CONTRACTS.
Except as otherwise specified in this Indemnity, all references in
this Indemnity to any Applicable Law or contracts specifically defined or
referred to herein, shall be deemed references to such Applicable Law or
contracts as may be amended, restated, supplemented, consolidated or otherwise
modified from time to time, or, in the case of any such contract, as the terms
thereof may be waived or modified, but only in the case of each such amendment,
waiver or modification of a contract, to the extent permitted by, and effected
in accordance with, the terms thereof and hereof and only to the extent such
amendment, waiver or modification of a contract is not prohibited by any
provision of this Indemnity.
SECTION 27. HEREIN.
The words "herein", "hereinabove", "hereinbelow", "hereof",
"hereunder", and words of similar import, when used in this Indemnity, shall
refer to such Indemnity as a whole.
SECTION 28. GENDER.
Whenever the context so requires, the neuter gender includes the
masculine or feminine and the singular number includes the plural, and vice
versa.
SECTION 29. INCLUDING WITHOUT LIMITATION.
The words "includes", "including" and similar terms used in this
Indemnity shall be construed as it followed by the words "without limitation".
SECTION 30. KNOWLEDGE.
As used in this Indemnity, the phrases "actual knowledge", "to the
Indemnitor's actual knowledge", "to the knowledge of the Indemnitor" and any
variations thereof shall mean, as of any date of determination, the actual (and
not constructive) knowledge or awareness, as of such date, of the Persons who
occupy the offices of Chairman of the Board, Vice Chairman, Chief Executive
Officer, President, General Counsel, Chief Operating Officer, Vice
President/Director of Marketing, Secretary, Treasurer, Vice President and Chief
Financial Officer and each regional manager of the Indemnitor or any Subsidiary
Owner. The Indemnitor represents and warrants that the foregoing Persons have
executive and administrative
16
<PAGE> 383
responsibility for the Indemnitor and its assets and in the performance of their
duties in the ordinary course of business, would customarily have knowledge of
the matters referred to herein.
SECTION 31. COSTS AND EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, the Indemnitor agrees to pay promptly (i) all the actual and
reasonable costs and expenses of preparation of the Indemnity; (ii) all the
costs of furnishing all opinions of counsel for the Indemnitor (including any
opinions requested by the Agent) as to any legal matters arising hereunder and
of the Indemnitor's performances of and compliance with all agreements and
conditions on its part to be performed or complied with under this Indemnity
including with respect to confirming compliance with environmental and
insurance requirements; (iii) the reasonable fees, expenses and disbursements
of counsel to the Agent in connection with the negotiation, preparation,
execution and administration of this Indemnity and any consents, amendments,
waivers or other modifications hereto or thereto and any other documents or
matters requested by the Indemnitor; (iv) all other actual and reasonable costs
and expenses incurred by the Agent in connection with the negotiation,
preparation and execution of this Indemnity and the transactions contemplated
hereby and thereby; and (v) after the occurrence of an Event of Default, all
costs and expenses, including reasonable attorneys' fees and costs of
settlement, incurred by the Agent in enforcing any Obligations of or in
collecting any payments due from the Indemnitor hereunder or under the other
Loan Documents by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Indemnity in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.
SECTION 32. ENTIRE AGREEMENT.
This Indemnity, taken together with all of the other Loan Documents
and all certificates and other documents delivered to the Agent hereunder and
thereunder, embody the entire agreement and supersede all prior agreements,
written and oral, relating to the subject matter hereof; provided, however,
that notwithstanding anything in this Indemnity or the other Loan Documents to
the contrary, the indemnity and contribution agreements of the Indemnitor set
forth in the Original Financing Letter shall remain in full force and effect in
accordance with their respective terms.
SECTION 33. SUCCESSORS AND ASSIGNS; BENEFIT.
This Indemnity shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Agent and the other Indemnified
Parties. Neither the Indemnitor's rights or obligations hereunder nor any
interest therein may be assigned or delegated by the Indemnitor.
17
<PAGE> 384
SECTION 34. COUNTERPARTS; EFFECTIVENESS.
This Indemnity and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Indemnity shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by the Indemnitor
and the Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
SECTION 35. SEVERABILITY.
In case any provision in or obligation under this Indemnity shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 36. APPLICABLE LAW.
THIS INDEMNITY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 37. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE INDEMNITOR OR ANY
SUBSIDIARY OWNER ARISING OUT OF OR RELATING TO THIS INDEMNITY, OR ANY
OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING
AND DELIVERING THIS INDEMNITY, EACH OF THE INDEMNITOR AND EACH SUBSIDIARY
OWNER, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
18
<PAGE> 385
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE INDEMNITOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 15;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE INDEMNITOR IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE AGENT AND THE OTHER INDEMNIFIED
PARTIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE INDEMNITOR AND
EACH SUBSIDIARY OWNER IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 37
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
SECTION 38. WAIVER OF TRIAL BY JURY.
EACH PARTY HERETO, HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
INDEMNITY. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each party hereto, (i) acknowledges that this waiver is a material inducement
to enter into a business relationship, that each has already relied on this
waiver in entering into this Indemnity or accepting the benefits thereof, as
the case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 38 AND EXECUTED BY EACH PARTY HERETO), AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS INDEMNITY. In the event of litigation, this Indemnity may
be filed as a written consent to a trial by the court.
[Remainder of page intentionally left blank.]
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<PAGE> 386
IN WITNESS WHEREOF, the Indemnitor and the Subsidiary Owners have
caused this Indemnity to be duly executed and delivered by their respective
duly authorized representatives as of the date first above written.
WYNDHAM HOTEL CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
WYNDHAM MANAGEMENT CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Wyndham Management Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
S-1
<PAGE> 387
GHALP CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
GHALP Corporation
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
ROSE HALL ASSOCIATES LIMITED
PARTNERSHIP,
a Texas limited partnership
By: WHC CARIBBEAN LIMITED,
a Jamaican corporation
By: /s/ MICHAEL R. SILVERMAN
-------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Rose Hall Associates Limited
Partnership
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
S-2
<PAGE> 388
WHC CARIBBEAN LIMITED,
a Jamaican corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
WHC Caribbean Limited
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
XERXES LIMITED,
a Jamaican corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Xerxes Limited
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
S-3
<PAGE> 389
WH INTEREST, INC.,
a Texas corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
WH Interest, Inc.
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
WHC VININGS CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
WHC Vinings Corporation
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
S-4
<PAGE> 390
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated as of
May 29, 1996 and entered into by and between WYNDHAM HOTEL CORPORATION, a
Delaware corporation ("Pledgor"), and BANKERS TRUST COMPANY, as agent for and
representative of (in such capacity herein called "Secured Party") the
financial institutions ("Lenders") party to the Credit Agreement (as
hereinafter defined).
RECITALS
A. Secured Party and Lenders have entered into a Senior Secured
Revolving Credit Agreement dated as of May 29, 1996 (said Credit Agreement, as
it may hereafter be amended, restated, supplemented or otherwise modified from
time to time, being the "CREDIT AGREEMENT", the terms defined therein and not
otherwise defined herein being used herein as therein defined) with Pledgor
pursuant to which Lenders have made certain commitments, subject to the terms
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
B. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Pledgor shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. CERTAIN DEFINITIONS. The following terms used in this
Agreement shall have the following meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all
amounts on deposit from time to time in the Collateral Account, (iii)
all interest, cash, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Collateral, and (iv) to the
extent not covered by clauses (i) through (iii) above, all proceeds of
any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account
established and maintained by Secured Party pursuant to Section 2(a).
"SECURED OBLIGATIONS" means all Obligations and all extensions
or renewals thereof, whether for principal, interest (including
without limitation interest that, but for the filing of a petition in
bankruptcy with respect to Pledgor, would accrue on such obligations,
whether or not a claim is allowed or allowable against Pledgor for
such
<PAGE> 391
interest in the related bankruptcy proceeding), reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Secured Party or any Lender as a
preference, fraudulent transfer or otherwise, and all obligations of
every nature of Pledgor now or hereafter existing under this
Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
(a) Secured Party is hereby authorized to establish and
maintain at its office at One Bankers Trust Plaza, New York, New York as a
blocked account in the name of Secured Party and under the sole dominion and
control of Secured Party, a restricted deposit account designated as "Wyndham
Collateral Account".
(b) The Collateral Account shall be operated in
accordance with the terms of this Agreement.
(c) All amounts at any time held in the Collateral
Account shall be beneficially owned by Pledgor but shall be held in the name of
Secured Party hereunder, for the benefit of Lenders, as collateral security for
the Secured Obligations upon the terms and conditions set forth herein. Pledgor
shall have no right to withdraw, transfer or, except as expressly set forth
herein, otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary
notwithstanding, the Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or governmental authority,
as may now or hereafter be in effect.
SECTION 3. DEPOSITS OF CASH COLLATERAL.
(a) All deposits of funds in the Collateral Account shall
be made by wire transfer (or, if applicable, by intra-bank transfer from
another account of Pledgor) of immediately available funds, in each case
addressed as follows:
Account No.:
ABA No.:
Reference:
Attention:
Pledgor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
2
<PAGE> 392
(b) If an Event of Default has occurred and is continuing
and, in accordance with Section 8 of the Credit Agreement, Pledgor is required
to pay to Secured Party an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to
the maximum amount that may at any time be drawn under all Letters of Credit
then outstanding under the Credit Agreement, Pledgor shall deliver funds in
such an amount for deposit in the Collateral Account in accordance with Section
3(a). If for any reason the aggregate amount delivered by Pledgor for deposit
in the Collateral Account as aforesaid is less than the Aggregate Available
Amount, the aggregate amount so delivered by Pledgor shall be apportioned among
all outstanding Letters of Credit for purposes of this Section 3(b) in
accordance with the ratio of the maximum amount available for drawing under
each such Letter of Credit (as to such Letter of Credit, the "MAXIMUM AVAILABLE
AMOUNT") to the Aggregate Available Amount. Upon any drawing under any
outstanding Letter of Credit in respect of which Pledgor has deposited in the
Collateral Account any amounts described above, Secured Party shall apply such
amounts to reimburse the Issuing Lender for the amount of such drawing. In the
event that Secured Party elects, at its sole discretion, to accept a cure of
all existing Events of Default, all amounts then remaining in the Collateral
Account shall be repaid to Pledgor. During the continuance of any Event of
Default, in the event of cancellation or expiration of any Letter of Credit in
respect of which Pledgor has deposited in the Collateral Account any amounts
described above, or in the event of any reduction in the Maximum Available
Amount under such Letter of Credit, Secured Party shall apply the amount then
on deposit in the Collateral Account in respect of such Letter of Credit (less,
in the case of such a reduction, the Maximum Available Amount under such Letter
of Credit immediately after such reduction) as provided in subsection [2.4B] of
the Credit Agreement.
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS. Pledgor hereby
pledges and assigns to Secured Party, and hereby grants to Secured Party a
security interest in, all of Pledgor's right, title and interest in and to the
Collateral as collateral security for the prompt payment or performance in full
when due in accordance with the provisions of the Credit Agreement, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. Section 362(a) or any successor provision thereto), of all Secured
Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT;
INTEREST ON AMOUNTS IN THE COLLATERAL ACCOUNT.
(a) Cash held by Secured Party in the Collateral Account
shall not be invested by Secured Party but instead shall be maintained as a
cash deposit in the Collateral Account pending application thereof as
elsewhere provided in this Agreement.
(b) To the extent permitted under Regulation Q of the
Board of Governors of the Federal Reserve System, any cash held in the
Collateral Account shall bear interest at the standard rate paid by Secured
Party to its customers for deposits of like amounts and terms.
3
<PAGE> 393
(c) Subject to Secured Party's rights under Section 12,
any interest earned on deposits of cash in the Collateral Account in accordance
with Section 5(b) shall be deposited directly in, and held in the Collateral
Account and paid out as provided in this Agreement with respect to the other
funds deposited therein.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time
of transfer thereof to Secured Party will be) the legal and beneficial owner of
the Collateral from time to time transferred by Pledgor to Secured Party, free
and clear of any Lien except for the security interest created by this
Agreement.
(b) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the grant by Pledgor of
the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the perfection of or the
exercise by Secured Party of its rights and remedies hereunder (except as may
have been taken by or at the direction of Pledgor).
(c) Perfection. The pledge and assignment of the
Collateral pursuant to this Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Secured Obligations.
(d) Other Information. All information heretofore, herein
or hereafter supplied to Secured Party by or on behalf of Pledgor with respect
to the Collateral is accurate and complete in all material respects as of the
date supplied.
SECTION 7. FURTHER ASSURANCES. Pledgor agrees that from time to time,
at the expense of Pledgor, Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary, or that Secured Party may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, Pledgor will: (a) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as Secured Party may reasonably request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby and (b) at Secured Party's request, appear in and defend any
action or proceeding that may adversely affect Pledgor's beneficial title to or
Secured Party's security interest in all or any part of the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Pledgor agrees that it will not
(a) sell, assign (by operation of law or otherwise) or otherwise dispose of any
of the Collateral or (b) create or suffer to exist any Lien upon or with
respect to any of the Collateral, except for the security interest under this
Agreement or the other Loan Documents.
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<PAGE> 394
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may reasonably deem
necessary to accomplish the purposes of this Agreement, including without
limitation to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Collateral without the
signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
agreement contained herein as provided herein, Secured Party may during the
continuance of an Event of Default, or if no Event of Default then exists and
such failure is reasonably related to maintaining the value of the Collateral,
upon Grantor's failure to do so after 10 days notice from Secured Party
requiring such action, itself perform, or cause performance of, such agreement,
and the reasonable expenses of Secured Party incurred in connection therewith
shall be payable by Pledgor under Section 13.
