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REGISTRATION NO. 333-18507
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WYNDHAM HOTEL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 7011 75-263-6072
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2001 BRYAN STREET, SUITE 2300
DALLAS, TEXAS 75201
(214) 863-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
JAMES D. CARREKER
CHIEF EXECUTIVE OFFICER
WYNDHAM HOTEL CORPORATION
2001 BRYAN STREET, SUITE 2300
DALLAS, TEXAS 75201
(214) 863-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
M. CHARLES JENNINGS
LOCKE PURNELL RAIN HARRELL
(A PROFESSIONAL CORPORATION)
2200 ROSS AVENUE, SUITE 2200
DALLAS, TEXAS 75201
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box:[ ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering:[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box:[ ]
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<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
---------- ---------- --------- -------------- ---
<S> <C> <C> <C> <C>
Common Stock, 646,669 $23.312 (1) $15,075,147 $4,568 (2)
$.01 par value
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(d) promulgated under the Securities Act of 1933, and based
upon the average of the high and low prices per share as reported on the New
York Stock Exchange Composite Index on December 3, 1996.
(2) Of this fee, $3,907 was paid by the Company in connection with the original
filing of this Registration Statement on December 20, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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WYNDHAM EMPLOYEES LTD.
Dear WEL Participant:
This letter and the accompanying Prospectus/Consent Solicitation
Statement are being sent to you concerning the proposed distribution by Wyndham
Employees Ltd. ("WEL") of 646,669 shares of Common Stock, $.01 par value per
share, of Wyndham Hotel Corporation to the 91 participants of WEL. The proposed
distribution of the Wyndham Shares is part of a plan (the "Plan of
Distribution") that will result in the dissolution and termination of WEL. The
Plan of Distribution must be approved by WEL participants holding a majority of
the percentage interests in WEL.
If approved, the Plan of Distribution would result in the
distribution to you of the number of Wyndham shares set forth on the individual
account statement included in the accompanying materials. The Wyndham shares
distributed to you will be subject to your pro rata share of the indebtedness
owed by WEL, which is also set forth on your individual account statement.
Prior to receiving your Wyndham shares, you will be required either to (i)
take out a loan (that will be secured by your Wyndham shares) to repay your
WEL indebtedness, (ii) sell a portion of your Wyndham shares to repay your
WEL indebtedness, or (iii) repay your WEL indebtedness through a direct payment
by you to the general partner of WEL.
The accompanying Prospectus and related materials provide a detailed
description of the Plan of Distribution, the business and financial information
of Wyndham and other matters to be considered by you.
The General Partner of WEL is seeking your vote to approve the Plan of
Distribution. Attached to this letter are (i) a Consent Form for your vote;
(ii) a Repayment and Resale Election Form that will be used by you to indicate
how you would like to repay your WEL indebtedness; and (iii) an individual
account statement that shows the number of Wyndham shares that will be
distributed to you in the Plan of Distribution and your pro rata share of WEL
indebtedness. THE GENERAL PARTNER HAS APPROVED THE PLAN OF DISTRIBUTION AND
RECOMMENDS THAT YOU VOTE FOR THE PLAN OF DISTRIBUTION.
PLEASE REVIEW THE ENCLOSED MATERIALS, THEN COMPLETE, SIGN AND DATE THE
CONSENT FORM AND THE REPAYMENT AND RESALE ELECTION FORM AND RETURN THEM IN THE
ENCLOSED POSTAGE PRE-PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, AND IN ANY
EVENT, BY 12:00 NOON (CENTRAL TIME), FEBRUARY 7, 1997. IT IS VERY IMPORTANT
THAT YOU RETURN THE ENCLOSED CONSENT FORM, BECAUSE FAILURE TO RETURN IT HAS THE
SAME EFFECT AS A VOTE AGAINST THE PLAN OF DISTRIBUTION. WHETHER OR NOT YOU VOTE
FOR THE PLAN, THE REPAYMENT AND RESALE ELECTION FORM MUST BE COMPLETED AND
RETURNED IN ORDER FOR YOU TO RECEIVE YOUR WYNDHAM SHARES IF THE PLAN IS
APPROVED. IN ADDITION, UNLESS YOU RETURN THE REPAYMENT AND RESALE ELECTION FORM
BY THE TIME INDICATED ABOVE, THE COMPANY WILL
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AUTOMATICALLY ARRANGE FOR THE SALE OF A SUFFICIENT NUMBER OF YOUR WYNDHAM
SHARES TO PAY YOUR WEL INDEBTEDNESS AND THE BROKERAGE COMMISSION ON THE SALE
AND ANY TAX OR OTHER COSTS AND EXPENSES ASSOCIATED WITH SUCH SALE.
IF YOU HAVE ANY QUESTIONS REGARDING THE PLAN OF DISTRIBUTION, THE
ENCLOSED MATERIALS OR HOW TO COMPLETE THE CONSENT FORM OR THE REPAYMENT AND
RESALE ELECTION FORM, YOU MAY CALL ELISE TURNER AT THE COMPANY AT (214)
863-1097.
Sincerely yours,
/s/ JAMES D. CARREKER
James D. Carreker
Wyndham Hotel Management Corporation,
General Partner
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WYNDHAM EMPLOYEES LTD.
CONSENT FORM AND POWER OF ATTORNEY
Introduction
This Consent Form and Power of Attorney (this "Consent Form") contains
materials that must be completed by each WEL Participant who has received a
copy of the accompanying Prospectus/Consent Solicitation Statement dated
January 27, 1997 and who wishes to vote FOR or AGAINST the Plan of
Distribution, as more fully described in the Prospectus. Capitalized terms not
otherwise defined herein shall have the meaning set forth in the
Prospectus/Consent Solicitation Statement.
You are asked to complete and return this Consent Form. A WEL
PARTICIPANT WHO FAILS TO RETURN A SIGNED CONSENT FORM OR COMPLETES HIS OR HER
CONSENT FORM IN AN UNINTELLIGIBLE MANNER SHALL BE DEEMED TO HAVE VOTED
"AGAINST" THE PLAN OF DISTRIBUTION. ANY WEL PARTICIPANT WHO RETURNS A SIGNED
CONSENT FORM BUT FAILS TO INDICATE HIS OR HER APPROVAL OR DISAPPROVAL OF THE
PLAN OF DISTRIBUTION SHALL BE DEEMED TO HAVE VOTED "FOR" THE PLAN OF
DISTRIBUTION.
IF YOU HAVE ANY QUESTIONS REGARDING THE PLAN OF DISTRIBUTION, PLEASE
CONTACT ELISE TURNER AT WYNDHAM HOTEL CORPORATION AT (214) 863-1097. THIS
CONSENT FORM MUST BE RETURNED TO AND RECEIVED BY:
WYNDHAM HOTEL MANAGEMENT CORPORATION
2001 BRYAN STREET, SUITE 2300
DALLAS, TEXAS 75201
ATTENTION: ELISE TURNER
TELEPHONE: (214) 863-1097
FACSIMILE: (214) 863-1262
PRIOR TO 12:00 NOON, CENTRAL TIME, ON FEBRUARY 7, 1997, or such later date as
may be designated in a mailing to all WEL Participants (the "Expiration Date").
The Consent Form will be effective only when it is actually received by Wyndham
Hotel Management Corporation. A pre-addressed Federal Express envelope has been
provided for your convenience.
A WEL Participant who executes and delivers a Consent Form will have
the right to withdraw it at any time prior to the Expiration Date by delivering
a written notice of withdrawal or change of vote (which may be delivered by any
means, including telecopy) to Wyndham Hotel Management Corporation at its
address set forth above. Consents and notices of withdrawal or change of vote
received after the Expiration Date will not be valid.
<PAGE> 5
THE GENERAL PARTNER BELIEVES THAT THE TERMS OF THE PLAN OF
DISTRIBUTION ARE FAIR AND IN THE BEST INTERESTS OF WEL PARTICIPANTS AND
RECOMMENDS THAT WEL PARTICIPANTS VOTE FOR THE PLAN OF DISTRIBUTION.
CONSENT
The undersigned hereby acknowledges receipt of the accompanying
Prospectus/Consent Solicitation Statement dated January 27, 1997 relating
to the Plan of Distribution.
Approval of Plan of Distribution.
Vote FOR or AGAINST the Plan of Distribution as more fully described in the
Prospectus by marking "X" in the appropriate box below. Please note that a vote
to approve the Plan of Distribution operates as a consent to (i) the
distribution of the Wyndham Shares to WEL Participants and (ii) the resulting
dissolution and termination of WEL.
[ ] FOR [ ] AGAINST
---------------------------
Signature
---------------------------
Print Name
---------------------------
Social Security Number
---------------------------
Date
<PAGE> 6
POWER OF ATTORNEY
The undersigned hereby makes, constitutes and appoints Wyndham Hotel
Management Corporation, a Texas corporation (the "General Partner"), with full
power of substitution, as the true and lawful attorney-in-fact of the
undersigned, in the name, place and stead of the undersigned, to execute, swear
to, acknowledge, certify, deliver, file and record any and all amendments,
assignments, agreements and other documents which may be required by, or to be
filed with, any governmental agency, or which the General Partner deems
advisable or necessary, to implement the Plan of Distribution if it is
approved.
The foregoing grant of authority is a special power of attorney
coupled with an interest and from and after the Expiration Date shall be
irrevocable and shall not terminate upon, but shall survive the death,
bankruptcy, disability or incompetence, mental incapacitation or dissolution of
the undersigned, to the extent the undersigned may legally contract for such
survival.
----------------------------
Signature of WEL Participant
----------------------------
Name (Please type or print)
----------------------------
Date
<PAGE> 7
WYNDHAM EMPLOYEES, LTD.
REPAYMENT AND RESALE ELECTION FORM
INTRODUCTION
This Repayment and Resale Election Form will serve as your
instructions to the General Partner of WEL as to how you would like to repay
your WEL Indebtedness. In addition, this form permits you to elect to sell a
portion of your Wyndham Shares during the "Resale Window" of three business days
following the solicitation period. It is currently anticipated that the "Resale
Window" will begin on Tuesday, February 11, 1997 and end on Thursday, February
13, 1997. You will be notified if these dates are changed. YOU MUST COMPLETE AND
RETURN THIS FORM TO THE GENERAL PARTNER BY FEBRUARY 7, 1997, THE END OF THE
SOLICITATION PERIOD, REGARDLESS OF WHETHER OR NOT YOU VOTED FOR OR AGAINST THE
PLAN OF DISTRIBUTION. IF THE PLAN OF DISTRIBUTION IS APPROVED AND YOU DO NOT
RETURN THIS FORM BY FEBRUARY 7, 1997, WYNDHAM WILL ARRANGE FOR THE SALE OF A
PORTION OF YOUR WYNDHAM SHARES IN AN AMOUNT SUFFICIENT TO REPAY YOUR WEL
INDEBTEDNESS PLUS THE BROKERAGE COMMISSION INCURRED IN CONNECTION WITH SUCH SALE
AND ANY TAX OR OTHER COSTS AND EXPENSES ASSOCIATED WITH SUCH SALE. SUCH A SALE
WOULD BE AT THE THEN PREVAILING MARKET PRICE FOR WYNDHAM COMMON STOCK, WHICH
COULD BE LOWER THAN THE PRICE THAT MIGHT BE OBTAINED IF YOU HELD THE WYNDHAM
SHARES AND SOLD THEM AT A LATER DATE. ACCORDINGLY, YOU ARE STRONGLY ENCOURAGED
TO COMPLETE AND RETURN THIS FORM TO THE GENERAL PARTNER PRIOR TO FEBRUARY 7,
1997. Capitalized terms used but not defined in this form have the meaning set
forth in the accompanying Prospectus/Consent Solicitation Statement dated
January 27, 1997.
In the event that the Plan of Distribution is approved, you will be
entitled to receive the number of Wyndham Shares set forth on your individual
account statement included in the accompanying materials. As described in the
Prospectus, however, the Wyndham Shares to which you are entitled are subject
to your pro rata allocation of WEL Indebtedness. In order to repay your WEL
Indebtedness (which is a condition to your receiving your shares), you must
choose one of the following three options: (i) You may choose to borrow funds
from Smith Barney under a Participant Loan, (ii) you may choose to have a
portion of your Wyndham Shares sold to repay your WEL Indebtedness, or (iii)
you may include with this form a check made payable to Wyndham Hotel Management
Corporation (the General Partner of WEL) for the amount of your WEL
Indebtedness. The General Partner will then remit the funds to the holders of
the WEL Indebtedness.
You also may elect pursuant to this form to sell a number of Wyndham
Shares beyond what is required to repay your WEL Indebtedness. Such sales will
be made on the open market by Smith Barney during the Resale Window expected to
begin on February 11, 1997 based upon the market price for Wyndham Common Stock
as reported on the New York Stock Exchange. FOLLOWING THE RESALE WINDOW, YOU
WILL NOT BE PERMITTED TO MAKE ANY SALE OF YOUR WYNDHAM SHARES UNTIL MARCH 10,
1997.
You will be charged a brokerage commission that will be discounted
50% from the published Smith Barney rate in connection with all sales made by
Smith Barney, whether or not the sales were made to repay WEL Indebtedness. The
applicable Smith Barney rate varies depending on the number of shares sold. To
obtain the applicable commission rate, contact Smith Barney.
YOU MUST OPEN AN ACCOUNT WITH SMITH BARNEY PRIOR TO TAKING OUT A
PARTICIPANT LOAN OR SELLING ANY WYNDHAM SHARES DURING THE RESALE WINDOW
(WHETHER OR NOT TO REPAY WEL INDEBTEDNESS). IF you have not opened an account
with Smith Barney, contact them immediately.
ALL QUESTIONS CONCERNING SMITH BARNEY SHOULD BE DIRECTED TO HEATHER
HUGHES AT (800) 527-5814 OR (214) 720- 5002. IF YOU HAVE QUESTIONS CONCERNING
THIS FORM CALL ELISE TURNER AT WYNDHAM AT (214) 863-1097.
<PAGE> 8
This Repayment and Resale Election Form and the accompanying materials
must be returned to Elise Turner at the following address and be received by
February 7, 1997:
Wyndham Hotel Management Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
WEL INDEBTEDNESS REPAYMENT ELECTION
You may repay your WEL Indebtedness in the following three ways: (i)
Through the proceeds of a Participant Loan from Smith Barney; (ii) from the
proceeds of a sale of a portion of your Wyndham Shares by Smith Barney; or
(iii) by including with this form a check made payable to Wyndham Hotel
Management Corporation (the General Partner) in the amount of your WEL
Indebtedness. Please indicate your election by checking one of the boxes below.
1. Participant Loans
[ ] I elect to repay my WEL Indebtedness by taking out a Participant
Loan with Smith Barney.
By making this election, you are choosing to open up a margin account
with Smith Barney and borrow against the value of your Wyndham Shares the
amount of WEL Indebtedness set forth on your individual account statement
included in the accompanying materials. The proceeds from this loan will be
paid by Smith Barney directly to the General Partner. By making this election,
you will be subject to the risks generally associated with margin borrowing and
the rules set forth by Smith Barney with respect to an individual margin
account. Before choosing this election, you are encouraged to read the
discussion on margin borrowing appearing in the Prospectus under the headings
"Risk Factors -- Risks Associated with Participant Loans" and "Plan of
Distribution -- Repayment of WEL Indebtedness -- Participant Loans." In
addition, you should review Smith Barney's rules governing margin accounts, a
discussion of which is part of your Smith Barney Account Application.
If you choose this election, you must also complete and return the
attached Irrevocable Letter of Authorization, which instructs Smith Barney to
pay the proceeds of the Participant Loan directly to the General Partner, which
will cause the funds to be remitted to the holders of the WEL Indebtedness. If
you choose this election, your Wyndham Shares will be credited to your account
with Smith Barney. Please call Smith Barney at the above number for the current
interest rate and any other questions you may have concerning Participant
Loans.
2. Sale of Wyndham Shares
[ ] I elect to repay my WEL Indebtedness by selling a portion of my
Wyndham Shares through Smith Barney.
By making this election, you are choosing to sell a sufficient number
of Wyndham Shares to repay the amount of WEL Indebtedness set forth on your
individual account statement included in the accompanying materials and the
brokerage commission incurred in connection with such sale. This sale will be
made on the open market on the first day of the "Resale Window" at the
prevailing market price for Wyndham Common Stock as reported on the New York
Stock Exchange. If you are considered an "affiliate" of the Company, you must
comply with certain securities law considerations in connection with any sale.
See "Plan of Distribution -- Resale Restrictions" in the Prospectus.
If you choose this election, you must also complete and return the
attached Irrevocable Letter of Authorization, which instructs Smith Barney to
pay the proceeds from the sale of the Wyndham Shares (less the amount of the
brokerage commission) directly to the General Partner, which will cause the
funds to be remitted to the holders of the WEL Indebtedness. If you choose this
election, the remainder of your
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<PAGE> 9
Wyndham Shares will be credited to your account with Smith Barney.
Please call Smith Barney at the above number for the applicable brokerage
commission and any other questions you may have concerning the sale of Wyndham
Shares.
3. Direct Payment to General Partner
[ ] I elect to repay my WEL Indebtedness by making a
payment from my own resources directly to the General
Partner, which will cause the funds to be remitted to
the holders of the WEL Indebtedness.
By making this election, you are choosing to repay your WEL
Indebtedness from your own resources. If you choose this election, you must
include with this form a check made payable to Wyndham Hotel Management
Corporation (the General Partner) in an amount equal to the amount of WEL
Indebtedness set forth on your individual account statement included in the
accompanying materials. The General Partner will cause the funds to be remitted
to the holders of the WEL Indebtedness. Once the funds have been received by
the holders of the WEL Indebtedness, a stock certificate representing your
Wyndham Shares will be mailed to you by Wyndham's transfer agent, Chemical
Mellon Shareholder Services L.L.C..
RESALE OF WYNDHAM SHARES
Whether or not you elect to make sales to repay WEL Indebtedness, you
may choose to sell some or all of your Wyndham Shares through Smith Barney
during the "Resale Window" following the Solicitation Period, subject to
compliance with the Company's insider trading policy. The Resale Window is
expected to begin on Tuesday, February 11, 1997. At the end of the Resale
Window, no resale of Wyndham Shares will be permitted until March 10, 1997. If
you are considered an "affiliate" of the Company, you must comply with certain
other securities law considerations in connection with any sale. See "Plan of
Distribution -- Resale Restrictions" in the Prospectus.
If you would like to sell Wyndham Shares during the Resale Window,
contact Smith Barney at the number listed above.
Sales made during the Resale Window will be made on the open market
by Smith Barney based upon the market price for Wyndham Common Stock as
reported on the New York Stock Exchange. If you choose to sell shares during
the Resale Window, you also may choose the day in the week of the Resale Window
on which you like such sale to occur. In order to choose the day, you must
notify Smith Barney at the above number by 3:00 p.m., Dallas time, on the day
prior to the day on which you would like to sell your shares.
You will be charged a brokerage commission that will be discounted
50% from the published Smith Barney rate in connection with such sales. The
applicable Smith Barney rate varies depending on the number of shares sold. To
obtain the applicable commission rate, contact Smith Barney at the above
number. Smith Barney will send you a check for the proceeds from the sale less
the amount of the sales commission or will credit such amount to your Smith
Barney Account.
Date: _______________________
_____________________________
Signature of WEL Participant:
_____________________________
Print Name:
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<PAGE> 10
WEL PARTICIPANTS WHO HAVE CHOSEN TO REPAY WEL INDEBTEDNESS THROUGH A
PARTICIPANT LOAN FROM SMITH BARNEY OR FROM THE PROCEEDS OF THE SALE OF WYNDHAM
SHARES MUST COMPLETE AND RETURN THIS IRREVOCABLE LETTER OF AUTHORIZATION TO
WYNDHAM HOTEL MANAGEMENT CORPORATION, 2001 BRYAN STREET, SUITE 2300, DALLAS,
TEXAS 75201, ATTENTION: ELSE TURNER.
IRREVOCABLE LETTER OF AUTHORIZATION
Smith Barney
200 Crescent Court
Suite 1200
Dallas, Texas 75201
Attention: Monk White/Stacy Oelsen
RE: Repayment of "WEL Indebtedness" from Smith Barney Account:
_________________________________________________________
(Fill in your Smith Barney account name and number)
Gentlemen:
The undersigned irrevocably authorizes and directs you, upon the transfer of
shares of Wyndham Hotel Corporation Common Stock to the above-mentioned Smith
Barney brokerage account (the "Account") from Wyndham Employees Ltd., to issue
a check from the Account made payable to Wyndham Hotel Management Corporation
in the amount of $_________ (amount of your WEL Indebtedness). Please have the
check delivered to the following address: C/O Wyndham Hotel Management
Corporation, 2001 Bryan Street, Suite 2300, Dallas, Texas 75201, Attention:
Elise Turner.
The authority conferred by this letter of authorization is irrevocable and
cannot be terminated by any act of the undersigned or by operation of law,
whether by the death or incapacity of the undersigned or by the occurrence of
any other event or events. If, however, no shares of Wyndham Common Stock are
transferred to the Account by April 1, 1997, the authority conferred pursuant
to this letter shall terminate automatically.
Very Truly Yours,
____________________________________ If joint Account, signature of spouse:
(Signature of WEL Participant)
Print Name: ________________________ ______________________________________
Print Name: __________________________
Date: ______________________________ Date: ________________________________
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<PAGE> 11
ALL WEL PARTICIPANTS MUST SIGN AND RETURN THIS ACKNOWLEDGEMENT AND
RELEASE PRIOR, TO RECEIVING ANY WYNDHAM SHARES, TO WYNDHAM HOTEL MANAGEMENT
CORPORATION, 2001 BRYAN STREET, SUITE 2300, DALLAS, TEXAS 75201, ATTENTION:
ELISE TURNER.
ACKNOWLEDGEMENT AND RELEASE
In accordance with the Plan of Distribution, you hereby agree to
release WEL, other WEL Participants, the General Partner and its officers and
directors, and the Company and its officers and directors (collectively, the
"Released Parties"), effective automatically upon distribution of the Wyndham
Shares by WEL, from all claims and demands of any kind or nature that you may
have arising from or related to your interest in WEL. This release includes,
but is not limited to, a waiver and release by you of all claims and demands
concerning (i) the value of your ownership interest in WEL, (ii) the number of
Wyndham Shares to which you are entitled in the Plan of Distribution and the
methodology used to determine such number, and (iii) the fairness of the Plan
of Distribution. This also includes, but is not limited to, a release of all
claims concerning the General Partner's past management of the affairs of WEL,
including the WEL Investments, and the valuation of the Other Assets. By
signing this release and accepting your Wyndham Shares, you are (i)
acknowledging that you are entitled only to the number of Wyndham Shares
appearing on your individual account statement accompanying these materials and
(ii) agreeing not to make or pursue any of the foregoing claims against the
Released Parties and not to file or become a party to a lawsuit advancing such
claims. This release covers both known and unknown claims.
This release shall by governed by the laws of the State of Texas.
Capitalized terms that are used herein but not defined have the meanings set
forth in the Prospectus/Consent Solicitation Statement dated January 27, 1997
relating to the distribution by Wyndham Employees Ltd., a Texas limited
partnership, of shares of common stock of Wyndham Hotel Corporation, a Delaware
corporation.
ACCEPTED AND AGREED TO:
Print Name:
- --------------------------------- --------------------------
(Name of WEL Participant)
Date:
----------------------------
<PAGE> 12
PROSPECTUS/CONSENT SOLICITATION STATEMENT
646,669 SHARES
WYNDHAM HOTEL CORPORATION
COMMON STOCK
This Prospectus/Consent Solicitation Statement (this "Prospectus")
relates to the proposed distribution of 646,669 shares of Common Stock, $.01
par value per share (the "Wyndham Shares"), of Wyndham Hotel Corporation (the
"Company") to the 91 participants ("WEL Participants") of Wyndham Employees
Ltd. ("WEL"). The proposed distribution of the Wyndham Shares is part of a plan
(the "Plan of Distribution" or the "Plan") that will result in the dissolution
and termination of WEL. The Plan of Distribution must be approved by WEL
Participants holding a majority of the percentage interests in WEL.
This Prospectus also constitutes a solicitation by Wyndham Hotel
Management Corporation, the General Partner of WEL (the "General Partner"), of
consents of WEL Participants to the Plan of Distribution, as more particularly
described herein. No special meeting of WEL Participants has been scheduled to
vote upon the Plan of Distribution. For instructions regarding the voting
procedures required to approve the Plan of Distribution, see "Plan of
Distribution -- Required Vote."
The Wyndham Shares will be distributed to WEL Participants as soon as
practicable following the General Partner's receipt of approval of the Plan of
Distribution by the WEL Participants, at which time certificates representing
the shares will be issued and delivered to each WEL Participant or his or her
duly authorized representative. The Wyndham Shares will be distributed in
accordance with the provisions of the Amended and Restated Agreement of Limited
Partnership of WEL (the "WEL Agreement") and will be subject to each WEL
Participant's pro rata share of WEL indebtedness.
Each WEL Participant will be permitted to borrow funds (the
"Participant Loans") from Smith Barney Inc. pursuant to a margin loan in an
amount equal to such participant's share of outstanding WEL indebtedness. The
Participant Loans will be used to repay such indebtedness in connection with
the distribution of the Wyndham Shares. The Participant Loans will be payable
on demand, will bear interest at a floating rate and will be secured by Wyndham
Shares with a market value that initially must equal 2.0 times the outstanding
balance of the Participant Loan. If a WEL Participant elects not to take out a
Participant Loan or to have Wyndham Shares sold to repay his or her share of
outstanding WEL indebtedness, such participant will be required to otherwise
repay his or her WEL indebtedness prior to receipt of any Wyndham Shares.
After the Wyndham Share distribution and the winding up of WEL's
business, any remaining assets will be distributed to WEL Participants and WEL
will be terminated. The assets of WEL currently consist of only the Wyndham
Shares and cash. WEL will reimburse the Company for certain costs incurred in
connection with the liquidation and dissolution of WEL. The costs and expenses
of registration of the Wyndham Shares under the Securities Act of 1933, as
amended, will be borne by the Company.
THE GENERAL PARTNER BELIEVES THAT THE TERMS OF THE PLAN OF
DISTRIBUTION ARE FAIR AND IN THE BEST INTERESTS OF WEL PARTICIPANTS. THE
GENERAL PARTNER HAS APPROVED THE PLAN OF DISTRIBUTION AND RECOMMENDS THAT WEL
PARTICIPANTS VOTE FOR THE PLAN OF DISTRIBUTION.
SEE "RISK FACTORS" BEGINNING ON PAGE 14 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED BY WEL PARTICIPANTS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JANUARY 27, 1997
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary........................................................................................... 2
Risk Factors................................................................................................. 14
The Plan of Distribution..................................................................................... 22
Dividend Policy.............................................................................................. 34
Price Range of Common Stock.................................................................................. 35
Capitalization............................................................................................... 36
Pro Forma Consolidated Financial Data........................................................................ 37
Selected Consolidated Financial Data......................................................................... 43
Management's Discussion and Analysis of Financial Condition and Results of Operations........................ 45
Business..................................................................................................... 56
Management................................................................................................... 89
Certain Relationships and Transactions....................................................................... 100
Principal Stockholders....................................................................................... 108
Shares Eligible for Future Sale.............................................................................. 109
Description of Capital Stock................................................................................. 110
Legal Matters................................................................................................ 115
Experts...................................................................................................... 115
Additional Information....................................................................................... 115
Index to Financial Statements................................................................................ F-1
Amended and Restated Agreement of Limited Partnership of Wyndham Employees Ltd............................... A-1
Plan of Distribution......................................................................................... B-1
</TABLE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER
IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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<PAGE> 14
PROSPECTUS SUMMARY
On May 24, 1996, immediately prior to the consummation of the initial
public offering of the Common Stock of Wyndham Hotel Corporation ("Wyndham" or
the "Company"), the Company succeeded to the hotel management and related
businesses of Wyndham Hotel Company Ltd. ("Old Wyndham"), ownership of 6
Wyndham brand hotels and leasehold interests relating to 12 additional Wyndham
brand hotels. Concurrent with the Company's initial public offering and as part
of its financing plan, the Company issued $100,000,000 aggregate principal
amount of 10 1/2% Senior Subordinated Notes due 2006 (the "Notes"). Unless the
context otherwise requires, the term "Company" or "Wyndham" when used in this
Prospectus refers to Wyndham Hotel Corporation and its combined subsidiaries,
and for the periods prior to May 24, 1996, includes the operations of Old
Wyndham and the Company's other predecessors. The following summary is
qualified in its entirety by the more detailed information and combined
financial statements, including the notes thereto, appearing elsewhere in this
Prospectus.
INTRODUCTION
Wyndham Hotel Corporation is a national hotel company operating
upscale hotels primarily under the Wyndham brand name. Wyndham hotels are
located in 26 states, the District of Columbia, Ontario, Canada and on 5
Caribbean islands. Wyndham hotels compete with national hotel chains such as
Marriott, Hyatt and Hilton. The Company offers three distinct full service
hotel products under the Wyndham brand designed to serve its core upscale
customers in urban, suburban and select resort markets. At January 15, 1997,
the Company's hotel portfolio consisted of 80 hotels operated by the Company
and 2 franchised hotels (the "Portfolio"). The Company's Portfolio consists of
76 upscale hotel properties (which includes four properties under renovation)
and 6 extended-stay hotel properties, which the Company began managing in
September 1996.
This Prospectus relates to the proposed distribution by WEL of 646,669
Wyndham Shares held by WEL to 91 WEL Participants. The proposed distribution of
the Wyndham Shares is part of a Plan of Distribution that would result in the
dissolution and termination of WEL. The Plan of Distribution must be approved
by the holders of a majority of the percentage interests held by all WEL
Participants.
THE PLAN OF DISTRIBUTION
GENERAL
WEL was established in 1990 by Old Wyndham as an equity participation
program designed to enable WEL Participants to receive indirect equity
interests in Old Wyndham, certain hotels managed by Old Wyndham and certain
hotel-related assets (collectively, the "WEL Investments"). Each WEL
Participant received his or her interest in WEL in connection with the
performance of services. In connection with the Company's initial public
offering, WEL received the Wyndham Shares in exchange for WEL's ownership
interest in certain of the WEL Investments. Wyndham Hotel Management
Corporation, as the General Partner of WEL, is proposing the distribution of
the Wyndham Shares to WEL Participants as part of the Plan of Distribution. The
Plan of Distribution must be approved by the holders of a majority of the
percentage interests held by all WEL Participants. Following the Wyndham Share
distribution, the business of WEL will be wound up and WEL will be terminated.
Any assets remaining in WEL following the winding up will be distributed to WEL
Participants. A copy of the Plan of Distribution is attached as Appendix B to
this Prospectus.
The Wyndham Shares will be distributed to WEL Participants as soon as
practicable following the date (the "Plan Effective Date") of the General
Partner's receipt of approval of the Plan of Distribution by WEL Participants.
In accordance with the provisions of the WEL Agreement, the Wyndham Shares will
be distributed to WEL Participants according to the balance in each WEL
Participant's capital account as adjusted in accordance with the WEL Agreement.
In accordance with 1996 amendments to the WEL Agreement, which established the
"EVBS Value" of Wyndham Shares at the initial public
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<PAGE> 15
offering price, or $16.00 per share, Wyndham Shares will be distributed based
on a share price of $16.00. A WEL Participant should refer to the individual
account statement included in the materials accompanying this Prospectus for
the number of Wyndham Shares to be distributed to him or her. The Wyndham
Shares also will be distributed subject to each participant's pro rata share of
"WEL Indebtedness," as described below. For a discussion of the methodology
used to determine the number of Wyndham Shares to be distributed to each WEL
Participant, see "Plan of Distribution -- Distribution Methodology."
As a result of the Wyndham Share distribution, each WEL Participant
will receive directly (subject to payment of his or her share of WEL
Indebtedness) the Wyndham Shares represented by his or her ownership interest
in WEL. As part of the Plan of Distribution, WEL Participants will be permitted
for a period of three business days (the "Resale Window") following the share
distribution to sell his or her Wyndham Shares, subject to compliance with the
Company's Insider Trading Policy and to repayment of any WEL Indebtedness or
Participant Loan secured by the Wyndham Shares being sold. Each WEL Participant
will be restricted under the Plan of Distribution from making any public sale
of his or her Wyndham Shares for a period (the "Lock-Up Period") of three weeks
following the Resale Window. The Resale Window and the Lock-Up Period are
designed to facilitate the resale of the Wyndham Shares on the open market. WEL
Participants who are considered "affiliates" of the Company will also be
required to comply with certain other securities law restrictions in connection
with any such sale. See "Plan of Distribution -- Resale Restrictions." No WEL
Participant is entitled to appraisal or similar rights in connection with the
Plan of Distribution.
REPAYMENT OF WEL INDEBTEDNESS
Since WEL's inception, WEL Investments have been purchased through
loans made to WEL by Wyndham Finance Limited Partnership or its predecessors
("WFLP"). In connection with the Company's initial public offering, the Company
purchased from WFLP the promissory notes evidencing such loans at their face
value, plus accrued interest, as of December 31, 1995. As of November 30, 1996,
the aggregate outstanding balance under such loans was $3,070,654. In addition,
WEL has issued promissory notes in connection with purchasing the interests of
former WEL Participants, the outstanding balance of which was $169,522 as of
November 30, 1996 and has incurred obligations to other former WEL
Participants, which total approximately $520,000. The total indebtedness owed
by WEL from time to time is referred to herein as the "WEL Indebtedness."
In order to facilitate the repayment of the WEL Indebtedness (without
WEL's having to sell any Wyndham Shares to provide funds), the Plan of
Distribution requires that the Wyndham Shares be distributed subject to each
participant's pro rata allocation of WEL Indebtedness. Each WEL Participant
will be permitted to borrow funds under a Participant Loan from Smith Barney
Inc. ("Smith Barney") to repay the WEL Indebtedness. Alternatively, WEL
Participants can elect to have a portion of their Wyndham Shares sold on the
first day of the Resale Window to repay their WEL Indebtedness. If a WEL
Participant elects not to take out a Participant Loan or to have a portion of
his or her Wyndham Shares sold, such participant will be required to otherwise
repay his or her share of WEL Indebtedness prior to receipt of any Wyndham
Shares. IN ORDER FOR A WEL PARTICIPANT TO RECEIVE HIS OR HER WYNDHAM SHARES,
SUCH PARTICIPANT MUST REPAY HIS OR HER SHARE OF WEL INDEBTEDNESS THROUGH A
PARTICIPANT LOAN, BY HAVING A PORTION OF HIS OR HER WYNDHAM SHARES SOLD OR BY
MAKING PAYMENT OF SUCH AMOUNT FROM OTHER SOURCES DIRECTLY TO THE GENERAL
PARTNER WHO WILL THEN REMIT THE FUNDS TO THE HOLDERS OF WEL INDEBTEDNESS. See
"Plan of Distribution -- Repayment of WEL Indebtedness."
The Participant Loans will be margin loans payable on demand and will
be secured by Wyndham Shares with a market value that initially must equal 2.0
times the outstanding balance of the Participant Loan. The Participant Loans
will bear interest at a floating interest rate that will fluctuate based on
short term interest rates. For purposes of illustration, the rate would be 8%
per annum as of the date of this Prospectus. WEL Participants may obtain the
actual rate by contacting Smith Barney. Each WEL Participant who takes out a
Participant Loan will become personally obligated to repay to Smith Barney the
proceeds of such loan and will be subject to the risks generally associated
with margin borrowing. For a discussion of these risks, see "Risk Factors --
Risks Associated with Participant Loans." For a summary of certain terms and
conditions of the Participant Loans, see "The Plan of Distribution -- Repayment
of WEL Indebtedness -- Participant Loans."
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<PAGE> 16
REASONS FOR PLAN OF DISTRIBUTION
WEL was established to enable WEL Participants to receive indirect
equity interests in WEL Investments. The primary purpose of WEL was to attract
and retain key executive and managerial employees and to motivate such
employees to achieve Old Wyndham's long range goals by granting them indirect
equity interests in WEL Investments. In connection with the Company's initial
public offering, the Company adopted the 1996 Wyndham Hotel Corporation
Long-Term Incentive Plan (the "1996 Incentive Plan"), which is a standard
long-term incentive compensation program for key employees of a publicly held
company. The 1996 Incentive Plan has replaced WEL as the Company's primary
ongoing incentive compensation program.
The General Partner believes that the Plan of Distribution is in the
best interests of WEL Participants. There are legal restrictions on the number
of persons who can become WEL Participants without subjecting WEL to
substantial regulatory compliance burdens. In addition, the Company has
determined, for a number of reasons, that WEL will not receive interests in
assets acquired by the Company in the future. Accordingly, the General Partner
believes that WEL's effectiveness as an ongoing incentive compensation program
has become limited. The General Partner also believes, however, that WEL has
served its purpose effectively by assisting in motivating and retaining key
Wyndham personnel that have contributed greatly to the Company's growth since
WEL was established in 1990.
The General Partner also decided to propose the Plan of Distribution
because of the numerous expressions of interest, directly and through the WEL
Steering Committee, by WEL Participants in receiving a distribution of the
Wyndham Shares, and because the distribution is not expected to result in the
recognition of taxable income or loss by WEL Participants until a participant
elects to sell all or any portion of his or her Wyndham Shares. See "Plan of
Distribution -- Federal Income Tax Considerations."
For additional information concerning reasons for the Plan of
Distribution, see "The Plan of Distribution -- Reasons for Plan of
Distribution."
REQUIRED VOTE
As of the date of this Prospectus, based upon a price per share of
$16.00, the Wyndham Shares represent approximately 98% of the overall economic
value of WEL. The WEL Agreement, a copy of which is attached as Appendix A to
this Prospectus, requires approval of the "transfer" of all or substantially
all of WEL's assets by the General Partner and the holders of a majority of the
percentage interests held by all WEL Participants. Because the term "transfer"
is broadly defined under the WEL Agreement, the General Partner has determined
to consider the Plan of Distribution to involve a "transfer" within the meaning
of the WEL Agreement and, therefore, is seeking approval of the Plan of
Distribution by WEL Participants. The Plan of Distribution also will constitute
an event of dissolution under the WEL Agreement. Accordingly, by voting in
favor of the Plan of Distribution, WEL Participants will be voting for (i) the
distribution of the Wyndham Shares to WEL Participants and (ii) the resulting
dissolution and termination of WEL.
VOTING PROCEDURES
This Prospectus, together with the accompanying materials, constitute
the "Solicitation Materials" being distributed to WEL Participants to obtain
their votes for or against the Plan of Distribution. (The power of attorney and
participant consent form included in the Solicitation Materials are referred to
collectively as the "Consent Form.") No special meeting of WEL Participants has
been scheduled to discuss the Solicitation Materials or vote upon the Plan of
Distribution. Only WEL Participants who are limited partners of WEL of record
as of the date of this Prospectus will receive notice of, and will be entitled
to vote with respect to, the Plan of Distribution.
The Solicitation Period is the time period during which WEL
Participants may vote for or against the Plan of Distribution. The Solicitation
Period will commence upon delivery of the Solicitation Materials to WEL
Participants
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<PAGE> 17
(on or about January 29, 1997) and will continue until the later of (a)
February 7, 1997 or (b) such later date as may be selected by the General
Partner and as to which notice is given to WEL Participants. In its discretion,
the General Partner may elect to extend the Solicitation Period. Any Consent
Form received by the General Partner prior to 12:00 noon, Central time, on the
last day of the Solicitation Period will be effective provided that such
Consent Form has been properly completed and signed. If you fail to return a
signed Consent Form by the end of the Solicitation Period, your WEL interest
will be counted as voting AGAINST the Plan of Distribution. WEL Participants
who return a signed Consent Form but fail to indicate their approval or
disapproval of the Plan of Distribution will be deemed to have voted FOR the
Plan. Consent Forms may be withdrawn at any time prior to the expiration of the
Solicitation Period.
CONDITIONS TO PLAN OF DISTRIBUTION
The Plan of Distribution is subject to certain conditions. In
accordance with the terms of the WEL Agreement, the Plan must receive the
approval of WEL Participants holding a majority of the percentage interests in
WEL. In addition, the Plan is conditioned upon the General Partner's not
withdrawing its recommendation of the Plan prior to the distribution of the
Wyndham Shares. The General Partner reserves its right to withdraw its
recommendation in its own discretion at any time prior to such distribution.
See "Plan of Distribution -- Conditions to Plan of Distribution."
DISSOLUTION OF WEL
In connection with the dissolution of WEL, the General Partner, as the
liquidating trustee, will establish a cash reserve in an amount believed to be
sufficient to discharge any remaining liabilities of WEL. Cash held by WEL in
excess of the reserve will be used to retire WEL Indebtedness in conjunction
with the Plan of Distribution. Following the distribution of the Wyndham
Shares, the General Partner will apply the cash reserve from time to time in
payment of, or provision for, WEL's remaining liabilities. WEL will be
terminated upon the earlier of (i) the application of all such cash in payment
of, or provision for, such liabilities, or (ii) 24 months following the Plan
Effective Date (or such other period as may be deemed appropriate by the
General Partner), at which time any cash remaining in WEL will be distributed
to WEL Participants. Because the amount of the cash reserve is expected to be
relatively small, however, the General Partner does not anticipate that there
will be cash remaining for distribution in connection with the dissolution of
WEL.
If the assets of WEL are insufficient to pay all liabilities of WEL
following the distribution of the Wyndham Shares and any cash, then each WEL
Participant may be personally liable to creditors of WEL for such liabilities
(including any unpaid or unmatured liabilities on the termination of WEL) to
the extent of the aggregate of an amount equal to (i) the fair market value of
the Wyndham Shares (net of WEL Indebtedness) received by the WEL Participant in
connection with the Plan of Distribution and (ii) other distributions received
by the WEL Participant from WEL in connection with its dissolution. With
respect to the satisfaction of any such remaining liabilities, however, the
General Partner has agreed to apply first the Wyndham Shares (net of WEL
Indebtedness and taxes) distributed to the General Partner in the Plan of
Distribution. Therefore, WEL Participants should not be exposed to any of the
foregoing liabilities (if any) until the General Partner's Wyndham Shares (net
of WEL Indebtedness and taxes) are exhausted.
RELEASE BY WEL PARTICIPANTS
As part of the Plan of Distribution, WEL Participants agree to release
WEL, other WEL Participants, the General Partner and its officers and
directors, and the Company and its officers and directors from all claims and
demands of any kind or nature that WEL Participants may have arising from or
related to their interest in WEL. This includes, but is not limited to, a
release by WEL Participants of all claims concerning (i) the value of their
ownership interests in WEL, (ii) the number of Wyndham Shares to which they are
entitled in the Plan of Distribution and the methodology used to determine such
number, and (iii) the fairness of the Plan of Distribution. This also includes,
but is not limited to, a release of all claims concerning the General Partner's
past management of the affairs of WEL, including the WEL Investments, and the
valuation of the Other Assets.
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<PAGE> 18
SALE OF OTHER WEL ASSETS
Other than the Wyndham Shares, WEL's assets as of November 30, 1996
consisted of approximately $215,000 in cash. Prior to the proposed Plan of
Distribution, WEL owned 5% limited partnership interests in nine partnerships
that own hotels managed by Wyndham, and five partnerships and one corporation
that own hotel-related assets (the "Other Assets"). Because of the relatively
low aggregate economic value of WEL's interests in these entities, as well as
the relative illiquidity of such interests, effective as of October 15, 1996,
the General Partner transferred the Other Assets to affiliates of the Company
in consideration for the assumption of $619,200 in indebtedness owed by WEL
with respect to such assets. The valuation and transfer of the Other Interests
was approved by a committee (the "WEL Steering Committee") composed of seven
WEL Participants selected by the Company. See " -- Conflicts of Interest."
CONFLICTS OF INTEREST
The Plan of Distribution was proposed and structured by the General
Partner in consultation with the WEL Steering Committee. Trammell S. Crow and
James D. Carreker are the sole stockholders and are on the Board of Directors
of the General Partner. The General Partner owns a 1% interest in WEL.
Consequently, in the event the Plan of Distribution is approved, Messrs. Crow
and Carreker will receive indirectly an aggregate of 6,466 Wyndham Shares,
which may cause a conflict of interest in the General Partner's recommendation
of the Plan of Distribution. In resolving any conflicts of interest, the
General Partner must act in accordance with its fiduciary duties to the WEL
Participants.
The Other Assets were transferred to Mr. Carreker, Leslie V. Bentley,
Anne L. Raymond and Stanley M. Koonce (collectively, the "Senior Executive
Officers") and entities in which Mr. Trammell S. Crow and Mr. Harlan R. Crow,
who also is on the Board of Directors of the General Partner, have an ownership
interest. The valuation of the Other Assets was determined according to
negotiations between the General Partner on behalf of WEL, and representatives
of the Crow Family and the Senior Executive Officers. WEL was represented by
Anne L. Raymond, who is an officer of the General Partner and Executive Vice
President and Chief Financial Officer of the Company. Ms. Raymond holds no
ownership interest in WEL, but received an ownership interest in the Other
Assets. WEL also was represented by the WEL Steering Committee. During the
course of the negotiations, the WEL Steering Committee proposed the transfer of
the Other Assets in consideration for the assumption of $619,200 in debt owed
by WEL. This proposal was accepted by representatives of the Senior Executive
Officers and Messrs. Trammell S. Crow and Harlan R. Crow. Nevertheless, no
independent third party was engaged to value the Other Assets. Furthermore,
while Messrs. Trammell S. Crow and Carreker indirectly have ownership interests
in WEL, Messrs. Crow and Carreker may not have the same interests in the Plan
of Distribution as WEL Participants. There are no assurances that if the
purchase of the Other Assets were the result of completely arm's-length
negotiations the resulting purchase price would not be higher than the purchase
price that was actually paid.
TAX CONSEQUENCES OF PLAN OF DISTRIBUTION
For a discussion of the federal income tax considerations in
connection with the Plan of Distribution, see "Plan of Distribution -- Federal
Income Tax Considerations."
THE COMPANY
Wyndham Hotel Corporation is a national hotel company operating
upscale hotels primarily under the Wyndham brand name. Wyndham hotels are
located in 26 states, the District of Columbia, Ontario, Canada and on 5
Caribbean islands. Wyndham hotels compete with national hotel chains such as
Marriott, Hyatt and Hilton. The Company offers three distinct full service
hotel products under the Wyndham brand designed to serve its core upscale
customers in urban, suburban and select resort markets. At January 15, 1997,
the Company's hotel portfolio consisted of 80 hotels operated by the Company
and 2 franchised hotels (the "Portfolio"). The Company's Portfolio consists of
76 upscale hotel properties (which includes four properties under renovation)
and 6 extended-stay hotel properties, which the Company began managing in
September 1996.
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<PAGE> 19
WYNDHAM BRAND
Wyndham has focused on developing a brand name that is nationally
recognized in the upscale hotel market, and on earning the loyalty of its core
upscale customers: individual business travelers, business groups and other
group customers, and leisure travelers. Because Wyndham has operating control
over more than 98% of the hotels operated under the Wyndham brand name, it is
able to consistently deliver quality products and services throughout its hotel
system and generate the marketing programs necessary to maintain the quality
associated with the Wyndham name. According to written guest surveys conducted
by Wyndham at its hotels during 1995, 91% of Wyndham guests surveyed rated the
overall quality of Wyndham hotel products and services good or excellent, and
94% of the guests surveyed indicated that they would return to that Wyndham
hotel on their next trip to the same city. The Company believes that growing
national recognition of the Wyndham brand, together with the quality and
efficiency of Wyndham hotel operations, has facilitated the Company's
historical growth and will enhance its ability to realize its future growth
objectives.
MULTIPLE UPSCALE HOTEL PRODUCTS
Wyndham offers three distinct full service hotel products under a
single brand name that are tailored to urban, suburban and select resort
markets, the primary markets that serve its core upscale customers.
o Wyndham Hotels. In urban markets, the Company operates or
franchises 22 large upscale hotels under the Wyndham brand
("Wyndham Hotels"), which contain an average of approximately 400
hotel rooms, generally between 15,000 and 250,000 square feet of
meeting space, and a full range of guest services and amenities.
Wyndham Hotels are targeted principally at business groups and
other group customers, as well as individual business travelers.
o Wyndham Garden Hotels. In suburban markets, Wyndham operates 40
mid-size hotels under the name "Wyndham Garden"R ("Wyndham Garden
Hotels"), which were created by the Company to cater to
individual business travelers and small business groups. (The
Company operates four additional hotels under brand names other
than the Wyndham brand, which are scheduled to become Wyndham
Garden Hotels following renovations that are currently underway.
Two of these hotels are scheduled to be converted by the first
quarter of 1997, and two are scheduled to be converted by the
second quarter of 1997.) With guest services, hotel finishings
and landscaping comparable to Wyndham Hotels, Wyndham Garden
Hotels are designed to provide a guest experience similar to that
enjoyed at Wyndham Hotels, but at a price that is competitive in
suburban markets. The Company locates Wyndham Garden Hotels
primarily near suburban business centers and airports and, where
possible, seeks to cluster these hotels in a "hub-and-spoke"
distribution pattern around one or more Wyndham Hotels in order
to achieve operating and marketing efficiencies and enhance local
name recognition. Wyndham Garden Hotels are full service upscale
hotels containing between approximately 150 and 225 hotel rooms
that offer a package of services and amenities focused on the
needs of the business traveler, including generally between 1,500
and 5,000 square feet of meeting space, restaurants that serve
three meals a day, exercise rooms, and laundry and room service.
o Wyndham Resorts. Wyndham's Portfolio also includes seven resort
hotels ("Wyndham Resorts") that are full service destination
resorts targeted at upscale leisure and incentive travelers and
are located both domestically and on five Caribbean islands.
Through Wyndham Resorts, the Company is able to offer guest
rewards and other cross-promotional benefits to its domestic
customers, thus improving Wyndham's competitiveness and brand
loyalty.
EXTENDED-STAY HOTEL PRODUCT
The Company manages six extended-stay hotel properties, which
following planned renovations will be operated under the Homegate Studios &
Suites brand name. These hotels are located in Texas and are targeted at
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<PAGE> 20
business travelers, professionals on temporary work assignments, persons
between domestic situations and persons relocating or purchasing a home, who
often desire accommodations for an extended duration. These midprice hotels
contain approximately 125 rooms and feature a fully equipped kitchen, upscale
residential-quality finishes and accessories, and separation between cooking,
living and sleeping areas.
PORTFOLIO OF OWNED, LEASED AND MANAGED HOTELS
Wyndham believes that the stability of its Portfolio of owned, leased
and managed hotels provides a strong foundation for the implementation of its
growth strategy. Wyndham's Portfolio consists of 10 owned hotels, 13 leased
hotels, 57 managed hotels and 2 franchised hotels. Of the Company's 13 leased
hotels, 12 are leased from an unaffiliated third party pursuant to one or more
long-term leases with an initial term of approximately 16 years and renewals
for 48 additional years that the Company may elect to exercise. The remaining
leased hotel is leased from an unaffiliated third party pursuant to a lease
with a remaining term of 22 years. The average remaining term at November 30,
1996 of the Company's 46 management contracts for Wyndham brand hotels was 14
years (including renewals that the Company may elect to exercise), with shorter
terms for 2 of the Company's 3 non-branded upscale hotel management contracts.
The management contracts relating to the Company's six extended-stay hotel
properties have ten-year terms. See "Business -- Management Contracts." The
Company believes that the stability of its management contracts is enhanced by
the fact that 16 of the upscale hotel management contracts for hotels operated
by the Company relate to hotels in which Mr. and Mrs. Trammell Crow, various
descendants of Mr. and Mrs. Trammell Crow and various corporations,
partnerships, trusts and other entities beneficially owned or controlled by
such persons (collectively, the "Crow Family Members") have interests. Crow
Family Members own approximately 47.3% of the outstanding Common Stock.
Seventeen additional upscale hotel management contracts for hotels managed by
the Company relate to hotels owned by entities (together with certain
affiliates, "Bedrock") and an institutional investor organized by the Hampstead
Group L.L.C. ("Hampstead"), which owns approximately 11.4% of the outstanding
Common Stock. The Company's six extended-stay hotel management contracts relate
to hotels owned by Homegate Hospitality, Inc., of which affiliates of Crow
Family Members, Trammell Crow Residential Company ("Trammell Crow Residential")
and Greystar Capital Partners, L.P. ("Greystar") were founders and remain
principal stockholders. See "Risk Factors -- Dependence on Management Contracts
and on Certain Hotel Owners" and "Principal Stockholders."
OPERATING AND FINANCIAL PERFORMANCE
The Company seeks to maximize revenues through its comprehensive
marketing strategy and the delivery of high quality accommodations and hotel
services that result in satisfied, loyal hotel guests. The Company believes
that this strategy has resulted in strong operating performance. During 1995,
the average occupancy rates, average daily room rates (total room revenues
divided by the total number of rooms occupied) ("ADR") and revenue per
available room (ADR multiplied by the average occupancy percentage) ("REVPAR")
for upscale Portfolio hotels were 69%, $88.79 and $60.96, respectively,
compared with an average during this period of 69%, $80.38 and $55.06,
respectively, in the upscale segment of the lodging industry. See "Business --
The Company's Hotels." During the nine months ended September 30, 1996 (the
"1996 First Nine Months"), average occupancy rates, ADR and REVPAR for upscale
Portfolio hotels were 70%, $92.24 and $64.93, respectively, compared with an
average during this period of 70%, $85.74 and $60.33, respectively, in the
upscale segment of the lodging industry.
The Company believes that its experience as a hotel owner makes it a
better hotel manager by keeping it focused on controlling each element of
operating expenses, which is essential to achieving attractive returns for both
the Company's hotels and managed hotels. The gross operating profit margins for
the 30 Wyndham brand hotels that have been operated by the Company since
January 1, 1993 ("Comparable Hotels") for 1993, 1994 and 1995 were 32%, 34% and
36%, respectively, and for the nine months ended September 30, 1995 (the "1995
First Nine Months") and the 1996 First Nine Months were 36% and %,
respectively. In comparison, the average for the upscale full service segment
of the lodging industry was 30%, 31% and 33%, respectively, during 1993, 1994
and 1995. (Gross operating profit margin statistics for the lodging industry
are not yet available for 1996.) Gross operating profit per available room for
Comparable Hotels in 1993, 1994 and 1995 was $9,612, $11,417 and $12,547,
respectively, compared to the average for the upscale full service segment of
the lodging industry of $8,397, $9,364 and $10,470, respectively, during 1993,
- 8 -
<PAGE> 21
1994 and 1995. (Gross operating profit per room statistics for the lodging
industry also are not yet available for 1996.) For a presentation of certain
financial data for the Company's entire hotel Portfolio, see " -- Summary
Combined Financial and Other Data" below. See "Business -- Operating Strategy."
MARKETING STRATEGY
Wyndham has a full complement of sales and marketing capabilities
designed to maximize hotel revenues and brand awareness. The Company's direct
sales program at the hotel level, implemented by a sales force of almost 500
representatives, is designed to "pull" local business into each hotel and in
1995 accounted for over 60% of room revenues at Wyndham brand hotels. The
Company also has a national sales team that focuses on major corporate, group
and association accounts and seeks to "push" business into Wyndham hotels on a
nationwide basis. Over 35% of Wyndham's hotel room revenues in 1995 were booked
through Wyndham's central reservations system, which features a single
telephone number for all Wyndham brand hotels (800-WYNDHAM). See "Business --
Customers and Marketing."
GROWTH STRATEGY
The Company intends to continue focusing on both internal
growth--enhancing the revenues, cash flow and profitability of its existing
hotels, and external growth--increasing the number of hotels in its Portfolio.
The Company believes that the primary factors contributing to internal growth
include (i) revenue increases resulting from continuing improvements in the
upscale segment of the lodging industry and continuing maturation of 41 hotels
added since the beginning of 1995 (including 14 Wyndham Garden Hotels and four
additional hotels under renovation that will be converted to the Wyndham Garden
brand), and (ii) improved operating margins resulting from operating leverage
and Wyndham's continued emphasis on controlling operating expenses.
The Company's external growth strategy is to continue to increase the
number of Wyndham brand hotels in the upscale full service segment of the
lodging industry. In addition, the Company expects to increase the number of
management contracts for extended-stay hotel properties in its Portfolio
operated under the Homegate Studios and Suites brand name. The near-term focus
of the Company's external growth strategy will be to increase the Wyndham
Portfolio through additional management contracts, "like new" renovations of
acquired properties, other acquisitions and joint ventures. The Company also
will consider franchising and hotel construction, depending on market
conditions. In addition, the Company expects to continue its evaluation of
other new hotel products that may be offered under the Wyndham brand. In
executing this growth strategy, the Company will continue to rely on its senior
executive officers (James D. Carreker, Leslie V. Bentley, Anne L. Raymond and
Stanley M. Koonce) (the "Senior Executive Officers").
See " -- Portfolio Additions."
The Company's strategic business relationships with Crow Family
Members and Bedrock, which collectively own approximately 58.7% of the
Company's Common Stock, have played an important role in the Company's growth
to date. The Company believes that these and other business relationships will
facilitate future growth by providing potential management contract,
acquisition, renovation and development opportunities. See "Business -- Growth
Strategy." The Company believes that its ability to achieve both internal and
external growth will help attract third party debt and equity capital to help
fund the growth of the Company's Portfolio. The Company has substantial capital
available for growth from a $100 million revolving credit facility (the
"Revolving Credit Facility"). As of November 30, 1996, $35.7 million was
available for borrowings under the Revolving Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
PORTFOLIO ADDITIONS
Since the Company's initial public offering, the Company has added on
a net basis four hotel management contracts to its base of 47 managed upscale
hotel properties and acquired a third property that has been managed by the
Company since it was built in 1988. This property, the 159 room Wyndham Garden
Hotel -- Vinings, was acquired from an unaffiliated third party in May 1996.
- 9 -
<PAGE> 22
The Company has acquired three additional upscale hotels since its
initial public offering. In July 1996, the Company acquired from an
unaffiliated third party a 181 room hotel located in the Overland Park, Kansas
metropolitan area. This hotel is currently being operated by the Company as a
Best Western Hotel during renovations that are underway. The Company expects
that this hotel will be converted to a Wyndham Garden Hotel in the first
quarter of 1997. In August 1996, the Company acquired from an unaffiliated
third party a 230 room hotel located in Dallas, Texas. This hotel is currently
being operated by the Company as a Quality Inn Hotel during renovations that
are underway. The Company expects that this hotel will be converted to a
Wyndham Garden Hotel in the first quarter of 1997. In August 1996, the Company
also acquired the Wyndham Bristol Hotel at Toronto Airport. This Wyndham Hotel,
which was acquired from an unaffiliated third party, contains 287 rooms and is
located in the Toronto, Canada Metropolitan area.
In August 1996, a subsidiary of the Company entered into a master
management assistance agreement (the "Homegate Agreement") with Homegate
Hospitality, Inc. ("Homegate"), a newly formed public company, pursuant to
which the Company is to provide to Homegate hotel management, purchasing,
marketing and technical services for mid-price extended-stay hotel properties
to be developed by Homegate. The hotel properties will be operated under the
name Homegate Studios and Suites and are targeted principally at business
travelers, professionals on temporary work assignments, persons between
domestic situations and persons relocating or purchasing a home, who often
desire accommodations for an extended period of time. The Homegate Agreement
provides for the Company to manage up to 60 extended-stay properties pursuant
to separate 10-year management contracts. Affiliates of Crow Family Members,
Trammell Crow Residential and Greystar were founders and remain principal
stockholders of Homegate. In addition, James D. Carreker and Harlan R. Crow
serve on the board of directors of Homegate. Since its initial public offering,
the Company has added six management contracts for extended-stay hotel
properties. Following planned renovations, five of these properties will be
converted to the Homegate Studios and Suites brand. See "Business."
In January 1997, Hospitality Properties Trust, a publicly traded real
estate investment trust, purchased the Doubletree Hotel in Salt Lake City from
City Hotels, S.A., a Belgian real estate Company, for $44 million. Hospitality
Properties Trust leased the property back to a subsidiary of the Company
pursuant to a lease with an initial term ending December 31, 2012 plus renewals
for 48 additional years that the Company may elect to exercise. The 381 room
hotel will be operated as a Wyndham Hotel. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
All statistics set forth in this Prospectus relating to the lodging
industry (other than Wyndham statistics) are from, or have been derived from,
information published or provided by Smith Travel Research, an industry
research organization. Smith Travel Research has not provided any form of
consultation, advice or counsel regarding any aspect of the proposed Plan of
Distribution, and Smith Travel Research is in no way associated with the
proposed Plan of Distribution.
- 10 -
<PAGE> 23
SUMMARY CONSOLIDATED FINANCIAL AND OTHER
DATA (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING,
MARGIN AND RATIO DATA)
The following table sets forth summary financial data for the Company.
The table also sets forth summary pro forma financial data for the Company as
if the Company's initial public equity offering and the issuance of the Notes
and the other transactions described under "Pro Forma Consolidated Financial
Data" had occurred at the beginning of 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------- ------------------------------------
(UNAUDITED)
PRO
PRO FORMA FORMA
1993 1994 1995 1995 1995 1996 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Portfolio Hotel Revenues(1) $ 345,733 $ 394,949 $ 534,204 N/A $ 379,625 $ 489,639 N/A
Statement of Income Data:
Revenues:
Hotel Revenues $ 43,921 $ 51,799 $ 54,673 $ 132,001 $ 41,685 $ 71,302 $ 105,461
Management Fees 10,731 13,302 16,921 14,274 11,909 16,546 15,426
Service Fees 2,127 2,904 4,120 3,391 2,823 2,961 2,616
Reimbursements 4,164 8,004 10,836 9,095 7,735 10,812 10,341
Other income 334 257 1,340 1,500 1,349 320 320
--------- ---------- ---------- ---------- ---------- ---------- ----------
Total Company Revenues 61,277 76,266 87,890 160,261 65,501 101,941 134,164
Operating costs and expenses 54,183 63,929 73,264 139,574 53,474 84,444 113,058
Operating income 7,094 12,337 14,626 20,687 12,027 17,497 21,106
Interest Expense, net (7,075) (7,526) (8,021) (13,278) (6,167) (6,944) (8,683)
Income before income taxes and
extraordinary item 1,654 6,265 7,949 8,193 6,901 11,172 13,013
Income taxes benefit(2) -- -- -- -- -- 10,388 --
Pro forma income taxes(2) -- -- -- (3,235) -- -- (5,140)
Net income 1,654 6,265 7,949 4,958 6,901 20,429 7,873
Historical net income as adjusted for pro
forma income tax 4,809 4,175 N/A
Historical net income as adjusted per
common share(3) .24 .21 1.02
Common shares outstanding(3) 20,018 20,018 20,018
Pro forma net income per share -- -- -- .25 -- -- .39
Pro forma common shares outstanding -- -- -- 20,018 -- -- 20,018
Portfolio Hotel Operating Data:(4)
Number of hotels(5) 47 53 66 64 74
Number of rooms(5) 12,116 12,866 17,604 17,186 18,601
Occupancy percentage(6) 65% 68% 69% 71% 70%
ADR(7) $ 80.60 $ 86.13 $ 88.79 $ 88.50 $ 92.24
REVPAR(8) $ 52.45 $ 58.84 $ 60.96 $ 62.65 $ 64.93
Gross operating profit margin(9) 26% 30% 29% 30% 32%
Food and beverage margin(10) 25% 25% 26% 24% 24%
Gross operating profit per available
room(11) $ 8,254 $ 10,628 $ 10,978 $ 8,225 $ 9,417
Comparable Hotel Operating Data:(12)
Number of hotels 30 30 30 30 30
Number of rooms 7,334 7,334 7,334 7,334 7,334
Occupancy percentage(6) 67% 70% 72% 74% 73%
ADR(7) $ 76.39 $ 80.16 $ 84.38 $ 84.18 $ 91.96
REVPAR (8) $ 51.31 $ 56.09 $ 60.99 $ 61.94 $ 66.85
Gross operating profit margin(9) 32% 34% 36% 36% 37%
Food and beverage margin(10) 29% 31% 31% 30% 28%
</TABLE>
- 11 -
<PAGE> 24
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------- ------------------------------------
(UNAUDITED)
PRO
PRO FORMA FORMA
1993 1994 1995 1995 1995 1996 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross operating profit per available
room(11) $ 9,612 $ 11,417 $ 12,547 $ 9,379 $ 10,306
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
1995 1996
ACTUAL ACTUAL
------ ------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents $ 4,160 $ 20,147
Total assets 133,403 240,091
Long-term obligations including current
portion 90,978 130,664
Total partners' capital and
stockholders' equity 17,557 71,916
</TABLE>
(1) Represents unaudited revenues of hotels owned, leased or managed by
the Company, as distinguished from Total Company Revenues.
(2) For the years 1993 through 1995 and the first five months of 1996,
Wyndham made no provision for income taxes because the combined
company was a combination of partnerships, S corporations and a
nontaxable Bermuda corporation that are not subject to U.S. federal
income taxes. Since the Company's formation in late May 1996, income
taxes have been provided. The provision for income taxes to arrive at
pro forma net income assumes a combined federal and state effective
income tax rate of 39.5% computed as follows:
<TABLE>
<S> <C>
Federal income tax rate 35.0%
Weighted average state income tax rate (net of federal benefit) 4.5%
----
39.5%
</TABLE>
The income tax benefit reflects the recognition of deferred income tax
associated with the change in tax status of the Company that occurred
in connection with the Company's initial public offering in May 1996.
(3) Historical net income as adjusted per common share is based on
historical net income as adjusted for pro forma income tax divided by
the number of shares issued in the initial public offering of the
Company as if the Company had been a corporation prior to its
formation in May 1996.
(4) Includes hotels owned, leased, managed or franchised during the
periods presented, except data for gross operating profit margin, food
and beverage margin and gross operating profit per available room
excludes the Company's franchised property, for which the information
is not available. The number of hotels listed in 1994 does not include
7 hotels for which the Company had signed management contracts that
were closed for renovations or construction in that period. Occupancy,
ADR, REVPAR, margin data and gross operating profit per available room
exclude extended-stay hotels. Annual changes in occupancy percentage,
ADR and REVPAR and fluctuations in gross operating profit margins for
the Company's Portfolio of hotels have been affected by the addition
of newly opened or renovated Wyndham brand hotels, which typically
begin operations with lower occupancy rates, ADR, REVPAR and margins
than mature hotels and improve over time as the hotels benefit from
Wyndham's operating standards and become integrated into Wyndham's
sales and marketing programs and central reservations system. There
can be no assurance that the Company's hotels opened or renovated
subsequent to January 1, 1993 will achieve occupancy rates, ADR,
REVPAR or operating results comparable to the Comparable Hotels.
(5) At end of period.
- 12 -
<PAGE> 25
(6) Occupancy percentage represents total rooms occupied divided by total
available rooms. Total available rooms represents the number of rooms
available for rent multiplied by the number of days in the reported
period.
(7) ADR represents total room revenues divided by the total number of
rooms occupied.
(8) REVPAR represents total room revenues divided by total available rooms.
(9) Gross operating profit margin represents gross operating profit as a
percentage of total revenues. "Gross operating profit" represents
gross revenues less department expenses and undistributed operating
expenses. Gross operating profit margins are included herein because
management uses them as a measure of hotel operating performance and
because management believes that these items are useful in making
industry comparisons.
(10) Food and beverage margin represents food and beverage operating profit
as a percentage of food and beverage revenues.
(11) Gross operating profit per available room represents gross operating
profit divided by total available rooms for the period. Gross
operating profit per available room for Portfolio Hotel Operating Data
has been calculated by dividing the gross operating profit for the
hotels operated by the Company during the entire period presented by
the total available rooms for such hotels.
(12) The Company has chosen a Comparable Hotel data set based on Wyndham
brand hotel properties operated by the Company since January 1, 1993
because the Company believes that these 30 hotels have been operated
by the Company for a sufficient period of time to provide meaningful
period-to-period comparisons and that these hotels fully reflect the
Company's operating capabilities.
- 13 -
<PAGE> 26
RISK FACTORS
In addition to the other information contained in this Prospectus, WEL
Participants should consider carefully the following factors in evaluating and
determining whether to vote for the Plan of Distribution.
RISKS ASSOCIATED WITH PARTICIPANT LOANS
A WEL Participant who chooses to borrow funds from Smith Barney
(referred to herein as a "Margin Borrower") through a Participant Loan will be
subject to the risks generally associated with margin borrowing. The margin
loan must be secured by the pledge of a portion of the Margin Borrower's
Wyndham Shares. The Wyndham Shares must have an initial market value of at
least 2.0 times the outstanding balance of the Participant Loans. In addition,
the value of the Wyndham Shares serving as collateral must remain at least 1.7
times the outstanding Participant Loan balance throughout the term of the loan.
The latter requirement is referred to as a "Margin Maintenance Requirement."
The market price of Wyndham Common Stock could be subject to significant
fluctuations in response to a number of factors. See " -- Price Volatility." A
decrease in the market value of Wyndham Common Stock may cause a Margin
Borrower's equity in the margin account to fall below the "Margin Maintenance
Requirement," triggering a "Margin Maintenance Call." Under such circumstances,
a Margin Borrower must immediately deposit cash or securities to restore the
value of the margin account to above the "Margin Maintenance Requirement."
There can be no assurance that the value of a Margin Borrower's Wyndham Shares
will not decrease in the future. THEREFORE, ONLY THOSE WEL PARTICIPANTS WHO ARE
PREPARED TO WEATHER PRICE FLUCTUATIONS AND WHO HAVE THE FINANCIAL RESOURCES AND
LIQUIDITY TO MEET "MARGIN MAINTENANCE CALLS" SHOULD TAKE OUT A PARTICIPANT LOAN
TO REPAY THEIR SHARE OF WEL INDEBTEDNESS. If a Margin Borrower has insufficient
liquid financial resources to satisfy a Margin Maintenance Call, some or all of
such borrower's Wyndham Shares that are pledged will be sold in order to reduce
the Participant Loan and satisfy the Margin Maintenance Requirement. Such
shares may be sold at a substantial loss to the Margin Borrower.
A Margin Borrower will be personally liable to repay the Participant
Loan. In addition, Participant Loans are due ON DEMAND. Therefore, if a demand
is made, a Margin Borrower must repay the entire Participant Loan balance,
together with accrued interest, regardless of the value of the Wyndham Shares
in the margin account. If the collateral in a Margin Borrower's account is
insufficient in value to repay the outstanding loan balance, Smith Barney may
pursue other assets of the Margin Borrower to satisfy repayment. For a summary
description of certain terms and conditions of the Participant Loans, see "The
Plan of Distribution -- Participant Loans."
Smith Barney may elect to increase the Margin Maintenance Requirement
at any time. The possibility for such an increase is greater when the
collateral in a margin account consists of a single equity security, such as
Wyndham Common Stock, and there is a resulting lack of diversity in the
collateral. Unless a WEL Participant decides to substitute collateral, his or
her Participant Loan will be secured only by Wyndham Shares.
FEDERAL INCOME TAX RISKS
No Internal Revenue Service Rulings. WEL has not and will not seek any
rulings from the IRS concerning federal income tax issues considered in this
Prospectus and discussed under "Plan of Distribution -- Federal Income Tax
Considerations", including, but not limited to, the classification of WEL as a
partnership for federal income tax purposes. Therefore, the IRS may take
positions contrary to those taken by WEL or the WEL Participants.
Possible Legislative or Other Developments. All representations made
in this Prospectus concerning federal income tax consequences of the Plan of
Distribution are based on the Internal Revenue Code and administrative and
judicial interpretations thereof as they exist today. No assurance can be given
that the currently anticipated income tax treatment of the Plan of Distribution
will not in the future be modified by legislative, administrative or judicial
changes, possibly having retroactive effect, to the detriment of the WEL
Participants.
- 14 -
<PAGE> 27
Other Tax Issues. Other tax matters are discussed under "Plan of
Distribution -- Federal Income Tax Considerations." This discussion does not
take into account any WEL Participant's unique financial or tax situation.
Therefore, it is urged that WEL Participants consult with their own tax
advisors regarding the possible federal and state and local tax consequences of
the Plan of Distribution.
RISKS ASSOCIATED WITH THE LODGING INDUSTRY
The Company's business is subject to the operating risks inherent in
the lodging industry. These risks include changes in general and local economic
conditions, cyclical overbuilding in the lodging industry, varying levels of
demand for rooms and related services, competition from other hotels, changes
in travel patterns, the recurring need for renovation, refurbishment and
improvement of hotel properties, changes in governmental regulations that
influence or determine wages, prices and construction and maintenance costs,
changes in interest rates, the availability of financing for operating or
capital needs and changes in real estate taxes and other operating expenses.
There can be no assurance that regulatory compliance or downturns or prolonged
adverse conditions in real estate or capital markets or national or local
economies will not have a material adverse effect on the Company's results of
operations.
COMPETITION IN THE LODGING INDUSTRY
The lodging industry is highly competitive. The Company's upscale
hotels compete with other national limited and full service hotel companies, as
well as with various regional and local hotels. Some of the larger hotel chains
with which the Company's upscale hotels compete include Marriott, Sheraton,
Hyatt, Hilton and Embassy Suites. The Company's extended-stay hotels compete on
a local level. The Company anticipates that competition within the
extended-stay industry segment will increase substantially in the foreseeable
future. In the midprice category of the extended-stay industry segment, a
number of other lodging chains and developers have recently announced plans to
develop or are currently developing extended-stay hotels which may compete with
the Company's hotels. A number of the Company's competitors for both upscale
and extended-stay hotel properties are larger, operate more hotels and have
substantially greater financial and other resources than the Company. In
addition, some of the Company's competitors operate hotel properties that have
locations superior to those of the Company's hotels. Competitive factors in the
lodging industry include room rates, quality of accommodations, name
recognition, service levels and convenience of location. There can be no
assurance that demographic, geographic or other changes in markets in which the
Company's hotels are located will not adversely affect the convenience or
desirability of certain of the Company's hotels. Furthermore, there can be no
assurance that new or existing competitors will not significantly lower rates
or offer greater conveniences, services or amenities or significantly expand or
improve facilities in a market in which the Company's hotels compete, thereby
adversely affecting the Company's results of operations. See "Business --
Competition."
RISKS ASSOCIATED WITH EXPANSION
Growth Risks. The Company's revenues and net income have grown
substantially during the past several years as a result of adding new
management contracts, acquiring, renovating and developing additional hotels,
and from increases in revenues and net income at existing hotels. The Company
intends to continue to pursue an aggressive growth strategy for the foreseeable
future, but there can be no assurance that the Company will successfully
achieve its growth objectives. The Company is subject to a variety of business
risks generally associated with growing companies. The Company's ability to
pursue successfully new growth opportunities will depend on many factors,
including, among others, the Company's ability to identify suitable growth
opportunities, finance acquisitions and renovations and successfully integrate
new hotels into its operations. While the Company believes that it has
sufficient capital to fund its growth strategy in the near term, this belief is
primarily premised on adequate cash being generated from operations and the
Company's Revolving Credit Facility. There can be no assurance that the Company
will generate adequate cash from operations. In addition, the Company may seek
an increase in the capital available to it under the Revolving Credit Facility
or otherwise obtain additional debt or equity financing, depending upon the
amount of capital required to pursue future growth opportunities or address
other needs. There can be no assurance that such increase or additional
financing will be available to the Company on acceptable terms, if at all. As
of November 30, 1996, the available balance under
- 15 -
<PAGE> 28
the Revolving Credit Facility was $35.7 million. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
In addition, there can be no assurance that the Company will be able
to integrate successfully new hotels or new hotel products into its operations,
that new hotels or new hotel products will achieve revenue and profitability
levels comparable to the Company's existing hotels or that the combined
business will be profitable. Newly acquired or developed hotels typically begin
with lower occupancy and room rates. Furthermore, the Company's expansion
within its existing markets could adversely affect the financial performance of
the Company's existing hotels or its overall results of operations. Expansion
into new markets may present operating and marketing challenges that are
different from those currently encountered by the Company in its existing
markets. There can be no assurance that the Company will anticipate all of the
changing demands that expanding operations will impose on its management,
management information and reservation systems, and the failure to adapt its
systems and procedures could have a material adverse effect on the Company's
business. See "Business -- Growth Strategy."
Competition for Expansion Opportunities. The Company competes for
management contract, acquisition, development, lease, franchise and other
expansion opportunities. The Company competes for these expansion opportunities
with national and regional hotel companies, some of which have greater
financial and other resources than the Company. Competitive factors for
expansion opportunities include relationships with hotel owners and investors,
the availability of capital, financial performance, management fees, lease
payments, brand name recognition, marketing support, reservation system
capacity and the willingness to provide funds in connection with new management
and lease arrangements. The Company's failure to compete successfully for
expansion opportunities or to attract and maintain relationships with hotel
owners and investors could adversely affect the Company's results of
operations. See "Business -- Competition."
Acquisition and Development Risks. The Company expects that it may
acquire additional hotels in the future. Acquisitions entail the risk that
investments will fail to perform in accordance with expectations. The Company
also intends to continue redevelopment and conversion of other acquired hotels
to Wyndham Garden Hotels. The Company has entered into a management contract
with respect to one new hotel that is currently under construction pursuant to
which the Company has undertaken certain obligations to provide furniture,
fixtures and equipment at a specified price. In addition, the Company has
acquired two hotels that will remain open during renovations and that will be
converted to Wyndham Garden Hotels. The Company also has entered into
management contracts for two hotels that will remain open during renovations
and that will be converted to Wyndham Garden Hotels. In addition, the Company
may develop new hotels in the future, depending on market conditions.
Significant hotel renovations and new project development are subject to a
number of risks, including risks of construction delays or cost overruns, risks
that the properties will not achieve anticipated performance levels and new
project commencement risks such as receipt of zoning, occupancy and other
required governmental permits and authorizations. These and other risks could
result in the incurrence of substantial costs for a project that is never
completed. The Company anticipates that most acquisitions, substantial
renovations and development will be financed under the Revolving Credit
Facility, through joint ventures or with other forms of short-term secured or
unsecured financing. See "Business -- Growth Strategy" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources." Permanent financing for these projects,
however, might not be available or might be available only on disadvantageous
terms. If permanent debt or equity financing were not available on acceptable
terms to refinance projects undertaken without permanent financing, such
projects could be curtailed and the Company's working capital could be
adversely affected.
DEPENDENCE ON MANAGEMENT CONTRACTS AND ON CERTAIN HOTEL OWNERS
Management contracts are acquired, terminated, renegotiated or
converted to franchise agreements in the ordinary course of the Company's
business. Crow Family Members, who own approximately 47.3% of the Company's
issued and outstanding Common Stock, have interests in 16 hotels that the
Company manages pursuant to management contracts. The Company also operates 17
hotels owned by Bedrock, which owns approximately 11.4% of the Company's issued
and outstanding Common Stock. See "Principal Stockholders." In addition, Crow
Family Members, Trammell Crow Residential and Greystar were founders and remain
principal stockholders of Homegate, which owns
- 16 -
<PAGE> 29
the six extended-stay hotel properties managed by the Company. While the
average remaining term of the Company's management contracts for Wyndham brand
hotels as of November 30, 1996 was 14 years (including renewals that the
Company may elect to exercise), these management contracts generally may be
terminated by the owner of the hotel property if the Company fails to meet
certain performance standards, if the property is sold to a third party, if the
property owner defaults on indebtedness encumbering the property and/or upon a
foreclosure of the property. The terms of the 3 non-Wyndham brand upscale hotel
management contracts range from one month to fifteen years, and the Company's
extended-stay hotel management contracts are for a term of 10 years. Other
grounds for termination of the Company's upscale hotel management contracts
include a hotel owner's election to close a hotel and certain business
combinations involving the Company in which the Wyndham name or current
management team does not survive. The Company's extended-stay management
contracts generally can be terminated if certain performance standards are not
met or upon a sale or foreclosure of the property. In addition, the contracts
can be terminated upon payment of a cancellation fee without cause if Homegate
desires to manage the hotels internally. There can be no assurance that the
Company will be able to replace terminated contracts or that the terms of
renegotiated or converted contracts will be as favorable as the terms that
existed before such renegotiation or conversion. The Company also is subject to
the risk of deterioration in the financial condition of a hotel owner and such
owner's ability to pay management fees to the Company. In addition, in certain
circumstances, the Company makes or may be required to make loans to or capital
investments in hotel properties in connection with management contracts. See
"Business -- Management Contracts." A material deterioration in the operating
results of one or more of these hotel properties and/or a loss of the related
management contracts could adversely affect the value of the Company's
investment in such hotel properties. In addition, the Company historically has
relied on Crow Family Members, Bedrock and other hotel owners and investors for
various acquisition, renovation, development and other expansion opportunities.
Although the Company believes that it enjoys satisfactory relationships with
such hotel owners and investors, there can be no assurance that such
relationships will remain satisfactory or that such owners and investors will
continue to provide expansion opportunities in the future. See "
-- Growth Strategy."
CONFLICTS OF INTEREST
Future Dealings with Affiliates of the Company. Crow Family Members,
certain of their affiliates and Bedrock are, collectively, parties to 33
management contracts as well as other business arrangements with the Company.
See "Certain Relationships and Transactions." In addition, affiliates of Crow
Family Members, Trammell Crow Residential and Greystar were founders and remain
principal stockholders of Homegate. The foregoing relationships, coupled with
the ownership of Common Stock by Crow Family Members and Bedrock, as well as
their representation on the Company's Board of Directors, could give rise to
conflicts of interest. Although the Company believes that its management
contracts with these persons are on terms no less favorable to the Company than
those that could have been obtained from unaffiliated third parties, there can
be no assurance that these parties will continue to transact business with the
Company or that they will not attempt to use their ownership positions with the
Company to influence the terms on which they transact business with the Company
in the future. In addition, the Company's senior executive officers have
ownership interests in hotels that are managed but not owned by the Company. An
entity owned by Crow Family Members and the Senior Executive Officers has
developed a new central reservations system for the Company, and is continuing
to develop the integrated property management component of such system. The
timing, performance and continued availability of such system is not fully
within the Company's control. The outside interests of the Senior Executive
Officers could give rise to certain conflicts of interest that may result in
decisions that do not fully reflect the interests of all stockholders. See
"Business -- Growth Strategy -- III. Ability to Execute Growth Strategy --
Relationships with Hotel Investors" and "Certain Relationships and
Transactions."
Conflicts Involving Certain Board Members. Robert A. Whitman and
Daniel A. Decker, who are directors of the Company, are principals of
Hampstead, which is related to an entity that has an ownership interest in
Bedrock and through other entities also has interests in another hotel company
that in the past has competed, and in the future may compete, with the Company
for both guests and hotel acquisitions. Hampstead is an investment firm and may
from time to time acquire interests in other hotel companies or assets.
Consequently, Messrs. Whitman and Decker may have conflicts of interest with
respect to certain matters potentially or actually involving or affecting the
Company and such
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other hotel-related investments, such as acquisition, development, financing
and other corporate opportunities that may be suitable for the Company and such
other hotel companies. In addition, such directors also may have conflicts of
interest with respect to corporate opportunities suitable for both the Company
and Hampstead or related entities. To the extent such opportunities arise, such
directors will make a determination after consideration of a number of factors,
including whether such opportunity is presented to any such director in his
capacity as a director of the Company or as an affiliate of such other hotel
company or of Hampstead, whether such opportunity is within the Company's line
of business or consistent with its strategic objectives and whether the Company
will be able to undertake or benefit from such opportunity. The Company and
Bedrock have agreed that the Company will be permitted to manage for a term of
15 years any hotel that is sourced by Bedrock and contains 250 or fewer rooms.