SECTION 11. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for interest earned on and moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral, it being understood that
Secured Party shall have no responsibility for (a) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Collateral) to preserve rights against any
parties with respect to any Collateral or (b) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property of like kind and Secured
Party's actions do not constitute gross negligence or willful misconduct.
SECTION 12. REMEDIES. Subject to the provisions of Section 3(b), upon
the occurrence and during the continuance of an Event of Default, Secured Party
may exercise in respect of the Collateral, in addition to all other rights and
remedies otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral).
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
primarily from Secured Party's or such Lender's gross negligence or willful
misconduct as financial determined by a court of competent jurisdiction.
5
<PAGE> 395
(b) Pledgor shall pay to Secured Party upon demand the
amount of any and all reasonable costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the amendment or modification of, or any
waiver or consent under, this Agreement, (ii) the custody, preservation, use or
operation of, release of or addition to, the perfection of any security
interest in, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure by Pledgor to perform or observe
any of the provisions hereof.
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), but subject to the provisions of subsection 9.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans
held by it to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to Lenders herein or
otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to Pledgor
without the necessity of further action or documentation. Upon any such
termination Secured Party shall, at Pledgor's expense, execute and deliver to
Pledgor such documents as Pledgor shall reasonably request to evidence such
termination and Pledgor shall be entitled to close the Collateral Account and
to the return, upon its request and at its expense, of such of the Collateral
as shall not have been otherwise applied pursuant to the terms hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, consents or approvals,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution
of Collateral), solely in accordance with this Agreement and the Credit
Agreement and Pledgor shall have no obligation to independently confirm the
authority of Secured Party to act hereunder on behalf of all of the Lenders.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as
6
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Agent under subsection 9.5 of the Credit Agreement by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Secured Party
under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums
held by Secured Party hereunder (which shall be deposited in a new Collateral
Account established and maintained by such successor Secured Party), together
with all records and other documents necessary or appropriate in connection
with the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Agent's
resignation or removal hereunder as Secured Party, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure
by Pledgor herefrom, shall in any event be effective unless the same shall be
in writing and signed by Secured Party and, in the case of any such amendment
or modification, by Pledgor. Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given.
SECTION 17. NOTICES. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or, as to either party, such
other address as shall be designated by such party in a written notice
delivered to the other party hereto.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
SECTION 19. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
7
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SECTION 20. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Pledgor hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Pledgor at its address provided in Section 17, such service being
hereby acknowledged by Pledgor to be sufficient for personal jurisdiction in
any action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Secured Party to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured Party each
acknowledge that this waiver is a material inducement for Pledgor and Secured
Party to enter into a business relationship, that Pledgor and Secured Party
have already relied on this waiver in entering into this Agreement and that
each will continue to rely on this waiver in their related future dealings.
Pledgor and
8
<PAGE> 398
Secured Party further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
23 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signature pages are physically
attached to the same document.
[Remainder of page intentionally left blank]
9
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IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
WYNDHAM HOTEL CORPORATION,
a Delaware corporation
By: /s/ MICHAEL R. SILVERMAN
-----------------------------------
Name: MICHAEL R. SILVERMAN
Title: Authorized Signatory
Notice Address:
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Michael R. Silverman
Fax: 214/863-1262
BANKERS TRUST COMPANY, as
Secured Party
By: /s/ GARRETT W. THELANDER
-----------------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
280 Park Avenue
New York, New York 10017
Attention: Garrett Thelander
Fax: 212/454-3821
S-1
<PAGE> 1
EXHIBIT 10.3
TO: CONFEDERATION LIFE INSURANCE COMPANY
AND TO: PEAT MARWICK THORNE INC.
as receiver and manager of assets of
Third Generation Realty Limited,
Ardwold Realty Investments Limited
and 980879 Ontario Inc.,
comprising Bristol Place Hotel
BRISTOL PLACE HOTEL
AGREEMENT OF PURCHASE AND SALE
1. OFFER
WHC Development Corporation (the "Purchaser"), a Delaware corporation, hereby
offers to purchase, which offer shall be irrevocable and open to acceptance by
the Vendors only until 5:00 p.m. on June 21, 1996:
(a) from Confederation Life Insurance Company ("Confederation Life"),
Confederation Life's freehold interest (the "Freehold Interest") in the
land and premises described in Schedule "A" hereto (the "Real Property")
for the purchase price (subject to the last paragraph of paragraph 2) of
$2,500,000 Canadian dollars; and
(b) from Peat Marwick Thorne Inc. (the "Receiver"), in its capacity as
receiver and manager of the assets of Third Generation Realty Limited,
Ardwold Realty Investments Limited and 980879 Ontario Inc.
(collectively, the "Debtors") comprising the Bristol Place Hotel (the
"Hotel"):
(i) the Debtors' leasehold interest in the Real Property under or
pursuant to the lease dated December 1, 1971 granted by
Confederation Life to Third Generation Realty Limited, as the
same may have been amended from time to time (as so amended, the
"Lease"), including, without limitation, the Debtors' interest
in the hotel building and other fixed improvements situate on
the Real Property or forming a part thereof;
(ii) all furnishings, fixtures and equipment of the Debtors (the
"Equipment") which at the Time of Closing are located on the
Real Property;
(iii) all inventory of the Debtors (the "Inventory") located on the
Real Property at the Time of Closing (including without
limitation all alcoholic beverages to the extent permitted by
law at the Time of Closing);
(iv) all the Debtors' interests in and to the agreements listed in
Schedule "B" hereto (the "Agreements");
<PAGE> 2
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(v) the Debtors' interests, if any, in the name "Bristol Place
Hotel", the Hotel's logo and all other intellectual property
used in connection with the ownership and operation of Hotel;
(vi) $22,000 of cash situated at the Real Property at the Time of
Closing, but excluding all other cash situated at the Real
Property at or before the Time of Closing received by Vendors;
and
(vii) all other assets of the Debtors (excluding all assets excluded
by subparagraphs (i) to (vi) hereof and excluding all accounts
receivable) as at the Time of Closing used in connection with
the Hotel;
(hereinafter referred to collectively as the "Hotel Assets"), for the
purchase price (subject to the last paragraph of paragraph 2) of
$20,500,000 Canadian dollars pursuant to and in accordance with the
provisions of this agreement.
For the purposes of this agreement, the Freehold Interest and the Hotel Assets
are hereinafter collectively referred to as the "Purchased Assets". The Vendors
acknowledge that the Purchaser's obligation to buy hereunder is for all of the
Purchased Assets as a whole and under no circumstances shall this offer be
interpreted to be an offer to purchase certain Purchased Assets to the
exclusion of other Purchased Assets.
2. PURCHASE PRICE
Subject to the last paragraph of this paragraph 2, the Purchaser shall pay the
total purchase price for the Purchased Assets in the amount of $23,000,000
Canadian dollars (the "Purchase Price"), subject to the adjustments referred to
in paragraph 21, as follows:
(a) The Purchaser shall deliver to Colliers Macaulay Nicolls (Ontario) Inc.
(the "Agent") as agent of Confederation Life and the Receiver
(collectively, the "Vendors") in accordance with paragraph 2(f) below;
<PAGE> 3
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(i) a deposit in the amount of $30,000 Canadian dollars in respect
of the Freehold Interest; and
(ii) a deposit in the amount of $270,000 Canadian dollars in
respect of the Hotel Assets,
in each case to be held by the Agent in accordance with the provisions
of this agreement.
<PAGE> 4
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(b) Within three (3) business days following the Due Diligence Date (as
hereinafter defined), the Purchaser shall deliver to the Agent the
following additional deposits to be held in accordance with the terms of
this agreement:
(i) a deposit in the amount of $120,000 Canadian dollars in respect
to the Freehold Interest; and
(ii) a deposit in the amount of $1,080,000 Canadian dollars in
respect to the Hotel Assets,
in each case to be held by the Agent in accordance with the provisions
of this agreement.
(c) The Purchaser shall pay to the Vendors (or as they may direct) by
certified cheques or bank drafts at the Time of Closing the balance of
the Purchase Price, subject to the adjustments referred to in paragraph
21.
(d) The Purchaser and the Receiver shall use all reasonable efforts to
agree on the allocation of the Purchase Price among the Hotel Assets
prior to the Due Diligence Date, but failure to do so shall not affect
the liabilities and obligations of the parties hereto. The Purchaser
and the Vendors agree that the purchase price of $20,500,000 Canadian
dollars for the Hotel Assets shall be allocated, as to $19,000,000
Canadian dollars, to the Debtors' interest in the Real Property, and as
to $1,500,000 Canadian dollars, to the other Hotel Assets.
(e) The parties hereto agree that the Purchaser shall be entitled to a
credit against the Purchase Price for any obligations assumed by the
Purchaser at the Time of Closing as provided in this agreement or with
the Receiver's written approval which relate to periods preceding the
Time of Closing, but nothing in this subparagraph 2(e) shall require the
Purchaser to assume any obligations in respect to periods prior to the
Time of Closing.
(f) Purchaser shall wire the deposits set forth in subparagraph 2(a) to the
Agent on the
<PAGE> 5
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next business day after receipt of notification that Purchaser's offer has been
accepted and that this agreement has been executed by all appropriate parties.
Notwithstanding the foregoing, however, the Vendors and the Purchaser agree
that, except to the extent the Time of Closing is delayed by reason of default
by the Purchaser hereunder, (i) if the Time of Closing (as hereinafter defined)
occurs in October, 1996, the Purchase Price shall be reduced by the sum of
$100,000 Canadian dollars, (ii) if the Time of Closing occurs in November,
1996, the Purchase Price shall be reduced by the sum of $200,000 Canadian
dollars, (iii) if the Time of Closing occurs in December, 1996, the
<PAGE> 6
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Purchase Price shall be reduced by the sum of $300,000 Canadian dollars, (iv)
if the Time of Closing occurs in January, 1997, the Purchase Price shall be
reduced by the sum of $400,000 Canadian dollars and (v) if the Time of Closing
occurs after January, 1997, the Purchase Price shall be reduced by the sum of
$500,000 Canadian dollars. Ten per cent (10%) of the amount of any such
reduction shall be allocated to the Freeholder Interest and ninety per cent
(90%) of the amount of any such reduction shall be allocated to the Hotel
Assets.
3. DEPOSIT
The deposits shall be held by the Agent in trust in an interest bearing trust
account with a Canadian chartered bank pending the completion of other
termination of this agreement. At the Time of Closing, the deposits and all
interest accrued thereon (collectively, the "Deposits") shall be credited to
the Purchaser as an adjustment and paid to the Vendors. If the agreement is not
completed through no fault of the Purchaser, the Deposits shall be paid to the
Purchaser promptly without deduction. If this agreement is not completed by
reason of a default by the Purchaser of any of its obligations pursuant to this
agreement, the Vendors shall be entitled to terminate their obligations
under this agreement, Confederation Life shall be entitled to retain the
Deposits referred to in sub-paragraphs 2(a)(i) and 2(b)(i) and the Receiver
shall be entitled to retain the Deposits referred to in sub-paragraph 2(a)(ii)
and 2(b)(ii). The Vendors acknowledge that in the event they terminate this
agreement by reason of a default hereunder by the Purchaser, the Vendors' sole
and exclusive remedy shall be the forfeiture of the Deposits and in no event
shall the Vendors have any other right, remedy, claim, suit or cause of action
whether at law or equity against the Purchaser hereunder, but such limit of
liability does not apply to the Purchaser for the indemnity granted under
paragraph 9 hereof.
4. DUE DILIGENCE INVESTIGATION
The Purchaser shall be entitled to investigate the Purchased Assets to
determine whether to purchase the Purchased Assets. If the results of the
Purchaser's investigations are not satisfactory to the Purchaser in its sole
and absolute discretion, the Purchaser may deliver to the Vendors on or before
the fortieth (40th) day following the date of execution by both Vendors and
the communication of such execution by the Receiver to the Purchaser (the "Due
Diligence Date") a written notice terminating this agreement in which case the
Deposits shall be paid to the Purchaser and this agreement shall terminate. If
the Vendors do not receive such termination notice on or before the Due
Diligence Date, the Purchaser shall complete the purchase of the Purchased
Assets in accordance with this agreement.
<PAGE> 7
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5. TIME OF CLOSING
Subject to paragraph 39, the closing of the purchase and sale of the Purchased
Assets shall commence at 11:00 a.m. (Toronto time) (the "Time of Closing") on
the first business day (the "Closing Date") following the fifteenth (15th) day
after the date on which the court order referred to in paragraph 11 hereof has
been obtained and such closing shall occur at the offices of Fraser & Beatty,
39th Floor, 1 First Canadian Place, Toronto, Ontario.
6. LIMITED REPRESENTATIONS AND WARRANTIES BY THE VENDORS
The Purchaser hereby agrees that:
(a) The Purchaser is purchasing the Purchased Assets on an "as is, where is"
basis and, except as otherwise expressly provided herein, without any
representation or warranty by the Vendors of any kind whatsoever, and
any and all conditions and warranties, express or implied, pursuant to
the Sale of Goods Act do not apply hereto and are hereby waived by the
Purchaser. Without limitation to the foregoing, there is no condition
and there is no representation or warranty of any kind whatsoever with
respect to title, description, encumbrances, collectability, condition,
cost, size, merchantability, fitness for purpose, quantity, quality or
any other matter whatsoever.
(b) The Purchaser will rely on its own investigation with respect to the
Purchased Assets and acknowledges that any information relating to the
Purchased Assets (including without limitation any environmental report,
any survey or any information memorandum) given by the Vendors, the
Agent or any other person to the Purchaser was delivered to the
Purchaser solely for the Purchaser's convenience and there is no
representation or warranty of any kind whatsoever made by the Vendors,
the Agent or any other person with respect to the accuracy or
completeness of any such information.
(c) All transfers, bills of sale and assignments delivered by the Vendors or
either of the Vendors to the Purchaser at the Time of Closing shall
state that they are delivered to the Purchaser without any condition,
representation or warranty of any kind whatsoever by the Vendors.
Notwithstanding the foregoing, however, Confederation Life represents and
warrants to the Purchaser that the Superintendent of Financial Institutions
(the "Superintendent") has been appointed the provisional liquidator of
Confederation Life pursuant to the court order of the Ontario Court of Justice
(General Division), the Honourable Mr. Justice Houlden presiding, dated Monday,
August 15, 1994, that this appointment remains in effect, that the said order
is final and binding, has not been rescinded and is not subject to any appeal
or
<PAGE> 8
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right of appeal, and that Peat Marwick Thorne Inc. has been duly appointed as
the agent of the Superintendent and is fully empowered as such to enter into
this Agreement, perform its obligations hereunder and sell the Freehold
Interest on behalf of Confederation Life.
The Receiver represents and warrants to the Purchaser that it is the duly
appointed receiver and manager of the Hotel Assets pursuant to the order of the
Ontario Court of Justice (General Division), the Honourable Mr. Justice Winkler
presiding, dated July 25, 1995, that such order is final and binding, has not
been rescinded and is not subject to any appeal or right of appeal, and that
the Receiver has full power and authority to enter into this Agreement, perform
its obligations hereunder and sell the Hotel Assets to the Purchaser as herein
contemplated, subject to obtaining the court order referred to in paragraph 11
hereof.
7. DOCUMENT DISCLOSURE
The Vendors shall, within eight days after the execution of this agreement by
all parties hereto, deliver to the Purchaser copies of the following Agreements
and the Purchaser agrees to purchase the Purchased Assets subject to any such
Agreements:
(a) equipment leases referred to in section A of Schedule "B" (subject to
the provisions of such section) which, after the Time of Closing, will
continue to affect any Purchased Assets;
(b) maintenance, service or other similar contracts referred to in section B
of Schedule "B"; and
(c) sub-leases referred to in section C of Schedule "B" of part of the Real
Property granted by and any of the Debtors or the Receiver to
sub-tenants.
The Receiver shall also provide the Purchaser and its authorized
representatives at all reasonable times up to and including the Due Diligence
Date (and, provided that the Purchaser has not terminated this Agreement
pursuant to paragraph 4 hereof, thereafter until the Time of Closing) with
access to all other financial statements, financial information, accounting
records, operating records, contracts, agreements, plans, drawings,
specifications, surveys, reports, studies, analyses, audits, claims, demands,
statements of claim, court documentation and all other information and
documentation pertaining to the Hotel Assets or any of them or to the
ownership, use, management or operation of the Hotel or any part thereof which
are at the Hotel or otherwise in the possession of the Receiver or to which
access may be had by the Receiver, using reasonable efforts to do so (but not
including taking legal proceedings against any person), but not including
appraisals, cash-flow projections or similar documents or information prepared
in
<PAGE> 9
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connection with the offering of the Purchased Assets for sale. The Purchaser
may, at its option, make and take away copies of any such document or
information, provided that if the Purchaser terminates this agreement pursuant
to paragraph 4 hereof, or if this agreement is otherwise terminated other than
by reason of default by either Vendor, all such copies shall, if required by
the Receiver, forthwith be returned to the Receiver.
The Purchaser shall hold all such documents in escrow and, if the transaction
is not completed, the Purchaser shall return all such documents to the
Receiver. The Purchaser shall, at the Time of Closing, deliver to the Receiver,
in form and substance satisfactory to the Receiver, an agreement by the
Purchaser assuming all obligations arising after the Time of Closing pursuant
to or in respect of the Agreements and indemnifying the Receiver in respect of
all such obligations. Notwithstanding the foregoing, no obligations in respect
of periods prior to the Time of Closing shall be assumed by the Purchaser, the
Receiver hereby agreeing to be responsible for same.
8. CONFIDENTIALITY
The Purchaser agrees that the provisions of the confidentiality agreement
delivered by the Purchaser to the Vendors shall apply to the documents referred
to in paragraph 7, that such confidentiality agreement shall not merge with the
execution of this agreement, and that the Purchaser shall comply with each
provision of such confidentiality agreement.
9. PURCHASER MAY ENTER
After the acceptance of this Offer, the Purchaser may arrange with the Receiver
to enter on and inspect the Real Property from time to time at all reasonable
times during normal business hours, by such agents, consultants, or other
persons as it deems necessary, but subject to the rights of tenants, guests and
other occupants of the Real Property and in such manner so as not to interfere
with normal business operations. Purchaser shall be entitled to conduct such
environmental or structural tests as Purchaser may deem appropriate, including
testing of materials and obtaining samples of the Real Property and/or the Hotel
Assets. The Purchaser agrees to repair any damage to the Real Property and/or
the Hotel Assets arising from the acts or omissions of the Purchaser during the
course of any such inspections or tests. The Purchaser hereby further agrees to
indemnify and hold harmless the Vendors with respect to any loss or damage
(other than consequential economic loss) suffered by the Vendors (and either of
them) and any loss or damage suffered by any other person for which the Vendors
(and either of them) may be or may become liable which loss or damage arises
from the acts or omissions of Purchaser occasioned by any such inspection or
test and this indemnity shall survive the closing or any termination of this
agreement regardless of the reason for such termination. Despite the foregoing,
the Purchaser shall:
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(a) provide the Receiver with at least forty-eight (48) hours'
prior written notice of any destructive testing (whether in respect of
environmental tests, structural tests or otherwise) and reasonable particulars
of the Purchaser's intentions with respect thereto;
(b) use only reputable contractors experienced in carrying out such
testing;
(c) permit the Receiver to have a representative present during any
such testing to monitor same; and
(d) generally co-operate with the Receiver and its representative
in the carrying out of such testing.
the Purchaser may arrange with the Receiver for access to any of the Debtors'
books of account, financial information and other information in the Receiver's
possession or control related to the Real Property, but not any financial
forecasts or projections, and the Receiver shall permit the Purchaser to make
copies thereof (which shall be held by the Purchaser on a confidential basis as
set out in paragraph 8 and returned to the Vendors if the transaction does not
close). The Vendors shall use their best efforts to ensure that the Purchaser
is given access to all such information requested by the Purchaser, except
financial forecasts or projections. The Purchaser shall be given ample
opportunity to meet with and interview all managerial employees of the Hotel
prior to the Due Diligence Date.
10. AUTHORIZATION
The Vendors shall, at the Purchaser's request, deliver to the Purchaser the
Vendors' written authorizations for the Purchaser to obtain from governments or
government agencies information concerning the Purchased Assets. The Purchaser
shall not initiate any inspection or audit by any government or government
agency.
11. COURT APPROVAL REQUIRED
The Vendors' obligations to complete this transaction shall be conditional on
the Receiver's obtaining the approval of the Ontario Court of Justice (General
Division) to this agreement and to the sale by the Receiver of the Hotel Assets
in accordance with the provisions of this agreement. The Receiver shall use all
reasonable and diligent efforts to obtain such approval and shall keep the
Purchaser fully apprised at all times as to the status and results of such
efforts, including notifying the Purchaser promptly when such approval has
been obtained. In the event the Receiver does not give written notice to the
Purchaser at or before 5:00 p.m. (Toronto time) on the thirtieth (30th) day
after the Due Diligence Date (as such period may be extended pursuant to the
last sentence of this paragraph 11) that this
<PAGE> 11
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condition has been satisfied, this condition shall be deemed not to have been
satisfied, this agreement shall terminate, the Deposits shall be paid to the
Purchaser without deduction and neither the Vendors nor the Purchaser shall
have any further obligations to complete the purchase and sale of the Purchased
Assets pursuant to this agreement. In the event the Receiver gives written
notice to the Purchaser at or before such time that this condition has been
satisfied, the Vendors shall complete this agreement in accordance with the
provisions of this agreement. Notwithstanding the foregoing, however, in the
event that the condition referred to in this paragraph 11 has not been
satisfied by the thirtieth (30th) day after the Due Diligence Date, either of
the Vendors or the Purchaser may, at their or its option, extend such date for
a further period of thirty (30) days, in which event the provisions of this
paragraph 11 shall continue to apply throughout such further thirty (30) days.
The obligation of the Purchaser to complete the purchase of the Purchased
Assets hereunder shall be conditional upon (i) an order giving such approval
having been obtained and being in full force and effect; and (ii) no person
having obtained a stay of such order or any injunction or other court order
prohibiting the completion of the transaction contemplated by this agreement.
12. INVESTMENT COMMITTEE APPROVAL
The obligation of the Purchaser to consummate the transactions contemplated
hereby are subject to the Purchaser having obtained the written approval of the
Investment Committee of Purchaser prior to the Due Diligence Date. If such
approval is not obtained by the Due Diligence Date, then the Purchaser may
terminate this agreement, in which case the Deposits shall be returned to the
Purchaser and the Purchaser shall have no further obligations under this
agreement.
13. REQUISITION DATE
The Purchaser shall be allowed until the Due Diligence Date to examine title to
the Real Property and to make such title inquiries as it deems appropriate at
the Purchaser's expense.
14. THE LEASE
Prior to the Time of Closing, Confederation Life, as landlord, and the Receiver
shall enter into an agreement amending the Lease, the effect of which is to make
the unexpired term of the Lease, including any renewals or extensions of the
term provided for in the Lease or in any separate option to lease or other
document entered into as part of the arrangement relating to the Lease, less
than fifty (50) years. This shall be effected, inter alia, by changing the
reference to "ninety-five (95) years" in paragraph 2 of the Lease to "sixty-five
(65) years", changing the reference to "2066" in said paragraph 2 to "2036",
deleting the references to "65th and 80th" in subparagraph 3(b) of the Lease and
deleting clauses (iii) and
<PAGE> 12
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(iv) from said subparagraph 3(b). As part of the closing registrations, the
Vendors shall register a notice of such amendment to the Lease title to the
Real Property.
15. TITLE
The Purchaser's obligation to complete the purchase shall be conditional on
applicable zoning by-laws being complied with, the present use of the Real
Property as a hotel being lawfully continued and the buildings on the Real
Property being insured against fire and on the title to the Real Property being
at the Time of Closing, upon the delivery by the Vendors to the Purchaser of
the vesting order referred to in paragraph 19, and the transfer of the Freehold
Interest, good and free from all encumbrances, except as set out in this
agreement and except for:
(a) the lease (subject to the provisions of paragraph 14 having been
complied with);
(b) the airport zoning regulations, agreements and other rights or matters
referred to in Schedule "C" hereto (the "Permitted Encumbrances"),
provided same are complied with;
(c) any registered restrictions or covenants that run with the Real
Property provided that they are complied with;
(d) any registered municipal agreements and registered agreements with
publicly regulated utilities provided they have been complied with,
or security has been posted to ensure compliance and completion, as
evidenced by a letter from the applicable municipality or regulated
utility; and
(e) any easements for the supply of utilities, telephone, cable or other
communication services to the Real Property or adjacent properties,
provided same are complied with.
If the Purchaser has delivered to the Receiver in writing prior to the Due
Diligence Date any valid objection to the title to the Real Property, or
noncompliance with zoning by-laws, or that the present use of the Real
Property may not be lawfully continued, or that buildings on the Real Property
cannot be insured, which the Vendors are unable or unwilling to remove or
correct prior to the Time of Closing and which the Purchaser will not waive,
this agreement shall terminate, the Deposits shall be paid to the Purchaser,
and the Vendors shall have no further obligation hereunder. Save as to any
valid objection made on or before the Due Diligence Date or any objection going
to the root of title to the Real Property, the foregoing condition shall be
deemed to have been satisfied, the Purchaser shall be conclusively deemed to
have accepted the title to the Real Property, and
<PAGE> 13
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the Purchaser shall complete the transaction. If, at any time prior to the Time
of Closing, the Real Property is affected by any work order or deficiency
notice, the Receiver shall, at its option, either remedy same at its own
expense prior to the Time of Closing (or within such reasonable period
thereafter as may be necessary to diligently complete such repair) or allow the
Purchaser an abatement in the Purchase Price equal to the reasonable costs of
remedying same and, in either case, the transaction of Purchase and Sale
contemplated herein shall be completed.
16. LIQUOR LICENCES
The Purchaser shall, within a reasonable time after execution of this agreement
by all parties hereto, complete all applications and provide all information
necessary to obtain all necessary liquor licences at the Time of Closing. In
the event that the Purchaser has not obtained all such licences by the Time of
Closing, the Receiver shall permit the Purchaser to use its liquor licence for
the Hotel, to the extent that the Receiver and the Purchaser are lawfully
permitted to do so, on a temporary basis until such time as the Purchaser has
received its own licence and the Purchaser shall indemnify and save the
Receiver harmless from any cost or expense the Receiver shall incur by reason
of the Purchaser using its liquor licence on such basis, such indemnity to
survive the completion of the transaction contemplated by this agreement.
17. SPECIAL TERMINATION RIGHT
The Purchaser may, by written notice given to the Vendors at any time prior to
the Time of Closing, terminate this agreement in the event that three or more
human fatalities occur prior to the Time of Closing at the Hotel which are
caused by disease, an act of violence or another cause which is specifically
identified with any of the Purchased Assets, in which event the Deposits shall
forthwith be returned to the Purchaser and neither the Purchaser nor the
Vendors shall have any further liability or obligation to the other to complete
the purchase and sale of the Purchased Assets hereunder.