See "Growth Strategy -- Primary Growth Opportunities -- Wyndham Garden Hotel
Redevelopment and Conversion Program" and "Certain Relationships and
Transactions -- Bedrock Investment Program."
Policy with Respect to Related Party Transactions. The Company has
implemented a policy requiring any material transaction (or series of related
transactions) between the Company and related parties to be approved by a
majority of the directors not affiliated with the Company (the "Independent
Directors"), if any, upon such directors' determination that the terms of the
transaction are no less favorable to the Company than those that could have
been obtained from unrelated third parties. The policy defines a material
related party transaction (or series of related transactions) as one involving
a purchase, sale, lease or exchange of property or assets or the making of any
investment with a value to the Company in excess of $1.0 million or a service
agreement (or series of related agreements) with a value in excess of $1.0
million in any fiscal year. There can be no assurance that this policy always
will be successful in eliminating the influence of conflicts of interest. See
"Management -- Directors and Executive Officers" and "Certain Relationships and
Transactions -- Policy with Respect to related Party Transactions."
For a discussion of certain conflicts of interest relating to the Plan
of Distribution, see "Plan of Distribution -- Conflicts of Interest."
RISKS ASSOCIATED WITH OWNING OR LEASING REAL ESTATE
The Company owns or leases 23 of the 82 hotels in its Portfolio.
Accordingly, the Company will be subject to varying degrees of risk generally
related to owning and leasing real estate. These risks include, among others,
changes in national, regional and local economic conditions, local real estate
market conditions, changes in interest rates and in the availability, cost and
terms of financing, liability for long-term lease obligations, the potential
for uninsured casualty and other losses, the impact of present or future
environmental legislation and compliance with environmental laws, adverse
changes in zoning laws and other regulations, many of which are beyond the
control of the Company and inclement regional weather conditions. In addition,
real estate investments are relatively illiquid; therefore, the ability of the
Company to vary its Portfolio in response to changes in economic and other
conditions may be limited.
SHARES ELIGIBLE FOR FUTURE SALE
The Company has 20,018,299 shares of Common Stock outstanding of which
4,197,500 shares are freely tradeable by persons other than "affiliates" of the
Company without restriction or limitation under the Securities Act of 1933, as
amended (the "Act"). Following the Plan of Distribution and the Lock-Up Period,
the 646,669 shares of Common Stock distributed to WEL Participants also will be
freely tradable by persons other than "affiliates" of the Company without
restriction or limitation under the Act. The remaining 15,174,130 shares are
"restricted securities" within the meaning of Rule 144 adopted under the Act
and may not be sold in the absence of registration under the Act unless an
exemption from registration is available, including the exemption contained in
Rule 144. The holders of the remaining 15,174,130 shares of Common Stock
possess registration rights with respect to such shares. See "Description of
Capital Stock -- Registration Rights. Future sales of shares of Common Stock
registered under the Act or pursuant to Rule 144 or otherwise, or the
perception that such sales could occur, could have an adverse effect upon the
market price for the Common Stock. See "Shares Eligible for Future Sale."
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CONTROL BY PRINCIPAL STOCKHOLDERS
Crow Family Members beneficially own an aggregate of approximately
47.3% of the outstanding shares of the Company's Common Stock, and Bedrock
beneficially owns approximately 11.4% of the Company's issued and outstanding
Common Stock. See "Principal Stockholders." In addition to the ability of Crow
Family Members, either independently or together with Bedrock, to block certain
actions requiring stockholder approval by virtue of the substantial number of
shares of Common Stock held by them, the terms of a stockholders' agreement
among the Company, Crow Family Members, Bedrock, the Company's senior executive
officers, WEL and Susan T. Groenteman, a director of the Company (the
"Stockholders' Agreement"), has the effect of concentrating control of the
Company among these parties. Under the terms of the Stockholders' Agreement,
Crow Family Members (together with the Senior Executive Officers, WEL and Ms.
Groenteman) and Bedrock have agreed, among other things, to allocate between
themselves the right to nominate members of the Board of Directors of the
Company as long as they continue to own a substantial number of shares of the
Company's Common Stock. In addition, pursuant to the terms of the Stockholders'
Agreement, Crow Family Members and Bedrock have allocated among themselves the
right to designate the Chairman of the Board so long as either party owns
shares of Common Stock covered by the Stockholders' Agreement that represents
at least 30% of the Company's outstanding Common Stock. Such provisions in the
Stockholders' Agreement will ensure such parties' ability to control the
election of the members of the Board of Directors and will enable such parties
to control the management and affairs of the Company. Following the Plan of
Distribution, neither WEL nor WEL Participants will be party to the
Stockholders' Agreement. See "Description of Capital Stock -- Stockholders'
Agreement."
SIGNIFICANT DEBT AND LEASE OBLIGATIONS
At September 30, 1996, the Company's long term consolidated debt was
approximately $109.7 million, its total stockholders' equity was approximately
$71.9 million and its ratio of earnings to fixed charges on a pro forma basis
for the nine months ended September 30, 1996 was 1.9 to 1. The Company's
indebtedness is substantial in relation to its stockholders' equity. In
addition, the Company has significant lease obligations with respect to the 12
hotel properties operated pursuant to long-term leases. See "Business --
Long-Term Hotel Leases." For the year ended December 31, 1995 and the nine
months ended September 30, 1996, the Company's rent expense was approximately
$15.5 million and $10.2 million, respectively. The degree to which the Company
is leveraged, as well as its rent expense, could have important consequences to
holders of Common Stock, including: (i) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions or general corporate purposes may be impaired; (ii) a substantial
portion of the Company's cash flow from operations may be dedicated to the
payment of principal and interest on its indebtedness and rent expense, thereby
reducing the funds available to the Company for its operation; and (iii)
certain of the Company's indebtedness, including the Revolving Credit Facility
contains financial and other restrictive covenants, including those restricting
the incurrence of additional indebtedness, the creation of liens, the payment
of dividends and sales of assets and imposing minimum net worth requirements.
There can be no assurance that the Company's operating results will be
sufficient for the payment of the Company's indebtedness. In addition, the
Company's indebtedness could increase the Company's vulnerability to adverse
general economic and lodging industry conditions (including increases in
interest rates) and could impair the Company's ability to take advantage of
significant business opportunities that may arise.
DEPENDENCE ON SENIOR MANAGEMENT
The Company's success will depend largely on the efforts and abilities
of senior management. The loss of the services of the Senior Executive Officers
could have a material adverse effect on the Company's business. The Company has
not entered into employment agreements with any member of senior management.
See "Management."
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS
The lodging industry is seasonal in nature. Quarterly earnings may be
adversely affected by events beyond the Company's control, such as poor weather
conditions, economic factors and other considerations affecting travel.
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In addition, the loss of one or several management contracts, the timing of
achieving incremental revenues from additional hotels and the realization of a
gain or loss upon the sale of a hotel also may adversely impact earnings
comparisons. If the Company loses a management contract that has capitalized
acquisition costs, the Company will record a write-off of the remaining book
value (less any termination fees received) of such capitalized costs, which
could have a material adverse effect on the operating results during the period
in which the write-off occurred. In addition, the Company's quarterly earnings
could be adversely affected by the loss of a hotel investment made in
connection with a management contract or other investment arrangement. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview" and "-- Seasonality."
ENVIRONMENTAL MATTERS
Under various federal, state, local and foreign environmental laws,
ordinances and regulations ("Environmental Laws"), a current or previous owner
or operator of real property may be liable for the cost of removal or
remediation of hazardous or toxic substances on, under or in such property.
Such laws often impose liability without regard to whether the owner or
operator knew of, or was responsible for, the release of such hazardous or
toxic substances. The presence of contamination from hazardous or toxic
substances, or the failure to remediate such contaminated property properly,
may adversely affect the owner's ability to sell or rent such real property or
to borrow using such real property as collateral. Persons who arrange for the
disposal or treatment of hazardous or toxic substances also may be liable for
the cost of removal or remediation of such substances at the disposal or
treatment facility, whether or not such facility is or ever was owned or
operated by such person. The operation and removal of certain underground
storage tanks also are regulated by federal and state laws. In connection with
the ownership and operation of its hotel properties, including properties
owned, as well as leased, managed or franchised by the Company, the Company
could be held liable for the cost of remedial action with respect to such
regulated substances and storage tanks and claims related to them. In addition
to clean-up actions brought by federal, state and local agencies, the presence
of hazardous or toxic substances on a hotel property also could result in
personal injury or similar claims by private plaintiffs. The Company has
received environmental information covering its owned and leased properties and
certain of its managed and franchised properties; however on many of the
managed and franchised properties, the Company has not performed or received
the results from any environmental investigations. As a result of the foregoing
limitations on performing environmental investigation and due to the fact that
Environmental Laws and conditions are subject to frequent change, there can be
no assurance that environmental liabilities or claims will not adversely affect
the Company in the future. See "Business -- Environmental Matters" for further
information germane to environmental issues relating to the Company.
ANTI-TAKEOVER MATTERS
The Company's Certificate of Incorporation and By-laws contain
provisions that may have the effect of delaying, deterring or preventing a
takeover of the Company that the Company's stockholders may consider to be in
their best interest. The Company's Certificate of Incorporation and By-laws
provide for a classified Board of Directors serving staggered terms of three
years, the prohibition of stockholder action by written consent and advance
notice requirements for stockholder proposals and director nominations. The
Company's Certificate of Incorporation also grants the Board of Directors the
authority to issue up to 5,000,000 shares of preferred stock, having such
rights, preferences and privileges as designated by the Board of Directors
without stockholder approval. In addition, Section 203 of the Delaware General
Corporation Law, which is applicable to the Company, contains provisions that
restrict certain business combinations with interested stockholders, which may
have the effect of inhibiting a non-negotiated merger or other business
combination involving the Company. (The Company believes that by its terms,
Section 203 does not restrict transactions with C.F. Securities L.P., a
partnership owned by Crow Family Members, or any other party to the
Stockholders' Agreement that becomes an Interested Stockholder (for purposes of
Section 203) as a result of the exercise of the right of first offer described
under "Description of Capital Stock -- Stockholders' Agreement.") Finally, the
Stockholders' Agreement may have the effect of delaying, deterring or
preventing a takeover of the Company, as it restricts the transfer of shares of
Common Stock held by Crow Family Members, the Senior Executive Officers, WEL,
Bedrock and Ms. Groenteman, and also provides for an agreed allocation of
director nominations among such parties. The Stockholders' Agreement permits
the Plan of Distribution. Following the Plan of Distribution, neither
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WEL nor WEL Participants will be party to the Stockholders' Agreement. See
"Description of Capital Stock -- Anti-Takeover Provisions" and
"-- Stockholders' Agreement."
The indenture governing the Notes provides that, upon the occurrence
of (i) the sale of a majority of the fair market value of the assets of the
Company, on a consolidated basis, (ii) any person or group not affiliated with
the Company's current stockholders becoming the beneficial owner of more than
45% of the total voting power of the Company or (iii) certain changes in a
majority of the Board of Directors of the Company during a two-year period
(collectively, a "Change of Control"), the holders of the Notes will have the
right to require the Company to repurchase their Notes at a price equal to 101%
of the aggregate principal amount thereof, plus accrued and unpaid interest.
Should a Change of Control occur and a substantial amount of the Notes be
presented for purchase, there can be no assurance that the Company or the
acquiring party would have sufficient financial resources to enable it to
purchase such Notes. In addition, the Change of Control purchase feature of the
Notes may make more difficult or discourage a takeover of the Company, and,
thus, the removal of incumbent management. The terms of the Revolving Credit
Facility prohibit such a Note repurchase. In addition, certain "changes of
control," as defined in the Revolving Credit Facility, constitute a default
thereunder.
PRICE VOLATILITY
The market price of the Common Stock could be subject to significant
fluctuations in response to variations in quarterly operating results and other
factors. In addition, the securities markets have experienced significant price
and volume fluctuations from time to time in recent years that often have been
unrelated or disproportionate to the operating performance of particular
companies. These broad fluctuations may adversely affect the market price of
the Common Stock.
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<PAGE> 34
THE PLAN OF DISTRIBUTION
GENERAL
WEL was established in 1990 by Old Wyndham as an equity participation
program designed to enable WEL Participants to receive indirect equity
interests in the WEL Investments. In connection with the Company's initial
public offering, WEL received the Wyndham Shares in exchange for WEL's
ownership interest in certain of the WEL Investments. The General Partner of
WEL is proposing the distribution of the Wyndham Shares to WEL Participants as
part of the Plan of Distribution, which would result in the dissolution and
termination of WEL. The Plan of Distribution must be approved by the holders of
a majority of the percentage interests held by all WEL Participants. Following
the Wyndham share distribution, the business of WEL will be wound up and WEL
will be terminated. Any assets remaining in WEL will be distributed to WEL
Participants. A copy of the Plan of Distribution is attached as Appendix B to
this Prospectus.
The Wyndham Shares will be distributed to WEL Participants as soon as
practicable following the Plan Effective Date, which is the date of the General
Partner's receipt of approval of the Plan of Distribution by WEL Participants.
In accordance with the provisions of the WEL Agreement, the Wyndham Shares will
be distributed to WEL Participants, first, according to the balance in each WEL
Participant's capital account and, second, in accordance with each
participant's percentage interest in WEL. The Wyndham Shares also will be
distributed subject to each participant's pro rata share of WEL Indebtedness,
as described below under " -- Repayment of WEL Indebtedness." A WEL Participant
should refer to the individual account statement included in the materials
accompanying this Prospectus for an estimate of the number of Wyndham Shares
expected to be distributed to him or her.
As a result of the Wyndham Share distribution, each WEL Participant
will receive directly (subject to payment of his or her share of WEL
Indebtedness) the Wyndham Shares represented by his or her ownership interest
in WEL. As part of the Plan of Distribution, WEL Participants who are not
considered "affiliates" of the Company will be permitted during the "Resale
Window" of three business days following the share distribution to sell his or
her Wyndham Shares, subject to compliance with the Company's Insider Trading
Policy and to repayment of any WEL Indebtedness or Participant Loan secured by
the Wyndham Shares to be sold. Each WEL Participant will be restricted under
the Plan of Distribution from making any public sale of his or her Wyndham
Shares during a three-week "Lock-Up Period" following the Resale Window. WEL
Participants who are considered "affiliates" of the Company will also be
required to comply with certain other securities law restrictions in connection
with any such sale. See " -- Resale Restrictions." No fractional shares of
Common Stock will be distributed, and payment will be made in cash of any
distribution amount that would otherwise be represented by a fractional share.
Certificates for Wyndham Shares will be issued and delivered to each WEL
Participant or his or her duly authorized representative as soon as practicable
following the Plan Effective Date, together with payment for any fractional
shares. No WEL Participant is entitled to appraisal or similar rights in
connection with the Plan of Distribution.
DISTRIBUTION OF WYNDHAM SHARES
Prior to the distribution of Wyndham Shares, in accordance with
Section 3.4 of the WEL Agreement, as of January 30, 1997, the General Partner
will adjust the gross asset value of WEL's assets to reflect the increase in
value of WEL's assets over the gross asset value as of January 1, 1996. As with
previous annual revaluations, the WEL Agreement provides that the value of
WEL's assets will be determined according to the "EVBS Value" methodology for
all "interests" held by WEL in "WHC Persons" and the fair market value of all
cash items held by WEL. As of November 30, 1996, WEL's assets consisted of the
Wyndham Shares and approximately $215,000 in cash. In accordance with 1996
amendments to the WEL Agreement, the EVBS Value of the Wyndham Shares is equal
to the initial public offering price of Wyndham Common Stock, which is $16.00
per share.
As set forth in the WEL Agreement, following the adjustment to the
gross asset value of WEL's assets, each WEL Participant's capital account will
be adjusted (the "Adjusted Capital Account") upward to reflect the increase in
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WEL's gross asset value as of January 30, 1997 over the value as of January 1,
1996. In accordance with Section 7.3 of the WEL Agreement, the assets of WEL
will then be allocated to the WEL Participants (i) first, according to the
positive balance in each WEL Participant's Adjusted Capital Account and, (ii)
second, in accordance with each WEL Participant's percentage interest in WEL.
For purposes of adjusting capital accounts and allocating the Wyndham Shares
for distribution to the WEL Participants, such shares will be valued based upon
their EVBS Value of $16.00 per share.
As a result of the Plan of Distribution, therefore, each WEL
Participant will receive a number of Wyndham Shares equal to the total number
of Wyndham Shares multiplied by a fraction, the numerator of which is such
participant's Adjusted Capital Account balance and the denominator of which is
the total Adjusted Capital Account balances of all WEL Participants. Similarly,
each WEL Participant's pro rata portion of the WEL Indebtedness will be
determined by multiplying the total amount of WEL Indebtedness outstanding at
the time of the Plan of Distribution by the same fraction discussed above. Each
WEL Participant should refer to the individual account statement included in
the materials accompanying this Prospectus for the number of Wyndham Shares to
be distributed and the amount of WEL Indebtedness to be allocated to him or
her. The foregoing illustration does not take into account the reserve to be
established by the General Partner. See " -- Dissolution of WEL."
REPAYMENT OF WEL INDEBTEDNESS
General. Since WEL's inception, WEL Investments have been purchased
with loans made to WEL by WFLP or its predecessors. In connection with the
Company's initial public offering, the Company purchased from WFLP the
promissory notes evidencing such loans at their face value, plus accrued
interest, as of December 31, 1995. As of November 30, 1996, the aggregate
outstanding balance under such loans was $3,070,654. In addition, WEL has
issued promissory notes in connection with purchasing the interests of former
WEL Participants, the outstanding balance of which was $169,522 as of November
30, 1996 and has incurred obligations to other former WEL Participants, which
total approximately $520,000. The total indebtedness owed by WEL from time to
time is referred to herein as the "WEL Indebtedness." Each WEL Participant
should refer to the individual account statement included in the materials
accompanying this prospectus for a discussion of his or her pro rata share of
the WEL Indebtedness.
In order to facilitate the repayment of the WEL Indebtedness (without
WEL's having to sell any Wyndham Shares to provide funds), the Plan of
Distribution requires that the Wyndham Shares be distributed subject to each
participant's pro rata allocation of WEL Indebtedness. Each WEL Participant
will be permitted to borrow funds through the Participant Loans from Smith
Barney to repay the WEL Indebtedness. Alternatively, WEL Participants can elect
to have a portion of their Wyndham Shares sold on the first day of the Resale
Window to repay their WEL Indebtedness. A brokerage commission that will be
discounted 50% from the published Smith Barney rate will be charged in
connection with any such sale, and the sale will be a taxable transaction to
the WEL Participant. (The applicable Smith Barney rate varies depending on the
number of shares sold.) See " -- Federal Income Tax Considerations -- Repayment
of WEL Indebtedness." If a WEL Participant elects not to take out a Participant
Loan or to have a portion of his or her Wyndham Shares sold, such participant
will be required to otherwise repay his or her share of WEL Indebtedness prior
to receipt of any Wyndham Shares.
The Company's WEL Indebtedness is secured by 181,698 Wyndham Shares.
The Company will release its security interest in the Wyndham Shares upon
repayment of the WEL Indebtedness. Under the Plan of Distribution and prior to
actual delivery to a WEL Participant of any Wyndham Shares, such WEL
Participant's pro rata share of WEL Indebtedness must be repaid (i) through the
proceeds of the Participant Loans, (ii) from the sale proceeds of elections by
individual participants to have a portion of their Wyndham Shares sold or (iii)
from a direct payment by WEL Participants from other sources to the General
Partner who will then remit such funds to the holders of WEL Indebtedness.
THEREFORE, IN ORDER FOR A WEL PARTICIPANT TO RECEIVE ANY WYNDHAM
SHARES, SUCH PARTICIPANT MUST REPAY HIS OR HER SHARE OF WEL INDEBTEDNESS
THROUGH ONE OF THE THREE OPTIONS DESCRIBED ABOVE. IF THE PLAN OF DISTRIBUTION
IS APPROVED AND A WEL PARTICIPANT DOES NOT MAKE A DECISION WITH RESPECT TO THE
REPAYMENT OF HIS OR HER WEL INDEBTEDNESS BY FEBRUARY 7, 1997 (THE ANTICIPATED
PLAN EFFECTIVE DATE), THE COMPANY WILL ARRANGE
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FOR THE SALE OF A PORTION OF SUCH WEL PARTICIPANT'S WYNDHAM SHARES (EVEN IF
SUCH PARTICIPANT VOTED AGAINST THE PLAN) IN AN AMOUNT SUFFICIENT TO REPAY HIS
OR HER WEL INDEBTEDNESS AND THE BROKERAGE COMMISSION INCURRED IN CONNECTION
WITH SUCH SALE AND ANY TAX OR OTHER COSTS AND EXPENSES ASSOCIATED WITH SUCH
SALE. SUCH A SALE WILL BE AT THE THEN PREVAILING MARKET PRICE FOR WYNDHAM
COMMON STOCK, WHICH COULD BE LOWER THAN THE PRICE THAT MIGHT BE OBTAINED IF THE
WYNDHAM SHARES WERE HELD BY THE WEL PARTICIPANT AND SOLD AT A LATER DATE.
ACCORDINGLY, WEL PARTICIPANTS ARE URGED TO MAKE A TIMELY DECISION WITH RESPECT
TO REPAYMENT OF THEIR WEL INDEBTEDNESS REGARDLESS OF WHETHER THEY VOTED FOR OR
AGAINST THE PLAN OF DISTRIBUTION.
Repayment Election. If a WEL Participant chooses to borrow funds from
Smith Barney, such participant must indicate that election on the enclosed
"Repayment and Resale Election Form" by checking the appropriate box. Before
making this election, the WEL Participant should read the following general
description of the Participant Loans, the Client Agreement included as part of
each WEL Participant's Smith Barney Account Application and related materials,
and the discussion set forth under "Risk Factors -- Risks Associated with
Participant Loans." In order to establish a Participant Loan, a WEL Participant
must first open an account with Smith Barney. IF YOU HAVE NOT OPENED A
BROKERAGE ACCOUNT WITH SMITH BARNEY, PLEASE CALL HEATHER HUGHES OF SMITH BARNEY
AT (800) 527-5814 OR (214) 720-5002.
If a WEL Participant chooses to have a portion of such participant's
Wyndham Shares sold on the first day of the Resale Window to repay his or her
WEL Indebtedness, he or she must indicate that election on the Repayment and
Resale Election Form by checking the appropriate box. By choosing this
election, a sufficient number of Wyndham Shares will be sold, at the market
price prevailing at the time of sale, to repay the participant's WEL
Indebtedness plus the brokerage commission incurred in connection with such
sale. In order to arrange for the sale of Wyndham Shares to repay WEL
Indebtedness, it is necessary to first establish a brokerage account with Smith
Barney. IF YOU HAVE NOT OPENED A BROKERAGE ACCOUNT WITH SMITH BARNEY, PLEASE
CALL HEATHER HUGHES OF SMITH BARNEY AT (800) 527-5814 OR (214) 720-5002.
Wyndham Shares sold pursuant to this election will be sold in accordance with
the procedures described under " -- Resale Restrictions."
If a WEL Participant chooses to repay his or her share of WEL
Indebtedness through such participant's own financial resources, he or she must
indicate that election by checking the appropriate box on the Repayment and
Resale Election Form. In addition, such participant must include a check made
payable to the General Partner for the total amount of WEL Indebtedness
specified on the participant's individual account statement. The General
Partner will then cause the funds to be remitted to the holders of WEL
Indebtedness.
Participant Loans. In connection with the Plan of Distribution, each
WEL Participant will be permitted to borrow funds under a Participant Loan from
Smith Barney to repay such participant's share of WEL Indebtedness. The
Participant Loans will be payable on demand and will bear interest at a
floating interest rate that will fluctuate based on short-term interest rates.
For purposes of illustration, the rate would be 8% per annum as of the date of
this Prospectus. WEL Participants may obtain the actual rate by contacting
Smith Barney at the number listed below. Interest is compounded daily on the
outstanding balance (including any unpaid interest) and is recorded on the loan
account monthly. There are no scheduled principal or interest payments. A WEL
Participant may repay the loan at any time. WEL Participants must repay the
entire loan balance before participants may sell or otherwise transfer the
Wyndham Shares serving as collateral to secure the loan. As described below,
Participant Loans must be secured by Wyndham Shares with an initial market
value of at least 2.0 times the outstanding balance of the loan. In addition,
the value of the Wyndham Shares serving as collateral must remain at least
approximately 1.7 times the outstanding Participant Loan balance throughout the
term of the loan.
WEL Participants who elect to take out Participant Loans must first
open a "margin account" with Smith Barney. A margin account permits WEL
Participants to borrow against the value of their Wyndham Shares. By using
Wyndham Shares as loan collateral, WEL Participants can repay their share of
WEL Indebtedness at an interest rate that historically has been lower than
rates charged by lenders for unsecured loans. In addition, the Participant
Loans permit WEL Participants to repay WEL Indebtedness and retain ownership of
their Wyndham Shares without having to sell a portion of such shares or obtain
funds from other sources. HOWEVER, WEL PARTICIPANTS WHO ELECT TO TAKE OUT A
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PARTICIPANT LOAN WILL BE SUBJECT TO THE RISKS GENERALLY ASSOCIATED WITH MARGIN
BORROWING AND THE RULES SET FORTH BY SMITH BARNEY WITH RESPECT TO AN INDIVIDUAL
MARGIN ACCOUNT. FOR A DISCUSSION OF THE RISKS OF MARGIN LOANS, SEE "RISK
FACTORS -- RISKS ASSOCIATED WITH PARTICIPANT LOANS." The general rules
governing a Smith Barney margin account are summarized below. This summary is
qualified in its entirety by reference to the Client Agreement included as part
of each WEL Participant's Smith Barney Account Application, which each WEL
Participant should read before taking out a Participant Loan.
Initially, a WEL Participant who elects to take out a Participant Loan
will be required to establish an "equity balance" (the market value of the
Wyndham Shares minus the loan balance) of at least 50% of the amount of the
Participant Loan. This is called the "Initial Margin Requirement." A WEL
Participant establishes the Initial Margin Requirement by depositing in a
margin account with Smith Barney Wyndham Shares with a market value that
initially must equal 2.0 times the amount of the Participant Loan. Because the
value of the Wyndham Shares will fluctuate throughout the term of the loan
based upon the market price as reported on the New York Stock Exchange, a WEL
Participant must maintain a minimum level of "equity" of 40% of the Participant
Loan at all times while the loan is outstanding. This is referred to as the
"Margin Maintenance Requirement." The Margin Maintenance Requirement is
typically less than the Initial Margin Requirement. The Margin Maintenance
Requirement would require WEL Participants to maintain a value of Wyndham
Shares in their margin account of approximately 1.7 times the outstanding
balance of the Participant Loan at any given time. Specific Margin Maintenance
Requirements may be changed at any time at the discretion of Smith Barney.
If during the term of the Participant Loan, Wyndham Common Stock
decreases in price, the value of the "equity" in the margin account would
decrease as well. If the level of equity falls below the Margin Maintenance
Requirement, the WEL Participant will be subject to an immediate Margin
Maintenance Call. If this occurs, the Participant will be notified that he or
she must immediately restore the equity balance of the account above the Margin
Maintenance Requirement. This can be accomplished in one of three ways: (1) by
depositing additional cash into the margin account; (2) by depositing
additional collateral (for example, additional securities) into the margin
account; or (3) by selling securities in the account. If new securities are
deposited into an account in response to a Margin Maintenance Call, only a
percentage of their market value may be used toward the Margin Maintenance
Requirement.
A Margin Maintenance Call must be met within the time frame set forth
in the notification. If not, industry regulations require Smith Barney to sell
securities in the margin account until the Margin Maintenance Requirement is
met. If securities in the margin account are sold, they will be sold at then
prevailing market prices and could be sold at a substantial loss to the
participant. THEREFORE, ONLY THOSE WEL PARTICIPANTS WHO ARE PREPARED TO WEATHER
PRICE FLUCTUATIONS AND WHO HAVE THE FINANCIAL RESOURCES AND LIQUIDITY TO MEET
"MARGIN MAINTENANCE CALLS" SHOULD TAKE OUT A PARTICIPANT LOAN TO REPAY THEIR
SHARE OF WEL INDEBTEDNESS.
Smith Barney may elect to increase the Margin Maintenance Requirement
at any time. The possibility for such an increase is greater when the
collateral in a margin account consists of a single equity security, such as
Wyndham Common Stock, and there is a resulting lack of diversity in the
collateral. Unless a WEL Participant decides to substitute collateral, his or
her Participant Loan will be secured only by Wyndham Shares. An increase in the
Margin Maintenance Requirement also could subject a WEL Participant to a Margin
Maintenance Call. In addition, factors that could cause a Margin Maintenance
Call before the Margin Maintenance Requirement is reached include situations
that affect a security adversely, such as a bankruptcy filing or generally
adverse market conditions.
Each WEL Participant who elects to take out a Participant Loan must
first open an account with Smith Barney. If you have not opened an account with
Smith Barney or have questions regarding the Participant Loans, please call
Heather Hughes of Smith Barney at (800) 527-5814 or (214) 720-5002.
RESALE RESTRICTIONS
The Plan of Distribution imposes certain resale restrictions on the
Wyndham Shares for approximately four weeks following the distribution of the
shares to WEL Participants. As part of the Plan of Distribution, WEL
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Participants will be permitted during the "Resale Window" of three business
days following the share distribution to sell their Wyndham Shares subject to
compliance with the Company's Insider Trading Policy and to repayment of any
WEL Indebtedness or Participant Loan secured by the Wyndham Shares being sold.
At the end of the Resale Window, no sale of Wyndham Shares will be permitted
for a "Lock-Up Period" of three weeks. The Resale Window and the Lock-Up Period
are designed to facilitate the resale of Wyndham Shares on the open market.
Following the Lock-Up Period, Wyndham Shares will be freely tradeable by
persons other than "affiliates" of the Company, subject to compliance with the
Company's Insider Trading Policy. WEL Participants who are considered
"affiliates" must comply with certain other securities law considerations in
connection with any such sale. The Resale Window is expected to begin on
Tuesday, February 11, 1997 and end on Thursday, February 13, 1997. The Lock-Up
Period is expected to end March 10, 1997. You will be notified if these dates
are changed.
WEL Participants who desire to sell Wyndham Shares during the Resale
Window must indicate that election on the enclosed Repayment and Resale
Election Form by checking the appropriate box and following the instructions
contained on the form. Such sales will be made on the open market by Smith
Barney during the Resale Window based upon the market price for Wyndham Common
Stock as reported on the New York Stock Exchange. EACH WEL PARTICIPANT WHO
CHOOSES TO SELL WYNDHAM SHARES MUST NOTIFY SMITH BARNEY BY 3:00 P.M., DALLAS
TIME, ON THE DAY PRIOR TO THE DAY SUCH PARTICIPANT WANTS HIS OR HER SHARES TO
BE SOLD. Such decision may be made by contacting a representative of Smith
Barney, BUT IT MUST BE MADE BY 3:00 P.M., DALLAS TIME, ON THE DAY BEFORE THE
SALE.
A brokerage commission that will be discounted 50% from the published
Smith Barney rate will be charged in connection with all sales made by Smith
Barney. (The applicable Smith Barney rate varies depending on the number of
shares sold. To obtain the applicable commission rate, contact Smith Barney at
the number listed below.) In general, such sales will be taxable to the WEL
Participant. See " -- Federal Income Tax Considerations -- Plan of
Distribution."
WEL Participants who are considered "affiliates" of the Company are
required to comply with certain securities law restrictions in addition to the
resale restrictions described above. Such persons must sell their Wyndham
Shares pursuant to an effective registration statement under the Securities Act
of 1933, as amended, or pursuant to an exemption from registration, including
the exemption found under Rule 144. For a discussion of the exemption available
under Rule 144, see "Shares Available for Future Sale."
WEL Participants who desire to sell Wyndham Shares during the Resale
Window must first establish a brokerage account with Smith Barney. If you have
not opened an account with Smith Barney or have any questions concerning the
resale of Wyndham during the Resale Window, contact Heather Hughes of Smith
Barney at (800) 527- 5814 or (214) 720-5002.
REASONS FOR PLAN OF DISTRIBUTION
WEL was established to enable WEL Participants to receive indirect
equity interests in WEL Investments. The primary purpose of WEL was to attract
and retain key executive and managerial employees and to motivate such
employees to achieve Old Wyndham's long range goals by granting them indirect
equity interests in the WEL Investments. In connection with the Company's
initial public offering, the Company adopted the 1996 Incentive Plan, which is
a standard long-term incentive compensation program for key employees of a
publicly held company. The 1996 Incentive Plan has replaced WEL as the
Company's primary ongoing incentive compensation program. In addition, the
continuation of WEL could subject the Company to significant potential
compensation expense charges in the future based solely on increases in the
value of assets held by WEL.
The General Partner believes that the Plan of Distribution is in the
best interests of WEL Participants. There are legal restrictions on the number
of persons who can become WEL Participants without subjecting WEL to
substantial regulatory compliance burdens. In addition, the Company has
determined, for a number of reasons, that WEL will not receive interests in
assets acquired by the Company in the future. Accordingly, the General Partner
believes that WEL's effectiveness as an ongoing incentive compensation program
has become limited. The General Partner also believes,
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however, that WEL has served its purpose effectively by assisting in motivating
and retaining key Wyndham personnel that have contributed greatly to the
Company's growth since WEL was established in 1990.
Furthermore, the General Partner believes that the assets currently
owned by WEL, principally Wyndham Shares, are appropriate for distribution to
individual WEL Participants. The Wyndham Shares are listed on the New York
Stock Exchange and, in general, will be freely tradeable during the Resale
Window and after the Lock-Up Period. Assuming a public market for the shares
continues to exist following the Plan of Distribution, WEL Participants may
elect to dispose of some or all of their Wyndham Shares in the public
securities markets. In contrast, WEL units and the WEL Investments, which were
minority interests in private partnerships, were essentially illiquid
investments and not readily marketable. By placing the Wyndham Shares in the
hands of WEL Participants, the Plan of Distribution enables each WEL
Participant to take individual control of the value in his or her WEL account.
The Plan of Distribution also continues to align the interests of WEL
Participants with those of the Company by transferring to them a direct equity
interest in the Company.
Finally, the General Partner decided to propose the Plan of
Distribution because of the numerous expressions of interests by WEL
Participants, directly and through the WEL Steering Committee, in receiving a
distribution of the Wyndham Shares and because the distribution is not expected
to result in the recognition of taxable income or loss by WEL Participants
until a participant elects to sell all or any portion of his or her Wyndham
Shares. See "Plan of Distribution -- Federal Income Tax Considerations."
EFFECTS OF PLAN DISTRIBUTION
The Plan of Distribution will change the nature of each WEL
Participant's interest in the Wyndham Shares. Currently, WEL Participants hold
an indirect interest through their percentage interests in WEL in the cash and
Wyndham Shares held by WEL, and these investments are managed by the General
Partner. Accordingly, WEL Participants are not required to make any decision
with respect to the acquisition, disposition, valuation or encumbrance of WEL's
assets. Following the Plan of Distribution, each WEL Participant will receive a
direct ownership interest in his or her Wyndham Shares. Accordingly, investment
decisions will no longer be made by the General Partner with respect to such
shares. Each WEL Participant will be responsible for making his or her own
decision as to the retention or disposition of Wyndham Shares and as to the
timing or pricing of any disposition.
There are no dissenters' rights or other rights of appraisal in
connection with the Plan of Distribution. If the Plan of Distribution is
approved, all WEL Participants will be entitled to the Wyndham Shares
represented by their ownership interest in WEL, subject to such participants'
pro rata allocation of WEL Indebtedness. Furthermore, in order to actually
receive Wyndham Shares, WEL Participants must make a decision with respect to
the method of repayment of WEL Indebtedness. If the Plan of Distribution is
approved, and a WEL Participant does not make a decision with respect to the
repayment of his or her WEL Indebtedness by February 7, 1997 (the anticipated
Plan Effective Date), the Company will arrange for the sale of a portion of
such WEL Participant's Wyndham Shares (even if such participant voted against
the Plan) in an amount sufficient to repay his or her WEL Indebtedness and the
brokerage commission incurred with respect to such sale and any tax or other
costs and expenses associated with such sale. Such sale will be at the then
prevailing market price for Wyndham Common Stock, which could be lower than the
price that might be obtained if the Wyndham Shares were held by the WEL
Participant and sold at a later date.
While the Plan of Distribution will change the nature of a WEL
Participant's ownership interest in the Wyndham Shares, the Plan generally will
not affect the risks associated with owning such shares. Currently, WEL's
assets consist almost entirely of a single security, Wyndham Common Stock.
Following the Plan of Distribution, WEL Participants will directly hold the
same security and generally will be subject to the same risks. The market price
of the Common Stock could be subject to significant price fluctuations in
response to various factors. For a discussion of these and other risks
associated with holding Wyndham Common Stock, see "Risk Factors."
As part of the Plan of Distribution, WEL Participants agree to release
WEL, other WEL Participants, the General Partner and its officers and
directors, and the Company and its officers and directors (collectively, the
"Released
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Parties") from all claims and demands of any kind or nature that WEL
Participants may have arising from or related to their interest in WEL. This
release includes, but is not limited to, a waiver and release by WEL
Participants of all claims and demands concerning (i) the value of their
ownership interest in WEL, (ii) the number of Wyndham Shares to which they are
entitled in the Plan of Distribution and the methodology used to determine such
number, and (iii) the fairness of the Plan of Distribution. This also includes,
but is not limited to, a release of all claims concerning the General Partner's
past management of the affairs of WEL, including the WEL Investments, and the
valuation of the Other Assets. By acknowledging and accepting their Wyndham
Shares, therefore, each WEL Participant agrees not to make or pursue any of the
foregoing claims against the Released Parties and not to file or become a party
to any lawsuit advancing such claims. This waiver and release covers both known
and unknown claims.
In the past, WEL Participants have received annual cash distributions
to cover payment of participants' income taxes. No cash distributions will be
made in 1997 to cover participants' income tax expenses, whether in connection
with the Plan of Distribution or otherwise.
REQUIRED VOTE
As of the date of this Prospectus, based upon a price per share of
$16.00, the Wyndham Shares represent approximately 98% of the overall economic
value of WEL. The WEL Agreement, a copy of which is attached as Appendix A to
this Prospectus, requires approval of the "transfer" of all or substantially
all of WEL's assets by the General Partner and the holders of a majority of the
percentage interests held by all WEL Participants. Because the term "transfer"
is broadly defined under the WEL Agreement, the General Partner has determined
to consider the Plan of Distribution a "transfer" within the meaning of the WEL
Agreement and, therefore, is seeking approval of the Plan of Distribution by
WEL Participants. The Plan of Distribution also will constitute an event of
dissolution under the WEL Agreement. Accordingly, by voting in favor of the
Plan of Distribution, WEL Participants will be voting in favor of (i) the
distribution of the Wyndham Shares to WEL Participants and (ii) the resulting
dissolution and termination of WEL. In the event that the Plan of Distribution
is not approved, WEL will continue in existence under the terms of the WEL
Agreement, and no Wyndham Shares would be distributed to WEL Participants.
VOTING PROCEDURES
This Prospectus, together with the accompanying materials, constitute
the "Solicitation Materials" being distributed to WEL Participants to obtain
their votes for or against the Plan of Distribution. (The power of attorney and
participant consent form included in the Solicitation Materials are referred to
collectively as the "Consent Form.") No special meeting of WEL Participants has
been scheduled to discuss the Solicitation Materials or vote upon the Plan of
Distribution. Only WEL Participants who are limited partners of WEL of record
on the date of this Prospectus will receive notice of, and will be entitled to
vote with respect to, the Plan of Distribution.
The Solicitation Period is the time period during which WEL
Participants may vote for or against the Plan of Distribution. The Solicitation
Period will commence upon delivery of the Solicitation Materials to WEL
Participants (on or about January 29, 1997) and will continue until the later
of (a) February 7, 1997 or (b) such later date as may be selected by the
General Partner and as to which notice is given to WEL Participants. In its
discretion, the General Partner may elect to extend the Solicitation Period.
Any Consent Form received by the General Partner prior to 12:00 noon, Central
time, on the last day of the Solicitation Period will be effective provided
that such Consent Form has been properly completed and signed. If a WEL
Participant fails to return a signed Consent Form by the end of the
Solicitation Period or completes his or her consent form in an unintelligible
manner, his or her WEL interest will be counted as voting AGAINST the Plan of
Distribution. WEL Participants who return a signed Consent Form but fail to
indicate their approval or disapproval as to the Plan of Distribution will be
deemed to have voted FOR the Plan of Distribution.
Consent Forms may be withdrawn at any time prior to the expiration of
the Solicitation Period. In addition, subsequent to the submission of a Consent
Form, but prior to the expiration of the Solicitation Period, a WEL Participant
may change his or her vote. For a withdrawal or change of vote to be effective,
however, a written or facsimile
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transmission notice of withdrawal or change of vote must be timely received by
the General Partner prior to the end of the Solicitation Period.
WEL Participants are requested to complete and sign each part of the
Consent Form in accordance with the instructions contained therein. A WEL
Participant may mark the Consent Form to vote "for" or "against" the Plan of
Distribution. (In addition, WEL Participants must complete and sign the
Repayment and Resale Election Form, the instructions for which are discussed
above under " -- Repayment of WEL Indebtedness -- Repayment Election.") Once a
WEL Participant has completed all portions of the Consent Form and the
Repayment and Resale Election Form, he or she should return them to the General
Partner in the enclosed self-addressed envelope. If a WEL Participant has any
questions regarding the forms or how to fill them out, the questions should be
directed to Elise Turner of the Company at (214) 863-1097. Questions regarding
the Participant Loans or the resale of Wyndham Shares should be directed to
Heather Hughes of Smith Barney at (800) 527-5814 or (214) 720-5002. The method
of delivery of the Consent Form and Repayment and Resale Election Form is at
the election and risk of the WEL Participant. A pre-addressed Federal Express
envelope has been included for your convenience.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal (if permitted) of Consent Forms and
Repayment and Resale Election Forms will be determined by the General Partner,
whose determination will be binding and final. The General Partner reserves the
right to reject any or all Consent Forms or Repayment and Resale Election Forms
that are not in proper form or that, in the opinion of counsel to the General
Partner, would be unlawful. The General Partner also reserves the right to
waive any irregularities or conditions of a particular Consent Form or
Repayment and Resale Election Form.
CONDITIONS TO PLAN OF DISTRIBUTION
The Plan of Distribution is subject to certain conditions. In
accordance with the terms of the WEL Agreement, the Plan must receive the
approval of WEL Participants holding a majority of the percentage interests in
WEL. In addition, the Plan is conditioned upon the General Partner's not
withdrawing its recommendation of the Plan prior to the distribution of the
Wyndham Shares. The General Partner reserves the right to withdraw its
recommendation in its own discretion at any time prior to such distribution.
DISSOLUTION OF WEL
The WEL Agreement requires that in the event of dissolution, a
liquidating trustee be elected by the vote of WEL Participants holding a
majority of the percentage interests in WEL. The role of the liquidating
trustee is to wind up the affairs of, and ultimately, terminate WEL. The Plan
of Distribution provides that the General Partner will serve as the liquidating
trustee.
In connection with the dissolution of WEL, the liquidating trustee
will establish a cash reserve in an amount believed to be sufficient to
discharge any remaining liabilities of WEL. Cash held by WEL in excess of the
reserve will be used to retire WEL Indebtedness in conjunction with the Plan of
Distribution. Following the distribution of the Wyndham Shares to WEL
Participants, the liquidating trustee will apply the cash reserve from time to
time in payment of, or provision for, WEL's remaining liabilities. WEL will be
terminated upon the earlier of (i) the application of all such cash in payment
of, or provision for, such liabilities, or (ii) 24 months following the Plan
Effective Date (or such other period as may be deemed appropriate by the
General Partner), at which time any cash remaining in WEL will be distributed
to WEL Participants. Because the amount of the cash reserve is expected to be
relatively small, however, the General Partner does not anticipate that there
will be cash remaining for distribution in connection with the dissolution of
WEL.
If the assets of WEL are insufficient to pay all liabilities of WEL
following the distribution of the Wyndham Shares and any cash, then each WEL
Participant may be personally liable to creditors of WEL for such liabilities
(including any unpaid or unmatured liabilities on the termination of WEL) to
the extent of the aggregate of an amount equal to (i) the fair market value of
the Wyndham Shares (net of WEL Indebtedness) received by the WEL Participant
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in connection with the Plan of Distribution and (ii) other distributions
received by the WEL Participant from WEL in connection with its dissolution.
With respect to the satisfaction of any such remaining liabilities, however,
the General Partner has agreed to apply first the Wyndham Shares (net of WEL
Indebtedness and taxes) distributed to the General Partner in the Plan of
Distribution. Therefore, WEL Participants should not be exposed to any of the
foregoing liabilities (if any) until the General Partner's Wyndham Shares (net
of WEL Indebtedness and taxes) were exhausted.
RELEASE BY WEL PARTICIPANTS
As part of the Plan of Distribution, WEL Participants agree to release
WEL, other WEL Participants, the General Partner and its officers and
directors, and the Company and its officers and directors from all claims and
demands of any kind or nature that WEL Participants may have arising from or
related to their interest in WEL. This includes, but is not limited to, a
release by WEL Participants of all claims concerning (i) the value of their
ownership interest in WEL, (ii) the number of Wyndham Shares to which they are
entitled in the Plan of Distribution and the methodology used to determine such
number, and (iii) the fairness of the Plan of Distribution. This also includes,
but is not limited to, a release of all claims concerning the General Partner's
past management of the affairs of WEL, including the WEL Investments, and the
valuation of the Other Assets.
SALE OF OTHER WEL ASSETS
Other than the Wyndham Shares, WEL's assets as of November 30, 1996
consisted of approximately $215,000 in cash. Prior to the proposed Plan of
Distribution, WEL owned 5% limited partnership interests in nine partnerships
that own hotels managed by Wyndham, and five partnerships and one corporation
that own hotel-related assets (the "Other Assets"). Because of the relatively
low aggregate economic value of WEL's 5% interest in these entities, as well as
the relative illiquidity of such interests, effective as of October 15, 1996,
the General Partner transferred the Other Assets to affiliates of the Company
in consideration for the assumption of $619,200 in indebtedness owed by WEL to
such affiliates. The valuation of the Other Interests was approved by the WEL
Steering Committee. See " -- Conflicts of Interest."
CONFLICTS OF INTEREST
The Plan of Distribution was proposed and structured by the General
Partner in consultation with the WEL Steering Committee, which was established
by the Company and consists of seven WEL Participants. Trammell S. Crow and
James D. Carreker are the sole stockholders and are on the Board of Directors
of the General Partner. The General Partner owns a 1% interest in WEL.
Consequently, in the event the Plan of Distribution is approved, Messrs. Crow
and Carreker will receive indirectly an aggregate of 6,466 Wyndham Shares,
which may cause a conflict of interest in the General Partner's recommendation
of the Plan of Distribution. In resolving any conflicts of interest, the
General Partner must act in accordance with its fiduciary duties to the WEL
Participants.
The Other Assets were transferred to the Senior Executive Officers and
entities in which Mr. Trammell S. Crow and Mr. Harlan R. Crow, who also is on
the Board of Directors of the General Partner, have an ownership interest. The
valuation of the Other Assets was determined according to negotiations between
the General Partner on behalf of WEL and representatives of the Crow Family and
the Senior Executive Officers. WEL was represented by Anne L. Raymond, who is
an officer of the General Partner and the Executive Vice President and Chief
Financial Officer of the Company. Ms. Raymond holds no ownership interest in
WEL, but received an ownership interest in the Other Assets. WEL also was
represented by the WEL Steering Committee. During the course of the
negotiations, the WEL Steering Committee proposed the transfer of the Other
Assets in consideration for the assumption of $619,200 in debt owed by WEL.
This proposal was accepted by representatives of the Senior Executive Officers
and Messrs. Trammell S. Crow and Harlan R. Crow. Nevertheless, no independent
third party was engaged to value the Other Assets. Furthermore, while Messrs.
Trammell S. Crow and Carreker indirectly have ownership interests in WEL,
Messrs. Crow and Carreker may not have the same interests in the Plan of
Distribution as WEL Participants. There are no assurances that if the purchase
of the Other Assets were the result of completely arm's-length negotiations the
resulting purchase price would not be higher than the purchase price that was
actually paid.
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FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of some of the federal income tax
consequences to the WEL Participants with respect to the Plan of Distribution.
The following discussion does not address, and no representations are made as
to, state and local tax consequences or estate and gift tax issues. This
summary is not a substitute for careful tax planning by each WEL Participant,
particularly since the federal, state and local income tax consequences of the
Plan of Distribution may not be the same for all WEL Participants. ACCORDINGLY,
WEL PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE SPECIFIC
TAX CONSEQUENCES TO THEM OF THE PLAN OF DISTRIBUTION, INCLUDING THE APPLICATION
AND EFFECT OF FEDERAL AND STATE AND LOCAL TAX LAWS AND POTENTIAL CHANGES IN THE
APPLICABLE TAX LAWS WITH POSSIBLE RETROACTIVE EFFECT.
This discussion of the federal income tax consequences of the Plan of
Distribution is based upon existing law contained in the Internal Revenue Code
of 1986, as amended (the "Code"), the Treasury Regulations promulgated under
the Code, administrative rulings and other pronouncements, and court decisions
as of the date hereof. The existing law, as currently interpreted, is subject
to change by either new legislation, or by differing interpretations of
existing law in Treasury Regulations, administrative pronouncements or court
decisions, any of which could, by retroactive application or otherwise,
adversely affect the federal income tax consequences described herein.
Classification as a Partnership. Final Treasury Regulations issued on
December 18, 1996 and effective January 1, 1997 (the "Check the Box
Regulations") pertain to the classification of business entities for federal
income tax purposes. According to the Check the Box Regulations, certain
noncorporate entities ("Eligible Entities"), including limited partnerships,
formed after December 31, 1996 may elect to be treated as partnerships for
federal income tax purposes. Eligible Entities in existence prior to January 1,
1997 will have the same classification that such entity claimed under Treasury
Regulations in effect prior to the promulgation of the Check the Box
Regulations. Moreover, Eligible Entities in existence prior to January 1, 1997
that claim to be classified as a partnership for federal income tax purposes
will be respected as such for all periods prior to January 1, 1997 provided
that (i) the Eligible Entity had a reasonable basis for its claimed
classification, (ii) the Eligible Entity and all members thereof recognized the
federal income tax consequences of any change in the entity's classification
within the sixty month period prior to January 1, 1997 and (iii) neither the
entity nor any of its members was notified in writing on or before May 8, 1996
that the classification of the entity was under examination.
WEL was formed as a limited partnership in 1990 and is an Eligible
Entity. WEL has not changed its classification as a partnership for federal
income tax purposes since its inception. WEL has not received written notice
that WEL's classification as a partnership is or will be subject to examination
and WEL has no knowledge of such written notification having been received by
any WEL Participant. Moreover, WEL believes that it has a reasonable basis for
claiming its status as a partnership pursuant to Treasury Regulations in effect
prior to the Check the Box Regulations since its inception. For these reasons,
WEL believes that it is, always has been and will continue to be properly
classified as a partnership for federal income tax purposes. Nevertheless, no
ruling has been sought or will be obtained from the Internal Revenue Service
(the "IRS") regarding the status of WEL as a partnership for federal income tax
purposes.
If WEL were classified as an association taxable as a corporation,
either initially or due to a change in the way it has been operated, WEL would
be subject to federal income tax on any taxable income at regular corporate tax
rates, reducing amounts available for distribution to the WEL Participants. In
this event, the distributions contemplated by the Plan of Distribution would be
considered distributions in complete liquidation of the WEL Participants'
interest in WEL. Characterized as a complete liquidation of an association
taxable as a corporation, WEL would be required to recognize gain upon the
distribution of its assets in kind to the WEL Participants to the extent the
fair market value of the assets distributed exceeds WEL's adjusted basis in
such assets. Conversely, no loss may be recognized by WEL upon such
distribution. Moreover, each WEL Participant would be required to recognize
gain (or loss) to the extent the cash and fair market value of the Wyndham
Shares received by such WEL Participant in the liquidation exceeds (or is less
than) the adjusted basis of such WEL Participant in his or her interest in WEL.
Overall, this treatment would
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substantially reduce the anticipated benefits of the Plan of Distribution by
subjecting the Plan of Distribution to two levels of tax: one at the WEL level
and the other at the WEL Participant level.
The balance of this discussion of "Federal Income Tax Considerations"
assumes that WEL is properly classified as a partnership for federal income tax
purposes.
Plan of Distribution. Each WEL Participant received his or her
interest in WEL in connection with the performance of services. Generally,
Section 83(a) of the Code requires one who receives property in connection with
the performance of services to include in gross income, as ordinary income, the
excess of the fair market value of the property received over the amount paid,
if any, for such property once such property is transferable or not subject to
a substantial risk of forfeiture (i.e. once the property "vests"). However, one
who receives unvested property in connection with the performance of services
may elect under Section 83(b) of the Code ("83(b) Election") to include in
gross income for the taxable year during which such property was transferred
the excess of the fair market value of the property at the time of transfer
over the amount paid, if any, for such property. In the event a service
provider makes a valid 83(b) Election, such person obtains a basis in the
property equal to the amount paid for such property, if any, plus the amount
included in gross income as a result of the 83(b) Election. The vesting of the
property is not a taxable event if an 83(b) Election has been made. WEL
believes that each WEL Participant made a valid 83(b) Election upon receipt of
his or her interest in WEL. Therefore, for purposes of the remainder of this
discussion, it is assumed that each WEL Participant made a valid 83(b) Election
in connection with the acquisition of his or her interest in WEL.
Presently, the assets of WEL consist of cash and the Wyndham Shares. A
portion of the cash held by WEL will be used to repay a portion of the WEL
Indebtedness and the remainder will be held as reserves to pay expenses
relating to the termination of WEL and any liabilities of WEL that may arise.
Therefore, pursuant to the Plan of Distribution, WEL will distribute to each
WEL Participant the number of Wyndham Shares to which such participant is
entitled under the WEL Agreement, subject to his or her pro rata portion of the
WEL Indebtedness. It is anticipated that no cash will be transferred to the WEL
Participants pursuant to the Plan of Distribution.
Subject to certain exceptions not relevant for purposes of this
discussion, the distribution of property in kind by a partnership in complete
liquidation of a partner's interest in the partnership should not result in
gain or loss to either the partnership or the partner. Similarly, the
distribution of cash to a partner by a partnership in complete liquidation of
such partner's interest generally does not result in gain or loss to either the
partnership or the partner. However, to the extent a partner receives cash in
excess of his or her adjusted basis in the partnership interest, such partner
must recognize gain in the amount of such excess. Such gain is generally
characterized as capital gain provided the partnership interest is held as a
capital asset. A partner's beginning tax basis in his or her partnership
interest includes the amount of money and the adjusted basis of any property
that the partner initially contributed to the partnership. In addition, as
described above, a partner's beginning tax basis in his or her partnership
interest acquired in connection with the performance of services includes the
amount paid for such interest, if any, plus the amount included in such
partner';s gross income as a result of an 83(b) Election. A partner's beginning
tax basis in his or her partnership interest is subsequently increased
principally by (i) the amount of any additional contributions of cash and the
tax basis of any additional contributions of property made by the partner to
the partnership, (ii) the partner's distributive share of any partnership
income, and (iii) the amount, if any, of the partner's share of partnership
indebtedness; and decreased, but not below zero, principally by (x)
distributions from the partnership to the partner, (y) the amount of the
partner's distributive share of partnership losses, and (z) any reduction in
the partner's share of partnership indebtedness.
A partner is considered to receive a distribution of cash from the
partnership to the extent of any decrease in the partner's share of partnership
liabilities and to the extent the partnership assumes a liability of the
individual partner. Conversely, any increase in a partner's share of
partnership liabilities and the assumption of a partnership liability by a
partner is considered a contribution of cash to the partnership by the partner.
It is anticipated that the amount of the WEL Indebtedness required to be
discharged by some WEL Participants pursuant to the Plan of Distribution may be
less than such participant's share of the WEL Indebtedness under the WEL
Agreement prior to the Plan of Distribution. These WEL Participants will be
deemed to receive a cash distribution from WEL in an amount equal to the excess
of such participant's decrease in his or her share of the WEL Indebtedness over
the amount of the WEL Indebtedness
- 32 -
<PAGE> 45
required to be discharged by the participant. This deemed distribution of cash
may result in the recognition of gain by the participant as described in the
preceding paragraph.
For purposes of determining whether a partner has received a cash
distribution in excess of his or her basis in the partnership interest such
that the partner must recognize gain with respect to the distribution, Section
731(c)(1)(A) of the Code generally provides that marketable securities are to
be treated as cash in the amount of the fair market value of such securities on
the date of distribution. The Wyndham Shares are traded on the New York Stock
Exchange and, therefore, are considered marketable securities for purposes of
Code Section 731(c)(1)(A). However, on December 26, 1996 final Treasury
Regulations were issued under Code Section 731(c) (the "731(c) Regulations")
according to which the distribution of a marketable security will not be
considered a distribution of cash in the event that the security was acquired
by the partnership in a nonrecognition transaction and the following conditions
are met: (i) the value of the marketable securities and cash exchanged by the
partnership in the nonrecognition transaction is less than 20% of the value of
all of the assets exchanged by the partnership in the nonrecognition
transaction and (ii) the security is distributed within five years of either
the date on which the security was acquired by the partnership, or if later,
the date on which the security became marketable (the "Nonrecognition
Exception").
WEL acquired the Wyndham Shares in exchange for its interest in Old
Wyndham and interests in various partnerships that own certain hotels and
certain hotel assets in a transaction qualifying for nonrecognition treatment
pursuant to Code Section 351. The assets exchanged by WEL in the nonrecognition
transaction were not marketable securities as defined in Section 731(c) of the
Code. Moreover, the Wyndham Shares will be distributed within five years of
acquisition by WEL. For these reasons, the Nonrecognition Exception should
apply to the Plan of Distribution such that WEL Participants will recognize no
gain as a result of the distribution of the Wyndham Shares in the Plan of
Distribution.
As noted above, WEL will establish a cash reserve for the purpose of
satisfying remaining liabilities of WEL, if any, and to cover expenses incurred
in connection with the termination of WEL. For this purpose, WEL may continue
to exist for a period not expected to exceed 24 months (the "Reserve Period").
WEL anticipates that no cash will be available for distribution to the WEL
Participants upon termination of the Reserve Period; however, it is possible
there could be a small amount of cash available for distribution by WEL at such
time. As discussed above, a partner who receives a distribution in liquidation
of his or her interest in the partnership generally recognizes gain only to the
extent the amount of money received exceeds such partner's adjusted basis in
the partnership interest. The basis of the property received by the partner in
kind pursuant to the liquidating distribution will equal such partner's
adjusted basis in his or her partnership interest immediately before the
distribution reduced by any cash distributed in the liquidation. Section 761(d)
of the Code defines the term "liquidation of a partner's interest" as the
termination of a partner's entire interest in a partnership by means of a
distribution, or series of distributions, to the partner by the partnership.
Therefore, the distribution of the Wyndham Shares should be considered a
distribution in liquidation of each WEL Participant's interest in WEL whether
or not cash is subsequently distributed following the Reserve Period.
The proper determination of the adjusted basis of each WEL Participant
in the Wyndham Shares is not clear in light of the cash reserve established by
WEL to pay expenses relating to the winding up of WEL and unascertained
liabilities, if any. It is anticipated that WEL will expend all cash held in
reserve during its taxable year ending December 31, 1997. However, it is
possible that some expenditures may occur in later years or that the cash
reserve may not be fully expended leaving a small amount of cash for
distribution in 1998 or thereafter. In the event the cash reserve is fully
expended in 1997, then each WEL Participant should be able to include his or
her distributive share of the deductions generated by such expenditures in his
or her individual income tax return. Consequently, the adjusted basis in each
WEL Participant's interest in WEL would be reduced by such participant's
distributive share of such deductions, thereby reducing the amount of basis
allocable his or her Wyndham Shares.
Conversely, if cash is distributed to WEL Participants or expended by
WEL in years subsequent to 1997, then the proper determination of the adjusted
basis of the Wyndham Shares with respect to each WEL Participant is unclear. On
one hand, a WEL Participant may take the position that the adjusted basis of
his or her Wyndham Shares should be reduced by his or her allocable share of
the amount of cash held in reserve subsequent to 1997, since such cash will
- 33 -
<PAGE> 46
either be distributed in the future or expended resulting in the generation of
deductions that should flow through to such participant. On the other hand, a
WEL Participant may take the position that the adjusted basis of his or her
Wyndham Shares should not be reduced by his or her allocable share of the
amount of cash held in years subsequent to 1997, since it has not been
distributed. AS A RESULT OF THE LACK OF AUTHORITY ON THIS ISSUE, EACH WEL
PARTICIPANT IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE
PROPER DETERMINATION OF SUCH PARTICIPANT'S ADJUSTED BASIS IN THE WYNDHAM SHARES
RECEIVED PURSUANT TO THE PLAN OF DISTRIBUTION AND THE EFFECT OF THE
EXPENDITURES BY WEL DURING THE RESERVE PERIOD AND/OR THE DISTRIBUTION OF CASH,
IF ANY, AT THE END OF THE RESERVE PERIOD.
It should also be noted that a WEL Participant will generally be
required to recognize gain (or loss) upon disposition, if any, of the Wyndham
Shares received pursuant to the Plan of Distribution to the extent the amount
realized upon such disposition exceeds (or is less than) such participant's
adjusted basis in the shares disposed, irrespective of application of the Non
Recognition Exception. The holding period for the Wyndham Shares should include
the period for which a WEL Participant held his or her interest in WEL.
Provided the Wyndham Shares are considered to be held for more than a year such
gain (or loss) should be long term capital gain provided such shares are
considered to be capital assets in the hands of the WEL Participant making such
disposition. Furthermore, each WEL Participant will be required to include his
or her distributive share of WEL income, gain, loss, deduction or credit from
the operation of WEL through termination of WEL in his or her individual tax
return.
Repayment of WEL Indebtedness. Pursuant to the Plan of Distribution,
WEL Participants will receive their portion of the Wyndham Shares subject to
their pro rata portion of the WEL Indebtedness. WEL Participants may satisfy
their portion of the WEL Indebtedness by refinancing such indebtedness with a
Participant Loan or by having a portion of their Wyndham Shares sold and using
the sale proceeds to satisfy the indebtedness. WEL Participants not choosing
either of these two options must otherwise pay their portion of the WEL
Indebtedness prior to receipt of any Wyndham Shares. The refinancing of the WEL
Indebtedness allocable to a WEL Participant with a Participant Loan or other
loan should result in no tax consequences to such WEL Participants. Conversely,
a WEL Participant who opts to satisfy his or her portion of the WEL
Indebtedness with proceeds from the sale of Wyndham Shares should recognize
gain (or loss) on the sale of the Wyndham Shares to the extent the amount
realized from the sale exceeds (or is less than) his or her basis in the
Wyndham Shares sold. Such gain (or loss) should be capital in nature provided
such shares are considered to be capital assets in the hands of the WEL
Participant.
DIVIDEND POLICY
The Company intends to retain any future earnings for use in its
business and does not intend to pay cash dividends in the foreseeable future.
Furthermore, the terms of the Revolving Credit Facility prohibit the Company
from paying, and the indenture governing the Notes limits the Company's ability
to pay, dividends on the Common Stock. See "Management's Discussion and
Analysis of Results of Operations -- Liquidity and Capital Resources." The
payment of future dividends, if any, will be at the discretion of the Company's
Board of Directors and will depend upon, among other things, future earnings,
operations, capital requirements, restrictions in future financing agreements,
the general financial condition of the Company and general business conditions.
- 34 -
<PAGE> 47
PRICE RANGE OF COMMON STOCK
The Company effected its initial public offering of Common Stock on
May 20, 1996, at a price to the public of $16.00 per share. Since that date,
the Company's Common Stock has traded on the New York Stock Exchange under the
symbol WYN. As of January 17, 1997, there were 67 record holders of Common
Stock, although the Company believes that the number of beneficial owners of
its Common Stock is substantially greater. The table below sets forth for the
fiscal periods indicated the high and low sales prices per share of the Common
Stock as reported on the New York Stock Exchange.
<TABLE>
<CAPTION>
1996 HIGH LOW
- ---- ---- ---
<S> <C> <C>
Second quarter (from May 20, 1996).................... $ 24 $ 19
Third quarter......................................... $ 22 1/8 $ 16 3/4
Fourth quarter........................................ $ 24 1/8 $ 18
1997
First quarter (through January 23, 1997).............. $ 24 7/8 $ 23 1/8
</TABLE>
On January 23, 1997, the closing price of the Common Stock, as
reported on the New York Stock Exchange was $24 1/4.
- 35 -
<PAGE> 48
CAPITALIZATION
The following table sets forth at September 30, 1996 the historical
capitalization of the Company. The information set forth in the table should be
read in conjunction with the Consolidated Financial Statements and the Notes
thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
September 30, 1996
------------------
(dollars in thousands)
(unaudited)
<S> <C>
Cash and cash equivalents ...................................... $ 20,147
=========
Long-term debt, including current maturities ................... 109,675
Capitalized lease obligations, including current portion ....... 20,989
Partners' capital and stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares authorized;
no shares outstanding .................................... --
Common Stock, $.01 par value, 45,000,000 shares authorized;
20,018,299 shares outstanding ............................ 200
Additional paid-in capital .................................. 84,342
Retained earnings ........................................... 7,894
Receivables from affiliates ................................. (1,352)
Notes receivable from stockholders .......................... (19,168)
---------
Total partners' capital and stockholders' equity ....... 71,916
---------
Total capitalization ................................... $ 202,580
=========
</TABLE>
- 36 -
<PAGE> 49
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated statements of income
for the year ended December 31, 1995 and the nine months ended September 30,
1996 reflect the effects of the transactions described below as if such
transactions had occurred at the beginning of 1995.
On May 24, 1996, immediately prior to the consummation of the initial
public equity offering of the Company, the Company succeeded to the hotel
management and related businesses of Old Wyndham, ownership of six Wyndham
brand hotels and leasehold interests relating to 12 additional Wyndham brand
hotels (the "Formation"). Concurrent with the Company's initial public equity
offering and as part of its financing plan, the Company issued $100,000,000
aggregate principal amount of 10 1/2% Senior Subordinated Notes due 2006 (the
"Notes"). As a result of the initial public equity offering and the offering of
the Notes, the Company generated aggregate net proceeds in the amount of $163.9
million (including a contribution of $10 million from Bedrock). The foregoing
transactions are referred to as the "Formation and the Financing Plan."
Prior to the Company's initial public equity offering, Garden Hotel
Associates L.P. ("GHALP") owned 11 Wyndham Garden Hotels managed by the Company
(the "GHALP Properties"). A 30% interest in GHALP was held by a partnership
owned by certain Crow Family Members and the Senior Executive Officers, and the
remaining 70% was held by an unaffiliated third party. In May 1996, Crow Family
Members and the Senior Executive Officers acquired the remaining 70% ownership
interest from the third party. The purchase price was funded from the proceeds
of the sale of the GHALP Properties to Hospitality Properties Trust (including
its subsidiaries, "HPT"), a publicly traded REIT, which properties were leased
back pursuant to one or more long-term leases with an initial term of
approximately 17 years (the "GHALP Lease") to a new partnership ("GHALP II"),
the ownership of which mirrors the ownership of GHALP. As part of the formation
of the Company, the Company succeeded to GHALP II's leasehold interest in the
GHALP Properties and continues to manage the hotels. The pro forma consolidated
statements of income reflect (i) the acquisition of the 70% interest in GHALP,
(ii) the sale/leaseback of the GHALP Properties to an unaffiliated REIT and
(iii) the repayment of indebtedness resulting from the Company's initial public
equity and Notes offerings. Pro forma adjustments related to the GHALP
transactions have been set forth in a separate column under "Pro Forma
Adjustments."
The unaudited pro forma consolidated statements of income also reflect
the Company's acquisition of four hotel properties since the Company's initial
public offering: the Wyndham Garden Hotel - Vinings; a 181 room hotel located
in the Overland Park, Kansas metropolitan area (which is currently being
operated as a Best Western and which will be converted to a Wyndham Garden
Hotel following renovations that are underway); a 230 room hotel located in
Dallas, Texas (which is currently being operated as a Quality Inn and which
will be converted to a Wyndham Garden Hotel following renovations that are
underway); and the Wyndham Bristol Place Hotel at Toronto Airport.
The unaudited pro forma consolidated financial data of the Company are
presented for informational purposes only and may not reflect the Company's
future results of operations and financial position or what the results of
operations and financial position of the Company would have been had such
transactions occurred as of the dates indicated. The unaudited pro forma
consolidated financial statements and accompanying notes of the Company should
be read in conjunction with the combined financial statements and notes thereto
contained elsewhere in this Prospectus.
- 37 -
<PAGE> 50
WYNDHAM HOTEL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
-----------------------------------------------
THE COMPANY FORMATION AND OTHER THE COMPANY
HISTORICAL FINANCING PLAN GHALP ACQUISITIONS PRO FORMA
----------- -------------- ----- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues
Hotel revenues $ 54,673 $ $ 56,642 (j) $ 20,686 (q) $ 132,001
Management fees 7,354 132 (a) 7,486
Management fees - affiliates 9,567 538 (a) (3,317)(k) 6,788
Service fees 2,192 2,192
Service fees - affiliates 1,928 (729)(l) 1,199
Reimbursements 4,378 4,378
Reimbursements - affiliates 6,458 (1,741)(m) 4,717
Other 1,340 160 (a) 1,500
--------- --------- --------- --------- ---------
Total revenues 87,890 830 50,855 20,686 160,261
--------- --------- --------- --------- ---------
Operating costs and expenses:
Hotel expenses 37,125 48,915 (n) 15,703 (r) 101,743
Selling, general and administrative
expenses 15,001 1,300 (b) 16,301
Equity participation compensation 3,992 3,992
Reimbursable expenses 4,378 4,378
Reimbursable expenses - affiliates 6,458 (1,741)(m) 4,717
Depreciation and amortization 6,311 947 (c) 1,185 (s) 8,443
--------- --------- --------- --------- ---------
Total operating costs and expenses 73,265 2,247 47,174 16,888 139,574
--------- --------- --------- --------- ---------
Operating income 14,625 (1,417) 3,681 3,798 20,687
Interest income 344 (d) 344
Interest income - affiliates 100 100
Interest expense (8,465) (4,704)(e) (553) (t) (13,722)
Equity in earnings of affiliate's hotel 0
partnership 1,664 (1,664)(o) 0
Foreign currency gain 405 (347)(f) 58
Amortization of deferred gain -- 726 (p) 726
--------- --------- --------- --------- ---------
Income before minority interests 8,673 (6,468) 2,743 3,245 8,193
Income attributable to minority interests 724 (724)(g)
--------- --------- --------- --------- ---------
Income before income taxes 7,949 (5,744) 2,743 3,245 8,193
Provision for income taxes -- (1,954)(h) (1,281)(u) (3,235)
--------- --------- --------- --------- ---------
Net income $ 7,949 $ (7,698) $ 2,743 $ 1,964 $ 4,958
========= ========= ========= ========= =========
Pro forma net income per common $ 0.25 (i)
share =========
Pro forma common shares outstanding 20,018 (i)
=========
</TABLE>
- 38 -
<PAGE> 51
WYNDHAM HOTEL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
---------------------------------------------
THE
COMPANY FORMATION AND OTHER THE COMPANY
HISTORICAL FINANCING PLAN GHALP ACQUISITIONS PRO FORMA
---------- -------------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Hotel Revenues $ 71,302 $ $ 21,495 (j) $ 12,664(q) $ 105,461
Management fees 6,434 6,434
Management fees - affiliates 10,112 168(a) (1,288)(k) 8,992
Service fees 1,111 1,111
Service fees - affiliates 1,850 (345)(l) 1,505
Reimbursements 4,636 4,636
Reimbursements - affiliates 6,176 (471)(m) 5,705
Other 320 320
--------- --------- --------- --------- ---------
Total revenues 101,941 168 19,391 12,664 134,164
--------- --------- --------- --------- ---------
Operating costs and expenses:
Hotel expenses 52,227 17,165 (n) 10,383(r) 79,775
Selling, general and administrative
expenses 12,877 438(b) 13,315
Equity participation compensation 2,919 2,919
Reimbursable expenses 4,636 4,636
Reimbursable expenses - affiliates 6,176 (471)(m) 5,705
Depreciation and amortization 5,609 416(c) 683(s) 6,708
--------- --------- --------- --------- ---------
Total operating costs and 84,444 854 16,694 11,066 113,058
--------- --------- --------- --------- ---------
expenses
Operating income 17,497 (686) 2,697 1,598 21,106
Interest income 982 (d) 982
Interest income - affiliates 536 536
Interest expense (8,462) (1,509)(e) (231)(t) (10,202)
Equity in earnings of affiliate's hotel 0
partnership 870 (870)(o) 0
Foreign currency gain -- 0
Amortization of deferred gain 320 271 (p) 591
--------- --------- --------- --------- ---------
Income before minority interests 11,743 (2,195) 2,098 1,367 13,013
Income attributable to minority interests 571 (571)(g) 0
--------- --------- --------- --------- ---------
Income before income taxes and
extraordinary item 11,172 (1,624) 2,098 1,367 13,013
Provision for income taxes 10,388 (14,988)(h) (540)(u) (5,140)
--------- --------- --------- --------- ---------
Income before extraordinary item $ 21,560 $ (16,612) $ 2,098 $ 827 $ 7,873
========= ========= ========= ========= =========
Pro forma net income per common share $ 0.39(i)
=========
Pro forma common shares outstanding 20,018(i)
=========
</TABLE>
- 39 -
<PAGE> 52
PRO FORMA COMBINED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ ------------
<S> <C> <C>
FORMATION AND FINANCING PLAN
(a) Adjustment to reflect an increase in management fee revenues and other
income due to the release and discharge of the Company from its obligation
to make payments to CHMC under CHMC Agreement, which payments have
historically been offset against management fee revenues from the
management agreements to which they relate:
Unaffiliated-- Management Fees ............................................................ $ 132 $ 19
============ ============
Affiliated-- Management Fees .............................................................. $ 538 $ 149
============ ============
Unaffiliated-- Other ...................................................................... $ 160 $ --
============ ============
Total ..................................................................................... $ 830 $ 168
============ ============
(b) Adjustment to reflect an increase in selling, general and administrative expenses related to
managing and administering a publicly held company ........................................... $ 1,300 $ 438
============ ============
(c) Adjustments to reflect a net increase in depreciation and amortization expense:
Amortization of loan costs relating to the Notes and the $100.0 million Revolving Credit ..... $ 1,294 $ 541
Facility
Elimination of amortization of deferred loan costs upon repayment of existing indebtedness ... $ (250) $ (85)
Depreciation expense reduction resulting from purchase of the 37.5% minority partnership
interest in Rose Hall Associates from an unrelated third party. Rose Hall Associates owns
one of the six Wyndham brand hotels acquired in the Formation ............................. (97) (40)
------------ ------------
$ 947 $ 416
============ ============
(d) The pro forma combined statements do not include any estimated interest
earned on $45 million cash and cash equivalents arising from proceeds of
the Company's initial public equity offering, representing the estimated
pro forma cash balance. At a simple interest rate of 5%, annual and five
months interest earned would be approximately $2,250 and $938,
respectively .................................................................................
(e) Pro Forma interest expense consists of the following:
Interest expense on the Notes ............................................................. $ 10,500 $ 7,875
Interest expense on the hotel property accounted for as a capital lease ................... 2,110 1,529
Interest expense on affiliated borrowings and other capital leases ........................ 84 163
Commitment fee of .375% per annum on the unused portion of the $100.0 million
Revolving Credit Facility and administration fee ...................................... 475 404
------------ ------------
Total Company Pro Forma interest expense .............................................. $ 13,169 $ 9,971
============ ============
Adjustments to reflect a net increase in interest expense consisting of:
Pro Forma expense set forth immediately above ............................................. $ (13,169) $ (9,971)
Less historical interest expense, which is replaced by the Notes and the $100.0 million
Revolving Credit Facility ............................................................. 8,465 8,462
------------ ------------
$ (4,704) $ (1,509)
============ ============
Pro forma interest on the Notes is calculated based on a rate of 10 1/2%
Bank fees are calculated based on an assumed administration fee and an
assumed .375% fee charged on the unused portion of the $100.0 million
Revolving Credit Facility ....................................................................
(f) Adjustment to reflect a reduction of the foreign currency gain as a result of the repayment of
foreign indebtedness to which the foreign currency gain is attributable ...................... $ (347) $ --
============ ============
</TABLE>
- 40 -
<PAGE> 53
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ ------------
<S> <C> <C>
(g) Adjustment to eliminate 100% of the reduction in earnings attributable to a 37.5% minority
interest in a resort hotel as a result of the purchase of that minority partnership
interest from an unaffiliated third party ................................................. $ (724) $ (571)
============ ============
(h) Adjustment to record the income tax expense associated with operating as
a corporation using an effective income tax rate of 39.5%. The pro forma
consolidated statements of income for the year ended December 31, 1995
and the nine months ended September 30, 1996 do not include the initial
recording of estimated deferred income tax benefits of $14,000 associated
with the change in tax status. This amount was recorded by the Company subsequent to the
closing of its initial public equity offering ............................................. $ (1,954) $ (14,988)
============ ============
(i) Pro forma net income per share is based on 20,018 shares of Common Stock
outstanding after the Offering
GHALP
(j) Adjustment to reflect the addition of revenue from 11 hotels upon combination of
GHALP as a result of acquisition of 70% partnership interest in GHALP from an
unrelated third party ..................................................................... $ 56,642 $ 21,495
============ ============
(k) Adjustments to reflect elimination of management fees earned by the Company from the
11 GHALP hotels upon combination as a result of acquisition of 70% partnership
interest in GHALP from an unrelated third party ........................................... $ (3,317) $ (1,288)
============ ============
(l) Adjustment to reflect elimination of service fees earned by the Company from the 11
GHALP hotels upon combination as a result of acquisition of 70% partnership interest
in GHALP from an unrelated third party .................................................... $ (729) $ (345)
============ ============
(m) Adjustment to reflect elimination of reimbursements between the 11 GHALP
hotels and the Company as a result of acquisition of 70% partnership
interest in GHALP from an unrelated third party:
Reimbursements include but are not limited to reimbursements for services
provided, such as accounting, legal, tax, finance and national sales and
marketing fund. Elimination of reimbursement income .................................. $ (1,741) $ (471)
============ ============
Elimination of reimbursement expense ................................................... $ (1,741) $ (471)
============ ============
(n) Adjustments to reflect net increase in hotel expenses from the 11 hotels
upon combination of GHALP as a result of acquisition of 70% partnership
interest in GHALP from an unrelated third party
Addition of the hotel expenses upon combination of GHALP, consisting of the following
expenses as of December 31, 1995 and September 30, 1996, respectively: Departmental
operating expenses of $19.6 million and $7.2 million; undistributed operating
expenses of $13.7 million and $4.9 million; management fees of $3.3 million and $1.3
million, rent, taxes and insurance expenses of $2.6 million and approximately $884;
and lease expenses of $13.6 million and $4.5 million ................................. $ 52,826 $ 18,788
Elimination of management and service fee expenses of GHALP, net of deferred gain on
sale of GHALP Properties ........................................................... (3,911) (1,623)
------------ ------------
$ 48,915 $ 17,165
============ ============
(o) Adjustment to reflect elimination of 30% equity interest in earnings of GHALP as a result
of acquisition of 70% partnership interest in GHALP from an unrelated third party, which
resulted in the combination of GHALP ...................................................... $ (1,664) $ (870)
============ ============
(p) Adjustment to reflect amortization of the deferred gain recognized from the GHALP
sale/leaseback transaction. The deferred gain is being recognized over the initial
term of the GHALP Lease ................................................................... $ 726 $ 271
============ ============
</TABLE>
- 41 -
<PAGE> 54
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ ------------
<S> <C> <C>
OTHER ACQUISITIONS
(q) Adjustments to reflect addition of hotel revenues from the following
acquisitions not included in The Company Historical:
Vinings Wyndham Garden Hotel .......................................... $ 4,939 $ 2,249
Dallas Market Center .................................................. 1,726 1,726
Overland Park ......................................................... 3,717 2,156
The Bristol Place in Toronto .......................................... 10,304 6,533
------------ ------------
$ 20,686 $ 12,664
============ ============
(r) Adjustments to reflect addition of hotel expenses from the following
acquisitions not included in The Company Historical:
Vinings Wyndham Garden Hotel .......................................... $ 2,529 $ 1,434
Dallas Market Center .................................................. 1,299 1,275
Overland Park ......................................................... 2,774 1,778
The Bristol Place in Toronto .......................................... 9,101 5,896
------------ ------------
$ 15,703 $ 10,383
============ ============
(s) Adjustments to reflect addition of depreciation expense on the following
acquisitions based on their purchase prices at the date of acquisition not
included in The Company Historical:
Vinings Wyndham Garden Hotel .......................................... $ 332 $ 138
Dallas Market Center .................................................. 182 106
Overland Park ......................................................... 110 64
The Bristol Place in Toronto .......................................... 561 375
------------ ------------
$ 1,185 $ 683
============ ============
(t) Adjustments to reflect the addition of interest expense on Vinings Wyndham
Garden Hotel industrial revenue bond indebtedness in the amount of $9.7
million that the Company assumed
at acquisition, calculated based on an interest rate of 5.72% per annum .. $ (553) $ (231)
============ ============
(u) Adjustments to record the income tax expense resulting from the addition
of operating results of new hotel properties ............................. $ (1,281) $ (540)
============ ============
</TABLE>
- 42 -
<PAGE> 55
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected consolidated financial data of
Wyndham Hotel Corporation. The selected combined statement of operations data
of the Company for the fiscal years ended December 31, 1991 and 1992 and the
selected combined balance sheet data as of December 31, 1991, 1992 and 1993 are
derived from the Company's unaudited Combined Financial Statements. The
selected combined statement of operations data of the Company for the fiscal
years ended December 31, 1993, 1994 and 1995 and the selected combined balance
sheet data as of December 31, 1994 and 1995 are derived from the Company's
audited Combined Financial Statements included elsewhere in this Prospectus.
The selected consolidated statement of operations data of the Company presented
for the nine months ended September 30, 1995 and 1996 have been derived from
unaudited consolidated financial statements and, in the opinion of the Company,
reflect all adjustments (which include only normal recurring adjustments)
necessary to present fairly the information set forth therein. The interim
results are not necessarily indicative of the operating results for a full
year. The summary pro forma financial data set forth below reflect the
Company's initial public equity offering, the issuance of the Notes and the
other transactions described under "Pro Forma Consolidated Financial Data" as
if they had occurred at the beginning of 1995.