18. CLOSING
At the Time of Closing, the Vendors shall deliver to the Purchaser the
following with respect to the Purchased Assets:
(a) a transfer of the Freehold Interest by Confederation Life;
(b) a certified copy of an Order of the Ontario Court of Justice (General
Division) in form acceptable to Purchaser approving the sale of the
Hotel Assets pursuant to this agreement; and
<PAGE> 14
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(c) the vesting order referenced in paragraph 19 herein, which order shall
be in form acceptable in all respects to the Purchaser, acting
reasonably.
19. VESTING ORDER
At or about the Time of Closing, the Receiver shall apply to the Ontario Court
of Justice (General Division) for a vesting order containing a registrable
legal description of the Real Property which vests the Hotel Assets in the
Purchaser free and clear of any and all mortgages, charges, liens, interests,
encumbrances and other adverse rights of third parties, in or affecting any of
the Hotel Assets, except those which, by the provisions of this agreement, the
Purchaser is required to assume or to which the Purchaser is required to take
subject. The Vendors shall not be obligated to obtain discharges of any
existing encumbrances of any of the Purchased Assets. The obligation of the
Purchaser to complete the purchase of the Purchased Assets hereunder shall be
conditional upon (i) such vesting order having been obtained and in full force
and effect; and (ii) no person having obtained a stay of such order, or any
injunction or other court order prohibiting the completion of the transaction
contemplated by this agreement.
20. EMPLOYEES
Subject to the Purchaser's rights under Section 4 hereof, the Purchaser agrees
to offer employment at the Time of Closing to all then existing employees of
the Hotel on the same financial terms and conditions and otherwise
substantially on the same terms and conditions as they are then employed,
except for such employees, to a maximum of seven (7), whom the Purchaser
designates, by notice in writing given to the Receiver not later than five (5)
days after the Due Diligence Date, as employees to whom it will not offer
employment. The Receiver shall terminate the employment of, pay and be
responsible for all moneys payable to such employees (not exceeding seven(7))
not offered employment with the Purchaser at the Time of Closing as required
under applicable law, including, without limitation, accrued wages and vacation
pay, termination pay and damages for wrongful dismissal.
21. ADJUSTMENTS, GOODS AND SERVICES TAX, GOVERNMENT APPROVALS
(a) The Receiver shall pay and be responsible for all charges, expenses,
costs, taxes, levies, liabilities and obligations relating to any of the
Purchased Assets, or the ownership and operation of the Hotel, to the
extent eligible in respect of any period preceding the Time of Closing
which:
<PAGE> 15
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(i) would or does, if not paid, result in any other person, other
than the Purchaser, having after the Time of Closing any charge,
lien or encumbrance on or interest in any of the Purchased
Assets, or disrupt or hinder after the Time of Closing the
continued supply of materials or services to the Real Property
pursuant to any Agreement assumed by the Purchaser hereunder;
and
(ii) are not expressly extinguished by the Vesting Order referred to
in paragraph 19 herein,
including, without limitation, realty taxes and charges for
hydro-electric power, water, sewers, gas and telephone service, and for
the purposes hereof, business taxes shall be deemed to be a charge, lien
or encumbrance to which clause (i) above applies.
(b) Adjustments shall be made as of the Time of Closing with respect to any
and all revenues, costs and expenses earned or owing, or paid or
payable, as the case may be, in respect of a period commencing before
the Time of Closing and concluding thereafter, including, without
limitation and without duplication;
(i) realty taxes, local improvement charges and other similar
levies;
(ii) the costs of water, sewage, hydro-electric power, gas and other
utilities, to the extent same cannot be determined as at the
Time of Closing from a meter or similar device definitively
showing the amount for which the Receiver is responsible up
until such time;
(iii) employee compensation, including, without limitation, wages,
salary, sick leave, bonuses, vacation pay and other benefits;
(iv) amounts received, paid or payable under any of the Agreements;
and
(v) deposits and prepaid expenses.
Fire and other insurance shall not be transferred. The day of closing,
subject to subparagraph 21(c), shall be for the Purchaser's account both
as to revenue and expense. In the event that final billings are not
available at the time of calculating the adjustments, the adjustments
shall be made on the basis of the most recent billings then available
and, upon final billings becoming available, the Purchaser and the
Vendors agree to readjust all such items, if necessary. This agreement
to readjust shall survive the completion of the transaction.
<PAGE> 16
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(c) Guest, convention, room, food, beverage and all other charges and
revenues from services rendered and the operation of all departments of
the Hotel shall be apportioned as of 6:00 a.m. on the Closing Date. The
Receiver shall be entitled to the room revenues for rooms occupied the
night preceding the Time of Closing. All prepaid rentals, room rental
deposits and all other deposits for advance registrations or
reservations for periods after 6:00 a.m. on the Closing Date shall be
credited to Purchaser.
(d) No adjustment shall be made for any charges or revenues which remain
uncollected on the Closing Date and the Receiver shall retain all rights
to collect such items for its own account. Purchaser agrees to remit all
amounts collected on such accounts promptly to the Receiver. Collections
from obligors who owe accounts with respect to the Hotel for periods
before and after 6:00 a.m. on the Closing Date and who do not specify
against which account such amount shall be applied (i) if received
within thirty (30) days after the Closing Date, shall be applied to the
Receiver's pre-Closing Date receivables and (ii) if received after such
thirty (30) day period, shall be applied pro rata by Purchaser to
Purchaser's post-Closing Date receivables, based upon a fraction, the
denominator of which shall be all receivables owing by such obligor to
Purchaser and the Receiver with respect to the Hotel at the time such
collection is received, and the numerator of which shall be the
Purchaser's post-Closing Date receivables owing by such obligor with
respect to the Hotel, with the remainder to be paid to the Receiver. All
other payments received from such obligors shall be applied as specified
by the obligor. The Purchaser shall deliver to the Receiver the amount
to which the Receiver is entitled pursuant to the pro rata application
of the collections described in the preceding sentences, together with a
statement of such pro rata calculation and, upon the reasonable request
of the Receiver, the documents and invoices supporting such calculation.
The Receiver shall have reasonable access to the books and records of
the Purchaser in respect of the Hotel relating to the periods prior to
and after the Time of Closing to the extent necessary to verify
receivables owing to it and facilitate the collection thereof.
(e) The Receiver shall ensure that there remains from the Purchase Price,
unpaid by the Receiver and undistributed to any other person or persons,
for a period of at least ninety (90) days after the Closing Date, the
sum of $230,000, which funds shall remain available and be used for the
purpose of paying any amount that shall become payable to the Purchaser
as an adjustment or readjustment of any item referred to in this
paragraph 21 and for which the Purchaser shall make a written claim to
the Receiver during such ninety (90) day period. If, at the end of such
ninety (90) day period, the Purchaser has made any written claim under
this paragraph 21(e) which the Receiver disputes, the Receiver shall
continue to retain the said sum of $230,000.00, or so much thereof as
would be sufficient to satisfy
<PAGE> 17
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such claim, until such claim is settled or until a court of competent
jurisdiction has made an order either giving effect to such claim or
dismissing it.
(f) The Vendors shall be entitled to all refunds of municipal taxes and
business taxes attributable to the years prior to 1996 and to the period
of 1996 attributable to the period prior to the Time of Closing. The
Purchaser acknowledges that the assessments related to the Hotel and the
Real Property have been appealed and agrees to co-operate, both before
and after the Time of Closing, with each of the Vendors in respect of
such appeals.
22. GOODS AND SERVICES TAX AND RETAIL SALES TAX
(a) The Purchaser and the Vendors agree that the Purchase Price is
exclusive of any goods and services tax ("GST") exigible pursuant to the
Excise Tax Act (Canada) as amended from time to time and any provincial
sales tax exigible pursuant to the Retail Sales Tax Act (Ontario) as
amended from time to time. All taxes exigible pursuant to the Retail
Sales Tax Act (Ontario) and Land Transfer Tax Act (Ontario) or otherwise
in connection with the transaction of purchase and sale contemplated
herein shall be paid by the Purchaser at the Time of Closing and the
Purchaser shall, at the Time of Closing, deliver evidence satisfactory
to the Vendors of such payment.
(b) The Purchaser agrees that it will, at or prior to the Time of Closing,
provide the Vendors with its GST registration number and a copy of its
certificate of registration relating to the GST. If the Purchaser fails
to provide the foregoing documents, the Purchaser shall pay to the
Vendors at the Time of Closing, in addition to all other sums due
hereunder, an amount equal to the GST payable with respect to the within
transaction and the Vendors shall account for such amount in accordance
with the provisions of the Excise Tax Act. For greater certainty, the
Purchaser agrees that if it fails to provide the said documents, the
amount payable on account of GST shall form part of the adjustments at
the Time of Closing and the failure by the Purchaser to pay such amount
to the Vendors at the Time of Closing shall be a breach of this
agreement. The Purchaser further agrees to indemnify and save harmless
the Vendors from and against such GST together with any penalties and
interest thereon which may arise as a result of the failure by the
Purchaser to pay such GST as aforesaid. Provided that the Purchaser
complies with the foregoing, the Purchaser and the Vendors shall execute
an election under Subsection 167(1) of the Excise Tax Act (Canada) to
have Section 167(1.1) of the said Act apply in respect of the purchase
and sale of the Purchased Assets hereunder. The election shall be in the
prescribed form and shall be filed by the Purchaser within the time
limits applicable thereto.
<PAGE> 18
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23. COMPETITION ACT/INVESTMENT CANADA ACT
The Purchaser represents and warrants to the Vendors that this transaction of
purchase and sale does not require approval under the Competition Act or the
Investment Canada Act. This representation and warranty shall survive the
completion of this transaction.
24. RISK OF DAMAGE
Until completion of this transaction, all buildings and chattels on the Real
Property shall be and remain at the risk of the Vendors. In the event of damage
thereto prior to completion of the transaction which is estimated by the
Receiver, acting reasonably, to cost more than $500,000 to repair, the
Purchaser shall be entitled to terminate this agreement by delivery of written
notice of termination to the Vendors on or before the 15th day after the
occurrence of such damage, whereupon this agreement shall terminate and the
Purchaser shall be entitled to the Deposits. If the Purchaser does not give
such notice to the Vendors by such date, the Purchaser shall be entitled to any
insurance proceeds with respect to such damage and shall complete the
transaction. In the event of lesser damage, the Vendors shall, at their option,
either repair such damage prior to the Time of Closing (or within such
reasonable time period thereafter as may be necessary to diligently complete
such repair) or allow the Purchaser an abatement in the purchase price equal to
the reasonable cost of such repair and, in either case, the transaction of
purchase and sale contemplated herein shall be completed. If the Purchaser
completes the transaction after any damage referred to in this paragraph, the
Purchaser shall be entitled, at the Time of Closing, to an assignment by the
Receiver of any business interruption insurance available in respect of such
damage.
25. INTERIM OPERATION
The Receiver covenants and agrees that it will, up until the Time of Closing,
operate the Hotel business in a commercially reasonable manner consistent with
the operating standards of the Hotel in effect during the 40-day period
referred to in paragraph 4 hereof, including, without limitation, keeping
capital equipment and inventories at reasonable levels. The Receiver shall not
terminate or materially amend any of the Agreements prior to the Time of
Closing (other than the Leasetec lease and the Xerox Canada lease) without the
prior written consent of the Purchaser, which consent shall not be unreasonably
withheld. However, termination of any Agreement or a breach thereof by the
other contracting party thereto shall not affect any of the provisions of this
Agreement.
<PAGE> 19
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26. CONDEMNATION
If portions of the Real Property having a fair market value equal to or in
excess of five percent (5%) of the Purchase Price for the Real Property are
taken prior to the Time of Closing by a governmental or quasi-governmental body
or agency in the exercise of the power of eminent domain, and such loss
permanently and materially impairs the current use of the Real Property then
either party, upon notice to the other, may terminate this Agreement, in which
event the Deposits will be returned to Purchaser and all condemnation awards
and proceeds shall be paid to Vendors and neither party hereto shall thereafter
have any further rights against, or obligations or liabilities to, any other by
reason of this agreement except for Purchaser's obligations and liabilities
pursuant to Section 8 and 9 hereof. If this agreement is not so terminated and
the closing hereunder is completed, all condemnation awards and proceeds shall
be paid to Purchaser. If the governmental authority exercising its power of
eminent domain has not determined the value of that portion of the Real
Property and the improvements to be taken, then the estimated value of such
portion shall be determined among the parties hereto.
27. NOTICE
Any tender or delivery of documents and any notice required or permitted to be
given hereunder shall be in writing and in each case may be sufficiently given
by personal delivery, by courier or by facsimile transmission, to the Purchaser
at the following address:
WHC DEVELOPMENT CORPORATION
2001 Bryan Street
Suite 2300
Dallas, Texas 75201-3075
Attention: Mr. Steven Miller
Facsimile: (214) 978-4601
with a copy to:
LOCKE PURNELL RAIN HARRELL
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201-6776
Attention: Brian R. Forbes
Facsimile: (214) 740-8800
and to the Vendors at the following addresses:
CONFEDERATION LIFE INSURANCE COMPANY
77 King Street West
9th Floor
Toronto, Ontario
M5W 1P9
Attention: Mr. Don Russell
Facsimile: (416) 955-7148
<PAGE> 20
- 18 -
PEAT MARWICK THORNE INC.