The selected consolidated financial data set forth below should be
read in conjunction with, and are qualified in their entirety by, the Combined
Financial Statements and related Notes, Pro Forma Consolidated Financial Data,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and other financial information included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1991 1992 1993 1994 1995 PROFORMA
---- ---- ---- ---- ---- --------
1995
----
<S> <C> <C> <C> <C> <C> <C>
Portfolio Hotel Revenues (1) $269,557 $315,151 $345,733 $394,949 $534,204 $ N/A
======== ======== ======== ======== ======== ========
Statement of Operations Data:
Revenues:
Hotel Revenues $ 34,859 $ 41,604 $ 43,921 $ 51,799 $ 54,673 $132,001
Management fees 8,472 10,130 10,731 13,302 16,921 14,274
Service fees 784 782 2,127 2,904 4,120 3,391
Reimbursements 3,650 4,130 4,164 8,004 10,836 9,095
Other income 253 156 334 257 1,340 1,500
-------- -------- -------- -------- -------- --------
Total Company Revenues 48,018 56,802 61,277 76,266 87,890 160,261
Operating costs and expenses 42,988 48,383 54,183 63,929 73,264 139,574
Operating income 5,030 8,419 7,094 12,337 14,626 20,687
Interest expense, net (8,449) (7,831) (7,075) (7,526) (8,021) (13,278)
Income (loss) before income
taxes (2,049) 163 1,654 6,265 7,949 8,193
Income tax benefit (2) -- -- -- -- -- --
Pro forma income taxes(2) -- -- -- -- -- (3,235)
Net income (loss) (2,049) 163 1,654 6,265 7,949 4,958
Historical net income as adjusted
for pro forma income tax -- -- -- -- 4,809
Historical net income as adjusted
per common .24
share (3)
Common shares outstanding(5) 20,018
Pro forma net income per share -- -- -- -- -- .25
Pro forma common shares
outstanding -- -- -- -- -- 20,018
<CAPTION>
NINE MONTHS ENDED SEPT. 30,
--------------------------------
1995 1996 PROFORMA
---- ---- --------
1996
----
<S> <C> <C> <C>
Portfolio Hotel Revenues (1) $379,625 $489,639 $ N/A
======== ======== ========
Statement of Operations Data:
Revenues:
Hotel Revenues $ 41,685 $ 71,302 $105,461
Management fees 11,909 16,546 15,426
Service fees 2,823 2,961 2,616
Reimbursements 7,735 10,812 10,341
Other income 1,349 320 320
-------- -------- --------
Total Company Revenues 65,501 101,941 134,164
Operating costs and expenses 53,474 84,444 113,058
Operating income 12,027 17,497 21,106
Interest expense, net (6,167) (6,944) (8,683)
Income (loss) before income
taxes 6,901 11,172 13,013
Income tax benefit (2) -- 10,388
Pro forma income taxes(2) -- -- (5,140)
Net income (loss) 6,901 20,429 7,873
Historical net income as adjusted
for pro forma income tax 4,175 N/A
Historical net income as adjusted
per common .21 1.02
share (3)
Common shares outstanding(5) 20,018 20,018
Pro forma net income per share -- -- .39
Pro forma common shares
outstanding -- -- 20,018
</TABLE>
- 43 -
<PAGE> 56
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
-------------------------------------------------------- SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash $ 3,086 $ 682 $ 827 $ 3,619 $ 4,160 $ 20,147
equivalents
Total assets 113,426 108,647 113,465 113,276 133,403 240,091
Long-term obligations,
including current 90,881 87,064 88,410 84,161 90,978 130,664
portion
Total partners' capital
and stockholders' (9,075) (7,303) (1,488) 1,716 17,557 71,916
equity (deficit)
</TABLE>
(1) Represents unaudited revenues of hotels owned, leased or managed by
the Company, as distinguished from Total Company Revenues.
(2) For the years 1993 through 1995 and the 1996 first five months,
Wyndham made no provision for income taxes because the combined
Company was a combination of partnerships, S corporations and a
nontaxable Bermuda corporation that are not subject to U.S. federal
income taxes. Since the Company's formation in late May 1996, income
taxes have been provided. The provision for income taxes to arrive at
pro forma net income assumes a combined federal and state effective
income tax rate of 39.5% computed as follows:
<TABLE>
<S> <C>
Federal income tax rate 35.0%
Weighted average state income tax rate (net of federal benefit) 4.5%
----
39.5%
====
</TABLE>
(3) Historical net income as adjusted per common share is based on
historical net income as adjusted for pro forma income tax divided by
the number of shares in the initial public offering of the Company as
if the Company had been a corporation prior to its formation in May
1995.
- 44 -
<PAGE> 57
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following should be read in conjunction with the Company's
consolidated financial statements, historical combined financial statements and
the summary and selected combined financial and other information located
elsewhere in this Prospectus.
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. See "Business -- Management Contracts"
for further information relating to the foregoing fees.
(3) The Company generates service fee revenues from hotels
that it manages or franchises. Service fee 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 growth 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 expenses associated with providing advertising and promotion
(through the Company's Marketing Fund), sales and marketing,
centralized reservations and other services.
The Company's total revenues grew from $61.3 million to $87.9 million
from 1993 through 1995. The Company's revenue growth is attributable to both
the improving financial performance of the existing upscale hotels in its
Portfolio, as well as the addition of new upscale hotels to its Portfolio.
During this period, the occupancy rates for Comparable Hotels (upscale hotels
that have been operated by the Company since January 1, 1993) improved from
year to year 67%, 70% and 72% in 1993, 1994 and 1995, respectively), while the
ADR of Comparable Hotels also increased $76.39, $80.16 and $84.38 for the same
periods). These improvements led to year to year improvements in REVPAR for the
Comparable Hotels of 9.3% and 8.7% in 1994 and 1995, respectively. The
Company's revenue growth continued in the 1996 First Nine Months, as revenues
increased 55.6% over revenues generated in the 1995 First Nine Months, from
$65.5 million to $101.9 million. Occupancy rates declined while ADR for
Comparable Hotels improved during the 1996 First Nine Months to 73% and $91.96,
respectively, from 74% and $84.18 in the 1995 First Nine Months. This
performance led to a period over period improvement of 7.9% in REVPAR.
Of the $26.6 million increase in the Company's total revenues from
1993 to 1995, 40.4% is attributable to increases in hotel revenues from the
Company's owned and leased hotels and 59.6% is attributable to managed hotels
within the Company's Portfolio. Revenues derived from managed hotels not only
include management fees, but also service fees and reimbursement revenues paid
to the Company.
- 45 -
<PAGE> 58
The Company's operating strengths have also yielded consistently
strong financial results. As a result of continued improvement in the
generation of revenues in the Company's existing Portfolio of upscale hotels,
and the Company's emphasis upon tight control of operating expenses, the gross
operating profit margins for the Company's Comparable Hotels were 32%, 34% and
36% in 1993, 1994 and 1995, respectively, and for both the 1995 First Nine
Months and the 1996 First Nine Months were 36% and 37%, respectively. Gross
operating profit per available room for Comparable Hotels during 1993, 1994 and
1995 was $9,612, $11,417 and $12,547, respectively. In addition, the average
food and beverage margins for the Comparable Hotels during 1993, 1994 and 1995
were 29%, 31% and 31%, respectively, and were 30% in the 1995 First Nine Months
and 28% in the 1996 First Nine Months. For presentation of certain operating
and financial data for the Company's entire Portfolio, see "Summary Prospectus
- -- Summary Combined Financial and Other Data."
The Company effectively held a 30% investment in GHALP during 1993
through 1995. Historically, the results of operations of the GHALP Properties
have been accounted for using the equity method. Consequently, the results of
the GHALP Properties are not included in historical hotel revenues and hotel
expenses for 1993 through 1995. As a result of the acquisition of a 70%
partnership interest in GHALP from an unrelated third party and the
sale/leaseback transaction that occurred on May 2, 1996, the results of the
GHALP Properties are combined into hotel revenue and hotel expenses for the
nine month period ended September 30, 1996.
From time to time, the value of WEL's interests in the WEL Investments
has been revalued, which results in the revaluation of each WEL Participant's
interest in WEL. The increase in value obtained by each WEL Participant by
virtue of this revaluation process is treated by the Company as compensation
expense in a manner similar to the expense associated with a formula unit
incentive plan. The Company recognized equity participation compensation
expenses derived from WEL of $1.5 million, $1.4 million and $2.7 million in
1993, 1994, 1995, respectively, and of approximately $900,000 in the 1996 First
Nine Months. The WEL Agreement was amended effective through February 28, 1996
to provide for a modified method of valuing WEL's investments to reflect the
fact that WEL's interests in certain WEL Investments were exchanged for the
Wyndham Shares as part of the formation and initial public offering of the
Company. The compensation expense incurred in the 1996 First Nine Months
resulted from the revaluation of WEL's ownership interest in the Wyndham
Shares. The Company does not expect to incur any additional compensation
expense attributable to WEL following the Plan of Distribution.
The Senior Executive Officers owned limited partner interests in Old
Wyndham and several affiliates of Old Wyndham. These limited partner interests
were purchased by the Senior Executive Officers for amounts equal to the fair
market value of such interests. The Senior Executive Officers borrowed the
funds used to purchase such limited partner interests from an affiliate and
pledged their limited partner interests to secure such loans. The Senior
Executive Officers' shares of the distributable cash of the limited
partnerships were used to repay such affiliate loans. For financial reporting
purposes, the net appreciation in the Senior Executive Officers' limited
partner interest resulted in compensation expense to the Company. The Company
recognized compensation expense due to the Senior Executive Officers' equity
participation of $1.2 million, $1.4 million and $1.3 million for the years
ended December 31, 1993, 1994, 1995, respectively, and of approximately $2.0
million in the 1996 First Nine Months. As a result of the Company's initial
public offering, this component of compensation expense was fixed at the
initial public offering price; therefore, this component of compensation
expense will not be incurred by the Company in future periods.
The Company's predecessors in interest operated the businesses
acquired by the Company in connection with its formation through a combination
of partnerships, S corporations and a nontaxable Bermuda corporation that are
not subject to U.S. federal income taxes. As a result, the following discussion
of the Company's results of operations does not include a discussion of income
tax expense, and the Company's net income results are presented on a pre-tax
basis. Upon consummation of the transactions constituting the formation of the
Company on May 24, 1996, the Company became fully subject to state and federal
income taxes. (No income tax expense is reflected in the period ended September
30, 1996 because the Company recognized an income tax benefit during this
period as a result of recording deferred income taxes arising in connection
with the formation of the Company.) See Note 2 of Notes to Combined Financial
Statements.
- 46 -
<PAGE> 59
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>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Hotel revenues 71.7% 67.9% 62.2% 63.6% 70.0%
Management fees 17.5 17.5 19.3 18.2 16.2
Service fees 3.5 3.8 4.7 4.3 2.9
Reimbursement revenues 6.8 10.5 12.3 11.8 10.6
Other 0.5 0.3 1.5 2.1 .3
-------- -------- -------- -------- --------
Total revenues 100.0 100.0 100.0 100.0 100.0
-------- -------- -------- -------- --------
Operating costs & expenses:
Hotel expenses 52.4 48.1 42.2 42.8 51.2
Selling, general and
administrative 16.2 14.0 17.1 15.4 12.6
expense
Equity participation 4.4 3.7 4.5 4.6 2.9
compensation
Reimbursable expense 6.8 10.5 12.3 11.8 10.6
Depreciation and amortization 8.6 7.5 7.2 7.0 5.5
-------- -------- -------- -------- --------
Total operating costs and 88.4 83.8 83.3 81.6 82.8
-------- -------- -------- -------- --------
expenses
Operating income 11.6 16.2 16.7 18.4 17.2
Interest expense, net (11.5) (9.8) (9.1) (9.4) (6.8)
Equity in earnings of affiliate's
hotel 1.3 1.6 1.9 2.1 .9
partnership
Foreign currency gain 1.0 0.5 0.4 .4 --
Amortization of deferred gain -- -- -- -- .3
-------- -------- -------- -------- --------
Income before minority interests 2.4 8.5 9.9 11.5 11.6
Income (loss) attributable to
minority interests (0.3) 0.3 0.9 .9 .6
-------- -------- -------- -------- --------
Income before income tax
benefit and
extraordinary item 2.7% 8.2% 9.0% 10.6% 11.0%
-------- -------- -------- -------- --------
</TABLE>
Nine Months Ended September 30, 1996 Compared to
Nine Months Ended September 30, 1995
Total revenues increased by 55.6% , or $36.4 million to $101.9 million
in 1996 from $65.5 million in 1995. Total operating costs and expenses
increased by 57.9%, or $31.0 million to $84.4 million in 1996 from $53.4
million in 1995. The increase in total revenues and operating expenses was
attributable principally to the addition of the
- 47 -
<PAGE> 60
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 71.0%, or $29.6 million, to $71.3 million
in 1996 from $41.7 million in 1995. Approximately 83.6% of the increase, or
$24.8 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
four new hotels.
Revenues from management fees increased by 38.9%, or approximately
$4.7 million, to $16.5 million in 1996 from $11.9 million in 1995.
Approximately $2.5 million of this increase resulted from 20 new managed hotels
added between September 30, 1995 and September 30, 1996. Approximately $3.7
million of the increase was attributable to increased management fees as a
result of improved operating results of managed hotels. The increase also
reflected management fee revenues of approximately $624,000 as a result of the
release and discharge of the Company from its obligation to make payments to an
affiliate under an agreement. The increase was offset by $876,000 from the loss
of certain management contracts and $1.2 million which 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 increased by 4.9%, or approximately
$137,000 to $3.0 million in 1996 from $2.8 million in 1995. The increase was
primarily due to increased central accounting fees. The increase was offset by
approximately $201,000 attributable to the elimination of service fees earned
from GHALP Properties, reflecting the consolidation of the results of GHALP
Properties.
Reimbursable revenues increased by 39.8%, or $3.1 million, to $10.8
million in 1996 from $7.7 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 $818,000 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 decreased by 76.3%, or $1.0 million in 1996. Other income
included $1.0 million and approximately $250,000 in fees recognized from
termination of management contracts in 1995 and 1996, respectively.
Hotel expenses increased by 86.1%, or $24.1 million, to $52.2 million
in 1996 from $28.1 million in 1995, reflecting the additional hotel expenses
from GHALP Properties as a result of the consolidation of the results of
operations of the GHALP Properties. Approximately 93.1% of the increase, or
$22.5 million, was a result of the consolidation of the GHALP properties. The
increase also reflected an increase in room expenses and food and beverage
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 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 73.2%
in 1996 from 67.3% in 1995. The increase in hotel expense percentage was
primarily attributable to a $5.7 million lease expense 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 65.3%.
SG&A expenses increased by 27.2%, or $2.8 million, to $12.9 million in
1996 from $10.1 million in 1995. As a percentage of total revenues, SG&A
expenses decreased to 12.6% in 1996 from 15.4% in 1995. Of the increase in SG&A
expenses, 79.2% of the increase, or $2.2 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, 10.2% of the increase, or approximately $281,000, is due to the
establishment of a provision for bad debt expense for management fees on an
unaffiliated hotel, and 11.7%, or approximately $321,000, is due to the
establishment of a provision for bad debt related to certain receivables. The
increase also reflected additional costs of managing and administering a
publicly held company.
- 48 -
<PAGE> 61
Equity participation compensation expenses decreased by 2.5%, or
approximately $75,000, to $2.9 million in 1996 from $3.0 million in 1995. The
primary component of the compensation expenses, 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 period
subsequent to the equity offering.
Reimbursable expenses grew by 39.8%, or $3.1 million, to $10.8 million
in 1996 from $7.7 million 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 sale 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 $818,000 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. As a percentage of total revenues, reimbursable expenses
decreased to 10.6% in 1996 from 11.8% in 1995.
Depreciation and amortization expense increased by 23.1%, or $1.0
million, to $5.6 million in 1996 from $4.6 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
$441,000 from the amortization of deferred debt issue costs relating to the
Notes and the Revolving Credit Facility.
Interest income increased by $1.3 million to $1.5 million in 1996 from
approximately $240,000 in 1995. The increase was primarily attributable to
approximately $671,000 income earned on unused cash generated from the initial
public offerings and approximately $557,000 income on notes receivable.
Interest expense increased by 32.1%, or approximately $2.1 million, to
$8.5 million in 1996 from $6.4 million in 1995, reflecting the additional
interest from the Notes, capital leases, less the elimination of interest
expense from the retired debt and affiliated borrowings.
Earnings from the Company's equity investment in hotel partnership
ceased 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.
As a result of the changes noted above, income before income tax
benefits increased by 61.9%, or $4.3 million, to $11.2 million in 1996 from
$6.9 million in 1995.
Income tax benefits of $10.7 million reflected the effect of recording
deferred income taxes arising as a result of incorporation in the amount of
$13.0 million, net of $2.3 million for the provision for the result of the
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.
1995 Compared to 1994
Total revenues increased by 15.2%, or $11.6 million, to $87.9 million
in 1995 from $76.3 million in 1994. Hotel revenues increased by 5.6%, or $2.9
million, to $54.7 million in 1995 from $51.8 million in 1994. Approximately 69%
of this increase in hotel revenues was due to a $2.0 million increase in
existing hotel room rental revenues, while 35% of the increase was due to a
$1.0 million increase in existing hotel food and beverage revenues, which
increases were offset by minor decreases in other hotel revenue categories. The
increase in hotel room rental revenue is due to a 1% increase in ADR and a 3%
increase in occupancy percentage.
- 49 -
<PAGE> 62
Revenues from management fees increased by 26%, or $3.5 million, to
$16.8 million in 1995 from $13.3 million in 1994. Approximately 64% of this
increase resulted from the addition of 14 new managed hotels in 1995, while 20%
of the increase resulted from increases in base management fees and trade name
fees and 16% of the increase resulted from increases in incentive management
fees derived from existing managed hotels.
Revenues from service fees increased by 41.8%, or $1.2 million, to
$4.1 million in 1995 from $2.9 million in 1994. Design fees relating to the
conversion of hotels to Wyndham brand hotels accounted for 31% of the increase,
while 29% of the increase was derived from new central accounting fees
resulting from Portfolio hotels added in 1995. The balance of the increase
reflected increased service fees from existing hotels.
Reimbursable revenues increased by 35.4%, or $2.8 million, to $10.8
million in 1995 from $8.0 million in 1994. Of this increase, 39% resulted from
increased payments to the Company's Marketing Fund from both new and existing
Portfolio hotels, while 29% of the increase resulted from fees generated from
room sales booked by the Company's National Sales Offices.
During 1995, the Company received $1.0 million for a terminated
management agreement that is included in other income. This termination
occurred as a result of a third party owner terminating the Company's
management agreement due to the third party owner's affiliation with another
hotel management company. This termination fee is offset by a payment of
approximately $160,000 relating to the CHMC Agreement. The remaining
approximately $500,000 of other income was derived from franchise fees and
miscellaneous income sources.
Hotel expenses increased by 1.0%, or approximately $381,000, to $37.1
million in 1995 from $36.7 million in 1994. This increase reflects a 9%
increase in room expenses and a 3.7% increase in food and beverage expenses.
These increased expenses were offset by a drop in other hotel expenses. Hotel
expenses decreased as a percentage of hotel revenues to 67.9% in 1995 from
70.9% in 1994, primarily as a result of operating leverage and increased
operating efficiencies. The operating profit margin on hotels owned or leased
by the Company improved to 32.1% in 1995 from 29.1% in 1994, due primarily to
increases in hotel occupancy rates and inflation (partially offset by a
decrease in rental income at one hotel).
SG&A expenses increased 40.9%, or $4.4 million, to $15.0 million in
1995 from $10.6 million in 1994. As a percentage of total revenues, SG&A
expenses increased to 17.1% in 1995 from 14.0% in 1994. Of the $4.4 million
increase in SG&A expenses, 64% of the increase, or $2.8 million, is due to
increased wages, contract labor and benefit costs arising from the addition of
corporate management and staff personnel in anticipation of the Company's need
to manage and provide services to the substantially larger number of hotels it
anticipates operating as it executes its growth strategy. In addition, 10% of
the increase, or approximately $426,000, is due to costs associated with
improved management information systems support and 8% of the increase, or
approximately $356,000, is due to development costs incurred in connection with
possible acquisitions of management contracts.
Equity participation compensation expenses increased by 42.5%, or $1.2
million, to $4.0 million in 1995 from $2.8 million in 1994. This increase
reflects the improved operating performance of the Company and affiliated
entities and the consequent increased valuation of WEL's and the Senior
Executive Officers' investments in the Old Management Company and affiliates.
Reimbursable expenses grew by 35.4%, or $2.8 million, to $10.8 million
in 1995 from $8.0 million in 1994. As a percentage of total revenues,
reimbursable expenses constituted 12.3% of total revenues in 1995, compared
with 10.5% in 1994. 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.
Depreciation and amortization expense increased by 10.0%, or
approximately $576,000, to $6.3 million in 1995 from $5.7 million in 1994 due
to the net acquisition of $3.3 million in property and equipment and the
addition of amortization of the Bedrock Options. See Note 13 of Notes to
Consolidated Financial Statements.
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Interest expense, net, increased by 6.6%, or approximately $495,000,
to $8.0 million in 1995 from $7.5 million in 1994. Interest expense, net, as a
percentage of total revenues decreased to 9.1% in 1995 from 9.8% in 1994,
reflecting relatively static interest expense while the Company's revenues grew
over this period.
Earnings from the Company's equity investment in GHALP grew by 34.6%,
or approximately $427,000, to $1.7 million in 1995 from $1.2 million in 1994,
reflecting improvements in the operating performance of the GHALP Properties.
As a result of the changes noted above, net income (exclusive of
income taxes) increased by 26.9%, or $1.7 million, to $7.9 million in 1995 from
$6.3 million in 1994.
1994 Compared to 1993
Total revenues increased by 24.5%, or $15.0 million, to $76.3 million
in 1994 from $61.3 million in 1993. Of this increase, hotel revenue generated
by the hotels owned or leased by the Company increased by 17.9%, or $7.9
million, to $51.8 million in 1994 from $43.9 million in 1993. Approximately 42%
of this increase in hotel revenues resulted from an increase of $3.3 million in
existing hotel room rental revenues, while 30% of the increase resulted from an
increase of $2.4 million in existing hotel food and beverage revenues. The
increase in hotel room rental revenue is due to a 5% increase in ADR and a 5%
increase in occupancy percentage. The remaining portion of the increase is
primarily attributable to the effects of a full year of operations generated by
the Wyndham Garden Hotel in Schaumburg, Illinois, which the Company acquired in
May 1993.
Revenues from management fees increased by 24%, or $2.6 million, to
$13.3 million in 1994 from $10.7 million in 1993. Of this increase, 33% is
attributable to fees earned from 11 new management contracts executed in 1994,
32% is from increases in base management and trade name fees and 35% is from
increases in management incentive fees derived from existing managed hotels.
Service fee revenues increased by 36.5%, or approximately $777,000, to
$2.9 million in 1994 from $2.1 million in 1993, due primarily to increased
central accounting fees and higher revenues derived from the provision of
purchasing services.
Reimbursement revenues increased by 92.2%, or $3.8 million, to $8.0
million in 1994 from $4.2 million in 1993. The Company established a Marketing
Fund in January 1994 to which all Portfolio hotels pay a percentage of room
revenues. Payments to the new Marketing Fund accounted for approximately 87% of
the increase in reimbursement revenues.
Hotel expenses increased by 14.4%, or $4.6 million, to $36.7 million
in 1994 from $32.1 million in 1993. Approximately 24% of the increase is
attributable to the effect of operating the Wyndham Garden Hotel in Schaumburg,
Illinois during all of 1994, and the balance is due to normal increases in
hotel operating expenses arising from increased hotel revenues (the most
important components of which were an increase in room expense of 11% and an
increase in food and beverage expense of 16%, which represented 12% and 31% of
the total increase in hotel expenses, respectively). Hotel expenses as a
percentage of hotel revenues decreased to 70.9% in 1994 from 73.1% in 1993,
primarily as a result of operating leverage and increased operating
efficiencies.
SG&A expenses increased by 7.4%, or approximately $732,000, to $10.6
million in 1994 from $9.9 million in 1993. This increase in SG&A expenses is
primarily attributable to an increase of approximately $872,000 in corporate
staffing and office expenses, partially offset by the non-recurrence in 1994 of
various 1993 expenses (approximately $250,000 established for a then pending
lawsuit, approximately $156,000 for a terminated employee and the remainder
relating to the reclassification of certain expenses). SG&A expenses as a
percentage of total revenues decreased to 14.0% in 1994 compared to 16.2% in
1993, as the growth in total revenues more than offset increased SG&A expenses.
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Equity participation compensation expenses increased by 5.0%, or
approximately $93,000, to $2.8 million in 1994 from $2.7 million in 1993. This
increase reflects the improved operating performance of the Company and
affiliated entities and the consequent increased valuation of WEL's and the
Senior Executive Officers' investments in the Old Management Company and
affiliates.
Reimbursable expenses increased by 92.2%, or $3.8 million, to $8.0
million in 1994 from $4.2 million in 1993. Approximately 87% of this increase
is due to increased advertising and promotional expenses associated with the
operation of the Company's Marketing Fund, which was established in January
1994.
Depreciation and amortization expense increased by 8.8%, or
approximately $466,000, due to the effect of a full year of ownership in 1994
of the Wyndham Garden Hotel in Schaumburg, Illinois and increased amortization
of management contract costs.
Interest expense, net, increased by 6.4%, or approximately $451,000,
to $7.5 million in 1994 from $7.1 million in 1993 primarily as a result of
increases in interest rates.
Earnings from the equity investment in GHALP increased by 59.1%, or
approximately $459,000, to $1.2 million in 1994 from approximately $777,000 in
1993 due to increased gross operating profits from the GHALP Properties.
As a result of the changes noted above, net income (exclusive of
income taxes) increased by 278.8%, or $4.6 million, to $6.3 million in 1994
from $1.7 million in 1993.
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. In the 1996 First Nine Months, the Company generated cash from
operations of $2.5 million, as compared with the generation of $8.5 million in
cash from operations in the 1995 First Nine Months. This decrease in the
generation of cash from operations is primarily attributable to the payment of
$13.7 million in security deposits, as required under the GHALP Lease. The
Company intends to retain any future earnings for use in its business and does
not intend to declare any cash dividends in the foreseeable future. See
"Dividend Policy." The Company therefore anticipates that any cash provided by
operations in the foreseeable future will be available to fund the Company's
liquidity and capital needs.
The Company completed its initial public equity offering and offering
of the Notes in May 1996, and generated net proceeds in the aggregate amount of
$163.9 million (including a contribution of $10.0 million from Bedrock). These
proceeds have so far been used to fund the cash payments associated with the
formation of the Company in the amount of $53.8 million, to repay certain
mortgage and other indebtedness in the amount of $64.8 million that was assumed
in connection with the formation of the Company, to pay approximately $5.1
million in fees and expenses incurred in connection with the GHALP transactions
and consummating certain financings associated with the formation of the
Company, to fund certain improvements to the Wyndham Rose Hall Resort in the
approximate amount of $879,000 and to fund the cash portion of the acquisition
costs of four hotel properties totaling $33.5 million.
The $100.0 million of Notes issued in May 1996 will mature on May 15,
2006, are unsecured obligations of the Company and are guaranteed by each of
the Company's subsidiaries (except for a number of insignificant subsidiaries).
The Notes bear interest at 10 1/2% per annum, and such interest is payable
semi-annually in arrears on May
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<PAGE> 65
15 and November 15, commencing November 15, 1996. Except in the event of a
Change of Control, there is 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 ability of the Company and its Restricted
Subsidiaries (as defined in the Indenture) to incur indebtedness is limited by
the Indenture unless the Company would, after giving effect to such incurrence,
have a Consolidated Fixed Charge Coverage Ratio (as defined in the Indenture)
greater than 1.75:1 with respect to any incurrence prior to May 31, 1997, or
2:1 with respect to any incurrence on or after May 31, 1997, provided that the
Company and any Restricted Subsidiary will be permitted to incur (A)
indebtedness of up to $150 million under the Revolving Credit Facility or any
replacement facility, (B) indebtedness owed to the Company or a Restricted
Subsidiary, (C) refinancings of indebtedness permitted by clauses (B), (D),
(F), (H) and (I) hereof, (D) indebtedness under (x) performance or similar
bonds provided in the ordinary course of business, (y) currency or interest
rate protection agreements or (z) indemnity or purchase price adjustment
obligations entered into in connection with asset dispositions, which
obligations do not exceed the proceeds of the related disposition, (E)
indebtedness under letters of credit and bankers' acceptances issued in the
ordinary course of business, (F) acquired indebtedness if, after giving effect
to such incurrence, the Company could incur at least $1.00 of additional
indebtedness (other than pursuant to clauses (A) through (J) hereof), (G)
indebtedness of up to $3 million incurred in connection with certain
retirements for value of Company securities held by employees or former
employees, (H) guarantees of indebtedness of the Company or a Restricted
Subsidiary, (I) indebtedness incurred in connection with the acquisition of the
Vinings Wyndham Garden Hotel and (J) other indebtedness of up to $25 million.
The Indenture also contains covenants limiting (A) the ability of the Company
and its Restricted Subsidiaries to pay dividends on or repurchase any capital
stock (including the Common Stock) not held by the Company or a wholly-owned
Restricted Subsidiary that is a guarantor of the Notes, (B) limiting the
ability of the Company and its Restricted Subsidiaries to voluntarily prepay or
repay any indebtedness that is not senior in right of payment to the Notes and
(C) limiting the ability of the Company to incur indebtedness that is senior in
right of payment to the Notes but junior in right of payment to the Company's
senior indebtedness.
The Company is also a party to an agreement with Bankers Trust, as
agent for a group of financial institutions (the "Lenders"), pursuant to which
the Lenders have agreed, subject to certain conditions, to provide the
Revolving Credit Facility. The Revolving Credit Facility provides for up to
$100.0 million of revolving loan borrowings. 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 or payments 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 November 30, 1996, approximately $35.7
million aggregate principal amount was available for borrowings at such date in
accordance with the terms of the Revolving Credit Facility. (In January of
1997, the Company borrowed approximately $10.8 million in connection with
entering into the lease for the Wyndham Salt Lake City Hotel.) 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 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 will be made available to 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.
The Revolving Credit Facility may be used for (a) the acquisition,
renovation, management and operation of certain hotel properties, (b) the
provision of equity and debt investments in joint ventures to acquire, renovate
and manage certain hotel properties, (c) equity and debt investments in and
credit support for owners of certain hotel properties managed by the Company
and its subsidiaries which are made in connection with the acquisition,
extension, renewal or modification of management agreements and (d) other
corporate purposes of the Company. The Revolving Credit Facility bears interest
at a rate equal to, at the election of the Company, (a) the Bankers Trust base
rate plus one percent (1.0%) per annum, or (b) one-, two-, three- or six-month
LIBOR plus two percent (2.0%) per annum, payable
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monthly in arrears; provided however, subject to the Company's satisfaction of
certain conditions, the aforementioned interest rates will be subject to a
reduction of 0.25% per annum. The Company paid customary fees in connection
with structuring the Revolving Credit Facility and continues to pay the Lenders
an unused commitment fee equal to 0.375% per annum of the unused portion of the
Revolving Credit Facility, payable quarterly in arrears. Under certain
circumstances, the Company may be required to obtain interest rate protection.
The Company is permitted to use up to $15.0 million of the amount available
under the Revolving Credit Facility for the issuance of letters of credit,
which is subject to a fee of 2.0% per annum on the maximum amount which may be
drawn under each letter of credit.
The Revolving Credit Facility contains covenants requiring the Company
to maintain certain financial ratios. The primary effect of these covenants are
to limit the Company's ability to obtain or maintain borrowings under the
Revolving Credit Facility, as well as to limit the Company's activities in a
number of other respects. Among the covenants contained in the Revolving Credit
Facility, are covenants requiring the Company to maintain a minimum net worth
of $55.0 million and to maintain the following financial ratios:
(a) the market value of the outstanding capital stock of the
Company shall not be less than 50% of the market value of such stock
on the date of the closing of the Revolving Credit Facility, unless
there shall have occurred a corresponding decrease in the market value
of the capital stock of a selected group of comparable companies;
(b) Total Consolidated Indebtedness (as defined in the
Revolving Credit Facility) and imputed indebtedness attributable to
the Company's ground lease obligations ("Imputed Debt") entered into
following the closing of the Revolving Credit Facility shall not
exceed the lesser of (i) the Adjusted Stockholders' Equity (as defined
in the Revolving Credit Facility) or (ii) 50% of Total Consolidated
Indebtedness plus Imputed Debt plus the market value of the
outstanding capital stock of the Company, unless the failure to meet
the ratio with respect to clause (ii) is attributable to a decrease in
the market value of the capital stock of a selected group of
comparable companies of more than 50% since the date of the closing of
the Revolving Credit Facility;
(c) an annually increasing ratio of Consolidated EBITDA (as
defined in the Revolving Credit Facility) plus total lease payments
under permitted sale-leaseback transactions (the "Lease Payments") to
Consolidated Fixed Charges (as defined in the Revolving Credit
Facility) plus the greater of the Lease Payments or an interest factor
on the Imputed Debt;
(d) an annually increasing ratio of Consolidated EBITDA minus
capital expenses incurred plus Lease Payments to Consolidated Fixed
Charges plus Lease Payments and an interest factor on the Imputed
Debt;
(e) an annually decreasing ratio of Total Consolidated
Indebtedness plus Imputed Debt to Consolidated EBITDA plus the Lease
Payments; and
(f) an annually decreasing ratio of Total Consolidated
Indebtedness plus Imputed Debt to Consolidated EBITDA minus capital
expenses incurred plus Lease Payments.
The Revolving Credit Facility also contains covenants that (a) impose
certain limitations on the right of the Company in respect of (i) the payment
of dividends and other distributions, (ii) the making of investments in,
guaranties for the benefit of or payments to subsidiaries, persons owning or
leasing hotels managed by the Company or otherwise, (iii) acquisitions of
additional hotel properties, (iv) the creation or incurrence of liens, (v) the
incurrence of indebtedness, lease obligations or contingent liabilities, (vi)
the issuance of preferred stock and (vii) sale leaseback transactions involving
any of its hotel properties, (b) require the Company to maintain a capital
reserve account of 3.5% of the gross revenues for each of the hotels owned or
leased by it (the GHALP Lease will require the Company to make deposits into a
capital reserve account in amounts equal to 5% of the gross revenues for each
of the GHALP Properties and the lease relating to the Wyndham Harbour Island
will require the Company to allocate amounts equal to 4% of the gross revenues
of the Wyndham Harbour Island for replacement and repair of furniture,
fixtures, equipment and other
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<PAGE> 67
improvements relating to such property), (c) require the Company to make
certain expenditures in connection with deferred maintenance and (d) require
the Company to undertake certain capital expenditures for the renovation of one
hotel property (the Wyndham Rose Hall Resort) and possibly other hotel
properties.
In connection with the Company's acquisition of the Vinings Wyndham
Garden Hotel, which was consummated in late May 1996, the Company assumed
industrial revenue bond indebtedness in the amount of $9.7 million with
interest payments to be based upon a rate of 7.625% per annum. Such industrial
bond indebtedness was in default and had been accelerated by the bondholders,
as the credit enhanced for such indebtedness was operating under court
supervised rehabilitation. As a condition to the Company's purchase of the
hotel, the trustee for the bondholders executed a forbearance agreement
pursuant to which it agrees not to exercise any remedies under the documents
relating to the indebtedness for a period of 15 months (which period will end
in August 1997). Notwithstanding the terms of the forbearance agreement, the
Company is required under the terms of the contract of sale to refinance the
industrial revenue bond indebtedness within nine months of the date of
acquisition of the hotel. The Company may need to obtain approval from the
Lenders under the Revolving Credit Facility in connection with such
refinancing. There can be no assurance as to the Company's ability or the terms
upon which it can refinance the industrial revenue bond indebtedness.
In connection with the Company's entering into the lease with respect
to the Wyndham Salt Lake City Hotel, the Company paid approximately $10.8
million in rental and related deposits. See "Business -- Long-Term Hotel
Leases." The Company borrowed these funds under the Revolving Credit Facility.
The Company has the following anticipated capital commitments.
Pursuant to the terms of an interim management agreement for a resort hotel
property, the Company has undertaken, subject to certain contingencies, certain
commitments to provide approximately $1.3 million (of which $________ was
funded in __________), approximately $750,000 of which shall be used for
preopening expenses and the purchase of furniture, fixtures and equipment and
the remainder of which shall be used to fund working capital for the hotel.
Finally, the Company is obligated pursuant to the terms of certain hotel
management agreements to fund loans for hotel acquisition and improvements in
the aggregate amount of $6.1 million.
The Company believes that cash generated by operations will be
sufficient to fund the Company's operating strategy for the foreseeable future,
and that any remaining cash generated by operations, together with capital
available under the Revolving Credit Facility and the remaining proceeds from
the Company's initial public equity and Notes offerings will be adequate to
fund the Company's growth strategy in the near term. The Company may seek an
increase in the capital available to it under the Revolving Credit Facility or
otherwise obtain additional debt or equity financing, depending upon the amount
of capital required to pursue future growth opportunities or address other
needs. No assurance can be given that the amount available under the Revolving
Credit Facility will be increased, or such additional financing will be
available, on acceptable terms, if at all.
SEASONALITY
The lodging industry is affected by normally recurring seasonal
patterns. Demand in the lodging industry is traditionally higher in the second
and third calendar quarters than in the first and fourth calendar quarters.
However, higher demand at most Wyndham Resorts during the first and fourth
quarters and the recognition of incentive fees in the fourth quarter offsets
the impact of reduced demand at other Wyndham brand hotels during these
quarters. See "Risk Factors -- Quarterly Fluctuations in Operating Results."
INFLATION
The effect of inflation, as measured by fluctuations in the Consumer
Price Index, has not had a material impact on the Company's revenues or net
income during the periods under review.
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BUSINESS
Wyndham Hotel Corporation is a national hotel company operating
upscale hotels primarily under the Wyndham brand name. Wyndham hotels are
located in 26 states, the District of Columbia, Ontario, Canada and on 5
Caribbean islands. Wyndham hotels compete with national hotel chains such as
Marriott, Hyatt and Hilton. The Company offers three distinct full service
hotel products under the Wyndham brand designed to serve its core upscale
customers in urban, suburban and select resort markets. At January 15, 1997,
the Company's hotel Portfolio consisted of 80 hotels operated by the Company
and 2 franchised hotels. The Company's Portfolio includes 76 upscale hotel
properties (which includes four properties under renovation) and 6
extended-stay hotel properties, which the Company began managing in September
1996.
OPERATING STRATEGY
The Company's goal is to continue the expansion of Wyndham Hotels,
Wyndham Garden Hotels and Wyndham Resorts in order to become one of the largest
brand hotel companies operating in North America while continuing to maintain
the quality of the Wyndham brand. In addition, the Company expects to increase
the number of management contracts for extended-stay hotel properties operated
under the Homegate Studios & Suites brand name. To achieve this goal, the
Company has developed an operating strategy designed to achieve high levels of
satisfaction and loyalty from both hotel guests and owners of managed hotels.
The Company believes that the successful implementation of this strategy will
facilitate the expansion of its Portfolio of owned, leased, managed and
franchised hotels. The principal elements of the Company's strategy are as
follows:
Capitalize on Strong Brand Image. Wyndham has focused on
developing a brand name that is nationally recognized as being
synonymous with quality, full service lodging in the upscale hotel
market. Because Wyndham has operating control over more than 98% of
the hotels operated under the Wyndham brand name, it is able to
consistently deliver quality hotel products and services throughout
its hotel system and support the marketing programs necessary to
maintain the quality associated with the Wyndham name. By developing
the Wyndham brand through upscale hotel products, the Company is able
to focus on earning the loyalty of its core upscale customers:
individual business travelers, business groups and other group
customers, and leisure travelers. According to written guest surveys
conducted by Wyndham at its hotels during 1995, 91% of Wyndham guests
surveyed rated the overall quality of Wyndham hotel products and
services good or excellent, and 94% of the guests surveyed indicated
that they would return to that Wyndham hotel on their next trip to the
same city. The Company believes that hotel owners and investors have
come to associate the Wyndham brand name with cost efficient
operations and the delivery of exceptional value to hotel properties.
The Company also believes that growing national recognition of the
Wyndham brand, together with the quality and efficiency of its hotel
operations, has facilitated the Company's historical growth and will
enhance its ability to realize its future growth objectives.
Multiple Upscale Hotel Products. Wyndham offers three
distinct full service hotel products under a single brand name that
are tailored to urban, suburban and select resort markets, the primary
markets that serve its core upscale customers.
o Wyndham Hotels. In urban markets, the Company operates or
franchises 22 Wyndham Hotels, which contain an average of
approximately 400 hotel rooms, generally between 15,000 and
250,000 square feet of meeting space, and a full range of
guest services and amenities. Wyndham Hotels are targeted
principally at business groups and other group customers, as
well as individual business travelers.
o Wyndham Garden Hotels. In suburban markets, Wyndham operates
40 Wyndham Garden Hotels, which were created by the Company
to cater to individual business travelers and small business
groups. (The Company operates four additional hotels under
brand names other than the Wyndham brand, which are scheduled
to become Wyndham Garden Hotels in the second quarter of 1997
following renovations that are currently underway. Two of
these hotels are scheduled to be converted
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by the first quarter of 1997, and two of these hotels are
scheduled to be converted by the second quarter of 1997) With
guest services, hotel finishings and landscaping comparable
to Wyndham Hotels, Wyndham Garden Hotels are designed to
provide a guest experience similar to that enjoyed at Wyndham
Hotels, but at a price that is competitive in suburban
markets. The Company locates Wyndham Garden Hotels primarily
near suburban business centers and airports and, where
possible, seeks to cluster these hotels in a "hub-and-spoke"
distribution pattern around one or more Wyndham Hotels in
order to achieve operating and marketing efficiencies and
enhance local name recognition. Wyndham Garden Hotels are
mid-size full service upscale hotels containing between
approximately 150 and 225 hotel rooms that offer a package of
services and amenities focused on the needs of the business
traveler, including generally between 1,500 and 5,000 square
feet of meeting space, restaurants that serve three meals a
day, exercise rooms, and laundry and room service.
o Wyndham Resorts. Wyndham's Portfolio also includes seven
Wyndham Resorts that are full service destination resorts
targeted at upscale leisure and incentive travelers and are
located both domestically and on five Caribbean islands.
Through Wyndham Resorts, the Company is able to offer guest
rewards and other cross-promotional benefits to its domestic
customers, thus improving Wyndham's competitiveness and brand
loyalty.
The Company believes that its strategy of offering multiple hotel
products under a single brand name enables it to achieve, through efficient
hotel distribution, strong penetration of the primary markets that serve its
core upscale customers. The Company also believes that this strategy enables it
to compete effectively for expansion opportunities covering a wide variety of
upscale hotel properties, thereby providing a competitive advantage over hotel
companies with fewer products. The Company expects to continue evaluating
opportunities for new hotel products that it may offer under the Wyndham brand.
See " -- Growth Strategy -- II. Additional Growth Opportunities -- New Lodging
Products."
Extended-Stay Hotel Product. The Company manages SIX extended stay
hotel properties, which following planned renovations, will be operated under
the Homegate Studios & Suites brand name. These hotels are located in Texas and
are targeted at business travelers, professionals on temporary work
assignments, persons between domestic situations and persons relocating or
purchasing a home, who often desire accommodations for an extended duration.
These midprice hotels contain approximately 125 rooms each and feature a fully
equipped kitchen, upscale residential- quality finishes and accessories, and
separation between cooking, living and sleeping areas.
Operating and Financial Performance. The Company seeks to maximize
revenues through its comprehensive marketing strategy and the delivery of high
quality accommodations and hotel services that result in satisfied, loyal hotel
guests. The Company believes that its experience as a hotel owner makes it a
better hotel manager by keeping it focused on controlling each element of
operating expenses, which is essential for achieving attractive returns for
both the Company's hotels and managed hotels. In addition, through yield
management of its room inventory, the Company seeks to maximize REVPAR during
periods of high occupancy by giving first priority for available rooms to
guests that will pay the full amount of the applicable room rate.
The Company has a proven track record of achieving strong operating
and financial results. During 1995, average occupancy rates, ADR and REVPAR for
upscale Portfolio hotels were 69%, $88.79 and $60.96, respectively, compared
with an average during this period of 69%, $80.38 and $55.06, respectively, in
the upscale segment of the lodging industry. During the 1996 First Nine Months,
average occupancy rates, ADR and REVPAR for upscale Portfolio hotels were 70%,
$92.24 and $64.93, respectively, compared with an average during this period of
70%, $85.74 and $60.33, respectively, in the upscale segment of the lodging
industry. During 1995 and the 1996 First Nine Months, respectively, REVPAR for
upscale Portfolio hotels outperformed the upscale segment of the lodging
industry by 11% and 8%, respectively.
The following table compares certain historical operating and
financial data of the Company's Comparable Hotels with the lodging industry.
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<TABLE>
<CAPTION>
UPSCALE
SEGMENT
OF THE
COMPARABLE LODGING
HOTELS(1) INDUSTRY(2)
--------- -----------
<S> <C> <C>
Occupancy percentage:(3)
1993 ..................................... 67% 67%
1994 ..................................... 70% 68%
1995 ..................................... 72% 69%
1996 First Nine Months ................... 73% 70%
ADR:(4)
1993 ..................................... $ 76.39 $ 74.19
1994 ..................................... 80.16 77.19
1995 ..................................... 84.38 80.38
1996 First Nine Months ................... 91.96 85.74
REVPAR:(5)
1993 ..................................... 51.31 49.71
1994 ..................................... 56.09 52.57
1995 ..................................... 60.99 55.06
1996 First Nine Months ................... 66.85 60.33
Gross operating profit margin:(6)
1993 ..................................... 32% 30%
1994 ..................................... 34% 31%
1995 ..................................... 36% 33%
1996 First Nine Months ................... 37% *
Food and beverage margin:(7)
1993 ..................................... 29% 17%
1994 ..................................... 31% 18%
1995 ..................................... 31% 21%
1996 First Nine Months ................... 28% *
Gross operating profit per available room:(8)
1993 ..................................... $ 9,612 $ 8,397
1994 ..................................... 11,417 9,364
1995 ..................................... 12,547 10,470
1996 First Nine Months ................... 10,306 *
</TABLE>
- -------------------
* 1996 First Nine Months lodging industry statistics are not available
for gross operating profit margin, food and beverage margin and gross
operating profit per available room.
(1) Comparable Hotels consists of the 30 Wyndham brand hotels that have
been operated by the Company since January 1, 1993.
(2) Occupancy percentage, ADR and REVPAR comparisons are to the upscale
segment of the lodging industry, which the Company believes is the
appropriate segment for comparing operating data based on the
competitive set for the Company's hotels, as measured by ADR. Gross
operating profit and margin comparisons are to the
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<PAGE> 71
upscale full service segment of the lodging industry, which consists
of upscale hotels with restaurants, because the Company believes that
the higher costs associated with restaurant operations provide the
most appropriate comparison of gross operating profits and margins.
(3) Occupancy percentage represents total rooms occupied divided by total
available rooms. Total available rooms represents the number of rooms
available for rent multiplied by the number of days in the reported
period.
(4) ADR represents total room revenues divided by the total number of
rooms occupied.
(5) REVPAR represents total room revenues divided by total available
rooms.
(6) Gross operating profit margin represents gross operating profit as a
percentage of total revenues. "Gross operating profit" represents
gross revenues less department expenses and undistributed operating
expenses. Gross operating profit margins are included herein because
management uses them as a measurement of hotel operating performance
and because management believes that these items are useful in making
industry comparisons.
(7) Food and beverage margin represents food and beverage operating profit
as a percentage of food and beverage revenues.
(8) Gross operating profit per available room represents gross operating
profit divided by total available rooms for the period.
The following table presents certain historical operating data for the
Company's 56 upscale hotels operated by the Company for each of the periods
presented:
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED PERCENTAGE
SEPTEMBER 30, 1995 SEPTEMBER 30, 1996 CHANGE
------------------ ------------------ ------
<S> <C> <C> <C>
Occupancy percentage(1)............................... 70.8% 72.3% 2.1%
ADR(2)................................................ $84.76 $91.83 8.3%
REVPAR(3)............................................. $60.04 $66.37 10.5%
</TABLE>
(1) Occupancy percentage represents total rooms occupied divided by total
available rooms. Total available rooms represents the number of rooms
available for rent multiplied by the number of days in the reported
period.
(2) ADR represents total room revenues divided by the total number of
rooms occupied.
(3) REVPAR represents total room revenues divided by total available
rooms.
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<PAGE> 72
Fully Integrated, Full Service Hospitality Company. The Company owns,
manages, leases and franchises hotels under the Wyndham brand name. In
addition, the Company is experienced in all aspects of hotel operations,
including purchasing, accounting and asset and risk management, as well as
hotel construction and design. The Company believes that operating as a fully
integrated, full service hospitality company enhances its performance by
enabling it to provide a full range of hotel services in an efficient,
cost-effective manner. In addition, the breadth of the Company's experience
enables it to compete effectively for multiple opportunities in the hospitality
industry. The Company also believes that the Wyndham brand name provides it
with a competitive advantage in its management business over companies without
their own brand because hotel owners might otherwise be required to pay a third
party franchise fee in addition to a management fee, which generally results in
a higher fee than Wyndham's overall fee structure.
Experienced, High Quality Management Personnel. The Company believes
that it has highly qualified, experienced executives in its senior management
positions. The Company's Senior Executive Officers have worked together to
successfully develop, operate and manage hotel properties in various phases of
the industry cycle. The Company was able to attract its executives and senior
management personal with a variety of strong incentives, including an equity
sharing program. The Company's Senior Executive Officers beneficially own an
aggregate of approximately 12.6% of the Company's Common Stock.
Based upon the Company's commitment to promoting managers from within
the system, Wyndham has developed a Managers in Development program that trains
over 150 participants each year. Over 70% of the Company's hotel general
managers have been promoted from another position within the Company. The
Company also provides formal training programs for managers and sales
personnel. The Company believes that by establishing uniform productivity
standards and skill requirements for its personnel, it is able to measure
employee performance effectively and reward high productivity. The Company also
believes that the quality and experience of its key executives and hotel
personnel are important components of its ability to consistently provide
strong financial results to its stockholders and third party hotel owners as
well as outstanding service to hotel guests.
"The Right Way -- The Wyndham Way." The Company's service signature,
"The Right Way -- The Wyndham Way," embodies its commitment to designing and
implementing the innovative practices and programs required to be a successful
hotel operating company. In addition to written guest surveys, Wyndham conducts
frequent personal interviews of its guests and employees. Wyndham responds to
their comments by shaping its products and services to meet or exceed the needs
and expectations of its guests, focusing specifically on the services and
amenities that drive the purchase decision or affect the Company's ability to
adjust room rates. For example, Wyndham has become well-known for its American
Airlines and Avis Rent-A-Car "Triple Upgrade" program and was the first upscale
hotel chain to provide free in-room coffee makers in every domestic Wyndham
brand hotel room. See " -- Customers and Marketing." The Company emphasizes
building the Wyndham brand image by delivering the highest quality guest
services, resulting in strong loyalty from its core upscale customers:
individual business travelers, business groups and other group customers, and
leisure travelers.
GROWTH STRATEGY
Since the beginning of 1990, the number of hotels in the Company's
Portfolio has increased from 25 hotels to 82 hotels. In addition to generating
internal growth through the improved performance of existing hotels, the
Company has developed a flexible external growth strategy designed to increase
the number of hotels in its Portfolio.
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<PAGE> 73
I. PRIMARY GROWTH OPPORTUNITIES
The near-term focus of the Company's growth strategy is as follows:
Growth from Existing Hotels. The Company expects improvements in the
financial performance of the existing hotels in its Portfolio to account for a
substantial portion of its financial growth in the near future. The Company
believes that the primary factors contributing to internal growth include (i)
revenue increases resulting from continuing improvements in the upscale segment
of the lodging industry and continuing maturation of 41 hotels added since the
beginning of 1995 (including 14 Wyndham Garden Hotels and four additional
hotels under renovation that will be converted to the Wyndham Garden brand),
and (ii) improved operating margins resulting from operating leverage and
Wyndham's continued emphasis on controlling operating expenses. For example,
the Company anticipates that management incentive fees, which escalate with
increased operating performance at the Company's managed hotels, will
contribute to internal growth. During the 1996 First Nine Months, the Company
earned incentive fees on 34% of its managed properties, and 19% of the
Company's management fee revenues were derived from incentive fees. The
Company's internal growth strategy has produced Comparable Hotel room revenue
increases of 9% in both 1994 and 1995 and has produced an increase in
Comparable Hotel gross operating profit margins from 32% in 1993 to 36% in
1995. These improvements have led to significant increases in gross operating
profit per available room of 19% and 10% in 1994 and 1995, respectively,
compare to the prior year period. Comparable Hotel gross operating profit
margins increased to 37% in the 1996 First Nine Months from 36% in the 1995
First Nine Months, and gross operating profit per available room increased by
9.9% in the 1996 First Nine Months over the 1995 First Nine Months. The Company
believes that its ability to achieve both internal and external growth will
help attract third party debt and equity capital to help fund the growth of the
Company's Portfolio.
Wyndham Garden Hotel Redevelopment and Conversion Program. The Company
believes that the continued growth of its Wyndham Garden Hotel product will
provide significant opportunities for increasing the number of Wyndham brand
hotels in its Portfolio. Since the beginning of 1990, the Company has added 34
Wyndham Garden Hotels to its Portfolio, 3 of which were developed through new
construction and 31 of which were existing hotels converted to the Wyndham
brand. In 1994, the Company accelerated the expansion of Wyndham Garden Hotels
through an investment program developed in conjunction with Bedrock and other
strategic partners. Together with certain lenders and an institutional
investor, Bedrock organized a development fund (the "Investment Program") for
projects approved by the Company and Bedrock for the purpose of acquiring
existing hotel properties for redevelopment and conversion to Wyndham Garden
Hotels and/or to make related hotel investments. Approximately $196 million of
debt and equity capital had been invested pursuant to the Investment Program as
of December 31, 1996. Although the commitments of certain of the participants
in the Investment Program expire in mid-1977, the Company will be entitled to
manage any Investment Program hotel for a term of 15 years. Bedrock is not
required to invest a minimum amount of capital through the Investment Program,
and Wyndham had not invested in any of the 17 Wyndham Garden Hotels acquired
pursuant to the Investment Program as of the date of this Prospectus. The
Company and Bedrock have agreed that the Company will be permitted to manage
any hotel containing 250 or fewer rooms that is sourced by Bedrock. See "Risk
Factors -- Conflicts of Interest" and "Certain Relationships and Transactions
- -- Bedrock Investment Program." Bedrock also has provided assistance with the
development, design and construction phase of the redevelopment process.
Because many acquired hotels require extensive redevelopment in
connection with their conversion to the Wyndham Garden Hotel brand, the Company
has instituted a program to redevelop these properties to a quality level
consistent with Wyndham's high standards (the "Redevelopment Program"). For
these hotels, the redevelopment process begins by identifying hotel properties
in prime suburban business centers and airport locations that can be
reconfigured to meet the operating model for Wyndham Garden Hotels. Once the
property is acquired, it is typically completely closed to permit extensive
exterior renovation (which often consists of a substantially renovated facade)
and total renovation of guest room, dining and common areas. Upon completion,
the hotel is reopened under the Wyndham Garden Hotel brand and competes in a
strong, visible location as if it were a newly constructed property. The
Company estimates that redeveloping Wyndham Garden Hotels currently costs about
75% of the cost of new construction and takes substantially less time (an
average of approximately nine months from the date of acquisition to the date
that the
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<PAGE> 74
hotel is reopened). The Company has the complete in-house design, development
and operating expertise necessary to manage the entire redevelopment process.
See "Risk Factors -- Risks Associated with Expansion" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
Wyndham intends to continue the Redevelopment Program with Bedrock and
other strategic partners, through direct investment by the Company, or some
combination thereof. The Company has executed a management contract for a
non-Bedrock hotel at La Guardia Airport in New York City, which is currently in
the renovation stage and is scheduled to reopen in the first quarter of 1997.
The Company also has executed two management contracts for non- Bedrock hotels
in Atlanta, Georgia. These hotels, which are open but under renovation, are
expected to be converted to Wyndham Garden Hotels in the second quarter of
1997. The Company has also acquired two hotels that are open but are in the
process of being converted to Wyndham Garden Hotels. One hotel is located in
Dallas, Texas and the other is located in Overland Park, Kansas. The Company
expects renovations to be completed on these hotels by the first quarter of
1997.
Addition of Upscale Management Contracts. The Company believes that a
significant source of potential future growth will be through the addition of
new management contracts for Wyndham Hotels, Wyndham Garden Hotels and Wyndham
Resorts at strategic locations. Since the beginning of 1990 through year-end
1995, the Company has added an average of ten new management contracts per
year, while the Company has lost an average of two management contracts per
year generally as a result of changes in ownership of managed hotels and
attrition resulting from scheduled termination of short-term non-Wyndham brand
management contracts. The Company believes that management contracts provide
stable growth opportunities through a variety of business environments because
of the relatively low capital requirements and short lead times necessary for
conversion to the Wyndham brand. Wyndham believes that it is able to compete
effectively for additional management contracts because of its strong
reputation in the upscale hotel industry, its track record of delivering strong
financial returns for hotel owners and investors and its willingness to
structure key terms of management contracts to satisfy hotel owner objectives.
In particular, the Company believes that its history of achieving strong
operating results for managed properties has led to a significant number of
owner referrals. In addition, by operating multiple upscale products, the
Company increases its opportunities to compete for new contracts. While the
Company anticipates that most new management contracts will be for Wyndham
brand hotels, the Company may enter into contracts to manage non-branded hotels
or to manage hotels under a different hotel brand. See " -- Additional Growth
Opportunities -- New Lodging Products."
Hotel Acquisitions and Joint Ventures. The Company anticipates that it
will be able to grow through the acquisition of hotels with attractive economic
prospects that are suitable for application of the Company's operating
strategy. In particular, the Company expects to focus on the selective
acquisition of Wyndham Hotels offering a full range of meeting and conference
capabilities that are located in new strategic markets or in existing urban
markets capable of supporting multiple Wyndham brand hotels. The Company also
will continue to assess the acquisition of other hotel chains that operate
hotel properties suitable to integrate into the Company's Portfolio as well as
the possible acquisition of resort hotels. The Company anticipates that it also
may make partial investments in hotel properties through joint ventures with
strategic business partners or through equity contributions or secured loans.
The Company may make such investments solely as an investor or in connection
with entering into a management contract. The Company also may issue equity
securities to finance future acquisitions in whole or in part. Notwithstanding
the foregoing, there can be no assurance that the Company will have adequate
capital resources to fund its growth. In addition, there can be no assurance
that the Company will be able to identify suitable acquisition or investment
opportunities or successfully integrate acquired properties. See "Risk Factors
- -- Risks Associated with Expansion" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
Addition of Extended-Stay Management Contracts. The Company believes
that it will be able to achieve additional growth by adding new management
contracts for Homegate Studios and Suites hotels. In August 1996, a subsidiary
of the Company entered into a master management assistance agreement (the
"Agreement") with Homegate, to provide hotel management, purchasing, marketing
and technical services for Homegate Studios and Suites extended-
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<PAGE> 75
stay hotels pursuant to and during the two-year term thereof. The Agreement
provides for the Company to manage up to sixty hotels pursuant to separate
10-year management contracts. See "-- Management Contracts" and "Certain
Transactions." The Company believes that the extended-stay program will provide
an opportunity to generate revenues by extending its management expertise and
operating programs into a new segment of the lodging industry without requiring
significant investment of the Company's capital. Homegate was founded by
affiliates of Crow Family Members, Trammell Crow Residential and Greystar,
which remain the principal stockholders.
II. ADDITIONAL GROWTH OPPORTUNITIES
Depending on market conditions in the lodging industry, the Company
also may pursue the following expansion opportunities:
Franchise Program. As of January 15, 1997, the Company franchised two
Wyndham brand hotels, and entered into a franchise agreement for a third hotel
that is currently being operated as a Best Western and is expected to be
converted to a Wyndham Hotel in February 1997. The Company plans to pursue
selective franchise opportunities with well-qualified owner/operators such as
American General Hospitality, Inc. and Starwood Lodging. The Company believes
that growth through selective franchise opportunities will add revenues through
royalties and increased brand awareness, without requiring significant capital
investment by the Company. The Company is in the process of developing a full
franchise program that it expects to have complete in advance of the next hotel
construction cycle in the upscale full service segment of the lodging industry.
The Company believes that this program will enable it to pursue franchise
opportunities on a broader scale, given appropriate market conditions.
In January 1997, the Company entered into an agreement with American
General Hospitality Corporation ("American General") relating to a strategic
alliance (the "Alliance") between the Company and American General. Pursuant to
the Alliance (i) the Company will have the non-exclusive right to franchise new
hotel acquisitions that American General has determined should undergo a brand
conversion; (ii) in connection with the conversion of hotels owned by American
General to the Wyndham brand, Wyndham will acquire American General common
stock or partnership units ("OP Units") in American General Hospitality
Operating Partnership L.P. (the "Alliance Securities"), in an amount equal to
nine times the estimated franchise fee payable to the Company during the first
twelve months such hotel is operated as a Wyndham brand; and (iii) American
General will be given the opportunity to bid on any hotels to be acquired by
the Company that it intends to sell to a REIT or any hotel with respect to
which it intends to enter into a sale or leaseback arrangement with a REIT
simultaneously with the hotel's purchase. The Company's purchase of the
Alliance Securities is subject to the satisfaction of certain conditions,
including the consent of the Company's lenders under the Revolving Credit
Facility, and will be at a price per share of common stock or OP Unit equal to
the average closing sale price of American General Common Stock on the NYSE for
the 30 trading days preceding the earlier of (i) the date on which the Company
consents to the conversion of an American General hotel to a Wyndham brand or
(ii) the date on which American General publicly announces its proposed
acquisition of the hotel that is ultimately converted to the Wyndham brand. Any
such purchase of Alliance Securities will occur within 30 days after an
American General hotel is converted to the Wyndham brand. No purchase of
Alliance Securities will occur in connection with the planned conversion of the
Albuquerque Airport Hotel. The Alliance will expire on December 31, 1999.
New Lodging Products. The Company intends to continue evaluating new
lodging products that it may offer under the Wyndham brand. These products may
include both new products within the full service upscale hotel segment, as
well as new products in other segments of the lodging industry. In particular,
the Company will seek to introduce new lodging products where, in the judgment
of management, the product can benefit from, and further enhance, the Wyndham
brand, as well as benefit from the Company's operating experience and business
strengths.
New Construction. Depending on market conditions, the Company will
continue to review opportunities to construct new Wyndham Hotels, Wyndham
Garden Hotels and possibly Wyndham Resorts in those strategic markets where
acquisition and conversion of existing properties at a substantial discount to
replacement cost is not possible.
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Currently, however, construction costs for new hotels in most markets remain
substantially higher than the costs of acquiring and converting existing
hotels.
III. ABILITY TO EXECUTE GROWTH STRATEGY
The Company believes that it has the in-house capabilities and
strategic business relationships with which to implement each aspect of its
growth strategy. These capabilities and relationships include the following:
In-House Development Expertise. The Company has a full in-house
development staff dedicated to identifying, evaluating and pursuing growth
opportunities. The development staff generally works in teams consisting of a
vice president of development, a development manager and an analyst. The
Company's in-house capabilities enable it to make an in-depth assessment of a
potential management, acquisition or other opportunity, including an analysis
of the surrounding market, the potential for increasing hotel performance and
value through the implementation of the Company's operating strategy, the
condition of the hotel property and the estimated renovation costs of achieving
Wyndham's standards for a fresh appearance and updated accommodations. The
Company's development staff also underwrites redevelopment and new construction
projects by analyzing estimated project costs and preparing market studies and
long-term projections of revenues and profitability. Each opportunity is also
assessed in terms of the contribution that the potential hotel will make to the
Wyndham brand identity.
The Company also maintains a highly qualified in-house construction
and design department, which enables it to manage all phases of redevelopment
and new construction projects. In 1994 and 1995, the Company managed more than
$135 million in redevelopment, remodeling and new construction projects. The
Company believes that its in-house capabilities provide a competitive advantage
by providing a strong network for identifying potential growth opportunities
and maintaining tight control over hotel quality standards.
Relationships with Hotel Investors. Wyndham believes that its strong
business relationships with various strategic partners will continue to
facilitate growth by providing hotel acquisition, renovation and development
opportunities as well as potential new management contract and franchise
opportunities. Currently, Crow Family Members, who own an aggregate of
approximately 47.3% of the Company's outstanding Common Stock, have interests
in 16 Wyndham brand hotels that are managed by the Company. Seventeen
additional Wyndham brand hotels that are managed by the Company are owned by
Bedrock, which owns approximately 11.4% of the Company's Common Stock. See
"Principal Stockholders." In addition, the Company's six extended-stay hotel
management contracts relate to hotels owned by Homegate, of which affiliates of
Crow Family Members, Trammell Crow Residential, one of the country's largest
apartment builders, and Greystar, a private investment company with substantial
multi-family housing development and construction expertise, were founders and
remain principal stockholders. Messrs. Carreker and Harlan R. Crow also serve
on the board of directors of Homegate. See "Certain Relationships and
Transactions."
In July 1996, certain Crow Family Members sold two Wyndham brand
hotels to Patriot American Hospitality, Inc., a publicly traded REIT ("Patriot
American"). These hotels were leased back to a new partnership controlled by
the Crow Family Members pursuant to a lease having a term of ten years, with
two extensions of five years each. The Company has continued to manage these
hotels on economic terms substantially identical to the terms upon which they
had been managed. Pursuant to the letter of intent relating to the sale of the
two hotels, the Company and Patriot American contemplate a future arrangement
whereby proposed additions to the Company's Portfolio of Wyndham brand hotels
will be presented to Patriot American on a preferred basis. There can be no
assurance that the transactions or arrangements contemplated by the letter of
intent will be consummated or otherwise definitively determined.
In addition to providing potential growth opportunities, the Company
believes that its successful track record with these and other hotel owners and
investors provides stability to the Company's management contracts with hotels
owned by such entities. The Company also believes that its relationship with
the Trammell Crow Company, one of the largest national real estate companies,
will continue to facilitate the Company's ability to identify and evaluate
potential acquisition, renovation and development opportunities.
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Sales of Mature Hotels; Long-Term Leases. The Company has developed
business relationships with certain publicly traded REITS. Generally, a REIT
cannot operate hotels because 75% of the gross income of a REIT must be derived
from certain defined categories of qualifying income derived directly or
indirectly from investments relating to real property or mortgages on real
property. Certain REITs, however, have purchased hotel properties that they
lease to a hotel management company because the income stream from leases is
generally regarded as qualifying income.
Prior to the Company's initial public offering, Garden Hotel
Associates L.P. ("GHALP") owned 11 Wyndham Garden Hotels managed by the Company
(the "GHALP Properties"). A 30% interest in GHALP was held by a partnership
owned by certain Crow Family Members and the Senior Executive Officers, and the
remaining 70% was held by an unaffiliated third party. In May 1996, Crow Family
Members and the Senior Executive Officers acquired the remaining 70% ownership
interest from the third party. The purchase price was funded from the proceeds
of the sale of the GHALP Properties to Hospitality Properties Trust ("HPT"), a
publicly traded REIT. HPT leased the GHALP Properties back to another entity,
the ownership of which mirrored the ownership of GHALP. As part of the
formation of the Company, the Company succeeded to such entity's leasehold
interest in the GHALP Properties. The Company continues to manage the hotels.
The Company anticipates that in the future, it may enter into similar
transactions whereby it would sell mature hotel properties to REITs, lease the
hotels back and manage them as Wyndham brand hotels. The Company believes that
this strategy permits it to participate in the initial growth phase of the
hotel properties that it acquires, while eventually freeing the Company's
balance sheet of real property upon disposition of the related hotels. Pursuant
to a long-term lease arrangement, the Company can retain long-term operating
control over the property and continue to benefit from any increases in the
operating performance of the hotel. The Company anticipates that it also may
enter into long-term leases with REITs with respect to hotel properties that
such REITs may acquire from unaffiliated third parties.
THE COMPANY'S HOTELS
General
Over 95% of the Company's upscale hotels are operated under the
Wyndham brand name, which is synonymous with high quality lodging facilities
and excellent service. The Wyndham name represents the high standards of the
Company's hotels, which present a casually elegant decor and emphasize fresh,
updated accommodations. Wyndham places great emphasis on maintaining hotel
properties in first-rate condition and providing consistently high quality
guest services at all of its hotels, and has designed numerous programs to
ensure that Wyndham guests receive the highest quality lodging experience
possible.
Amenities common to almost all Wyndham brand hotels include
restaurants, exercise rooms, swimming pools and cable television channels.
Services common to all Wyndham brand hotels include room service, laundry and
valet service and safe deposit boxes. Wyndham believes that by focusing
attention on guest room details it creates an attractive room package that is
appreciated by its upscale guests, particularly business travelers. Therefore,
all domestic Wyndham brand hotels provide in-room coffee makers with
complimentary coffee, comfortable and efficient workspace, generous guest room
lighting, a shower massager and a "Toiletries You Forgot" program, which
provides frequently forgotten travel items, such as toothpaste, deodorant and
razors, at no cost. During 1995, Wyndham Hotels, Wyndham Garden Hotels and
Wyndham Resorts generated 50.2%, 34.5% and 15.3%, respectively, of room
revenues from Wyndham brand hotels.
Wyndham Hotels
Wyndham Hotels are typically large, architecturally distinctive
properties located primarily in major urban locations. These hotels are
targeted principally at upscale business groups and other group customers, as
well as upscale business travelers. Total guest room revenues for Wyndham
Hotels in 1995 by customer mix consisted of 54.6% group meetings, 32.6%
individual business travelers and 12.8% leisure travelers.
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The Company operates or franchises 22 Wyndham Hotels containing an
aggregate of 8,562 guest rooms. Wyndham Hotels contain an average of
approximately 400 hotel rooms and generally between 15,000 and 250,000 square
feet of meeting space. The considerable meeting and catering capabilities of
Wyndham Hotels attract major corporate groups and numerous national, regional
and local associations for business conventions, sales meetings, conferences,
banquets, receptions, training sessions and private celebrations. Meeting
services offered at most Wyndham Hotels include comprehensive business centers
with private offices, a library, state-of-the-art audiovisual equipment and
secretarial and telecopy services.
Mid-week room rates at Wyndham Hotels range from $99 to $225 per
night, depending on location and season. Guests at these hotels are offered a
variety of services and amenities, including room and concierge service, same
day laundry and dry cleaning, valet parking, individual room climate control,
voice-mail, in-room minibars and often a spa and choice of restaurants. Four
hotels offer elegant four-star dining, and the restaurants at the remaining
Wyndham Hotels feature similar menus containing high quality food selections at
affordable prices that are updated frequently to maintain freshness and to
reflect the identity of the hotel and the surrounding region. The Company has
invested significant time, talent and capital in its hotel restaurants, and
believes that the quality of its restaurants makes a substantial contribution
to its hotel guests' total lodging experience.
Wyndham Garden Hotels
The Company created and designed Wyndham Garden Hotels to cater
primarily to upscale individual business travelers and small business groups in
suburban markets. Wyndham Garden Hotels are mid-size, full service hotels
located primarily near suburban business centers and airports. The Company
generally seeks to cluster Wyndham Garden Hotels in a "hub-and-spoke"
distribution pattern around one or more Wyndham Hotels in order to achieve
operating and marketing efficiencies and enhance local name recognition.
Through market studies, the Company has determined that its target business
customer generally selects a hotel within an approximate five mile radius of
his or her business destination. Therefore, the Company selects individual
Wyndham Garden Hotel sites based on its evaluation of the local business market
surrounding a potential hotel location.
Through its Wyndham Garden Hotels, the Company strives to provide
upscale individual business travelers and small business groups with a first
class guest experience in a suburban setting. The Company believes that the
business travelers who stay at Wyndham Garden Hotels are similar to the
business travelers at Wyndham Hotels and that their business destination is the
primary factor that draws them to a Wyndham Garden Hotel. Accordingly, with
guest services, hotel finishings and landscaping comparable to Wyndham Hotels,
Wyndham Garden Hotels are designed to provide a guest experience similar to
that enjoyed at Wyndham Hotels, but at a price that is competitive in suburban
markets. Mid-week room rates range between $79 and $129 at Wyndham Garden
Hotels, depending on location. Total guest room revenues for Wyndham Garden
Hotels in 1995 by customer mix consisted of 64.6% individual business
travelers, 19.2% small group meetings and 16.2% leisure travelers.
The Company operates 40 Wyndham Garden Hotels containing an aggregate
of 7,296 guest rooms. (The Company operates four additional hotels under brand
names other than the Wyndham brand, which are scheduled to become Wyndham
Garden Hotels following renovations that are currently underway. Two of these
hotels are scheduled to be converted by the first quarter of 1997, and two are
scheduled to be converted by the second half of 1996.) Each Wyndham Garden
Hotel contains between approximately 150 and 225 rooms and generally between
1,500 to 5,000 square feet of meeting space. The amenities and services
provided in Wyndham Garden Hotels are designed to meet the needs of the upscale
business traveler. Amenities and services in each room include desks large
enough to accommodate personal computers, longer phone cords, high wattage
light bulbs for reading, room service and access to 24-hour telecopy and
mail/package service. The meeting facilities at Wyndham Garden Hotels generally
can accommodate groups of between 10 and 200 people and include a flexible
meeting room design, exterior views, additional phone lines and audiovisual
equipment. Wyndham Garden Hotels also feature a lobby lounge, most of which are
appointed with a fireplace, a library typically overlooking a beautifully
landscaped garden, and a swimming pool. In addition, many Wyndham Garden Hotels
contain a whirlpool and an exercise facility.
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Dining services at Wyndham Garden Hotels are an important feature.
Unlike many mid-priced hotels, each Wyndham Garden Hotel contains a cafe
restaurant that serves a full breakfast, lunch and dinner daily. Wyndham has
designed a uniform food program that features delicious, healthful meals with
minimum delay. By implementing the same menus, preparation process and
purchasing program throughout the Wyndham Garden Hotel system, the Company has
achieved significant operating efficiencies. The Company believes that the
breadth and quality of the dining services offered at Wyndham Garden Hotels
distinguish these hotels from other hotel chains that target the upscale
individual business traveler in suburban markets.
Wyndham Resorts
Wyndham Resorts are full service destination resorts that are located
both domestically and on five Caribbean islands. Wyndham Resorts are targeted
at upscale leisure travelers and incentive travelers. Total guest room revenue
for Wyndham Resorts in 1995 by customer mix consisted of 73.0% individual
leisure travelers and 22.0% group travelers and 5.0% individual business
travelers.
The Company operates or franchises seven resort hotels containing an
aggregate of 2,263 guest rooms. Each Wyndham Resort contains between
approximately 200 and 500 hotel rooms and, with the exception of the Wyndham
Morgan Bay Resort, generally between 6,000 and 20,000 square feet of meeting
space. Room rates at Wyndham Resorts range between $135 and $210, depending on
location and season.
Wyndham Resorts are designed to provide a memorable guest experience.
They feature spacious, luxurious guest rooms that are air conditioned and
typically contain private balconies. Most resorts have swimming pools, health
and fitness centers and tennis courts. In addition, two resorts offer golf and
two resorts contain casinos. Guest amenities include room service, concierge
and valet service and tour information. Guests can choose from a variety of
restaurants and menus, and most resorts provide a variety of live nightly
entertainment. In addition, Wyndham Resorts offer or arrange a full range of
activities, including sailing, snorkeling, windsurfing, waterskiing,
parasailing, horseback riding, scuba diving, deep-sea fishing and cruises.
Wyndham Resorts seek to capitalize on national recognition of the
Wyndham brand name. Through its resort division, the Company is able to offer
guest rewards and other cross-promotional benefits to its domestic customers,
thus improving Wyndham's competitiveness and brand loyalty. The Company's
national sales team targets Wyndham customers as well as travel agents and
meeting planners for leisure and group sales in an effort to take advantage of
their familiarity with the Wyndham hotel system.
Management Service Hotels
The Company provides hotel management services pursuant to management
contracts relating to three hotels that are owned by third parties and operated
under unaffiliated hotel brands. Each of these hotels is an upscale hotel
offering services and amenities consistent with Wyndham's quality standards.
The Company entered into these management contracts in order to take advantage
of opportunities to develop relationships with third party hotel owners, as
well as to generate revenues in circumstances that would not permit conversion
of the hotels to the Wyndham brand. See " -- Growth Strategy -- I. Primary
Growth Opportunities."
Homegate Studios and Suites
The Homegate Studios & Suites prototype has been designed and
developed to offer consistent, high quality accommodations in a standard
format, providing much of the value offered by limited service hotels with many
of the added features and comforts of apartment living. Homegate Studios &
Suites hotels will offer three functional room configurations, studio, deluxe
and one bedroom. Each room will feature a fully equipped kitchen, upscale
residential- quality finishes and accessories, and separation between the
cooking, living, and sleeping areas, and other amenities, such as weekly maid
service, twice-weekly linen service, resident laundry facilities, direct
telephone service with voice mail messaging and dataport capabilities, cable
TV, a business center and an exercise facility.
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The Company currently manages six extended-stay hotels containing an
aggregate of 751 rooms. Following planned renovations, these hotels are
expected to be converted to the Homegate Studios and Suites brand in the first
quarter of 1997. These properties contain approximately 125 rooms each and will
compete in the midprice segment of the extended-stay industry. In general, it
is expected that average weekly room rates will range between $280 and $350,
but room rates at specific hotels may vary significantly depending on local
market factors.
Hotels Closed for Renovation or Under Construction
The Company has entered into management contracts to operate three
hotels that are scheduled to open in 1997. In addition, the Company has entered
into a franchise agreement for a fourth hotel. The franchised hotel is located
at the Albuquerque International Airport in Albuquerque, New Mexico. The hotel
contains 266 rooms and approximately 8,000 square feet of meeting space. The
hotel is currently being operated as a Best Western, and the Company expects
that it will be converted to the Wyndham brand in February of 1997.
The first managed hotel will be located at La Guardia Airport in New
York City and will contain 225 hotel rooms and approximately 4,000 square feet
of meeting space. This hotel is under renovation, and the Company anticipates
that it will open in the first quarter of 1997.
The Company currently is subject to a temporary restraining order that
prevents it from operating Wyndham brand hotels or advertising the Wyndham name
in connection with the operation of any hotel within a 50 mile radius (within
the State of New York) of the "Mados Wyndham Hotel" (as defined below under "
- -- Legal Proceedings") pending resolution of a lawsuit concerning the Company's
use of the Wyndham name within such area. (See " -- Legal Proceedings.") An
adverse decision in such lawsuit or a delay in the resolution of the litigation
beyond the anticipated opening date of the La Guardia hotel would require the
Company to open such hotel under a brand name other than Wyndham or Wyndham
Garden.
The second managed hotel, the Wyndham International Trade Center,
which is currently under construction, will be a Wyndham Garden Hotel located
in Mt. Olive, New Jersey that will contain 141 hotel rooms and approximately
3,700 square feet of meeting space. The Company anticipates that this hotel
will be open by the second quarter of 1997. The third managed hotel, Wyndham
Old San Juan Hotel & Casino (the "San Juan Hotel"), which is currently under
construction, will be a Wyndham Resort located in San Juan, Puerto Rico that
will contain 242 hotel rooms and approximately 6,200 feet of meeting space. The
Company anticipates that this hotel will open by the second quarter of 1997.
Pursuant to the terms of the management contract, the Company made certain
commitments to provide furniture, fixtures and equipment for the San Juan Hotel
at a fixed price of $6.0 million. There can be no assurance, however, that
these hotels will be completed as scheduled.
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SUMMARY OF HOTELS
The following table sets forth, as of January 15, 1997, certain
information with respect to the Company's hotels.
<TABLE>
<CAPTION>
OWNED, LEASED,
MANAGED OR NUMBER OF
HOTELS HOTEL LOCATION FRANCHISED(1) ROOMS
------ -------------- ------------- -----
<S> <C> <C> <C>
WYNDHAM HOTELS
Wyndham Anatole Dallas, TX Managed 1,620
Wyndham Bel Age West Hollywood, CA Managed 199
Wyndham Bristol Washington, DC Managed 239
Wyndham Bristol Place Hotel Toronto, Canada Owned 287
Wyndham Checkers Hotel Los Angeles, CA Managed 188
Wyndham Dublin Hotel Columbus, OH Managed(2) 217
Wyndham Emerald Plaza San Diego, CA Managed 436
Wyndham Five Seasons Cedar Rapids, IA Managed 283
Wyndham Fort Lauderdale Airport Fort Lauderdale, FL Franchised 250
Wyndham Franklin Plaza Philadelphia, PA Managed 758
Wyndham Greenspoint Houston, TX Managed 472
Wyndham Harbour Island Tampa, FL Leased(3) 300
Wyndham Kingston Kingston, Jamaica Managed 303
Wyndham Hotel at Los Angeles
International Airport Los Angeles, CA Managed 591
Wyndham Hotel at Metrocenter Phoenix, AZ Managed 284
Wyndham Milwaukee Center Milwaukee, WI Managed 221
Wyndham Northwest Chicago Itasca, IL Managed 408
Wyndham Palm Springs Palm Springs, CA Managed 410
Wyndham Playhouse Square Cleveland, OH Managed 205
Wyndham Riverfront New Orleans, LA Managed 202
Wyndham Salt Lake City Salt Lake City, Utah Leased 381
Wyndham Warwick Houston, TX Managed 308
-----
TOTAL WYNDHAM HOTELS 22
TOTAL WYNDHAM HOTEL ROOMS 8,562
=====
WYNDHAM GARDEN HOTELS
Albuquerque Albuquerque, NM Managed 150
Annapolis Annapolis, MD Managed 197
Atlanta Gwinnet(4) Atlanta, GA Managed 131
Atlanta North Lake(4) Atlanta, GA Managed 131
Atlanta Perimeter Center Atlanta, GA Leased 143
Bloomington Minneapolis, MN Leased 209
Bothell Seattle, WA Leased 166
Brookfield Lakes Milwaukee, WI Owned 178
Buckhead Atlanta, GA Managed 221
Burlington Burlington, MA Managed 180
Chandler Phoenix, AZ Leased 159
</TABLE>
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<PAGE> 82
<TABLE>
<CAPTION>
OWNED, LEASED,
MANAGED OR NUMBER OF
HOTELS HOTEL LOCATION FRANCHISED(1) ROOMS
------ -------------- ------------- -----
<S> <C> <C> <C>
Charlotte Charlotte, NC Owned 173
Commerce Los Angeles, CA Owned(3) 201
Culver City Culver City, CA Managed 199
Dallas Market Center(4) Dallas, TX Owned 230
Denver Denver, CO Managed 240
Detroit Metro Romulus, MI Managed 153
Indianapolis Indianapolis, IN Owned 171
Kansas City Plaza Kansas City, MO Managed 241
Lake Buena Vista Orlando, FL Managed 167
Las Colinas Dallas, TX Managed 168
Lexington Lexington, KY Managed 177
Marin/San Rafael Marin County, CA Managed 235
Midtown Atlanta Atlanta, GA Managed 191
Monrovia Monrovia, CA Managed 148
Naperville Chicago, IL Leased 143
Nashville Airport Nashville, TN Leased 180
North Phoenix Phoenix, AZ Leased 166
North San Diego San Diego, CA Leased 180
Novi Detroit, MI Managed 148
Oakbrook Oakbrook Terrace, IL Managed 222
O'Hare Chicago, IL Managed 225
Orange County Airport Costa Mesa, CA Managed 238
Overland Park(4) Overland Park, KS Owned 181
Phoenix Airport Phoenix, AZ Leased 210
Piscataway/Somerset Piscataway, NJ Managed 165
Pittsburgh Pittsburgh, PA Managed 140
Pleasanton Pleasanton, CA Managed 171
Schaumburg Schaumburg, IL Owned 188
Seattle-Tacoma Airport Seattle, WA Leased(3) 204
Sunnyvale San Jose, CA Leased 180
Vinings Atlanta, GA Owned 159
Waltham Waltham, MA Managed 148
Wood Dale Chicago, IL Managed 162
-----
TOTAL WYNDHAM GARDEN HOTELS 44
TOTAL WYNDHAM GARDEN HOTEL ROOMS 7,969
=====
</TABLE>
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<PAGE> 83
<TABLE>
<CAPTION>
OWNED, LEASED,
MANAGED OR NUMBER OF
HOTELS HOTEL LOCATION FRANCHISED(1) ROOMS
------ -------------- ------------- -----
<S> <C> <C> <C>
WYNDHAM RESORTS
Inn at Semi-Ah-Moo--A Wyndham
Resort Blaine, WA Managed 198
The Village at Breckenridge--A
Wyndham Resort Breckenridge, CO Franchised 235(5)
Wyndham Aruba Beach Resort &
Casino Palm Beach, Aruba Managed 444
Wyndham Morgan Bay Resort Choc Bay, St. Lucia Managed 238
Wyndham Palmas del Mar Humacao, Puerto Rico Managed 359
Wyndham Rose Hall Resort Montego Bay, Jamaica Owned(3) 489
Wyndham Sugar Bay Resort St. Thomas, U.S.V.I. Managed 300
------
TOTAL WYNDHAM RESORTS 7
TOTAL WYNDHAM RESORT HOTEL ROOMS 2,263
======
MANAGEMENT SERVICE HOTELS
Dedham Hilton Dedham, MA Managed 247
Pruneyard Inn Campbell, CA Managed 117
Confidential Confidential Managed 692
------
TOTAL MANAGEMENT SERVICE HOTELS 3
TOTAL MANAGEMENT SERVICE HOTEL ROOMS 1,056
======
EXTENDED-STAY HOTELS(6)
Westar Suites - Amarillo Amarillo, TX Managed 124
Westar Suites - El Paso El Paso, TX Managed 124
Westar Suites - Fiesta Park San Antonio, TX Managed 124
Studio Suites - Grand Prairie Grand Prairie, TX Managed 139
Westar Suites - Irving Irving, TX Managed 124
Westar Suites - San Antonio Airport San Antonio, TX Managed 116
------
TOTAL EXTENDED-STAY HOTELS 6
TOTAL EXTENDED-STAY HOTEL ROOMS 751
------
TOTAL PORTFOLIO 82
TOTAL PORTFOLIO HOTEL ROOMS 20,601
======
HOTELS CLOSED FOR RENOVATION OR UNDER
CONSTRUCTION(7)
Wyndham Albuquerque Airport Albuquerque, N.M. Franchised 266
La Guardia Airport New York, NY Managed 225
Wyndham International Trade Center Mt. Olive, New Jersey Managed 141
Wyndham San Juan (Wyndham Resort) San Juan, Puerto Rico Managed 242
------
TOTAL HOTELS UNDER RENOVATION OR 4
CONSTRUCTION
TOTAL HOTEL ROOMS UNDER RENOVATION OR
CONSTRUCTION 874
------
TOTAL HOTELS 86
TOTAL HOTEL ROOMS 21,475
======
</TABLE>
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<PAGE> 84
(1) Ownership Interest Key:
Owned = Wholly owned (100%) and managed by the Company.
Leased = Long-term lease with unaffiliated third party and
managed by the Company. See " -- Long-Term Hotel
Leases."
Managed = Operated under management contracts. See " --
Management Contracts."
Franchised = Franchised to a third party. See " -- Franchising
Program."
(2) The Company owns a partial interest in this hotel.
(3) The Company's interests in these hotel properties (and in the case of
the Wyndham Rose Hall Resort, the golf course adjacent to the hotel
property) are subject to ground leases which, including renewal
options, expire between 2018 and 2077.
(4) These hotels are currently being managed by the Company under a brand
other than the Wyndham brand name. Following renovations that are
currently underway, these hotels will be converted to Wyndham Garden
Hotels. The Atlanta Gwinnet and Atlanta North Lake hotels are
scheduled to be converted by the second quarter of 1997. The Dallas
Market Center and Overland Park hotels are scheduled to be converted
by the first quarter of 1997.
(5) The actual room inventory at The Village at Breckenridge fluctuates
because approximately 70 rooms at such hotel are owned privately, and
the availability of such rooms to the general public depends upon the
election of the private owners thereof as to the use of such rooms.
(6) The Company expects that five of these hotels will be converted to the
Homegate Studios and Suites brand in the first quarter of 1997.
(7) The Albuquerque Airport hotel is currently being operated as a Best
Western hotel and is scheduled to convert to the Wyndham brand in
February 1997. The anticipated dates of operation for the La Guardia,
International Trade Center and San Juan hotels are first, second and
third quarter 1997, respectively.
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<PAGE> 85
The following table presents certain comparative information with
respect to the Company's hotels:
<TABLE>
<CAPTION>
WYNDHAM MANAGEMENT EXTENDED-
WYNDHAM GARDEN WYNDHAM SERVICE STAY TOTAL
HOTELS HOTELS(1) RESORTS HOTELS HOTELS HOTELS
--------- --------- --------- --------- --------- ---------
<C> <C> <C> <C> <C> <C>
Total number of properties(2) 22 44 7 3 6 82
Total number of rooms(2) 8,562 7,969 2,263 1,056 751 20,601
Average number of rooms per
hotel(2) 390 181 323 352 127 251
Percentage of hotels to 27% 54% 8% 4% 7% 100%
total(2)
Percentage of rooms to 41% 39% 11% 5% 4% 100%
total(2)
1995 Occupancy 68% 70% 65% 73% * 69%
percentage(4)
1995 ADR(4) $ 94.58 $ 73.67 $ 122.75 $ 85.24 * $ 88.79
1995 REVPAR(5) $ 64.01 $ 52.75 $ 79.76 $ 62.45 * $ 60.96
</TABLE>
- ---------------------
* Operating data are not available for these hotels for 1995.
The Company began operating these hotels in September 1996.
(1) Number of properties and rooms include four hotels that are currently
being managed by the Company under a brand other than the Wyndham
brand name. Following renovations that are currently underway, these
hotels will be converted to Wyndham Garden Hotels. Two of these hotels
are scheduled to be converted by the first quarter of 1997, and two
are scheduled to be converted by the second quarter of 1997. Operating
data include one hotel (Wyndham Garden Hotel - Denver) that was
managed by the Company as a Ramada Inn while being converted to the
Wyndham Garden Hotel brand.
(2) As of January 15, 1997.
(3) Occupancy percentage represents total rooms occupied divided by total
available rooms. Total available rooms represents the number of rooms
available for rent multiplied by the number of days in the reported
period.
(4) ADR represents total room revenues divided by the total number of
rooms occupied.
(5) REVPAR represents total room revenues divided by total available
rooms.
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<PAGE> 86
CUSTOMERS AND MARKETING
The Company's target core customers are upscale business travelers and
business groups, as well as upscale leisure travelers. Total guest room revenue
for Wyndham brand hotels in 1995 by customer mix consisted of 39.5% individual
business travelers, 36.9% group customers, 11.6% resort leisure travelers and
12.0% leisure travelers. To increase revenues at its hotels, the Company has
developed a "push-pull" sales and marketing program as well as various other
promotional, guest service and advertising programs. The key components of
these programs are as follows:
Direct Local Sales Efforts
Wyndham started in 1982 as a hotel management company for a small
group of hotels without a recognized brand name and a very limited marketing
budget. Consequently, Wyndham developed a "backyard" marketing program designed
to "pull" revenues into these hotels from surrounding businesses. Wyndham has
continued to develop and refine its direct local marketing programs and
currently employs a direct sales force of almost 500 highly trained
representatives who generally are assigned to individual hotels and who focus
their sales efforts primarily on the local businesses and organizations
surrounding each hotel. The Company motivates its sales force with an
aggressive incentive based compensation structure that ties compensation to
hotel performance at all levels of the hotel sales and management structure.
In 1995, the Company's direct sales program accounted for over 60% of
room revenues at Wyndham brand hotels. The direct sales efforts at Wyndham
Hotels focus primarily on group business. The direct sales efforts at Wyndham
Garden Hotels focus primarily on the market within a three-to-five mile radius
of the hotel because the Company has determined through market research that
most of its guests do business within this area. The Company's local sales
programs include direct solicitation of local businesses, special programs,
such as its Wyn Club program, which provides certain incentives for repeat
bookings at Wyndham brand hotels, participation in local and regional trade
shows, and local promotional and advertising campaigns.
National Sales Efforts
The Company's national sales program, which is split into a national
group sales force and a national negotiated rate team, is designed to "push"
revenues into Wyndham Hotels on a chain-wide basis. The national group sales
force consists of 23 national account managers assigned to six national sales
offices located in New York City, Washington, D.C., Chicago, Los Angeles, San
Jose and Phoenix. The purpose of this sales force is to develop national group
and association business primarily for Wyndham Hotels and Wyndham Resorts. The
national sales team consists of five national account managers and focuses on
identifying, obtaining and maintaining major corporate accounts whose employees
do business across the nation. The Company has developed its corporate
clientele by offering special rate programs applicable to all Wyndham brand
hotels. The Company currently has national rate programs with approximately 400
different companies as well as the nation's top 20 travel agencies.
Wyndham Service Programs
Wyndham's service signature, "The Right Way -- The Wyndham Way,"
characterizes Wyndham's entire approach to doing business and embodies
Wyndham's commitment to designing and implementing the innovative practices and
programs required to be a successful hotel operating company. The Right Way --
The Wyndham Way also embodies the Company's focus on understanding and
providing the guest services and amenities that are most important to its core
customers. Wyndham conducts frequent guest surveys and personal interviews in
an effort to identify the services and amenities valued by upscale business
travelers and responds with various programs designed to meet or exceed such
travelers' expectations. For example, Wyndham has established a unique training
program for its hotel personnel, entitled "ACE" (Attentive, Courteous,
Efficient), which stresses the importance of a great service attitude at its
hotels. Wyndham recognizes that beyond training its personnel to provide the
standard services required by its discerning guests, it is necessary to cater
to special guest needs, and, accordingly, Wyndham provides its employees with
the authority to address guest complaints and requests on the spot.
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<PAGE> 87
Through its business traveler research, Wyndham also seeks to identify
those guest room amenities that most affect the purchase decision of its
customers. For example, in response to frequent business traveler surveys,
Wyndham was the first upscale hotel chain to provide a coffee maker and
complimentary coffee or tea in every domestic Wyndham brand hotel room. Wyndham
also has added larger desks, extra long phone cords, high wattage light bulbs
for reading, real hook hangers, comfortable pillows and a shower massager as
standard features of each room. To accommodate the desire of its business
customers to be able to obtain quickly a healthful breakfast or lunch, Wyndham
implemented a breakfast bar and a luncheon pasta bar at all Wyndham Garden
Hotels and most Wyndham Hotels, which is designed to provide delicious meals
efficiently at a value price. Wyndham also has implemented similar guest room
amenities and quality standards in all Wyndham brand hotels. Wyndham believes
that its commitment to providing an outstanding guest experience throughout its
hotel system has contributed greatly to the development and clarity of the
Wyndham brand while earning strong loyalty from its core customers, upscale
business travelers and business groups. For example, according to written guest
surveys conducted by Wyndham at its hotels in 1995, 91% of Wyndham guests
surveyed rated the overall quality of Wyndham hotel products and services good
or excellent, and 94% of the guests surveyed indicated that they would return
to that Wyndham hotel on their next trip to the same city.
Guest Rewards and Other Programs
The Company participates in both the American Airlines AAdvantage
program, the largest airline mileage program, and the Midwest Express frequent
flier program. These programs provide the Company with ongoing promotional
access to over 28 million members and enable the Company to target frequent
business travelers and increase name recognition. Through an alliance with
American Airlines and Avis Rent-A-Car, Wyndham developed its popular "Triple
Upgrade" R program, which provides American Airlines AAdvantage members that
are Wyndham guests with an airline upgrade, a room upgrade and a rental car
upgrade, plus up to 1,500 AAdvantage miles. The rewards are given at checkout
and are provided for each stay at any Wyndham hotel for guests that pay a
regular or corporate room rate. Wyndham designed the program to provide guests
with meaningful rewards for each hotel visit. Wyndham's Triple Upgrade program
is currently in effect during six months of each calendar year.
Wyndham developed the first "Rate Integrity Guarantee" program in the
hotel industry, which is a corporate travel program designed to ensure that
corporate travel planners and travel agents receive the lowest available
Wyndham room rates for their individual business travelers. The program enables
travel planners and agents to obtain each rate in every category for Wyndham
brand hotels through the major airline reservation systems and provides a
complimentary night stay if a better rate was available. The Company also runs
other promotional programs periodically for individual business travelers,
weekend leisure customers and resort customers. In addition to providing
incentives for its guests to select Wyndham, the Company believes that its
promotional programs increase national recognition of the Wyndham brand.
Advertising
Wyndham's national advertisements, which have been featured on CNN,
CNN "Headline News," ESPN and in major in-flight magazines, primarily target
the upscale business customer and are designed to enhance the consumer's
awareness of Wyndham as an upscale, full service, national hotel chain. These
advertisements promote "The Right Way -- The Wyndham Way" and emphasize
attitude, comfort and location. The Company also promotes its services,
programs and individual hotel locations in the major hotel reference
directories used by travel and meeting planners, and in major trade magazines
and major metropolitan newspapers.
Central Reservations System
In 1995, over 35% of all Wyndham brand hotel room revenues were booked
through Wyndham's central reservations system. The Company uses a single
central reservation number (800-WYNDHAM) for all Wyndham brand hotels, which is
accessible to customers throughout the United States and Canada. The
reservation system provides Wyndham's reservation agents with information about
hotel locations, available rooms and rates in order to assist customers in
booking rooms. In addition, the Company uses special marketing programs in
conjunction with its central
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<PAGE> 88
reservations system in order to target the individual upscale business
traveler, who the Company believes is strongly influenced by brand recognition
and preference.
In 1995, approximately 50% of all Wyndham reservations made through
its central reservations system were received electronically by means of
airline reservation systems. In 1995, the last year for which comparative
industry information is available, according to an industry report in which the
Company participated, the Company's percentage of automated reservations was
among the highest in the industry. The Company believes that its volume of
electronic reservations reflects the Company's commitment to investing in
technology in order to create cost-effective, efficient operations.
ISIS 2000, a limited partnership currently owned by Crow Family
Members and the Senior Executive Officers, has developed an integrated real
time central reservations system designed to handle all of the Company's
central reservations requirements. ISIS 2000 is continuing to develop the
integrated property management component of such system. ISIS 2000 will provide
such central reservations and hotel property management services to Wyndham and
Wyndham brand hotels pursuant to a five-year service contract (which services
will be provided to Wyndham on an exclusive basis for a two-year period). The
reservation services are being provided for a fee comprised of an initial
link-up charge plus a per reservation fee. The property management services
will be provided on a charge per hotel basis. In addition, the Company has
guaranteed equipment leases on behalf of ISIS 2000 in the approximate amount of
$2.0 million. The Company may in the future invest in ISIS 2000. See "Certain
Relationships and Transactions" and "Risk Factors -- Conflicts of Interest --
Future Dealings with Affiliates of the Company."
The central reservations and property management system, when fully
implemented, will include, among other enhancements, complete connectivity with
all Wyndham brand hotels, a single data base for all hotel information, a
direct interface with airlines and real time/last available room inventory.
Wyndham believes that the new system will improve substantially the Company's
ability to manage the yield from its room inventory. In addition, the Company
believes the new system will significantly enhance the Company's direct
marketing, guest recognition and revenue forecasting capabilities, as well as
its ability to monitor its corporate rate programs. The central reservations
system also will provide point of sale information for all Wyndham brand
hotels. The Company implemented the central reservations system during the
third quarter of 1996.
Wyndham also participates in all four of the major airline reservation
systems, "SABRE," "APOLLO," "WORLDSPAN" and "SYSTEM ONE." These airline
reservation systems have an aggregate of approximately 190,000 computer
terminals on line at approximately 41,000 locations, allowing travel agents to
book Wyndham hotel reservations when guests are making other travel
arrangements.
HOTEL OPERATIONS
Wyndham's corporate management structure and centralized support
services are designed to permit the Company to control operations and costs, as
well as allocate departmental expertise efficiently among operating divisions.
The Company's organizational structure emphasizes direct accountability through
vertical integration in order to maintain Wyndham's high standards for guest
services and hotel operations throughout its hotel system. The Company has
established certain uniform productivity standards and skill requirements for
hotel employees, which the Company believes increase operating efficiencies by
enhancing the Company's ability to measure performance and interchange certain
employees within the hotel system.
Hotel Management. Each Wyndham brand hotel is managed by a general
manager and supported by a regional and corporate management organization. The
size of each management team and its hourly staff varies, depending on the type
of hotel, its size and its business volume.
General Managers; Hotel Management Personnel. Wyndham has an
experienced team of general managers, and over 70% of these managers have been
promoted from an existing position within the Company. Each general manager is
responsible for supervising the day-to-day operations of a single hotel.
Because of the Company's emphasis
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<PAGE> 89
on taking an owner's approach to the hotel business, each general manager also
has been specially trained to understand the financial side of hotel
operations, including cash flow, gross operating margins, debt service and
return on investment. Each general manager can receive up to 75% of his or her
base salary in the form of cash bonuses and equity participation based largely
on the financial performance and quality of hotel operations at the hotel he or
she manages. The Company believes that by emphasizing financial accountability
and performance-based compensation at the general manager level, it is able to
achieve the appropriate balance between providing high quality guest services
and strong returns, to both the Company and owners of managed hotels. Each
Wyndham Hotel and Wyndham Resort is run by an executive committee that oversees
a management team of approximately 16 managers. The executive committees
typically consist of a general manager, a director of sales and marketing, a
controller, a director of food and beverage operations, a director of rooms
operations, a human resources director and a director of engineering. A typical
Wyndham Garden Hotel management committee consists of a general manager, a
director of sales, two sales managers, a guest services manager, a food and
beverage manager, a catering manager, a food production manager and a
housekeeping manager.
Regional Operations. Wyndham's general managers report directly to a
regional director of operations, who, in turn, reports to one of five vice
presidents of operations. These vice presidents of operations report to the
head of either the Wyndham Hotel and Resort Division or the Wyndham Garden
Division. The regional management teams provide management support and
direction to the general managers and their staff, coordinate communications
between the properties and the Company's centralized corporate departments and
assist in establishing and administering corporate policies, procedures and
standards.
Centralized Corporate Services. The Company's hotel operations are
divided into two operating divisions, consisting of a Wyndham Hotel and Resort
Division and a Wyndham Garden Division. The head of each operating division
reports to the Company's Chief Executive Officer. The Company's Senior
Executive Officers have worked together to successfully operate, manage and
develop the Company's hotels in various phases of the industry cycle. The
Company also has a centralized corporate staff located in Dallas, Texas, which
provides a variety of managerial and support services to both hotel divisions.
The Company believes that the experience of its corporate management team
enables it to provide strong, central leadership in all areas of operations,
including marketing, development, design and construction, purchasing, finance,
accounting, legal and human resources. The Company believes that the quality
and experience of management are important components of its ability to provide
consistently strong financial results to owners and outstanding service to
hotel guests. In addition to the foregoing areas of operations, the Company's
centralized corporate staff provides technical assistance and training to each
hotel's employees for administrative operations, room and guest services,
reservations, maintenance and engineering, retail services, and human resources
and benefits.
Recruiting and Training. The Company is strongly committed to
developing and promoting its management personnel from within the Wyndham
system. Wyndham believes that it has developed one of the largest and most
visible college recruiting programs in the industry. Over the past five years,
the Company has hired over 400 new college graduates through its on-campus
recruiting program at 15 universities with four-year hotel management programs.
The Company believes that it has been quite successful at recruiting top
college graduates and providing them with outstanding training and experience.
The Company will continue to emphasize college recruiting as an important
source of management talent. In 1995, the Company recruited 90 new college
graduates. New campus recruits receive up to 12 months training and are then
generally assigned to the sales or operations departments at a Wyndham operated
hotel.
The Company has developed a Managers in Development program that
trains over 150 participants each year and contains ten separate training
modules. The Company also provides formal training programs for general
managers and sales personnel. Wyndham believes that by creating meaningful,
measurable goals for each key position within the Company, it is able to track
individual performance, reward productivity and assist in developing the
careers of its personnel. Wyndham believes that this approach has contributed
significantly to high labor productivity and employee retention, as evidenced
by the fact that 70% of the Company's existing general managers were promoted
from within the Company.
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MANAGEMENT CONTRACTS
Upscale Hotels. Wyndham operates 51 upscale hotels for third parties
pursuant to management contracts under which it is responsible for the
day-to-day operations of the hotels. These operations include managing hotel
accommodations, meeting rooms and food and beverage services as well as hiring
and training each hotel's staff, planning and providing sales and marketing
services, purchasing operating supplies, inventories and furniture, fixtures
and equipment, providing routine repairs and maintenance and performing hotel
accounting functions, including the preparation of monthly financial statements
and budgeting.
The hotel owner generally is responsible for all costs and expenses
incurred in connection with operating the hotel, including reimbursing the
Company for the expenses associated with salaries and benefits of all hotel
employees. The hotel owner also generally is required to contribute an amount
equal to a specified percentage of gross revenues to a reserve fund on a
monthly basis to fund replacement and substitution of furniture, fixtures and
equipment and the costs of certain non-routine repairs and maintenance. Under
certain management contracts, Wyndham has agreed to make loans for the benefit
of the hotel to cover shortfalls in operating cash flow and also has agreed
under certain management contracts to make loans or capital contributions for
hotel renovations, conversion costs and other purposes.
Under nearly all management contracts, the hotel owner has agreed to
indemnify the Company against liabilities arising from the management and
operation of the hotel, typically including environmental and general tort
liabilities. These indemnities generally exclude various degrees of negligent
conduct by the Company as well as the Company's willful misconduct or willful
violation of legal requirements. Under most management contracts, the Company
generally has agreed to indemnify the hotel owner against liabilities caused by
the Company's negligence, willful misconduct, willful violation of legal
requirements or breach of the management contract. A few management contracts,
however, give broader protection to the hotel owner with regard to liabilities
arising from the operation of the hotel, and one management contract provides
protection to the hotel owner from claims that the hotel owner is the employer
of certain hotel employees when the management contract provides otherwise.
As compensation for its management services, Wyndham receives a base
management fee under each management contract. Wyndham also may receive an
incentive fee, as well as a trade name fee, for hotels operated under the
Wyndham brand name. The average base management fee for the Company's
management contracts is in excess of 3% of gross revenues from hotel
operations, and the average trade name fee is in excess of 1% of gross room
revenues. The average base management fee for the Company's management
contracts entered into after January 1, 1994 is in excess of 3% of gross
revenues from hotel operations, and the average trade name fee is in excess of
1.6% of gross room revenues. The Company believes that the increase in trade
name fees since January 1, 1994 generally reflects increased recognition in the
past two years of the Wyndham brand name and the Company's operating
capabilities. The actual percentage of base fees and trade name fees for any
given contract may vary from these averages depending on the size and location
of a particular hotel, the market in which it competes and other factors. The
Company also receives an incentive management fee under most management
contracts. The calculation of incentive management fees varies from management
contract to contract, but is generally based on a percentage of a hotel's
operating profit or the amount by which the hotel's operating profit exceeds
specified performance targets.
In addition to property-specific marketing and promotional services
that Wyndham provides at the hotel owner's expense for each hotel that it
operates, Wyndham also provides marketing services to Wyndham brand hotels
consisting of chain-wide and/or division level marketing programs, research
services, advertising and public relations efforts. The costs of these
marketing services are paid by the hotel owners pursuant to a marketing
contribution made to Wyndham in an amount generally equal to a specified
percentage of gross room revenues. In addition to marketing services, owners of
Wyndham brand hotels receive group and/or individual traveler sales services
provided by Wyndham's national and/or local sales offices. The cost of national
sales and marketing services generally are allocated among all hotels for which
the services are provided. The cost of local sales services generally are
allocated directly to each individual hotel. Wyndham also provides centralized
reservations services to Wyndham brand hotels, with the costs being allocated
to each hotel generally based on reservations made at that hotel. For Wyndham
Garden Hotels
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and smaller Wyndham Hotels, Wyndham also typically provides off-site accounting
services at the hotel owner's expense.
In addition to the services described above that are provided pursuant
to management contracts, Wyndham also makes available to hotel owners design,
construction, purchasing and technical services for an additional fee. These
services generally are provided pursuant to separate technical services
management contracts and purchasing agreements.
The terms of Wyndham's upscale management contracts vary from hotel to
hotel. The terms of the management contracts for the 46 Wyndham brand hotels
managed by the Company generally range between 10 and 20 years. The terms for
the non-Wyndham brand hotels range from one month to fifteen years. At November
30, 1996, the average remaining term for Wyndham brand hotel management
contracts was 14 years (including renewals that the Company may elect to
exercise). Each management agreement is subject to early termination in
connection with a default by either party. In addition, the management
contracts generally are subject to termination by the hotel owner for Wyndham's
failure to achieve certain performance standards, in connection with the
owner's sale of the hotel to a third party, upon the owner's default on
indebtedness encumbering the property and/or upon a foreclosure of the
property. Other grounds for termination for certain contracts include the hotel
owner's election to close the hotel and certain business combinations involving
the Company in which the Wyndham name or its current management team does not
survive. In the event a management contract is terminated for certain reasons,
most management contracts require the owner to pay a termination fee that is
generally based upon a multiple of the average monthly management fees under
the contract depending on the remaining term of the contract, hotel performance
and other factors.
A majority of the management contracts include a provision restricting
the Company from managing, operating or investing in other hotels within a
competitive geographical region, usually within a five mile radius of the hotel
subject to the management contract. While some of these non-competition clauses
restrict the Company's involvement in any hotel within the covered region, many
of the clauses limit competition only with respect to hotels similar to the
hotel subject to the restriction.
EXTENDED-STAY PROPERTY MANAGEMENT CONTRACTS
A subsidiary of the Company has entered into a master management
assistance agreement (the "Agreement") with Homegate, which provides for the
Company to manage up to 60 extended-stay hotels as well as to provide Homegate
with market research, a preferred vendor program, a proprietary property
management software package and national and local marketing efforts. Under the
Agreement, the Company has agreed not to own, operate or develop a competing
extended-stay facility within certain specified states that include Homegate's
target markets (subject to certain exceptions), for the term of the Agreement.
Unless extended, the Agreement terminates upon the earlier of the execution of
a management contract with respect to the 60th extended-stay hotel or December
31, 1998.
Pursuant to each property-specific management contract, Wyndham will
manage and operate the specific Homegate studios and suites hotel in exchange
for the payment of a base management fee of 3% of the hotel's gross revenues
for the applicable period, and an incentive management fee that varies from 1%
to 3% depending upon the return on cost realized by Homegate for the particular
property. In addition, Homegate will pay Wyndham a monthly fee (adjusted
annually for inflation) for Wyndham's accounting services, and will reimburse
Wyndham for reimbursable expenses incurred by Wyndham with respect to the
hotel. Each management contract also provides that to the extent Homegate
elects to establish a marketing fund and contributes 1.5% of the gross room
revenues to such fund, Wyndham will manage such fund. Each contract also
provides that Wyndham will not own, develop, manage or lend money to an
extended-stay facility that is similar in operation and format to Homegate's
hotel within a five-mile radius thereof, subject to certain exceptions. This
non-competition covenant survives for the duration of the applicable management
contract. Individual management contracts can be terminated in connection with
additions to the Company's portfolio that otherwise might violate the
non-competition covenant. Homegate has the right to terminate the
property-specific management contract if certain performance standards are not
met. In addition, Homegate may terminate such contracts without cause with the
payment of a cancellation fee if Homegate desires to manage the hotel
internally. In addition,
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the management contracts are generally subject to termination (upon payment of
a cancellation fee) in connection with the sale of the hotels to a third party,
upon Homegate's default on indebtedness encumbering the properties and/or upon
a foreclosure of the property or upon a default by the Company.
Under each extended-stay property management contract, Homegate has
agreed to indemnify the Company against liabilities arising from the
construction, renovation, management or operation of the hotel, typically
including environmental and general tort liabilities. These indemnities
generally exclude various degrees of negligent conduct by the Company as well
as the Company's willful misconduct or willful violation of legal requirements.
Under each extended-stay property management contract, the Company generally
has agreed to indemnify Homegate against liabilities arising from the
management and operation of the hotel caused by the Company's demonstrable
negligence, willful misconduct or willful violation of legal requirements.
LONG-TERM HOTEL LEASES
The Company leases and operates 13 hotels. The initial term of the
lease relating to the 11 GHALP Properties (the "GHALP Lease") is approximately
16 years with renewals for four consecutive 12 year terms exercisable at the
Company's option for all, but not less than all, 11 hotels. While the lessor
has retained the right to sell one or more of these leased hotels to third
parties (subject to the GHALP Lease), the Company has a right of first refusal
to acquire such property, which terms are set forth in the GHALP Lease.
Rental payments under the GHALP Lease consist of minimum rent (the
"Minimum Rent"), payable monthly, and, commencing January 1997, additional rent
(the "Additional Rent"), which is based upon growth in revenues at the leased
hotels. The Minimum Rent for all of the leased hotels is $1,133,334 per month.
The Additional Rent is equal to 8% of the amount, if any, by which the
consolidated total hotel sales (as defined in the GHALP Lease) for the 11
leased hotels for the then current year to date exceeds the consolidated total
hotel sales for the corresponding period in 1996. The GHALP Lease allows the
Company to retain all of the benefit from any increase in operating income from
these properties during the term of the GHALP Lease, subject to the payment of
Additional Rent. All management fees due to the Company from these hotels are
subordinated to rent due to the lessor.
The GHALP Lease is a triple net lease that requires the Company to
maintain the leased hotels in good condition and repair and in conformity with
all applicable legal requirements and to make or cause to be made all items of
maintenance, repair, replacement and alteration to the leased hotels as
necessary for such purposes. The Company has established a reserve account (the
"FF&E Reserve") and, throughout the lease term, the Company must add to the
FF&E Reserve at the end of each month an amount equal to 5% of total hotel
sales during such month to be used for maintenance, repair, replacements and
alterations that are proposed by the Company and approved by the lessor. Under
certain circumstances, the lessor may be required to fund major repairs, in
which event the Minimum Rent will be increased by at least 10% of the amount
funded. In addition, the Company is required to pay substantially all expenses
associated with the operation of the leased hotels, including all ground rent,
if applicable, real estate taxes and insurance. All personal property (except
motor vehicles and liquor licenses and permits) owned by the Company and used
in connection with the operation of the leased hotels, including personal
property purchased with funds from the FF&E Reserve, is pledged to the lessor
to secure the Company's obligations under the GHALP Lease. At the termination
of the GHALP Lease, any funds remaining in the FF&E Reserve and property
purchased with funds from the FF&E Reserve will be paid and title delivered to
the lessor as additional charges. In addition, the lessor has the option to
purchase any personal property of the Company located at, or used in connection
with, the leased hotels at its then net market value.
In connection with the acquisition of its leasehold interest in the
GHALP Properties the Company succeeded to a $13.6 million Retained Fund that
was established to secure the lessor's rights under the GHALP Lease. The
Company's interest in the Retained Fund is subject to offset if the Company
fails to perform its obligations under the GHALP Lease. The Retained Fund,
which will earn no interest on the Company's behalf, will be paid to the
Company upon the end of the GHALP Lease term provided that the Company has not
defaulted under the GHALP Lease. In addition, the Company has pledged to the
lessor a security interest that is subordinate to that of the lenders under the
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Revolving Credit Facility of all of the capital stock of its subsidiary that is
the lessee under the GHALP Lease to secure the obligations under the GHALP
Lease.
Under the GHALP Lease, the Company has agreed to indemnify the lessor,
the hotel mortgagees and their agents and assigns against costs resulting from
the presence during the lease term of any hazardous substances in, upon or
under the soil or groundwater of the leased property or any properties
surrounding the leased property in violation of any law or regulation, provided
that the costs arise due to the failure by the Company to perform or comply in
accordance with all laws and orders applicable to the storage, use,
maintenance, spillage, disposition or transfer of hazardous substances or
certain lease provisions requiring notice of environmental-related events and
activities to be given to the lessor, except to the extent such costs arise
from the acts or omissions of the lessor or any other indemnified party or
during any period that the lessor is in possession of the leased property. The
Company also has agreed to indemnify the lessor against liabilities due to the
Company's failure to perform or comply with the lease agreement, any claims
relating to the use, misuse or condition of the property caused by the Company,
the imposition of any taxes or assessments, or claims arising from accidents,
death or personal injury occurring at the leased premises. The lessor may
terminate the lease upon an event of default, which includes: the failure to
pay rent; failure to maintain required insurance; an uncured default by the
Company of any of the terms of the lease agreement; an uncured default under
any of the leases constituting the GHALP Lease, the management contracts
relating to the properties and certain other related documents; the loss of any
material license or permit; any false or misleading material representation or
warranty made by the Company contained in the GHALP Lease or certain other
related documents; the Company not paying debts as they become due or making a
general assignment for the benefit of creditors; filings under any federal or
state bankruptcy or insolvency laws with respect to the Company; levy upon or
attachment of the Company's interest in the leased property; or the tenant
under the GHALP Lease at any time ceasing to be a wholly owned direct or
indirect subsidiary of the Company. The lessor may cancel the Company's
management agreements related to these hotels in the event the GHALP Lease is
in default. Upon a termination due to an event of default, the Company is
liable for the rental payments that would have been payable for the remainder
of the unexpired term. If the lessor re-lets the properties, however, the
Company is liable for only the difference between the proceeds from re-letting
and proceeds that would have been payable had the GHALP Lease remained in
effect for the duration of the term. In addition to damages that the lessor may
receive pursuant to the preceding sentence as a result of the Company's
default, the lessor may elect to require the Company to pay as final liquidated
damages the amount of the excess of the lease payments that would have been
payable from the date of termination through the unexpired term over the fair
rental value of the properties for the same period.
Under the purchase contract relating to the sale of the GHALP
Properties to the lessor, GHALP undertook to indemnify the lessor against any
liabilities arising out of GHALP's actions in connection with the ownership or
operation of the GHALP Properties and any third party claims in connection with
such properties occurring prior to the consummation of the sale. In addition,
the lessor undertook to indemnify GHALP against any liabilities arising out of
the lessor's actions in connection with the ownership or operation of the GHALP
Properties and any third party claims in connection with such properties
occurring after the sale. In connection with the formation of the Company, the
Company assumed GHALP's rights and obligations under the purchase contract. The
Company also assumed the representations and warranties made by GHALP under the
purchase contract, including that, to GHALP's knowledge, at the time of the
agreement: no undisclosed conditions, agreements, litigation or environmental
liabilities existed that would materially and adversely affect the properties
or result in the imposition of a lien upon any of the GHALP Properties; no
taxes were delinquent; the properties had access to sufficient utilities and
services; the properties and the use and operation thereof did not violate any
material law; all material licenses and permits necessary to the operation of
the GHALP Properties were in effect; and the copies of the ground leases
delivered to the lessor were true, valid and not in default. Liability with
respect to the representations and warranties survive through April of 1997.
The GHALP Lease restricts the Company from owning, building,
franchising, managing or operating any Wyndham Garden Hotel within a designated
area surrounding each respective GHALP Property during the lease term. Hotel
products other than Wyndham Garden Hotels are expressly excluded from this
restriction.
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In connection with the entry by a subsidiary of the Company into the
lease relating to the Wyndham Hotel property in Salt Lake City (the "Salt Lake
City Lease"), the Company has entered into a Limited Guaranty Agreement (the
"Limited Guaranty") pursuant to which the Company has guaranteed the
obligations of the lessee under the Salt Lake City Lease and has deposited with
the lessor a guaranty deposit in the amount of $5,275,000. Provided that no
event of default occurs, the deposit balance accumulates interest at the rate
of 11.11% per annum. Accrued interest on this deposit will be credited against
the monthly Minimum Rent to be paid by the Company under the Salt Lake City
Lease. In general, the unapplied balance of the guaranty deposit will be
returned to the Company at such time that, after January 1, 1998, for a period
of 12 consecutive months the hotel property meets or exceeds certain cash flow
targets set forth in the Limited Guarantee and satisfies certain other
requirements (the "Performance Criteria"). In the event that the Performance
Criteria are not met, the guarantee deposit will be returned upon the Company's
satisfaction of all obligations under the Salt Lake City Lease.
The terms of the Salt Lake City Lease by and between HPTSLC
Corporation, a Delaware corporation, and a subsidiary of the Company, are
generally similar to those of the GHALP lease set forth above but vary as to
the following provisions. The Minimum Rent under the Salt Lake City Lease is
$4,400,004 per month and Additional Rent for the 1998 fiscal year is equal to
5% of the amount, if any, by which the Total Hotel Sales (as defined in the
Salt Lake City Lease) for the then current year to date exceed total hotel
sales (the "Excess Total Hotel Sales") for the equivalent period in 1997 and 8%
of the Excess Total Hotel Sales for the equivalent period in 1998 for each
fiscal year thereafter during the term of the Lease.
The Salt Lake City Lease requires a cash security deposit of
$4,725,000 (the "Security Deposit") that cannot be mortgaged, assigned,
transferred or otherwise encumbered by the lessee without prior written consent
except for certain authorized leasehold mortgages. Provided that the Company
complies with all terms, covenants and conditions of the Salt Lake City Lease,
the Security Deposit will be returned to the Company at the end of the term of
the lease. Improvement advances in an aggregate amount of up to $3,250,000 may
be advanced by the lessor for certain improvements to the hotel.
The Company has agreed that under the following circumstances, in
addition to the events of default outlined under the GHALP Lease, the lessor
under the Salt Lake City Lease may terminate the lease: in the case of any
false or misleading material representation or warranty made by the Company or
any Affiliated Person as to the Company contained in the lease or certain other
related documents, or if the Limited Guaranty is disaffirmed, disavowed or
challenged by the Company. The Salt Lake City lease also reserves the option
for HPTSLC Corporation, exercisable on or before the fifth anniversary of the
date of the lease, to require amendments to both the GHALP Lease and the Salt
Lake City Lease providing that (i) an event of default under either of such
leases would constitute an event of default under the other lease; (ii) that
the renewal option under the GHALP Leases could not be declined unless the
renewal option under the Salt Lake City Lease were also declined; and (iii)
that amounts in the FF&E Reserves under each of the GHALP Leases and the Salt
Lake City Lease be pooled and consolidated.
The Salt Lake City Lease restricts the Company from owning, building,
franchising, managing or operating any full-service Wyndham Hotel within a
designated area surrounding the hotel during the lease term. Wyndham Garden and
Resort Hotels are expressly excluded from this restriction.
The remaining leased hotel is leased to the Company from an
unaffiliated third party pursuant to a capitalized lease with a remaining term
of 22 years. The lease requires payment of base rent of $2,300,000 per year
plus contingent rent through 1999 of 20% of the amount net operating income
before management fees exceeds base rent plus the management fee and
thereafter, 50% of such amount.
FRANCHISING PROGRAM
As of January 15, 1997, the Company franchised two Wyndham hotels, and
entered into a franchise agreement for a third hotel that is currently being
operated as a Best Western and is expected to be converted to a Wyndham Hotel
in February 1997. See " -- The Company's Hotels." The Company plans to pursue
selective franchise opportunities with well-qualified owner/operators such as
American General Hospitality, Inc. and Starwood Lodging.
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The Company is in the process of developing a comprehensive franchise
program that it expects to have complete in advance of the next hotel
construction cycle in the upscale full service segment of the lodging industry.
The Company believes that this program will enable it to pursue franchise
opportunities on a broader scale, given appropriate market conditions.
COMPETITION
The lodging industry is highly competitive. The Company's upscale
hotels compete with other national limited and full service hotel companies, as
well as with various regional and local hotels. Some of the larger hotel chains
with which the Company competes include Marriott, Sheraton, Hyatt, Hilton and
Embassy Suites. The Company's extended-stay hotels compete on a local level.
The Company anticipates that competition within the extended-stay industry
segment will increase substantially in the foreseeable future. In the midprice
category of the extended-stay industry segment, a number of other lodging
chains and developers have recently announced plans to develop or are currently
developing extended-stay hotels which may compete with the Company's hotels. A
number of the Company's competitors for both upscale and extended-stay hotel
properties are larger, operate more hotels and have substantially greater
financial and other resources than the Company. In addition, some of the
Company's competitors operate hotel properties that have locations superior to
those of the Company's hotels. Competitive factors in the lodging industry
include room rates, quality of accommodations, name recognition, service levels
and convenience of location. There can be no assurance that demographic,
geographic or other changes in markets in which the Company's hotels are
located will not adversely affect the convenience or desirability of certain of
the Company's hotels. Furthermore, there can be no assurance that new or
existing competitors will not significantly lower rates or offer greater
conveniences, services or amenities or significantly expand or improve
facilities in a market in which the Company's hotels compete, thereby adversely
affecting the Company's results of operations. See "Risk Factors -- Competition
in the Lodging Industry."
The Company also competes for management contract, acquisition,
development, lease, franchise and other expansion opportunities. The Company
competes for these expansion opportunities with national and regional hotel
companies, some of which have greater financial and other resources than the
Company. Competitive factors for expansion opportunities include relationships
with hotel owners and investors, the availability of capital, financial
performance, management fees, lease payments, brand name recognition, marketing
support, reservation system capacity, and the willingness to provide funds in
connection with new management and lease arrangements. The Company's failure to
compete successfully for expansion opportunities or to attract and maintain
relationships with hotel owners and investors could adversely affect the
Company's results of operations. See "Risk Factors -- Risks Associated with
Expansion -- Competition for Expansion Opportunities."
EMPLOYEES
At November 30, 1996, Wyndham had approximately 170 employees at the
corporate level and approximately 11,240 employees (including part-time and
seasonal employees) at hotel properties managed by the Company.
Employees at five of the Company's managed hotels currently are
represented by a labor union. Management believes its ongoing labor relations
to be good.
TRADEMARKS
The service marks "Wyndham" and "Wyndham Garden" are material to the
Company's business. The Company has filed an application with the United States
Patent and Trademark Office (the "USPTO") for registration of the Wyndham
service mark. The Company also has filed an application with the USPTO for
registration of the "The Right Way, The Wyndham Way" slogan, the Company's
800-WYNDHAM reservation number and certain other marks as service marks. In
addition, the Company has registered "Wyndham Garden," the Wyndham "W" logo and
"Triple Upgrade" as service marks with the USPTO. The Company also claims
common law service mark rights in the Wyndham "W" logo, the foregoing marks as
well as certain other marks. The Company has registered "Wyndham" and
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"Wyndham Garden" as service marks in various states and "Wyndham" and "Wyndham
Garden" as service marks in Puerto Rico and various foreign countries.
The Company's application to register "Wyndham" also claims exclusive
use of this mark with the exception of two limited areas in which the Company
is aware of prior uses of the "Wyndham" mark by hotel operators that have no
existing or historical relationship with the Company. One of these hotels is
located in Ambler, Pennsylvania, and the other is located in Manhattan (the
"Mados Wyndham Hotel"). The Company has not used the Wyndham name in connection
with the operation of a Wyndham hotel in either of these areas.
In June 1992, the managers and lessees of the Mados Wyndham Hotel,
John and Suzanne Mados (the "Madoses"), registered the name "Wyndham Hotel"
with the New York Secretary of State pursuant to a New York State statute that
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, prima facie, the
exclusive right to use the name in the State of New York. However, this
presumption of exclusive use can be rebutted, and the registration may be
revoked at the time enforcement is sought if the registrant never had exclusive
use of the mark in New York State.
In February 1995 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 the Company's applications be denied. The
Company subsequently entered into a settlement agreement with Yassky pursuant
to which Yassky assigned to the Company all of its rights (to the extent it had
any) in the "Wyndham" mark throughout the world with the exception of 11 New
York State counties, including New York County and Queens County. The Company
believes that it and Yassky each have non-exclusive rights to use the mark
"Wyndham" in these 11 counties. In addition, Yassky withdrew its Oppositions 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 Settlement Agreement.
In June 1995, the Madoses filed a 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. The Trademark Trial and Appeal Board has suspended the
Opposition Proceeding pending resolution of the New York Action.
In July 1996, the Madoses filed a Petition to Cancel the Company's
registration for the mark "Wyndham Garden." The Company filed its Answer to the
Petition to Cancel in August 1996, and the Madoses filed a Motion to Suspend
Proceedings until a final determination is made regarding the action described
below under " -- Legal Proceedings."
The Company does not believe that the Madoses' narrow common law
rights to use the Wyndham name will prevent the Company's registration of its
exclusive right to use the "Wyndham" mark throughout the country with the
exception of the limited area surrounding the Mados Wyndham Hotel in Manhattan
and Ambler, Pennsylvania. 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 use the mark "Wyndham." 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 larger
radius of the Mados Wyndham Hotel. For further information relating to disputes
involving the "Wyndham" mark, see " -- Legal Proceedings" below.
LEGAL PROCEEDINGS
On June 29, 1992, the Madoses 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
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Wyndham Hotels & Resorts (referred to herein as "The Old Management Company")
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. The Old Management Company
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 limited
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 The Old Management
Company 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
(subsequently amended to 100) mile radius thereof.
On January 29, 1996, the court issued a temporary restraining order
that is limited to the borough of Manhattan or within a 50 mile radius (within
the State of New York), which, as modified in a subsequent opinion of February
13, 1996, prohibits The Old Management Company from operating or managing a
hotel using the "Wyndham" name pending the resolution of the lawsuit and from
advertising the Company's property at LaGuardia Airport (which is currently
under renovation).
Post trial filings have been completed for the trial on the above
proceedings that occurred from May 14 to May 31, 1996, and The Old Management
Company is awaiting the Court's decision. After the trial, the Madoses sought
to increase the radius of the requested injunction from 50 to 100 miles.
The Old Management Company has appealed the Trial Court's modification
of the temporary restraining order subsequent to the trial to permit The Old
Management Company to use the word "Wynd" in connection with its property at La
Guardia Airport under certain conditions unacceptable to The Old Management
Company. It is not known when a decision will be rendered by the Trial Court or
the Appellate 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 limited geographic area in
the borough of Manhattan or within a 50 to 100 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 opening date for the Company's hotel at La
Guardia Airport would require the Company to open this hotel under a brand name
other than "Wyndham" or "Wyndham Garden." It is management's opinion that the
losses resulting from the ultimate resolution of the aforementioned lawsuit are
not currently ascertainable. For further information relating to disputes
involving the "Wyndham" mark, see " -- Trademarks" above.
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.
See Note 13 to the Company's Combined Financial Statements.
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.
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INSURANCE
Each of the Company's hotels is covered by comprehensive insurance
policies, including liability, fire and extended coverage and, where
applicable, flood and earthquake coverage. The Company believes that such
coverage is of the type and amount customarily obtained by hotel owners. In
addition, the Company has the types of insurance coverage, including
comprehensive general liability and excess umbrella liability insurance, that
it believes are appropriate for a company in the hotel management business.
Subject to the requirements of any management contracts and the Revolving
Credit Agreement to maintain certain levels of insurance, the Board of
Directors will use its discretion in determining the amounts, coverage limits
and deductibility provisions of insurance, with a view to maintaining
appropriate insurance coverage on the Company's hotel properties at a
reasonable cost and on suitable terms. This might result in insurance coverage
that, in the event of a substantial loss, would not be sufficient to pay the
full current market value or current replacement cost of a damaged property.
The Company operates seven Wyndham brand hotel properties (six managed
and one leased) in the Los Angeles, California area that are currently insured
against earthquake damage under an insurance policy maintained by the Company.
The Company has been advised by its insurance underwriters, however, that if
the Company were to add an additional hotel in the Los Angeles area, it is
possible that the Company would not be able to obtain earthquake insurance for
such hotel under the Company's current policy. In such event, the Company would
seek to obtain separate earthquake coverage for the additional hotel, which may
not be economically feasible.
ENVIRONMENTAL MATTERS
Under various federal, state, local and foreign environmental laws,
ordinances and regulations, a current or previous owner or operator of real
property may be liable for the cost of removal or remediation of hazardous or
toxic substances on, under or in such property. Such laws often impose
liability without regard to whether the owner or operator knew of, or was
responsible for, the release of such hazardous or toxic substances. The
presence of contamination from hazardous or toxic substances, or the failure to
remediate such contaminated property properly, may adversely affect the owner's
ability to sell or rent such real property or to borrow using such real
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances also may be liable for the cost of removal or
remediation of such substances at the disposal or treatment facility, whether
or not such facility is or ever was owned or operated by such person. The
operation and removal of certain underground storage tanks also are regulated
by federal and state laws. In connection with the ownership and operation of
its hotel properties, including properties owned, as well as leased, managed,
or franchised by the Company, the Company could be held liable for the cost of
remedial action with respect to such regulated substances and storage tanks and
claims related thereto. In addition to clean-up actions brought by federal,
state and local agencies, the presence of hazardous or toxic substances on a
hotel property also could result in personal injury or similar claims by
private plaintiffs. As the current owner or long-term lessee of 22 hotel
properties, manager of 55 hotel properties and franchisor of 1 hotel property
Wyndham, and any subsidiary involved in the ownership, leasing, management or
franchising of hotel properties, will be subject to this full range of
environmental issues and potential liability.
To manage some of these risks, Wyndham provides in nearly all of its
management contracts that the owner of the hotel indemnifies Wyndham against
any environmental liabilities, except any caused by varying degrees of
Wyndham's negligence or by Wyndham's willful misconduct or willful violation of
legal requirements. See " -- Management Contracts."
Under the GHALP Lease, the Company has agreed to indemnify the lessor,
the hotel mortgagees and their agents and assigns against costs resulting from
the presence during the lease term of any hazardous substances in, upon or
under the soil or groundwater of the leased property or any properties
surrounding the leased property in violation of any law or regulation, provided
that the costs arise due to the failure by the Company to perform or comply in
accordance with all laws and orders applicable to the storage, use,
maintenance, spillage, disposition or transfer of hazardous substances or
certain lease provisions requiring notice of environmental-related events and
activities to be
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given to the lessor, except to the extent such costs arise from the acts or
omissions of the lessor or any other indemnified party or during any period
that the lessor is in possession of the leased property.
Periodically, the Company may agree to indemnify lenders of
non-recourse indebtedness secured by certain hotel properties against
liabilities arising from violations of environmental laws or regulations.
In connection with its initial public offering, the Company received
environmental site assessments, which generally include a physical inspection,
but in most instances no soil or groundwater analyses, on the 18 owned or
leased hotel properties acquired by the Company in connection with its
formation (the "Recent Environmental Assessments"). In addition, the Company
previously received other environmental information with respect to some but
not all of the 18 hotel properties prior to acquiring an interest in the
property, and the Company also received environmental information concerning
some, but not all, of the managed or franchised properties prior to entering
into management or franchising contracts with respect to these properties.
(collectively, the "Prior Environmental Information").
Asbestos-containing building materials ("ACM") are present in several
of the hotel buildings owned, operated, or managed by the Company. The Company
has an operations and maintenance plan in place, or is in the process of
implementing a plan, establishing operating procedures with respect to such
ACMs. The Company believes that these materials are currently adequately
managed and contained and that any cost related to managing or disposing of ACM
will not have a material adverse effect on the Company.
Some of the properties owned, operated or managed by the Company are
on, adjacent to or near properties that have contained in the past or currently
contain underground and/or above-ground storage tanks used to store regulated
substances such as petroleum products or other hazardous or toxic substances.
Some of the properties owned, operated or managed by the Company are in the
vicinity of properties which are currently or have been subject to releases of
regulated substances and remediation activity, and the Company is currently
aware of several properties owned, operated or managed by the Company which may
be impacted by regulated substances which may have migrated from adjacent or
nearby properties or which may be within the borders of areas suspected to be
impacted by regional groundwater contamination. In addition, the Company is
aware of the presence or the potential presence of regulated substances in the
soil or groundwater at several properties owned, operated or managed by it
which may have resulted from historical or ongoing activities on those
properties. Based on the information available to date, the Company believes
that the environmental issues described above will not have a material adverse
effect on the Company.
The Recent Environmental Assessments and the Prior Environmental
Information do not constitute an assurance or guarantee by the Company or any
other person as to the presence or absence of any type of environmental problem
in, on, under or around the hotel properties. Also, on many of the managed and
franchised properties, the Company has not performed or received the results
from any environmental investigations. Given the specific nature and limited
scope of the environmental information obtained by the Company to date, the
environmental issues described above may be more severe than indicated, and
environmental problems may exist that have not been uncovered.
As a result of the foregoing limitations on performing environmental
investigation and due to the fact that Environmental Laws and conditions are
subject to frequent change, there can be no assurance that environmental
liabilities or claims will not adversely affect the Company in the future.
The Company has no current plans to undertake further steps, other
than those described in the Recent Environmental Assessments, to assess
environmental liabilities with respect to hotel properties owned, leased,
managed or franchised by it. These Recent Environmental Assessments were
performed by a qualified environmental engineering firm, and were performed in
accordance with a scope of work that meets and exceeds the "Standard Practice
for Environmental Site Assessments: Phase I Environmental Site Assessment
Process," Designation E1527, promulgated by the American Society for Testing
and Materials. In the majority of the reports, the consultant concluded that no
further investigation of any material environmental issue is warranted and the
Company concurs with this conclusion. The Company does intend to follow the
recommendations contained in the Recent Environmental Assessments
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concerning management practices and on-site conditions at two sites,
implementation of an operations and maintenance plan with respect to asbestos
containing materials at two sites, and registration of drywells at several
sites. The Company does not believe that any of these issues are material.
The Company has no current plans to assess any potential environmental
liabilities at managed or franchised properties. The Company believes that no
assessment is warranted because the risk of environmental liability being
imposed on it for environmental issues at hotel properties that it does not own
or lease, but merely manages or franchises, is lower. The Company believes the
risk of environmental liability is lower for three principal reasons. First,
because the nature of hotel management does not involve the handling of
hazardous substances, except in small, manageable quantities found in consumer
products and used for janitorial or maintenance purposes, the Company's
management activities are unlikely to create or contribute to an environmental
problem. The possibility of creating or contributing to an environmental
problem is even more remote in connection with a franchised hotel property
because the Company is not even present on the property. Second, because the
Company is unlikely to have created or contributed to an environmental problem
at a hotel property, the Company believes that, from a legal standpoint, it
would either have a defense to any claim for liability arising from an
environmental problem not caused or contributed to by it, or it would have an
effective right of contribution under various environmental statutes against
the owner of the managed or franchised property. In addition, in nearly all of
its management agreements, the Company is indemnified by the owner against all
environmental problems not caused or created by the Company. Third, the Company
believes that the managed and the franchised hotels are being operated in
material compliance with environmental laws. Based on its experience with
managing many of the properties over a number of years, the Company believes
that it is aware of the environmental conditions at these sites and of the
types of issues that may arise at other sites, and that it can appropriately
manage any environmental issues that may arise from operations in the future.
Therefore, because the risk of liability arising from the existence of an
environmental problem at a managed or franchised property is lower, the Company
does not believe that the assessment of these properties is warranted.
GOVERNMENT REGULATION
The hotel industry is subject to numerous federal, state and local
government regulations, including those relating to the preparation and sale of
food and beverages (such as health and liquor license laws) and building and
zoning requirements. The Company also is subject to laws governing its
relationship with employees, including minimum wage requirements, overtime,
working conditions and work permit requirements. In addition, the Company is
subject to federal regulations and certain state laws that govern the offer and
sale of franchises. The Company believes that it has the necessary permits and
approvals to operate each of its hotels and their respective businesses.
Under the Americans with Disabilities Act of 1990 (the "ADA"), all
public accommodations are required to meet certain federal requirements related
to access and use by disabled persons. While the Company believes that its
hotels are substantially in compliance with these requirements, a determination
that the Company is not in compliance with the ADA could result in the
imposition of fines or an award of damages to private litigants. While the
Company may be required to incur additional costs of complying with the ADA in
the future, the Company does not expect such costs to have a material adverse
effect on the Company's financial condition or results of operations.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information concerning the directors and executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
James D. Carreker(1)(2) 49 President, Chief Executive Officer and Director
Leslie V. Bentley 45 Executive Vice President, Wyndham Garden Division President and
Director
Anne L. Raymond(2) 38 Executive Vice President, Chief Financial Officer and Director
Stanley M. Koonce, Jr. 48 Executive Vice President--Marketing, Planning and Technical
Services and Director
Charles E. Griffin 63 Senior Vice President--Human Resources
Carla S. Moreland 37 Vice President--General Counsel and Secretary
Glen H. Griffith 62 Vice President--Chief Information Officer
Edward L. Stahl 52 Vice President--Marketing
John P. Klumph 41 Vice President--Corporate Controller
John J. Kelly 48 Vice President--Technical Services
Harlan R. Crow(1) 47 Director
Daniel A. Decker 44 Director
Susan T. Groenteman 42 Director
James C. Leslie(3)(4) 40 Director
Philip J. Ward(3)(4) 48 Director
Robert A. Whitman(1) 43 Director
</TABLE>
- -------------------
(1) Member of Executive Committee.
(2) Member of the Retainer Stock Plan Committee.
(3) Member of the Compensation Committee.
(4) Member of the Audit Committee.
JAMES D. CARREKER has served as President and Chief Executive Officer
of the Company since May 1988 and as a director of the Company since February
1996. He also served as Chief Executive Officer of Trammell Crow Company, an
affiliated entity and national real estate company, from August 1994 to
December 1995. Prior to 1988, Mr. Carreker served as President of Burdine's,
the Miami based division of Federated Department Stores. Mr. Carreker has been
a Director of Homegate Hospitality, Inc. since October 1996.
LESLIE V. BENTLEY has been employed by the Company since March 1985,
has served as Executive Vice President and Wyndham Garden Division President of
the Company since May 1990 and was elected a director of the Company in January
1997. From January 1987 to June 1988, Mr. Bentley served as Regional Vice
President of the Company. From June 1988 to December 1988, Mr. Bentley served
as Vice President of Operations of the Company, and from December 1988 to May
1990, he served as Senior Vice President of Operations of the Company. Prior to
joining the Company, Mr. Bentley was employed by Marriott Hotels for eight
years.
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ANNE L. RAYMOND joined the Company in 1983 as Controller and served in
that and other financial capacities through September 1987. From September 1987
to July 1994, she served as Investment Manager for Crow Family Holdings, an
affiliated entity, where her responsibilities included managing and overseeing
Crow Family Holdings' interests in the Trammell Crow Company, an affiliated
entity, and Wyndham. Upon the formation of the Crow Investment Trust in August
1994, Ms. Raymond was named Director--Capital Markets thereof and had
responsibility for developing and maintaining investment relationships with
real estate capital sources. In March 1995, Ms. Raymond officially rejoined the
Company as Executive Vice President and Chief Financial Officer, and was
elected a director of the Company in April 1996.
STANLEY M. KOONCE, JR. has served as Executive Vice
President--Marketing, Planning and Technical Services of the Company since
October 1994, was elected a director of the Company in January 1997 and served
as Senior Vice President of Sales and Marketing of the Company from October
1989 to October 1994. Mr. Koonce served as President of CUC Travel Services, a
division of CUC International, in Stamford, Connecticut from 1986 to 1989, as
Vice President of the Marketing Department with American Express from 1979 to
1986 and as a Director of Finance and Planning for American Airlines from 1976
to 1979.
CHARLES E. GRIFFIN has served as Senior Vice President--Human
Resources of the Company since October 1996. From September 1994 to October
1996, Mr. Griffin served as Executive Vice President of Rocco Originals, Inc.,
a sunglasses manufacturer and wholesaler in San Antonio, Texas, and from March
1994 to July 1994 as Executive Vice President of Catherine Dial Easley, Inc., a
women's accessory company in San Antonio, Texas. From 1993 to 1994, Mr. Griffin
was a retail consultant with Strategic Retail Ventures in Dallas, Texas and
from 1991 to 1993 was a retail search consultant of executive talent with P.R.
Associates of Dallas, Texas. From 1990 to 1991, Mr. Griffin served as President
of Suzanne's off-price retail stores in Dallas, Texas, and from 1985 to 1990
served as President and Consultant to Ginnie Johansen Designs, Inc., a women's
accessory company in Dallas, Texas. Prior to 1985, Mr. Griffin served in
various positions with divisions of Federated Department Stores.
CARLA S. MORELAND has served as Vice President--General Counsel of the
Company since April 1994 and as Secretary since March 1996. From 1988 to 1994,
Ms. Moreland practiced law with Weil, Gotshal & Manges in Dallas, Texas, and
from 1984 through 1987, she practiced law with Freytag, Perry, LaForce,
Rubinstein & Teofan in Dallas, Texas.
GLEN H. GRIFFITH has served as Vice President--Chief Information
Officer of the Company since March 1995. He has also served as Chief
Information Officer of Trammell Crow Company, an affiliated entity, and
national real estate company, since March 1995. From March 1994 to March 1995
Mr. Griffith was retired from Federated Department Stores and performed
independent consulting services. From 1985 to March 1994, Mr. Griffith served
as Chief Executive Officer of Federated Systems Group, a division of Federated
Department Stores. From 1983 to 1985, Mr. Griffith served as Senior Vice
President--MIS for both Sanger Harris Department Stores in Dallas, Texas and
Burdine's Department Stores in Miami, Florida, and from 1974 to 1983, he served
as Senior Vice President of Sanger Harris Department Stores in Dallas, Texas.
EDWARD L. STAHL has served as Vice President--Marketing of the Company
since December 1995. From 1986 to 1995, Mr. Stahl served as Vice President of
Advertising and Marketing Programs for the Sheraton Corporation, where he
directed Sheraton's corporate advertising, Frequent Traveler and Partner
Marketing Programs. From 1979 to 1986, Mr. Stahl served as Vice President of
Consumer Marketing for Epsilon Data Management in Burlington, Massachusetts.
From 1975 to 1979, Mr. Stahl held several marketing management positions with
both Holiday Inns, Inc. and United Airlines.
JOHN P. KLUMPH has been employed by the Company since February 1988
and has served as Vice President- Corporate Controller of the Company since
1989. Prior to joining the Company, Mr. Klumph served as Director of Hotel
Accounting for Lincoln Hotel Company in Dallas, Texas from 1986 to 1988 and as
Controller and Assistant Controller for the Sheraton Corporation in Washington
D.C. from 1982 to 1986.
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JOHN J. KELLY has served as Vice President--Technical Services since
February 1996. From 1992 to January 1996, Mr. Kelly was Vice President of
Marketing for the Orlando office of McDevitt Street Bovis, Inc., a national
construction company, where he had responsibility for managing the marketing
and operations of the hospitality group. Mr. Kelly served as Director of
Construction for ITT Sheraton Corporation from 1989 to 1992, and as Vice
President of Design & Construction for Ramada International from 1987 until
1989. Mr. Kelly served in a variety of positions within Holiday Corporation
from 1973 until 1987, and was the Vice President of Construction Management for
Holiday Corporation from 1983 to 1987.
HARLAN R. CROW is a director of the Company. Mr. Crow is the chief
executive officer of Crow Family Holdings, an investment company managing
investments in a variety of real estate related and other businesses, a
position he has held since 1986. Prior to 1986, Mr. Crow was a Regional Partner
in the office building unit of Trammell Crow Company, a commercial real estate
management and development company. Mr. Crow is a former member of the Board of
Directors of Texas Commerce Bancshares, a banking institution. In any given
year within the past five years, Mr. Crow has indirectly owned interests in
over 1,000 partnerships (or affiliates of partnerships) or corporations. In the
past five years, Mr. Crow was a general partner, officer or director in
approximately 90 partnerships or corporations, or affiliates of such
partnerships or corporations, that filed for protection under federal
bankruptcy laws. In addition, in the past five years, Mr. Crow was a general
partner, executive officer or director in approximately 15 partnerships or
corporations, or affiliates of such partnerships or corporations, that were
placed in receivership. Mr. Crow has been a Director of Homegate Hospitality,
Inc. since October 1996.
DANIEL A. DECKER is a director of the Company. Since 1990, Mr. Decker
has been a partner of Hampstead, an investment firm, which indirectly through
Bedrock is a significant stockholder of the Company, as well as being a
stockholder of Bristol, and other companies not involved in the lodging
business. See "Risk Factors -- Conflicts of Interest," "Business -- Growth
Strategy," "Certain Relationships and Transactions" and "Principal
Stockholders." Prior to 1990, Mr. Decker was a partner in the Dallas law firm
of Decker, Hardt, Kopf, Harr, Munsch & Dinan, P.C. Mr. Decker was a director of
Forum Group from June of 1993 until March of 1996. Mr. Decker is a past
director of Bristol and is presently a director of Mountasia Entertainment
International, Inc. ("Mountasia").
SUSAN T. GROENTEMAN is a director of the Company. Ms. Groenteman is
the Director (chief operating officer) of Crow Family Holdings, an investment
company managing investments in a variety of real estate related businesses,
along with other industries, a position she has held since 1988. From 1986
through 1988, Ms. Groenteman was Controller of Crow Family Holdings. Ms.
Groenteman served in a variety of positions for Crow Hotel Company, a
predecessor to the Company. In any given year within the past five years, Ms.
Groenteman has served as an executive officer or director in over 1,000
partnerships (or affiliates of partnerships) or corporations. In the past five
years, Ms. Groenteman has served as an executive officer or director of
approximately 90 partnerships or corporations, or for affiliates of such
entities, that filed for protection under federal bankruptcy laws. In addition,
in the past five years, Ms. Groenteman served as an executive officer or
director in approximately 15 partnerships or corporations, or affiliates of
such partnerships or corporations, that were placed in receivership.
JAMES C. LESLIE has served as President and Chief Operating Officer of
The Staubach Company since March 1996. Mr. Leslie served as Chief Financial
Officer of the company from 1982 to 1992 and President - Staubach Financial
Services from January 1992 to March 1996. Mr. Leslie is also President and a
board member of Wolverine Holding Company and serves on the boards of Columbus
Realty Trust, FM Properties, Inc., Forum Retirement Partners, L.P., and The
Staubach Company. Mr. Leslie is a certified public accountant. Mr. Leslie was
an officer in the corporate general partner of McCallum, Ltd., which filed for
protection under the federal bankruptcy laws in 1990. In addition, Mr. Leslie
was an officer in the corporate general partner of Retail, Ltd., which filed
for protection under the federal bankruptcy laws in 1994.
PHILIP A. WARD is a director of the Company. Mr. Ward is the Senior
Managing Director in charge of the Real Estate Investment Division of CIGNA
Investments, Inc., a division of CIGNA Corporation, a position he has held
since December 1985. Mr. Ward joined Connecticut General's Mortgage and Real
Estate Department (a predecessor of CIGNA) in 1971 and became an officer in
1976. Since joining CIGNA, Mr. Ward has held real estate investment
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assignments in Mortgage and Real Estate Production and in Portfolio Management.
Mr. Ward is also a Director of the Simon DeBartolo Group, Inc., of
Indianapolis, Indiana, and a Director of the Connecticut Housing Investment
Fund.
ROBERT A. WHITMAN is a director of the Company. Mr. Whitman has since
1991 been President and Co-Chief Executive Officer of Hampstead. Prior to 1991,
Mr. Whitman served as the Managing Partner and Chief Executive Officer of
Trammell Crow Ventures, the real estate investment, banking and investment
management unit of Trammell Crow Company, and, from 1988 to 1992, Mr. Whitman
also served as Chief Financial Officer for Trammell Crow Company, an affiliated
entity. Mr. Whitman is a director of Forum Group, Inc., a company traded on the
Nasdaq Stock Market that is engaged in the ownership and operation of senior
living facilities and is also a director of Mountasia. Mr. Whitman is a past
Director and Vice Chairman of the Board of Bristol.
Pursuant to the terms of the Stockholders' Agreement, the Crow Family
Members, Senior Executive Officers, WEL and Ms. Groenteman on the one hand, and
Bedrock on the other hand, have agreed to allocate between themselves the right
to nominate directors to serve on the Company's Board of Directors (and its
constituent committees) based on their proportionate ownership of shares of
Common Stock. Following the Plan of Distribution, WEL will not be a party to
the Stockholders' Agreement. See "Description of Capital Stock -- Stockholders'
Agreement."
The Company's Certificate of Incorporation and By-laws provide for
three classes of directors. Messrs. Crow, Carreker and Leslie are the Class I
directors and will serve until the meeting of stockholders in 1997; Ms.
Groenteman and Messrs. Ward and Whitman are the Class II directors and will
serve until the meeting of stockholders in 1998; and Ms. Raymond and Messrs.
Decker, Bentley and Koonce are the Class III directors and will serve until the
meeting of stockholders in 1999. After these directors' initial terms expire,
newly elected directors shall serve for a three year term or until their
successors are duly elected and qualified.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee, an Executive Committee, a
Compensation Committee and a Retainer Stock Plan Committee. The Audit Committee
is responsible for (i) assisting in the selection of the Company's independent
auditors, (ii) reviewing the arrangements for and the scope of the auditors'
examination of the Company's financial statements and (iii) meeting with the
auditors, the Board of Directors and officers of the Company to review the
adequacy of the Company's internal controls. The Executive Committee has the
authority, between meetings of the Board of Directors, to take all actions with
respect to the management of the Company's business that require action by the
Board of Directors, except with respect to matters (i) that by law, contract or
other express Board policy must be approved by the entire Board of Directors or
certain specified directors, (ii) that are delegated to other committees of the
Board of Directors or (iii) that involve the acquisition or disposition of
assets for total consideration exceeding $25 million or the creation of a
liability of the Company exceeding $25 million. The Compensation Committee
assists in the determination of the salaries and incentive bonuses of the
executive officers of the Company and administers the Company's 1996 Long Term
Incentive Plan. The Retainer Stock Option Committee is responsible for
administering the Company's Non-Employee Directors' Retainer Stock Plan.
Messrs. Leslie and Ward serve on the Audit Committee; Mr. Decker and Ms.
Groenteman serve on the Compensation Committee; Mr. Carreker and Ms. Raymond
serve on the Retainer Stock Plan Committee; and Messrs. Carreker, Crow and
Whitman serve on the Executive Committee.
COMPENSATION AND OTHER COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the Company had no Compensation Committee or other
committee of the Board of Directors performing similar functions. Decisions
concerning the compensation of executive officers, including that of Mr.
Carreker, were collectively made by Messrs. Carreker and Crow.
During 1996, Ms. Groenteman, who is an executive officer of Trammell
Crow Interests Company, served on the Compensation Committee of the Company's
Board of Directors. During 1996, Mr. Carreker served on an advisory board of
directors of Trammell Crow Interests Company and in such capacity served on the
Compensation Committee of such board.
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Certain directors are parties to transactions with the Company, as
described under the caption "Certain Relationships and Transactions" below.
EXECUTIVE COMPENSATION
The following table sets forth summary information for 1996 regarding
the compensation awarded to, earned by, or paid to (i) the Chief Executive
Officer of the Company, (ii) the four other most highly compensated executive
officers of the Company whose total annual salary and bonus earned during such
period exceeded $100,000 and (iii) one additional executive officer of the
Company who would have been included under category (ii) above but who as not
an executive officer of the Company at the end of 1996 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
----------------------
LONG-TERM
COMPENSATION
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(2) OPTIONS (#) COMPENSATION(3)
------------------ ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
James D. Carreker 1996 $ 349,998 $ 182,852 130,000 $ 2,102
President, Chief Executive Officer
and Director
Leslie V. Bentley 1996 $ 200,000 $ 129,750 60,000 $ 1,135
Executive Vice President and
Wyndham Garden Division
President
Anne L. Raymond 1996 $ 200,000 $ 100,000 60,000 $ 867,180(4)
Executive Vice President, Chief
Financial Officer and Director
Stanley M. Koonce, Jr 1996 $ 175,000 $ 90,253 60,000 $ 1,498
Executive Vice
President--Marketing,
Planning and Technical Services
Carla S. Moreland 1996 $ 171,923 $ 45,000 27,500 $ 1,631
Vice President -- General Counsel
and Secretary
Eric A. Danziger(5) 1996 $ 119,231 $ 35,917 60,000 $ 1,107,983(4)
Executive Vice President and
Wyndham Hotels and Resorts
Division President
</TABLE>
(1) None of the named executive officers received any perquisites or other
personal benefits in 1996 that in the aggregate exceeded the lesser of
$50,000 or 10% of such named executive officer's salary and bonus for
such year.
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(2) Bonuses have not been declared yet for 1996. The amounts reflected
represent bonus advances made to the Named Executive Officers in 1996.
These advances will be offset by the actual bonuses once declared. It
is expected that actual bonuses will be equal to or in excess of the
bonus advances.
(3) Unless otherwise noted, consists of contributions by the Company to
the Company's 401(k) plan.
(4) Non-cash compensation was reported and recorded for Mr. Danziger and
Ms. Raymond in the amounts of $1,107,983 and $866,642, respectively,
reflecting compensation relating to equity participation in Old
Wyndham and other affiliated entities, which equity was purchased at
fair market value. In accordance with generally accepted accounting
principles, in 1996 no equity participation compensation expense was
required to be reported or recorded for Messrs. Carreker, Bentley or
Koonce or Ms. Moreland.
(5) Mr. Danziger resigned from the Company in July 1996. Amount reflected
in salary column represents actual salary earned in 1996. Due to his
resignation from the Company in 1996, Mr. Danziger will not receive a
1996 bonus. The amount advanced to him is owed to the Company.
1996 LONG TERM INCENTIVE PLAN
Scope. The Board of Directors and stockholders of the Company have
approved the Wyndham Hotel Corporation 1996 Long Term Incentive Plan (the
"Incentive Plan"). The Incentive Plan authorizes the granting of incentive
stock options and non-qualified stock options to purchase Common Stock, stock
appreciation rights, restricted stock and performance units, to key executives
and other key employees of the Company, including officers of the Company and
its subsidiaries. The purpose of the Incentive Plan is to attract and retain
key employees, to motivate key employees to achieve long-range goals and to
further identify the interests of key employees with those of the other
stockholders of the Company.
The Incentive Plan authorizes the award of 2,133,811 shares of Common
Stock to be used for stock options, stock appreciation rights or restricted
stock. If an award made under the Incentive Plan expires, terminates or is
forfeited, canceled or settled in cash, without issuance of shares of Common
Stock covered by the award, those shares will be available for future awards
under the Incentive Plan. The Incentive Plan will terminate on December 31,
2005.
Administration. The Incentive Plan will be administered by the Board
of Directors or, if directed by the Board of Directors, the Compensation
Committee or any successor thereto of the Board of Directors of the Company
(the Board of Directors or, if applicable, the Compensation Committee is
referred to herein as the "Compensation Committee"). Subject to the provisions
of the Incentive Plan, the Compensation Committee has the authority to select
employees to receive awards, to determine the time or times of receipt, to
determine the types of awards and the number of shares covered by the awards,
to establish the terms, conditions and provisions of such awards, to determine
the value of performance units, and to cancel or suspend awards. In making such
award determinations, the Compensation Committee may take into account the
nature of services rendered by the employee, his or her present and potential
contribution to the Company's growth and success and such other factors as the
Compensation Committee deems relevant. The Compensation Committee is authorized
to interpret the Incentive Plan, to establish, amend and rescind any rules and
regulations relating to the Incentive Plan, to determine the terms and
provisions of any agreements made pursuant to the Incentive Plan and to make
all other determinations that may be necessary or advisable for the
administration of the Incentive Plan.
Eligibility. Executive and other key employees of the Company and its
subsidiaries may be selected by the Compensation Committee to receive awards
under the Incentive Plan. The Incentive Plan provides that no more than 500,000
shares of Common Stock may be subject to awards granted per year to any one
employee participating in the Incentive Plan. In the discretion of the
Compensation Committee, an eligible employee may receive an award in the form
of a stock option, stock appreciation right, restricted stock award or
performance unit or any combination thereof, and more than one award may be
granted to an eligible employee.
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<PAGE> 107
Stock Options. The Incentive Plan authorizes the award of both
incentive stock options ("ISOs") and nonqualified stock options. Under the
Incentive Plan, an option may be exercised at any time during the exercise
period established by the Compensation Committee, except that: (i) no option
may be exercised prior to the expiration of six months from the date of grant;
(ii) no option may be exercised more than three months after employment with
the Company or any of its subsidiaries terminates by reason other than death,
disability or authorized leave of absence for military or government service;
and (iii) no option may be exercised more than one year after employment with
the Company or any of its subsidiaries terminates by reason of death or
disability. The aggregate fair market value (determined at the time of the
award) of the Common Stock with respect to which ISOs are exercisable for the
first time by any employee during any calendar year may not exceed $100,000.
The term of each option is determined by the Compensation Committee, but in no
event may such term exceed 10 years from the date of grant (or 5 years in the
case of ISOs granted to stockholders owning 10% or more of the Company's
outstanding shares of Common Stock). The exercise price of options is
determined by the Compensation Committee, but the exercise price of ISOs cannot
be less than the fair market value of the Common Stock on the date of the grant
(or 110% of the fair market value of the Common Stock on the date of grant in
the case of ISOs granted to stockholders owning 10% or more of the Company's
outstanding shares of Common Stock). The exercise price of options may be paid
in cash or, with the Compensation Committee's approval, in shares of Common
Stock. Grants of options do not entitle any optionee to any rights as a
stockholder, and such rights will accrue only as to shares actually purchased
through the exercise of an option.
In connection with the Company's initial public offering, the Board of
Directors granted options to purchase an aggregate of 797,700 shares of Common
Stock under the Incentive Plan to certain key personnel. The exercise price of
all such options is equal to the initial public offering price of the Company's
Common Stock. The Board of Directors granted options covering 130,000 shares of
Common Stock to Mr. Carreker, options covering 60,000 shares of Common Stock to
each of Messrs. Bentley and Koonce, and Ms. Raymond and options covering 27,500
shares to Ms. Moreland, as part of the foregoing grant of options. The Company
granted additional options to purchase 20,000 shares of Common Stock in
November in conjunction with hiring an executive officer. All such options will
vest 20% on the third anniversary of the date of grant, 50% on the fourth
anniversary of the date of grant and 100% on the fifth anniversary of the date
of grant.
Stock Appreciation Rights. The Incentive Plan authorizes the grant of
both primary stock appreciation rights ("SARs") and additional SARs. Primary
SARs may be granted either separately or in tandem with options. Primary SARs
entitle the holder to receive an amount equal to the difference between the
fair market value of a share of Common Stock at the time of exercise of the SAR
and the option price (or deemed option price in the event of an SAR that is not
granted in tandem with an option), multiplied by the number of shares of Common
Stock subject to the option or deemed option as to which the SAR is being
exercised (subject to the terms and conditions of the option or deemed option).
An SAR may be exercised at any time when the option to which it related may be
exercised and will terminate no later than the date on which the right to
exercise the tandem option (or deemed option) terminates (or is deemed to
terminate). The participating employee has the discretion to determine whether
the exercise of an SAR will be settled in cash, in Common Stock (valued at its
fair market value at the time of exercise) or in a combination of the two,
subject to the approval of the Compensation Committee in certain circumstances.
The exercise of an SAR requires the surrender of the tandem option, if any, and
the exercise of a stock option requires the surrender of the tandem SAR, if
any.
Additional SARs may be granted only in tandem with stock options and
entitle the holder to receive an amount equal to the difference between the
fair market value of a share of Common Stock on the date of exercise of the
related option and the option price, multiplied by the number of shares of
Common Stock subject to the option as to which the SAR is being exercised
(subject to the terms and conditions of the option), multiplied by a percentage
factor ranging from 10% to 100% (as determined either by the Compensation
Committee at the date of grant or by the formula established by the
Compensation Committee at the date of grant).
If an SAR, or the corresponding option with which the SAR was awarded,
is not exercised prior to the date that it ceases to be exercisable, then such
SAR generally shall be deemed exercised as of such date and shall be paid to
the employee in cash. No SAR may be exercised more than three months after
employment with the Company or any of its subsidiaries terminates by reason
other than death, disability or authorized leave of absence for military or
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<PAGE> 108
government service. No SAR may be exercised more than 12 months after the
holder's employment with the Company and its subsidiaries terminates by reason
of death or disability.
Restricted Stock. Restricted stock awards are grants of Common Stock
made to employees subject to a required period of employment following the
award (the "Restricted Period") and any other conditions established by the
Compensation Committee. An employee will become the holder of shares of
restricted stock free of all restrictions if he or she completes the Restricted
Period and satisfies any other conditions; otherwise, the shares will be
forfeited. Under the Incentive Plan, the Restricted Period may not be more than
ten years. The employee will have the right to vote the shares of restricted
stock and, unless the Compensation Committee determines otherwise, will have
the right to receive dividends on the shares during the Restricted Period. The
employee may not sell, pledge or otherwise encumber or dispose of restricted
stock until the conditions imposed by the Compensation Committee have been
satisfied. The Compensation Committee may accelerate the termination of the
Restricted Period or waive any other conditions with respect to any restricted
stock.
Performance Units. Performance units are awards that entitle the
holder to receive a specified value for the units at the end of a performance
period established by the Compensation Committee if performance measures
established by the Compensation Committee at the beginning of the performance
period are met. Although the performance measures and performance period will
be determined by the Compensation Committee at the time of the award of
performance units, they may be subject to such later revision as the
Compensation Committee deems appropriate to reflect significant events or
changes. If the employment of a holder of a performance unit with the Company
or a subsidiary terminates by reason of death, disability or retirement, then
the Company will pay the employee or his or her beneficiary or estate the
amount of the performance unit earned as of the date of termination. If the
employment of a holder of a performance unit with the Company or a subsidiary
terminates for any other reason, then the performance units held by such holder
will automatically be forfeited.
Adjustments. In the event of any change in the outstanding shares of
Common Stock by reason of any stock dividend, split, spinoff, recapitalization,
merger, consolidation, combination, exchange of shares or other similar change,
the aggregate number of shares with respect to which awards may be made under
the Incentive Plan, and the terms and the number of shares of any outstanding
option, SAR, performance unit or restricted stock, may be equitably adjusted by
the Compensation Committee in its sole discretion.
Business Combinations. Unless provision is otherwise made in the terms
of the award granted by the Compensation Committee, or by the terms of the
agreement with respect to the business combination, in the event of a change in
control of the Company (as defined), all outstanding stock options, SARs,
restricted stock and performance units shall terminate, provided that the
holders of any options or SARs may exercise such awards to the extent then
vested immediately prior to any such event and the holders of any performance
units shall be entitled to the then vested values of such units as of such
date.
Termination and Amendment. The Incentive Plan may be suspended,
terminated or amended by the Board of Directors, provided that, in the absence
of stockholder approval, no amendment of the Incentive Plan or action of the
Board of Directors may materially increase the total number of shares of Common
Stock with respect to which awards may be made under the Incentive Plan (except
as discussed in "Adjustments" above), change the exercise price of a stock
option or the base price of an SAR, materially modify the requirements as to
eligibility for participation in the Incentive Plan or materially increase the
benefits accruing to participants under the Incentive Plan. No amendment,
suspension or termination of the Incentive Plan may alter or impair any option,
SAR, share of restricted stock or performance unit previously awarded under the
Incentive Plan without the consent of the holder thereof.
Awards in Connection with Initial Public Offering. The amounts that
were paid pursuant to the Incentive Plan during fiscal 1996, as stock option
awards to the Named Executive Officers and in total are reflected in the
following table.