3300 Commerce Court West
Toronto, Ontario
M5L 1B2
Attention: Mr. Doug Mackay
Facsimile: (416) 777-3891
with copies to:
FRASER & BEATTY
39th Floor, P.O. Box 100
1 First Canadian Place
Toronto, Ontario
M5X 1B2
Attention: Mr. Ross Walker
Facsimile: (416) 863-4592
COLLIERS MACAULAY NICOLLS (ONTARIO) INC.
One Queen Street East
Suite 2200
Toronto, Ontario
M5C 2Z2
Attention: Mr. William Stone
Facsimile: (416) 777-2277
Any notice or other document delivered in person, by courier or by facsimile
transmission shall be deemed to have been given on the date of delivery or
transmission, as the case may be.
28. MISCELLANEOUS
(a) The solicitors acting for the Vendors or the Purchaser are hereby
authorized on behalf of their respective clients, to give or receive
any moneys, notices, approvals, waivers or other documentation in
connection with the transaction contemplated herein, or to agree in
writing to any variation of the provisions thereof.
(b) It shall be sufficient that a negotiable cheque certified by one of the
five largest Canadian chartered banks be tendered instead of cash.
(c) The Purchaser shall, subject to the following sequence, be credited
towards the Purchase Price with the amount, if any, which it shall be
necessary for the Purchase to pay to the Receiver General for Canada in
order to satisfy the Purchaser's liability in respect of tax payable by
the Vendors under the non-residency provisions of the Income Tax Act by
reason of this sale. The Purchaser shall not claim such credit if the
Vendors deliver to the Purchaser on completion the prescribed
certificate or a statutory declaration or statutory declarations that
none of the Debtors is then a non-resident of Canada.
<PAGE> 21
- 19 -
(d) The Purchaser and Vendors agree that this agreement may be evidenced by
facsimile transmission.
29. ENTIRE AGREEMENT
This agreement including any schedules attached hereto shall constitute the
entire agreement between the Purchaser and the Vendors. There is no
representation, warranty, collateral agreement or condition, whether direct or
collateral, or express or implied, which induced any party hereto to enter into
this agreement or on which reliance is placed by any party, or which affects
this agreement or the Purchased Assets other than as expressed herein. All of
the Purchaser's indemnities herein contained shall survive the completion of
the transaction or the termination of this agreement.
30. ASSIGNMENT BY PURCHASER
Purchaser shall have the right to assign this Agreement or any right or
interest in this agreement to an affiliate of Purchaser but no such assignment
shall affect the Purchaser's obligations to the Vendors hereunder.
31. TIME OF THE ESSENCE
Time shall, in all respects, be of the essence of this agreement; provided
however that the time for doing or completing any matter provided for herein may
be extended or abridged by an agreement in writing signed by the Vendors and
Purchaser or by their respective solicitors who are expressly appointed in this
regard.
32. TENDER OF DOCUMENTS
Any tender of documents or money hereunder may be made on the Vendors or the
Purchaser or their respective solicitors at the Time of Closing, or at such
other date expressly provided for herein.
33. GOVERNING LAW
This agreement shall be governed by and construed in accordance with the laws
of Ontario.
34. SUCCESSORS AND ASSIGNS
This agreement shall be binding on and enure to the benefit of the parties
hereto, their respective successors and permitted assigns, as the case may be.
<PAGE> 22
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35. FURTHER ASSURANCES
Each party agrees to make such further assurances as may be reasonably required
from time to time by any other parties to more fully implement the true intent
of this agreement.
36. FUTURE USE
The Vendors and the Purchaser agree that there is no condition, express or
implied, representation or warranty of any kind that the future intended use of
the Real Property by the Purchaser is or will be lawful.
37. BINDING AGREEMENT
Upon the Vendors' acceptance of this offer there shall be a binding agreement
of purchase and sale between the Purchaser and the Vendors.
38. NO REGISTRATION OF AGREEMENT
The Purchaser shall not register this agreement or any notice thereof against
title to the Real Property.
39. EXTENSION IF CHALLENGED
In the event that either or both of the court orders referred to in paragraphs
11 and 19 hereof are stayed prior to the Time of Closing, or a further court
order is made prior to the Time of Closing prohibiting the completion of the
transaction contemplated by this agreement, then the Vendors shall use all
reasonable and diligent efforts to have such stay lifted or such further order
stayed, but if, notwithstanding such reasonable and diligent efforts by the
Vendors, the Vendors have not had such stay lifted or further order stayed by
the Time of Closing as extended pursuant to this Section 39, either the
Purchaser or the Vendors may, at their option, on written notice to the other
party or its solicitors, terminate this agreement and the Deposits shall be
immediately remitted to the Purchaser. Despite the foregoing, in the event that
either or both the court orders referred to in paragraphs 11 and 19 hereof are
stayed prior to the Time of Closing, or a further court order is made prior to
the Time of Closing prohibiting the completion of the transaction contemplated
by this agreement, and such stay has not been lifted or such further order
stayed, then either party, at its option, may extend the Time of Closing for a
period or periods up to 120 days, in the aggregate.
<PAGE> 23
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40. PLANNING ACT
This agreement shall be effective to create an interest in the Real Property
only if the subdivision control provisions of the Planning Act, R.S.O. 1990, as
amended, are complied with on or before completion.
41. SEVERAL OBLIGATIONS AND LIABILITIES
The obligations and liabilities of the Vendors hereunder are several and
neither joint nor joint and several. Neither Vendor shall have any liability
for any default by the other Vendor.
42. NO PERSONAL LIABILITY
Peat Marwick Thorne Inc., as receiver and manager of the Hotel Assets, is
executing this agreement in a representative capacity and the Purchaser shall
have no recourse to Peat Marwick Thorne Inc. or any asset of Peat Marwick
Thorne Inc. for any matter hereunder pertaining to the Hotel Assets except for
recourse to the Hotel Assets. Peat Marwick Thorne Inc., as agent of the
Superintendent of Financial Institutions, the provisional liquidator of
Confederation Life, is executing this agreement in a representative capacity
and the Purchaser shall have no recourse to Peat Marwick Thorne Inc. or any
asset of Peat Marwick Thorne Inc. for any matter hereunder pertaining to the
Freehold Interest except for recourse to the Freehold Interest. Peat Marwick
Thorne Inc. shall not under any circumstances have any greater liability
hereunder than as set out in the immediately two preceding sentences.
43. VENDORS' AGENT
The Vendors confirm that the listing broker, Colliers Macaulay Nicolls
(Ontario) Inc., is acting on behalf of the Vendors and will be compensated by
the Vendors as outlined in their listing agreement dated as of February 5,
1996. The Purchaser shall have no liability for any compensation to such
broker.
44. CURRENCY
Any reference herein to dollars shall mean Canadian dollars.
<PAGE> 24
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DATED this 6th day of June, 1996.
WHC DEVELOPMENT CORPORATION,
a Delaware corporation
Per: /s/ ANNE RAYMOND
------------------------------------
Name: Anne Raymond
Title: Vice President
We accept the foregoing offer this 13th day of June, 1996.
CONFEDERATION LIFE INSURANCE
COMPANY, by its provisional liquidator,
the Superintendent of Financial
Institutions, by its agent,
Peat Marwick Thorne Inc.
Per: /s/ KERRYN M. DOWNEY
------------------------------------
Name: Kerryn M. Downey
Title: Senior Vice President
We accept the foregoing offer this 11th day of June, 1996.
PEAT MARWICK THORNE INC., in its
capacity as receiver and manager of
assets of the Debtors comprising
Bristol Place Hotel
Per: /s/ ROBERT A. CUMMING
------------------------------------
Name: Robert A. Cumming
Title: Senior Vice President
<PAGE> 25
SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT made as of the 6th day of August, 1996
among WHC DEVELOPMENT CORPORATION (the "Purchaser"), a Delaware Corporation,
CONFEDERATION LIFE INSURANCE COMPANY ("Confederation Life"), in liquidation,
and KPMG INC. (formerly PEAT MARWICK THORNE INC.) (the "Receiver"), as receiver
and manager of the assets of Third Generation Realty Limited, Ardwold Realty
Investments Limited and 980879 Ontario Inc. (the "Debtors") comprising the
Bristol Place Hotel, witnesses that:
WHEREAS:
(a) The Purchaser, Confederation Life and the Receiver are parties
to an agreement of purchase and sale (the "Agreement of Purchase
and Sale") consisting of an offer made by the Purchaser on June
6, 1996 and accepted by the Receiver and Confederation Life on
June 11 and 13, 1996 respectively pursuant to which the
Purchaser agreed to purchase the Freehold Interest from
Confederation Life and the Hotel Assets from the Receiver.
(b) Capitalized terms used herein, but not defined herein, are
intended to have the respective meanings ascribed thereto in the
Agreement of Purchase and Sale.
(c) The Purchaser's obligations under the Agreement of Purchase and
Sale were conditional on the Purchaser investigating the
Purchased Assets to determine on or before the fortieth day
following the date of execution of the Agreement of Purchase and
Sale whether to purchase the Purchased Assets.
(d) Pursuant to a letter dated July 19, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to July 31, 1996.
(e) Pursuant to a letter dated July 31, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, Diligence Date was
extended to August 1, 1996.
(f) Pursuant to a letter dated August 1, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian
<PAGE> 26
- 2 -
counsel to the Purchaser, the Due Diligence Date was extended
to 12:00 noon (Toronto time) on August 2, 1996.
(g) Pursuant to a letter dated August 2, 1996 from Fraser &
Beatty, counsel to Confederation Life and the Receiver, to
Stikeman, Elliott, Canadian counsel to the Purchaser, the Due
Diligence Date was extended to 3:00 p.m. (Toronto time) on
August 2, 1996.
(h) Pursuant to a letter dated August 2, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 3:30 p.m. (Toronto time) on August 2, 1996.
(i) Pursuant to a letter dated August 2, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 11:00 a.m. (Toronto time) on August 6,
1996.
(j) Pursuant to a letter dated August 6, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 3:00 p.m. (Toronto time) on August 6, 1996.
(k) Pursuant to a letter dated August 6, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 6:00 p.m. (Toronto time) on August 6, 1996.
(l) The parties wish to amend and supplement the provisions of the
Agreement of Purchase and Sale on the terms and conditions set
out herein.
NOW THEREFORE in consideration of the sum of $10.00 and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties agree as follows:
1. The Purchase Price for the Purchased Assets is hereby reduced to
$22,920,000 (Canadian Dollars) and the Purchase Price, as so reduced, is
hereby allocated among the following Purchased Assets as follows:
Freehold Interest $2,500,000
Debtors' Interest in
Real Property
<PAGE> 27
- 3 -
and Hotel 18,920,000
Other Hotel Assets 1,500,000
The Purchaser intends to allocate $17,920,000 to the Debtors' interest
in the Hotel building and $1,000,000 to the Debtors' interest in the
Real Property.
2. The orders referred to in paragraphs 11 and 19 of the Agreement of
Purchase and Sale shall be in the forms attached hereto as Schedules
"A" and "B" respectively, subject only to such modifications thereto as
may be agreed to by the Purchaser and the Receiver, both acting
reasonably. The Purchaser shall not be entitled to object to any such
modification to the order attached hereto as Schedule "A" unless such
modification affects the substance of any of paragraphs 1 through 6
thereof inclusive.
3. (a) The Receiver covenants and agrees to use all reasonable and
diligent efforts (together with such assistance from the
Purchaser as the Receiver reasonably requires) to cause a
maximum of ten (10) of the Agreements listed in Schedule "B" to
the Agreement of Purchase and Sale to be amended, prior to the
Time of Closing, such that (i) they shall be terminable by the
Purchaser, after the Time of Closing, on not more than sixty
(60) days' prior written notice to the other party or parties
thereto and (ii) they shall expressly provide that the Purchaser
shall not be liable for the payment, performance or observance
of any obligation of the Receiver, any of the Debtors or any
other person arising in respect of any period preceding the Time
of Closing. The Purchaser shall advise the Receiver not later
than August 13, 1996 which of such Agreements it desires to have
so amended. The Receiver's efforts aforesaid shall not extend to
paying money to the other party or parties to any such
Agreement. At the Time of Closing, the Purchaser shall enter
into an agreement with the Receiver and the other party or
parties to each such Agreement assuming the Receiver's
obligations thereunder as and from the Time of Closing, provided
such Agreement has been amended as aforesaid.
(b) The Purchaser may also advise the Receiver, not later than
August 13, 1996 which of such Agreements (other than those
referred to in subparagraph 3(a)) it desires not to assume as
and from the Time of Closing and the Receiver may then, at its
option, terminate any such Agreement prior to the Time of
Closing.
(c) With respect to any Agreement which has not been so amended
prior to the business day immediately preceding the Time of
Closing, or to which
<PAGE> 28
- 4 -
subparagraph 3(b) does not apply, at the option of the
Purchaser, either (i) the Purchaser shall assume the Receiver's
obligations under such Agreement as and from the Time of
Closing, notwithstanding that it has not been amended as
aforesaid, or (ii) the Receiver shall, on such day, provide
written notice to the other party or parties to such Agreement
that the Receiver terminates such Agreement effective on the
sixtieth (60th) day after the date of such notice and the
Purchaser shall then assume such Agreement as and from the Time
of Closing until such effective date of termination.
(d) Except as provided in subparagraph 3(e), the costs, expenses and
liabilities, if any, of the Receiver having terminated any
Agreement pursuant to subparagraphs 3(b) or 3(c) shall be for
the account of the Purchaser and the Purchaser shall indemnify
and save the Receiver harmless thereagainst and therefrom. In
performing any such indemnification obligation, the Purchaser
shall be entitled, at its sole cost and expense (including the
costs of legal counsel retained by the Purchaser to defend the
Receiver with respect to such claim, any award of costs made
against the Receiver and the reasonable costs of the Receiver's
own time devoted to defending such claim), to defend any claim
made against the Receiver by the other party or parties to any
such Agreement in connection with such termination. The
Purchaser shall be entitled to determine, in its sole and
unfettered discretion, the amount, if any, to be paid in
settlement of any such claim, but otherwise, the Purchaser shall
consult with the Receiver with respect to the defence to be made
to any such claim and obtain the Receiver's approval thereof,
such approval not to be unreasonably withheld or delayed.
(e) However, the Purchaser shall not be liable for, nor shall its
indemnification extend to, any additional cost or obligation
under any such Agreement arising as a result of the actions or
conduct of the Receiver during the period of the Receiver's
tenure as receiver of the Hotel Assets the effect of which is or
was to modify the obligations owed to the other party or parties
to such Agreement from what they were immediately prior to the
Receiver's appointment.
4. The Receiver and the Purchaser agree that the Agreements listed in
Schedule "C" hereto shall not form part of the Hotel Assets and the
Purchaser shall not be required to assume them.
5. The Purchaser agrees to apply, or to cause an affiliate of the Purchaser
to apply, for a transfer of the Receiver's liquor licences for the Hotel
forthwith after
<PAGE> 29
- 5 -
execution of this Supplemental Agreement and the Receiver will consent
to such transfer and agrees to co-operate with the Purchaser in
obtaining all necessary liquor licences and to do all acts and execute
all documents, at the Purchaser's expense, as are required by
governmental or public authorities in order to obtain a transfer of such
liquor licences as expeditiously as possible. In the event that the
Purchaser has not obtained such transfer by the Time of Closing, the
Receiver shall permit the Purchaser to use its liquor licences for the
Hotel for a period of up to ninety (90) days after the Time of Closing,
to the extent allowed by law. The Purchaser shall indemnify and save the
Receiver harmless from any cost, expense or liability whatsoever the
Receiver shall incur by reason of the Purchaser using the Receiver's
liquor licence on such basis, such indemnity to survive the completion
of the transaction contemplated by the Agreement of Purchase and Sale
and this Supplemental Agreement.
6. The Purchaser may register against title to the Real Property prior to
the Time of Closing, at its sole cost and expense, a reference plan
prepared by an Ontario Land Surveyor, showing the Real Property as a
part or parts thereon, provided that such reference plan is first
approved by the Receiver, such approval not to be unreasonably withheld
or delayed.
7. The Receiver covenants and agrees to carry out and complete, not later
than August 23, 1996, at its sole cost and expense, such work as is
necessary to comply with the work orders issued by the Fire Marshall's
Office requiring that certain meeting room doors on the second floor of
the Hotel be replaced in accordance with the Fire Code and the Hotel
Fire Safety Act, and to provide the Purchaser with written confirmation
from the Fire Marshall that such work has been carried out to the Fire
Marshall's satisfaction.
8. The Receiver covenants and agrees to carry out and complete, not later
than August 23, 1996, at its sole cost and expense, such work as is
necessary to comply with the work orders issued by the Ministry of
Consumer and Commercial Relations - Elevating Devices in respect of the
elevators in the Hotel, and to provide the Purchaser with written
confirmation from the Ministry that such work has been carried out to
the Ministry's satisfaction.
9. The Receiver agrees to provide a letter of confirmation to the
Purchaser at the Time of Closing indicating that the Receiver will hold
back from distribution for a period of ninety (90) days after the Time
of Closing the sum of Two Hundred and Thirty Thousand Dollars
($230,000), as required pursuant to subparagraph 21(e) of the Agreement
of Purchase and Sale.
<PAGE> 30
- 6 -
10. The Receiver acknowledges that the Purchaser has advised it that there
is a deficiency of four parking spaces at the Hotel based on a municipal
by-law requirement of 309 spaces and the provision on the Real Property
of 305 spaces. The Purchaser will determine in consultation with the
Receiver, each acting in good faith and in a commercially reasonable
manner, the most economically efficient means of rectifying such
deficiency and, without limiting the generality of the foregoing, shall
consider (i) creating new parking spaces on the Real Property, (ii)
restriping existing parking spaces on the Real Property and (iii)
seeking the minor variance from the provisions of such municipal by-law
pursuant to the Planning Act (Ontario). Once the means of rectifying
such deficiency have been established, the Purchaser shall proceed to
implement same forthwith and the Receiver shall reimburse the Purchaser
for all reasonable out-of-pocket costs incurred by the Purchaser in so
doing, forthwith after demand therefor. The Receiver agrees that
reducing the number of rooms in the Hotel or reducing the maximum
capacity of any of the facilities at the Hotel is not a means of
rectifying such deficiency that the Purchaser is required to consider or
implement pursuant to this paragraph.
11. The Purchaser may designate the seven employees referred to in paragraph
20 of the Agreement of Purchase and Sale at any time up to and including
August 16, 1996. In negotiating the costs of effecting the termination
of employment of such seven employees, the Receiver shall use its best
efforts to minimize same, having regard to its legal obligations owed to
such employees. When all such costs have been definitively settled, the
Receiver shall pay to the Purchaser the amount, if any, by which
$150,000 exceeds the aggregate costs incurred by the Receiver in
effecting such terminations of employment, such amount to be paid by the
Receiver from the $230,000 held back by the Receiver pursuant to
subparagraph 21(e) of the Agreement to Purchase and Sale, net of any
amount paid therefrom pursuant to paragraph 21 of the Agreement of
Purchase and Sale. The Receiver shall consult with the Purchaser prior
to settling such termination costs if the Receiver anticipates that the
aggregate costs of termination are likely to exceed $60,000.
12. The Purchaser hereby waives its right to terminate the Agreement of
Purchase and Sale pursuant to paragraph 4 thereof.
13. The following Schedules attached to this Supplemental Agreement are to
be read as and shall form part of this Supplement Agreement:
Schedule "A" - Form of Approval Order
Schedule "B" - Form of Vesting Order
Schedule "C" - Certain Contracts
<PAGE> 31
- 7 -
14. This Supplemental Agreement shall be governed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable
therein and shall be treated in all respects as an Ontario contract.
15. Except to the extent varied hereby or inconsistent herewith, all the
terms and conditions of the Agreement of Purchase and Sale shall remain
the same and time shall be of the essence. In the event of any conflict
between the terms of the Agreement of Purchase and Sale and those of
this Supplemental Agreement, the terms of this Supplemental Agreement
shall govern.
16. This Supplemental Agreement shall be binding on and shall enure to the
benefit of the successors and assigns of each of the parties hereto.
17. This Supplemental Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which taken together shall be deemed to constitute one and the same
instrument. Counterparts may be executed either in original or faxed
form and the parties may adopt any signatures received by a receiving
fax machine as original signatures of the parties; provided, however,
that any party providing its signature in such manner shall promptly
forward to all other parties an original of the signed copy of this
Supplemental Agreement which was so faxed.
<PAGE> 32
- 8 -
IN WITNESS WHEREOF the parties hereto have executed this Supplemental
Agreement by their duly authorized signing authorities.
WHC DEVELOPMENT CORPORATION
Per: [ILLEGIBLE]
--------------------------------
Name:
Title:
CONFEDERATION LIFE INSURANCE COMPANY,
by its provisional liquidator, the
Superintendent of Financial
Institutions, by its agent, KPMG Inc.
Per:
--------------------------------
Name:
Title:
KPMG INC., as Receiver and Manager of
assets of Third Generation Realty
Limited, Ardwold Realty Investments
Limited and 980879 Ontario Inc.,
comprising Bristol Place Hotel
Per:
--------------------------------
Name:
Title:
<PAGE> 33
- 8 -
IN WITNESS WHEREOF the parties hereto have executed this Supplemental
Agreement by their duly authorized signing authorities.
WHC DEVELOPMENT CORPORATION
Per:
----------------------------------
Name:
Title:
CONFEDERATION LIFE INSURANCE
COMPANY, by its provisional liquidator,
the Superintendent of Financial
Institutions, by its agent, KPMG Inc.
Per: /s/ KERRYN M. DOWNEY
----------------------------------
Name: Kerryn M. Downey
Title: Senior Vice President
KPMG INC., as Receiver and Manager of
assets of Third Generation Realty
Limited, Ardwold Realty Investments
Limited and 980879 Ontario Inc.,
comprising Bristol Place Hotel
Per: /s/ ROBERT A. CUMMING
----------------------------------
Name: Robert A. Cumming
Title: Senior Vice President
<PAGE> 34
ASSIGNMENT, ASSUMPTION AND AMENDMENT
OF MANAGEMENT AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT OF MANAGEMENT AGREEMENT
(this "Amendment") is made and entered into as of July 11, 1996, by and between
HOUSTON GREENSPOINT HOTEL ASSOCIATES, L.P. a Texas limited partnership, whose
address is 3500 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201
("HGRA"), CROW HOTEL LESSEE, INC., a Texas corporation, whose address is 3500
Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201 ("Crow"), and
WYNDHAM MANAGEMENT CORPORATION, a Delaware corporation, whose address is 2001
Bryan Tower, 2001 Bryan Street, Suite 2300, Dallas, Texas 75201 (the
"Manager").
RECITALS:
HGHA and Wyndham Hotel Company, a Texas corporation and a predecessor
in interest to Manager ("WHC"), entered into that certain Management Agreement
dated as of December 1, 1984 (the "Management Agreement"), pursuant to which
HGHA retained WHC to manage and operate that certain hotel situated on the Site
(as defined in the Management Agreement). Manager has succeeded to the rights,
obligations and interests of WHC in, to and under the Management Agreement.
HGHA desires to assign all of its right, title, interest and
obligations in, to and under the Management Agreement to Crow and Crow desires
to accept such assignment and assume such obligations. Manager is willing to
consent to such assignment, and Crow and Manager desire to amend the Management
Agreement in accordance with the terms set forth herein. For and in
consideration of the premises and of the mutual covenants and agreements set
forth herein, HGHA, Crow and Manager agree as follows:
1. Assignment and Assumption. HGHA hereby assigns to Crow all of
HGHA's interest in, and its rights and obligations under, the Management
Agreement, and Crow hereby accepts such assignment and assumes such
obligations. Manager hereby consents to such assignment and assumption.
References to the "Owner" in the Management Agreement hereafter shall mean
Crow.
2. Amendments to Management Agreement. The Management Agreement
is amended as follows:
2.1 Amendment of Definitions. Section 1.2 of the Management
Agreement is amended by deleting the defined terms "Group Services Assessment"
and "Owner Partnership Agreement" set forth therein, by amending the
definitions of "Executive Personnel" and "Mortgage" set forth therein to read
in their entirety as set
<PAGE> 35
forth below and by adding thereto the other defined terms set forth below:
Executive Personnel shall mean all or any one of the
following: general manager, assistant general manager, director of
food and beverage, director of sales, director of marketing,
controller and any other key executive of the Project designated by
Manager.
Gross Room Revenues in respect of any period shall mean all
revenues derived during such period, as finally determined on an
accrual basis in accordance with the Uniform System of Accounts and
generally accepted accounting principles consistently applied, from
(i) rentals and charges for quest rooms and suites ("Rooms"); (ii) all
business interruption insurance awards in respect of the Rooms; and
(iii) Condemnation awards for temporary use of the Rooms.
Lease Agreement shall mean that certain Lease Agreement dated
July 11, 1996 by and between Crow Hotel Lessee, Inc. and Patriot
American Hospitality Partnership, L.P.
Lessor shall mean Patriot American Hospitality Partnership,
L.P.
Marketing Contribution shall have the meaning provided
therefor in Section 3.14.
Marketing Services shall have the meaning provided therefor in
Section 3.14.
Mortgage shall mean any mortgage or deed of trust created by
Owner and encumbering all or any portion of the Project, whether now
in existence or hereafter created.
In addition to the foregoing, clause (6) in the definition of Gross Revenues is
hereby amended to read in its entirety as follows:
(6) All sales and other receipts of tenants, licensees
and concessionaires (provided, however, that all rents, fees,
commissions and concessions charged to any such lessee, licensee or
concessionaire are included in Gross Revenues pursuant to clause (e)
above; and provided further, that sales and other receipts of the
party providing alcoholic beverage service at the Project shall be
included in Gross Revenues); and
2.2 Amendment of Section 2.1. Section 2.1 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 2.1 Term. The term (the "Term") of this Agreement
shall be that period commencing on the Effective
-2-
<PAGE> 36
Date and continuing until the stated expiration date of the Lease
Agreement as in effect on the original execution date thereof (but
giving effect to any renewal options exercised thereunder), unless
this Agreement shall be sooner terminated or extended as herein
provided, in which case the word "Term" shall mean such lesser or
extended period of time.
2.3 Amendment of Section 3.3. Section 3.3 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 3.3 Personnel.
(a) Manager shall be responsible for and shall have the
sole and exclusive right to hire, promote, discharge, supervise,
train, transfer and determine the terms of employment of the Executive
Personnel and, through the Executive Personnel, all other
administrative, service and operating employees of the Project. All
such employees of the Project shall be employees of Manager or one of
Manager's Affiliates. In addition, Manager may, from time to time,
assign one or more of its employees to the staff of the Project on a
full-time, part-time or temporary basis. Notwithstanding the
provisions of this Section 3.3 (a) or any other provision of this
Agreement, the responsibility of Manager for acts or omissions of
Project employees shall not extend beyond responsibility for acts or
omissions of the Executive Personnel. Manager acknowledges,
however,that such Executive Personnel have the duties specified in the
first sentence of this Section 3.3(a) with respect to other Project
employees.