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<PAGE> 109
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS
STOCK GRANTED IN
NAME AND POSITION OPTIONS(1) FISCAL YEAR
----------------- ---------- -----------
<S> <C> <C>
James D. Carreker.................................................................. 130,000 16%
President, Chief Executive Officer and Director
Leslie V. Bentley.................................................................. 60,000 7%
Executive Vice President, Wyndham Garden Division President and Director
Eric A. Danziger(2)................................................................ 60,000 7%
Executive Vice President and Wyndham Hotels and Resorts Division President
Anne L. Raymond.................................................................... 60,000 7%
Executive Vice President, Chief Financial Officer and Director
Stanley M. Koonce, Jr.............................................................. 60,000 7%
Executive Vice President--Marketing, Planning and Technical Services and
Director
Carla S. Moreland 27,500 3%
Vice President -- General Counsel and Secretary..................................
Named Executive Officers as a Group................................................ 370,000
------------
Remainder of Company Employees..................................................... 447,700
------------
</TABLE>
- ----------------------
(1) The per share exercise price of all options granted to the Named
Executive Officers is equal to $16.00, the initial public offering
price of the Company's Common Stock. The options expire on the tenth
anniversary from the date of grant and vest 20% on the third
anniversary, 50% on the fourth anniversary and 100% on the fifth
anniversary.
(2) Mr. Danziger resigned from the Company in July 1996. Consequently,
such stock options were forfeited.
Federal Income Tax Consequences. The following summary of the federal
income tax consequences of the Incentive Plan is not comprehensive and is based
on current income tax laws, regulations and rulings. Optionees are urged to
consult their own tax advisors concerning the federal income tax consequences
of the Incentive Plan.
Incentive Stock Options. An optionee does not recognize
income on the grant of an incentive stock option. Subject to the
effect of the alternative minimum tax, discussed below, if an optionee
exercises an ISO stock option in accordance with the terms of the ISO
and does not dispose of the shares acquired within two years from the
date of the grant of the ISO nor within one year from the date of
exercise, the optionee will not realize any income by reason of the
exercise and the Company will be allowed no deduction by reason of the
grant or exercise. The optionee's basis in the shares acquired upon
exercise will be the amount paid upon exercise. Provided the optionee
holds the shares as a capital asset, at the time of sale or other
disposition of the shares, his gain or loss, if any, recognized on the
sale or other disposition will be capital gain or loss. The amount of
his gain or loss will be the difference between the amount realized on
the disposition of the shares and his basis in the shares.
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If an optionee disposes of the shares within two years from
the date of grant of the option or within one year from the date of
exercise (an "Early Disposition"), the optionee will realize ordinary
income at the time of such Early Disposition, which will equal the
excess, if any, of the lesser of (1) the amount realized on the Early
Disposition or (2) the fair market value of the shares on the date of
exercise, over the optionee's basis in the shares. The Company will be
entitled to a deduction in an amount equal to such income. The excess,
if any, of the amount realized on the Early Disposition of such shares
over the fair market value of the shares on the date of exercise will
be long-term or short-term capital gain, depending upon the holding
period of the shares, provided the optionee holds the shares as a
capital asset at the time of Early Disposition. If an optionee
disposes of such shares for less than his basis in the shares, the
difference between the amount realized and his basis will be a
long-term or short-term capital loss, depending upon the holding
period of the shares, provided the optionee holds the shares as a
capital asset at the time of disposition.
The excess of the fair market value of the shares at the time
the incentive stock option is exercised over the exercise price for
the shares is an item of "tax preference" as such term is used in the
Code (the "Stock Option Preference").
Nonqualified Stock Options. Nonqualified stock options do not
qualify for the special tax treatment accorded to incentive stock
options under the Code. Although an optionee does not recognize income
at the time of the grant of the option, he recognizes ordinary income
upon the exercise of a nonqualified option in an amount equal to the
difference between the fair market value of the stock on the date of
exercise of the option and the amount of the exercise price. The
optionee's basis in the shares acquired will be the amount paid upon
exercise. When the optionee disposes of such shares, his gain or loss,
if any, will be long-term or short-term capital gain or loss,
depending on the holding period of his shares. The amount of his gain
or loss will be the difference between the amount realized on the
disposition of the shares and his basis in the shares.
As a result of the optionee's exercise of a nonqualified
stock option, the Company will be entitled to deduct as compensation
an amount equal to the amount included in the optionee's gross income.
The Company's deduction will be taken in the Company's taxable year in
which the option is exercised.
The excess of the fair market value of the stock on the date
of exercise of a nonqualified stock option over the exercise price is
not an item of tax preference.
Appreciation Rights. Recipients of SARs do not recognize
income upon the grant of such an award. When a participant elects to
receive payment under an SAR, he recognizes ordinary income in an
amount equal to the cash and/or fair market value of shares received,
and the Company is entitled to a deduction equal to such amount.
Restricted Stock; Performance Units. Grantees of restricted
stock and performance units do not recognize income at the time of the
grant of such stock or units. However, when shares of restricted stock
become free from any restrictions or when performance units are paid,
grantees recognize ordinary income in an amount equal to the cash and
the fair market value of the stock on the date all restrictions are
satisfied. Alternatively, the grantee of restricted stock may elect to
recognize income upon the grant of the stock and not at the time the
restrictions lapse.
Taxation of Preference Items. Section 55 of the Code imposes
an alternative minimum tax equal to the excess, if any, of (1) 26% of
the optionee's "alternative minimum taxable income" that does not
exceed $175,000, plus 28% of his "alternative minimum taxable income"
in excess of $175,000, over (2) his "regular" federal income tax.
Alternative minimum taxable income is determined by adding the
optionee's Stock Option Preference and any other items of tax
preference to the optionee's adjusted gross income and then
subtracting certain allowable deductions and an exemption amount. The
current exemption amount is $33,750 for single taxpayers, $45,000 for
married taxpayers filing jointly, and $22,500 for married taxpayers
filing separately.
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<PAGE> 111
However, these exemption amounts are phased out beginning at certain
levels of alternative minimum taxable income.
Change of Control. If there is an acceleration of the vesting
of benefits and/or an acceleration of the exercisability of stock
options upon a change of control (as defined in the Incentive Plan),
all or a portion of the accelerated benefits may constitute "excess
parachute payments" under Section 280G of the Code. The employee
receiving an excess parachute payment incurs an excise tax of 20% of
the amount of the payment in excess of the employee's average annual
compensation over the five calendar years preceding the year of the
change of control, and the Company is not entitled to a deduction for
such payment.
401(K) SAVINGS PLAN
The Company sponsors a retirement plan called the Wyndham Employee
Savings & Retirement Plan (the "401(k) Plan"). The total 401(k) Plan assets as
of December 31, 1996 were valued at $15,494,797. The trustee for the 401(k)
Plan is CG Trust Company. The 401(k) Plan permits employees to direct
investments of their accounts among a selection of 6 mutual funds. The Company
intends to amend the 401(k) Plan in the near future to also permit employees to
direct the investment of some or all of their accounts to purchase shares of
Common Stock, and to permit the Company to make any contributions to the 401(k)
Plan in the form of Common Stock. Employees (including members of management)
are eligible to make voluntary contributions of up to fifteen percent (15%) of
their compensation under the 401(k) Plan. The Company is permitted to make a
discretionary contribution to the 401(k) Plan each fiscal quarter which will be
allocated among participants as a matching contribution based on their
contributions under the 401(k) Plan. The 401(k) Plan is intended to qualify as
a profit sharing plan under Sections 401(a) and 401(k) of the Code.
DIRECTOR COMPENSATION
Each member of the Company's Board of Directors who is not an employee
of the Company (a "Non-Employee Director") is paid an annual retainer of
$25,000, plus $1,000 for each committee meeting attended ($1,200 for each
committee meeting attended as a committee chairman). As described below, a
Non-Employee Director may elect to receive the annual retainer fee in cash or
in the form of shares of Common Stock, or to defer receipt of all or a portion
of such fee and have the deferred amount treated as if it were invested in
shares of Common Stock.
The Board of Directors and stockholders of the Company have adopted
the Wyndham Hotel Corporation Non-Employee Directors' Retainer Stock Plan (the
"Retainer Plan") for its Non-Employee Directors, and 50,000 shares of Common
Stock have been reserved for use under the Retainer Plan. The purpose of the
Retainer Plan is to provide to Non-Employee Directors of the Company the
opportunity to elect to receive all or a portion of their annual retainer fees
in the form of shares of Common Stock, or to defer receipt of all or a portion
of such fees and have the deferred amounts treated as if invested in shares of
Common Stock. Only a Non-Employee Director who on January 1 of any calendar
year or such later date as such director is first elected or appointed to the
Board of Directors is eligible to participate in the Retainer Plan.
Participation in the Retainer Plan is voluntary. To participate in the Retainer
Plan, a Non-Employee Director must file an irrevocable election with the
Company no later than the later of (i) six months prior to the date the annual
retainer or, if applicable, the first portion thereof, is to be paid to the
Non-Employee Director or (ii) the last day of the calendar year. Each election
or change of election will be effective as of the later of (i) six months
following the election, or (ii) January 1 following the election. The
Non-Employee Director may elect to either receive shares of Common Stock in
lieu of cash for part or all of such Non-Employee Director's annual retainer or
to defer receipt of all or a portion of such retainer. A Non-Employee Director
also may file an election within 30 days after the date that such director is
elected or appointed to the Board of Directors, to be effective six months
following the election.
The Board of Directors will from time to time appoint two or more
persons who are members of the Board of Directors to administer the Retainer
Plan (the "Retainer Plan Committee") who are not eligible to participate in the
Retainer Plan. The Retainer Plan Committee will administer the Retainer Plan in
accordance with its terms.
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Each Non-Employee Director who elects to participate in the Retainer
Plan for any year must irrevocably elect, until such time as a subsequent
election is made, (i) whether to receive payment of 0, 50% or 100% of his or
her annual retainer in the form of shares of Common Stock under the Retainer
Plan, (ii) whether to defer payment of any whole percentage up to 100% of his
or her annual retainer, to be credited to the participant's account, to be
deemed to be invested in shares of Common Stock and paid in accordance with the
Retainer Plan, and (iii) whether dividend equivalents, if any, on any amounts
credited to such account will be paid directly to the participant or credited
to the participant's account to be reinvested in shares of Common Stock. The
combined percentage of the annual retainer to be paid in shares of Common Stock
and deferred under the Retainer Plan must not exceed 100% of the annual
retainer for any Retainer Plan year. In the event the annual retainer is
increased during any year, a participant's elections in effect for such year
will apply to the amount of such increase. The annual retainer consists of
amounts paid to Non-Employee Directors as a retainer for services as a
director, but does not include meeting fees, discretionary bonuses or
reimbursement for expenses.
In compliance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), neither the Retainer Plan Committee nor any other person
(other than a participant acting in conformity with the terms of the Retainer
Plan) has any discretionary authority to make determinations regarding (i)
eligibility to become a participant, (ii) the times when elections can be made,
when shares of Common Stock will be issued or its equivalents credited to the
participants' accounts, or when distributions will be made, (iii) the portion
of a participant's annual retainer that may be allocated to the acquisition of
shares of Common Stock or its equivalents by participants under the Retainer
Plan, the calculation of the number of shares of Common Stock or its
equivalents by participants under the Retainer Plan, the calculation of the
number of shares of Common Stock or its equivalents to be acquired thereby, and
the payment or deemed reinvestment of dividend equivalents, or (iv) any other
decisions under the Retainer Plan required by Rule 16b-3(b) under the Exchange
Act to be afforded exclusively to "disinterested persons" as defined
thereunder.
The Company will transfer to a participant who elects to receive all
or a portion of the annual retainer in the form of shares of Common Stock a
number of shares of Common Stock having a fair market value equal to such
portion of the annual retainer on the last trading day prior to the date or
dates on which the cash portion of the participant's annual retainer is due. No
fractional shares will be issued; however, in lieu thereof, the cash fair
market value of any fractional share will be paid to participants.
Non-Employee Directors will receive payment in shares of Common Stock
in an amount equal to the number of Common Stock equivalents credited to their
accounts under the Retainer Plan upon the date that is three years following
the date that the annual retainer would have been paid to such Directors in
cash absent their election. Such payment will be made in a lump sum. Upon a
change of control of the Company, the Company will pay to the participating
Non-Employee Directors in cash a lump sum equal to the fair market value of the
Common Stock equivalents credited to all accounts under the Retainer Plan.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
GENERAL
On May 24, 1996, immediately prior to the consummation of the
Company's initial public offering, the Company succeeded to the hotel
management and related business of Old Wyndham, ownership of 6 Wyndham brand
hotels and leasehold interests relating to 12 additional Wyndham brand hotels.
The following discussion of certain relationships and transactions assumes that
the formation of the Company occurred on January 1, 1994 and includes (i) hotel
management and related fees paid to the Company by certain affiliates, (ii)
capital contributions, loans and other payments made by the Company to certain
affiliates in connection with the Company's entry into hotel management
contracts with related parties, (iii) transactions between the Company (which
includes its predecessors and combined subsidiaries) on the one hand, and Crow
Family Members, the "Senior Executive Officers" (James D. Carreker, Leslie V.
Bentley, Anne L. Raymond and Stanley M. Koonce, Jr.) or Bedrock, on the other
hand, relating to the transactions
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comprising the formation of the Company and (iv) loans made to the Senior
Executive Officers of the Company that the Company purchased in connection with
its formation.
RELATED PARTY TRANSACTIONS
During 1994, 1995 and 1996, the Company received hotel management fees
in the aggregate amounts of $4,972,921, $6,797,761 and $11,413,315,
respectively, from the partnerships owning Wyndham hotels ("Hotel
Partnerships") listed below, in which Crow Family Members (which includes
Harlan R. Crow, a director of the Company) have an interest. Some or all of the
Senior Executive Officers of the Company have an ownership interest in six of
such Hotel Partnerships. The terms of the agreements pursuant to which the
Company provides hotel management services to Wyndham hotels are described
generally under "Business -- Management Contracts."
During 1994, 1995 and 1996, the Company received payments in the
aggregate amounts of $2,926,786, $3,803,162 and $6,741,861, respectively, from
the Hotel Partnerships listed below, in which Crow Family Members have an
interest. Some or all of the Senior Executive Officers have an ownership
interest in seven of such Hotel Partnerships. The payments were received as
reimbursements for certain administrative, tax, legal, accounting, finance,
risk management, sales and marketing services provided by the Company to such
entities.
<TABLE>
<CAPTION>
HOTEL PARTNERSHIP(1) HOTEL
-------------------- -----
<S> <C>
Anatole Hotel Investors, L.P. Wyndham Anatole
Hotel Bel Age Associates, L.P. Wyndham Bel Age
Bristol Hotel Associates, Ltd. Wyndham Bristol
Playhouse Square Hotel Limited Partnership Wyndham Playhouse Square
Franklin Plaza Associates Wyndham Franklin Plaza
Houston Greenspoint Hotel Associates Wyndham Greenspoint
MTD Associates Wyndham Milwaukee Center
Itasca Hotel Company Wyndham Northwest Chicago
Hotel and Convention Center Partners I-XI, Ltd. Wyndham Palm Springs
CLC Limited Partnership Wyndham Las Colinas
Atlanta Midtown Associates Wyndham Garden Hotel-Midtown Atlanta
Novi Garden Hotel Associates Wyndham Garden Hotel-Novi
Amgreen-Heritage Hotel Partnership, Ltd. Wyndham Garden Hotel-Orange County Airport
Pleasanton Hotel Associates, Ltd. Wyndham Garden Hotel-Pleasanton
Wood Dale Garden Hotel Partnership Wyndham Garden Hotel-Wood Dale
Convention Center Boulevard Hotel, Limited Wyndham Riverfront
</TABLE>
- -------------------
(1) Management fees, reimbursements and design and construction fees were
not received from all of the Hotel Partnerships in all three years.
During 1994, 1995 and 1996, the Company received payments in the
aggregate amounts of $211,321, $759,895 and $429,978 respectively, from the
Hotel Partnerships listed above, in which Crow Family Members have an interest.
Some or all of the Senior Executive Officers have an ownership interest in
seven of such Hotel Partnerships. The payments were received as fees for
certain design and construction services provided by the Company to such
entities.
During 1994, 1995 and 1996, the Senior Executive Officers incurred
indebtedness to Wyndham Finance Limited Partnership ("WFLP"), a partnership
owned by Crow Family Members. In addition, WEL, in which certain executive
officers of the Company have an interest, incurred indebtedness to WFLP. The
purpose of the loans was to
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finance such officers' and WEL's capital contributions to Old Wyndham and
various Hotel Partnerships in which the officers and WEL acquired ownership
interests. In addition, one Senior Executive Officer used a portion of the
indebtedness to finance housing and education expenses. Notes representing such
loans were purchased by the Company in May of 1996 in connection with its
Formation for a cash payment to WFLP in the amount of $15,873,461, which is
equivalent to the aggregate outstanding principal and accrued interest
severally owing by the Senior Executive Officers and WEL to WFLP. Such
promissory notes, which are made payable to the Company, accrue interest at 6%
per annum and are fully secured by the pledge of shares of Common Stock held by
the note obligors. The outstanding principal and accrued interest (compounded
quarterly) is payable in a single lump sum in May 2001. The aggregate principal
amounts of such loans made to each Senior Executive Officer and WEL in 1993,
1994 and 1995, and the aggregate balance of the notes representing such loans
that were purchased by the Company in connection with its formation, are as
follows:
<TABLE>
<CAPTION>
AGGREGATE
1994 1995 BALANCE(1)
---- ---- ----------
<S> <C> <C> <C>
James D. Carreker $ 669,634 $ 1,867,627 $ 5,135,155
Leslie V. Bentley $ 218,594 $ 767,104 $ 1,890,000
Anne L. Raymond $ 0 $ 4,417,588 $ 4,625,275
Stanley M. Koonce, Jr. $ 207,995 $ 547,207 $ 1,925,465
WEL $ 323,405 $ 881,488 $ 3,043,838
</TABLE>
(1) The aggregate balances are as of December 31, 1996, include principal
and accrued interest and reflect indebtedness incurred prior to
January 1, 1994.
In 1995, the Company made loans to WHC-LG Hotel Partners L.P.,
Pleasanton Hotel Partners, L.P. and New Orleans Hotel I, L.P., each of which is
owned directly or indirectly by Crow Family Members and the Senior Executive
Officers (the "Investing Partnerships"). The purpose of the loans was to
finance such Investing Partnerships' acquisition, construction and renovation
of hotels owned by the following three Hotel Partnerships: WHC-LG Hotel
Associates, L.P. (La Guardia Airport), Pleasanton Hotel Associates, Ltd.
(Pleasanton Garden) and Convention Center Boulevard Hotel Limited (Wyndham
Riverfront). The aggregate amount of such loans was $6,431,263, all of which
was outstanding as of December 31, 1996. The loans are secured by the Investing
Partnerships' partnership interests in the Hotel Partnerships. The loans accrue
interest at 9%, are payable in May, October and December of 2005 and are
reduced by any cash distributions by such Hotel Partnerships to the Investing
Partnerships.
During 1995, WFLP incurred indebtedness to the Company in the amount
of $1,253,754 for the purpose of acquiring or developing hotel properties, to
be managed by the Company, in which the Senior Executive Officers have
ownership interests. The loan is evidenced by a promissory note, bears an
adjustable rate of interest based on the prime rate and is due and payable on
April 15, 2000.
During 1994, 1995 and 1996, the Company received hotel management fees
in the aggregate amounts of $514,472, $2,043,087 and $4,165,217, respectively,
from the Hotel Partnerships listed below (other than Bedrock Kingsway
Investment Partners Level I, L.P.), in which Bedrock has an ownership interest
(Messrs. Whitman and Decker, directors of the Company, have ownership interests
in Bedrock).
During 1994, 1995 and 1996, the Company made cash advances in the
aggregate amounts of $1,092,537, $1,380,702 and $328,650, respectively, to the
Hotel Partnerships listed below, in which Bedrock has an ownership interest.
The advances were used to pay certain renovations costs for Wyndham Garden
Hotels that were redeveloped by Bedrock. The advances are repaid through
Bedrock's redevelopment fund. At December 31, 1996, no amounts were
outstanding.
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<PAGE> 115
During 1994, 1995 and 1996, the Company received payments in the
aggregate amounts of $798,503, $976,980 and $139,318, respectively, from the
Hotel Partnerships listed below, in which Bedrock has an ownership interest.
The payments were received as fees for certain design and construction services
provided by the Company to such entities.
During 1994, 1995 and 1996, the Company received payments in the
aggregate amounts of $170,669, $831,553 and $1,584,726, respectively, from the
Hotel Partnerships listed below, in which Bedrock has an ownership interest.
The payments were received as reimbursements for certain administrative, tax,
legal, accounting, finance, risk management, sales and marketing services
provided by the Company to such entities.
<TABLE>
<CAPTION>
HOTEL PARTNERSHIP(1) HOTEL
-------------------- -----
<S> <C>
Grand Avenue Partners L.P. Wyndham Checkers Hotel
Bedrock Metrolux Investment Partners Wyndham Hotel at Metrocenter
Level I, L.P.
Bedrock Annapolis Investment Partners Wyndham Garden Hotel-Annapolis
Level I, L.P.
Burlington Garden Partners Level I, L.P. Wyndham Garden Hotel-Burlington
CC Bedrock Investment Partners Level I, L.P. Wyndham Garden Hotel-Culver City
BRP Denver Garden Partners Level I, L.P. Wyndham Garden Hotel-Denver
Detroit Metro Partners Level I, L.P. Wyndham Garden Hotel-Detroit
Airport
Bedrock Marin Investment Partners Wyndham Garden Hotel-Marin/San
Level I, L.P. Rafael
BR Partners--Monrovia Level I, L.P. Wyndham Garden Hotel-Monrovia
Bedrock Oakbrook Investment Partners Wyndham Garden Hotel-Oakbrook
Level I, L.P.
O'Hare Garden Partners Level I, L.P. Wyndham Garden Hotel-O'Hare
Garden LBV Investment Partners I, L.P. Wyndham Garden Hotel-Lake Buena
Vista
Bedrock Kingsway Investment Partners Wyndham Garden Hotel-Piscataway
Level I, L.P.
BR Pittsburgh Airport Level I, L.P. Wyndham Garden Hotel-Pittsburgh
BRP Waltham Investment Partners Wyndham Garden Hotel-Waltham
Level I, L.P.
KC Plaza Investment Partners, Level I L.P. Wyndham Garden-Kansas City
Bed Lex Investment Partners, Level I L.P. Wyndham Garden-Lexington
</TABLE>
- ---------------------
(1) Management fees, reimbursements and design and construction fees were
not received from all of the Hotel Partnerships in both years. In
addition, cash advances were not made by the Company to all of the
Hotel Partnerships in both years.
During 1994, 1995 and 1996, the Company made payments in the aggregate
amounts of $1,352,468, $1,739,804 and $1,742,369, respectively, to Wyndham
Travel Management Ltd., an entity owned by Lucy Billingsley (the daughter of
Trammell Crow), for travel services provided to the Company.
During 1994 and 1995, the Company made payments in the aggregate
amounts of $701,203 and $830,164, respectively, to CHMC, which is owned by Crow
Family Members, pursuant to the an agreement pursuant to which the Company
acquired in 1988 a number of management agreements relating to Wyndham brand
hotels then in operation.
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<PAGE> 116
The Company's payment obligations under the agreement were released and
discharged in connection with the formation of the Company in exchange for a
cash payment paid by the Company to CHMC.
During 1994, 1995 and 1996, the Company made payments in the aggregate
amounts of $743,922, $875,122 and $850,330, respectively, as lease payments for
its corporate office space to Tower 2001 Limited Partnership, a partnership in
which Crow Family Members have an ownership interest. The Company's current
lease on its corporate office space expires in April 1997. Following this
period, the lease reverts to a month-to-month term.
During 1994 and 1995, the owners of hotels owned or leased by the
Company made contributions to a loss prevention fund in the amounts of $620,006
and $624,422, which funds were deposited to WFLP pending the use of such
contributions by the loss prevention fund. The contributions were used to cover
a portion of the deductible on insurance policies for such hotels in connection
with insured claims made against the hotels.
In 1995, the Company made payments in connection with entering into a
management contract for the Wyndham Anatole Hotel, in which Crow Family Members
have an ownership interest. The amount of such payment was $523,360 and the
purpose was to pay costs associated with converting the property to the Wyndham
brand.
During 1994, 1995 and 1996, the Company received payments in the
aggregate amounts of $175,366, $176,210 and $182,720, respectively, from
Crow-Los Patios Limited, a senior assisted living facility in which certain
Crow Family Members have an ownership interest. The payments were received as
management fees.
During 1994, 1995 and 1996, the Company made payments in the aggregate
amounts of $321,333, $332,113 and $288,577, respectively, to GHMB, Inc., an
entity owned by Mr. Bentley for the operation of liquor concessions at the
Wyndham Garden Commerce.
In 1994, the Company paid $155,000 to Rochelle Charter, Inc.
("Rochelle"), an entity in which Trammell Crow, his spouse and Harlan R. Crow
have an interest. The payment was made to charter a boat that was operated by
Rochelle and used by the Company to entertain business associates.
During 1995 and 1996, the Company received payments in the aggregate
amount of $72,593 and $514,232 from Convention Center Boulevard Hotel Limited,
Waterfront Hotel Associates, S.E. and WHC-LG Hotel Associates, L.P., Hotel
Partnerships in which Crow Family Members and some or all of the Senior
Executive Officers have an interest. The payments were received as construction
and renovation fees for the Wyndham Riverfront and Wyndham San Juan Hotels and
for the Company's La Guardia Airport hotel.
The Company is a guarantor of the obligations of Playhouse Square
Hotel Limited Partnership (the owners of which include Crow Family Members and
the Senior Executive Officers, except for Ms. Raymond) to fund operating
deficits relating to such Hotel Partnership. The guarantee requires the
guarantors (including the Company) to advance up to $600,000 per year to the
extent the Hotel Partnership experiences operating deficits, with maximum
required advances of $2.3 million over the term of the guarantee extending from
1995 to 2000. Playhouse Square Hotel Limited Partnership has caused to be
deposited the sum of $1,000,000 as a reserve to secure the payment of the
guaranteed obligations and to fund operating deficits. The Company has not to
date been required to make any advance under the guarantee.
Pursuant to the terms of the management contract for the San Juan
hotel, the Company has made a commitment to provide furniture, fixtures and
equipment at a fixed price of $6.0 million. In addition, with respect to the
Riverfront hotel, the Company has entered into an operating deficit guaranty,
which requires the Company 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. In addition, the Company has guaranteed $875,000 in
indebtedness relating to the Riverfront hotel. The Company also made a
commitment to provide furniture, fixtures and equipment for the Riverfront
hotel at a fixed price of $2.1 million. The actual cost of such furniture,
fixtures and equipment (including certain other expenses) was approximately
$2.4 million. The Company has indirectly paid the excess amount of
approximately $300,000 hotel by contributing
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such amount to Convention Center Boulevard Hotel Limited, the partnership that
owns the Riverfront hotel (the "Riverfront Partnership"). The contribution is
treated as having been made on behalf of Crow Family Members and the Senior
Executive Officers, who have an indirect ownership interest in the Riverfront
Partnership. The Company is entitled to repayment of the contributed amount
out of distributions made by the Riverfront Partnership in respect of the
contributed amount. The Company also paid certain pre-opening expenses for the
Riverfront hotel in the amount of $495,000.
Pursuant to the terms of its management agreement relating to the
Wyndham Hotel at Los Angeles Airport (the "LAX"), Wyndham agreed to loan
$4,560,000 to be applied to costs of refurbishment of the LAX. The
refurbishment loan is evidenced by a promissory note (the "Note Receivable"),
which has been partially funded in the amount of $3,973,736 as of December 31,
1996. The Company's obligation to make the remaining advances under the
refurbishment loan is secured by a letter of credit, which, in turn, is
collateralized by $865,439 as of December 31, 1996 in cash. Prior to the
formation of the Company, WHC LAX Associates, L.P. ("WHC LAX"), a limited
partnership owned by Crow Family Members and the Senior Executive Officers,
paid to Wyndham $4,560,000 in return for Wyndham's agreement to pay to WHC LAX
all payments that Wyndham receives under the Note Receivable. Wyndham also
agreed that, insofar as the WHC LAX's $4,560,000 payment to the Company exceeds
advances that Wyndham is obligated to make, but has not yet made, under the
Note Receivable, it would pay to WHC LAX interest at a variable rate that has
ranged from 5.25% to 5.81% per annum on the unfunded amounts. As of December
31, 1996, the Company has accrued such interest in the amount of $31,779.
In 1996, James D. Carreker received a $100,000 consulting fee for
services provided as a consultant to Trammell Crow Company, an entity in which
Crow Family Members have an interest.
The Company has entered into a five year service agreement with ISIS
2000, an entity owned by Crow Family Members and the Senior Executive Officers,
whereby ISIS 2000 will provide centralized reservations and property management
services to all Wyndham brand hotels. The services will be provided for a fee
comprised of an initial link-up charge plus a per reservation fee and a per
hotel charge for the property management system. The service fee payable by the
Company totaled $772,372 in 1996. The Company has entered into an asset
management agreement with ISIS 2000 providing for human resource, finance,
accounting, payroll, legal and tax services. In addition, the Company has
guaranteed operating leases on behalf of ISIS 2000 in the approximate amount of
$2.0 million as of December 31, 1996.
In 1995 and 1996, the Company made payments to Trammell Crow Company
in the amounts of $386,759 and $937,051, respectively, for contract labor
(including related costs) provided to the Company for management information
services.
The Company has made insurance premium payments to Wynright Insurance
("Wynright"), an entity owned by Crow Family Members and the Senior Executive
Officers, with respect to certain insurance policies maintained for the benefit
of the Company and hotels owned or leased by the Company. Such payments totaled
$592,774 in 1996. The Company also will enter into an asset management
agreement with Wynright providing for human resource, finance, accounting,
payroll, legal and tax services.
In 1996, a subsidiary of the Company entered into a master management
agreement (the "Agreement") with Homegate, an entity in which Crow Family
Members have an interest, which provides for the Company to manage up to 60
extended-stay hotel properties and to provide Homegate with market research, a
preferred vendor program, a proprietary property management software package,
and national and local marketing efforts. In addition, Messrs. Carreker and
Harlan R. Crow serve on the board of Homegate. The Company and Homegate have
agreed that Homegate will pay Wyndham or an affiliate a one-time fee of $25,000
for Wyndham's provision of design services in developing the initial prototype,
certain other fees for the provision of software and other services, and a
commission of 5% of the aggregate purchase price of all items that Homegate
purchases through Wyndham's purchasing department. Homegate also must reimburse
Wyndham for up to $100,000 for the costs incurred in developing Homegate's
payroll and accounts payable software and for developing a marketing database,
which costs will be reimbursed ratably upon
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the signing of the first 10 management contracts. Wyndham and Homegate will
agree upon any fees to be paid with respect to ongoing systems support and
maintenance services.
The Company currently manages six extended-stay hotel properties for
Homegate pursuant to separate management agreements, as provided for by the
Agreement. The aggregate amount of management, technical service, purchasing
and other fees paid to Wyndham totaled $206,849 in 1996.
In connection with the execution of the Agreement, certain Crow Family
Members have agreed to grant Wyndham a right of first refusal affording Wyndham
a preferential right to purchase their shares in connection with any proposed
sale by any of such parties or their affiliates of shares of Homegate Common
Stock into the public market pursuant to Rule 144 under the Securities Act or
pursuant to a shelf registration statement filed pursuant to such Act.
BEDROCK INVESTMENT PROGRAM
In May 1994, the Company entered into an Investment Agreement and an
Option Agreement (collectively, the "Bedrock Agreements") with Bedrock pursuant
to which, as amended, Bedrock agreed to provide up to $335 million in equity
and debt capital (the "Investment Program") to acquire hotels or hotel
management companies and to make hotel related investments that are approved by
both the Company and Bedrock. Approximately $196 million of debt and equity
capital had been invested pursuant to the Investment Program as of December 31,
1996. Although the commitments of certain of the participants in the Investment
Program expire in mid-1997, the Company will be entitled to manage any
Investment Program hotel for a term of 15 years. Pursuant to the terms of the
Investment Agreement, Bedrock is not required to invest a minimum amount of
capital through the Investment Program, and Wyndham had not invested in any of
the 17 hotels acquired pursuant to the Investment Program. Pursuant to the
Investment Agreement, as amended, the Company and Bedrock have agreed that the
Company will be permitted to manage any hotel with 250 or fewer rooms that is
sourced by Bedrock. Subject to certain limitations, certain Crow Family Members
have the right to co-invest with Bedrock in the Investment Program. The Company
also has certain limited rights to co-invest with Bedrock in the Investment
Program; provided, however, that once the Company elects to co-invest in
Investment Program projects, it must co-invest in each subsequent project or it
would forfeit additional rights to co-invest. At December 31, 1994, 1995 and
1996, the Company had executed management contracts with Bedrock for 11, 15 and
17 Wyndham brand hotels, respectively, through the Investment Program.
Bedrock has certain registration rights with respect to 2,276,055
shares of Common Stock. See "Description of Capital Stock -- Registration
Rights." Bedrock also entered into the Stockholders' Agreement with the
Company, Crow Family Members, the Senior Executive Officers and WEL, which
provides for, among other things, representation on the Company's Board of
Directors. See "Management -- Directors and Executive Officers" and
"Description of Capital Stock -- Stockholders' Agreement."
The Bedrock Agreement provides for a contingent payment (the
"Contingent Option Payment") to Old Wyndham, for distribution to the
non-Bedrock owners of Old Wyndham, at such time as all hotels financed by the
Investment Program achieve an investment return target of 15% on all equity
capital invested through such program plus certain overhead costs. The amount
of the Contingent Option Payment is 10% of all cash proceeds realized in excess
of the investment return target. The Contingent Option Payment is due 70% upon
the achievement of the investment target return and 30% upon Bedrock's
disposition of its entire interest in Wyndham. A separate entity owned by Crow
Family Members, the Senior Executive Officers and WEL has purchased the right
to the Contingent Option Payment for $10,000 from the owners of Old Wyndham in
connection with the Company's initial public offering (WEL's interest in the
Contingent Option Payment was subsequently transferred to certain Crow Family
Members and the Senior Executive Officers).
POLICY WITH RESPECT TO RELATED PARTY TRANSACTIONS
With respect to future material transactions (or series of related
transactions) between the Company and related parties, the Company has
implemented a policy requiring any such transaction to be approved by a
majority of the
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Independent Directors, if any, upon such directors' determination that the
terms of the transaction are no less favorable to the Company than those that
could be obtained from unrelated third parties. The policy defines a material
related party transaction (or series of related transactions) as one involving
a purchase, sale, lease or exchange of property or assets or the making of any
investment with a value to the Company in excess of $1.0 million or a service
agreement (or series of related agreements) with a value in excess of $1.0
million in any fiscal year. There can be no assurance that this policy always
will be successful in eliminating the influence of conflicts of interest.
BENEFITS OF THE FORMATION OF THE COMPANY TO RELATED PARTIES
In connection with their participation in the transactions related to
the formation of the Company, certain major stockholders, directors and
executive officers of the Company received the following benefits.
At the closing of the initial public offering of the Company, Crow
Family Members received, collectively, 9,487,391 shares of Common Stock and
$19.6 million in cash in exchange for their interests in the businesses
acquired by the Company in connection with its formation (of which 31,250
shares were transferred indirectly to Ms. Groenteman shortly following the
initial public offering). See "Principal Stockholders." In addition, Crow
Family Members received $3.8 million in cash as a result of the repayment of
certain loans that they made to certain of the businesses acquired by the
Company in connection with its formation. WFLP, a partnership owned by Crow
Family Members, received $18.6 million in cash for the sale of promissory notes
that represented obligations of the Senior Executive Officers and WEL. CHMC,
which is owned by certain Crow Family Members, received $6.0 million, in cash,
as consideration for the release and discharge of the Company's payment
obligations under the CHMC Agreement.
The Senior Executive Officers of the Company received the following
number of shares of Common Stock in exchange for their respective interests in
the businesses acquired by the Company in connection with its formation:
- James D. Carreker: 1,173,416 shares;
- Leslie V. Bentley: 330,377 shares
- Anne L. Raymond: 380,151 shares; and
- Stanley M. Koonce, Jr.: 388,001 shares.
Bedrock (in which Messrs. Whitman and Decker have ownership interests)
received 2,276,055 shares of Common Stock in consideration of Bedrock's
transfer to the Company of the certain options owned by Bedrock and to purchase
Wyndham Common Stock and contribution by Bedrock in the amount of $10.0
million.
WEL (in which certain executive officers and employees of the Company
participate) received 646,669 shares of Common Stock in exchange for its
interests in the businesses acquired by the Company in connection with its
formation.
TCI, which is owned by certain Crow Family Members and the Senior
Executive Officers, received a payment of approximately $250,000 from the
Company as a commission that was paid to an employee of TCI for his efforts in
facilitating the sale of the 11 Wyndham Garden Hotels to Hospitality Properties
Trust.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock for (i) each director of the Company, (ii)
each of the Named Executive Officers, (iii) all directors and executive
officers of the Company as a group and (iv) each person or group who was on
such date the beneficial owner of more than five percent of the outstanding
Common Stock.
<TABLE>
<CAPTION>
SHARES OWNED SHARES OWNED AFTER
BEFORE PLAN OF DISTRIBUTION PLAN OF DISTRIBUTION
--------------------------- --------------------
NAME(1) NUMBER PERCENT NUMBER PERCENT
------- ------ ------- ------ -------
<S> <C> <C> <C> <C>
CF Securities, L.P.(2)(3).................. 9,447,745 47.20% 9,447,745 47.20%
Harlan R. Crow(3)(4) 100 * 100 *
James D. Carreker(5)....................... 1,365,309 6.82% 1,371,775 (6) 6.85%
Wyndham Employees, Ltd.(7)............... 646,669 3.31% -- --
Leslie V. Bentley(8)....................... 392,057 1.96% 392,057 1.96%
Anne L. Raymond ........................... 380,151 1.90% 380,151 1.90%
Stanley M. Koonce, Jr...................... 388,001 1.92% 388,001 1.92%
Carla S. Moreland.......................... 600 * 9,887 *
Eric A. Danziger(9)........................ 381,234 1.90% 381,234 1.90%
Bedrock(10)................................ 2,276,055 11.37% 2,276,055 11.37%
Daniel A. Decker(11)
Robert A. Whitman(11)
Susan T. Groenteman(12).................... 31,250 * 31,250 *
James C. Leslie............................ 3,000 * 3,000 *
Philip J. Ward............................. -- -- -- --
Directors and executive officers
as a group (16 persons).................. 14,937,637(13) 74.62% 14,347,549 (14) 71.67%
</TABLE>
* Less than 1%.
(1) The address of each beneficial owner, with the exception of CF
Securities, L.P., Bedrock and Susan T. Groenteman, is 2001 Bryan
Street, Suite 2300, Dallas, TX 75201.
(2) When the shares held by CF Securities, L.P. are aggregated with the
shares held separately by Harlan R. Crow and a single Crow Family
Member, the total number of shares held by Crow Family Members would
be 9,456,241 shares (47.3% of the outstanding Common Stock). The
address of CF Securities, L.P. is 2001 Ross Avenue, Dallas, TX 75201.
(3) Harlan R. Crow directly holds 100 shares of Common Stock. Mill Springs
Holdings, Inc. ("Mill Springs") is the general partner of CF
Securities, L.P. Mr. Crow is a principal stockholder of Mill Springs
and its sole director. Mr. Crow disclaims beneficial ownership of all
Common Stock held by CF Securities, L.P.
(4) Mr. Crow is a director of Wyndham Hotel Management Corporation
("WHMC"), which holds 114,222 shares of Common Stock. WHMC is the
General Partner of WEL, which, prior to the Plan of Distribution, held
646,669 shares of Common Stock. Mr. Crow disclaims beneficial
ownership of all shares of Common Stock held by WHMC or WEL.
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<PAGE> 121
(5) James D. Carreker directly holds 1,173,416 shares of Common Stock,
including 100 shares issued to Mr. Carreker in the initial formation
of the Company. Shares listed in the table include 77,671 shares held
in a trust for which Mr. Carreker is the special trustee and has full
voting rights. Mr. Carreker disclaims beneficial ownership of all
Common Stock held in the trust. Shares listed also include 114,222
shares held by WHMC, but exclude the 646,669 shares held by WEL prior
to the Plan of Distribution. Mr. Carreker is a director and principal
stockholder of WHMC, which is the General Partner of WEL. Mr. Carreker
disclaims beneficial ownership of all Common Stock held by WHMC beyond
his percentage ownership therein and disclaims beneficial ownership of
all Common Stock held by WEL beyond the percentage ownership held
therein by WHMC.
(6) Includes 6,466 shares to be distributed to WHMC in th Plan of
Distribution. Mr. Carreker is a director and principal stockholder of
WHMC, which is the General Partner of WEL. Mr. Carreker disclaims
beneficial ownership of all Common Stock held by WHMC beyond his
percentage ownership therein.
(7) Mr. Carreker is a director and principal stockholder of WHMC, which is
the General Partner of WEL. Mr. Crow is a director of WHMC. Both
Messrs. Carreker and Crow disclaim beneficial ownership of all Common
Stock held by WEL.
(8) Includes 61,680 shares held in trusts for which Mr. Bentley is the
special trustee and has full voting rights. Mr. Bentley disclaims
beneficial ownership of all Common Stock held in the trusts.
(9) Mr. Danziger resigned from the Company in July 1996.
(10) The address of Bedrock is 2200 Ross Avenue, Suite 4200 West, Dallas,
Texas 75201.
(11) Robert A. Whitman and Daniel A. Decker directly hold no shares of
Common Stock. Messrs. Whitman and Decker are principals of Hampstead,
an affiliate of Bedrock. Messrs. Whitman and Decker disclaim
beneficial ownership of all Common Stock held by Bedrock.
(12) Ms. Groenteman's address is 2001 Ross Avenue, Dallas, TX 75201.
(13) Includes shares held by WEL. WHMC is the corporate general partner of
WEL. Mr. Carreker is a director and a principal stockholder of WHMC,
and Mr. Crow is a director of WHMC, but each disclaims beneficial
ownership of all Common Stock held by WEL. Excludes shares held by
Eric A. Danziger, who resigned from the Company in July 1996.
(14) Reflects shares distributed by WEL in Plan of Distribution to
executive officers and entities owned by directors and executive
officers, assuming no executive officer sells shares immediately
following the Plan of Distribution, based on the number of shares
allocable as of June 30, 1996. Excludes shares held by Eric A.
Danziger, who resigned from the Company in July 1996.
SHARES ELIGIBLE FOR FUTURE SALE
The Company has outstanding 20,018,299 shares of Common Stock, of
which 4,197,500 shares are freely tradeable without restriction under the
Securities Act unless purchased by "affiliates" of the Company. Following the
Plan of Distribution and the Lock-Up Period, the 646,669 shares of Common Stock
distributed to WEL Participants also will be freely tradeable without
restriction under the Securities Act by persons other than "affiliates" of the
Company.
The remaining 15,174,130 shares of Common Stock are "restricted
securities" under the Securities Act. These shares may not be sold unless they
are registered under the Securities Act or unless an exemption from
registration, such as the exemption provided by Rule 144 under the Securities
Act, is available. The Company has granted certain registration rights to Crow
Family Members, the Senior Executive Officers, Bedrock, Ms. Groenteman and Mr.
Danziger covering the 15,316,667 restricted shares of Common Stock issued in
the formation of the Company. In addition, the Company has granted certain
registration rights to General Electric with respect to 504,032 restricted
shares issued to General Electric in connection with the formation of the
Company. See "Description of Capital Stock -- Registration Rights."
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In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated), including an affiliate of the Company,
who has beneficially owned restricted shares for at least two years, will be
entitled to sell in any three-month period a number of shares that does not
exceed the greater of (i) 1% of the then outstanding shares of the Common Stock
(approximately 200,000 shares) or (ii) the average weekly trading volume of the
Common Stock on the New York Stock Exchange during the four calendar weeks
immediately preceding the date on which notice of the sale is filed with the
Commission. Sales pursuant to Rule 144 are also subject to certain other
requirements relating to manner of sale, notice and availability of current
public information about the Company. A person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of the Company at any
time during the three months immediately preceding the sale is entitled to sell
restricted shares pursuant to Rule 144(k) without regard to the limitations
described above, provided that three years have expired since the later of the
date on which such restricted shares were acquired from the Company or the date
they were acquired from an affiliate of the Company.
The Company has adopted the Incentive Plan and the Retainer Plan for
the purpose of attracting, retaining and motivating executive officers of the
Company, other key employees and directors. The Company has reserved 2,133,811
shares of Common Stock for future issuance under the Incentive Plan and 50,000
shares of Common Stock for future interest under the Retainer Plan. The
Company's Board of Directors granted options to purchase an aggregate of
797,700 shares of Common Stock under the Incentive Plan to certain key
personnel in connection with the formation of the Company at the initial public
offering price. The Company has filed a registration statement under the
Securities Act to register shares of Common Stock issuable upon the exercise of
stock options granted under the Incentive Plan or shares of Common Stock
issuable under the Retainer Plan. See "Management -- 1996 Long Term Incentive
Plan" and " -- Director Compensation." Shares issued upon the exercise of stock
options after the effective date of such registration statement generally will
be available for sale in the open market.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED SHARES
The authorized capital stock of the Company consists of 45,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock, $.01 par value
per share ("Preferred Stock"), issuable in series.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Accordingly, holders of a
majority of shares of Common Stock entitled to vote in any election of
directors may elect all of the directors standing for election. Holders of
Common Stock are entitled to receive dividends and other distributions when, as
and if declared from time to time by the Board of Directors out of funds
legally available therefor subject to any preferential rights of, and sinking
fund or redemption or purchase rights with respect to, any Preferred Stock that
may be issued. In the event of voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities
subject to prior distribution rights of any Preferred Stock then outstanding.
Holders of the Common Stock have no preemptive or conversion rights and the
Common Stock is not subject to further calls or assessment by the Company.
There are no redemption or sinking fund provisions applicable to the Common
Stock.
PREFERRED STOCK
The Company's Certificate of Incorporation ("Certificate") authorizes
5,000,000 shares of Preferred Stock, none of which is outstanding. The Board of
Directors has the authority, without any further vote or action by the
stockholders, to issue Preferred Stock in one or more series and to fix the
number of shares, designations, relative rights (including voting rights),
preferences and limitations of such series to the full extent now or
hereinafter permitted by Delaware law. The Company has no present intention to
issue shares of Preferred Stock.
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DIRECTORS' LIABILITY
As authorized by the Delaware General Corporation Law ("DGCL"), the
Certificate limits the liability of Directors to the Company for monetary
damages. The effect of this provision in the Certificate is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a Director
for breach of fiduciary duty as a Director (including breaches resulting from
negligent behavior), except in certain limited situations. This provision does
not limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a
breach of a Director's fiduciary duty. These provisions will not alter the
liability of Directors under federal securities law.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to the provisions of Section 203 of the DGCL.
That section provides, with certain exceptions, that a Delaware corporation may
not engage in any of a broad range of business combinations with a person or an
affiliate or associate of such person who is an "Interested Stockholder" (as
defined below) for a period of three years from the date that such person
became an Interested Stockholder unless: (i) the business combination or the
transaction resulting in a person's becoming an Interested Stockholder is
approved by the board of directors of the corporation before the person becomes
an Interested Stockholder, (ii) upon consummation of the transaction which
resulted in the person becoming an Interested Stockholder, the Interested
Stockholder owned 85% or more of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares owned by
persons who are both officers and directors of the corporation and shares held
by certain employee stock ownership plans) or (iii) on or after the date the
person became an Interested Stockholder, the business combination is approved
by the corporation's board of directors and by the holders of at least 66 2/3%
of the corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the Interested Stockholder. An "Interested
Stockholder" is defined as any person that is (i) the owner of 15% or more of
the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an Interested Stockholder. The Company believes that by
its terms, Section 203 does not restrict transactions with CF Securities, L.P.,
which became an Interested Stockholder in connection with the formation of the
Company, or any other party to the Stockholders' Agreement that becomes an
Interested Stockholder (for purposes of Section 203) as a result of the
exercise of the right of first offer described under " -- Stockholders'
Agreement." In such cases, the Company's Board of Directors has approved the
transactions pursuant to which such parties will or may become Interested
Stockholders.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Certificate could have an anti-takeover
effect. These provisions are intended to enhance the likelihood of continuity
and stability in the composition of the Board of Directors of the Company and
in the policies formulated by the Board of Directors and to discourage certain
types of transactions, described below, which may involve an actual or
threatened change in control of the Company. The provisions are designed to
reduce the vulnerability of the Company to an unsolicited proposal for a
takeover of the Company that does not contemplate the acquisition of all of its
outstanding shares, or an unsolicited proposal for the restructuring or sale of
all or part of the Company. The provisions are also intended to discourage
certain tactics that may be used in proxy fights. The Board of Directors
believes that, as a general rule, such takeover proposals would not be in the
best interests of the Company and its stockholders. See "Risk Factors --
Anti-Takeover Matters."
Classified Board of Directors. The Certificate provides for the Board
of Directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the Board of
Directors will be elected each year.
The Board of Directors believes that a classified Board of Directors
will help to assure the continuity and stability of the Board of Directors and
the business strategies and policies of the Company as determined by the Board
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of Directors, because the likelihood of continuity and stability in the
composition of the Company's Board of Directors and in the policies formulated
by the Board will be enhanced by staggered three-year terms.
The classified board provision could have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain
control of the Company, even through such an attempt might be beneficial to the
Company and its stockholders. In addition, the classified board provision could
delay stockholders who do not agree with the policies of the Board of Directors
from removing a majority of the Board for two years. See " -- Number of
Directors; Removal; Filling Vacancies."
Number of Directors; Removal; Filling Vacancies. The Certificate will
provide that the Board of Directors will consist of between 5 and 13 members,
the exact number to be fixed from time to time by resolution adopted by a
majority of the directors then in office. The Company's board currently
consists of eight directors. Further, subject to the Stockholders' Agreement
and the rights of the holders of any series of Preferred Stock then
outstanding, the Certificate authorizes only the Board of Directors to fill
vacancies, including newly created directorships. Accordingly, this provision
could prevent a stockholder from obtaining majority representation on the Board
of Directors by enlarging the Board of Directors and filling the new
directorships with its own nominees. Subject to the Stockholders' Agreement and
the rights of the holders of any series of Preferred Stock then outstanding,
the Certificate also provides that directors of the Company may be removed only
for cause and only by the affirmative vote of holders of a majority of the
outstanding shares of voting stock.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Certificate establishes an advance notice procedure for the
nomination, other than by or at the discretion of the Board of Directors or a
committee thereof, of candidates for election as director as well as for other
stockholder proposals to be considered at annual stockholders' meetings.
Notice of stockholder proposals and director nominations must be
timely given in writing to the Secretary of the Company prior to the meeting at
which the matters are to be acted upon or the directors are to be elected. To
be timely, notice must be received at the principal offices of the Company not
less than 60, nor more than 90, days prior to the meeting of stockholders;
provided, that in the event that less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made, notice by the
stockholder in order to be timely must be so received not later than the close
of business on the 10th day following the day on which notice of the date of
the meeting was mailed or the day on which public disclosure was made,
whichever first occurs.
The purpose of requiring advance notice is to afford the Board of
Directors an opportunity to consider the qualifications of the proposed
nominees or the merits of other stockholder proposals and, to the extent deemed
necessary or desirable by the Board of Directors, to inform stockholders about
those matters.
Written Consent; Special Meetings of Stockholders . The Certificate
prohibits the taking of stockholder action by written consent without a
meeting. The Certificate provides that special meetings of the stockholders of
the Company may be called only by the Chairman, or a majority of the members of
the Board of Directors. These provisions will make it more difficult for
stockholders to take action opposed by the Board of Directors.
Amendment of Certain Provisions of the Certificate. The Certificate
generally requires the affirmative vote of the holders of at least 662/3% of
the outstanding voting stock in order to amend any provisions of the
Certificate concerning (i) the classified board, (ii) the amendment of Bylaws,
(iii) any proposed compromise or arrangement between the Company and its
creditors, (iv) the authority of stockholders to act by written consent, (v)
the liability of directors, (vi) certain mergers, consolidations and sales,
leases and exchanges of all or substantially of the Company's property and
assets, (vii) the required vote to amend the Certificate, (viii) the call of a
special meeting of stockholders, (ix) stockholder proposals concerning business
to be conducted at an annual meeting of stockholders, (x) director nominations
by stockholders, (xi) what considerations the Board, a committee of the Board
and each director may take into account when discharging their respective
duties, (xii) indemnification of directors and (xiii) authorization of the
Board to pursue or take action with respect to transactions that would result
in a change of control of the Company.
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These voting requirements will make it more difficult for minority stockholders
to make changes in the Certificate which could be designed to facilitate the
exercise of control over the Company. In addition, the requirement for approval
by at least a 662/3% stockholder vote will enable the holders of a minority of
the voting stock of the Company to prevent the holders of a majority or more of
such securities from amending such provisions of the Certificate.
In addition, the Stockholders' Agreement described below may have the
effect of delaying, deterring or preventing a takeover of the Company. See " --
Stockholders' Agreement."
STOCKHOLDERS' AGREEMENT
In connection with its formation, the Company entered into a
stockholders' agreement (the "Stockholders' Agreement") with various affiliates
of Bedrock (for purposes of this section of the Prospectus, the "Bedrock
Stockholders") and certain Crow Family Members, the Senior Executive Officers,
WEL and Ms. Groenteman (the "Crow/Wyndham Stockholders"), which imposes certain
restrictions on the transfer of Common Stock held by such stockholders (the
"Stockholders") and entitles such Stockholders to certain rights regarding
corporate governance. Following the Plan of Distribution, neither WEL nor WEL
Participants will be a party to the Stockholders' Agreement.
Pursuant to the Stockholders' Agreement, each of the Stockholders
agree not to sell, transfer, pledge or otherwise dispose of ("Transfer") its
Common Stock otherwise than as permitted by the provisions of the Stockholders'
Agreement. The Stockholders' Agreement permits the following Transfers: (i)
open-market sales not exceeding the volume limitations imposed by Rule 144
under the Act, (ii) sales in the Offering and (iii) Transfers of Common Stock
by WEL to the direct or indirect owners of equity interests in WEL. The
Stockholders' Agreement also provides that any Stockholder may Transfer any
Common Stock, provided that the transferee agrees to be bound by the
Stockholders' Agreement, (a) to any wholly-owned affiliate of the selling
Stockholder, (b) to certain selling Stockholder family members, trusts or, if
the selling stockholder is a corporation, partnership or other entity, its
equity owners, (c) to certain Crow Family Members or their lineal descendants
(the "Crow Interests"), (d) to the Company or to any then-existing Crow/Wyndham
Stockholder or to any full time senior executive officer of the Company, (e) as
a pledge to secure indebtedness, provided that the pledgee agrees to offer a
right of purchase, in the event of any foreclosure of the pledge, to the other
Stockholders in accordance with the Stockholders' Agreement, and (f) to the
owners of equity interests in a Stockholder upon a partial or complete
liquidation or dissolution of such Stockholder.
The Stockholders' Agreement further provides that except with respect
to a permitted Transfer described above, the proposed Transfer by a Stockholder
to a third party of Common Stock shall be subject to a first right of purchase
in favor of the Stockholders in the other Stockholder Group (as defined below)
at the price and on the other terms of the proposed third-party sale. Wyndham
has a prior right to purchase Common Stock subject to a proposed Transfer if
the offered Common Stock represents all of the Common Stock held by the Crow
Interests, but only to the extent the purchase by the Bedrock Stockholders of
the Common Stock would cause the Bedrock Stockholders to own more than 40% of
the outstanding Common Stock. A similar first right of purchase requirement
applies in the event of third-party sales in connection with a shelf
registration or an underwritten public offering in which Stockholders propose
to sell Common Stock.
Under the Stockholders' Agreement, the Bedrock Stockholders and the
Crow/Wyndham Stockholders (each, a "Stockholder Group") are each entitled to
nominate a portion of the Company's Board of Directors, such portion to be
based upon the proportionate number of shares of Common Stock held by each
Stockholder Group and to be allocated as proportionately as practicable between
Independent Directors and other directors. Each Stockholder Group is also
entitled to nominate directors to serve on each of the Board's Committees on a
similar proportionate basis. Subject to certain conditions set forth in the
Stockholders' Agreement, each Stockholder Group agrees to use its best efforts
to elect the directors nominated in accordance with the Stockholders' Agreement
and to remove directors under certain circumstances. The Stockholders'
Agreement further provides that as long as the Crow Interests own at least 30%
of the outstanding Common Stock (excluding any shares acquired from a third
party after the date of the Stockholders' Agreement), the Chairman of the Board
of Wyndham shall be a person designated by the Crow Interests. In the event the
Bedrock Stockholders own at least 30% of the outstanding Common Stock
(excluding any shares
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acquired from a third party after the date of the Stockholders' Agreement ) and
the Crow Interests no longer own at least such percentage, the Chairman of the
Board shall be a person designated by the Bedrock Stockholders.
The Stockholders' Agreement terminates upon the earliest to occur of
(a) the sixth anniversary of the date of the Stockholders' Agreement, (b) the
Bedrock Stockholders and the Crow/Wyndham Stockholders collectively owning less
than 37.5% of the outstanding Common Stock of the Company, (c) the termination
of management contracts under the Investment Program below a specified level,
(d) certain changes in control of the Bedrock Stockholders, (e) the Bedrock
Stockholders owning less than 50% of the number of shares of Common Stock held
by them immediately following the Offering and (f) any distribution of Common
Stock by the Bedrock Stockholders to direct or indirect owners of equity
interests in the Bedrock Stockholders that results in such Common Stock being
held by anyone other than a Bedrock principal or an entity controlled by such a
principal.
REGISTRATION RIGHTS
In connection with the formation of the Company, the Company entered
into a registration rights agreement with Crow Family Members, the Senior
Executive Officers, WEL, Ms. Groenteman and Bedrock (the "Registration Rights
Agreement"), pursuant to which the Company agreed, subject to certain
limitations and under certain circumstances, to register for sale any shares of
Common Stock of the Company (and other securities of the Company that are
exercisable to purchase, convertible into or exchangeable for shares of capital
stock of the Company) that are held by the parties thereto (collectively, the
"Registrable Securities"). Following the Plan of Distribution, neither WEL, nor
WEL Participants will be a party to the Registration Rights Agreement. All of
the 15,316,667 shares of Common Stock issued in the initial public offering of
the Company are Registrable Securities. The Registration Rights Agreement
provides that any holder of Registrable Securities may require the Company upon
written notice to register for sale such Registrable Securities (a "Demand
Registration"), provided that the total amount of Registrable Securities to be
included in the Demand Registration has a market value of at least $20 million
and provided that notice is not given prior to six months after the effective
date of the previous Demand Registration. If Registrable Securities are going
to be registered by the Company pursuant to a Demand Registration, the Company
must provide written notice to the other holders of Registrable Securities and
permit them to include any or all Registrable Securities that they hold in the
Demand Registration, provided that the amount of Registrable Securities
requested to be registered may be limited by the underwriters in an
underwritten offering based on such underwriters' determination that inclusion
of the total amount of Registrable Securities requested for registration would
materially and adversely affect the success of the offering. Upon notice of a
Demand Registration, the Company is required to file a Registration Statement
within 60 days of the date on which notice is given, although the Company may
postpone the filing for up to 90 days under certain circumstances. Subject to
the conditions stated or referred to above, the holders of Registrable
Securities may request an unlimited number of Demand Registrations. Crow Family
Members, the Senior Executive Officers, Ms. Groenteman and Bedrock agree not to
exercise any Demand Registration Rights for a period of six months from the
date of execution of the Registration Rights Agreement. The Registration Rights
Agreement provided for the registration of the Wyndham shares in connection
with the Plan of Distribution at the expense of the Company.
The Registration Rights Agreement also provides that, subject to
certain exceptions, in the event the Company proposes to file a registration
statement with respect to an offering of any class of equity securities, with
the exception of certain other types of registrations, the Company will offer
the holders of Registrable Securities the opportunity to register the number of
Registrable Securities they request to include (the "Piggyback Registration"),
provided that the amount of Registrable Securities requested to be registered
may be limited by the underwriters in an underwritten offering based on such
underwriters' determination that inclusion of the total amount of Registrable
Securities requested for registration would materially and adversely affect the
success of the offering. The Company is generally required to pay all of the
expenses of Demand Registrations and Piggyback Registrations, other than
underwriting discounts and commissions. In the event of a Demand Registration
within one year of the date of the Registration Rights Agreement, the holders
of the Registrable Securities being registered must pay up to $250,000
($125,000 in the case of a shelf registration) of such expenses.
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As required by the terms of a credit agreement (the "GE Credit
Agreement") between the Company and General Electric Pension Trust ("General
Electric"), the Company entered into a registration rights agreement with
General Electric (the "GE Registration Rights Agreement"). The GE Registration
Rights Agreement provides General Electric with a one time right, exercisable
during the eighteen-month period starting November 16, 1996, to effect a demand
registration of the 504,032 shares of Common Stock of the Company that it
holds. The GE Registration Rights Agreement also provides General Electric with
certain piggyback registration rights during the 18 month period, although the
securities requested to be registered may be limited or excluded by the
underwriters in an underwritten offering based on such underwriters'
determination that the inclusion of such securities (or a portion thereof)
would adversely affect the marketing of the securities to be sold by the
Company. The demand registration rights will be exercisable only if the shares
of Common Stock to be registered have a market value of at least $1.0 million.
Registration expenses (other than underwriting discounts and commissions)
relating to a piggyback registration will be borne solely by the Company and
one-half of the registration expenses relating to a demand registration will be
paid by General Electric, up to $25,000.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered by
this Prospectus will be passed upon for the Company by Locke Purnell Rain
Harrell (A Professional Corporation), Dallas, Texas.
EXPERTS
The financial statements and schedule included in this Prospectus and
elsewhere in the registration statement to the extent and for the periods
indicated in their reports have been audited by Coopers & Lybrand L.L.P.
independent accountants, and are included in this Prospectus in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
reports.
ADDITIONAL INFORMATION
The Company has filed with the Commission a registration statement on
Form S-1 (as amended and together with all exhibits and schedules thereto, the
"Registration Statement") under the Securities Act of 1933 with respect to the
shares of Common Stock offered in the Plan of Distribution. As permitted by the
rules and regulations of the Commission, this Prospectus does not contain all
of the information set forth in the Registration Statement. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement. Statements contained in this Prospectus
concerning the provisions of any contract, agreement, or other documents are
not necessarily complete. With respect to each contract, agreement, or other
document filed as an exhibit to the Registration Statement, reference is made
to the exhibit for the complete contents of the exhibit, and each statement
concerning its provisions is qualified in its entirety by such reference. The
Registration Statement may be inspected and copied at the offices of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its
regional offices at 7 World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661-2551. Copies of such materials may also be obtained by mail at
prescribed rates from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
at http://www.sec.gov.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year.
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WYNDHAM HOTEL CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
WYNDHAM HOTEL CORPORATION--COMBINED FINANCIAL STATEMENTS:
Report of Independent Accountants F-2
Combined Balance Sheets at December 31, 1994, 1995 and September 30, 1996 (unaudited) F-3
Combined Statements of Income for the years ended December 31,1993, 1994 and 1995 and the
nine months ended September 30, 1995 and 1996 (unaudited) F-5
Combined Statements of Partners' Capital and Stockholders' Equity for the years ended
December 31, 1993, 1994 and 1995 and the nine months ended September 30, 1996 F-6
(unaudited)
Combined Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and
the nine months ended September 30, 1995 and 1996 (unaudited) F-7
Notes to Combined Financial Statements F-9
GARDEN HOTELS ASSOCIATES LIMITED PARTNERSHIP
Report of Independent Accountants F-26
Balance Sheets at December 31, 1994 and 1995 F-27
Statements of Income for the years ended December 31, 1993, 1994 and 1995 F-28
Statements of Partners' Capital for the years ended December 31, 1993, 1994 and 1995 F-29
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 F-30
Notes to Financial Statements F-31
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL--
THE BRISTOL PLACE HOTEL TORONTO F-35
Report of Independent Accountants F-36
Balance Sheet at December 31, 1995 F-37
Statement of Operations for the year ended December 31, 1995 F-38
Statement of Partners' Deficit for the year ended December 31, 1995 F-39
Statement of Cash Flows for the year ended December 31, 1995 F-40
Notes to Financial Statements F-41
</TABLE>
F-1
<PAGE> 129
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners and Shareholders
Wyndham Hotel Corporation:
We have audited the accompanying combined balance sheets of Wyndham
Hotel Corporation (as identified in Note 1) (collectively the "Company") as of
December 31, 1994 and 1995 and the related combined statements of income,
partners' capital and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
the Company as of December 31, 1994 and 1995 and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
March 8, 1996
F-2
<PAGE> 130
WYNDHAM HOTEL CORPORATION
COMBINED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------- -------------
1994 1995 1996
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,620 $ 4,160 $ 20,147
Cash, restricted 271 3,053 857
Accounts receivable, less allowance of $146 in 1994, $267 in
1995 and $840 at September 30, 1996 (unaudited) 9,261 10,838 13,441
Due from affiliates 3,447 3,584 14,066
Inventories 1,043 1,020 1,437
Deferred income taxes -- -- 1,448
Other 730 769 1,964
---------- ---------- ----------
Total current assets 18,372 23,424 53,360
Investment in an affiliate's hotel partnership 2,969 2,597 --
Notes and other receivables from affiliates -- 7,674 7,685
Notes receivable -- 2,450 726
Property and equipment, net 89,426 87,604 129,689
Management contract costs, net 1,181 7,579 7,073
Security deposits -- -- 14,398
Deferred income taxes -- -- 14,749
Other 1,328 2,075 12,411
---------- ---------- ----------
Total assets $ 113,276 $ 133,403 $ 240,091
---------- ---------- ----------
LIABILITIES, PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 8,922 8,454 23,646
Accounts payable and accrued expenses due to affiliates 4,036 1,578 198
Deposits 1,315 1,667 1,073
Deposits from affiliates 253 354 344
Current portion of long-term debt and capital lease obligation 4,939 16,035 499
Due to affiliates 1,037 2,592 --
---------- ---------- ----------
Total current liabilities 20,502 30,680 25,760
---------- ---------- ----------
Payable to affiliates 4,979 2,627 --
Payable to minority interest 203 218 --
Long-term debt and capital lease obligation 79,222 74,943 130,165
Deferred gain -- -- 12,250
---------- ---------- ----------
84,404 77,788 142,415
---------- ---------- ----------
Minority interest 6,654 7,378 --
---------- ---------- ----------
Commitments and contingencies
</TABLE>
F-3
<PAGE> 131
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1994 1995 1996
--------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Partners' capital and stockholders' equity:
Common stock -- -- 200
Additional paid-in capital -- -- 84,342
Retained earnings -- -- 7,894
Notes receivable from stockholders -- -- (19,168)
Receivables from affiliates (2,205) (2,303) (1,352)
Partners' capital 3,921 19,860 --
--------- --------- ---------
Total partners' capital and stockholders' equity 1,716 17,557 71,916
--------- --------- ---------
Total liabilities and equity $ 113,276 $ 133,403 $ 240,091
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
F-4
<PAGE> 132
WYNDHAM HOTEL CORPORATION
COMBINED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Hotel revenues $ 43,921 $ 51,799 $ 54,673 $ 41,685 $ 71,302
Management fees 4,414 5,930 7,354 5,439 6,434
Management fees--affiliates 6,317 7,372 9,567 6,470 10,112
Service fees 1,058 1,671 2,192 1,494 1,111
Service fees--affiliates 1,069 1,234 1,928 1,329 1,850
Reimbursements 1,215 3,110 4,378 3,833 4,636
Reimbursements--affiliates 2,949 4,893 6,458 3,902 6,176
Other 334 257 1,340 1,349 320
--------- --------- --------- --------- ---------
Total revenues 61,277 76,266 87,890 65,501 101,941
--------- --------- --------- --------- ---------
Operating costs and expenses:
Hotel expenses 32,127 36,744 37,125 28,060 52,227
Selling, general and administrative
expenses 9,913 10,644 15,001 10,127 12,877
Equity participation compensation 2,710 2,802 3,992 2,994 2,919
Reimbursable expenses 1,215 3,110 4,378 3,833 4,636
Reimbursable expenses--affiliates 2,949 4,894 6,458 3,902 6,176
Depreciation and amortization 5,269 5,735 6,311 4,558 5,609
--------- --------- --------- --------- ---------
Total operating costs and 54,183 63,929 73,265 53,474 84,444
expenses --------- --------- --------- --------- ---------
Operating income 7,094 12,337 14,625 12,027 17,497
Interest income 140 178 344 231 982
Interest income--affiliates -- -- 100 9 536
Interest expense (7,215) (7,705) (8,465) (6,407) (8,462)
Equity in earnings of affiliate's hotel
partnership 777 1,237 1,664 1,395 870
Foreign currency gain 647 404 405 253 --
Amortization of deferred gain -- -- -- -- 320
--------- --------- --------- --------- ---------
Income before minority interests 1,443 6,451 8,673 7,508 11,743
Income (loss) attributable to minority
interests (211) 186 724 607 571
--------- --------- --------- --------- ---------
Income before income taxes and
extraordinary item 1,654 6,265 7,949 6,901 11,172
Income tax benefit -- -- -- -- 10,388
--------- --------- --------- --------- ---------
Income before extraordinary item 1,654 6,265 7,949 6,901 21,560
Extraordinary item (less applicable
income -- -- -- -- (1,131)
tax benefit of $270) --------- --------- --------- --------- ---------
Net income $ 1,654 $ 6,265 $ 7,949 $ 6,901 $ 20,429
========= ========= ========= ========= =========
Pro forma income tax adjustment
(unaudited) 3,140 2,726 --
Historical net income as adjusted for
pro forma income tax (unaudited) 4,809 4,175 --
Earnings per share:
Historical income before
extraordinary
item as adjusted common share $ .24 $ .21 $ 1.08
========= ========= =========
(unaudited)
Extraordinary item $ -- $ -- $ (.06)
========= ========= =========
Historical net income as adjusted
(unaudited) $ .24 $ .21 $ 1.02
========= ========= =========
Common shares outstanding before the
issuance (unaudited) $ 20,018 $ 20,018 $ 20,018
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
F-5
<PAGE> 133
WYNDHAM HOTEL CORPORATION
COMBINED STATEMENTS OF PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
PARTNERS' CAPITAL
AND STOCKHOLDERS'
EQUITY
--------
<S> <C>
Balance January 1, 1993 $ (6,039)
Capital contributions 6,799
Capital distributions (4,662)
Equity participation compensation 2,710
Net income 1,654
--------
Balance December 31, 1993 462
Capital contributions 2,120
Capital distributions (7,728)
Equity participation compensation 2,802
Net income 6,265
--------
Balance December 31, 1994 3,921
Capital contributions 14,795
Capital distributions (10,931)
Distribution made to withdrawing partner (2,577)
Bedrock options 2,711
Equity participation compensation 3,992
Net income 7,949
--------
Balance December 31, 1995 19,860
Capital contributions (unaudited) 4,801
Capital distributions (unaudited) (29,593)
Equity participation compensation (unaudited) 2,919
Issuance of common stock (unaudited) 76,386
Payment to affiliate for release from obligations under an agreement (unaudited) (6,000)
Notes receivable from stockholders and affiliates (unaudited) (20,520)
Deferred income taxes from incorporation (unaudited) 3,240
Accrued interest on notes receivable from stockholders (unaudited) 394
Net income (unaudited) 20,429
--------
Balance September 30, 1996 (unaudited) $ 71,916
========
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
F-6
<PAGE> 134
WYNDHAM HOTEL CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,654 $ 6,265 $ 7,949 $ 6,901 $ 20,429
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 5,269 5,735 6,311 4,558 5,168
Provision for bad debt 50 84 265 78 628
Deferred income taxes -- -- -- -- (12,958)
Amortization of deferred debt issuance costs -- -- -- -- 441
Write-off of predecessor deferred debt issuance costs -- -- -- -- 1,401
Amortization of deferred gain -- -- -- -- (312)
Equity in earnings (loss) of affiliate's hotel partnership 922 (36) 372 61 --
Foreign currency translation gain (647) (404) (405) (253) --
Equity participation compensation 2,710 2,802 3,992 2,994 2,919
Minority interest (211) 186 724 607 571
Net (deposits to)/withdrawals from restricted cash 74 360 (485) (128) 2,196
Changes to operating assets and liabilities:
Accounts receivable (1,302) (1,487) (1,842) (4,225) (3,887)
Due from affiliates (36) (850) (137) 105 (3,901)
Inventories 59 (40) 23 49 (67)
Other 49 (169) (39) (77) (2,846)
Current income taxes -- -- -- -- 2,569
Accounts payable and accrued expenses (941) (758) (63) (3,909) 10,409
Accounts payable and accrued expenses due to affiliates -- 4,036 (2,458) 976 (2,309)
Deposits 200 70 352 (251) (1,672)
Deposits from affiliates 85 (25) 101 (253) (10)
Security deposits -- -- -- -- (13,676)
Due to affiliates 330 (684) 1,555 1,301 (2,564)
--------- --------- --------- --------- ---------
Net cash provided by operating activities 8,265 15,085 16,215 8,534 2,529
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment (8,901) (2,101) (3,556) (2,753) (4,964)
Proceeds from sale of property and equipment -- -- -- -- 136,374
Investments in management contracts (688) (285) (4,346) (3,730) (575)
Notes and other receivables from affiliates -- -- (7,674) (2,184) (11)
Notes receivable -- -- (2,451) (911) 1,724
Payments for purchase of hotels, net of cash acquired -- -- -- -- (33,470)
Acquisition of minority interest -- -- -- -- (5,479)
Other (169) 1,770 (3,316) (907) --
--------- --------- --------- --------- ---------
Net cash provided by (used in) investing activities: (9,758) (616) (21,343) (10,485) 93,599
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Partners' contributed capital 6,799 2,120 14,795 12,844 4,801
Partners' capital contributions (4,662) (7,728) (10,932) (5,891) (29,593)
Distribution made to withdrawing partner -- -- (2,577) (2,577) (982)
Increase in receivables from affiliates (679) (255) (98) (73) 996
Decrease in payable to affiliates (682) (597) (2,353) (1,192) (2,627)
Increase in payable to minority interest -- 24 15 12 (218)
</TABLE>
F-7
<PAGE> 135
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Proceeds from issuance of common stock -- -- -- -- 69,504
Proceeds from long-term borrowings 5,400 51 13,600 7,069 94,383
Repayments on long-term debt and capital lease (4,538) (5,291) (6,782) (5,670) (197,516)
obligation
Notes receivable from stockholders -- -- -- -- (18,889)
--------- --------- --------- --------- ---------
Net cash provided by (used in) financing 1,638 (11,676) 5,668 4,522 (80,141)
--------- --------- --------- --------- ---------
Increase in cash and cash equivalents 145 2,793 540 2,571 15,987
Cash and cash equivalents at beginning of period 682 827 3,620 3,620 4,160
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of period $ 827 $ 3,620 $ 4,160 $ 6,191 $ 20,147
========= ========= ========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 7,221 $ 7,694 $ 8,154 $ 5,925 $ 5,638
========= ========= ========= ========= =========
Cash paid for income taxes $ -- $ -- $ -- $ -- $ 2,629
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
F-8
<PAGE> 136
WYNDHAM HOTEL CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
1. COMPANY DESCRIPTION AND BASIS OF PRESENTATION:
Wyndham Hotel Corporation ("WHC") was incorporated in Delaware in
February 1996 and intends to enter into the Formation Agreement in 1996 with
Wyndham Hotel Company, Ltd. and four related management entities ("Wyndham" or
the "Old Management Company"), six wholly owned, one 62.5% owned and one 30%
owned related hotel entities (the "Hotel Entities") and seven related general
and limited partner entities of the hotel entities ("Partner Entities")
(collectively, the "Assigned Businesses"), (the Assigned Businesses and WHC
will be referred to collectively as the "Company"). The Company will effect
certain exchanges, a merger and other transactions (collectively the
"Formation"). The Formation will accomplish the exchange of all the Assigned
Businesses' equity interest held by their partners, including the five Senior
Executive Officers, who are promoters of the Company, and stockholders to the
Company for consideration of common stock and the payment of cash. The
Formation transaction will be accounted for in a manner similar to that of a
pooling of interests. As a result, the combination has been accounted for
using the historical cost for the Assigned Businesses. Concurrent with the
Formation, the Company intends to offer approximately $150,000,000 of equity
and debt in an initial public offering.
The accompanying combined financial statements include the accounts of
the Company which consist of the following majority owned entities (except
Garden Hotel Associates LP which is 30% owned):
Management Entities:
Wyndham Hotel Company, Ltd. (a Texas limited partnership)
Pleasanton Hotel Management Ltd. (a Texas limited partnership)
Wyndham Hotels and Resorts Ltd. (a Bermuda corporation)
Wyndham Hotel Canada II, Inc. (a Texas S-corporation)
Old San Juan Management, Ltd. (a Texas limited partnership)
Hotel Entities:
Brookfield Lakes Partners Limited (a Texas limited partnership)
Commerce Hotel Partners Ltd. (a Texas limited partnership)
Indianapolis Partners Ltd. (a Texas limited partnership)
Rose Hall Associates (a Texas limited partnership)
Schaumburg Hotel Partners LP (a Texas limited partnership)
WHI Limited Partnership (a Texas limited partnership)
Wyndham Charlotte Garden Hotel Limited Partnership (a Texas
limited partnership)
Garden Hotel Associates L P (a Texas limited partnership)
Partner Entities:
Garden Hotel Corp. No. 1 (a Texas S-corporation)
Garden Hotel Corp. No. 2 (a Texas S-corporation)
Garden Hotel Partners L P (a Texas limited partnership)
Schaumburg Hotel, Inc. (a Texas S-corporation)
Schaumburg Hotel Partners L P (a Texas limited partnership)
WH Interest, Inc. (a Texas S-corporation)
WHC Caribbean Limited (a Jamaican corporation)
F-9
<PAGE> 137
A controlling interest in each of the above entities, with the exception
of Garden Hotel Associates LP, is owned by Crow Family Members. In addition,
these entities are all managed by Wyndham. As a result, the Company has both
voting and operational control over these entities. All significant
intercompany balances and transactions have been eliminated in combination.
The stockholders' equity balances of Wyndham Hotel Canada II, Inc. and Wyndham
Hotels and Resorts Ltd. have been included with Partners' Capital.
The Company has a 30% investment in an affiliate, Garden Hotel
Associates LP ("GHALP") which owns eleven Wyndham Garden Hotels located
throughout the United States. The Company does not have voting or operational
control over GHALP; therefore, the entity is accounted for using the equity
method in the accompanying financial statements. Profits and losses of GHALP
are allocated to the partners in accordance with its partnership agreement.
(See Note 17)
At December 31, 1995, minority interest represented the 37.50% interest
in Rose Hall Associates held by two unaffiliated entities.
Wyndham, which was formed effective January 1, 1988, provides management
and development services to hotel property owners. As of December 31, 1995, 70
properties, located in 22 states, the District of Columbia and five Caribbean
islands were under management or franchise contracts.
Wyndham operates 19 Wyndham Hotels, 38 Wyndham Garden Hotels and six
Wyndham Resort hotels. The Company provides management services to four
non-Wyndham brand hotels and provides construction and development services for
three hotels under renovation or construction.
The Hotel Entities, which own 17 hotels and lease one hotel, were formed
for the purpose of acquiring, owning, leasing and operating hotels throughout
the United States, and the Caribbean. Hotel revenues are primarily dependent
upon the individual business traveler and small business groups.
The Partner Entities, which are comprised of five corporate general
partners and three limited partner partnerships, were formed for the purpose of
managing and investing in certain Hotel Entities.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Interim Financial Information
The consolidated balance sheet as of September 30, 1996, the
consolidated statement of partners' capital for the nine months then ended, and
the consolidated statements of operations and cash flows for the nine months
ended September 30, 1995 and 1996, have been prepared by the Company without
audit. The financial statements at September 30, 1996 and for the period since
the Formation and through September 30, 1996 include the accounts of WHC and
its wholly owned subsidiaries resulting from the Formation. In the opinion of
management, all adjustments (which included only normal, recurring adjustments)
necessary to present fairly the financial position at September 30, 1996, and
the results of operations and cash flows for all periods presented have been
made. The results of operations for the interim periods are not necessarily
indicative of the operating results for the full year.
F-10
<PAGE> 138
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash
For purposes of reporting cash flows, all highly liquid debt instruments
with original maturities of three months or less are considered to be cash
equivalents.
Restricted cash consists of reserves for quarterly cash flow payments
and property tax escrows at hotels under management. As of December 31, 1995,
restricted cash also includes a depository account balance of $2,595,112 which
collateralizes a letter of credit. Management anticipates the deposit will be
reduced concurrent with reductions in the letter of credit commitment.
The Company participates in a centralized cash management system with
affiliates who are excluded from these financial statements. A portion of net
cash flow of the Company is held in a central bank account from which operating
expenses and other disbursements are paid. Each entity's share of pooled cash
has been properly reflected on the individual entity's financial statements.
The Company maintains cash and cash equivalents in accounts with various
financial institutions in excess of the amount insured by the Federal Deposit
Insurance Corporation. The Company has not experienced any losses in such
accounts.
Inventories
Inventories consist of food, beverages, china, linen, glassware,
silverware, uniforms, and supplies and are stated at cost which approximates
market, with cost determined using the first-in, first-out method.
Property and Equipment
Buildings are carried at cost and depreciated over forty years using the
straight-line method. Furniture and equipment are recorded at cost and
depreciated using the straight-line method over the estimated useful lives,
which range from three to nine years. Assets recorded under capital leases and
leasehold improvements are amortized over the shorter of the lives of the
assets or the terms of the related leases. Normal repairs and maintenance are
charged to expense as incurred.
In 1995, the Company adopted Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of." Impairment losses are recognized in operating income as
they are determined. The Company periodically reviews its property and
equipment to determine if its carrying cost will be recovered from future
operating cash flows. In cases when the Company does not expect to recover its
carrying cost, the Company recognizes an impairment loss. No such losses have
been recognized to date.
Management Contracts
Wyndham has entered into management agreements which required payment of
certain costs associated with the change in the management of hotels. These
costs have been recorded as deferred management contract costs and are being
amortized on a straight-line basis over the terms of the agreements. The
Company periodically evaluates the recoverability of management contract costs
to determine whether such costs will be recovered from future operations.
Certain management agreements include repayment provisions if
termination occurs prior to the term of the agreement. During 1995, the
Company received $1,000,000 for a terminated agreement that is included in
other revenues.
F-11
<PAGE> 139
Other Assets
Other assets consist primarily of loan costs totaling approximately
$491,450 and $745,951 and restricted cash of $317,181 and $615,919 at December
31, 1994 and 1995, respectively. Amortization of loan costs is computed using
the level yield method over the lives of the related loans. Restricted cash
consists of amounts reserved for replacement of fixed assets on several of the
hotel entities.
Deposits
Deposits represent cash received from guests for future hotel
reservations for the Hotel Entities and cash received from the owners of
certain hotels managed by Wyndham for various operating expenses paid by
Wyndham on behalf of managed properties. Upon termination of the management
contracts, the excess, if any, of the deposits over the actual operating
expenses owed to Wyndham would be refunded to the owners.
Income Taxes
Each of the combined companies is either a partnership, an S corporation
or a nontaxable Bermuda corporation, and consequently, is not subject to
federal income taxes. Thus, taxable income or loss is allocated directly to
the taxable income of the individual partners and stockholders. The Company's
tax returns and the amount of allocable income or loss are subject to
examination by federal and state taxing authorities. If such examinations
result in changes to income or loss, the tax liability of the partners and
stockholders could be changed accordingly.
Revenue Recognition
Hotel revenue, management fees, service fees, reimbursements and other
income are recognized when earned.
Foreign Currency Translation
The books of record of one of the Hotel Entities are maintained using
the U.S. dollar as the functional currency. Assets and liabilities of non-U.S.
operations are translated into U.S. dollars at the exchange rate in effect as
of the balance sheet date. Revenues and expenses on non-U.S. operations are
translated at the weighted average exchange rate during the year. Realized
foreign currency gains and losses are included in results of operations.
Self Insurance
The Company is self insured for various levels of general liability,
workers' compensation and employee medical coverages. Accrued expenses include
the estimated cost from unpaid incurred claims.
Income per share (unaudited)
Historical pro forma income per share is based on the number of shares
of common stock outstanding immediately prior to the issuance. Proceeds from
the exercise of dilutive stock options are assumed to be used to repurchase
outstanding shares of the Company's common stock at the average fair market
value during the period. Historical pro forma income per common share is based
on net income per share as adjusted for a pro forma provision for income taxes
based on an assumed tax rate of 39.5%.
3. ACQUISITIONS:
During 1993, the Company purchased substantially all the assets of one
hotel from an unrelated party for a cash purchase price of $6,750,000. 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.
4. INVESTMENT IN AN AFFILIATE'S HOTEL PARTNERSHIP:
The summary of the significant financial information of GHALP is as
follows (in thousands):
F-12
<PAGE> 140
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1994 1995
------------ ------------
<S> <C> <C>
Total current assets $ 6,209 $ 6,770
Property and equipment, net 105,947 103,798
Other 2,737 1,947
------------ ------------
$ 114,893 $ 112,515
============ ============
</TABLE>
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1994 1995
------------ ------------
<S> <C> <C>
Total current liabilities $ 4,373 $ 5,049
Long-term debt, excluding current portion 93,000 93,000
Partners' equity 17,520 14,466
------------ ------------
$ 114,893 $ 112,515
============ ============
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1993 1994 1995
----------- ------------ ------------
<S> <C> <C> <C>
Revenues $ 45,299 $ 50,917 $ 56,976
Expenses 42,708 46,795 51,429
----------- ------------ ------------
Net Income $ 2,591 $ 4,122 $ 5,547
=========== ============ ============
</TABLE>
A reconciliation of the investment in GHALP to the underlying assets is
as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995
------------ ------------
<S> <C> <C>
Investment in an affiliate
Hotel partnership $ 2,969 $ 2,597
============ ============
Initial capital contributions $ 7,000 $ 7,000
Contributions 149 149
Distributions (3,052) (5,088)
Net income (loss) (1,128) 536
------------ ------------
$ 2,969 $ 2,597
============ ============
</TABLE>
The Company's initial contribution upon formation of GHALP was
$7,000,000 of the total initial aggregate contributions of $36,000,000.
Pursuant to the Partnership agreement, the Company has a 30% ownership interest
in the Partnership.
The promissory notes represent loans made to affiliated entities to
acquire hotels which then have executed management agreements with the Company.
The loans are collateralized by the partnership interests in the respective
entities. Interest income of $100,377 was earned for the year ended December
31, 1995.
6. NOTES RECEIVABLE
Pursuant to the terms of a management agreement obtained during 1995,
Wyndham is obligated to provide $4,560,000 for renovation of this hotel. As of
December 31, 1995, $2,344,974 of this obligation, classified as a note
F-13
<PAGE> 141
receivable, has been funded. The note bears interest at prime plus .5% and is
due March 15, 2005. The payment of interest associated with this note
receivable is subject to payment priorities including a cumulative preferred
priority return to the owner.
7. MANAGEMENT SERVICES AND RELATED REVENUES:
Wyndham has entered into management agreements for hotels. The owners
of certain hotels Wyndham manages are affiliates related by common ownership or
control. Management fees earned for hotels owned by affiliates in 1993, 1994
and 1995 were $6,316,897, $7,371,893 and $9,528,374, respectively.
Various operating expenses have been paid by Wyndham on behalf of
managed properties. As of December 31, 1993, 1994 and 1995, accounts
receivable from hotels owned by affiliates were $1,825,419, $2,519,881 and
$3,002,315, respectively.
Wyndham provides centralized accounting services such as accounts
payable, payroll and financial statement preparation for certain managed
hotels. Wyndham charges an accounting fee to these hotels for such services.
Design fees are additional service fees paid to Wyndham for the development,
design and construction of new hotels as well as for the refurbishment of
existing hotels. In addition, Wyndham receives purchasing fees based on a
percentage of cost of goods ordered for purchasing various items. Service fees
earned for hotels owned by affiliates in 1993, 1994 and 1995 were $1,069,443,
$1,233,641 and $1,927,669, respectively.
Reimbursements represent revenues recognized for the reimbursement of
expenses associated with providing sales and marketing, centralized
reservations, partnership accounting and other support services. Included in
reimbursable expenses are advertising and promotional expenses of $3,654,929
and $4,905,191 for the years ended December 31, 1994 and 1995. Advertising and
promotional expenses were not included in reimbursable expenses in 1993, since
the expenses were incurred by each hotel. Reimbursable revenues recognized for
hotels owned by affiliates in 1993, 1994 and 1995 were $2,948,704, $4,893,584
and $6,458,554, respectively.
8. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
------------
1994 1995
------------ ------------
<S> <C> <C>
Property and equipment, at cost:
Land $ 9,955 $ 9,955
Buildings and improvements 76,802 77,108
Furniture, fixtures and equipment 24,807 28,057
Leasehold improvements 247 247
------------ ------------
111,811 115,367
Less accumulated depreciation and amortization (22,385) (27,763)
------------ ------------
$ 89,426 $ 87,604
============ ============
</TABLE>
F-14
<PAGE> 142
9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following (in
thousands):
<TABLE>
<CAPTION>
December 31,
------------
1994 1995
------------ ------------
<S> <C> <C>
Accounts payable $ 4,449 $ 3,648
Taxes 1,509 1,486
Payroll and related costs 1,650 2,055
Accrued interest 569 880
Other 745 385
------------ ------------
$ 8,922 $ 8,454
============ ============
</TABLE>
10. LONG-TERM DEBT:
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
------------
1994 1995
---- ----
<S> <C> <C>
Mortgage loan, a hotel property is pledged as collateral,
interest payable monthly at prime (8.50% at December
31, 1995) plus .5% and principal due in installments
based on cash flow maturing May 2, 1996 $ 13,425 $ 12,607
Mortgage loan, a hotel property is pledged as collateral,
interest payable monthly at LIBOR (5.44% at December
31, 1995) plus 1.75% and principal due in installments
based on cash flow maturing December 31, 1999 10,600 10,034
Mortgage loan, a hotel property is pledged as collateral,
interest payable monthly at LIBOR plus 1.5% and
principal due in installments based on cash flow 10,275 10,115
maturing December 31, 1999
Mortgage loan, a hotel property is pledged as collateral,
interest payable monthly at LIBOR plus 3.25%, and
principal maturing May 21, 2000 5,400 5,400
Mortgage loan, a hotel property is pledged as collateral,
interest payable monthly at prime plus 1.25%, and
principal due in installments based on cash flow 8,959 8,734
maturing August 28, 1997
Mortgage loan, a hotel property is pledged as collateral,
interest payable quarterly at 86% of LIBID, and
principal payable quarterly and maturing November 15, 6,902 5,870
1999
Revolving credit agreement, substantially all of the assets of
Wyndham are pledged as collateral, interest payable
quarterly at 9%, and principal maturing June 30, 2002 -- 12,500
Note payable to seller of a hotel, partnership interest
pledged as collateral, interest payable quarterly at
8%, principal payable quarterly and maturing May 21, 3,845 2,392
1997
Development loan, a hotel property is pledged as collateral,
interest payable monthly at 7%, principal matured April 814 --
28, 1995
</TABLE>
F-15
<PAGE> 143
<TABLE>
December 31,
------------
1994 1995
---------- ----------
<S> <C> <C>
Note payable to seller of a hotel, interest payable quarterly
at 11.5%, principal due quarterly and maturing November 2,761 2,348
15, 1999
Note payable to bank interest payable quarterly at Jamaican
prime plus 1.5%, principal payable quarterly and
maturing November 15, 1999 272 195
---------- ----------
63,253 70,195
Current portion of long-term debt 4,613 15,653
---------- ----------
Long-term debt, excluding current portion $ 58,640 $ 54,542
========== ==========
</TABLE>
The annual principal requirements for the five years subsequent
to December 31, 1995 are as follows (in thousands):
<TABLE>
<S> <C>
1996 $ 15,653
1997 11,038
1998 1,479
1999 24,126
2000 5,400
Thereafter 12,500
------------
$ 70,196
============
</TABLE>
The revolving credit agreement which has an unfunded commitment of $7.5
million contains various covenants including limitations on distributions and
fixed charge ratios. The lender has 20 business days, in the event of a public
offering, to exercise an option to convert 50% of the debt to restricted common
stock at the Option Price, as defined in the agreement as the initial public
offering price per share less the underwriting discounts and commissions per
share. The option also contains a provision to effect a registration of the
restricted common stock for a 24 month period following the registration.
The Company has an outstanding letter of credit of $2,595,112
collateralized by a depository account balance of $2,595,112.
11. LEASES:
The Company leases various types of property including land and
buildings of hotel properties, office facilities and equipment under agreements
ranging from 1 to 30 years. Leased capital assets included in property and
equipment at December 31, 1994 and 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
------------
1994 1995
----------- -----------
<S> <C> <C>
Property $ 14,529 $ 14,530
Equipment 3,151 3,434
----------- -----------
17,680 17,964
Accumulated amortization (4,731) (5,721)
----------- -----------
$ 12,949 $ 12,243
=========== ===========
</TABLE>
The future minimum lease payments required under the capital lease
(together with the present value of net minimum lease payments) and future
minimum lease payments required under operating leases that have an initial
term or remaining noncancelable lease term in excess of one year at December
31, 1995 are as follows (in thousands):
F-16
<PAGE> 144
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------------- -----------
<S> <C> <C>
Year ending December 31:
1996 $ 2,431 $ 904
1997 2,438 252
1998 2,376 111
1999 2,300 63
2000 2,300 24
Thereafter 40,250 --
------------- -----------
Total minimum lease payments 52,095 $ 1,354
===========
Less imputed interest 31,313
-------------
Present value of net minimum lease payments 20,782
Less current portion 382
-------------
Long term portion of net minimum lease payments $ 20,400
=============
</TABLE>
WHI Limited Partnership ("WHI") has a lease agreement for the property
which is accounted for as a capital lease. This agreement provides for
payments of contingent rent based on a percentage of net operating income, as
defined, less basic rent and the management fee (base amount). For lease years
1990 through 1999, contingent rent payable to the landlord is 20% of the excess
of net operating income, as defined, over the base amount and 50% of the excess
for lease years thereafter. Contingent rent expense for the years ended
December 31, 1993, 1994 and 1995 was $119,609, $107,735 and $58,789,
respectively.
This capital lease agreement provides for a reserve for capital
expenditures equal to 4% of the gross income of the respective hotel. At the
end of the lease term, WHI is required to refund to Wyndham the excess of
amounts reserved over actual capital expenditures. At December 31, 1994 and
1995, the reserved amount exceeded expenditures by $973,051 and $1,038,577,
respectively.
The lease requires WHI to meet a minimum net worth requirement. The
initial net worth requirement was $5,000,000 and is reduced upon achievement of
certain operating results. WHI demonstrated the initial net worth requirements
by obtaining a letter of credit in the amount of $4,000,000 and a personal
guarantee from one of the partners in the amount of $1,000,000. The letter of
credit was collateralized by a $2,000,000 certificate of deposit and a
$2,000,000 personal guarantee of one of the partners.
The lease agreement provides for a reduction of the $5,000,000 required
net worth upon achievement of certain operating results. If net operating
income exceeds $2,875,000 per year for two consecutive years, the net worth
requirement is reduced to $2,500,000. If net operating income exceeds
$2,875,000 per year for three consecutive years, the net worth requirement is
reduced to zero. During 1993, 1994 and 1995, WHI's net operating income, as
defined, exceeded $2,875,000.
12. RECEIVABLES FROM AFFILIATES:
Management fees for one managed hotel, owned by a partner of the
Company, are deferred until certain operating criteria, as defined in the
partnership's management agreement and loan agreement, are met. As of December
31, 1994 and 1995, this deferred balance, a receivable from an affiliate
included in partners' capital, was $1,125,240 and $1,223,302, respectively.
These management fees will be collected upon meeting the operating criteria as
defined in the agreement.
In addition, included in partners' capital are receivables from
affiliates which include certain partner capital contributions and accrued
interest of $1,080,046 and $1,080,046 as of December 31, 1994 and 1995,
respectively.
13. 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 operating
F-17
<PAGE> 145
or managing a hotel using the Wyndham name within a 50 mile radius (within the
State of New York) of an existing Wyndham hotel that has no existing or
historical relationship with the Company and, as subsequently modified, from
advertising the Company's property at La Guardia Hotel (which is currently
under renovation). 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 limited
geographic area in the borough of Manhattan or within a 50 to 100 mile radius
of the Mados Wyndham Hotel, which owns certain service mark rights to use the
Wyndham name in a limited geographic area in the borough of Manhattan. 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 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. Management, after review and consultation with
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 combined financial statements.
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 combined financial
statements.
In May 1994, the Company entered into an Investment Agreement and an
Option Agreement (collectively, the "Bedrock Agreements") with Bedrock pursuant
to which, as amended, Bedrock agreed to provide up to $335 million in capital
(the "Investment Program") to acquire hotels or hotel management companies and
to make hotel related investments that are approved by both the Company and
Bedrock. Pursuant to the terms of the Investment Agreement, Bedrock is not
required to invest a minimum amount of capital through the Investment Program,
but the Company is entitled to manage any Investment Program hotel properties
for a term of 15 years and for a market-based management fee. At December 31,
1994 and December 31, 1995, the Company had executed management contracts with
Bedrock for 11 Wyndham brand hotels and 15 Wyndham brand hotels, respectively,
through the Investment Program.
Pursuant to the Option Agreement, the Company granted to Bedrock options
(the "Bedrock Options") to purchase up to a 37.5% limited partnership interest
in Wyndham at a price equal to the percentage interest purchased multiplied by
the applicable strike price defined for each year of the option period, as
determined pursuant to the Bedrock Agreements. (Under the terms of the Bedrock
Agreements, Bedrock is entitled to purchase a 1% interest in Wyndham for each
$320,000 of projected annual management fees generated by the management
contracts relating to hotels owned by Bedrock, and at December 31, 1994 and
December 31, 1995, Bedrock was entitled to purchase a 17.4% and 24.3% interest
in Wyndham, respectively.) As additional consideration for the grant of the
Bedrock Options, Bedrock granted to the Company the right to require Bedrock to
invest up to $20 million from the Investment Program in the amount of a $10
million contribution to the Company (the "Direct Contribution") in exchange for
a percentage interest therein (not to exceed the 37.5% ownership limitation)
and a $10 million contribution to affiliated partnerships the "Indirect
Contribution" in which some or all of the Company, Crow Family Members and the
Senior Executive Officers invest. The Direct Contribution took the form of the
Bedrock Contribution. The Indirect Contribution was eliminated in connection
with the Bedrock Exchange Agreement.
Wyndham performed a valuation analysis of the Option Agreement. Wyndham
used the Black Scholes method and the Intrinsic Value method to calculate the
value of the Option Agreement and the Direct Contribution, respectively. The
calculations were adjusted for subsequent changes in the expected or actual
outcome of the contingent condition that determines the amount of the limited
partnership interest to be earned by Bedrock. The adjusted calculations
resulted in a net value of zero and approximately $2.7 million in 1994 and
1995, respectively, amortized on a straight-line basis over the terms of the
management agreements of the hotels owned by Bedrock.
The Option Agreement also provides for a contingent payment (the
"Contingent Option Payment") to the Old Management Company, for distribution to
the non-Bedrock owners of the Old Management Company, at such time as all
hotels financed by the Investment Program achieve an investment return target
of 15% on all equity capital invested through such program plus certain
overhead costs. The amount of the Contingent Option Payment is 10% of all cash
proceeds realized in excess of the investment return target. The Contingent
Option Payment is due 70% upon the achievement of the investment target return
and 30% upon Bedrock's disposition of its entire interest in Wyndham.
F-18
<PAGE> 146
During 1994 and 1995, the Company received hotel management fees from
Bedrock of $514,472 and of $2,043,087, respectively.
During 1994 and 1995, the Company made cash advances of $1,092,532 and
$1,380,702, respectively, to certain hotel partnerships in which Bedrock has an
interest. The advances were used to pay certain renovation costs of these
hotel partnerships. At December 31, 1994 and 1995, the outstanding receivables
from the hotel partnerships were $27,842 and $686,749, respectively.
During 1994 and 1995, the Company received payments of $798,503 and
$976,980, respectively, from certain hotel partnerships in which Bedrock has an
interest for design, purchasing and construction service fees.
During 1994 and 1995, the Company received payments of $170,669 and
$831,553, respectively, from certain hotel partnerships in which Bedrock has an
interest for services and reimbursements provided by the Company.
Pursuant to the terms of the management agreements of two
affiliated-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 provided 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 the Hotel Partnership 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 combined statements of income for any of the years in the
three-year period ended December 31, 1995. 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.
14. EMPLOYEE BENEFIT PLANS:
The Company sponsors a 401(k) retirement savings plan. Employees who
are over 21 years of age and have completed one year of service are eligible to
participate in the plan. The Company matches employee contributions up to 4%
of an employee's salary. The aggregate expense under the plans amounted to
approximately $129,035, $166,415 and $202,115 for the years ended December 31,
1993, 1994 and 1995, respectively.
Wyndham maintains a self-insured group health plan through a Voluntary
Employee Benefit Association ("VEBA") for certain partnerships and
corporations. This plan is funded to the limits provided in the Internal
Revenue Code, and liabilities have been recorded for estimated incurred but
unreported claims. Aggregate and stop loss insurance exists at amounts which
limit exposure to the partnerships. The Company has recognized expenses
related to the plan of $742,814, $686,580 and $832,212 for the years ended
December 31, 1993, 1994 and 1995, respectively.
Certain management employees are partners in an equity participation
plan, Wyndham Employees, Ltd. ("WEL"). The Company has accounted for WEL in a
manner similar to a formula unit incentive plan. Partners are admitted into
WEL and partnership units are awarded at the discretion of Wyndham's Senior
Executive Officers. Units vest five years after award date and are payable by
WEL upon certain events. Unit values are determined by formulas related to
appreciation in value of Wyndham and other affiliated entities. In addition,
the Senior Executive Officers own limited partner interests in Wyndham and
several affiliates of Wyndham. These limited partner interests were purchased
by these Senior Executive Officers for amounts equal to the fair value of such
interests. The Senior Executive Officers borrowed the funds used to purchase
such limited partner interests from an affiliate of Wyndham and collateralized
such borrowings with their limited partner interests. The Senior Executive
Officers' shares of the distributable cash of the limited partnerships is used
to repay such affiliate loans. For financial reporting purposes, the Company
has recognized compensation expense under WEL and the Senior Executive Officer
equity participation of $2,709,770, $2,802,387 and $3,992,143 for the years
ended December 31, 1993, 1994 and 1995, respectively.
F-19
<PAGE> 147
15. FAIR VALUE:
The Company has estimated the fair value of its financial instruments at
December 31, 1995 as required by Statement of Financial Accounting Standards
No. 107. The carrying values of cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses are reasonable estimates of
their fair values. The carrying values of variable and fixed rate debt are
reasonable estimates of their fair values based on their discounted cash flows
at discount rates currently available to the Company for debt with similar
terms and remaining maturities.
16. TRANSACTIONS WITH RELATED PARTIES:
Effective January 1, 1988, Wyndham acquired certain hotel management
contracts previously held by an affiliate. At the date of the transfer, there
was no step-up in basis of these management contracts as a result of common
control of the entities. In exchange for the contracts, Wyndham agreed to pay
an affiliate 16% of management fees earned from the acquired contracts
(exclusive of contracts entered into during 1988). The fees became payable
quarterly in arrears beginning in 1989; however, payment is limited to 50% of
net cash flows, as defined in the agreement. Net cash flow was sufficient to
make full payment during the years ended December 31, 1993, 1994 and 1995 of
$698,498, $701,203 and $830,164, respectively.
In 1995, the Company paid $523,360 in management contract costs in
connection with entering into a management agreement for the Wyndham Anatole
Hotel. These costs are being amortized over the management agreement term.
During 1993, 1994 and 1995, the Company made lease payments totaling
$638,039, $743,922 and $875,122, respectively, to an affiliate for the
Corporate office space.
The Company subleases land from a related party which is accounted for
as an operating lease. Contingent rent is payable to the related party at 50%
of Adjusted Net Income, as defined in the sublease agreement. Contingent rent
expense as of December 31, 1993 and 1994 was $278,000 and $487,000
respectively. There was no contingent rent expense for the year ended December
31, 1995.
During 1993, 1994 and 1995, Wyndham made payments in the aggregate
amounts of $310,412, $321,333 and $332,113, respectively, to GHMB, Inc., an
entity owned by a senior executive officer for the operation of liquor
concessions at one of the Hotel Entities.
During 1993, 1994 and 1995, the Company made payments of $1,098,270,
$1,352,468 and $1,739,804, respectively, to an entity owned by an affiliate for
travel services provided to the Company.
In 1995, the Company made payments to Trammell Crow Company in the
amount of $386,759 for contract labor (including related costs) provided to the
Company for management information services. The Company anticipates that in
1996, it will pay approximately $810,000 to Trammell Crow Company for these
contract labor services (including related costs).
17. SUBSEQUENT EVENTS:
On May 2, 1996, GHALP entered into a sale/leaseback agreement with an
unaffiliated real estate investment trust ("REIT"). The sale/leaseback
agreement stipulated the sale of eleven hotels containing 1,940 rooms for
$135,320,000 to the REIT and eleven long-term operating leases back to the
Company each with an initial term of seventeen years and four optional
twelve-year renewals exercisable at the Company's option for all hotels. Under
terms of these leases, yearly base rent aggregates $13,600,000 plus a
contingent rent paid based on a percentage of excess revenue over base year
revenues. The leases require the Company to pay substantially all expenses
associated with the operation of the leased hotels, real estate taxes and
insurance.
As part of the formation of the Company, the Company entered into the
Bedrock Exchange Agreement with various affiliates of Bedrock, which replaces
the Bedrock Agreements, pursuant to which Bedrock transferred certain options
owned by Bedrock and the Bedrock contribution (in the amount of $10 million) in
exchange for 2,276,055 (unaudited) shares of Common Stock. In addition, the
Bedrock Exchange Agreement eliminated the $10 million indirect contribution.
Prior to the formation of the Company, a separate entity owned by Crow Family
Members, the Senior
F-20
<PAGE> 148
Executive Officers and WEL purchased the right to the Contingent Option Payment
for $10,000 from the owners of Wyndham (Crow Family Members, the Senior
Executive Officers and WEL).
18. RECENT TRANSACTIONS AND ACQUISITIONS (UNAUDITED)
In May 1996, the Company implemented substantially all of its formation
and financing plan. As part of its 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 $100,000,000 of subordinated notes.
During the quarter ended June 30, 1996, the Company acquired from an
unaffiliated party the Wyndham Vinings Hotel. 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.
In July 1996, the Company, in separate transactions, acquired a 181 room
hotel in Kansas and a 254 room hotel in Dallas, Texas for a total purchase
price of $13.7 million.
On August 30, 1996, the Company acquired a 287 room hotel, the Bristol
Place hotel in Toronto, Canada. The total investment approximated $19.9
million with a purchase price of $17.4 million and renovation and other costs
of $2.5 million.
These acquisitions were 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. These acquisitions were funded with a portion of the net proceeds
from the initial public offerings.
The following unaudited pro forma financial information for the nine
months ended September 30, 1996 and 1995 is presented in accordance with
Regulations S-X to reflect the acquisition of Bristol Hotel (the other three
hotel acquisitions have been excluded because they are not significant) as if
it had occurred at January 1, 1995 (in thousands, except per share data):
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
DATA ADJUSTMENTS DATA
----------------- ------------------ ----------------
<S> <C> <C> <C>
Nine months ended September 30, 1995:
Total revenues $ 65,501 $ 7,597 $ 73,098
Net income 6,901 (9) 6,892
Earnings per share (primary and fully diluted) N/A -- N/A
Nine months ended September 30, 1996:
Total revenues $ 101,941 $ 6,533 $ 108,474
Income before extraordinary item 21,560 (267) 21,293
Net income 20,429 (267) 20,162
Earnings per share (primary and fully diluted)
Income before extraordinary items 1.08 (.01) 1.07
Net Income 1.02 (.01) 1.01
</TABLE>
19. CONDENSED COMBINED FINANCIAL INFORMATION OF GUARANTOR SUBSIDIARIES
Pursuant to the Debt Offering, the Company issued $100.0 million
aggregate principal amount of 10 1/2% Senior Subordinated Notes due 2006. All
of the Company's subsidiaries, with the exception of a number of subsidiaries
(which subsidiaries are individually and collectively inconsequential), have
fully and unconditionally guaranteed the Company's obligations under the Notes
on a joint and several basis (the "Guarantor Subsidiaries"). Accordingly, the
condensed combined financial information set forth below summarizes financial
information for all of the Guarantor Subsidiaries on a combined 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.
F-21
<PAGE> 149
Condensed combined financial information of the Guarantor Subsidiaries
(see note to condensed combined financial information) as of December 31, 1994
and 1995 and September 30, 1996, and for the years ended December 31, 1993,
1994 and 1995 and nine months ended September 30, 1996 were as follows:
GUARANTOR SUBSIDIARIES
CONDENSED COMBINED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1994 1995 1996
---------------- ---------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 2,469 $ 3,708 $ 5,039
Cash, restricted as to use -- 2,595 857
Accounts receivable, net 8,597 13,732 21,500
Other 5,092 1,606 2,714
---------------- ---------------- -------------
Total current assets 16,158 21,641 30,110
Investment in an affiliate's hotel 2,969 2,597 --
partnership
Notes and other receivables from affiliates -- 7,674 7,685
Notes receivable -- 2,450 726
Property and equipment, net 47,594 47,321 59,041
Management contract costs, net 1,181 7,579 7,073
Security deposits -- -- 14,398
Other 661 1,068 3,314
---------------- ---------------- -------------
Total assets $ 68,563 $ 90,330 $ 122,347
================ ================ =============
LIABILITIES AND PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities 9,564 $ 6,600 $ 16,371
Deposits 1,401 1,914 1,147
Current portion of long-term debt and
capital lease obligations 3,525 3,428 499
Due to affiliates 1,035 1,454 39,792
---------------- ---------------- -------------
Total current liabilities 15,525 13,396 57,809
---------------- ---------------- -------------
Payable to affiliates 3,842 2,627 --
Payable to minority interest 203 218 --
Long-term debt and capital lease obligations 31,163 40,659 30,083
---------------- ---------------- -------------
35,208 43,504 30,083
---------------- ---------------- -------------
Minority interest 6,654 7,379 --
---------------- ---------------- -------------
Partners' capital and stockholders' equity:
Receivables from affiliates (1,829) (1,927) (1,352)
Partners' capital 13,005 27,978 --
Additional paid-in capital -- -- 31,071
Retained earnings -- -- 4,736
---------------- ---------------- -------------
Total partners' capital and
stockholders'
equity 11,176 26,051 34,455
---------------- ---------------- -------------
Total liabilities and equity $ 68,563 $ 90,330 $ 122,347
================ ================ =============
</TABLE>
See note to the condensed combined financial information.
F-22
<PAGE> 150
GUARANTOR SUBSIDIARIES
CONDENSED COMBINED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
----------------------- -------------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $ 44,069 $ 55,611 $ 65,524 $ 48,344 $ 82,280
----------------- ---------------- ---------------- ----------------- ----------------
Operating costs and expenses 35,426 42,659 51,210 37,008 60,778
Depreciation and amortization 2,960 3,328 3,929 2,793 3,352
Other 311 175 105 34 520
----------------- ---------------- ---------------- ----------------- ----------------
Total operating costs and
expenses 38,697 46,162 55,244 39,835 64,650
----------------- ---------------- ---------------- ----------------- ----------------
Operating income 5,372 9,449 10,280 8,509 17,630
Interest expense, net (4,442) (4,194) (3,816) (3,033) (2,128)
Equity in earnings of affiliate's 777 1,237 1,664 1,395 870
hotel partnership
Foreign currency gain 647 404 405 253 --
----------------- ---------------- ---------------- ----------------- ----------------
Income before minority interests 2,354 6,896 8,533 7,124 16,372
Income (loss attributable to
minority interests) (211) 186 724 607 571
----------------- ---------------- ---------------- ----------------- ----------------
Income before income taxes and
extraordinary item 2,565 6,710 7,809 6,517 15,801
Income taxes -- -- -- -- 3,325
----------------- ---------------- ---------------- ----------------- ----------------
Income before extraordinary item 2,565 6,710 7,809 6,517 12,476
Extraordinary item (less applicable
tax benefits) -- -- -- -- (1,028)
----------------- ---------------- ---------------- ----------------- ----------------
Net income $ 2,565 $ 6,710 $ 7,809 $ 6,517 $ 11,448
================= ================ ================ ================= ================
</TABLE>
GUARANTOR SUBSIDIARIES
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31, September 30,
------------------- --- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities $ 5,022 $ 11,823 $ 13,144 $ 5,634 $ 2,322
------- ------- ------- ------- -------
Cash flows from investing activities
Purchase of property and equipment (1,592) (1,820) (2,917) (2,277) (3,581)
Sale of property and equipment -- -- -- -- 133,778
Investments in management contracts (687) (285) (4,346) (3,478) (575)
Notes and other receivables from affiliates -- -- (7,674) (2,184) (11)
Notes receivable -- -- (2,451) -- --
Payments for purchase of hotels, net of cash acquired -- -- -- -- (2,520)
Acquisition of minority interest -- -- -- -- (5,479)
Other 5 1,903 (3,080) (1,546) 1,674
-------- -------- -------- -------- --------
Net cash used in investing activities (2,274) (202) (20,468) (9,485) 123,286
-------- -------- -------- -------- --------
Cash flows from financing activities:
Partners' contributed capital 4,709 1,781 13,711 11,135 26,502
Partners' capital distributions (3,259) (6,368) (10,672) (7,888) (42,572)
Distribution made to withdrawing partner -- -- (2,577) -- --
Decrease (increase) in receivable from affiliates -- -- -- (73) 5,327
Increase (Decrease) in payable to affiliate 254 (1,035) (1,215) (55) 32,379
Increase (decrease) in payable to minority interest -- -- -- 11 (218)
Proceeds from long-term borrowings -- -- 13,600 7,100 2,500
Repayments on long-term debt and capital lease obligations (4,094) (3,858) (4,201) (3,416) (148,195)
</TABLE>
F-23
<PAGE> 151
<TABLE>
<CAPTION>
Year Ended December 31, September 30,
----------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(Unaudited)
S> <C> <C> <C> <C> <C>
Other (315) (219) (83) -- --
-------- -------- -------- -------- --------
Net cash provided by (used in) financing activities (2,705) (9,699) 8,563 6,814 (124,277)
-------- -------- -------- -------- --------
Increase in cash and cash equivalents 43 1,922 1,239 2,963 1,331
Cash and cash equivalents at beginning of year 504 547 2,469 2,469 3,708
-------- -------- -------- -------- --------
Cash and cash equivalents at end of year $ 547 $ 2,469 $ 3,708 $ 5,432 $ 5,039
======== ======== ======== ======== ========
</TABLE>
(1) The foregoing condensed combined financial information for 1993, 1994 and
1995 includes Wyndham (100%), WHI Limited Partnership (100%) and Rose
Hall Associates (62.5%). Also reflected in this information is an
investment in Garden Hotel Associates L.P. (30%), which is being
accounted for using the equity method.
The foregoing condensed combined financial information for the 1996
period includes GHALP Corporation, Waterfront Management Corporation,
WHCMB, Inc. Wyndham Management Corporation, Wyndham Hotel & Resort
(Aruba) N.V., WHC Vinings Corporation, WH Interest, Inc., Wyndham IP
Corporation, Rose Hall Associates, L.P., XERXES Limited, WHC Caribbean,
Ltd., WHC Development Corporation, Rodehouse Restaurants of Kansas, Inc.,
WHCMB, Toronto, Inc., WHC Columbus Corporation, Wyndham Hotels & Resorts
Management Ltd. and a subsidiary for a non-branded hotel. They all are
wholly-owned subsidiaries of the Company at September 30, 1996.
F-24
<PAGE> 152
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Garden Hotel Associates LP:
We have audited the accompanying balance sheets of Garden Hotel
Associates LP as of December 31, 1994 and 1995 and the related statements of
income, changes in partners' capital, and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Garden Hotel
Associates LP as of December 31, 1994 and 1995, and its results of operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
February 27, 1996
F-25
<PAGE> 153
GARDEN HOTEL ASSOCIATES LP
(A TEXAS LIMITED PARTNERSHIP)
BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
December 31,
------------
1994 1995
---------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,582 $ 5,027
Accounts receivable, less allowance of $19 in 1994 and $31 in 1995 1,276 1,248
Due from affiliates -- 155
Inventories 200 190
Prepaid expense 151 150
---------------- --------------
Total current assets 6,209 6,770
Property and equipment, net 105,947 103,798
Designated cash 817 605
Other assets, net of accumulated amortization of $4,338 and $4,175 in
1994 and 1995, respectively 1,920 1,342
---------------- --------------
Total assets $ 114,893 $ 112,515
================ ==============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued expenses $ 3,935 $ 4,087
Due to Operator 358 475
Advance deposits 80 487
---------------- --------------
Total current liabilities 4,373 5,049
Long-term debt 93,000 93,000
---------------- --------------
Total liabilities 97,373 98,049
Partners' capital 17,520 14,466
---------------- --------------
Total liabilities and partners' capital $ 114,893 $ 112,515
================ ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-26
<PAGE> 154
GARDEN HOTEL ASSOCIATES LP
(A TEXAS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1993 1994 1995
------------- ------------ ------------
<S> <C> <C> <C>
Revenues:
Rooms $ 33,181 $ 37,025 $ 42,311
Food and beverage 9,611 11,035 11,532
Operating departments 2,399 2,666 2,799
------------- ------------ ------------
45,191 50,726 56,642
------------- ------------ ------------
Operating costs and expenses:
Departmental expenses:
Room 8,138 8,787 10,088
Food and beverage 7,112 7,868 8,304
Operating departments 1,249 1,225 1,229
Operating expenses:
Administrative and general 4,750 4,941 5,102
Management fees 2,415 2,888 3,317
Sales and Marketing 3,278 3,817 3,953
Property operating costs 4,035 4,207 4,577
Property insurance, rent and taxes 2,085 2,311 2,451
Depreciation and amortization 4,809 4,955 5,059
Other 217 176 204
------------- ------------ ------------
Total operating costs and expenses 38,088 41,175 44,284
------------- ------------ ------------
Operating income 7,103 9,551 12,358
Interest income 108 191 334
Interest expense (4,613) (5,618) (7,145)
------------- ------------ ------------
Net income $ 2,598 $ 4,124 $ 5,547
============= ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-27
<PAGE> 155
GARDEN HOTEL ASSOCIATES LP
(A TEXAS LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(IN THOUSANDS)
<TABLE>
<S> <C>
Balance at January 1, 1993 $25,517
Distributions (8,752)
Net income 2,598
---------------
Balance at December 31, 1993 19,363
Contributions 498
Distributions (6,465)
Net Income 4,124
---------------
Balance at December 31, 1994 17,520
Distributions (8,601)
Net income 5,547
---------------
Balance at December 31, 1995 $ 14,466
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-28
<PAGE> 156
GARDEN HOTEL ASSOCIATES LP
(A TEXAS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $2,598 $4,124 $5,547
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization of interest rate contracts 40 134 134
Depreciation and amortization 4,809 4,955 5,059
Provision for bad debt 98 25 47
Changes to operating assets and liabilities
Accounts receivable 572 (211) (19)
due from affiliates -- -- (155)
Inventories (17) 12 10
Prepaid expenses (3) 14 2
Other assets (393) (431) 93
Accounts payable and accrued expenses 550 (45) 152
Due to Operator (445) 203 117
Advance deposits 41 (4) 407
------------ ---------- ----------
Net cash provided by operating activities 7,850 8,776 11,394
------------ ---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (1,280) (1,663) (2,348)
Proceeds from land sale 17 -- --
------------ ---------- ----------
Net cash used in investing activities (1,263) (1,663) (2,348)
------------ ---------- ----------
Cash flows from financing activities
Other (498) -- --
Partners' contributed capital -- 498 --
Partners' capital distributions (8,752) (6,465) (8,601)
Proceeds from long-term debt 3,000 -- --
------------ ---------- ----------
Net cash used in financing activities (6,250) (5,967) (8.601)
------------ ---------- ----------
Increase (decrease) in cash and cash equivalents 337 1,146 445
Cash and cash equivalents at beginning of period 3,099 3,436 4,582
------------ ---------- ----------
Cash and cash equivalents at end of period $ 3,436 $ 4,582 $ 5,027
============ ========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 4,568 $ 5,292 $ 6,978
============ ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-29
<PAGE> 157
GARDEN HOTEL ASSOCIATES LP
(A TEXAS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
Garden Hotel Associates LP (the "Partnership") was formed May 11,
1990, for the purpose of acquiring, owning and operating eleven Wyndham Garden
Hotels throughout the United States of which three are located in or near
Phoenix, Arizona.
The partners contributed $36,000,000 upon formation of the
Partnership. The general partner is required to and the limited partner may,
at its discretion, make additional contributions necessary to fund operating
deficits as defined in the Partnership agreement. Profits and losses are
allocated to the partners in accordance with the Partnership agreement.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash and Cash Equivalents
For purposes of reporting cash flows, all highly liquid debt
instruments with original maturities of three months or less are considered to
be cash equivalents.
Designated cash totaling $816,858 and $605,250 as of December 31, 1994
and 1995, respectively, consists of amounts designated for repairs and
replacement of property and equipment.
The Partnership maintains cash and cash equivalents in accounts with
various financial institutions in excess of amounts insured by the Federal
Deposit Insurance Corporation.
Inventories
Inventories consist of food, beverages, china, linen, glassware,
silverware, uniforms, and supplies and are stated at cost, which approximates
market, with cost determined using the first-in, first-out method.
Property and Equipment
Buildings are carried at cost and depreciated over forty years using
the straight-line method. Furniture and equipment are recorded at cost and
depreciated using the straight-line method over the estimated useful lives,
which range from three to seven years. Normal repairs and maintenance are
charged to expense as incurred.
In 1995, the Partnership adopted Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of." Impairment losses are recognized in operating income
as they are determined.
F-30
<PAGE> 158
The Partnership periodically reviews its property and equipment to
determine if its carrying cost will be recovered from future operating cash
flows. In cases when the Partnership does not expect to recover its carrying
cost, the Partnership recognizes an impairment loss. No such losses have been
recognized to date.
Other Assets
Other assets consist primarily of deferred finance costs totaling
approximately $1,387,243 and $819,759 at December 31, 1994 and 1995,
respectively, and are stated at net cost. Amortization of loan costs is
computed using the effective yield method over the lives of the related loans.
The remaining balance consists primarily of security deposits totaling
approximately $404,189 and $522,613 at December 31, 1994 and 1995,
respectively, and are stated at cost.
Preopening costs, which are classified as other assets, are recorded
at cost and amortized over twelve months using the straight-line method. Fully
amortized preopening expenses of $859,256 were written off in 1995.
Income Taxes
The Partnership is not a taxable entity and the results of its
operations are included in the tax returns of the partners. The Partnership's
tax returns and the amount of allocable income or loss are subject to
examination by federal and state taxing authorities. If such examinations
result in changes to income or loss, the tax liability of the partners could be
charged accordingly.
Revenue Recognition
Room, food and beverage, telephone and other revenues are recognized
when earned.
Self-Insurance
The Partnership is self insured for various levels of general
liability, workers' compensation and employee medical coverages. Accrued
expenses include the estimated cost from unpaid incurred claims.
Interest Rate Contracts
The Partnership enters into interest rate contracts to manage its
exposure to interest rate volatility. These contracts have been interest rate
caps, where the Partnership pays a lump-sum for the right to receive future
payments should interest rates exceed an agreed upon rate. The Partnership is
exposed to credit loss in the event of nonperformance by the counter parties to
its interest rate contracts. The Partnership does not anticipate
nonperformance by the counter parties. The Partnership accounts for interest
rate cap contracts by amortizing the up-front premium to interest expense over
the life of the contract.
Advertising Costs
The Partnership participates in various advertising and marketing
programs with a related party. All costs are expensed in the period incurred.
The Partnership recognized advertising expenses of $1,003,589, $1,198,335 and
$1,148,385 for the years ended December 31, 1993, 1994 and 1995, respectively.
Reclassifications
Certain amounts previously reported have been reclassified to conform
with the current year presentation.
3. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following (in thousands):
F-31
<PAGE> 159
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1994 1995
------------ -----------
<S> <C> <C>
Land $ 17,428 $ 17,428
Buildings 91,467 91,467
Furniture, fixtures and equipment 15,494 17,841
------------ -----------
124,389 126,736
Less accumulated depreciation 18,442 22,938
------------ -----------
$ 105,947 $ 103,798
============ ===========
</TABLE>
4. MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS:
On May 21, 1990, the Partnership and Wyndham Hotel Company, Ltd. (the
"Operator"), a related party, entered into a management agreement which
provides for a base management fee and chain services fee equal to 5% of gross
revenues plus an incentive fee equal to 15% of total operating cash flow. Due
to Operator includes management fees and other expenses payable to the
Operator. As provided for in the management agreement, cash in excess of
amounts required for on-site operations is held in a central account in the
name of the Operator.
The Partnership receives sales and marketing, centralized
reservations, accounting and other support services from affiliates which are
reimbursed as an adjustment to management fees in the normal course of
business.
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1994 1995
----------- ------------
<S> <C> <C>
Accounts payable $ 1,004 $ 977
Taxes 1,052 1,061
Payroll and related costs 1,100 1,176
Accrued interest 564 597
Other 215 276
----------- ------------
$ 3,935 $ 4,087
=========== ============
</TABLE>
6. LONG-TERM DEBT:
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1994 1995
----------- ----------
<S> <C> <C>
Acquisition loan $ 90,000 $ 90,000
Revolver loan 3,000 3,000
----------- ----------
$ 93,000 $ 93,000
=========== ==========
</TABLE>
F-32
<PAGE> 160
The Acquisition and Revolver loans are payable to an affiliate.
During 1993, two interest rate caps were purchased for $498,000 which fixed
$60,000,000 of the acquisition loan balance at a 6% interest rate effective
September 30, 1994 for the remainder of the loan. The remaining balances of
these loans bear interest at various rates which ranged from 4.63% to 6.5%,
4.5% to 9% and 7.1% to 7.9% during the years ended December 31, 1993, 1994 and
1995, respectively. Interest only is payable for both the Acquisition and
Revolver loans until maturity at May 21, 1997, when the principal is due.
The Partnership's debt is collateralized principally by property and
equipment.
7. EMPLOYEE BENEFIT PLANS:
The Partnership participates in a 401(k) retirement savings plans.
Employees who are over 21 years of age and have completed one year of service
are eligible to participate in the plan. The Partnership matches employee
contributions up to 4% of an employee's salary. The Partnership expensed
$31,628, $44,185, and $77,075 for the years ended December 31, 1993, 1994 and
1995, respectively, related to the plan.
The Partnership participates in a self-insured group health plan
through a Voluntary Employee Benefit Association ("VEBA") for its employees.
This plan is funded to the limits provided in the Internal Revenue Code, and
liabilities have been recorded for unpaid claims. Aggregate and stop loss
insurance exists at amounts which limit exposure to the Partnership. The
Partnership has recognized expenses under the plan of $419,817, $443,277 and
$511,643 for the years ended December 31, 1993, 1994 and 1995, respectively.
8. FAIR VALUE:
The Partnership has estimated the fair value of its financial
instruments at December 31, 1995 as required by Statement of Financial
Accounting Standards No. 107. The carrying values of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses are
reasonable estimates of their fair values. The carrying values of variable and
fixed rate debt are reasonable estimates of their fair values based on their
discounted cash flows at discount rates currently available to the Company for
debt with similar terms and remaining maturities.
9. COMMITMENTS AND CONTINGENCIES:
The Partnership has entered into a land lease for one of the
Partnership's hotels. Future minimum rental payments of $160,000 per year are
required under the operating lease. The lease, which expires March 2052,
includes a renewal option of 25 years and contingent lease payments which are
based on a percentage of the hotel's gross income. The related renewal rental
expense was $160,000 for the years ended 1993, 1994 and 1995, and contingent
rental expense was $75,333, $112,464 and $153,862 for the years ended December
31, 1993, 1994 and 1995, respectively.
The Partnership is subject to environmental regulations related to the
ownership of real estate (hotels). As part of due diligence procedures, the
Partnership has conducted Phase I environmental assessments on each property
prior to acquisition. The cost of complying with the environmental regulations
was not material to the Partnership's statements of income for any of the years
in the three-year period ended December 31, 1995. The Partnership is not aware
of any environmental condition on any of its properties which is likely to have
a material adverse effect on the Partnership's financial statements.
10. SUBSEQUENT EVENT:
It is the intent of an affiliated entity to acquire a 70% ownership
interest in the Partnership. The acquiring entity and the Operator are
affiliated through common ownership. In addition, a letter of intent has been
entered into with a third party real estate investment trust ("REIT"). This
transaction will result in a sale/leaseback that provides for the sale of all
eleven hotels containing 1,940 rooms for $135,320,000 to the REIT and eleven
long-term operating leases back to the Operator. Each lease has an initial
term of seventeen years and four optional twelve-year extensions
F-33
<PAGE> 161
exercisable at the Operator's option for all hotels. Annual minimum base rents
aggregate $13,600,000 plus a contingent rent payment is required based on a
percentage of excess revenue over base year revenues. The leases will require
the Operator to pay substantially all expenses associated with the operation of
the leased hotels, real estate taxes and insurance.
F-34
<PAGE> 162
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEAR ENDED DECEMBER 31, 1995
F-35
<PAGE> 163
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Wyndham Hotel Corporation:
We have audited the accompanying balance sheet of the Wyndham Hotel
Corporation Acquisition Hotel - The Bristol Place Hotel Toronto (described in
Note 1) as of December 31, 1995 and the related statements of operations,
partners' deficit, and cash flows for the year then ended. These financial
statements are the responsibility of management of the Partnership. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying financial statements were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission as described in Note 1 to the financial statements.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Wyndham Hotel Corporation
Acquisition Hotel - The Bristol Place Hotel Toronto as of December 31, 1995
and its results of operations and its cash flows for the year ended December
31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND, LLP
Dallas, Texas
November 7, 1996
F-36
<PAGE> 164
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
BALANCE SHEET
DECEMBER 31, 1995
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investment in hotel property at cost:
Buildings and improvements $ 6,544,826
Furniture, fixtures and equipment 4,060,874
------------
10,605,700
Less accumulated depreciation and amortization (7,478,951)
------------
Net investment in hotel property 3,126,749
Cash and cash equivalents 655,804
Accounts receivable 651,680
Inventories 178,930
Other assets 71,174
------------
Total assets $ 4,684,337
============
LIABILITIES AND PARTNERS' DEFICIT
Mortgages payable and accrued interest $ 27,204,560
Accounts payable, trade 559,537
Accrued expenses and other liabilities 588,370
------------
Total liabilities 28,352,467
Commitments and contingencies
Partners' deficit (23,668,130)
------------
Total liabilities and partners' deficit $ 4,684,337
============
</TABLE>
The accompanying notes are an integral part of these statements.
F-37
<PAGE> 165
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN U.S. DOLLARS)
<TABLE>
<S> <C>
Revenues:
Rooms $ 5,048,871
Food and beverage 4,747,696
Other 507,098
------------
Total revenue 10,303,665
------------
Expenses:
Property operating costs and expenses 2,032,047
Food and beverage costs and expenses 3,741,512
Selling, general and administrative 1,274,665
Repairs and maintenance 502,394
Utilities 388,291
Receivership expenses 339,079
Management fees 305,273
Franchise cost 84,733
Depreciation and amortization 229,079
Real estate and personal property taxes, and property insurance 1,008,687
Interest expense 2,770,274
Other expense 258,499
------------
Total expenses 12,934,533
------------
Net loss $ (2,630,868)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE> 166
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
STATEMENT OF PARTNERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN U.S. DOLLARS)
<TABLE>
<S> <C>
Balance at December 31, 1994 $(20,505,040)
Translation adjustment (532,222)
Net loss (2,630,868)
------------
Balance at December 31, 1995 $(23,668,130)
============
</TABLE>
The accompanying notes are an integral part of these statements.
F-39
<PAGE> 167
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN U.S. DOLLARS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $(2,630,868)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 229,079
Changes in assets and liabilities:
Accounts receivable (214,304)
Inventories 34,049
Prepaid expenses 59,270
Other assets (5,861)
Accounts payable, trade (1,063)
Accrued expenses and other liabilities 178,074
Accrued interest recognized in mortgages payable 2,077,287
-----------
Net cash provided by operating activities (274,337)
-----------
Cash flows used in investing activities:
Improvements and additions to hotel property (22,719)
-----------
Cash flows provided by financing activities:
Proceeds from borrowings 732,500
-----------
Effect of exchange rate changes on cash 16,214
Net change in cash and cash equivalents 451,658
Cash and cash equivalents at beginning of periods 204,146
-----------
Cash and cash equivalents at end of periods $ 655,804
===========
Supplement disclosure of cash flow information:
Cash paid during the period for interest $ --
===========
</TABLE>
F-40
<PAGE> 168
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
NOTES TO FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
1. ORGANIZATION AND BASIS OF PRESENTATION:
Organization - Wyndham Hotel Corporation ("WHC") acquired a 287 room -
hotel, The Bristol Place Hotel ("Bristol"), located in Toronto, Ontario,
Canada from parties controlled by persons unaffiliated with WHC on
August 30, 1996. The hotel was placed into receivership by the mortgage
payable holders on July 25, 1995.
Basis of Presentation - The accompanying financial statements of Bristol
have been presented on a basis consistent with WHC due to the anticipated
common ownership and management since the entity will be the subject of a
business combination with WHC. The financial statements have been
presented in accordance with U.S. generally accepted accounting
principles and using U.S. dollars as the reporting functional currency.
The hotel was owned by an unincorporated joint venture for income tax
purposes and therefore federal and provincial income taxes are the
responsibility of the owners. Substantially all assets and operations of
the joint venture were acquired by WHC on August 30, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Investment in Hotel Property - The hotel property is stated at the lower
of cost or net realizable value and is depreciated using the declining
balance method at a rate of 5% for building and improvements and 20% for
furniture, fixtures and equipment.
The management of Bristol reviews the carrying value of the property to
determine if circumstances exist indicating an impairment in the carrying
value of the investment of the hotel property or that depreciation
periods should be modified. If facts or circumstances support the
possibility of impairment, the owner of the Bristol will prepare a
projection of the discounted future cash flows, without interest charges,
of the specific hotel property and determine if the investment in hotel
property is recoverable based on the discounted future cash flows. The
owner of Bristol does not believe that there are any factors or
circumstances indicating impairment of any of its investment in hotel
property.
Maintenance and repairs are charged to operations as incurred; major
renewals and betterments are capitalized. Upon the sale or disposition of
a fixed asset, the asset and related accumulated depreciation are removed
from the accounts and the gain or loss is included in operations.
F-41
<PAGE> 169
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
(IN RECEIVERSHIP)
NOTES TO FINANCIAL STATEMENTS - (continued)
(IN U.S. DOLLARS)
Cash and Cash Equivalents - For purposes of reporting cash flows, all
highly liquid debt instruments with original maturities of three months
or less are considered to be cash equivalents.
Inventories - Inventories consist primarily of food and beverage items
and are stated at the lower of cost or market, with cost determined using
the first-in, first-out method.
Foreign Currency Translation - Assets and liabilities denominated in
foreign currencies are translated into US dollars at the current rate in
effect at year-end. All foreign income and expenses are translated at the
weighted average exchange rates during the year.
Current year translation loss is reported separately as a component of
partners' capital.
Income Taxes - The hotel is included in an unincorporated joint venture
which is not a taxable entity. The results of operations are included in
the tax returns of the partners. The joint venture's tax return and the
amount of allocable income or loss are subject to examination by federal
and provincial taxing authorities. If such examinations result in changes
to income or loss, the tax liability of the partners could be changed
accordingly.
Revenue Recognition - Room, food and beverage and other revenues are
recognized when earned. Ongoing credit evaluations are performed and an
allowance for potential credit losses is provided against the portion of
accounts receivable which is estimated to be uncollectible.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Advertising Costs - The hotel participates in various advertising and
marketing programs. All advertising costs are expensed in the period
incurred. The hotel recognized advertising expenses of $205,846 for the
year ended December 31, 1995.
F-42
<PAGE> 170
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. MORTGAGES PAYABLE:
Mortgages payable at December 31, 1995 consists primarily of four
mortgage note payables totaling $25,961,537, including accrued interest
(as described below) and an escrow account for property taxes paid in the
amount of $459,439, including interest at a rate of 11.50%.
All debt is collateralized by the investment in hotel property.
<TABLE>
<CAPTION>
Mortgage Interest Amount
-------------------- -------------- -----------
<S> <C> <C>
First 10.00% $ 2,648,841
Second 11.00% 1,813,051
Third 11.50% 2,691,454
Fourth 11.50% 18,859,275
-----------
Total $26,012,621
===========
</TABLE>
The owner defaulted on the mortgage note payables on July 25, 1995 and
the hotel was placed into receivership by the trustee.
A receivers certificate was received on September 8, 1995 in the amount
of $732,500, the liability to the receiver is due upon receivership
termination and Bristol accrued $51,328 interest at a rate of prime plus
2%.
Upon the sale of the hotel to WHC on August 30, 1996, the receiver
anticipates using the proceeds from the sale to repay the receivers
certificate in full and to repay the remainder to the mortgage note
payables holders.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS:
Statements of Financial Accounting Standards No. 107 requires all
entities to disclose the fair value of certain financial instruments in
their financial statements. Accordingly, Bristol reports the carrying
amounts of cash and cash equivalents, accounts receivable, accounts
payable, accrued expenses and other liabilities at cost, which
approximates fair value due to the short maturity of these instruments.
The carrying amount of Bristol's debt approximates fair value due to the
ability to obtain such borrowings at comparable interest rates.
F-43
<PAGE> 171
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. COMMITMENTS AND CONTINGENCIES:
The hotel is required to remit 11.5% of gross room revenue to the
franchiser for reservation costs and sales and advertising expenses
incurred to promote the hotel at the national level. Additional sales and
advertising costs are incurred at the local property level.
Participation fees represent the annual expense under the terms of the
lease agreement expiring November 30, 2066. Participation costs are based
upon 8% of the defined gross annual profit up to $582,880 and 4.5% upon
profit exceeding the limit. When the mortgages are repaid these amounts
reduce to 6.5% and 3% respectively.
WHC is subject to environmental regulations related to the ownership of
real estate (hotels). As part of the diligence procedures, WHC has
conducted a Phase I environmental assessment on the hotel prior to
acquisition. The cost of complying with the environmental regulations was
not material to the statements of operations for the year ended December
31, 1995. WHC is not aware of any environmental condition at the hotel
which is likely to have a material adverse effect on the financial
statements.
The aggregate future minimum lease payments for operating leases relating
to the premises and the hotel's operations are as follows:
<TABLE>
<CAPTION>
For the year ending: Amount
----------
<S> <C>
December 31, 1996 $ 101,837
December 31, 1997 88,941
December 31, 1998 87,847
December 31, 1999 71,061
December 31, 2000 55,302
Thereafter 2,370,907
----------
Total $2,775,895
==========
</TABLE>
F-44
<PAGE> 172
WYNDHAM HOTEL CORPORATION ACQUISITION HOTEL -
THE BRISTOL PLACE HOTEL TORONTO
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. RELATED PARTY TRANSACTIONS:
Transactions between related parties included in the financial statements
are as follows:
<TABLE>
<CAPTION>
<S> <C>
Bristol Group International--management fees $305,273
Park Plaza Hotel--other operating expenses 25,309
--------
Total $330,582
--------
</TABLE>
7. SUBSEQUENT EVENTS:
As discussed in Note 1, Bristol was acquired by WHC on August 30, 1996.
The acquisition will be accounted for by WHC under the purchase method of
accounting. Accordingly, the cost basis of the hotel will change to
reflect the acquisition price of the hotel by WHC. Any post-acquisition
debt will be different than the historical debt reflected in the
accompanying financial statements. The management agreement is expected
to be terminated concurrently with the sale of the hotel to WHC. The
financial statements do not reflect the effects of this transaction.
F-45
<PAGE> 173
APPENDIX A
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WYNDHAM EMPLOYEES LTD.
Dated December 31, 1993
THE PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY JURISDICTION. NO PARTNERSHIP
INTEREST MAY BE SOLD OR OFFERED FOR SALE (WITHIN THE MEANING OF ANY SECURITIES
LAW) UNLESS A REGISTRATION STATEMENT UNDER ALL APPLICABLE SECURITIES LAWS WITH
RESPECT TO THE INTEREST IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS IS THEN APPLICABLE TO THE INTEREST. A PARTNERSHIP
INTEREST ALSO MAY NOT BE TRANSFERRED OR ENCUMBERED UNLESS THE PROVISIONS OF
ARTICLE V OF THIS AGREEMENT ARE SATISFIED.
<PAGE> 174
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
I. FORMATION OF PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Places of Business and Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5. Title to Partnership Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. CAPITALIZATION AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Percentage Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Required Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3. Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Voluntary Contributions and Adjustment of Percentage Interests . . . . . . . . . . . . . . . . . . . 3
2.5. Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6. Interest on and Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7. Negative Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.8. Adjustment of Gross Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
III. ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS TO THE PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1. Profits, Losses and Distributive Shares of Tax Items . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Calculation of Net Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3. Distribution of Net Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4. Revaluation of Partnership Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IV. MANAGEMENT OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1. The General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2. Specific Authority of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3. Limitations on Power and Authority of the General Partner . . . . . . . . . . . . . . . . . . . . . 15
4.4. Compensation and Expenses of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5. Other Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6. Partnership Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.7. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8. Limitations on Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.9. Other Activities of the Partners and Agreements with Related Parties . . . . . . . . . . . . . . . . 17
4.10. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.11. Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12. Tax Matters Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
V. NEW PARTNERS, RESTRICTIONS ON TRANSFER OF
PARTNERSHIP INTERESTS AND OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
-i-
<PAGE> 175
<TABLE>
<S> <C>
5.1. Admission of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2. Procedure for Admission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3. Permitted Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4. General Partner Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5. Transfer Upon Termination of Marital Relationship . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6. Interfamily Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
VI. BUY-OUT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1. Buy-Out Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3. Procedure Upon Buy-Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
VII. LIQUIDATION AND DISSOLUTION OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1. Dissolution Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2. Continuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.3. Method of Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4. Date of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.5. Death, Dissolution, Legal Incompetency or Bankruptcy of a Limited Partner . . . . . . . . . . . . . 29
VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3. Reports; Annual Valuation of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4. Method of Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.5. Representations of the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.7. Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.8. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.9. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.10. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.11. Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.12. Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.13. General Partner with Interest as Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.14. Legal Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.15. Gender, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.16. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.17. Filing of Composite State Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.18. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.19. Involvement of the Partnership in Certain Proceedings . . . . . . . . . . . . . . . . . . . . . . . 42
8.20. Waiver of Partition and Certain Other Rights; Nature of Interests in the Partnership . . . . . . . . . . . 42
8.21. Partner Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.22. Partner Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.23. Creditors Not Benefitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.24. Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.25. Mandatory Exchange of Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
-ii-
<PAGE> 176
This Amended and Restated Agreement of Limited Partnership (this
"Agreement") is entered into as of the date set forth on the cover page to this
Agreement among the Persons executing this Agreement. Defined terms in this
Agreement have the meanings assigned to them in Section 8.18.
I. FORMATION OF PARTNERSHIP
1.1. Formation. Pursuant to an Agreement of Limited Partnership
dated April 30, 1990 (the "Original Agreement"), the initial Partners formed
the Partnership as a limited partnership under the Texas Revised Limited
Partnership Act (the "Act"). In accordance with the authority set forth in
Section 8.7 of the Original Agreement, the Partners executing this Agreement
desire to amend and restate the Original Agreement in its entirety.
1.2. Name. The name of the Partnership is Wyndham Employees Ltd.
The General Partner may change the name of the Partnership from time to time.
The General Partner also may adopt one or more fictitious names for use by the
Partnership.
1.3. Places of Business and Registered Office. The principal and
registered office of the Partnership is at Suite 2300, 2001 Bryan Street,
Dallas, Texas 75201. The General Partner, which is a corporation organized
under the laws of the State of Texas and which has a business office at the
Partnership's registered office, is the initial registered agent for the
Partnership. The General Partner may change the principal or registered office
or registered agent of the Partnership from time to time. The General Partner
may establish, maintain and abandon one or more additional places of business
for the Partnership.
1.4. Purpose. The purpose of the Partnership is to conduct any
activity permitted by law, any of which will be permitted regardless of whether
any WHC Person has a direct or indirect interest in the activity.
1.5. Title to Partnership Property. Property may be acquired in
the name of the Partnership or in the name of an agent or nominee on terms and
conditions the General Partner deems appropriate.
1.6. Term. The term of the Partnership will continue until 99
years from the effective date of the formation of the Partnership, subject to
earlier termination under Article VII.
II. CAPITALIZATION AND RELATED MATTERS
2.1. Percentage Interests. Except as otherwise provided in this
Agreement, no Partner shall be obligated to make a Capital Contribution.
Subject to Section 2.4, the Percentage Interest of the General Partner at any
time will be one percent (1%). Subject to Section 2.4, the Percentage Interest
of each Limited Partner at any time will equal the product determined by
multiplying ninety-
<PAGE> 177
nine percent (99%) by a fraction, the numerator of which is the number of units
of Partnership interests ("Units") owned by the Limited Partner as set forth on
the records of the Partnership, and the denominator of which is the total
number of Units held by all Limited Partners as of the date of determination.
Percentage Interests may be changed from time to time in accordance with this
Agreement.
2.2. Required Funds. (a) General. Any funds required by the
Partnership to meet its cash requirements will be provided by (i) capital
contributions made by the Partners as provided in this Agreement, or (ii)
borrowings by the Partnership from one or more Persons (including without
limitation TCI Persons and affiliates of TCI Persons) on terms and conditions
the General Partner deems appropriate. No Partner will have an obligation to
advance any funds to the Partnership (either as a loan or a capital
contribution) except as provided in Section 3.3(b).
(b) Certain Deemed Contributions. If a Partner makes a payment
directly to a creditor or another Partner in satisfaction of any indebtedness
of the Partnership or any indemnity or contribution obligation in respect of
Partnership indebtedness for which the Partner bears the ultimate financial
responsibility, the payment will be deemed to be a contribution of money to the
Partnership.
2.3. Borrowings. (a) Third Person Borrowings. Any additional
funds required by the Partnership to meet its cash requirements may, if the
General Partner elects, be borrowed by the Partnership from third Persons upon
the terms and conditions that the General Partner deems appropriate.
(b) Borrowings from Partners. In lieu of borrowings from third
Persons, the General Partner from time to time may cause the Partnership to
borrow required amounts from one or more Partners. Loans made by Partners
under this Section 2.3(b) will not be considered a contribution to the capital
of the Partnership; but will constitute indebtedness of the Partnership to the
advancing Partner, payable from the first available Net Cash Flow of the
Partnership (taking into account, first, all other cash payment obligations of
the Partnership, notwithstanding that any such payment is based upon or
computed with reference to a measure of the Partnership's cash flow) and, to
the extent still unpaid, upon the termination and liquidation of the
Partnership. Each loan by a Partner will bear simple interest on the unpaid
principal balance at 75% of the Interest Rate or at any other rate approved by
the General Partner, but in any case not in excess of the maximum lawful rate.
Payments made to an advancing Partner will be credited first to interest and
then to principal. At the request of the Partner making an advance, the
Partnership will execute a promissory note evidencing the indebtedness. The
General Partner
-2-
<PAGE> 178
will not be personally liable for loans made by Partners under this Section
2.3(b) or be obligated to make a contribution to the capital of the Partnership
to repay those loans. Loans made by Partners under this Section 2.3(b) will be
payable only from the assets of the Partnership.
2.4. Voluntary Contributions and Adjustment of Percentage
Interests. (a) Voluntary Contributions. From time to time the General
Partner may accept, on behalf of the Partnership, capital contributions by
existing Partners.
(b) Adjustment of Percentage Interests. The Percentage Interests
of the Partners may be adjusted by the General Partner in the manner determined
in the sole discretion of the General Partner to be appropriate to compensate
for capital contributions. Each of the Partners irrevocably authorizes the
General Partner from time to time to make adjustments and irrevocably consents
to the adjustments.
(c) Guidelines for Adjustment. In making any adjustment the
General Partner will be guided by the following general principles:
(i) The Partner contributing capital will have his Percentage
Interest increased, based on the proportion that the total Net Value of his
contribution bears to the total Net Value of all assets of the Partnership
after giving effect to the contribution, using the aggregate of the EVBS Values
of the interests held by the Partnership in WHC Persons as of the most recent
June 30 (or such other date deemed appropriate by the General Partner) and the
fair market value of all Cash Items owned or held by the Partnership.
(ii) The remaining Percentage Interests will be allocated among the
Partners not contributing in proportion to their Percentage Interests before
the contribution, provided, however, that the General Partner will have a
Percentage Interest of at least one percent (1%).
(d) Miscellaneous. Each of the Partners (i) waives any right
which he might have to object to any adjustment made under this Section 2.4,
(ii) waives any preemptive or other right he may have arising out of the
acceptance of any capital contribution and consents to adjustments of the
Percentage Interests as provided in this Section 2.4, and (iii) without
limiting the generality of Section 4.10, agrees to execute from time to time
any amendments to this Agreement or the Partnership Certificate which the
General Partner may determine to be advisable to reflect any capital
contributions and adjustments to the Percentage Interests made under this
Section 2.4.
2.5. Capital Accounts. (a) Establishment and Maintenance. A
separate capital account ("Capital Account") will be maintained
-3-
<PAGE> 179
for each Partner. The Capital Account of each Partner will be determined and
adjusted as follows:
(i) Each Partner's Capital Account will be credited with the
Partner's Capital Contributions, the Partner's distributive share of Profits,
any items in the nature of income or gain that are specially allocated to the
Partner under Sections 3.1(c) or 3.1(d), the Partner's share of any Positive
Adjustment under Section 3.4, and the amount of any Partnership liabilities
that are assumed by the Partner or secured by any Partnership property
distributed to the Partner.
(ii) Each Partner's Capital Account will be debited with the amount
of cash and the Gross Asset Value of any Partnership property distributed to
the Partner under any provision of this Agreement, the Partner's distributive
share of Losses, any items in the nature of deduction or loss that are
specially allocated to the Partner under Sections 3.1(c) or 3.1(d), the
Partner's share of any Negative Adjustment under Section 3.4, and the amount of
any liabilities of the Partner assumed by the Partnership or which are secured
by any property contributed by the Partner to the Partnership.
(iii) If any interest in the Partnership is transferred in accordance
with the terms of this Agreement, the transferee will succeed to the Capital
Account of the transferor to the extent it relates to the transferred interest.
(iv) In determining the amount of any liability for purposes of
Sections 2.5(a)(i) and 2.5(a)(ii), Code Section 752 (c) and any other
applicable provisions of the Code and the Treasury Regulations will be taken
into account.
(b) Modifications by the General Partner. The provisions of this
Section 2.5 and the other provisions of this Agreement relating to the
maintenance of Capital Accounts have been included in this Agreement to comply
with Section 704 (b) of the Code and Treasury Regulations Section 1.704-1(b)
and will be interpreted and applied in a manner consistent with those
provisions. Without limiting the generality of this Section 2.5, the General
Partner may modify the manner in which the Capital Accounts are maintained
under this Section 2.5 in order to comply with those provisions, as well as
upon the occurrence of events that might otherwise cause this Agreement not to
comply with those provisions.
2.6. Interest on and Return of Capital. No Partner will be
entitled to any interest on his Capital Account or on his contributions to the
capital of the Partnership. Except as expressly provided in this Agreement, no
Partner will have the right to demand or receive the return of all or any part
of his
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capital or to receive property other than cash from the Partnership.
2.7. Negative Capital Accounts. No Partner will be required to pay
to the Partnership or to any other Partner any deficit or negative balance
which may exist from time to time in the Partner's Capital Account.
2.8. Adjustment of Gross Asset Value. Gross Asset Value, with
respect to any asset, is the adjusted basis for federal income tax purposes of
that asset, except as follows:
(a) The initial Gross Asset Value of any asset
contributed (or deemed contributed under Treasury Regulations Section
1.708-1(b)(1)(iv)) by a Partner to the Partnership will be the fair
market value of the asset on the date of the contribution, as
determined by the General Partner.
(b) The Gross Asset Values of all Partnership assets will
be adjusted to equal the respective fair market values of the assets,
as determined by the General Partner, as of (i) the date required
under Section 3.4, (ii) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership property as
consideration for an interest in the Partnership if the General
Partner reasonably determines an adjustment is necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership within the meaning of Treasury Regulations Section
1.704-1(b)(2)(iv)(g), and (iii) the liquidation of the Partnership
within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g).
(c) The Gross Asset Value of any Partnership asset
distributed to any Partner will be the gross fair market value of the
asset on the date of distribution.
(d) The Gross Asset Values of Partnership assets will be
increased or decreased to reflect any adjustment to the adjusted basis
of the assets under Code Section 734 (b) or 743(b), but only to the
extent that the adjustment is taken into account in determining
Capital Accounts under Treasury Regulations Section 1. 704-1 (b) (2)
(iv) (m), provided that Gross Asset Values will not be adjusted under
this Section 2.8(d)to the extent that the General Partner determines
that an adjustment under Section 2.8(b) is necessary or appropriate in
connection with a transaction that would otherwise result in an
adjustment under this Section 2.8(d).
After the Gross Asset Value of any asset has been determined or adjusted under
Sections 2.8(a), 2.8(b) or 2.8(d), Gross Asset Value
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will be adjusted by the Depreciation taken into account with respect to the
asset for purposes of computing Profits and Losses.
III. ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS TO THE PARTNERS
3.1. Profits, Losses and Distributive Shares of Tax Items.
(a) Profits. Profits for any fiscal year will be allocated to the
Partners in the following order and priority:
(i) First, until the cumulative Profits allocated
pursuant to this Section 3.1(a)(i) are equal to the cumulative Losses,
if any, allocated pursuant to Section 3.1(b)(ii) from the Adjustment
Date to the end of such fiscal year;
(ii) Second, to the Partners in proportion to their
respective Percentage Interests.
(b) Losses. Losses for any fiscal year will be allocated to the
Partners in the following order and priority:
(i) First, until the cumulative Losses allocated pursuant
to this Section 3.1(b)(i) are equal to the cumulative Profits, if any,
allocated pursuant to Section 3.1(a)(ii) from the Adjustment Date to
the end of such fiscal year;
(ii) Second, to the Partners in proportion to their
respective Percentage Interests.
(c) Special Allocations. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following
order and priority:
(i) Partnership Minimum Gain Chargeback.
Notwithstanding any other provision of this Section 3.1, if there is a
net decrease in Partnership Minimum Gain during any Partnership fiscal
year, each Partner will be specially allocated items of Partnership
income and gain for that year (and, if necessary, subsequent years) in
an amount equal to the greater of (A) the portion of that Partner's
share of the net decrease in Partnership Minimum Gain, determined in
accordance with Treasury Regulations Section 1.704-2(g)(2), or (B) if
the Partner would otherwise have an Adjusted Capital Account Deficit
at the end of that year, an amount sufficient to eliminate the
Partner's Adjusted Capital Account Deficit. Allocations pursuant to
the previous sentence will be made in proportion to the respective
amounts required to be allocated to the various Partners pursuant
thereto. The items to be so allocated will be determined in
accordance with Treasury
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Regulations Section 1.704-2(f)(6), 1.740-2(g)(2), and
1.704-2(j)(2)(i). This Section 3.1(c)(i) is intended to comply with
the minimum gain chargeback requirement in that Section of the
Treasury Regulations and will be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 3.1 except Section 3.1(c)(i), if there
is a net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any Partnership fiscal year, each Partner with
a share of the Partner Minimum Gain attributable to the Partner
Nonrecourse Debt, determined in accordance with Treasury Regulations
Section 1.704- 2(i)(4), will be specially allocated items of
Partnership income and gain for that year (and, if necessary,
subsequent years) in an amount equal to the greater of (A) the portion
of the Partner's share of the net decrease in Partner Minimum Gain
attributable to the Partner Nonrecourse Debt, determined in accordance
with Treasury Regulations Section 1.704-2(i)(5) or (B) if the Partner
would otherwise have an Adjusted Capital Account Deficit at the end of
that year, an amount sufficient to eliminate the Partner's Adjusted
Capital Account Deficit. Allocations pursuant to the previous
sentence will be made in proportion to the respective amounts required
to be allocated to the various Partners pursuant thereto. The items
to be so allocated will be determined in accordance with Treasury
Regulations Section 1.704-2(i)(5). This Section 3.1(c)(ii) is
intended to comply with the minimum gain chargeback requirement in
that Section of the Treasury Regulations and will be interpreted
consistently therewith.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulations Section 1.704- 1(b)(2)(ii)(d)(4),
(5) or (6), items of Partnership income and gain will be specially
allocated to that Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the
Adjusted Capital Account Deficit of the Partner as quickly as
possible, provided that an allocation pursuant to this Section
3.1(c)(iii) will be made only if and to the extent that the Partner
would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 3.1 have been tentatively
made as if this Section 3.1(c)(iii) were not in the Agreement.
(iv) Gross Income Allocation. In the event any Partner
has a deficit Capital Account at the end of any Partnership fiscal
year which is in excess of the sum of (A) the amount that Partner is
obligated to restore pursuant to any provision of this Agreement and
(B) the amount that Partner is deemed to be obligated to restore
pursuant to Treasury Regulations
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Sections 1.704-2(g)(1) and 1.704-2(i)(5), that Partner will be
specially allocated items of Partnership income and gain in the amount
of the excess as quickly as possible, provided that an allocation
pursuant to this Section 3.1(c)(iv) will be made only if and to the
extent that the Partner would have a deficit Capital Account in excess
of the sum after all other allocations provided for in this Section
3.1 have been made as if this Section 3.1(c)(iv) and Section
3.1(c)(iii) were not in the Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for
any fiscal year or other period will be specially allocated among the
Partners in proportion to their respective Percentage Interests in the
Partnership.
(vi) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any fiscal year or other period will be
allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which the Partner
Nonrecourse Deductions are attributable in accordance with Treasury
Regulations Section 1.704-2(i)(1).
(vii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset under
Code Sections 734(b) or 743(b) is required to be taken into account in
determining Capital Accounts under Treasury Regulations Section
1.704-1(b)(2)(iv)(m) , the amount of the adjustment to the Capital
Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis), and the gain or loss will be specially allocated to the
Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted under Treasury Regulations
Section 1.704-1(b)(2)(iv)(m).
(viii) Section 38 Property Loss. Any reduction in the tax
basis or cost of Partnership Code Section 38 Property under Code
Section 48(q) will be allocated among the Partners (as an item in the
nature of deduction or loss) in the same proportions as the basis or
cost of the property is allocated under Section 3.1(f).
(ix) Section 38 Property Gain. In the event that the
adjusted tax basis of any Code Section 38 Property that has been
placed in service by the Partnership is increased under Code Section
48(q), the increase will be specially allocated among the Partners (as
an item in the nature of income or gain) in the same proportions as
the investment tax credit that is recaptured with respect to the
property is shared among the Partners.
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(x) Reallocation. To the extent Losses allocated to a
Partner would cause the Partner to have an Adjusted Capital Account
Deficit at the end of any fiscal year, the Losses will be reallocated
among other Partners in accordance with their respective Percentage
Interests, subject to the limitations contained in this Section
3.1(c).
(xi) Interest in Partnership. Notwithstanding any other
provision of this Agreement, no allocation of Profit, Loss or item of
Profit or Loss will be made to a Partner if the allocation would not
have "economic effect" under Treasury Regulations Section
1.704-1(b)(2)(ii) or otherwise would not be in accordance with the
Partner's interest in the Partnership within the meaning of Treasury
Regulations Section 1.704-1(b)(3). The General Partner will have the
authority to reallocate any item in accordance with this Section
3.1(c)(xi).
(d) Curative Allocations. The "Regulatory Allocations" consist of
allocations made to a Partner (or predecessor) under Sections 3.1(c)(i), (ii),
(iii), (iv) and (x), allocations to a Partner (or predecessor) under Section
3.1(c)(v) to the extent the cumulative amount of those allocations exceeds the
cumulative amount of Nonrecourse Deductions allocated to that Partner (or
predecessor), and allocations to a Partner (or predecessor) under Section
3.1(c)(vi) to the extent the cumulative amount of those allocations exceeds the
cumulative amount of Partner Nonrecourse Deductions allocated to that Partner
(or predecessor). Notwithstanding any other provision of this Section 3.1
(other than the Regulatory Allocations), the Regulatory Allocations will be
taken into account in allocating other items of income, gain, loss and
deduction among the Partners so that, to the extent possible, the net amount of
those allocations of other items and the Regulatory Allocations to each Partner
will be equal to the net amount that would have been allocated to the Partner
if the Regulatory Allocations had not occurred.
(e) Tax Allocations--Code Section 704(c). In accordance with Code
Section 704(c) and the related Treasury Regulations, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership, solely for tax purposes, will be allocated among the Partners so
as to take account of any variation between the adjusted basis to the
Partnership of the property for federal income tax purposes and the initial
Gross Asset Value of the Property (computed in accordance with Section 2.8).
If the Gross Asset Value of any Partnership asset is adjusted under Section
2.8, subsequent allocations of income, gain, loss and deduction with respect to
that asset will take account of any variation between the adjusted basis of the
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the related Treasury Regulations.
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Any elections or other decisions relating to allocations under this Section
3.1(e) will be made in any manner that the General Partner determines
reasonably reflects the purpose and intention of this Agreement. Allocations
under this Section 3.1(e) are solely for purposes of federal, state and local
taxes and will not affect, or in any way be taken into account in computing,
any Partner's Capital Account or share of Profits, Losses or other items or
distributions under any provision of this Agreement.
(f) Other Allocation Rules. The following rules will apply to the
calculation and allocation of Profits, Losses and other items:
(i) Except as otherwise provided in the Agreement, all
Profits, Losses and other items allocated to the Partners will be
allocated among them in proportion to their Percentage Interests.
(ii) For purposes of determining the Profits, Losses or
any other item allocable to any period, Profits, Losses and other
items will be determined on a daily, monthly or other basis, as
determined by the General Partner using any permissible method under
Code Section 706 and the related Treasury Regulations.
(iii) Except as otherwise provided in this Agreement, all
items of Partnership income, gain, loss, deduction and other
allocations not provided for in this Agreement will be divided among
the Partners in the same proportions as they share Profits and Losses.
(iv) Except as otherwise provided in this Agreement, all
items that are components of Profits or Losses will be divided among
the Partners in the same proportions as they have been allocated those
Profits or Losses, as the case may be, for the year.
(v) For purposes of determining a Partner's proportionate
share of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Treasury Regulations Section 1.752-3(a)(3),
Partnership profits shall be allocated among the Partners in
accordance with their respective Percentage Interests in the
Partnership.
(g) Partner Acknowledgment. The Partners agree to be bound by the
provisions of this Section 3.1 in reporting their shares of Partnership income
and loss for income tax purposes.
3.2. Calculation of Net Cash Flow. The net cash flow of the
Partnership (the "Net Cash Flow") will be determined as of the end of each
fiscal year and will be the Profit or Loss of the
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Partnership for that year, as determined in accordance with the method of
accounting then in effect for the Partnership, increased by, without
duplication:
(a) Depreciation and other non-cash charges deducted in
computing the Profit or Loss of the Partnership for the year;
(b) Any loan proceeds or capital contributions received
by the Partnership during the year;
(c) Any cash that becomes available during the year by
reason of a sale, refinancing or other capital transaction or a net
reduction in any reserves;
(d) Any decrease under Sections 2.8(b) or 2.8(c) taken
into account in computing Profit or Loss; and
(e) Any net decrease during the year in non-cash working
capital; and
decreased by, without duplication:
(i) Principal payments made by the Partnership on any of
its indebtedness during the year;
(ii) Capital expenditures, including purchases of
property, made by the Partnership during the year which are not
deductible in computing the Partnership's Profit or Loss for the year;
(iii) Additions during the year to reserves deemed appropriate
by the General Partner;
(iv) Any increase under Sections 2.8(b) or 2.8(c) taken
into account in computing Profit and Loss; and
(v) Any net increase during the year in non-cash working
capital.
3.3. Distribution of Net Cash Flow. (a) Regular Distributions.
Except as provided in Section 7.3, the Net Cash Flow of the Partnership for any
fiscal year, as determined under Section 3.2, will be distributable to the
Partners in the following order:
(i) First, an amount up to the sum of the Partners
positive Capital Accounts as of the last day of the fiscal year, will
be distributed to the Partners who have positive Capital Accounts in
proportion to their respective positive Capital Accounts; and
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(ii) The balance, if any, will be distributed to the
Partners in accordance with their Percentage Interests as of the last
day of the fiscal year.
Distributions will be made on the dates that the General Partner determines to
be appropriate.
(b) Special Distributions. In addition to distributions of Net
Cash Flow, the General Partner may authorize other distributions from time to
time, including without limitation distributions to a Partner to be repaid by
the Partner on terms concerning repayment and interest, if any, the General
Partner agrees to with the Partner receiving the distribution, provided that
all disproportionate withdrawals, to the extent they have not already been
repaid, will in all events be payable on demand by the Partnership during the
liquidation of the Partnership.
(c) Effect on Capital. Distributions to a Partner will be
considered a return of capital only to the extent the distributions exceed that
Partner's Proportionate Share of Profits and Losses increased by Depreciation
and other non-cash charges deducted in computing the Profit and Loss of the
Partnership.
3.4. Revaluation of Partnership Assets. Immediately before any
additional Partners are admitted to the Partnership, or additional Units are
issued to existing Partners, under Section 5.1(b), and on January 1 of each
year after 1990 or such other dates as the General Partner shall determine, the
General Partner will adjust the Gross Asset Values of the Partnership's assets
under Section 2.8 by using the EVBS Values of the interests held by the
Partnership in WHC Persons as of the most recent June 30 (or such other date
deemed appropriate by the General Partner) and the fair market value of all
Cash Items owned or held by the Partnership. The Partnership simultaneously
will adjust the Partners' Capital Accounts upward if the aggregate Gross Asset
Values of all Partnership assets, as so adjusted, exceed the aggregate Gross
Asset Values of all Partnership assets immediately prior to such adjustments
("Positive Adjustment") or downward if the aggregate Gross Asset Values of all
Partnership assets, as so adjusted, are less than the aggregate Gross Asset
Values of all Partnership assets immediately prior to such adjustments
("Negative Adjustment"), by the amount of the difference between the aggregate
Gross Asset Values of all Partnership assets immediately prior to such
adjustments and the Gross Asset Values of all Partnership assets, as so
adjusted, such adjustment to be allocated among the Partners' Capital Accounts
in the manner the inherent gain or loss in the Partnership's assets would be
allocated (in accordance with Section 3.1 hereof) if the assets were sold on
that date. In the event additional Partners are admitted to the Partnership,
or additional Units are issued to existing Partners, under Section 5.1(b) on
the date the Partners' Capital Accounts are adjusted
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under this Section 3.4, all adjustments will be completed before the new
Partners are so admitted or the additional Units are so issued.