(b) Manager will negotiate, subject to Owner's right to
have a representative present at any time, with any labor union
lawfully entitled to represent employees of the Project. Manager shall
not enter into any collective bargaining agreements or labor contracts
with respect to employees of the Project without the prior written
consent of Owner, which consent shall not be unreasonably withheld or
delayed.
(c) Manager shall be entitled to withdraw from the
Operating Accounts all wages, salaries, fringe benefits and other
compensation paid or payable with respect to all Project employees and
Manager shall pay such compensation directly to such employees.
(d) Manager shall decide which, if any, of the Executive
Personnel shall reside at the Project. Manager shall be permitted to
provide free room and board to one member of the Executive Personnel
and his or her family. In addition, Manager shall be permitted to
provide free accommodations and amenities to Manager's employees and
representatives visiting the Project on a temporary basis in
connection with the
-3-
<PAGE> 37
management and operation of the Project.
(e) Subject to reasonable availability, Manager shall, at
no cost to Manager, be responsible for arranging health insurance
coverage for employees of the Project. Subject to the prior agreement
of Owner and Manager and subject to reimbursement of Manager of all
applicable costs and expenses (including, but not limited to, those
associated with compliance with the Consolidated Omnibus Budget
Reconciliation Act of 1985 and an exit premium in connection with the
termination of such coverage), Manager may permit the enrollment of
some or all of such employees under health insurance plans maintained
by Manager.
2.4 Amendment of Section 3.7. Section 3.7 of the Management
Agreement is hereby amended by deleting the parenthetical provision in the
third sentence thereof and by deleting the words "Except as provided in Section
6.4 of this Agreement," in the fourth sentence thereof.
2.5 Amendment of Section 3.14. Section 3.14 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 3.14 Marketing, National Sales Office and Centralized
Reservations Services.
(a) To the extent provided generally by Manager for the
benefit of the Hotel and other Wyndham hotels in the same division as
the Hotel, Manager will provide for the Project during the Term
marketing services (the "Marketing Services") consisting of chain-wide
and/or division level marketing programs, marketing collateral,
research services, advertising and public relations efforts.
(b) On or before the tenth (10th) day of each calendar
month during the Term, Owner shall pay or reimburse Manager, for the
provision of the Marketing Services, an amount to be provided for in
the Annual Budget (the "Marketing Contribution") that is not less than
one and one-half percent (1.5%) of Gross Room Revenues of the Project
(or such other amount as may be provided for in the Annual Budget) for
the period from the commencement of the then current Operating Year to
the end of the immediately preceding calendar month or the date of the
expiration or sooner termination of the Term, as the case may be, less
the aggregate amount of monthly payments theretofore paid in respect
of the Marketing Contribution for such Operating Year. Manager in its
discretion may collect less than the amount provided for in the
preceding sentence. The Marketing Contribution will be collected and
applied to pay actual costs incurred and allocated in respect of the
provision of the Marketing
-4-
<PAGE> 38
Services. A marketing budget setting forth the estimated costs and
expenses of the Marketing Services for each Operating Year shall be
set forth in each Annual Budget delivered under this Agreement. The
Marketing Contribution shall not include, and Owner shall pay
separately, the costs of any local, regional or property-specific
advertising and the costs of any third party marketing partner
programs (such as frequent flyer and similar programs) in which the
Hotel participates that are direct-billed to participating hotels,
such as costs of airline mileage or other direct operating costs to
marketing partners.
(c) Manager will collect the Marketing Contribution
payable under this Agreement and shall expend the same at such time
and in such manner as it reasonably deems appropriate for the
provision of the Marketing Services. Prior to the expenditure thereof,
the collected Marketing Contributions may be held or maintained in one
or more accounts, any of which also may include funds other than
Marketing Contributions, but Manager in any event shall account to
Owner for the Marketing Contribution collected under this Agreement.
Manager will permit Owner access to Manager's records concerning the
holding and expenditure of such Marketing Contribution at any
reasonable time or times during Manager's regular business hours.
(d) Notwithstanding the foregoing provisions of this
Section 3.14, any service that otherwise would constitute a Marketing
Service covered by the Marketing Contribution hereunder instead may be
provided on a cost allocation basis administered in a reasonable and
non-discriminatory manner. In either case, the amount thereof shall be
provided for in the Annual Budget.
(e) Owner shall pay the Hotel's allocable share of the
cost of Manager's national sales office efforts, including group and
transient sales services. The Hotel's allocable share of Manager's
cost of providing group sales services generally will be computed
based on a calculation of the Gross Room Revenues produced by the
group sales efforts of the national sales offices for the Hotel in
relation to the Gross Room Revenues produced by the group sales
efforts of the national sales offices for all hotels for which such
services are provided. The Hotel's allocable share of Manager's cost
of providing transient sales services generally will be computed based
on the available rooms in the Hotel in relation to the total number of
available rooms in all hotels for which such services are provided;
provided, however, that with respect to any hotel which historically
derives more than 75% of its business from group sales, 40% of the
hotel's rooms shall be included in the calculation of the transient
sales allocation.
-5-
<PAGE> 39
(f) Centralized reservation costs incurred in respect of
the Project shall be paid or reimbursed on the basis of an initial
link-up charge and subsequent charges based on the cost of handling
reservations made at the Project.
2.6 Addition of Section 3.15. Article III of the Management
Agreement is hereby amended by adding thereto a new Section 3.15, which shall
read in its entirety as follows:
Section 3.15 Purchasing and Technical Services Fees. To
the extent provided for in the Annual Budget or otherwise approved by
Owner, Manager or one of its Affiliates shall be entitled to the
payment of purchasing and technical services fees with respect to the
acquisition, or supervision of installation or construction, of
Capital Improvements, FF&E, Operating Equipment and Inventories at the
Project.
2.7 Amendment of Section 4.3. Section 4.3 of the Management
Agreement is hereby amended by deleting the words "except to the extent that
Manager is required to provide such funds under Section 6.4 of this Agreement"
in the second sentence of Section 4.3(b) and by deleting the words "except as
otherwise provided in Section 6.4 of this Agreement" in the second sentence of
Section 4.3(c).
2.8 Amendment of Section 5.1. Section 5.1 of the Management
Agreement is hereby amended by deleting the words "except as provided in
Section 6.4 of this Agreement" in the third sentence of Section 5.1(e).
2.9 Amendment of Section 6.4. Section 6.4 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 6.4 Subordination. All Management Fees and other
amounts payable to Manager hereunder shall be subordinate to the
payment by Owner to Lessor of Rent (as defined in the Lease Agreement)
and any other sums due under the Lease Agreement, on a month-to-month
basis, and shall at all times from and after the occurrence and during
the continuation of an Event of Default under the Lease Agreement be
subordinate to all payments of rent and other sums due by Owner to
Lessor under the Lease Agreement. Notwithstanding the foregoing, all
Management Fees and other sums paid to Manager for a month when full
Rent has been paid to Lessor shall be deemed to have been earned by
Manager and shall not be subject to disgorgement or reimbursement by
Manager to Owner or Lessor.
2.10 Amendment of Article VII. Article VII of the Management
Agreement is hereby amended to read in its entirety as follows:
-6-
<PAGE> 40
ARTICLE VII
INSURANCE AND INDEMNITIES
Section 7.1 Insurance. Subject to reasonable
availability, Manager shall, at no cost to Manager, procure and
maintain with responsible and properly licensed companies reasonably
acceptable to Owner insurance in such amounts, written on such forms
and covering such risks as shall be required by the Lease Agreement or
any Mortgagee or as shall otherwise be reasonably required by Owner or
Manager, including but not limited to the insurance in respect of the
Project described in Exhibit B to this Agreement.
Section 7.2 Evidence of Insurance. Upon written request
of Owner, Manager agrees to deliver to Owner evidence reasonably
satisfactory to Owner that all insurance required to be maintained
under this Agreement is in full force and effect. In addition, prior
to the date on which any such insurance premiums must be paid to
prevent delinquency thereof, Manager will, upon request of Owner,
deliver to Owner a statement or statements showing the amount of the
premiums required to be paid, the name and mailing address of the
party to whom the same is payable and receipts reflecting that all
such amounts have been fully paid.
Section 7.3 Investigation of Claims and Reports. Manager
shall promptly investigate and, as soon as reasonably practicable,
make a full written report to Owner as to all material accidents,
claims for damage relating to the ownership, operation and maintenance
of the Project and the estimated cost of repair thereof, and shall
prepare at the expense of and for the approval of Owner, any and all
reports required by any insurance company in connection therewith. All
such reports shall be promptly filed with the applicable insurance
company. All policies of insurance required under this Agreement shall
provide for adjustment of losses of less than Fifty Thousand Dollars
($50,000) by Manager alone and of greater losses by Owner and Manager
jointly.
Section 7.4 Indemnities.
(a) Manager shall indemnify and hold harmless Owner and
its shareholders and Affiliates and their respective partners,
shareholders, directors, officers, employees and agents from and
against any and all liability, loss, damages, costs and expenses
("Liabilities") incurred by reason of the management and operation of
the Project by Manager during the Term insofar and only insofar as
such Liabilities are caused by the gross negligence, willful
misconduct or willful violation of Legal Requirements by Manager.
Project employees other than the Executive Personnel shall not be
deemed to be employees or
-7-
<PAGE> 41
agents of, or otherwise acting on behalf of, Manager.
(b) Owner shall indemnify and hold harmless Manager and
its shareholders and Affiliates and their respective partners,
shareholders, directors, officers, employees and agents from and
against any and all Liabilities (INCLUDING THOSE CAUSED BY THE SIMPLE
NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE MAY
BE STRICTLY LIABLE) (i) arising out of or incurred in connection with
the construction, renovation, management or operation of the Project
or (ii) which may be asserted or arise as a direct or indirect result
of the presence on or under, or escape, seepage, leakage, spillage,
discharge, emission or release from the Project of any hazardous
materials or any hazardous materials contamination or arise out of or
result from the environmental condition of the Project or the
applicability of any Legal Requirements relating to hazardous
materials, except, in the case of both (i) and (ii) above, those
Liabilities caused by the gross negligence, willful misconduct or
willful violation of Legal Requirements by Manager during the Term.
OWNER ACKNOWLEDGES THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT
LIMITED TO, AN AGREEMENT BY OWNER TO INDEMNIFY THE INDEMNITEE AGAINST
LIABILITIES CAUSED BY THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND
THOSE AS TO WHICH THE INDEMNITEE MAY BE STRICTLY LIABLE.
(c) In case an action covered by this Section 7.4 is
brought against any indemnified party, the indemnifying party will be
entitled to assume the defense thereof, subject to the provisions
herein stated, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election to so assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense
of the action with counsel reasonably satisfactory to the indemnified
party; provided that the fees and expenses of the indemnified party's
counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing
by the indemnifying party or (ii) such indemnified party shall have
been advised by counsel that there is a conflict of interest or issue
conflict involved in the representation by counsel employed by the
indemnifying party in the defense of such action on behalf of the
indemnified party or that there may be one or more legal defenses
available to such indemnified party which are not available to the
indemnifying party (in which case the indemnifying party shall not
have the right to assume
-8-
<PAGE> 42
the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys for the indemnified party, which firm shall be designated in
writing by the indemnified party).
(d) The provisions of this Section shall survive any
termination or expiration of this Agreement, whether by lapse of time
or otherwise, and shall be binding upon the parties hereto and their
respective successors and assigns.
2.11 Amendment of Section 9.2. Section 9.2 of the Management
Agreement is hereby amended by deleting the parenthetical provision in the
second sentence of Section 9.2(a).
2.12 Amendment of Section 10.1. Section 10.1 of the Management
Agreement is hereby amended by replacing the words "group services" in the
sixth line thereof with the words "Marketing Services."
2.13 Amendment of Section 10.2. Section 10.2 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 10.2 Assignment by Owner. Except as otherwise
expressly provided for herein, Owner may not sell transfer or
otherwise convey all or any part of the Project or Owner's interest
therein or assign this Agreement or any interest herein without the
express prior written consent of Manager. Manager agrees that it will
not use its right to grant or withhold consent as a means to extract
economic concessions from Owner. Instead, Manager agrees to make its
decision based on its evaluation of whether the proposed transferee or
assignee has adequate net worth to timely discharge all of the
obligations of Owner under this Agreement and whether the persons
identified with the proposed transferee or assignee will be persons of
high character and with a favorable reputation for integrity, honesty
and veracity and whether a proposed transfer or assignment will
adversely affect the ownership, operation and management of the
Project subject to and in accordance with the provisions of this
Agreement. In addition, Manager may consider whether the proposed
transferee is, or is affiliated with, another hotel manager or
franchisor. Accordingly, Manager shall grant or withhold consent to
any proposed transfer or assignment on the basis of Manager's
evaluations and determinations of the factors enumerated in the
preceding sentences. Any transferee or assignee by reason of any such
transfer or assignment shall
-9-
<PAGE> 43
assume and agree to perform all of Owner's duties, obligations and
liabilities herein contained pursuant to a written instrument in form
and substance satisfactory to Manager and reflecting any amendments to
this Agreement reasonably necessary in order to preserve and protect
Manager's rights hereunder in light of the change in ownership. The
sale or other disposition of fifty percent (50%) or more of the
beneficial interests in Owner (whether partnership interests, shares
of stock or other beneficial interests), whether in a single
transaction or in a series of transactions, shall be deemed to
constitute the sale or disposition of an interest in the Project for
purposes of this Article.
2.14 Addition of Section 10.4. Article X of the Management
Agreement is hereby amended by adding thereto a new Section 10.4, which shall
read in its entirety as follows:
Section 10.4 Special Provisions Related to Termination of
Lease.