IV. MANAGEMENT OF THE PARTNERSHIP
4.1. The General Partner. The business and affairs of the
Partnership will be managed by the General Partner. Except as otherwise
expressly provided in this Agreement with respect to matters requiring the
approval of Partners, all determinations relating to the business and affairs
of the Partnership (including without limitation all decisions required or
permitted to be made by the Partnership as a participant in any other Person in
which it may have an interest) will be made by the General Partner in its sole
discretion and will not give rise to any right or claim by any Partner or the
Partnership unless made in violation of an express provision of this Agreement.
The General Partner will have complete authority to take, in its own name or in
the name of the Partnership, any action that the General Partner determines to
be appropriate under this Agreement or for the conduct of the business of the
Partnership, including without limitation the actions specified in Section 4.2.
All decisions and actions taken by the General Partner under the authority of
this Section 4.1 will be binding upon all of the Partners and the Partnership.
The General Partner will not be liable or accountable, in damages or otherwise,
to the Partnership or to any other Partner for anything it may do or refrain
from doing, except in the case of its willful breach of a material provision of
this Agreement or gross negligence in connection with the business and affairs
of the Partnership.
4.2. Specific Authority of the General Partner. (a) Specified
Authority. The authority of the General Partner to manage the business and
affairs of the Partnership will include complete authority:
(i) To borrow money for the Partnership;
(ii) To create an Encumbrance on all or any part of the
Partnership's assets in order to secure loans or advances to the
Partnership or any Person in which the Partnership has a direct or
indirect interest, or any obligation of the Partnership or any Person
in which the Partnership has a direct or indirect interest, or for any
other Partnership purpose;
(iii) To execute and deliver for the Partnership agreements
and other instruments (including without limitation instruments
creating an Encumbrance on Partnership assets for any purpose
authorized by clause (ii)), including without limitation agreements
and instruments in connection with loans or the Transfer of property;
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(iv) To guarantee obligations of any Person;
(v) To acquire, either directly or indirectly, real
property and tangible and intangible personal property and to Transfer
all or any part of the property of the Partnership or any Person in
which the Partnership has a direct or indirect interest;
(vi) To collect all income of the Partnership and to
satisfy all obligations of the Partnership, including without
limitation expenses of the General Partner relating to the Partnership
described in Section 4.4 and indemnification obligations arising under
Section 4.7;
(vii) To prepare and file all tax returns for the Partnership
(but not the tax returns or other reports of the Partners);
(viii) To make all tax elections for the Partnership,
including without limitation any special basis adjustments under
Section 754 of the Code, provided that the Partner requesting any
Section 754 election must agree to reimburse the Partnership for any
costs incurred by the Partnership in making the election or in
maintaining or preparing any additional records or reports in
connection with the election;
(ix) To prosecute, defend and settle legal, arbitration or
administrative proceedings on behalf of or against the Partnership or,
to the extent relating to the Partnership, any of its Partners;
(x) To manage, maintain and operate the assets of the
Partnership or any Person in which the Partnership has a direct or
indirect interest;
(xi) To employ one or more Persons (including without
limitation any TCI Person or any partner, shareholder, officer,
director, agent or advisor of any TCI Person) in connection with the
business of the Partnership;
(xii) To establish arrangements for the deposit of monies
received on behalf of the Partnership in accordance with Section 4.11
and to disburse all funds on deposit on behalf of the Partnership in
amounts and at times as required in connection with the business of
the Partnership;
(xiii) To procure and maintain insurance against risks and in
amounts determined to be appropriate by the General Partner, including
without limitation errors and omissions or other insurance under which
members or the General Partner and
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its shareholders, officers, directors, agents and affiliates are
beneficiaries;
(xiv) To advance funds of the Partnership to any Person in
which the Partnership has a direct or indirect interest;
(xv) To compromise or release the obligation of a Partner
to make a contribution or otherwise pay cash or Transfer property or
to return cash or property paid or distributed to the Partner in
violation of the Act or this Agreement;
(xvi) To do or cause to be done any action referred to in
this Agreement through any designee; and
(xvii) To do or cause to be done any other act which the
General Partner considers to be appropriate to carry out any of its
powers or in furtherance of the purposes or character of the
Partnership.
(b) Certain Transfers of Property. Notwithstanding Section
4.2(a), the General Partner may not Transfer all or substantially all of the
Partnership's assets, or Transfer to a TCI Person all or substantially all of
the Partnership's interest in real property in which the Partnership has an
interest, without in either case the approval of the General Partner and
Limited Partners holding at least a majority of the Percentage Interests held
by Limited Partners.
4.3. Limitations on Power and Authority of the General Partner.
(a) Certain Limitations. Without the consent of all of the Partners, the
General Partner will not have the authority to do any of the following:
(i) Any act in contravention of this Agreement;
(ii) Any act which would make it impossible to carry on
the ordinary business of the Partnership, other than a Transfer of all
or substantially all of the assets of the Partnership;
(iii) Confess a judgment against the Partnership except in
connection with the settlement of an action or proceeding; or
(iv) Possess property of the Partnership or assign the
Partnership's rights in specific property for other than Partnership
purposes.
(b) Authority as to Third Persons. Notwithstanding Sections
4.2(b) and 4.3(a), the signed statement of the General Partner reciting that it
has the authority or necessary approval of
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Partners for any action, as to any third Person, will be conclusive evidence of
the authority of the General Partner to take that action and of compliance with
Section 4.2, if applicable. Each Partner will promptly execute instruments
determined by the General Partner to be appropriate to evidence the authority
of the General Partner to consummate any transaction permitted by this
Agreement.
4.4. Compensation and Expenses of the General Partner. The General
Partner will not receive any compensation from the Partnership for serving as
General Partner, but all expenses incurred by, or allocated by any TCI Person
to, the General Partner in connection with its service as General Partner
(including without limitation charges for property management, off-site
development, architectural, legal, accounting, data processing, administrative,
executive, tax and other services rendered by employees of any TCI Person) will
be paid or promptly reimbursed by the Partnership. Nothing contained in this
Section 4.4 is intended to affect the Percentage Interest of the General
Partner or the amounts that may be payable to the General Partner by reason of
its Percentage Interest.
4.5. Other Partners. The Limited Partners, in their capacities as
Limited Partners, may not act for or bind the Partnership and may not
participate in the general management, conduct or control of the Partnership's
business or affairs. Nothing contained in this Section 4.5 will prohibit any
Limited Partner from acting as an officer, director, employee, agent or other
representative of the General Partner or the Partnership.
4.6. Partnership Liabilities. The General Partner will have no
liability for the return of the Partners' capital. All liabilities of the
Partnership, including without limitation indemnity obligations under Section
4.7, will be liabilities of the Partnership as an entity, and will be paid or
satisfied from Partnership assets. No liability of the Partnership will be
payable in whole or in part by any Partner in his capacity as a Partner (other
than the General Partner and then only in its capacity as such as determined by
a non-appealable order of a court of competent jurisdiction and subject to
Section 4.7) or by any partner, shareholder, director, officer, agent,
affiliate or advisor of any Partner or any other TCI Person.
4.7. Indemnity. Subject to the limitations contained in Article 11
of the Act, the Partnership to the extent of its assets legally available for
that purpose, will indemnify and hold harmless the Partners and any partner,
shareholder, director, officer, agent, affiliate and professional or other
advisor of any of them (collectively, the "Indemnified Persons") , from and
against any and all loss, damage, expense (including without limitation fees
and expenses of attorneys and other advisors and any court costs incurred by
any Indemnified Person) or liability by
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reason of anything any Indemnified Person does or refrains from doing for, or
in connection with the business or affairs of, the Partnership, except to the
extent that the loss, damage, expense or liability results primarily from the
Indemnified Person's gross negligence or willful breach of a material provision
of this Agreement which in either event causes actual material damage to the
Partnership.
4.8. Limitations on Indemnity. (a) Waiver by Partnership. Subject
to the limitations contained in Article 11 of the Act, the Partnership, with
the approval of the General Partner and Limited Partners who hold at least a
majority of the Percentage Interests held by Limited Partners, may indemnify
any of the Indemnified Persons for any loss, damage, expense or liability for
which the Indemnified Persons would not be entitled to mandatory
indemnification under Section 4.7.
(b) Waiver by Partner. A Partner may waive the benefits of
indemnification under Section 4.7.
(c) Certain Related Rights. The rights to indemnification under
Section 4.7 are exclusive of other rights which any Indemnified Person may
otherwise have at law or in equity, including without limitation common law
rights to indemnification or contribution. Nothing in this Section 4.8 will
affect the rights or obligations of any Person (or the limitations on those
rights or obligations) under any other agreement or instrument to which that
Person and any other TCI Person are parties.
4.9. Other Activities of the Partners and Agreements with Related
Parties. Each Partner will be free to own or otherwise participate directly or
indirectly in the ownership or operation of any activity of any Person, whether
or not the activity competes with or is enhanced by any activity of the
Partnership, provided that nothing in this Section 4.9 will affect the rights
or obligations of any Partner under any other agreement or instrument to which
he and any other TCI Person are parties.
4.10. Power of Attorney. (a) General. Each Partner appoints the
General Partner his attorney-in-fact, with full power of substitution and
resubstitution, to execute in the Partner's name and deliver:
(i) A Partnership Certificate and any amendments to the
Partnership Certificate that the General Partner deems appropriate;
(ii) Any instrument that the General Partner deems
appropriate in order to qualify the Partnership to do business in any
jurisdiction and any other instrument relating to the
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qualification or registration of the Partnership that the General
Partner deems appropriate;
(iii) All certificates and other instruments that may be
appropriate to effect the dissolution and termination of the
Partnership under Article VII;
(iv) All reports, forms and schedules that the General
Partner determines appropriate to file with any governmental body in
connection with any Partnership activity;
(v) Any amendment to this Agreement appropriate to
reflect the Transfer of an interest in the Partnership permitted by
this Agreement, or the admission to, or withdrawal from, the
Partnership of a Partner permitted by this Agreement;
(vi) Any amendment to this Agreement authorized under
Section 8.7; and
(vii) Any instrument or agreement determined by the General
Partner to be necessary or appropriate to effect an exchange
authorized under Section 8.25.
(b) Irrevocable Grant. The power of attorney granted under this
Section 4.10 is coupled with an interest and is irrevocable and will survive
the death, dissolution, legal incompetency, bankruptcy and withdrawal from the
Partnership of any Partner or the Transfer of his interest in the Partnership.
4.11. Banking. The funds of the Partnership will be kept in banking
and other accounts from time to time in accordance with policies approved by
the General Partner, including without limitation any master or general account
of TCI or any TCI Person, provided that funds of the Partnership may not be
kept in any master or general account of TCI or any other TCI Person unless
separate entries are made on the records of the Partnership and on the books
and records of TCI or the other TCI Person reflecting that amounts received
from the Partnership have been deposited for the account of the Partnership and
that withdrawals by or for the Partnership have been made for the purpose of
disbursing funds to the Partnership or for paying liabilities of the
Partnership. Withdrawals from any account will be made on the manual or
facsimile signature of one or more individuals designated by the General
Partner. There will be no commingling of the assets of the Partnership with
the assets of any other Person except as permitted by this Agreement.
4.12. Tax Matters Partner. The General Partner is designated as the
"tax matters partner" under Section 6231 of the Code. If an audit of the
Partnership's federal income tax return is commenced,
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the General Partner will promptly advise all Partners of the audit and provide
each Partner with a copy of any final partnership administrative adjustment (as
defined in Section 6223(a) of the Code).
V. NEW PARTNERS, RESTRICTIONS ON TRANSFER OF
PARTNERSHIP INTERESTS AND OTHER MATTERS
5.1. Admission of Partners. (a) Transfers of Partnership
Interests. Except as expressly provided in Sections 5.3, 5.5 and 5.6 and
Article VI, without the prior written consent of the General Partner (which
consent may be given or withheld in its sole discretion) , no Partner may
voluntarily or involuntarily Transfer, or create or suffer to exist any
Encumbrance against, all or any part of his record or beneficial interest in
the Partnership.
(b) Additional Limited Partners; Additional Units. Subject to the
express provisions contained elsewhere in this Agreement, from time to time the
General Partner may admit additional Limited Partners to the Partnership, or
issue additional Units to existing Partners, upon any terms deemed appropriate
by the General Partner. The General Partner will specify the number of Units
acquired by each Partner and that number will be used in computing the
Partner's Percentage Interest under Section 2.1.
(c) Additional General Partners. Except as provided in
Section 7.2, no new General Partner will be admitted to the Partnership
(whether by admission of a new Partner or conversion of all or part of the
Partnership Interest of an existing Limited Partner) except with the approval
of the General Partner and Limited Partners holding a majority of the
Percentage Interests held by all Limited Partners.
5.2. Procedure for Admission. (a) General. No Person will have
title to any interest in the Partnership until he (i) has executed and
delivered all documents deemed appropriate by the General Partner to reflect
his admission to the Partnership and his agreement to be bound by this
Agreement and, to the extent applicable to the transferred interest, any other
agreement or instrument to which the transferor and any other TCI Person are
parties and (ii) has paid all expenses connected with his admission. Any
purported Transfer or Encumbrance will be ineffective until the transferor and
his transferee furnish to the Partnership the instruments and assurances the
General Partner may request, including without limitation, if requested, an
opinion of counsel satisfactory to the General Partner that the Transfer or
Encumbrance of the Partnership interest has been registered or is exempt from
registration under the Securities Act and all applicable securities laws. No
Transfer or Encumbrance will be effective if it would result in the
"termination" of the Partnership under Section 708 of the Code, unless the
General
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Partner gives its prior written consent to the Transfer or Encumbrance.
(b) Effect of Transfers. Upon an effective Transfer of ownership
of all or any part of a Partner's interest in the Partnership, the Partnership
will continue and, upon compliance with the provisions of this Section 5.2, the
transferee of the interest, if the transferee is not already a Partner of the
same class, will be admitted to the Partnership as a Partner of that class or,
if the transferee is already a Partner of the same class, will continue as a
Partner of that class with an additional Percentage Interest reflecting the
Transfer.
5.3. Permitted Transfers. Upon compliance with the provisions of
Section 5.2, any Limited Partner may Transfer all or any portion of his
interest in the Partnership to a Permitted Transferee.
5.4. General Partner Withdrawal. The General Partner will not
cease to be a general partner of the Partnership or be deemed to have withdrawn
from the Partnership as a result of the occurrence of an event described in
Paragraphs (4), (5), (7), (8) or (9) of Section 4.02(a) of the Act, except as
otherwise expressly provided in this Agreement. Any event that causes the
General Partner to cease to be a General Partner under Sections 4.02 and 6.02
of the Act under circumstances not otherwise expressly allowed in this
Agreement will constitute a breach of this Agreement.
5.5. Transfer Upon Termination of Marital Relationship. The
interest in the Partnership of each Partner who is not a current or former WHC
Employee (including without limitation any Partner who receives a Partnership
interest in connection with a marital dissolution to which this Section 5.5
applies) is subject to an option to purchase (the "Marital Option") in favor of
any Associated WHC Person of the Partner. A Marital Option with respect to the
Partnership interest of a Partner may be exercised if the marital relationship
of that Partner and any Associated WHC Person is terminated (whether by death,
divorce or otherwise) unless the Associated WHC Person succeeds to the entire
Partnership interest under this Section 5.5. Upon the exercise of a Marital
Option, the Person who owns the Partnership interest subject to the Marital
Option (the "Spouse Partner") must sell the Partnership interest at the price
and on the other terms and conditions agreed upon by the Spouse Partner and the
Associated WHC Person. If the purchase of a Partnership interest is not
completed (whether by reason of a failure to exercise the Marital Option or to
agree upon price or terms or any other reason) within 60 calendar days after
the Marital Option becomes exercisable, the failure will constitute a Buy-out
Event (as defined in Section 6.1) with regard to the interest in the
Partnership covered by that Marital Option, and the provisions of Article VI
will apply. The Marital Option will expire no later than 21 years after the
death of the last remaining
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child, living as of the date of this Agreement, of any Partner who is a partner
of the Partnership at the time of its formation.
5.6. Interfamily Disputes. This Section 5.6 will apply if the
General Partner determines that orderly conduct of the Partnership's business
or affairs is likely to be impaired by an interfamily dispute between a Partner
who is not a current or former WHC Employee and the Associated WHC Person of
the Partner. When this Section 5.6 applies, the Associated WHC Person will
have 60 calendar days to purchase the entire Partnership interest of the
Associated WHC Person. If the purchase of the Partnership interest is not
completed (whether by reason of a failure to agree on price or terms or for any
other reason) within 60 calendar days after the Associated WHC Person receives
notice of the determination of the General Partner, the failure will constitute
a Buy-Out Event (as defined in Section 6.1) with regard to the interest in the
Partnership of the Partner and the provisions of Article VI will apply,
provided that in no event will the Partner have any right to purchase the
interest in the Partnership of any Person.
VI. BUY-OUT
6.1. Buy-Out Events. (a) Definition of Buy-Out Events. Each of
the following events constitutes a "Buy- Out Event" under this Agreement:
(i) Any withdrawal or retirement from the Partnership by
a Partner;
(ii) Any voluntary or involuntary termination, regardless
of the circumstances giving rise to or the legality of the
termination, by any Partner or Associated WHC Person of a Partner of
all of his employment and agency relationships with WHC;
(iii) The filing of a suit, or delivery of notice, to
terminate or dissolve the Partnership by a Partner;
(iv) The death, declaration of legal incompetence or
dissolution and winding-up of a Partner or any Associated WHC Person
of a Partner;
(v) A judicial determination of the insolvency of, or any
filing under the bankruptcy laws by or against, a Partner or any
Associated WHC Person of a Partner;.
(vi) Any material breach of this Agreement by a Partner,
including without limitation any purported voluntary or involuntary
Transfer or Encumbrance of all or any part of a Partner's interest in
the Partnership in a manner not expressly permitted under this
Agreement;
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(vii) The entry of a final judgment, order or decree of a
court or governmental agency having proper jurisdiction that a Partner
or any Associated WHC Person of a Partner is guilty of a felony
involving moral turpitude, fraud or wrongdoing in connection with any
business activity;
(viii) The occurrence of an event described in Section 5.5
or 5.6, but only to the extent provided in Section 5.5 or 5.6;
(ix) Failure of a Consent of Spouse, in the form approved
by the General Partner, to be in effect for the spouse (other than a
spouse who is a current or former WHC Employee) of a Partner or
Associated WHC Person of a Partner; or
(x) A determination by the General Partner that a Partner
has conducted himself so as to be deemed to have withdrawn from the
Partnership.
(b) Definition of Buy-Out Date. "Buy-Out Date" means the date on
which a Buy-Out Event occurs or, if any waiver has been granted under Section
6.2, the anniversary of the date on which the Buy-Out Event occurred that
coincides with the expiration of the waiver. For purposes of Section
6.1(a)(ii), the Buy-Out Event shall be deemed to occur, unless otherwise
determined by the General Partner, on the date that notice of termination is
given, notwithstanding that employment may be continued for some period
thereafter, whether for purposes of salary continuation, participation in
benefits or otherwise.
(c) Definition of Buy-Out Interest. "Buy-Out Interest" means (i)
all of the Withdrawing Partner's interest in the Partnership if the relevant
Buy-Out Event is not one described in Section 6.1(a)(viii), or (ii) all of the
Withdrawing Partner's interest in the Partnership that, under the terms of
Section 5.5 or 5.6, is subject to purchase, if the Buy-Out Event is one
described in Section 6.1(a)(viii).
(d) Notice of Buy-Out Event. The Withdrawing Partner shall give
notice of the Buy-Out Event to the General Partner within 15 days after its
occurrence.
6.2. Waiver. The General Partner from time to time may waive for
one or more one-year periods a Buy-Out Event. If a waiver is granted, Section
6.3 will not apply to the Buy-Out Event during the waiver period.
6.3. Procedure Upon Buy-Out. (a) Mechanics. Upon the occurrence
of a Buy-Out Event which is not waived as provided in Section 6.2, the Partner
as to whom the event has occurred (the "Withdrawing Partner") will be deemed to
have withdrawn from the Partnership as of the Buy-Out Date as to the Buy-Out
Interest, and
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the Buy-Out Interest will be acquired by the Partnership under the terms and
conditions set forth in this Section 6.3. The Withdrawing Partner will have no
rights in or against the Partnership, other than to receive the amount provided
for in this Section 6.3 on the terms stated in this Section 6.3. As of the
Buy-Out Date, the Buy-Out Interest will be allocated to or among one or more of
the remaining Limited Partners in such manner as the General Partner deems
appropriate.
(b) Value. For the purposes of this Section 6.3, the value
("Value") of a Buy-Out Interest will be determined by calculating the amount
the Withdrawing Partner would receive under Section 7.3 if all interests held
by the Partnership in WHC Persons were disposed of for their respective EVBS
Values determined as of the prior June 30 (or such other date as the General
Partner shall determine) and all Cash Items were reduced to cash of an amount
equal to the fair market value of such Cash Items, and the proceeds were
distributed in accordance with Section 7.3 and by deducting therefrom (i) any
cash distributions made to the Withdrawing Partner since the June 30 (or such
other date determined by the General Partner) as of which the EVBS Values were
determined, and (ii) any other obligation or debt of the Withdrawing Partner to
a WHC Person. The Value of a Buy-Out Interest is subject to adjustment under
Sections 6.3(h) and 6.3(i).
(c) Consummation and Payment. The purchase and sale of the
Buy-Out Interest (the "Buy-Out Closing") shall take place within 60 days after
the Buy-Out Date, provided, however, that if the Withdrawing Partner fails to
give the notice required by Section 6.1(d) within the time period therein
specified, the General Partner may elect to defer the Buy-Out Closing to any
date not later than 60 days after the date that the Withdrawing Partner
actually gives such notice. The Partnership will become obligated to pay the
Value upon execution and delivery by the Withdrawing Partner at the Buy-Out
Closing of all agreements and instruments that the General Partner reasonably
determines to be appropriate to evidence and render fully effective the
Transfer of the Buy-Out Interest to the Partnership. The Partnership and the
Withdrawing Partner will each pay one-half of any transfer taxes, recording
fees, legal fees for preparation of agreements and instruments and other fees
and expenses (including legal and accounting fees and expenses of WHC or any
WHC Person allocated to the Partnership in accordance with WHC's allocation
policies in effect from time to time) incurred by the Partnership or any
Partner in connection with the Transfer of any interest in the Partnership
under this Article VI. However, the Partnership, the Withdrawing Partner and,
subject to Section 4.7, each other Partner will be responsible for all legal
and other costs incurred by it or him in connection with any litigation arising
out of this Article VI. The Value will be paid to the Withdrawing Partner in
accordance with the following schedule:
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(i) 10% of the Value, together with accrued interest on
the Value at a rate equal to the lesser of 75% of the Interest Rate
and the maximum lawful rate under applicable law, which interest will
commence to accrue on the date of the Buy-Out Closing, will be paid to
the Withdrawing Partner on the date (the "First Installment Date") 30
days following the end of the fiscal year during which the Buy-Out
Closing shall occur.
(ii) The remainder of the Value will be payable in nine
equal annual installments due and payable on each succeeding
anniversary of the First Installment Date until the ninth anniversary
thereof, each together with accrued interest on the unpaid balance of
the Value payable to the Withdrawing Partner at a rate equal to the
lesser of 75% of the Interest Rate and the maximum lawful rate under
applicable law. The First Installment Date together with each
succeeding anniversary thereof until the ninth anniversary thereof,
are sometimes hereinafter collectively referred to as the "Installment
Dates."
The Partnership's obligation to pay the Value in accordance with this Section
6.3(c) will be evidenced by an unsecured, nonnegotiable promissory note of the
Partnership dated the date of the Buy-Out Closing.
(d) Alternative Payment Methods. If the General Partner so
elects, it may in connection with payment of the Value:
(i) Pay the Value in full on the First Installment Date;
(ii) Prepay any outstanding balance in respect of the
Value at any time without premium or penalty; or
(iii) Adjust the rate of interest payable in respect of the
Value under Section 6.3 (c) upward to such other rate or rates as the
General Partner shall deem appropriate.
(e) Alternate Provisions. Notwithstanding any other provision of
this Article VI, the Partnership and a Withdrawing Partner may agree on the
Value and the terms upon which the Value will be paid, and in such event, their
agreement shall control. Without limiting the foregoing, the Partnership and a
Withdrawing Partner may agree upon payment of a discounted percentage of the
Value at the Buy-Out Closing in full satisfaction of the amount due the
Withdrawing Partner under this Section 6.3.
(f) Nature of Liability. The obligation to pay the Value will be
an obligation of the Partnership as an entity and will be satisfied only from
the assets of the Partnership. The General Partner will not be required to
contribute capital to the Partnership to pay the Value, nor will it otherwise
be liable for
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payment of the Value. The Partnership's obligation to pay the Value to a
Withdrawing Partner shall be subject to a restriction (the "Cash Flow
Restriction") so that in no event shall an installment of the Value payable on
any Installment Date, together with amounts payable on such Installment Date to
all other Withdrawing Partners, exceed an amount (the "Available Buy-Out Cash
Flow") equal to 50% of the Net Cash Flow (determined in accordance with Section
3.2 but without taking into account payments made by the Partnership to
Withdrawing Partners) for the fiscal year immediately preceding the Installment
Date in question. In the event the Available Buy-Out Cash Flow is not
sufficient to make all payments of the Value due to Withdrawing Partners on any
Installment Date, the Available Buy-Out Cash Flow shall be applied
proportionately to the Partnership's obligation to each Withdrawing Partner
based on the amount of the payment due thereto in relation to the amounts due
on such Installment Date to all Withdrawing Partners, and the amount of each
payment not made to Withdrawing Partners by reason of the Cash Flow Restriction
(together with interest thereon at the rate above provided, a "Deferred
Amount") shall be deferred until the next Installment Date; provided, however,
that on any Installment Date the Available Buy-Out Cash Flow shall first be
applied to outstanding Deferred Amounts in the order in which they were
deferred; to the extent that Available Buy-Out Cash Flow is not sufficient to
pay all Deferred Amounts that have been outstanding since the same Installment
Date, it shall be applied proportionately to each such Deferred Amount based on
the amount thereof in relation to the amounts of all other such Deferred
Amounts; and as to each Deferred Amount, the Available Buy-Out Cash Flow shall
be applied first to accrued interest and then to principal.
(g) Exception. If, at the time of a Buy-Out Event, the
Partnership is no longer acquiring interests in WHC Persons, the Withdrawing
Partner will not be entitled to receive the Value but, instead, will be paid in
liquidation of the Buy-Out Interest the amounts that he otherwise would have
received as distributions with respect to the Buy-Out Interest at such times as
such amounts otherwise would have been distributed to him had he not withdrawn
from the Partnership, provided, however, that if such Buy-Out Event occurs
during the Vesting Period for the Withdrawing Partner, the aggregate amount
payable to him shall equal $10 per Unit held by him.
(h) Vesting. The Partners recognize that the appreciation in value
of the Partnership's assets will be dependent, to a large extent, upon efforts
of the Partners to be expended in their work for WHC and that it, therefore, is
appropriate to adjust the Value of a Partner's interest in the Partnership
based upon the period he makes contributions in a significant role at WHC.
Accordingly, if a Buy-Out Event occurs with respect to a Withdrawing Partner
during the Vesting Period (as defined below), the amount payable to him
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shall equal $10 per Unit held by the Withdrawing Partner. As used in this
Section 6.3(h), the "Vesting Period" for a Partner is a period commencing on
the date on which the Partner first acquires an equity interest in the
Partnership and ending on the fifth anniversary of the commencement date;
provided, however, that the General Partner, in its sole discretion, may
shorten or waive the Vesting Period for a Partner without affecting the Vesting
Period for any other Partner; and provided further, that in the event that the
Buy-Out Event shall be caused by the death or permanent disability of the
Withdrawing Partner, then the Buy-Out Event in all cases shall be deemed to
have occurred after the end of the Vesting Period. The determination whether a
Limited Partner has a permanent disability shall be made by the General Partner
in its sole discretion.
(i) Restoration Obligations. The Value, as adjusted pursuant to
Section 6.3(h), will be reduced by the amount that the Withdrawing Partner
would be obligated to pay under Section 3.3(b), assuming that the Partnership
was immediately liquidated. If the Value that would be payable to a
Withdrawing Partner is less than the amount that would be owed by the
Withdrawing Partner under Section 3.3(b), the Withdrawing Partner will pay to
the Partnership, within 90 days after the Buy-Out Date, the amount by which the
payment obligation exceeds the Value.
VII. LIQUIDATION AND DISSOLUTION OF THE PARTNERSHIP
7.1. Dissolution Events. The Partnership will be dissolved upon
the happening of any of the following events:
(a) All or substantially all of the assets of the Partnership,
including its Cash Items, are sold or distributed to the Partners (unless the
General Partner notifies the Partners that it has elected to continue the
business of the Partnership, in which event the Partnership will continue until
the General Partner gives notice that it elects to dissolve the Partnership);
(b) A document is signed by the General Partner and by Limited
Partners holding at least a majority of the Percentage Interests held by
Limited Partners which states their election to dissolve the Partnership;
(c) The entry of a final judgment, order or decree of a court of
competent jurisdiction adjudicating the Partnership to be bankrupt and the
expiration without appeal of the period, if any, allowed by applicable law in
which to appeal;
(d) Any withdrawal or retirement from the Partnership by the
General Partner;
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(e) The making of any general assignment for the benefit of
creditors by the General Partner, or the filing of a voluntary petition in
bankruptcy or a voluntary petition for an arrangement or reorganization under
the Bankruptcy Code by the General Partner, or the appointment of a receiver or
trustee for all or substantially all of the properties or assets of the General
Partner if the receiver or trustee is not removed within 60 calendar days;
(f) The dissolution or liquidation of the General Partner;
(g) The expiration of the term of the Partnership (as set forth in
Section 1.6); or
(h) The completion of a mandatory exchange of Partnership
interests with a Successor Corporation as permitted by Section 8.25.
7.2. Continuation. Upon the withdrawal or retirement from the
Partnership of the General Partner, or the occurrence of an event described in
Section 7.1(e) or 7.1(f) with respect to the General Partner, the business of
the Partnership will be continued if within 90 calendar days the Limited
Partners elect by unanimous written action to continue the business of the
Partnership and designate one or more Persons (including without limitation any
Limited Partner who consents) to be a General Partner of the Partnership, upon
terms consented to by all Limited Partners. If the business of the Partnership
is continued, the interest of the General Partner will be converted to that of
a Limited Partner. If the Limited Partners fail to continue the Partnership's
business as provided in this Section 7.2, the Partnership will be liquidated
under Section 7.3. The election by the Limited Partners to continue the
business of the Partnership will not affect any right to acquire the interest
in the Partnership of the General Partner under Article VI.
7.3. Method of Liquidation. (a) Generally. Upon the happening of
any of the events specified in Section 7.1 (except the event specified in
Section 7.1(h)) and, if applicable, the failure to continue the business of the
Partnership under Section 7.2, a liquidating trustee, elected by Limited
Partners holding at least a majority of the Percentage Interests owned by
Limited Partners, will commence as promptly as practicable to wind up the
Partnership's affairs as promptly as practicable, unless the liquidating
trustee determines that an immediate liquidation of Partnership assets would
cause undue loss to the Partnership, in which event the liquidation may be
deferred for a time determined by the liquidating trustee to be appropriate.
Assets of the Partnership may be liquidated or distributed in kind, as the
liquidating trustee determines to be appropriate. The Partners will continue
to share Net Cash Flow from operations and Profits
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and Losses during the period of liquidation in the manner set forth in Sections
3.1 and 3.3. The proceeds from liquidation of the Partnership, including
repayment of any debts of Partners to the Partnership, will be applied in the
following order of priority:
(i) To payment of the debts and satisfaction of the other
obligations of the Partnership, including without limitation debts and
obligations to Partners;
(ii) To the establishment of any reserves deemed
appropriate by the liquidating trustee for any liabilities or
obligations of the Partnership, which reserves will be held for the
purpose of paying liabilities or obligations and, at the expiration of
a period the liquidating trustee deems appropriate, will be
distributed in the manner provided in Sections 7.3(a)(iii) and
7.3(a)(iv);
(iii) To the payment to the Partners of the positive
balances in their respective Capital Accounts, pro rata, in proportion
to the positive balances in those Capital Accounts after giving effect
to all allocations under Section 3.1 and all distributions under
Section 3.3 for all prior periods, including the period during which
the distribution occurs; and
(iv) To the Partners in proportion to their respective
Percentage Interests.
If the Partnership makes distributions in kind of Partnership property which
secures indebtedness, each of the Partners receiving the distribution of
property subject to the indebtedness will be severally liable (as among each
other, but not for the benefit of others) for his Proportionate Share of the
indebtedness, provided that no Partner will be deemed to have assumed any
liability on any indebtedness secured by property distributed to any Partner
for which the Partner is not liable under the terms of the instrument creating
the indebtedness, and provided that the liability of each Partner to other
Partners for indebtedness secured by property distributed to him will be
limited to the value of his interest in the property. Indebtedness secured by
property distributed to Partners in kind need not be discharged out of the
proceeds of liquidation of the Partnership.
(b) Mandatory Exchange of Partnership Interests. Upon the
happening of the event specified in Section 7.1(h), the General Partner shall
wind up the Partnership's affairs and, in connection therewith, shall have such
authority and shall apply and transfer the assets of the Partnership in such
manner as the agreement with the Successor Corporation shall provide, except to
the extent such agreement is in conflict with the Act, in which event the Act
shall control.
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(c) Compliance with Timing Requirements of Treasury Regulations.
If the Partnership is "liquidated" within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g), (i) distributions will be made under this Section
7.3 (if the liquidation constitutes a dissolution of the Partnership) or
Section 3.3 (if the liquidation does not constitute a dissolution) to the
Partners who have positive Capital Accounts in compliance with Treasury
Regulations Section 1.704- 1(b)(2)(ii)(b) and (ii) if any Partner is indebted
to the Partnership under Section 3.3(b), the Partner will pay the indebtedness
in accordance with the provisions of Section 3.3(b). In the discretion of the
General Partner, a pro rata portion of the distributions that would otherwise
be made to the Partners under the preceding sentence may be applied as follows:
(i) The distributions may be distributed to a trust
established for the benefit of the Partners for the purposes of
liquidating Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen liabilities or
obligations of the Partnership arising out of or in connection with
the Partnership. The assets of any trust established under this
Section 7.3 (c) (i) will be distributed to the Partners from time to
time, in the reasonable discretion of the General Partner, in the same
proportions as the amount distributed to the trust by the Partnership
would otherwise have been distributed to the Partners under this
Agreement; or
(ii) The distributions may be withheld to provide a
reasonable reserve for Partnership liabilities (contingent or
otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership. The withheld amounts will be
distributed to the Partners as soon as practicable.
7.4. Date of Termination. The Partnership will terminate when all
of the cash and property available for application under Section 7.3 have been
applied in accordance with Section 7.3. The establishment of any reserves in
accordance with the provisions of Section 7. 3 (a) (ii) will not extend the
term of the Partnership, but any reserve will be distributed in the manner
provided in Section 7.3 upon expiration of the period established for the
reserve.
7.5. Death, Dissolution, Legal Incompetency or Bankruptcy of a
Limited Partner. The death, dissolution, declaration of legal incompetence or
bankruptcy of a Limited Partner will not dissolve the Partnership. The
deceased, dissolved, incompetent or bankrupt Limited Partner's interest in the
Partnership will pass to a successor in interest of the Limited Partner, who
will succeed to the deceased, dissolved, incompetent or bankrupt Limited
Partner's
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entire interest in the Partnership and, subject to the applicable provisions of
Article VI, will become a Limited Partner of the Partnership with the same
Percentage Interest, the same rights to distributions made by the Partnership,
the same obligations and the same share of the Partnership's Profits and Losses
as the deceased, dissolved, incompetent or bankrupt Limited Partner.
VIII. MISCELLANEOUS
8.1. Fiscal Year. The fiscal year of the Partnership will end on
December 31, unless another fiscal year- end is selected by the General
Partner.
8.2. Records. The records of the Partnership will be
maintained at the principal place of business of the Partnership or at any
other location the General Partner selects. Appropriate records in reasonable
detail will be maintained to reflect income tax information for the Partners.
The Partnership will pay the expense of maintaining its records, including the
share of the expenses of any TCI Person allocated to it in accordance with
TCI's allocation policies as in effect from time to time for maintenance of
Partnership records. Each Partner may inspect and make copies of the records
maintained by the Partnership during reasonable business hours and upon
reasonable notice. Each Partner, at his expense, may require an audit of the
books of account maintained by the Partnership to be conducted by the
independent accountants for the Partnership or WHC.
8.3. Reports; Annual Valuation of Assets. The General Partner, at
Partnership expense, will cause to be prepared and, distributed to each Partner
after the end of each of the Partnership's fiscal years, a yearly statement of
cash flow and a balance sheet as of the close of the Partnership's fiscal year
(or such other reports or at such other times as the General Partner may
determine) and all pertinent information concerning the Partner's distributive
share of Partnership income and loss for that year, the distributions of cash
for that year and any other information reasonably necessary to enable the
Partner to prepare the Partner's tax return. The Partnership will determine
the aggregate value of its assets annually, as of each June 30, which aggregate
value shall be equal to the aggregate of the EVBS Values of the interests held
by the Partnership in WHC Persons, plus the fair market value of all Cash
Items owned or held by the Partnership.
8.4. Method of Accounting. The Partnership records will be
maintained, and its Profits and Losses will be accounted for, in accordance
with the method of accounting from time to time adopted by the General Partner.
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8.5. Representations of the Partners. (a) Sophistication. Each of
the Partners represents to the Partnership and to each of the other Partners
that (i) he is a WHC Person and is fully aware of, and is capable of bearing,
the risks relating to his interest in the Partnership and (ii) he has acquired
his interest in the Partnership for his own account and without any intention
of participating directly or indirectly in any redistribution or resale of any
portion of the interest in violation of the Securities Act or any applicable
securities law.
(b) Securities Laws. Each of the Partners acknowledges that he is
aware that his interest in the Partnership has not been registered under the
Securities Act or the securities laws of any state. Each of the Partners
acknowledges that he has paid no consideration (including without limitation in
exchange for services rendered to WHC or a WHC Person) for his interest in the
Partnership and therefore, the receipt of an interest in the Partnership does
not constitute a sale of a security within the meaning of the Securities Act or
the securities laws of any state. Each of the Partners further acknowledges
that his representations contained in this Section 8.5 are being relied upon by
the Partnership and by the other Partners as the basis for exemption of the
issuance of the Partner's interest in the Partnership from registration
requirements of the Securities Act and state securities laws. Each of the
Partners further acknowledges that the Partnership has no obligation to
register his interest in the Partnership under the Securities Act or any state
securities law.
(c) Full Disclosure. Each of the Partners acknowledges that
before his execution of this Agreement, he received a copy of this Agreement
and that he has examined this Agreement or caused this Agreement to be examined
by his representative or attorney. Each of the Partners further acknowledges
that he or his representative or attorney is familiar with this Agreement and
with the business and prospective business of the Partnership, and that he does
not desire any further information or data relating to the Partnership, the
other Partners or the Partnership's business or prospective business.
(d) Legend. Each of the Partners agrees that a legend reflecting
the restrictions imposed under Article V and under the Securities Act and
applicable state securities laws may be placed on the first page of this
Agreement and on the Partnership Certificate.
8.6. Notices. The General Partner will notify the Partners of any
change in the name, principal or registered office or registered agent of the
Partnership. Any notice or other communication required by this Agreement must
be in writing. Notices and other communications will be deemed to have been
given when delivered by hand or dispatched by telegraph, telex or other
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means of electronic facsimile transmission, or three business days after being
deposited in the United States mail, postage prepaid, addressed to the Partner
to whom the notice is intended to be given at his address set forth on the
signature pages to this Agreement or on Schedule A to this Agreement or, in the
case of the Partnership or the General Partner, to the Partnership's principal
place of business provided for in Section 1.3. A Person may change his notice
address by notice in writing to the Partnership and to each other Partner given
under this Section 8.6.
8.7. Amendments; Waivers. Except as otherwise expressly provided
in this Section 8.7, no amendment of this Agreement will be valid or binding
upon the Partners unless approved by the General Partner and by Limited
Partners holding at least a majority of the Percentage Interests held by
Limited Partners and no waiver of any term of this Agreement will be effective
unless approved by the General Partner. Notwithstanding the immediately
preceding sentence, any amendment requiring the Partners to make any capital
contributions or loans to the Partnership not provided for in this Agreement
must be approved by each Partner affected by the amendment. Notwithstanding
the first sentence of this Section 8.7, the General Partner may approve
amendments to this Agreement which are necessary or appropriate to reflect (a)
a Transfer of an interest in the Partnership permitted by this Agreement, or
the admission to, or withdrawal from, the Partnership of a Partner permitted by
this Agreement or (b) to satisfy or take advantage of any requirements,
conditions, guidelines, options or elections contained in any federal or state
tax statute or any opinion, directive, order, ruling or regulation of the
Internal Revenue Service or any other state or federal tax authority that is
applicable to the Partnership.
8.8. Binding Effect. This Agreement will inure to the benefit of
and will be binding upon the Partners, their legal representatives,
transferees, heirs, administrators, and other successors and assigns. Each
Person who acquires an interest in the Partnership by Transfer will be bound by
any agreement relating to the business of TCI by which the transferor is bound,
to the extent provided in the agreement.
8.9. Duplicate Originals. Any number of counterparts of this
Agreement may be executed. Each counterpart will be deemed to be an original
instrument and all counterparts taken together will constitute one agreement.
8.10. Construction. The titles of the Articles and Sections in this
Agreement have been inserted as a matter of convenience of reference only and
do not affect the meaning or construction of any of the provisions in this
Agreement.
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8.11. Governing Law; Jurisdiction. This Agreement is to be governed
by the laws of the State of Texas, without giving effect to the principles of
conflict of laws. Each of the Partners consents to the jurisdiction of any
court in Dallas County, Texas with subject matter jurisdiction for any action
commenced by the Partnership or another Partner arising out of matters related
to this Agreement or the Partnership. Each Partner waives the right to
commence an action in connection with this Agreement in any court outside
Dallas County, Texas.
8.12. Other Instruments. The Partners will execute other agreements
and instruments that the General Partner determines to be appropriate to carry
out this Agreement or any provision of this Agreement.
8.13. General Partner with Interest as Limited Partner. If the
General Partner has or acquires an interest as a Limited Partner, the General
Partner, with respect to that Limited Partner's interest, will enjoy all of the
rights and be subject to all of the duties of a Limited Partner. The General
Partner's interest as a Limited Partner, if any, will be included in
determining whether any required approval of Limited Partners has been duly
given.
8.14. Legal Construction. In case any one or more of the provisions
contained in this Agreement for any reason is held to be invalid or
unenforceable, the invalidity or unenforceability will not affect any other
provision of this Agreement, which will be construed as if the invalid or
unenforceable provision had not been contained in this Agreement and, in lieu
of each invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to the invalid or
unenforceable provision as may be possible and be valid and enforceable.
8.15. Gender, Etc. Words used in this Agreement in any gender will
be deemed to include the masculine, feminine or neuter gender; singular words
will include the plural and plural words will include the singular; and the word
"or" will be disjunctive but not necessarily exclusive, unless the context
otherwise requires.
8.16. Confidentiality. (a) Generally. The terms of this Agreement,
its subject matter, the identity of any Person with whom the Partnership may be
holding discussions with respect to any investment, acquisition or other
transaction or in whom the Partnership may invest directly or indirectly, and
all other business, financial or other information relating directly to the
conduct of the business and affairs of the Partnership or the relative or
absolute rights or interests of any of the Partners (collectively, the
"Information") that has not been publicly disclosed by an authorized WHC
employee is confidential and
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proprietary information of the Partnership and of WHC the disclosure of which
would cause irreparable harm to the Partnership and the Partners. Accordingly,
each Partner represents that he has not and agrees that he will not and will
direct his agents, advisors and affiliates not to, disclose to any Person any
Information or confirm any statement made by third Persons regarding
Information until the Partnership has publicly disclosed the Information and
has notified each Partner that it has done so.
(b) Legal Proceedings. Each Partner agrees not to disclose any
Information to any Person (other than a Person agreeing to maintain all
Information in strict confidence, a judge, magistrate or referee) in any
action, suit or proceeding relating to or arising out of this Agreement or
otherwise, and to keep confidential all documents (including without limitation
responses to discovery requests) containing any Information. Each Partner
hereby consents in advance to any motion for any protective order brought by
any other Partner represented as being intended by the movant to implement the
purposes of this Section 8.16, provided that if a Partner receives a request to
disclose any Information under the terms of a valid and effective order issued
by a court or government agency and the order was not sought by or on behalf of
or consented to by the Partner, the Partner may disclose the Information to the
extent required if the Partner as promptly as practicable (i) notifies the
General Partner of the existence, terms and circumstances of the order, (ii)
consults in good faith with the General Partner on the advisability of taking
legally available steps to resist or to narrow the order, and (iii) if
disclosure of the Information is required, exercises his best efforts to obtain
a protective order or other reliable assurance that confidential treatment will
be accorded to the portion of the disclosed Information that the General
Partner designates. The cost (including without limitation attorneys' fees and
expenses) of obtaining a protective order covering Information designated by
the General Partner will be a Partnership cost.
(c) Exceptions. Notwithstanding any other provision of this
Section 8.16, a Partner and each agent, advisor and affiliate of a Partner may
disclose Information required to reflect accurately the EVBS Values of his
interests in WHC Persons to Persons with whom he deals and who have a
legitimate interest in the matter.
(d) Miscellaneous. Without limiting the General Partner's other
rights, power or authority under this Agreement, the General Partner may waive,
on behalf of the Partnership and any or all of the Partners, any of the
covenants contained in this Section 8.16. The covenants contained in this
Section 8.16 will survive the Transfer of the interest in the Partnership of
any Partner and the termination of the Partnership.
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(e) No Effect on Competition. This Section 8.16 will not prevent
a Partner from competing with the Partnership or from using business contacts
and general knowledge of operating procedures in the competing business.
8.17. Filing of Composite State Tax Return. Each Limited Partner
shall be deemed to have authorized the Partnership, or in those states where
required, a designated Partner (which shall be the General Partner), to
prepare, execute and file composite state income tax returns and to make tax
payments, including estimated tax payments, on behalf of such Limited Partner
in each state in which the General Partner, in its sole discretion, considers
the filing of a composite state income tax return to be in the best interest of
any one or more of the Limited Partners. Each Limited Partner shall be deemed
to have elected to be included in the composite state income tax returns. Each
Limited Partner acknowledges that notwithstanding the filing of a composite
state income tax return by the Partnership on his behalf, he remains
responsible for:
(a) The filing of his state income tax returns;
(b) The making of his estimated state income tax payments, if
required;
(c) The payment of his share of the total state income taxes that
are due, including any penalty and interest on any underpayment of estimated
state income taxes; and
(d) The statements made on his behalf in composite state income
tax returns.
Each Limited Partner agrees to waive the right to claim deductions, exemptions
and credits in the composite state income tax returns for those states where
such waiver is required.
8.18. Defined Terms. As used in this Agreement, the following terms
will have the following meanings when used herein with initial capital letters:
"Act" has the meaning assigned to it in Section 1.1.
"Adjusted Capital Account Deficit" means, with respect to a Partner,
the deficit balance, if any, in that Partner's Capital Account as of the end of
the relevant taxable year, after giving effect to the following adjustments:
(a) The Capital Account will be increased by any amount
that the Partner is obligated to restore under Section 3.3(b),
including any amount that he is deemed to be obligated to
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restore under Treasury Regulation Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) The Capital Account will be decreased by the items
described in Treasury Regulations Sections 1.704- 1(b)(2)(ii)(d)(4),
(5) and (6).
This definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Treasury Regulations Section 1.7041(b)(2)(ii)(d).
"Adjustment Date" means the date of the last revaluation of
Partnership assets under Section 2.8 (b) hereof; provided, however, that in the
absence of a revaluation under Section 2.8(b), "Adjustment Date" means the
effective date of the formation of the Partnership.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership.
"Associated WHC Person" means an individual who is a current or former
WHC Employee and who (a) with respect to a Partner who is an individual, is a
member of the Immediate Family of the individual, (b) with respect to a Partner
who is a corporation, partnership or other legal entity (other than a trust),
is, or is a member of the Immediate Family of, a beneficial owner of an equity
interest in the corporation, partnership or other legal entity, and (c) with
respect to a Partner who is a trust, is the grantor or trustee of the trust.
An individual will not be an Associated WHC Person of any other individual who,
under WHC policies, is or was entitled to receive Partnership interests as a
WHC Employee.
"Available Buy-Out Cash Flow" has the meaning assigned to it in
Section 6.3(f).
"Buy-Out Closing" has the meaning assigned to it in Section 6.3(c).
"Buy-Out Date" has the meaning assigned to it in Section 6.1(b).
"Buy-Out Event" has the meaning assigned to it in Section 6.1(a).
"Buy-Out Interest" has the meaning assigned to it in Section 6.1(c).
"Capital Account" has the meaning assigned to it in section 2.5(a).
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"Capital Contribution" means, with respect to any Partner, the amount
of money and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership with respect to the interest in the Partnership
held by that Partner. Any reference in this Agreement to the Capital
Contribution of a Partner will include a Capital Contribution made by any
prior Partner with respect to the Partnership interest of the Partner.
"Cash Flow Restriction" has the meaning assigned to it in Section
6.3(f).
"Cash Items" means cash and cash equivalent assets.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time. References to sections of the Code include successor provisions to
those sections.
"Code Section 38 Property" means property for which the investment
tax credit is allowed under Code Section 48.
"Deferred Amount" has the meaning assigned to it in Section 6.3(f).
"Depreciation" means, for each taxable year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for the year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of the year or other period, Depreciation
will be an amount which bears the same ratio to the beginning Gross Asset Value
as the federal income tax depreciation, amortization or other cost recovery
deduction for the year or other period bears to the beginning adjusted tax
basis, provided that if the federal income tax depreciation, amortization, or
other cost recovery deduction for the year is zero, Depreciation will be
determined with reference to the beginning Gross Asset Value using any
reasonable method selected by the General Partner.
"Encumbrance" means any lien, pledge, encumbrance, collateral
assignment or hypothecation.
"EVBS Value" means, at a given time, the value of a WHC Person, the
assets of a WHC person or an interest in a WHC Person, as the case may be,
determined in accordance with the valuation methods then generally used by such
WHC Person.
"First Installment Date" has the meaning assigned to it in Section
6.3(c)(i).
"General Partner" means the Person identified as a General Partner on
the signature pages to this Agreement.
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"Gross Asset Value" means, with respect to any asset, the adjusted
basis of the asset for federal income tax purposes, adjusted as provided in
Section 2.8.
"Immediate Family" means the spouse of an individual and the parents,
children and grandchildren of the individual or his spouse. An adopted child
will be treated as the child of his adoptive parent or parents if he was
adopted before he reached 21 years of age.
"Indemnified Persons" has the meaning assigned to it in Section 4.7.
"Information" has the meaning assigned to it in Section 8.16.
"Installment Dates" has the meaning assigned to it in Section
6.3(c)(ii).
"Interest Rate" means the "prime," "reference" or "base" rate of
interest for commercial loans as announced from time to time by Citibank, N.A.
"Limited Partners" means the Persons admitted to the Partnership as
limited partners.
"Losses" has the meaning assigned to it in "Profits" and "Losses."
"Marital Option" has the meaning assigned to it in Section 5.5.
"Negative Adjustment" has the meaning assigned to it in Section 3.4.
"Net Cash Flow" has the meaning assigned to it in Section 3.2.
"Net Value" means, with respect to an asset, the gross fair market
value of that asset less any indebtedness encumbering the asset which the
Partnership has assumed or taken subject to.
"Nonrecourse Debt" has the meaning given to the term "nonrecourse
liability" by Treasury Regulations Section 1.752-1(a)(2).
"Nonrecourse Deductions" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a
Partnership fiscal year equals the excess, if any, of the net increase, if any,
in the amount of Partnership Minimum Gain during that fiscal year over the
aggregate amount of any distributions during that fiscal year of proceeds of a
Nonrecourse Debt that are allocable to an increase in Partnership Minimum Gain,
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determined according to the provisions of Treasury Regulations Section
1.704-2(h).
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
the Partner Nonrecourse Debt were treated as Nonrecourse Debt, determined in
accordance with Treasury Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Treasury
Regulations Section 1.704-2(i)(1). The amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership fiscal
year equals the excess, if any, of the net increase, if any, in the amount of
Partner Minimum Gain attributable to that Partner Nonrecourse Debt during that
fiscal year over the aggregate amount of any distributions during that fiscal
year to the Partner that bears the economic risk of loss for that Partner
Nonrecourse Debt of proceeds of the Partner Nonrecourse Debt that are allocable
to an increase in Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined according to the provisions of Treasury Regulations Section
1.704-2(i)(2).
"Partners" means the General Partner and the Limited Partners.
"Partnership" means the partnership organized under the Original
Agreement.
"Partnership Certificate" means the certificate of limited Partnership
of the Partnership as from time to time amended.
"Partnership Minimum Gain" has the meaning assigned to it in Treasury
Regulations Section 1.704-2(d).
"Percentage Interest" means the interest of a Partner in the
Partnership, expressed as a percentage of the whole.
"Permitted Transferee" means, (a) with respect to a Partner who is an
individual, a member of the Immediate Family of the Partner and of the
Partner's Associated WHC Person, if any, or a trust whose sole beneficiaries
are members of the Immediate Family of the Partner and of the Partner's
Associated WHC Person, if any, (b) with respect to a Partner that is a
corporation, partnership or other entity (other than a trust), an equity owner
of the corporation, partnership or other legal entity, and (c) with respect to
a Partner that is a trust, any member of the Immediate Family of the Associated
WHC Person that is the grantor or trustee of the trust.
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"Person" means an individual or an entity.
"Positive Adjustment" has the meaning assigned to it in Section 3.4.
"Profits" and "Losses" mean, for each taxable year or other period, an
amount equal to the Partnership's taxable income or loss for the year or other
period, determined in accordance with Section 703(a) of the Code (including all
items of income, gain, loss or deduction required to be stated separately under
Section 703 (a) (1) of the Code), with the following adjustments:
(a) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in computing
Profits or Losses will be added to taxable income or loss;
(b) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Section 705(a)(2)(B) expenditures
under Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses, will be
subtracted from taxable income or loss;
(c) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized
for federal income tax purposes will be computed by reference to the
Gross Asset Value of the property, notwithstanding that the adjusted
tax basis of the property differs from its Gross Asset Value;
(d) In lieu of depreciation, amortization and other cost
recovery deductions taken into account in computing taxable income or
loss, there will be taken into account Depreciation for the taxable
year or other period;
(e) Any items which are specially allocated under
Section 3.1(c) or 3.1(d) will not affect calculations of Profits or
Losses; and
(f) If the Gross Asset Value of any Partnership asset is
adjusted under Section 2.8(b)(ii), 2.8(b)(iii) or 2.8(c), the
adjustment will be taken into account as gain or loss from disposition
of the asset for purposes of computing Profits or Losses.
"Proportionate Share" means a Partner's share of an item, based upon
the respective Percentage Interest of that Partner as compared to the
Percentage Interests of all Partners entitled to share in the item.
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"Regulatory Allocations" has the meaning assigned to it in Section
3.1(d).
"Securities Act" means the Securities Act of 1933, as amended.
"Spouse Partner" has the meaning assigned to it in Section 5.5.
"Successor Corporation" has the meaning assigned to it in Section
8.25.
"TCI" means Trammell Crow Interests Company, a Texas corporation.
"TCI Person" means any Partner, TCI, WHC or any Person in which
Partners, TCI, WHC and partners, shareholders, directors, officers, employees
and affiliates of Partners, TCI or WHC have a 5% or greater equity interest.
"Transfer" means sell, assign, transfer, lease or otherwise dispose of
property, including without limitation an interest in the Partnership.
"Units" has the meaning assigned to it in Section 2.1.
"Value" has the meaning assigned to it in Section 6.3(b).
"Vesting Period" has the meaning assigned to it in Section 6.3(h).
"WHC" means Wyndham Hotel Company Ltd., a Texas limited partnership.
"WHC Employee" means any employee of a TCI Person who is primarily
engaged in activities related to the operation or management of WHC and WHC
Persons.
"WHC Person" means any Partner, WHC or any Person in which Partners,
WHC or partners, shareholders, directors, officers, employees and affiliates of
Partners or WHC have a 5% or greater equity interest.
"Withdrawing Partner" has the meaning assigned to it in Section
6.3(a).
8.19. Involvement of the Partnership in Certain Proceedings. If any
Partner or any affiliate of a Partner becomes involved in legal proceedings
unrelated to the business of the Partnership in which the Partnership is called
upon to provide information, the Partner will indemnify and hold harmless the
Partnership against all costs and expenses, including without limitation fees
and
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expenses of attorneys and other advisors, incurred by the Partnership in
preparing or producing the required information or in resisting any request for
production or obtaining a protective order limiting the availability of the
information actually provided by the Partnership.
8.20. Waiver of Partition and Certain Other Rights; Nature of
Interests in the Partnership. Each of the Partners irrevocably waives any
right or power that he might have:
(a) To cause the Partnership or any of its assets to be
partitioned;
(b) To cause the appointment of a receiver for all or any
portion of the assets of the Partnership;
(c) To compel any sale of all or any portion of the
assets of the Partnership; and
(d) To file a complaint, or to institute proceedings at
law or in equity, to cause the dissolution or liquidation of the
Partnership.
Each of the Partners has been induced to enter into this Agreement in reliance
upon the waivers set forth in this Section 8.20 and without those waivers no
Partner would have entered into this Agreement. No Partner has any interest in
specific Partnership property. The interests of all Partners in the
Partnership are personal property.
8.21. Partner Approvals. Written approvals by Partners may be given
in lieu of a meeting of Partners. A written approval may be in one or more
instruments each of which may be signed by one or more Partners. A written
approval need not be signed by all Partners or by all Partners of the class of
Partners whose approval is required unless the approval of all Partners or all
Partners of the class in question is required. No notice need be given of
action proposed to be taken by written action, or an approval given by written
action, unless specifically required by the Act.
8.22. Partner Meetings. Meetings of Partners or a class of Partners
may be held on such terms, and after such notice, as the General Partner may
establish. Notice of a meeting of Partners must be given to all Partners
entitled to vote at the meeting at least five days before the date of the
meeting.
8.23. Creditors Not Benefitted. Nothing contained in this Agreement
(including specifically Sections 2.2, 2.3, 2.4 and 3.3(b)) will benefit any
creditor of the Partnership or a Partner. No creditor of the Partnership or a
Partner will be entitled to require the General Partner to solicit or accept
any loan or
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additional capital contribution for the Partnership or to enforce any right
which the Partnership or any Partner may have against a Partner, whether
arising under this Agreement or otherwise.
8.24. Merger or Consolidation. The Partnership may merge or
consolidate with one or more domestic or foreign limited partnerships or other
entities in the manner and with the effect provided in the Act if (i) the
General Partner determines that the merger or consolidation is in the best
interest of the Partnership and (ii) the plan or agreement of merger or
consolidation is approved by Limited Partners holding at least a majority of
the Percentage Interests held by Limited Partners.
8.25. Mandatory Exchange of Partnership Interests. If the General
Partner determines that it is in the best interest of the Partnership that its
business be carried on by a corporation or other entity (a "Successor Entity"),
the General Partner may, with the consent of Limited Partners holding at least
a majority of the Percentage Interests held by Limited Partners, require that
all, but not less than all, of the Partners exchange their entire interests in
the Partnership for equity interests in the Successor Entity or equity
interests in the Successor Entity and other consideration. Distinction shall
not be made with respect to the type of equity interests in the Successor
Entity or other consideration to be received by Partners holding interests in
the Partnership of the same class or as to the method of valuing such interests
for purposes of determining the equity interests or other consideration to be
received. If a proposed exchange is approved as set forth in this Section
8.25, each Limited Partner agrees, on request of the General Partner, to
execute and deliver such instruments and agreements as the General Partner
determines to be necessary or appropriate to effect such exchange.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amended and Restated Agreement of Limited Partnership to be effective as
of December 31, 1993.
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GENERAL PARTNER:
Percentage
Name, Address and Signature Interest
----------
Wyndham Hotel Management 1.00%
Corporation
3200 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
By:
---------------------------------------------------------
Printed Name:
-----------------------------------------------
Title:
------------------------------------------------------
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LIMITED PARTNER:
Number of
Name, Address and Signature Units
- --------------------------- ---------
Name:
---------------------------------------
Address:
------------------------------------
------------------------------------
------------------------------------
- ---------------------------------------------
(Signature)
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AMENDMENT TO AMENDED
AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
WYNDHAM EMPLOYEES LTD.
THIS AMENDMENT is entered into by and among WYNDHAM HOTEL MANAGEMENT
CORPORATION, a Texas corporation (the "General Partner"), and those persons
whose signatures appear on the signature page of this Amendment, or
counterparts hereof, as limited partners (the "Limited Partners") of WYNDHAM
EMPLOYEES LTD., a Texas limited partnership (the "Partnership).
WHEREAS, the affairs of the Partnership are currently governed by an
Amended and Restated Agreement of Limited Partnership dated as of December 31,
1993 (as previously amended, the "Partnership Agreement"); and
WHEREAS, the General Partner and the Limited Partners desire to amend
the Partnership Agreement to document and reflect certain changes in valuing
the assets of the Partnership;
NOW, THEREFORE, the General Partner and the Limited Partners agree as
follows:
1. Terms not otherwise defined herein shall have the meanings
assigned to them in the Partnership Agreement.
2. The following definition in Section 8.18 of the Partnership
Agreement shall be amended so that, as amended, such
definition shall read in its entirety as follows:
"EVBS Value" means, as of a given date, the value of a WHC
Person, the assets of a WHC Person or an interest in a WHC
Person, as the case may be, determined in accordance with the
valuation methods then generally used by such WHC Person,
provided, however, in the case of an interest in a WHC Person
represented by publicly traded securities, (i) the EVBS Value
of such interest as of any date shall be equal to the average
of the daily closing sales prices of such security, on the
principal national securities exchange on which such security
is listed, for each trading day during the 180-day period
immediately preceding the date in question or (ii) if, as of
such date, 280 days has not elapsed since the class of
securities was first offered and sold to the public by the
issuer thereof, the EVBS Value shall be equal to the price at
which such security was sold to the public in the initial
public offering.
3. The foregoing amendments shall be effective with respect to
any event giving rise to the need to determine the
<PAGE> 222
EVBS Value of the assets of the Partnership which occurs on or
after the date of this Amendment.
4. Except as expressly set forth in this Amendment, the
Partnership Agreement remains in full force and effect.
5. This Amendment may be executed in one or more counterparts,
all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the General Partner and the Limited Partners have
executed this Amendment as of the 15th day of November, 1996.
GENERAL PARTNER:
WYNDHAM HOTEL MANAGEMENT CORPORATION
By:
---------------------------------
James D. Carreker
President
LIMITED PARTNER:
- ---------------
Name and Signature: Number of Units:
- ------------------ --------------- ------
- ----------------------------------
Printed Name:
---------------------
-2-
<PAGE> 223
APPENDIX B
PLAN OF DISTRIBUTION
FOR
WYNDHAM EMPLOYEES LTD.
1. SCOPE OF THE PLAN.
This Plan of Distribution (the "Plan") provides for the proposed
distribution of 646,669 shares of common stock, $.01 par value per share, of
Wyndham Hotel Corporation (the "Wyndham Shares") to participants of Wyndham
Employees Ltd., a Texas limited partnership ("WEL"), and the resulting
dissolution and termination of WEL.
2. REQUIRED VOTE.
Under the Amended and Restated Agreement of Limited Partnership
of WEL (the "WEL Agreement"), approval of a "transfer" of all or substantially
all of WEL's assets is required of the General Partner and the holders of a
majority of the percentage interests held by all participants of WEL (the "WEL
Participants"). Because the term "transfer" is defined broadly under the WEL
Agreement, the General Partner has determined to consider the Plan to involve a
"transfer" within the meaning of the WEL Agreement and, therefore, is seeking
approval of the Plan by WEL Participants.
3. SOLICITATION PERIOD.
WEL Participants who are limited partners of WEL of record on the
date of the Prospectus/Consent Solicitation Statement relating to the Plan (the
"Prospectus") will receive the Prospectus, together with the accompanying
transmittal letter, consent and other forms (the "Solicitation Materials") and
will be entitled to vote for or against the Plan during the "Solicitation
Period." The Solicitation Period will commence upon delivery of the
Solicitation Materials to WEL Participants and will continue until the later of
(a) February 7, 1997 (a date not less than 10 calendar days from the initial
delivery of the Solicitation
B-1
<PAGE> 224
Materials) or (b) such later date as may be selected by the General Partner and
as to which notice will be given to WEL Participants. In its discretion, the
General Partner may elect to extend the Solicitation Period. A WEL Participant
may change his or her vote with respect to the Plan at any time prior to
expiration of the Solicitation Period.
4. DISTRIBUTION OF WYNDHAM SHARES.
As soon as practicable following, and conditioned upon, the
approval of the Plan by written consent of WEL Participants holding a majority
of the percentage interests in WEL, the Wyndham Shares will be distributed to
WEL Participants. The Wyndham Shares will be allocated to WEL Participants
according to the WEL Agreement. Prior to the distribution of the Wyndham
Shares, the General Partner will adjust the gross asset value of WEL's assets
as of January 1, 1997 to reflect the increase in value of such assets over the
gross asset value as of January 1, 1996. In accordance with the 1996
amendments to the WEL Agreement, the Wyndham Shares will be valued based upon
an "EVBS Value" of $16.00 per share. Following this adjustment, each WEL
Participant's capital account will be adjusted (the "Adjusted Capital Account")
upward to reflect the January 30, 1997 increase in WEL's gross asset value over
January 1, 1996. The Wyndham Shares and the WEL indebtedness (as described
below) will then be allocated to the WEL Participants (i) first, according to
the positive balance in each WEL Participant's Adjusted Capital Account and
(ii) second, in accordance with each WEL Participant's percentage interest in
WEL.
The Wyndham Shares will be distributed subject to each WEL
Participant's pro rata allocation of indebtedness owed by WEL to third parties
(the "WEL Indebtedness"). Such indebtedness will be allocated according to the
previous paragraph. Prior to or simultaneous with and as a precondition to the
receipt by a WEL Participant of any Wyndham Shares, such WEL Participant's pro
rata share of WEL Indebtedness must be
B-2
<PAGE> 225
repaid. In order to repay such indebtedness, each WEL Participant will have
the option of (i) borrowing funds (the "Participant Loans") from Smith Barney,
Inc. pursuant to a margin loan, (ii) electing to have a portion of his or her
Wyndham Shares sold or (iii) otherwise repaying his or her share of WEL
Indebtedness directly to the General Partner who will remit such funds
immediately to the holders of WEL Indebtedness.
5. RESTRICTIONS ON RESALE OF WYNDHAM SHARES.
WEL Participants who are not considered affiliates of Wyndham
Hotel Corporation ("Wyndham") will be permitted during the "Resale Window" of
three business days following distribution of the Wyndham Shares to sell their
Wyndham Shares, subject to compliance with Wyndham's Insider Trading Policy and
to repayment of any WEL Indebtedness or Participant Loan secured by the Wyndham
Shares being sold. At the end of the Resale Window, no sale of Wyndham Shares
will be permitted for a "Lock-Up Period" of three weeks, after which the
Wyndham Shares will be freely tradeable subject to compliance with Wyndham's
Insider Trading Policy by WEL Participants who are not considered affiliates of
Wyndham.
6. RELEASE BY WEL PARTICIPANTS.
As part of the Plan, WEL Participants must agree to release WEL,
other WEL Participants, the General Partner and its officers and directors, and
Wyndham and its officers and directors from all claims and demands of any kind
or nature that WEL Participants may have arising from or related to their
interest in WEL. This release will include, but is not limited to, a release
by WEL Participants of all claims concerning (i) the value of their ownership
interest in WEL, (iii) the number of Wyndham Shares to which they are entitled
in the Plan and the methodology used to determine such number, and (iii) the
fairness of the Plan. This release also will include, but is not limited to, a
release of all
B-3
<PAGE> 226
claims concerning the General Partner's past management of the affairs of WEL,
including the WEL Investments, and the valuation of WEL's interests that were
transferred by the General Partner to affiliates of Wyndham effective as of
October 15, 1996.
7. DISSOLUTION AND WINDING UP.
The Plan will constitute an event of dissolution under the
provisions of the WEL Agreement. At such time as may be deemed appropriate by
the General Partner following distribution of the Wyndham Shares to the WEL
Participants and the satisfaction of existing liabilities, WEL shall wind up
its affairs and be terminated.
a. Liquidating Trustee.
The WEL Agreement provides for the election of a
liquidating trustee in the event of dissolution. The General Partner shall
serve as liquidating trustee to wind up the affairs of, and ultimately
terminate, WEL.
b. Payment of Liabilities.
In its capacity as liquidating trustee, the General
Partner will establish a cash reserve (the "Reserve") in an amount believed to
be sufficient to discharge any remaining liabilities of WEL. Any cash in
excess of the Reserve amount will be applied to pay costs associated with the
Plan and to reduce the WEL Indebtedness to be discharged by the WEL
Participants. Following the distribution of the Wyndham Shares, the
liquidating trustee will apply the Reserve from time to time in payment of, or
provision for, WEL's remaining liabilities. With respect to the satisfaction
of any liabilities in excess of the Reserve, the General Partner shall apply
first the fair market value of the Wyndham Shares (net of WEL Indebtedness and
taxes) received by the General Partner in the Plan.
WEL will be terminated upon the earlier of (i) the application of
the Reserve in payment of, or provision for, such liabilities, or (ii) 24
months following the Plan Effective
B-4
<PAGE> 227
Date (as defined below) (or such other period as may be deemed appropriate by
the General Partner), at which time any cash remaining in WEL will be
distributed to WEL Participants.
On the completion of the winding up of WEL, the General Partner
shall file a certificate of cancellation with the Secretary of State of Texas.
8. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective upon receipt by the General
Partner of the approval of the Plan by written consent of WEL Participants
holding a majority of the percentage interests in WEL (such date being referred
to herein as the "Plan Effective Date"). The Plan is subject to the condition
that the General Partner shall not have withdrawn its recommendation of the
Plan prior to the distribution of the Wyndham Shares to the WEL Participants.
9. ABANDONMENT OF THE PLAN.
The General Partner may, in its discretion, withdraw its
recommendation of the Plan at any time prior to the distribution of the Wyndham
Shares.
10. INTERPRETATION AND ADMINISTRATION.
The General Partner shall have exclusive authority to interpret
and implement the Plan, and determinations made by the General Partner in that
regard shall be final and binding.
B-5
<PAGE> 228
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the expenses the Company expects to
incur in connection with the Offering described in this Registration Statement.
<TABLE>
<S> <C>
SEC Registration Fee $ 4,568
Blue Sky and Related Fees (including counsel fees) 4,000
Accountants' Services and Expenses 50,000
Legal Services and Expenses 150,000
Printing and Engraving Fees 25,000
Miscellaneous 10,000
--------
TOTAL $243,568
--------
</TABLE>
- -----------------------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides, in effect, that any person made a party to any action by reason of
the fact that he is or was a director, officer, employee or agent of the
Company may and, in certain cases, must be indemnified by the Company against,
in the case of a non-derivative action, judgments, fines, amounts paid in
settlement and reasonable expenses (including attorney's fees) incurred by him
as a result of such action, and in the case of a derivative action, against
expenses (including attorney's fees), if in either type of action he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company. This indemnification does not apply, in a
derivative action, to matters as to which it is adjudged that the director,
officer, employee or agent is liable to the Company, unless upon court order it
is determined that, despite such adjudication of liability, but in view of all
the circumstances of the case, he is fairly and reasonably entitled to
indemnity for expenses, and, in a non-derivative action, to any criminal
proceeding in which such person had reasonable cause to believe his conduct was
unlawful.
Article 15 of the Company's Amended and Restated Certificate of
Incorporation provides that no director or former director of the Company shall
be liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director to the fullest extent permitted by Delaware Law.
Article 15 of the Company's Amended and Restated Certificate of Incorporation,
which is filed as Exhibit 3.1 to this Registration Statement, is incorporated
herein by reference.
Article 16 of the Company's Amended and Restated Certificate of
Incorporation provides that the Company shall indemnify any and all of its
directors and officers, or former directors and officers, or any person who may
have served at the Company's request as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise. Article 16
of the Company's Amended and Restated Certificate of Incorporation, which is
filed as Exhibit 3.1 to this Registration Statement, is incorporated herein by
reference.
The Company has entered into Indemnification Agreements with each
director of the Company, copies of which are filed as Exhibit 10.15 to this
Registration Statement. Pursuant to such agreements, the Company will, to the
extent permitted by applicable law, indemnify such directors against all
expenses, judgments, fines and penalties incurred in connection with the
defense or settlement of any actions brought against them by reason of the fact
that they were directors of the Company or assumed certain responsibilities at
the direction of the Company. The Company has also purchased directors and
officers liability insurance in order to limit its exposure to liability for
indemnification of directors and officers.
II-1
<PAGE> 229
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On February 16, 1996, the Company issued 100 shares of Common Stock to
James D. Carreker, its Chief Executive Officer and a director, for nominal
consideration. The shares were issued without registration under the Securities
Act pursuant to the exemption from registration afforded by Section 4(2) of the
Securities Act or the rules and regulations promulgated thereunder.
Reference is made to "Certain Relationships and Transactions --
Benefits of the Formation of the Company to Related Parties" regarding shares
of Common Stock issued in connection with the formation of the Company, the
purchasers thereof and the consideration therefor. Such issuances occurred
without registration under the Securities Act pursuant to exemptions from
registration afforded by Section 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
+3.1 -- Amended and Restated Certificate of
Incorporation of the Company.
+3.2 -- Amended and Restated Bylaws of the Company.
+4.1 -- Form of specimen certificate for the Common
Stock.
+4.2 -- Relevant portions of Amended and Restated
Certificate of Incorporation (Reference is
hereby made to Exhibit 3.1).
5.1 -- Opinion of Locke Purnell Rain Harrell (A
Professional Corporation).
+10.1(a) -- Management Agreement dated as of May 10,
1995 by and between Anatole Hotel Investors,
L.P. and Wyndham Hotel Company Ltd.
+10.1(b) -- Form of Management Agreement dated as of
September 27, 1994 by and between Bedrock
Annapolis Investment Partners Level I, L.P.
and Wyndham Hotel Company Ltd. (together
with attachment).
+10.1(c) -- Management Agreement dated as of March 10,
1988 by and between Franklin Plaza
Associates and Wyndham Hotel Company, as
amended by First Amendment dated November
17, 1993.
+10.1(d) -- Service Agreement dated as of November 17,
1993 by and between Franklin Plaza Realty
Limited Partnership and Wyndham Hotel
Company Ltd.
+10.1(e) -- Management Agreement dated as of December 1,
1984 by and between Houston Greenspoint
Hotel Associates and Wyndham Hotel Company.
+10.1(f) -- Management Agreement dated as of December 4,
1991 by and between Itasca Hotel Company and
Wyndham Hotel Company Ltd., as amended by
Amendment dated March 19, 1996.
+10.1(g) -- Management Agreement dated as of June 30,
1994 by and between Waterfront Hotel
Associates, S.E. and Old San Juan
Management, Ltd. S.E.
II-2
<PAGE> 230
+10.1(h) -- Management Agreement dated as of May 26,
1995 by and between Convention Center
Boulevard Hotel, Limited and Wyndham Hotel
Company Ltd.
+10.1(i) -- Management Agreement dated as of August 25,
1993 by and between Playhouse Square Hotel
Limited Partnership and Wyndham Hotel
Company Ltd.
+10.1(j) -- Management Agreement dated as of March 1,
1986 by and between CLC Partnership and
Wyndham Hotel Company, as amended by First
Amendment dated June 30, 1988.
+10.1(k) -- Management Agreement dated as of December
22, 1987 by and among Badger XVI Limited
Partnership, Crow Division Partners and
Wyndham Hotel Company, as amended by First
Amendment dated February 26, 1988.
+10.1(l) -- Management Agreement dated as of November
20, 1987 by and between Hotel and Convention
Center Partners I, I.C. Ltd. and Wyndham
Hotel Corporation II, Inc., as amended by
Amendment dated November 1, 1993.
10.1(m) -- [INTENTIONALLY OMITTED]
+10.2 -- Investment Agreement dated as of May 2, 1994
among The Hampstead Group, Inc., Wyndham
Hotel Company Ltd., The Partners in Wyndham
Hotel Company Ltd., and Crow Family
Partnership, L.P., as amended.
10.3(a) -- Lease dated as of April 1, 1996 by and
between Hospitality Properties Trust and
Garden Hotel Associates II Limited
Partnership.
+10.3(b) -- Lease Agreement dated as of March 1, 1988 by
and between Lincoln Island Associates No. 1,
Limited and WH Limited Partnership.
+10.3(c) -- Lease Agreement dated December 19, 1989 by
and between Rose Hall Hotel Limited and Rose
Hall Associates Limited Partnership.
+10.3(d) -- Sublease Agreement dated as of November 17,
1989 by and between Copley-Commerce-
Telegraph #1 Associates, as assignee of
Crow-Staley-Commerce #1 Limited Partnership
and Commerce Hotel Partners Ltd.
+10.3(e) -- Ground Lease dated as of March 26, 1987 by
and between Fred C. Boysen, Dorothy Boysen,
Ted Boysen and Rose Boysen and Garden Hotel
Associates Limited Partnership, as assignee
of Ramada Hotel Operating Company as amended
by First Amendment dated as of May 7, 1990.
+10.3(f) -- Lease Agreement dated as of November 26,
1990 by and between Tower 2001 Limited
Partnership and Wyndham Hotel Company Ltd.,
as amended by Letter Agreement dated March
9, 1994 and Letter Agreement dated March 22,
1995, and as amended by Amendment No. 1
dated as of November 30, 1995.
+10.3(g) -- Lease Agreement dated as of January 1992 by
and between 475 Park Avenue South Co. and
Wyndham Hotel Company Ltd., as amended by
Amendment of Lease dated January 30, 1995.
II-3
<PAGE> 231
+10.3(h) -- Sublease dated as of May 31, 1995 between
Banc One Mortgage Corporation and Wyndham
Hotels & Resorts.
+10.3(i) -- Lease Agreement dated as of May 16, 1994 by
and between Wirtz Realty Corporation, as
agent for 333 Building Corporation and
Wyndham Hotel Company Ltd.
+10.3(j) -- Lease Agreement dated as of May 18, 1994 by
and between Columbia Executive Offices, Inc.
and The Inn at Semiahmoo a Wyndham Resort.
10.3(k) -- Lease Agreement dated as of January 8, 1997
by and between HPTSLC Corporation and WHC
Salt Lake City Corporation.
10.4 -- Master Alliance Agreement dated as of
January 9, 1997 by and among American
General Hospitality Corporation, American
General Hospitality Operating Partnership,
L.P., WHC Franchise Corporation and WHC
Development Corporation.
10.5 -- Limited Guaranty Agreement dated as of
January 8, 1997 made by the Company for the
benefit of HPTSLC Corporation.
+10.5(a) -- Form of Asset Management Agreement to be
entered into between the Company and various
Crow Family Real Estate Entities.
10.6(a) -- Service Agreement dated as of May 21, 1996
by and between the Company and ISIS 2000 LP.
10.6(b) -- Service Agreement dated as of May 21, 1996
by and between the Company and Wynright
Insurance.
10.6(c) -- Service Agreement dated as of May 21, 1996
by and between the Company and
CW Synergistech, LP.
10.7 -- INTENTIONALLY OMITTED
10.8 -- INTENTIONALLY OMITTED
10.9 -- INTENTIONALLY OMITTED
10.10 -- Indenture relating to the 10 1/2% Senior
Subordinated Notes due 2006.
10.11 -- INTENTIONALLY OMITTED
10.12 -- INTENTIONALLY OMITTED
10.13 -- Stockholders' Agreement among Wyndham Hotel
Corporation and the Stockholders listed on
the signature pages thereof.
10.14 -- Registration Rights Agreement among Wyndham
Hotel Corporation and the parties identified
on the signature pages thereof.
10.15(a) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and James D.
Carreker.
II-4
<PAGE> 232
10.15(b) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Anne L.
Raymond.
10.15(c) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Harlan R.
Crow.
10.15(d) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Daniel A.
Decker.
10.15(e) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Susan T.
Groenteman.
10.15(f) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Stanley M.
Koonce, Jr.
10.15(g) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Leslie V.
Bentley.
10.15(h) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Robert A.
Whitman.
+10.16(a) -- 6% Promissory Note made by James D.
Carreker.
+10.16(b) -- 6% Promissory Note made by Leslie V.
Bentley.
+10.16(c) -- 6% Promissory Note made by Eric A. Danziger.
+10.16(d) -- 6% Promissory Note made by Anne L. Raymond.
+10.16(e) -- 6% Promissory Note made by Stanley M.
Koonce, Jr.
+10.16(f) -- 6% Promissory Note made by Wyndham Employees
Ltd.
10.17 -- [INTENTIONALLY OMITTED]
10.18 -- [INTENTIONALLY OMITTED]
+10.19(a) -- Wyndham Employees Savings & Retirement Plan.
+10.19(b -- Wyndham Hotel Corporation 1996 Long Term
Incentive Plan, as revised.
+10.19(c) -- Non-Employee Directors' Retainer Stock Plan,
as revised.
10.20 -- [INTENTIONALLY OMITTED]
10.21 -- [INTENTIONALLY OMITTED]
+10.22 -- Operating Deficit Guaranty and Reserves
Agreement dated as of August 25, 1993 by and
among Playhouse Square Hotel Limited
Partnership, Society National Bank and the
Lenders.
II-5
<PAGE> 233
10.23 -- [INTENTIONALLY OMITTED]
10.24 -- [INTENTIONALLY OMITTED]
+10.25 -- Registration Rights Agreement dated as of
April 29, 1996 between the Company and
General Electric Investment Corporation.
+10.26 -- Form of Promissory Note dated April 15,
1995 between the Company and WFLP.
10.27 -- [INTENTIONALLY OMITTED]
10.28 -- Computerized Reservation Service
Agreement between ISIS 2000 and the
Company.
10.29 -- Indemnification Agreements by and between
Elise Turner as an Officer of GHMB, Inc.;
MBAH, Inc.; CHMB, Inc.; Waterfront
Management Corporation; PSMB, Inc.; MTMB,
Inc.; MDMB, Inc.; AMMB, Inc.; OHMB, Inc.;
WNMB, Inc.; MBWD, Inc.; MBWH, Inc.; and
BHMB, Inc., which Corporations are the
Holders of Liquor Licenses, and Wyndham
Management Corporation.
*10.30 -- Senior Secured Revolving Credit Agreement
among Wyndham Hotel Corporation, The
Lenders Party Thereto and Bankers Trust
Company (incorporated by reference to the
Company's Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 1996).