(a) Subject to Section 10.4(c) below, effective upon
any termination of the Lease Agreement other than pursuant to Section
36.1(c) thereof, this Agreement also shall terminate.
(b) Effective upon any termination of the Lease Agreement
pursuant to Section 36.1(c) thereof, Owner shall cause Lessor to
assume and agree to perform all of Owner's duties, obligations and
liabilities herein contained pursuant to a written instrument in form
and substance reasonably satisfactory to Manager. Notwithstanding the
provisions of Section 10.2 of this Agreement, Lessor thereafter may
transfer or convey the Project in connection with a bona fide, arm's
length sale of the Project. Lessor, as the Owner hereunder, and
Manager each shall have the right to terminate this Agreement in
connection with such a sale. Lessor shall give Manager written notice
of any such proposed sale not less than thirty (30) days prior to the
consummation thereof, which notice shall specify whether Lessor elects
to terminate this Agreement effective upon the consummation of such
sale. If Lessor does not elect to terminate this Agreement in
connection with such sale, Lessor shall promptly provide to Manager
such information regarding the proposed transferee as Manager may
reasonably request, and Manager shall have the right to terminate this
Agreement effective upon consummation of such sale, transfer or
conveyance, by giving written notice thereof to Lessor not more than
fifteen (15) days after Lessor's notice to Manager pursuant to the
preceding sentence. Not later than the effective date of any
termination of this Agreement pursuant to this Section 10.4(b), and
as a condition to the effectiveness of any such termination, Lessor
shall pay to Manager a termination fee in an amount equal to the
discounted present value (using a discount rate of fifteen
-10-
<PAGE> 44
percent (15%) per annum) of seventy-five percent (75%) of the
Management Fees projected for the remaining term of this Agreement on
the basis of the average of the Management Fees for the last twelve
full calendar months immediately preceding the date of termination.
If neither Lessor nor Manager terminates this Agreement in connection
with any such sale, Lessor shall cause the transferee by reason of any
such sale to assume and agree to perform all of the duties,
obligations and liabilities of "Owner" herein contained and thereafter
arising pursuant to a written instrument in form and substance
reasonably satisfactory to Manager; provided, however, that the right
to sell the Project provided to Lessor under this Section 10.4(b)
shall not be assignable or transferable, and any subsequent
assignment, transfer or conveyance by any transferee from Lessor shall
be subject to the provisions of Section 10.2 hereof. Any notice of
termination given under this Section 10.4(b) shall be deemed
ineffective if the related sale is not consummated.
(c) In connection with any termination of the Lease
Agreement (other than pursuant to a sale of the Project as
contemplated by Section 10.4(b)), Lessor or its designee may, upon
at least thirty (30) days prior written notice to Manager, assume this
Agreement for a period commencing upon the effective date of such
termination and continuing for up to four (4) months thereafter.
During such period, Lessor shall pay to Manager, in addition to the
Management Fees otherwise payable hereunder, a Trade Name Fee in an
amount equal to that generally charged by Manager to other comparable
hotels that it operates as "Wyndham" hotels; provided, however, that
no such Trade Name Fee shall be payable if the Lease Agreement shall
have been terminated as a result of the occurrence of an Event of
Default by the Lessee thereunder.
2.15 Amendment of Article XI. The captions and text of Article XI
are deleted and replaced with the following: "[Reserved.]."
2.16 Amendment of Article XII. Article XII of the Management
Agreement is hereby amended by adding thereto new Sections 12.15 and 12.16,
which shall read in their entirety as follows:
Section 12.15 Amendment of Lease Agreement. Owner agrees
that it shall not amend the Lease Agreement without the prior written
consent of Manager, which shall not be unreasonably withheld.
Section 12.16 Obligation to Repay Advances by Manager.
Owner agrees that, to the extent that Manager has not been repaid for
any advances that it has made pursuant to the provisions of Section
6.4 as in effect prior to the amendment of this Agreement entered into
on July 11, 1996, Owner shall
-11-
<PAGE> 45
repay such advances to Manager as soon as practicable out of Owner's
available cash.
2.17 Addition of Exhibit B. The Management Agreement is hereby
amended by adding as Exhibit B thereto the Exhibit B attached hereto.
3. Miscellaneous.
(a) Capitalized terms used in this Amendment that are not
defined herein shall have the meaning provided therefor in the Management
Agreement.
(b) The captions used for the Sections in this Amendment
are inserted only as a matter of convenience and for reference and in no way
define, limit or describe the scope or the intent of this Amendment or any
Section hereof.
(c) This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be construed as a single instrument.
(d) In the event any provision of this Amendment is
declared or adjudged to be unenforceable or unlawful by any Governmental
Authority, then such unenforceable or unlawful provision shall be excised
herefrom, and the remainder of this Amendment, together with all rights and
remedies granted thereby, shall continue and remain in full force and effect.
(e) The Management Agreement, as amended by this
Amendment, constitutes the entire agreement between the parties hereto with
respect to the matters covered hereby and thereby. All prior negotiations,
representations and agreements with respect thereto not incorporated in this
Amendment or the Management Agreement are hereby canceled. As modified hereby,
the Management Agreement shall continue in full force and effect and be binding
upon the parties hereto and their respective successors and permitted assigns.
References to the Management Agreement after the date hereof shall mean the
Management Agreement as amended pursuant to this Amendment.
(f) This Amendment shall be governed by and construed
under the law governing the Management Agreement.
-12-
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.
HOUSTON GREENSPOINT HOTEL ASSOCIATES,
L.P., a Texas limited partnership
("HGHA")
By: Greenspoint Associates, Ltd., a Texas
limited partnership, General Partner
By: New Greenspoint Hotel Corp., a
Texas corporation, its General
Partner
By: /s/ TIMOTHY J. HOGAN
-----------------------------
Name: Timothy J. Hogan
--------------------------
Title: Vice President
--------------------------
CROW HOTEL LESSEE, INC., a Texas
corporation
("Crow")
By: /s/ TIMOTHY J. HOGAN
-------------------------------------
Name: Timothy J. Hogan
------------------------------
Title: Vice President
------------------------------
WYNDHAM MANAGEMENT CORPORATION, a
Delaware corporation
("Manager")
By: /s/ A. RAYMOND
-------------------------------------
Name:
------------------------------
Title:
------------------------------
-13-
<PAGE> 47
EXHIBIT B
INSURANCE
A. Pursuant to Section 7.1 of the Management Agreement
("Agreement") dated December 1, 1984, as amended, between Crow Hotel Lessee,
Inc. (the "Owner") and Wyndham Management Corporation (the "Manager"), subject
to reasonable availability, Manager shall procure and maintain insurance in
respect of the Project (as that term is defined in the Agreement), at Owner's
expense, as follows:
1. Property damage insurance in an amount not less than
that stipulated by Owner covering all real and personal property,
which insurance shall be written on an "all risks" and replacement
cost form;
2. Boiler and machinery coverage insuring against damage
to, and against loss or damage caused by an accident or occurrence
arising from or related to, boilers, heating apparatus, pressure
vessels and pipes, air conditioning apparatus and electrical
equipment, which insurance coverage shall be written on a standard,
broad form boiler and machinery policy (on a blanket or comprehensive
basis) and shall include "repair and replacement" coverage;
3. Commercial general liability insurance in an amount
not less than $1,000,000.00 per occurrence/$3,000,000.00 aggregate,
insuring against liability for bodily injury and property damage and,
including without limitation, the following coverage:
a) premises and operations liability;
b) independent contractors liability;
c) product/completed operations liability;
d) broad form property damage liability;
e) blanket contractual liability with respect to
all contracts, written and oral;
f) personal injury liability;
g) liquor liability;
h) incidental malpractice liability;
i) garagekeepers legal liability;
j) worldwide jurisdiction; and
<PAGE> 48
k) watersports liability.
4. Comprehensive automobile liability insurance in an
amount not less than $1,000,000.00 per occurrence covering liability
for bodily injury and property damage arising out of the ownership,
maintenance or use of all private passenger and commercial vehicles
and other equipment required to be licensed for road use;
5. Innkeeper's legal liability insurance covering the
property of premises guests in an amount not less than $10,000.00 per
guest and $250,000.00 per occurrence;
6. Safe depository insurance in an amount not less than
$250,000.00 per occurrence;
7. Business interruption insurance written on an "all
risks" form either as endorsements to the policies satisfying (1) and
(2) above or on a separate policy, such insurance to include specific
coverage for Manager's Management Fee calculated based on the Gross
Revenues used as the basis for calculation of the business
interruption insurance award; and
8. Broad form umbrella/excess liability insurance, which
shall cover defense costs on a "first dollar" basis and shall provide
coverage not less than "following form" in respect of all underlying
coverages, in an amount not less than $140,000,000.00 covering against
excess liability over coverages provided by all primary general
liability, automobile liability and employers' liability insurance
policies.
B. In addition, Owner and Manager agree that, subject to
reasonable availability, Manager shall maintain the following insurance with
respect to Project employees, agents and servants, at Owner's expense:
1. Workers' compensation insurance complying with the
statutory workers' compensation law for the state in which the Project
is located;
2. Employer's liability insurance in an amount not less
than $500,000.00 covering against liability in respect of employees,
agents and servants not covered by workers' compensation insurance and
against occupational disease benefits; and
3. Employee fidelity insurance in an amount not less
than $1,000,000.00.
4. Employment practices insurance in an amount not
-B-2-
<PAGE> 49
less than $1,000,000 per claim/aggregate.
Manager shall also maintain such other insurance as Manager shall deem
necessary for operation of the Project, with the prior approval of Owner.
C. All insurance procured and maintained pursuant to the
Agreement shall have such deductibles, limits and coverages, and shall
otherwise be in such form, as Manager shall from time to time specify. However,
Owner assumes all responsibility and risks with respect to the adequacy of
insurance in respect of the Hotel.
D. All insurance policies procured and maintained pursuant to the
Agreement shall have attached thereto an endorsement that such policy shall not
be canceled or materially changed without at least thirty (30) days prior
written notice to Owner and Manager.
E. All property damage insurance procured and maintained pursuant
to the Agreement, including, without limitation, insurance procured and
maintained pursuant to A(l), A(2) and A(7) above, shall name Owner and Manager
as insureds and shall provide for the payment of losses thereunder to Owner and
Manager as their respective interests shall appear thereon. All liability
insurance procured and maintained pursuant to the Agreement, including without
limitation, the policies procured and maintained pursuant to A(3), (4), (5),
(6) and (8), shall name Owner, Manager, their Affiliates and their and their
Affiliates' respective shareholders, partners, directors, officers, agents and
employees as insureds. All policies of Workers Compensation, Employers
Liability and Employment Practices insurance pursuant to B (1), (2) and (4)
shall include a waiver of subrogation in favor of Owner.
F. Any insurance procured and maintained pursuant to the
Agreement by either party may be effected under policies of blanket insurance
which may cover other properties managed or owned by such party.
-B-3-
<PAGE> 1
EXHIBIT 11
WYNDHAM HOTEL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
QUARTER AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30 June 30
------------------------ ---------------------
1995 1996 1995 1996
----------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Primary Earnings Per Share:
- ---------------------------
Number of Shares Outstanding:
Common stock - 20,018 - 20,018
Assumed exercise of stock options - 214 - 214
---------- --------- --------- ----------
- 20,232 - 20,232
========== ========= ========= ==========
Income before extraordinary item $ 2,177 $ 13,624 $ 5,195 $ 18,790
Extraordinary item - (1,131) - (1,131)
---------- --------- --------- ----------
Net income $ 2,177 $ 12,493 $ 5,195 $ 17,659
========== ========= ========= ==========
Earnings per share:
Income before extraordinary item N/A $ .67 N/A $ .93
Extraordinary item N/A (.06) N/A (.06)
--------- ----------
Net Income N/A $ .61 N/A $ .87
========= ==========
Fully Diluted Earnings Per Share:
- ---------------------------------
Number of Shares Outstanding:
Common stock - 20,018 - 20,018
Assumed exercise of stock options - 214 - 214
---------- --------- --------- ----------
- 20,232 - 20,232
========== ========= ========= ==========
Income before extraordinary item $ 2,177 $ 13,624 $ 5,195 $ 18,790
Extraordinary item - (1,131) - (1,131)
---------- --------- --------- ----------
Net Income $ 2,177 $ 12,493 $ 5,195 $ 17,659
========== ========= ========= ==========
Earnings per share:
Income before extraordinary item N/A $ .67 N/A $ .93
Extraordinary item N/A (.06) N/A (.06)
--------- ----------
Net Income N/A $ .61 N/A $ .87
========= ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 51,675
<SECURITIES> 0
<RECEIVABLES> 27,490
<ALLOWANCES> (774)
<INVENTORY> 1,254
<CURRENT-ASSETS> 83,704
<PP&E> 127,731
<DEPRECIATION> (30,619)
<TOTAL-ASSETS> 237,216
<CURRENT-LIABILITIES> 25,378
<BONDS> 109,675
<COMMON> 200
0
0
<OTHER-SE> 68,993
<TOTAL-LIABILITY-AND-EQUITY> 237,216
<SALES> 40,914
<TOTAL-REVENUES> 60,526
<CGS> 0
<TOTAL-COSTS> 28,313
<OTHER-EXPENSES> 21,796
<LOSS-PROVISION> 507
<INTEREST-EXPENSE> 5,055
<INCOME-PRETAX> 6,595
<INCOME-TAX> (12,195)
<INCOME-CONTINUING> 18,790
<DISCONTINUED> 0
<EXTRAORDINARY> (1,131)
<CHANGES> 0
<NET-INCOME> 17,659
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
</TABLE>