*10.31 -- Management Contract between Homegate
Hospitality, Inc. and the Company, dated
August 26, 1996 (incorporated by
reference to Exhibit No. 10.1 of the
Company's Quarterly Report on Form 10-Q
for the Quarter ended September 30,
1996).
*11 -- Computation of Earnings Per Share.
21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Locke Purnell Rain Harrell (A
Professional Corporation) (included in
Exhibit 5.1).
*24.1 -- Powers of Attorney (included on signature
page).
*27.1 -- Financial Data Schedule.
- ---------------
+ Incorporated by reference to the corresponding Exhibit Number in
Amendment No. 3 to the Company's Registration Statement on Form S-1
(Registration No. 333-2214) filed with the Securities and Exchange
Commission on May 20, 1996.
* Previously filed.
II-6
<PAGE> 234
(b) Financial Statement Schedules.
<TABLE>
<CAPTION>
SCHEDULE PAGE
<S> <C>
XI: Real Estate and Accumulated Depreciation.............................................S-1
</TABLE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer, or
controlling person of the Company in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Act,
the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Act, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
II-7
<PAGE> 235
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Dallas, State of Texas, on the 27th day of January, 1997.
WYNDHAM HOTEL CORPORATION
By: /s/ JAMES D. CARREKER
----------------------------------
Name: James D. Carreker
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in their
indicated capacities on January 27th, 1997.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
President, Chief Executive Officer
/s/ James D. Carreker and Director
- ------------------------------- (principal executive officer)
James D. Carreker
Executive Vice President, Wyndham
/s/ Leslie V. Bentley Garden Division
- ------------------------------- President and Director
Leslie V. Bentley
Executive Vice President, Chief
/s/ Anne L. Raymond Financial Officer and
- ------------------------------- Director (principal financial officer)
Anne L. Raymond
Executive Vice President --
/s/ Stanley M. Koonce, Jr. Marketing, Planning
- ------------------------------- and Technical Services and Director
Stanley M. Koonce, Jr.
Vice President--Corporate
/s/ John P. Klumph Controller (principal
- ------------------------------- accounting officer)
John P. Klumph
* Director
- -------------------------------
Harlan R. Crow
* Director
- -------------------------------
Daniel A. Decker
* Director
- -------------------------------
Susan T. Groenteman
* Director
- -------------------------------
James C. Leslie
* Director
- -------------------------------
Philip J. Ward
* Director
- -------------------------------
Robert A. Whitman
</TABLE>
- ---------------
* The undersigned has executed this Registration Statement on behalf of
each of the persons named above pursuant to Powers of Attorney filed
with the Securities and Exchange Commission.
/s/ CARLA S. MORELAND
-----------------------------------
Carla S. Moreland, Attorney-in-Fact
II-8
<PAGE> 236
SCHEDULE XI
WYNDHAM HOTEL CORPORATION
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS GROSS AMOUNT
BUILDINGS BUILDINGS ACCUMU- DEPRE-
& & ACQUISI- LATED DATE OF CIATION
IMPROVE- SUBSEQUENT IMPROVE- TION DEPRECIA- CONSTRUC- LIFE
DESCRIPTION DEBT LAND MENTS COSTS LAND MENTS TOTAL TION TION (IN YEARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wyndham Garden Hotels
Brookfield Lakes $10,275 $ 985 $ 7,157 $ 70 $ 985 $ 7,227 $ 8,212 $ 1,070 June 90 20-40
Indianapolis 10,600 495 6,845 262 495 7,107 7,602 962 Nov 90 20-40
Commerce 15,000 300 11,966 409 300 12,375 12,675 1,348 Dec. 91 20-40
Charlotte 10,286 595 6,044 489 562 6,533 7,095 1,062 Dec 89 20-40
Schaumburg 5,400 1,613 4,263 0 1,613 4,263 5,876 280 May 93 40
Wyndham Rose Hall
Resort 16,879 6,000 24,628 446 6,000 25,074 31,074 3,976 Jan 90 20-40
Wyndham Harbour Island 20,471 0 14,137 392 0 14,529 14,529 3,746 Mar 88 30
------- ------- ------- ------- ------- ------- ------- -------
$88,911 $ 9,988 $75,040 $ 2,068 $ 9,955 $77,108 $87,063 $12,444
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(1) Amount represents the capital lease obligation balance as of 12/31/95.
S-1
<PAGE> 237
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
+3.1 -- Amended and Restated Certificate of
Incorporation of the Company.
+3.2 -- Amended and Restated Bylaws of the Company.
+4.1 -- Form of specimen certificate for the Common
Stock.
+4.2 -- Relevant portions of Amended and Restated
Certificate of Incorporation (Reference is
hereby made to Exhibit 3.1).
5.1 -- Opinion of Locke Purnell Rain Harrell (A
Professional Corporation).
+10.1(a) -- Management Agreement dated as of May 10,
1995 by and between Anatole Hotel Investors,
L.P. and Wyndham Hotel Company Ltd.
+10.1(b) -- Form of Management Agreement dated as of
September 27, 1994 by and between Bedrock
Annapolis Investment Partners Level I, L.P.
and Wyndham Hotel Company Ltd. (together
with attachment).
+10.1(c) -- Management Agreement dated as of March 10,
1988 by and between Franklin Plaza
Associates and Wyndham Hotel Company, as
amended by First Amendment dated November
17, 1993.
+10.1(d) -- Service Agreement dated as of November 17,
1993 by and between Franklin Plaza Realty
Limited Partnership and Wyndham Hotel
Company Ltd.
+10.1(e) -- Management Agreement dated as of December 1,
1984 by and between Houston Greenspoint
Hotel Associates and Wyndham Hotel Company.
+10.1(f) -- Management Agreement dated as of December 4,
1991 by and between Itasca Hotel Company and
Wyndham Hotel Company Ltd., as amended by
Amendment dated March 19, 1996.
+10.1(g) -- Management Agreement dated as of June 30,
1994 by and between Waterfront Hotel
Associates, S.E. and Old San Juan
Management, Ltd. S.E.
<PAGE> 238
+10.1(h) -- Management Agreement dated as of May 26,
1995 by and between Convention Center
Boulevard Hotel, Limited and Wyndham Hotel
Company Ltd.
+10.1(i) -- Management Agreement dated as of August 25,
1993 by and between Playhouse Square Hotel
Limited Partnership and Wyndham Hotel
Company Ltd.
+10.1(j) -- Management Agreement dated as of March 1,
1986 by and between CLC Partnership and
Wyndham Hotel Company, as amended by First
Amendment dated June 30, 1988.
+10.1(k) -- Management Agreement dated as of December
22, 1987 by and among Badger XVI Limited
Partnership, Crow Division Partners and
Wyndham Hotel Company, as amended by First
Amendment dated February 26, 1988.
+10.1(l) -- Management Agreement dated as of November
20, 1987 by and between Hotel and Convention
Center Partners I, I.C. Ltd. and Wyndham
Hotel Corporation II, Inc., as amended by
Amendment dated November 1, 1993.
10.1(m) -- [INTENTIONALLY OMITTED]
+10.2 -- Investment Agreement dated as of May 2, 1994
among The Hampstead Group, Inc., Wyndham
Hotel Company Ltd., The Partners in Wyndham
Hotel Company Ltd., and Crow Family
Partnership, L.P., as amended.
10.3(a) -- Lease dated as of April 1, 1996 by and
between Hospitality Properties Trust and
Garden Hotel Associates II Limited
Partnership.
+10.3(b) -- Lease Agreement dated as of March 1, 1988 by
and between Lincoln Island Associates No. 1,
Limited and WH Limited Partnership.
+10.3(c) -- Lease Agreement dated December 19, 1989 by
and between Rose Hall Hotel Limited and Rose
Hall Associates Limited Partnership.
+10.3(d) -- Sublease Agreement dated as of November 17,
1989 by and between Copley-Commerce-
Telegraph #1 Associates, as assignee of
Crow-Staley-Commerce #1 Limited Partnership
and Commerce Hotel Partners Ltd.
+10.3(e) -- Ground Lease dated as of March 26, 1987 by
and between Fred C. Boysen, Dorothy Boysen,
Ted Boysen and Rose Boysen and Garden Hotel
Associates Limited Partnership, as assignee
of Ramada Hotel Operating Company as amended
by First Amendment dated as of May 7, 1990.
+10.3(f) -- Lease Agreement dated as of November 26,
1990 by and between Tower 2001 Limited
Partnership and Wyndham Hotel Company Ltd.,
as amended by Letter Agreement dated March
9, 1994 and Letter Agreement dated March 22,
1995, and as amended by Amendment No. 1
dated as of November 30, 1995.
+10.3(g) -- Lease Agreement dated as of January 1992 by
and between 475 Park Avenue South Co. and
Wyndham Hotel Company Ltd., as amended by
Amendment of Lease dated January 30, 1995.
<PAGE> 239
+10.3(h) -- Sublease dated as of May 31, 1995 between
Banc One Mortgage Corporation and Wyndham
Hotels & Resorts.
+10.3(i) -- Lease Agreement dated as of May 16, 1994 by
and between Wirtz Realty Corporation, as
agent for 333 Building Corporation and
Wyndham Hotel Company Ltd.
+10.3(j) -- Lease Agreement dated as of May 18, 1994 by
and between Columbia Executive Offices, Inc.
and The Inn at Semiahmoo a Wyndham Resort.
10.3(k) -- Lease Agreement dated as of January 8, 1997
by and between HPTSLC Corporation and WHC
Salt Lake City Corporation.
10.4 -- Master Alliance Agreement dated as of
January 9, 1997 by and among American
General Hospitality Corporation, American
General Hospitality Operating Partnership,
L.P., WHC Franchise Corporation and WHC
Development Corporation.
10.5 -- Limited Guaranty Agreement dated as of
January 8, 1997 made by the Company for the
benefit of HPTSLC Corporation.
+10.5(a) -- Form of Asset Management Agreement to be
entered into between the Company and various
Crow Family Real Estate Entities.
10.6(a) -- Service Agreement dated as of May 21, 1996
by and between the Company and ISIS 2000 LP.
10.6(b) -- Service Agreement dated as of May 21, 1996
by and between the Company and Wynright
Insurance.
10.6(c) -- Service Agreement dated as of May 21, 1996
by and between the Company and
CW Synergistech, LP.
10.7 -- INTENTIONALLY OMITTED
10.8 -- INTENTIONALLY OMITTED
10.9 -- INTENTIONALLY OMITTED
10.10 -- Indenture relating to the 10 1/2% Senior
Subordinated Notes due 2006.
10.11 -- INTENTIONALLY OMITTED
10.12 -- INTENTIONALLY OMITTED
10.13 -- Stockholders' Agreement among Wyndham Hotel
Corporation and the Stockholders listed on
the signature pages thereof.
10.14 -- Registration Rights Agreement among Wyndham
Hotel Corporation and the parties identified
on the signature pages thereof.
10.15(a) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and James D.
Carreker.
<PAGE> 240
10.15(b) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Anne L.
Raymond.
10.15(c) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Harlan R.
Crow.
10.15(d) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Daniel A.
Decker.
10.15(e) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Susan T.
Groenteman.
10.15(f) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Stanley M.
Koonce, Jr.
10.15(g) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Leslie V.
Bentley.
10.15(h) -- Indemnification Agreement by and between
Wyndham Hotel Corporation and Robert A.
Whitman.
+10.16(a) -- 6% Promissory Note made by James D.
Carreker.
+10.16(b) -- 6% Promissory Note made by Leslie V.
Bentley.
+10.16(c) -- 6% Promissory Note made by Eric A. Danziger.
+10.16(d) -- 6% Promissory Note made by Anne L. Raymond.
+10.16(e) -- 6% Promissory Note made by Stanley M.
Koonce, Jr.
+10.16(f) -- 6% Promissory Note made by Wyndham Employees
Ltd.
10.17 -- [INTENTIONALLY OMITTED]
10.18 -- [INTENTIONALLY OMITTED]
+10.19(a) -- Wyndham Employees Savings & Retirement Plan.
+10.19(b -- Wyndham Hotel Corporation 1996 Long Term
Incentive Plan, as revised.
+10.19(c) -- Non-Employee Directors' Retainer Stock Plan,
as revised.
10.20 -- [INTENTIONALLY OMITTED]
10.21 -- [INTENTIONALLY OMITTED]
+10.22 -- Operating Deficit Guaranty and Reserves
Agreement dated as of August 25, 1993 by and
among Playhouse Square Hotel Limited
Partnership, Society National Bank and the
Lenders.
<PAGE> 241
10.23 -- [INTENTIONALLY OMITTED]
10.24 -- [INTENTIONALLY OMITTED]
+10.25 -- Registration Rights Agreement dated as of
April 29, 1996 between the Company and
General Electric Investment Corporation.
+10.26 -- Form of Promissory Note dated April 15,
1995 between the Company and WFLP.
10.27 -- [INTENTIONALLY OMITTED]
10.28 -- Computerized Reservation Service
Agreement between ISIS 2000 and the
Company.
10.29 -- Indemnification Agreements by and between
Elise Turner as an Officer of GHMB, Inc.;
MBAH, Inc.; CHMB, Inc.; Waterfront
Management Corporation; PSMB, Inc.; MTMB,
Inc.; MDMB, Inc.; AMMB, Inc.; OHMB, Inc.;
WNMB, Inc.; MBWD, Inc.; MBWH, Inc.; and
BHMB, Inc., which Corporations are the
Holders of Liquor Licenses, and Wyndham
Management Corporation.
*10.30 -- Senior Secured Revolving Credit Agreement
among Wyndham Hotel Corporation, The
Lenders Party Thereto and Bankers Trust
Company (incorporated by reference to the
Company's Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 1996).
*10.31 -- Management Contract between Homegate
Hospitality, Inc. and the Company, dated
August 26, 1996 (incorporated by
reference to Exhibit No. 10.1 of the
Company's Quarterly Report on Form 10-Q
for the Quarter ended September 30,
1996).
*11 -- Computation of Earnings Per Share.
21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Locke Purnell Rain Harrell (A
Professional Corporation) (included in
Exhibit 5.1).
*24.1 -- Powers of Attorney (included on signature
page).
*27.1 -- Financial Data Schedule.
- ---------------
+ Incorporated by reference to the corresponding Exhibit Number in
Amendment No. 3 to the Company's Registration Statement on Form S-1
(Registration No. 333-2214) filed with the Securities and Exchange
Commission on May 20, 1996.
* Previously filed.
<PAGE> 1
EXHIBIT 5.1
[LOCKE PURNELL RAIN HARREL LETTERHEAD]
(214) 740-8525
January 27, 1997
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Re: Registration Statement on Form S-1
(No. 333-18507)
Ladies and Gentlemen:
We have acted as counsel for Wyndham Hotel Corporation, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of 646,669 shares of the
Company's Common Stock, $.01 par value per share (the "Securities"). We have
examined such documents and questions of law as we have deemed necessary or
advisable for purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Securities,
when distributed in accordance with the terms and conditions set forth in the
above referenced Registration Statement (as amended, the "Registration
Statement"), will be legally issued, fully paid and nonassessable.
The opinion expressed above is limited in all respects to the laws of
the State of Texas, the General Corporation Law of the State of Delaware and
the federal laws of the United States of America, each as presently in effect.
This letter is furnished by us as counsel to you in connection with
the above referenced public offering and is solely for your benefit and not for
the benefit of any other person. This letter may not be relied upon by you for
any other purpose or relied upon or furnished to any other person without our
prior written consent.
<PAGE> 2
Wyndham Hotel Corporation
January 27, 1997
Page 2
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the prospectus
contained therein under the caption "Legal Matters." In giving this consent,
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
Respectfully submitted,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By: /s/ M. CHARLES JENNINGS
------------------------
M. Charles Jennings
<PAGE> 1
EXHIBIT 10.3(a)
LEASE AGREEMENT
DATED AS OF APRIL 1, 1996
BY AND BETWEEN
HPTWN CORPORATION,
AS LANDLORD
AND
GARDEN HOTEL ASSOCIATES TWO LP,
AS TENANT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Additional Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Affiliated Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Base Total Hotel Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Base Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Capital Addition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Capital Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Collective Leased Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Condemnor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Consolidated Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Date of Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 Disbursement Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.22 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 Environmental Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Environmental Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.28 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.29 Excess Total Hotel Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 Extended Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 FF&E Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.32 FF&E Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 Financial Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.35 Fixed Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.36 Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.37 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
[1.38 Ground Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.39 Government Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.40 Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.41 Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.42 Hotel Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
-ii-
<TABLE>
<S> <C> <C>
1.43 Hotel Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.44 Immediate Family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.45 Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.46 Incidental Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.47 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.48 Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.49 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.50 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.51 Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.52 Landlord Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.53 Lease Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.54 Leased Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.55 Leased Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.56 Leased Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.57 Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.58 Leasehold Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.59 Leasehold Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.60 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.61 Lending Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.62 Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.63 Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.64 Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.65 Minimum Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.66 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.67 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.68 Other Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.69 Overdue Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.70 Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.71 Partnership Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.72 Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.73 Permitted Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.74 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.75 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.76 Pledge and Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.77 Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.78 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.79 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.80 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.81 State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.82 Stock Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.83 Subordinated Creditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.84 Subordination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.85 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.86 Successor Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.87 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.88 Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.89 Tenant's Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.90 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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1.91 Total Hotel Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.92 Uniform System of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.93 Unsuitable for Its Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.94 WHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.95 Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.96 Wyndham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 2: LEASED PROPERTY AND TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 Condition of Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Fixed Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4 Extended Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3: RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1.1 Minimum Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1.2 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.3 Additional Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.2 Late Payment of Rent, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.3 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 No Termination, Abatement, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.5 Security for Tenant's Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4: USE OF THE LEASED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.2 Necessary Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.3 Lawful Use, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Compliance with Legal/Insurance Requirements, Etc. 26
4.3 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.3.1 Restriction on Use, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.3.2 Indemnification of Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5: MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1.1 Tenant's General Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1.2 FF&E Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.1.3 Landlord's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1.4 Nonresponsibility of Landlord, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.2 Tenant's Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3 Yield Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4 Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE 6: IMPROVEMENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Improvements to the Leased Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Salvage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 7: LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Landlord's Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 8: PERMITTED CONTESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 9: INSURANCE AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 General Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Replacement Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.4 Form Satisfactory, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.6 No Separate Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.7 Indemnification of Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 10: CASUALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Damage or Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2.1 Damage or Destruction of Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2.2 Partial Damage or Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2.3 Insufficient Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.2.4 Disbursement of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.3 Damage Near End of Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.4 Tenant's Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.5 Restoration of Tenant's Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.6 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.8 Effect on Other Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 11: CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.1 Total Condemnation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2 Partial Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.3 Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4 Temporary Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5 Allocation of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.6 Effect on Other Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 12: DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.3 Tenant's Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.4 Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.5 Landlord's Right to Cure Tenant's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 13: HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 14: LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.1 Landlord Notice Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.2 Landlord's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 15: PURCHASE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
15.1 First Refusal to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
15.2 Landlord's Option to Purchase the Tenant's
Personal Property; Transfer of Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 16: SUBLETTING AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.1 Subletting and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.2 Required Sublease Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16.3 Permitted Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
16.4 Sublease Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
16.5 Required Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 17: ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17.1 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17.3 General Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 18: LANDLORD'S RIGHT TO INSPECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 19: LEASEHOLD MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
19.1 Leasehold Mortgages Authorized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
19.2 Notices to Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
19.3 Cure by Leasehold Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
19.4 Landlord Estoppel Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 20: HOTEL MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
20.1 Landlord May Grant Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
20.2 Subordination of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
20.3 Notice to Mortgagee and Superior Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
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ARTICLE 21: ADDITIONAL COVENANTS OF TENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
21.1 Prompt Payment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
21.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
21.3 Maintenance of Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
21.4 Notice of Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
21.5 Indebtedness of Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
21.6 Financial Condition of Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
21.7 Distributions, Payments to Affiliated Persons, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 66
21.8 Prohibited Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
21.9 Liens and Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
21.10 Merger; Sale of Assets; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE 22: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
22.1 Limitation on Payment of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
22.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
22.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
22.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
22.5 Acceptance of Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
22.6 No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
22.7 Conveyance by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
22.8 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
22.9 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
22.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
22.11 Trade Area Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
22.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
22.13 Counterparts; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
22.14 Applicable Law, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
22.15 Right to Make Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
22.16 Nonrecourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
22.17 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
EXHIBITS
A - Annual Minimum Rent
B - Other Leases
C - The Land
D - Restricted Trade Area
E - Form of Landlord Estoppel
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LEASE AGREEMENT
THIS LEASE AGREEMENT is entered into as of this ___ day of _________,
1996, by and between HPTWN CORPORATION, a Delaware corporation, as landlord
("Landlord"), and GARDEN HOTEL ASSOCIATES TWO LP, a Texas limited partnership,
as tenant ("Tenant").
W I T N E S S E T H :
WHEREAS, Landlord owns fee simple title to the Leased Property [holds
the tenant's interest under the Ground Lease]_(this and other capitalized terms
used and not otherwise defined herein having the meanings ascribed to such
terms in Article 1); and
WHEREAS, Landlord wishes to lease the Leased Property to Tenant and
Tenant wishes to lease the Leased Property from Landlord, all subject to and
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in
this Article shall have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein shall have the meanings assigned to them in accordance
with GAAP, (iii) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of this
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Agreement, and (iv) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
1.1 "Additional Rent" shall have the meaning given such term in
Section 3.1.2(a).
1.2 "Additional Charges" shall have the meaning given such term in
Section 3.1.3.
1.3 "Affiliated Person" shall mean, with respect to any Person, (a)
in the case of any such Person which is a partnership, any partner in such
partnership, (b) in the case of any such Person which is a limited liability
company, any member of such company, (c) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one
or more of the Persons referred to in the preceding clauses (a) and (b), (d)
any other Person who is an officer, director, trustee or employee of, or
partner in or member of, such Person or any Person referred to in the preceding
clauses (a), (b) and (c), and (e) any other Person who is a member of the
Immediate Family of such Person or of any Person referred to in the preceding
clauses (a) through (d).
1.4 "Agreement" shall mean this Lease Agreement, including Exhibits A
to D hereto, as it and they may be amended from time to time as herein
provided.
1.5 "Applicable Laws" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits and orders, from time
to time in existence, of all courts of competent jurisdiction and Government
Agencies, and all applicable judicial and administrative and regulatory
decrees, judgments and orders, including common law rulings and determinations,
relating to injury to, or the protection of, real or personal property or human
health (except those requirements which, by definition, are solely the
responsibility of employers) or the Environment, including, without limitation,
all valid and lawful requirements of courts and other Government Agencies
pertaining to reporting, licensing, permitting, investigation, remediation and
removal of underground improvements (including, without limitation, treatment
or storage tanks, or water, gas or oil wells), or emissions, discharges,
releases or threatened
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releases of Hazardous Substances, chemical substances, pesticides, petroleum or
petroleum products, pollutants, contaminants or hazardous or toxic substances,
materials or wastes whether solid, liquid or gaseous in nature, into the
Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances,
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or
toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature.
1.6 "Award" shall mean all compensation, sums or other value awarded,
paid or received by virtue of a total or partial Condemnation of the Leased
Property (after deduction of all reasonable legal fees and other reasonable
costs and expenses, including, without limitation, expert witness fees,
incurred by Landlord, in connection with obtaining any such award).
1.7 "Base Total Hotel Sales" shall mean Total Hotel Sales for the
Base Year; provided, however, that in the event that, with respect to any Lease
Year, or portion thereof, for any reason (including, without limitation, a
casualty or Condemnation) there shall be, for two hundred seventy (270) days or
more in any Lease Year, a reduction in the number of rooms at the Hotel or any
other Hotel (as defined in the Other Leases) or a change in the services
provided at the Hotel or such other Hotels (including, without limitation,
closing of restaurants or the discontinuation of food or beverage services)
from the number of rooms or the services provided during the Base Year, in
determining Additional Rent payable with respect to such Lease Year, Base Total
Hotel Sales shall be reduced as follows: (a) in the event of the termination
of any of the Other Leases and following application of any business
interruption or Award proceeds collected with respect thereto, all Total Hotel
Sales attributable to the Leased Property demised thereunder during the Base
Year shall be subtracted from Base Total Hotel Sales; (b) in the event of a
complete closing of a Hotel and following application of any business
interruption or Award proceeds collected with respect thereto, all Total Hotel
Sales attributable to such Hotel during the Base Year shall be subtracted from
Base Total Hotel Sales throughout the period of such closing; (c) in the event
of a partial closing of a Hotel
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affecting any number of guest rooms in such Hotel and following application of
any business interruption or Award proceeds collected with respect thereto,
Total Hotel Sales attributable to guest room occupancy or guest room services
at such Hotel during the Base Year shall be ratably allocated among all guest
rooms in service at such Hotel during the Base Year and all such Total Hotel
Sales attributable to rooms no longer in service shall be subtracted from Base
Total Hotel Sales throughout the period of such closing; (d) in the event of a
closing of a restaurant and following application of any business interruption
or Award proceeds collected with respect thereto, all Total Hotel Sales
attributable to such restaurant during the Base Year shall be subtracted from
Base Total Hotel Sales throughout the period of such closing; and (e) in the
event of any other change in circumstances affecting any Hotel, Base Total
Hotel Sales shall be equitably adjusted in such manner as Landlord and Tenant
shall reasonably agree.
1.8 "Base Year" shall mean the 1996 calendar year.
1.9 "Business Day" shall mean any day other than Saturday, Sunday, or
any other day on which banking institutions in The Commonwealth of
Massachusetts or the State of Texas are authorized by law or executive action
to close.
1.10 "Capital Addition" shall mean any renovation, repair or
improvement to the Leased Property (or portion thereof), the cost of which
constitutes a Capital Expenditure.
1.11 "Capital Expenditure" shall mean any expenditure treated as
capital in nature in accordance with GAAP.
1.12 "Claim" shall have the meaning given such term in Article 8.
1.13 "Code" shall mean the Internal Revenue Code of 1986 and, to the
extent applicable, the Treasury Regulations promulgated thereunder, each as
from time to time amended.
1.14 "Collective Leased Properties" shall mean, collectively, the
Leased Property and every other Leased Property (as defined therein) under the
Other Leases.
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1.15 "Commencement Date" shall mean the date of this Agreement.
1.16 "Condemnation" shall mean (a) the exercise of any governmental
power with respect to the Leased Property, whether by legal proceedings or
otherwise, by a Condemnor of its power of condemnation, (b) a voluntary sale or
transfer of the Leased Property by Landlord to any Condemnor, either under
threat of condemnation or while legal proceedings for condemnation are pending,
or (c) a taking or voluntary conveyance of all or part of the Leased Property,
or any interest therein, or right accruing thereto or use thereof, as the
result or in settlement of any Condemnation or other eminent domain proceeding
affecting the Leased Property, whether or not the same shall have actually been
commenced.
1.17 "Condemnor" shall mean any public or quasi-public authority, or
private corporation or Person, having the power of Condemnation.
1.18 "Consolidated Financials" shall mean, for any Fiscal Year or
other accounting period of Tenant, annual audited and quarterly unaudited
financial statements of Wyndham prepared on a consolidated basis, including
Wyndham's consolidated balance sheet and the related statements of income and
cash flows, all in reasonable detail, and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding Fiscal
Year, and prepared in accordance with GAAP throughout the periods reflected.
1.19 "Date of Taking" shall mean the date the Condemnor has the right
to possession of the Leased Property, or any portion thereof, in connection
with a Condemnation.
1.20 "Default" shall mean any event or condition which with the
giving of notice and/or lapse of time may ripen into an Event of Default.
1.21 "Disbursement Rate" shall mean an annual rate of interest equal
to the greater of, as of the date of determination, (i) the Interest Rate and
(ii) the per annum rate for ten (10) year U.S. Treasury Obligations as
published in The Wall Street Journal plus three hundred fifty (350) basis
points.
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1.22 "Distribution" shall mean (a) any declaration or payment of any
dividend (except dividends payable in common stock of Tenant) on or in respect
of any shares of any class of capital stock of Tenant, (b) any purchase,
redemption, retirement or other acquisition of any shares of any class of
capital stock of a corporation, (c) any other distribution on or in respect of
any shares of any class of capital stock of a corporation, or (d) any return of
capital to shareholders.
1.23 "Encumbrance" shall have the meaning given such term in Section
20.1.
1.24 "Entity" shall mean any corporation, general or limited
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, cooperative, any government or agency or political
subdivision thereof or any other entity.
1.25 "Environment" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
1.26 "Environmental Obligation" shall have the meaning given such
term in Section 4.3.1.
1.27 "Environmental Notice" shall have the meaning given such term in
Section 4.3.1.
1.28 "Event of Default" shall have the meaning given such term in
Section 12.1.
1.29 "Excess Total Hotel Sales" shall mean, with respect to any Lease
Year, or portion thereof, the amount of Total Hotel Sales for such Lease Year
with respect to the Collective Leased Properties, or portion thereof, in excess
of Base Total Hotel Sales with respect to the Collective Leased Properties for
the equivalent period.
1.30 "Extended Terms" shall have the meaning given such term in
Section 2.4.
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1.31 "FF&E Estimate" shall have the meaning given such term in
Section 5.1.2(c).
1.32 "FF&E Reserve" shall have the meaning given such term in Section
5.1.2(a).
1.33 "Financial Officer's Certificate" shall mean, as to any Person,
a certificate of the chief financial officer or chief accounting officer (or
such officers' authorized designee) of such Person, duly authorized,
accompanying the financial statements required to be delivered by such Person
pursuant to Section 17.2, in which such officer shall certify (a) that such
statements have been properly prepared in accordance with GAAP and are true,
correct and complete in all material respects and fairly present the
consolidated financial condition of such Person at and as of the dates thereof
and the results of its and their operations for the periods covered thereby,
and (b) certify that no Event of Default has occurred and is continuing
hereunder.
1.34 "Fiscal Year" shall mean the calendar year.
1.35 "Fixed Term" shall have the meaning given such term in Section
2.3.
1.36 "Fixtures" shall have the meaning given such term in Section
2.1(d).
1.37 "GAAP" shall mean generally accepted accounting principles
consistently applied.
[ 1.38 "Ground Lease" shall mean ______________.]
1.39 "Government Agencies" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning and
zoning), bureau, commission, department, office or instrumentality of any
nature whatsoever of any governmental or quasi-governmental unit of the United
States or the State or any county or any political subdivision of any of the
foregoing, whether now or hereafter in existence, having jurisdiction over
Tenant or the Leased Property or any portion thereof or the Hotel operated
thereon.
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1.40 "Hazardous Substances" shall mean any substance:
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any federal, state or
local statute, regulation, rule, ordinance, order, action or policy; or
(b) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future federal, state or local
statute, regulation, rule or ordinance or amendments thereto including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. et seq.) and the Resource
Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) and the
regulations promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
and is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United
States, any state of the United States, or any political subdivision
thereof; or
(d) the presence of which on the Leased Property causes or
materially threatens to cause an unlawful nuisance upon the Leased
Property or to adjacent properties or poses or materially threatens to
pose a hazard to the Leased Property or to the health or safety of
persons on or about the Leased Property; or
(e) without limitation, which contains gasoline, diesel fuel
or other petroleum hydrocarbons or volatile organic compounds; or
(f) without limitation, which contains polychlorinated
biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive
particles, waves or material; or
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(h) without limitation, constitutes materials which are now or
may hereafter be subject to regulation pursuant to the Material Waste
Tracking Act of 1988, or any Applicable Laws promulgated by any
Government Agencies.
1.41 "Hotel" shall mean the Wyndham Garden Hotel being operated on the
Leased Property.
1.42 "Hotel Mortgage" shall mean any Encumbrance placed upon the
Leased Property in accordance with Article 20.
1.43 "Hotel Mortgagee" shall mean the holder of any Hotel Mortgage.
1.44 "Immediate Family" shall mean, with respect to any individual,
such individual's spouse, parents, brothers, sisters, children (natural or
adopted), stepchildren, grandchildren, grandparents, parents-in-law, brothers-
in-law, sisters-in-law, nephews and nieces.
1.45 "Impositions" shall mean collectively, all taxes (including,
without limitation, all taxes imposed under the laws of the State, as such laws
may be amended from time to time, and all ad valorem, sales and use, or similar
taxes as the same relate to or are imposed upon Landlord, Tenant or the
business conducted upon the Leased Property), assessments (including, without
limitation, all assessments for public improvements or benefit, whether or not
commenced or completed prior to the date hereof), water, sewer or other rents
and charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property or
the business conducted thereon by Tenant (including all interest and penalties
thereon due to any failure in payment by Tenant), which at any time prior to,
during or in respect of the Term hereof may be assessed or imposed on or in
respect of or be a lien upon (a) Landlord's interest in the Leased Property,
(b) the Leased Property or any part thereof or any rent therefrom or any
estate, right, title or interest therein, or (c) any occupancy, operation, use
or possession of, or sales from, or activity conducted on, or in connection
with the Leased Property or the
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leasing or use of the Leased Property or any part thereof by Tenant; provided,
however, that nothing contained herein shall be construed to require Tenant to
pay (i) any tax based on net income imposed on Landlord, (ii) any net revenue
tax of Landlord, (iii) any transfer fee or other tax imposed with respect to
the sale, exchange or other disposition by Landlord of the Leased Property or
the proceeds thereof, (iv) any single business, gross receipts tax, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Landlord, (v) any interest or penalties imposed on Landlord as a result of the
failure of Landlord to file any return or report timely and in the form
prescribed by law or to pay any tax or imposition, except to the extent such
failure is a result of a breach by Tenant of its obligations pursuant to
Section 3.1.3, (vi) any Impositions imposed on Landlord that are a result of
Landlord not being considered a "United States person" as defined in Section
7701(a)(30) of the Code, (vii) any Impositions that are enacted or adopted by
their express terms as a substitute for any tax that would not have been
payable by Tenant pursuant to the terms of this Agreement or (viii) any
Impositions imposed as a result of a breach of covenant or representation by
Landlord in any agreement governing Landlord's conduct or operation or as a
result of the gross negligence or willful misconduct of Landlord.
1.46 "Incidental Documents" shall mean the Pledge and Security
Agreement, the Stock Pledge Agreement and the Partnership Interest Pledge
Agreement.
1.47 "Indebtedness" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the obligor's
balance sheet as liabilities.
1.48 "Insurance Requirements" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any
such policy and all orders, rules and regulations and any other requirements of
the National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon Landlord, Tenant or the Leased Property.
1.49 "Interest Rate" shall mean ten percent (10%) per annum.
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1.50 "Land" shall have the meaning given such term in Section 2.1(a).
1.51 "Landlord" shall have the meaning given such term in the
preambles to this Agreement and shall also include its permitted successors and
assigns.
1.52 "Landlord Liens" shall mean liens on or against the Leased
Property or any payment of Rent (a) which result from any act of, or any claim
against, Landlord or any owner of a direct or indirect interest in the Leased
Property, or which result from any violation by Landlord of any terms of this
Agreement or the Purchase Agreement, or (b) which result from liens in favor of
any taxing authority by reason of any tax owed by Landlord or any fee owner of
a direct or indirect interest in the Leased Property; provided, however, that
"Landlord Lien" shall not include any lien resulting from any tax for which
Tenant is obligated to pay or indemnify Landlord against until such time as
Tenant shall have already paid to or on behalf of Landlord the tax or the
required indemnity with respect to the same.
1.53 "Lease Year" shall mean any Fiscal Year or portion thereof,
commencing with the 1996 Fiscal Year, during the Term.
1.54 "Leased Improvements" shall have the meaning given such term in
Section 2.1(b).
1.55 "Leased Intangible Property" shall mean all hotel licensing
agreements and other service contracts, equipment leases, booking agreements
and other arrangements or agreements affecting the ownership, repair,
maintenance, management, leasing or operation of the Leased Property to which
Landlord is a party; all books, records and files relating to the leasing,
maintenance, management or operation of the Leased Property belonging to
Landlord; all transferable or assignable permits, certificates of occupancy,
operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, rights to deposits, trade
names, service marks, telephone exchange numbers identified with the Leased
Property, and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character belonging to Landlord with
respect to the Leased Property.
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1.56 "Leased Personal Property" shall have the meaning given such
term in Section 2.1(e).
1.57 "Leased Property" shall have the meaning given such term in
Section 2.1.
1.58 "Leasehold Mortgage" shall mean a mortgage, a deed to secure
debt, or other security instrument by which the leasehold estate or any other
rights of Tenant (including, without limitation, rights created by this
Agreement) is mortgaged, conveyed, assigned, or otherwise transferred by
Tenant, to secure a loan or loans obtained, or obligations incurred or
guaranteed, by Tenant to a Lending Institution.
1.59 "Leasehold Mortgagee" shall mean the holder of any Leasehold
Mortgage.
1.60 "Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Leased Property or
the maintenance, construction, alteration or operation thereof, whether now or
hereafter enacted or in existence, including, without limitation, (a) all
permits, licenses, authorizations, certificates and regulations necessary to
operate the Leased Property for its Permitted Use, and (b) all covenants,
agreements, restrictions and encumbrances contained in any instruments at any
time in force affecting the Leased Property, including those which may (i)
require material repairs, modifications or alterations in or to the Leased
Property or (ii) in any way materially and adversely affect the use and
enjoyment thereof, but excluding any requirements arising as a result of
Landlord's status as a real estate investment trust.
1.61 "Lending Institution" shall mean any United States insurance
company, banking corporation, federally insured commercial or savings bank,
national banking association, United States savings and loan association,
employees' welfare, pension or retirement fund or system, corporate profit
sharing or pension trust, college or university, or real estate investment
trust, including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust, such trust having a
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net worth of at least $100,000,000 and shall also mean and include Bankers
Trust Company and any Person participating in a loan syndicate with Bankers
Trust Company.
1.62 "Lien" shall mean any mortgage, security interest, pledge,
collateral assignment, or other encumbrance, lien or charge of any kind, or any
transfer of property or assets for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors.
1.63 "Management Agreement" shall mean the Amended and Restated
Management Agreement, dated the date hereof, between Tenant and Wyndham,
together with all amendments, modifications and supplements thereto.
1.64 "Manager" shall mean Wyndham or an Affiliated Person with
respect to Wyndham and permitted assignees.
1.65 "Minimum Rent" shall mean, with respect to each calendar year,
the sum set forth on Exhibit A.
1.66 "Notice" shall mean a notice given in accordance with Section
22.10.
1.67 "Officer's Certificate" shall mean a certificate signed by an
officer of the certifying Entity duly authorized by the board of directors of
the certifying Entity.
1.68 "Other Leases" shall mean, collectively, the Lease Agreements
between Landlord and Tenant described on Exhibit B.
1.69 "Overdue Rate" shall mean, on any date, a per annum rate of
interest equal to the lesser of fifteen percent (15%) and the maximum rate then
permitted under applicable law.
1.70 "Parent" shall mean, with respect to any Person, any Person
which owns directly, or indirectly through one or more Subsidiaries or
Affiliated Persons, five percent (5%) or more of the voting or beneficial
interest in, or otherwise has the right or power (whether by contract, through
ownership of securities or otherwise) to control, such Person.
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1.71 "Partnership Pledge Agreement" shall mean the Partnership
Interest Pledge Agreement, dated as of the date hereof, made by the partners of
Tenant to Landlord.
1.72 "Permitted Encumbrances" shall mean all rights, restrictions,
and easements of record set forth on Schedule B to the applicable owner's or
leasehold title insurance policy issued to Landlord on the date hereof, plus
any other such encumbrances as may have been consented to in writing by
Landlord from time to time.
1.73 "Permitted Liens" shall mean any Liens granted in accordance with
Section 21.9(a).
1.74 "Permitted Use" shall mean any use of the Leased Property
permitted pursuant to Section 4.1.1.
1.75 "Person" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of
such Person where the context so admits.
1.76 "Pledge and Security Agreement" shall mean the Pledge and
Security Agreement, dated as of the date hereof, made by Tenant for the benefit
of Landlord.
1.77 "Purchase Agreement" shall mean the Purchase and Sale Agreement,
dated as of March 5, 1996, by and between Landlord and Garden Hotel Associates
Limited Partnership, as amended.
1.78 "Records" shall have the meaning given such term in Section 7.2.
1.79 "Rent" shall mean, collectively, the Minimum Rent, Additional
Rent and Additional Charges.
1.80 "SEC" shall mean the Securities and Exchange Commission.
1.81 "State" shall mean the state or commonwealth or district in
which the Leased Property is located.
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1.82 "Stock Pledge Agreement" shall mean the Stock Pledge Agreement
made by Wyndham to Landlord with respect to the stock of the required assignee
of Tenant pursuant to Section 16.5.
1.83 "Subordinated Creditor" shall mean any creditor of Tenant which
is a party to a Subordination Agreement in favor of Landlord.
1.84 "Subordination Agreement" shall mean any agreement executed by a
Subordinated Creditor pursuant to which the payment and performance of Tenant's
obligations to such Subordinated Creditor are subordinated to the payment and
performance of Tenant's obligations to Landlord under this Agreement.
1.85 "Subsidiary" shall mean, with respect to any Person, any Entity
(a) in which such Person owns directly, or indirectly through one or more
Subsidiaries, forty-nine percent (49%) or more of the voting or beneficial
interest or (b) which such Person otherwise has the right or power to control
(whether by contract, through ownership of securities or otherwise).
1.86 "Successor Landlord" shall have the meaning given such term in
Section 20.2.
1.87 "Tangible Net Worth" shall mean the excess of total assets over
total liabilities, total assets and total liabilities each to be determined in
accordance with GAAP, excluding, however, from the determination of total
assets: (a) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles; (b) all
deferred charges or unamortized debt discount and expense; (c) all reserves
carried and not deducted from assets; (d) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary; (e) securities which are not readily marketable; (f) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to the Commencement Date; (g) deferred gain; and (h) any items not
included in clauses (a) through (g) above that are treated as intangibles in
conformity with GAAP; and excluding, however, from the determination of total
liabilities deferred fees payable to the Manager in accordance with the
Management Agreement.
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1.88 "Tenant" shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and assigns.
1.89 "Tenant's Personal Property" shall mean all motor vehicles and
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other tangible personal property of
Tenant, if any, acquired by Tenant on and after the date hereof and located at
the Leased Property or used in Tenant's business at the Leased Property and all
modifications, replacements, alterations and additions to such personal
property installed at the expense of Tenant, other than any items included
within the definition of Fixtures or Leased Personal Property.
1.90 "Term" shall mean, collectively, the Fixed Term and the Extended
Terms, to the extent properly exercised pursuant to the provisions of Section
2.4, unless sooner terminated pursuant to the provisions of this Agreement.
1.91 "Total Hotel Sales" shall mean, for each Fiscal Year during the
Term, all revenues and receipts of every kind derived by Tenant from operating
the Leased Property and parts thereof, including, but not limited to: income
(from both cash and credit transactions), after deductions for bad debts, and
discounts for prompt or cash payments and refunds, from rental of rooms,
stores, offices, meeting, exhibit or sales space of every kind; license, lease
and concession fees and rentals (not including gross receipts of licensees,
lessees and concessionaires); income from vending machines; health club
membership fees; food and beverage sales; wholesale and retail sales of
merchandise (other than proceeds from the sale of furnishings, fixture and
equipment no longer necessary to the operation of the Hotel, which shall be
deposited in the FF&E Reserve); service charges, to the extent not distributed
to the employees at the Hotel as gratuities; and proceeds, if any, from
business interruption or other loss of income insurance; provided, however,
that Total Hotel Sales shall not include the following: gratuities to Hotel
employees; 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; insurance proceeds (other than proceeds from
business interruption or other loss of
<PAGE> 24
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income insurance); Award proceeds (other than for a temporary Condemnation);
any proceeds from any sale of the Leased Property or from the refinancing of
any debt encumbering the Leased Property; proceeds from the disposition of
furnishings, fixture and equipment no longer necessary for the operation of the
Hotel; and interest which accrues on amounts deposited in the FF&E Reserve.
1.92 "Uniform System of Accounts" shall mean A Uniform System of
Accounts for Hotels, Eighth Revised Edition, 1986, as published by the Hotel
Association of New York City, as the same may be further revised from time to
time.
1.93 "Unsuitable for Its Permitted Use" shall mean a state or
condition of the Hotel such that (a) following any damage or destruction
involving the Hotel, the Hotel cannot be operated in the good faith judgment of
Tenant on a commercially practicable basis for its Permitted Use and it cannot
reasonably be expected to be restored to substantially the same condition as
existed immediately before such damage or destruction, and as otherwise
required by Section 10.2.4, within twelve (12) months following such damage or
destruction or such shorter period of time as to which business interruption
insurance is available to cover Rent and other costs related to the Leased
Property following such damage or destruction, or (b) as the result of a
partial taking by Condemnation, the Hotel cannot be operated, in the good faith
judgment of Tenant or the Manager on a commercially practicable basis for its
Permitted Use.
1.94 "WHC" shall mean Wyndham Hotel Corporation, a Delaware
corporation, which it is currently contemplated will, directly or indirectly,
succeed to substantially all of the business and assets of Wyndham Hotel
Company, Ltd., certain shares of which will be publicly traded on a nationally
recognized exchange and all permitted successors and assigns of such
corporation.
1.95 "Work" shall have the meaning given such term in Section 10.2.4.
1.96 "Wyndham" shall mean, prior to the assignment described in
Section 16.5, Wyndham Hotel Company, Ltd., a Texas limited partnership, and
following the assignment described in Section 16.5, WHC.
<PAGE> 25
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ARTICLE 2
LEASED PROPERTY AND TERM
2.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from
Landlord all of Landlord's right, title and interest in and to all of the
following (collectively, the "Leased Property"):
(a) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit C, attached hereto and made a part
hereof (the "Land");
(b) all buildings, structures and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and off-site),
parking areas and roadways appurtenant to such buildings and structures
presently situated upon the Land (collectively, the "Leased
Improvements");
(c) all easements, rights and appurtenances relating to the
Land and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of
property, now or hereafter permanently affixed to or incorporated into
the Leased Improvements, including, without limitation, all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment,
all of which, to the maximum extent permitted by law, are hereby deemed
by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto, but
specifically excluding all items included within the category of
Tenant's Personal Property (collectively, the "Fixtures");
<PAGE> 26
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(e) all machinery, equipment, furniture, furnishings, moveable
walls or partitions, computers or trade fixtures or other personal
property of any kind or description used or useful in Tenant's business
on or in the Leased Improvements, and located on or in the Leased
Improvements, and all modifications, replacements, alterations and
additions to such personal property, except items, if any, included
within the category of Fixtures, but specifically excluding all items
included within the category of Tenant's Personal Property
(collectively, the "Leased Personal Property");
(f) all of the Leased Intangible Property; and
(g) any and all leases of space (including any security
deposits held by Tenant or the Manager pursuant thereto) in the Leased
Improvements to tenants thereof.
2.2 Condition of Leased Property. Tenant acknowledges receipt and
delivery of possession of the Leased Property and Tenant accepts the Leased
Property in its "as is" condition, subject to the rights of parties in
possession, the existing state of title, including all covenants, conditions,
restrictions, reservations, mineral leases, easements and other matters of
record or that are visible or apparent on the Leased Property, all applicable
Legal Requirements, the lien of any financing instruments, mortgages and deeds
of trust existing prior to the Commencement Date or permitted by the terms of
this Agreement, and such other matters which would be disclosed by an
inspection of the Leased Property and the record title thereto or by an
accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED
PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF
SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD
OR LANDLORD'S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY
CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED
PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS
FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS
TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT
BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum
extent permitted by law, however, Landlord hereby
<PAGE> 27
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assigns to Tenant all of Landlord's rights to proceed against any predecessor
in title for breaches of warranties or representations or for latent defects in
the Leased Property. Landlord shall fully cooperate with Tenant in the
prosecution of any such claims, in Landlord's or Tenant's name, all at Tenant's
sole cost and expense. Tenant shall indemnify, defend, and hold harmless
Landlord from and against any loss, cost, damage or liability (including
reasonable attorneys' fees) incurred by Landlord in connection with such
cooperation.
2.3 Fixed Term. The initial term of this Agreement (the "Fixed
Term") shall commence on the Commencement Date and shall expire December 31,
2012.
2.4 Extended Term. Provided that no Event of Default shall have
occurred and be continuing, this Agreement shall be in full force and effect,
and the term of all of the Other Leases shall be simultaneously extended
(unless any such Other Leases shall have been terminated pursuant to the
provisions of Articles 10 or 11 thereof or unless the Other Lease pertaining to
real property in Seatac, Washington shall be terminated or extinguished due to
the termination of the Ground Lease [as defined therein] as a result of a
default by the ground lessee thereunder which was not caused by Tenant), the
Term shall be automatically extended for four (4) consecutive renewal terms of
twelve (12) years each (collectively, the "Extended Terms"), unless Tenant
shall give Landlord Notice, not later than two (2) years prior to the scheduled
expiration of the then current Term of this Agreement (Fixed or Extended, as
the case may be), that Tenant elects not so to extend the term of this
Agreement and the Other Leases (and time shall be of the essence with respect
to the giving of such Notice). It is expressly understood and agreed that such
Notice from Tenant shall be void and of no effect and the Term shall be
automatically extended unless Tenant shall simultaneously elect not to extend
the term of the Other Leases.
Each Extended Term shall commence on the day succeeding the expiration
of the Fixed Term or the preceding Extended Term, as the case may be. All of
the terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall give Notice that it
elects not to extend the Term in accordance with this
<PAGE> 28
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Section 2.4, this Agreement shall automatically terminate at the end of
the Term then in effect and Tenant shall have no further option to extend the
Term of this Agreement. Otherwise, the extension of this Agreement shall be
automatically effected without the execution of any additional documents; it
being understood and agreed, however, that Tenant and Landlord shall execute
such documents and agreements as either party shall reasonably require to
evidence the same.
[Notwithstanding the foregoing, to the extent this Agreement shall be in
effect on any date that Landlord has the right, under the provisions of the
Ground Lease, to elect to renew or extend the term of the Ground Lease,
Landlord shall so extend the term of the Ground Lease and the Term of this
Agreement shall be deemed to be automatically extended to the expiration of the
term of the Ground Lease, as renewed or extended.]
ARTICLE 3
RENT
3.1 Rent. Tenant shall pay, in lawful money of the United States of
America which shall be legal tender for the payment of public and private
debts, without offset, abatement, demand or deduction (unless otherwise
expressly provided in this Agreement), Minimum Rent and Additional Rent to
Landlord and Additional Charges to the party to whom such Additional Charges
are payable, during the Term. All payments to Landlord shall be made by wire
transfer of immediately available federal funds or by other means acceptable to
Landlord in its sole discretion. Rent for any partial Accounting Period shall
be prorated on a per diem basis.
3.1.1 Minimum Rent.
(a) Minimum Rent shall be paid in advance on the first
Business Day of each month; provided, however, that the first payment of
Minimum Rent shall be payable on the Commencement Date (and, if
applicable, such payment shall be prorated as provided in the last
sentence of the first paragraph of Section 3.1).
<PAGE> 29
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(b) Adjustments of Minimum Rent Following Disbursements
Under Sections 5.1.3(b), 10.2.4 or 11.2. Effective on the date of each
disbursement to pay for the cost of any repairs, maintenance,
renovations or replacements pursuant to Sections 5.1.3(b), 10.2.4 or
11.2, the Minimum Rent shall be increased by a per annum amount equal to
the Disbursement Rate times the amount so disbursed. If any such
disbursement is made during any month on a day other than the first day
of a month, Tenant shall pay to Landlord on the first day of the
immediately following month (in addition to the amount of Minimum Rent
payable with respect to such month, as adjusted pursuant to this
paragraph (b)) the amount by which Minimum Rent for the preceding month,
as adjusted for such disbursement on a per diem basis, exceeded the
amount of Minimum Rent paid by Tenant for such preceding month.
3.1.2 Additional Rent.
(a) Amount. Commencing with the Second Lease Year, for each
Lease Year or portion thereof, Tenant shall pay an aggregate amount of
additional rent ("Additional Rent") with respect to such Lease Year,
pursuant to this Agreement and the Other Leases, in an amount, not less
than zero, equal to eight percent (8%) of Excess Total Hotel Sales.
(b) Monthly Installments. Commencing with the Second Lease
Year, installments of Additional Rent for each Lease Year or portion
thereof shall be calculated and paid monthly in arrears, together with
an Officer's Certificate setting forth the calculation of Additional
Rent due and payable for such month.
(c) Reconciliation of Additional Rent. In addition, on or
before April 30, of each year, commencing April 30, 1997, Tenant shall
deliver to Landlord an Officer's Certificate setting forth the Total
Hotel Sales for the Collective Leased Properties for such preceding
Lease Year, together with an audit of Tenant's revenues for the
preceding Lease Year, conducted by Arthur Anderson and Co., or another
"Big Six", so-called, firm of independent certified public accountants
proposed by Tenant and approved
<PAGE> 30
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by Landlord (which approval shall not be unreasonably withheld or
delayed).
If the annual Additional Rent for such preceding Lease Year as shown in
the Officer's Certificate exceeds the amount previously paid with respect
thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the
Officer's Certificate is delivered, together with interest at the Interest
Rate, which interest shall accrue from the close of such preceding Lease Year
until the date that such certificate is required to be delivered and,
thereafter, such interest shall accrue at the Overdue Rate, until the amount of
such difference shall be paid or otherwise discharged. If the annual
Additional Rent for such preceding Lease Year as shown in the Officer's
Certificate is less than the amount previously paid with respect thereto by
Tenant, provided that no Event of Default shall have occurred and be
continuing, Landlord shall grant Tenant a credit against the Rent next coming
due in the amount of such difference, together with interest at the Interest
Rate, which interest shall accrue from the date of payment by Tenant until the
date such credit is applied or paid, as the case may be. If such credit cannot
be made because the Term has expired prior to application in full thereof,
provided no Event of Default has occurred and is continuing, Landlord shall pay
the unapplied balance of such credit to Tenant, together with interest at the
Interest Rate, which interest shall accrue from the date of payment by Tenant
until the date of payment by Landlord.
(d) Confirmation of Additional Rent. Tenant shall utilize, or
cause to be utilized, an accounting system for the Collective Leased
Properties in accordance with its usual and customary practices and in
accordance with GAAP, which will accurately record all Total Hotel Sales
and Tenant shall retain, for at least three (3) years after the
expiration of each Lease Year, reasonably adequate records conforming to
such accounting system showing all Total Hotel Sales for such Lease
Year. Landlord, at its own expense, except as provided hereinbelow,
shall have the right, exercisable by Notice to Tenant within one (1)
year after receipt of the applicable Officer's Certificate, by its
accountants or representatives to audit the information set forth in the
Officer's Certificate referred to in subparagraph (c) above and, in
connection with such audits,
<PAGE> 31
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to examine Tenant's and the Manager's books and records with respect
thereto (including supporting data and sales and excise tax returns).
If any such audit discloses a deficiency in the payment of Additional
Rent and, either Tenant agrees with the result of such audit or the
matter is otherwise compromised with Landlord, Tenant shall forthwith
pay to Landlord the amount of the deficiency, as finally agreed or
determined, together with interest at the Interest Rate, from the date
such payment should have been made to the date of payment thereof. If
such deficiency, as agreed upon or compromised as aforesaid, is more
than four percent (4%) of the Total Hotel Sales reported by Tenant for
such Lease Year and, as a result, Landlord did not receive at least
ninety-five percent (95%) of the Additional Rent payable with respect to
such Lease Year, Tenant shall pay the reasonable cost of such audit and
examination. If any such audit discloses that Tenant paid more
Additional Rent for any Lease Year than was due hereunder, and either
Landlord agrees with the result of such audit or the matter is otherwise
determined, provided no Event of Default has occurred and is continuing,
Landlord shall grant Tenant a credit equal to the amount of such
overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at
the Interest Rate, which interest shall accrue from the time of payment
by Tenant until the date such credit is applied or paid, as the case may
be. If such a credit cannot be made because the Term has expired before
the credit can be applied in full, provided no Event of Default has
occurred and is continuing, Landlord shall pay the unapplied balance of
such credit to Tenant, together with interest at the Interest Rate,
which interest shall accrue from the date of payment by Tenant until the
date of payment from Landlord.
Any proprietary information obtained by Landlord with respect to Tenant
pursuant to the provisions of this Agreement shall be treated as confidential,
except that such information may be used, subject to appropriate
confidentiality safeguards, in any litigation between the parties and except
further that Landlord may disclose such information to its prospective lenders,
provided that Landlord shall direct and obtain the agreement of such lenders to
maintain such information as confidential. The obligations of Tenant and
Landlord contained
<PAGE> 32
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in this Section 3.1.2 shall survive the expiration or earlier termination of
this Agreement.
3.1.3 Additional Charges. In addition to the Minimum
Rent and Additional Rent payable hereunder, Tenant shall pay to the appropriate
parties and discharge as and when due and payable the following (collectively,
"Additional Charges"):
(a) Impositions. Subject to Article 8 relating to permitted
contests, Tenant shall pay, or cause to be paid, all Impositions before
any fine, penalty, interest or cost (other than any opportunity cost as a
result of a failure to take advantage of any discount for early payment)
may be added for non- payment, such payments to be made directly to the
taxing authorities where feasible, and shall promptly, upon request,
furnish to Landlord copies of official receipts or other reasonably
satisfactory proof evidencing such payments. If any such Imposition may,
at the option of the taxpayer, lawfully be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition),
Tenant may exercise the option to pay the same (and any accrued interest
on the unpaid balance of such Imposition) in installments and, in such
event, shall pay such installments during the Term as the same become due
and before any fine, penalty, premium, further interest or cost may be
added thereto. Landlord, at its expense, shall, to the extent required
or permitted by Applicable Law, prepare and file all tax returns and pay
all taxes due in respect of Landlord's net income, gross receipts, sales
and use, single business, transaction privilege, rent, ad valorem,
franchise taxes and taxes on its capital stock, and Tenant, at its
expense, shall, to the extent required or permitted by Applicable Laws
and regulations, prepare and file all other tax returns and reports in
respect of any Imposition as may be required by Government Agencies.
Provided no Event of Default shall have occurred and be continuing, if
any refund shall be due from any taxing authority in respect of any
Imposition paid by Tenant, the same shall be paid over to or retained by
Tenant. Landlord and Tenant shall, upon request of the other, provide
such data as is maintained by the party to whom the request is made with
respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event Government Agencies classify
any
<PAGE> 33
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property covered by this Agreement as personal property, Tenant shall
file all personal property tax returns in such jurisdictions where it may
legally so file. Each party shall, to the extent it possesses the same,
provide the other, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Landlord is legally required to file personal property
tax returns for property covered by this Agreement, Landlord shall
provide Tenant with copies of assessment notices in sufficient time for
Tenant to file a protest. All Impositions assessed against such personal
property shall be (irrespective of whether Landlord or Tenant shall file
the relevant return) paid by Tenant not later than the last date on which
the same may be made without interest or penalty.
Landlord shall give prompt Notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has knowledge;
provided, however, that Landlord's failure to give any such notice shall
in no way diminish Tenant's obligation hereunder to pay such Impositions,
unless such failure continues for more than twelve (12) months after the
date Landlord learned of such Imposition.
(b) Utility Charges. Tenant shall pay or cause to be paid all
charges for electricity, power, gas, oil, water and other utilities used
in connection with the Leased Property.
(c) Insurance Premiums. Tenant shall pay or cause to be paid
all premiums for the insurance coverage required to be maintained
pursuant to Article 9.
(d) Other Charges. Tenant shall pay or cause to be paid all
other amounts, liabilities and obligations, including, without
limitation, [ground rents and other sums payable under the Ground Lease]
and all amounts payable under any equipment leases and all agreements to
indemnify Landlord under Sections 4.3.2 and 9.7.
(e) Reimbursement for Additional Charges. If Tenant pays or
causes to be paid property taxes or similar or other Additional Charges
attributable to periods after the end of the Term, whether upon
expiration or sooner termination of
<PAGE> 34
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this Agreement (other than termination by reason of an Event of Default),
Tenant may, within a reasonable time after the end of the Term, provide
Notice to Landlord of its estimate of such amounts. Landlord shall
promptly reimburse Tenant for all payments of such taxes and other
similar Additional Charges that are attributable to any period after the
Term of this Agreement.
3.2 Late Payment of Rent, Etc. If any installment of Minimum Rent,
Additional Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Landlord) shall not be paid within ten (10) days
after its due date, Tenant shall pay Landlord, on demand, as Additional
Charges, a late charge (to the extent permitted by law) computed at the Overdue
Rate on the amount of such installment, from the due date of such installment
to the date of payment thereof. To the extent that Tenant pays any Additional
Charges directly to Landlord or any Hotel Mortgagee pursuant to any requirement
of this Agreement, Tenant shall be relieved of its obligation to pay such
Additional Charges to the Entity to which they would otherwise be due. If any
payments due from Landlord to Tenant shall not be paid within ten (10) days
after its due date, Landlord shall pay to Tenant, on demand, a late charge (to
the extent permitted by law) computed at the Overdue Rate on the amount of such
installment from the due date of such installment to the date of payment
thereof.
In the event of any failure by Tenant to pay any Additional Charges when
due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost which is added for non-payment or late payment
of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Agreement or by statute or
otherwise in the case of non-payment of the Additional Charges as in the case
of non-payment of the Minimum Rent and Additional Rent.
3.3 Net Lease. The Rent shall be absolutely net to Landlord so that
this Agreement shall yield to Landlord the full amount of the installments or
amounts of the Rent throughout the Term, subject to any other provisions of
this Agreement which expressly provide otherwise, including those provisions
for adjustment or abatement of such Rent.
<PAGE> 35
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3.4 No Termination, Abatement, Etc. Except as otherwise specifically
provided in this Agreement, each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by this Agreement in accordance with its
terms and shall not take any action without the consent of the other to modify,
surrender or terminate this Agreement. In addition, except as otherwise
expressly provided in this Agreement, Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or reduction of the Rent, or set-off
against the Rent, nor shall the respective obligations of Landlord and Tenant
be otherwise affected by reason of (a) any damage to or destruction of the
Leased Property or any portion thereof from whatever cause or any Condemnation,
(b) the lawful or unlawful prohibition of, or restriction upon, Tenant's use of
the Leased Property, or any portion thereof, or the interference with such use
by any Person or by reason of eviction by paramount title; (c) any claim which
Tenant may have against Landlord by reason of any default (other than a
monetary default) or breach of any warranty by Landlord under this Agreement or
any other agreement between Landlord and Tenant, or to which Landlord and
Tenant are parties; (d) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee of Landlord; or
(e) for any other cause whether similar or dissimilar to any of the foregoing
(other than a monetary default by Landlord); provided, however, that the
foregoing shall not apply or be construed to restrict Tenant's rights in the
event of any act or omission by Landlord constituting gross negligence or
willful misconduct. Except as otherwise specifically provided in this
Agreement, Tenant hereby waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law (a) to
modify, surrender or terminate this Agreement or quit or surrender the Leased
Property or any portion thereof, or (b) which would entitle Tenant to any
abatement, reduction, suspension or deferment of the Rent or other sums payable
or other obligations to be performed by Tenant hereunder. The obligations of
each party hereunder shall be separate and independent covenants and
agreements, and the Rent and all other sums payable by Tenant hereunder shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Agreement. In
any instance where, after the occurrence of an Event of
<PAGE> 36
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Default, Landlord retains funds which, but for the occurrence of such Event of
Default, would be payable to Tenant, Landlord shall refund such funds to Tenant
to the extent the amount thereof exceeds the amount necessary to compensate
Landlord for any cost, loss or damage incurred in connection with such Event of
Default.
3.5 Security for Tenant's Performance. Tenant acknowledges that the
Retained Funds (as defined in the Purchase Agreement) constitute security for
the faithful observance and performance by Tenant of all the terms, covenants
and conditions of this Agreement by Tenant to be observed and performed. If
any Event of Default shall occur and be continuing, Landlord may, at its option
and without prejudice to any other remedy which Landlord may have on account
thereof, appropriate and apply so much of the Retained Funds as may be
necessary to compensate Landlord toward the payment of the Rent or other sums
or loss or damage sustained by Landlord due to such breach by Tenant. It is
understood and agreed that the amount of the Retained Funds is not to be
considered as prepaid rent, nor shall damages be limited to the amount of the
amount of the Retained Funds. Provided this Agreement shall not be terminated
as a result of an Event of Default, the Retained Funds shall be paid as
provided in the Purchase Agreement, Section 3.2(b)(ii) of the Purchase
Agreement being incorporated herein by this reference solely for the purpose of
setting forth such payment provisions, such Purchase Agreement not having been
merged with the Agreement.
ARTICLE 4
USE OF THE LEASED PROPERTY
4.1 Permitted Use.
4.1.1 Permitted Use.
(a) Tenant shall, at all times during the Term and at any
other time that Tenant shall be in possession of the Leased Property,
continuously use and operate, and cause the Manager to use and operate,
the Leased Property as a Wyndham Garden hotel and any uses incidental
thereto. Tenant shall not use (and shall direct the Manager not to use)
the Leased Property or any portion thereof for any other use without
<PAGE> 37
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the prior written consent of Landlord. No use shall be made or
permitted to be made of the Leased Property and no acts shall be done
thereon which will cause the cancellation of any insurance policy
covering the Leased Property or any part thereof (unless another
adequate policy is available), nor shall Tenant sell or otherwise
provide or permit to be kept, used or sold in or about the Leased
Property any article which may be prohibited by law or by the standard
form of fire insurance policies, or any other insurance policies
required to be carried hereunder, or fire underwriter's regulations.
Tenant shall, at its sole cost (except as expressly provided in Section
5.1.2(b)), comply (or direct the Manager to comply) with all Insurance
Requirements. Tenant shall not take or omit to take (and Tenant shall
direct the Manager not to take or omit to take) any action, the taking
or omission of which materially impairs the value or the usefulness of
the Leased Property or any part thereof for its Permitted Use.
(b) In the event that, in the reasonable determination of
Tenant, it shall no longer be economically practical to operate the
Leased Property as a Wyndham Garden hotel, Tenant shall give Landlord
Notice thereof, which Notice shall set forth in reasonable detail the
reasons therefor. Thereafter, Landlord and Tenant shall negotiate in
good faith to agree on an alternative use for the Leased Property,
appropriate adjustments to the Additional Rent and other related
matters; provided, however, in no such event shall the Minimum Rent be
reduced or abated.
4.1.2 Necessary Approvals. Tenant shall proceed with all due
diligence and exercise best efforts to obtain and maintain, and shall direct
the Manager to obtain and maintain, all approvals necessary to use and operate,
for its Permitted Use, the Leased Property and the Hotel located thereon under
applicable law.
4.1.3 Lawful Use, Etc. Tenant shall not, and shall direct the
Manager not to, use or suffer or permit the use of the Leased Property or
Tenant's Personal Property, if any, for any unlawful purpose. Tenant shall
not, and shall direct the Manager not to, commit or suffer to be committed any
waste on the Leased Property, or in the Hotel, nor shall Tenant cause or permit
any
<PAGE> 38
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unlawful nuisance thereon or therein. Tenant shall not, and shall direct the
Manager not to, suffer nor permit the Leased Property, or any portion thereof,
to be used in such a manner as (i) might reasonably impair Landlord's title
thereto or to any portion thereof, or (ii) may reasonably allow a claim or
claims for adverse usage or adverse possession by the public, as such, or of
implied dedication of the Leased Property or any portion thereof.
4.2 Compliance with Legal/Insurance Requirements, Etc. Subject to
the provisions of Article 8 and Section 5.1.3(b), Tenant, at its sole expense,
shall (or shall direct the Manager to) (i) comply with all material Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair, alteration and restoration of the Leased Property and with
the terms and conditions of any ground lease affecting the Leased Property and
(ii) procure, maintain and comply with all appropriate licenses, and other
authorizations and agreements required for any use of the Leased Property and
Tenant's Personal Property, if any, then being made, and for the proper
erection, installation, operation and maintenance of the Leased Property or any
part thereof.
4.3 Environmental Matters.
4.3.1 Restriction on Use, Etc. During the Term and any other
time that Tenant shall be in possession of the Leased Property, Tenant shall
not (and shall direct the Manager not to) store, spill upon, dispose of or
transfer to or from the Leased Property any Hazardous Substance, except in
compliance with all Applicable Laws. During the Term and any other time that
Tenant shall be in possession of the Leased Property, Tenant shall maintain
(and shall direct the Manager to maintain) the Leased Property at all times
free of any Hazardous Substance (except in compliance with all Applicable
Laws). Tenant shall promptly: (a) upon receipt of notice or knowledge and
shall direct the Manager upon receipt of notice or knowledge promptly to,
notify Landlord in writing of any material change in the nature or extent of
Hazardous Substances at the Leased Property, (b) transmit to Landlord a copy of
any Community Right to Know report which is required to be filed by Tenant or
the Manager with respect to the Leased Property pursuant to SARA Title III or
any other Applicable Law, (c) transmit to Landlord copies of any
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citations, orders, notices or other governmental communications received by
Tenant or the Manager or their respective agents or representatives with
respect thereto (collectively, "Environmental Notice"), which Environmental
Notice requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or presents a material risk of any
material violation of any Applicable Law and/or presents a material risk of any
material cost, expense, loss or damage (an "Environmental Obligation"), (d)
observe and comply (and direct the Manager to observe and comply) with all
Applicable Laws relating to the use, maintenance and disposal of Hazardous
Substances and all orders or directives from any official, court or agency of
competent jurisdiction relating to the use or maintenance or requiring the
removal, treatment, containment or other disposition thereof, and (e) pay or
otherwise dispose of any fine, charge or Imposition related thereto, unless
Tenant or the Manager shall contest the same in good faith and by appropriate
proceedings and the right to use and the value of the Leased Property is not
materially and adversely affected thereby.
If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those maintained in accordance with Applicable Laws) are
discovered on the Leased Property, subject to Tenant's and the Manager's right
to contest the same in accordance with Article 8, Tenant shall take (and shall
direct the Manager to take) all actions and incur any and all expenses, as are
required by any Government Agency and by Applicable Law, (i) to clean up and
remove from and about the Leased Property all Hazardous Substances thereon,
(ii) to contain and prevent any further release or threat of release of
Hazardous Substances on or about the Leased Property and (iii) to use good
faith efforts to eliminate any further release or threat of release of
Hazardous Substances on or about the Leased Property.
4.3.2 Indemnification of Landlord. Tenant shall protect,
indemnify and hold harmless Landlord and each Hotel Mortgagee, their trustees,
officers, agents, employees and beneficiaries, and any of their respective
successors or assigns with respect to this Agreement (collectively, the
"Indemnitees" and, individually, an "Indemnitee") for, from and against any and
all debts, liens, claims, causes of action, administrative orders or notices,
costs, fines, penalties or expenses (including, without limitation, reasonable
attorney's fees and expenses)
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imposed upon, incurred by or asserted against any Indemnitee resulting from,
either directly or indirectly, the presence during the Term (or any other time
Tenant shall be in possession of the Leased Property) in, upon or under the
soil or ground water of the Leased Property or any properties surrounding the
Leased Property of any Hazardous Substances in violation of any Applicable Law
or otherwise, provided that any of the foregoing arises by reason of any
failure by Tenant, the Manager or any Person claiming by, through or under
Tenant or the Manager to perform or comply with any of the terms of this
Section 4.3, except to the extent the same arise from the acts or omissions of
Landlord or any other Indemnitee or during any period that Landlord or a Person
designated by Landlord (other than Tenant) is in possession of the Leased
Property. Tenant's duty herein includes, but is not limited to, costs
associated with personal injury or property damage claims as a result of the
presence prior to the expiration or sooner termination of the Term and the
surrender of the Leased Property to Landlord in accordance with the terms of
this Agreement of Hazardous Substances in, upon or under the soil or ground
water of the Leased Property in violation of any Applicable Law. Upon Notice
from Landlord and any other of the Indemnitees, Tenant shall undertake the
defense, at Tenant's sole cost and expense, of any indemnification duties set
forth herein, in which event, Tenant shall not be liable for payment of any
duplicative attorneys' fees incurred by any Indemnitee.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge, any
cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) reasonably incurred by Landlord and arising from a failure of
Tenant to observe and perform the requirements of this Section 4.3, which
amounts shall bear interest from the date ten (10) days after written demand
therefor is given to Tenant until paid by Tenant to Landlord at the Overdue
Rate.
4.3.3 Survival. The provisions of this Section 4.3 shall
survive the expiration or sooner termination of this Agreement.
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ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 Maintenance and Repair.
5.1.1 Tenant's General Obligations. Tenant shall, at its sole
cost and expense (except as expressly provided in Section 5.1.3(b)), or shall
direct the Manager to, keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto (and Tenant's Personal Property) in
good order and repair, reasonable wear and tear excepted (whether or not the
need for such repairs occurs as a result of Tenant's or the Manager's use, any
prior use, the elements or the age of the Leased Property or Tenant's Personal
Property or any portion thereof), and shall promptly make (or cause the Manager
to make) all necessary and appropriate repairs and replacements thereto of
every kind and nature, whether interior or exterior, structural or
nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the commencement of the Term (concealed
or otherwise). All repairs shall be made in a good, workmanlike manner,
consistent with the Manager's and industry standards for like hotels in like
locales, in accordance with all applicable federal, state and local statutes,
ordinances, by-laws, codes, rules and regulations relating to any such work.
Tenant shall not take or omit to take (and shall direct the Manager not to take
or omit to take) any action, the taking or omission of which would materially
and adversely impair the value or the usefulness of the Leased Property or any
part thereof for its Permitted Use. Tenant's obligations under this Section
5.1.1(a) shall be limited in the event of any casualty or Condemnation as set
forth in Sections 10.2 and 11.2 and also as set forth in Section 5.1.3(b) and
Tenant's obligations with respect to Hazardous Substances are as set forth in
Section 4.3.
5.1.2 FF&E Reserve.
(a) Upon execution of this Agreement, the FF&E Funded Amount
(as defined in the Purchase Agreement) has been deposited in a reserve
account (the "FF&E Reserve") in a bank designated by Tenant and approved
by Landlord. The purpose of the FF&E Reserve is to cover the cost of:
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(i) Replacements and renewals to the Hotel's furnishings, fixtures
and equipment;
(ii) Certain routine repairs and maintenance to the Hotel building
which are normally capitalized under GAAP such as exterior and
interior repainting, resurfacing building walls, floors, roofs and
parking areas, and replacing folding walls and the like; and
(iii) Major repairs, alterations, improvements, renewals or
replacements to the Hotel's buildings' structure, roof, or
exterior facade, or to its mechanical, electrical, heating,
ventilating, air conditioning, plumbing or vertical transportation
systems.
Tenant agrees that it will, from time to time, execute such
reasonable documentation as may be requested by Landlord and any Hotel
Mortgagee to assist Landlord and such Hotel Mortgagee in establishing or
perfecting its security interest in Landlord's residual interest in the
funds which are in the FF&E Reserve, it being acknowledged and agreed
that the funds in the FF&E Reserve are the property of Tenant; provided,
however, that no such documentation shall contain any amendment or
modification of any of the provisions of this Agreement. It is
understood and agreed that, during the Term, the FF&E Reserve may not be
applied against debts secured by a Hotel Mortgage nor shall any Hotel
Mortgagee have the right to approve the release of such funds pursuant to
the terms of this Agreement unless and until Landlord shall default
in its obligations to such Hotel Mortgagee.
(b) Throughout the Term, Tenant shall transfer (as of the end
of each month of the Term) into the FF&E Reserve an amount equal to five
percent (5%) of Total Hotel Sales for such month. Together with the
documentation provided to Landlord pursuant to Section 3.1.2(c), Tenant
shall deliver to Landlord an Officer's Certificate setting forth the
total amount of deposits made to and expenditures from the FF&E Reserve
for the preceding Fiscal Year, together with a reconciliation of such
expenditures with the applicable FF&E Estimate.
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(c) Each year, on or before December 1 of the preceding year,
Tenant shall prepare an estimate (the "FF&E Estimate") of FF&E Reserve
expenditures necessary during the ensuing Fiscal Year, and shall submit
such FF&E Estimate to Landlord for its review and approval, which
approval shall not be unreasonably withheld or delayed. In the event
Landlord shall fail to respond within thirty (30) days after receipt of
the FF&E Estimate, such FF&E Estimate shall be deemed approved by
Landlord. All expenditures from the FF&E Reserve shall be (as to both
the amount of each such expenditure and the timing thereof) both
reasonable and necessary, given the objective that the Hotel will be
maintained and operated to a standard comparable to competitive hotels.
(d) Tenant shall, consistent with the FF&E Estimate approved
by Landlord, from time to time make expenditures from the FF&E Reserve as
it deems necessary provided that Tenant shall not materially deviate from
the FF&E Estimate approved by Landlord without the prior approval of
Landlord, except in the case of emergency where immediate action is
necessary to prevent imminent danger to person or property.
(e) Upon the expiration or sooner termination of this
Agreement, funds in the FF&E Reserve and all property purchased with
funds from the FF&E Reserve during the Term shall be paid, granted and
assigned to Landlord as Additional Charges.
(f) It is understood and agreed that the FF&E Reserve pursuant
to this Agreement and the Other Leases shall be maintained on a
consolidated basis.
5.1.3 Landlord's Obligations.
(a) Except as otherwise expressly provided in this Agreement,
Landlord shall not, under any circumstances, be required to build or
rebuild any improvement on the Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or,
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except as provided in Section 5.1.3(b), to make any expenditure
whatsoever with respect thereto, or to maintain the Leased Property in
any way. Except as otherwise expressly provided in this Agreement,
Tenant hereby waives, to the maximum extent permitted by law, the right
to make repairs at the expense of Landlord pursuant to any law in effect
on the date hereof or hereafter enacted. Landlord shall have the right
to give, record and post, as appropriate, notices of nonresponsibility
under any mechanic's lien laws now or hereafter existing.
(b) If, at any time, funds in the FF&E Reserve shall be
insufficient for necessary and permitted expenditures thereof or,
pursuant to the terms of this Agreement, Tenant is required to make any
expenditures in connection with any repair, maintenance or renovation
with respect to the Leased Property and the amount of such disbursements
or expenditures exceeds the amount on deposit in the FF&E Reserve or such
repair, maintenance or renovation is not a permitted expenditure from the
FF&E Reserve as described in Section 5.1.2(a)(i), (ii) and (iii), Tenant
may, at its election, give Landlord Notice thereof, which Notice shall
set forth, in reasonable detail, the nature of the required repair,
renovation or replacement, the estimated cost thereof and such other
information with respect thereto as Landlord may reasonably require.
Provided that no Event of Default shall have occurred and be continuing
and Tenant shall otherwise comply with the applicable provisions of
Article 6, Landlord shall, within ten (10) Business Days after such
Notice, subject to and in accordance with the applicable provisions of
Article 6, disburse such required funds to Tenant (or, if Tenant shall so
elect, directly to the Manager or any other Person performing the
required work) and, upon such disbursement, the Minimum Rent shall be
adjusted as provided in Section 3.1.1(b); provided, however, that, in the
event that Landlord shall elect not to disburse any funds pursuant to
this Section 5.1.3(b), Tenant's sole recourse shall be to elect not to
make the applicable repair, maintenance or renovation.
5.1.4 Nonresponsibility of Landlord, Etc. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting
with Tenant with respect to the Leased
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Property, or any part thereof, are hereby charged with notice that liens on the
Leased Property or on Landlord's interest therein are expressly prohibited and
that they must look solely to Tenant to secure payment for any work done or
material furnished by Tenant, the Manager or for any other purpose during the
term of this Agreement.
Nothing contained in this Agreement shall be deemed or construed in any
way as constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or
materialmen for the performance of any labor or the furnishing of any materials
for any alteration, addition, improvement or repair to the Leased Property or
any part thereof or as giving Tenant any right, power or authority to contract
for or permit the rendering of any services or the furnishing of any materials
that would give rise to the filing of any lien against the Leased Property or
any part thereof nor to subject Landlord's estate in the Leased Property or any
part thereof to liability under any Mechanic's Lien Law of the State in any
way, it being expressly understood Landlord's estate shall not be subject to
any such liability.
5.2 Tenant's Personal Property. Tenant shall provide and maintain
throughout the Term all such Tenant's Personal Property as shall be necessary
in order to operate in compliance with applicable Legal Requirements and
Insurance Requirements and otherwise in accordance with customary practice in
the industry for the Permitted Use and all of such Personal Property shall,
upon the expiration or earlier termination of this Agreement, become the
property of Landlord. If, from and after the Commencement Date, Tenant
acquires an interest in any item of tangible personal property (other than
motor vehicles) on, or in connection with, the Leased Property which belongs to
anyone other than Tenant, Tenant shall require the agreements permitting such
use to provide that Landlord or its designee may assume Tenant's rights and
obligations under such agreement upon the termination of this Agreement and the
assumption of management or operation of the Hotel by Landlord or its designee.
5.3 Yield Up. Upon the expiration or sooner termination of this
Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in
substantially the same condition in which the Leased Property was in on the
Commencement Date, except as
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repaired, rebuilt, restored, altered or added to as permitted or required by
the provisions of this Agreement, reasonable wear and tear excepted (and
casualty damage and Condemnation, in the event that this Agreement is
terminated following a casualty or total Condemnation in accordance with
Article 10 or Article 11 excepted).
In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its good
faith efforts to transfer to and cooperate with Landlord or Landlord's nominee
in connection with the processing of all applications for licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental Entities which may be
necessary for the use and operation of the Hotel as then operated. If
requested by Landlord, Tenant will direct the Manager to continue to manage the
Hotel after the expiration of the Term and for up to one hundred twenty (120)
days, on such reasonable terms (which shall include a market rate management
fee and an agreement to reimburse the Manager for its reasonable out-of-pocket
costs and expenses, and reasonable administrative costs), as Landlord shall
reasonably request.
5.4 Management Agreement. Tenant shall not, without Landlord's prior
written consent, amend or modify the provisions of the Management Agreement
which provide (i) that, from and after the occurrence of any Default or Event
of Default, all amounts due from Tenant to the Manager shall be subordinate to
all amounts due from Tenant to Landlord, (ii) for operation of the Leased
Property under the "Wyndham" and "Wyndham Garden" names, (iii) that Wyndham,
the Manager and their Affiliated Persons are prohibited from operating,
managing or franchising another Wyndham Garden hotel within the designated area
on Exhibit D and (iv) for termination thereof, at Landlord's option, upon the
termination of this Agreement. Tenant shall not take any action, grant any
consent or permit any action under the Management Agreement which might have a
material adverse effect on Landlord, without the prior written consent of
Landlord; provided, however, that Landlord's consent shall not be required in
connection with any assignment of the Manager's rights under the Management
Agreement to (x) any Affiliated Person of Wyndham having the full power, right
and authority to provide all services and organizational expertise as
contemplated and
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required by the Management Agreement or (y) any Person (including, but not
limited to, any Lending Institution) who acquires all or substantially all of
the management contracts of Wyndham (including, without limitation, all of the
Management Agreements with respect to the Collective Leased Properties that
have not been theretofore cancelled or terminated pursuant to the terms
thereof), provided that, in either such case, the Leased Property will retain
the right to use the "Wyndham" and "Wyndham Garden" names. In the event of an
assignment pursuant to clause (y) preceding, provided that the successor
Manager (i) assumes, in writing all obligations of the Manager under the
Management Agreement, and (ii) has a Tangible Net Worth, as of the date of
assignment, equal to the greater of the Tangible Net Worth of Wyndham as of the
date of this Agreement, and the Tangible Net Worth of Wyndham as of the date of
such assignment, Wyndham shall be released from all liabilities arising under
the Management Agreement from and after the effective date of such assignment.
Tenant shall not agree to any change in the Manager (except as provided in the
preceding sentences), to any change in the Management Agreement (except as
provided in the preceding sentences), terminate the Management Agreement or
permit the Manager to assign the Management Agreement (except as provided in
the preceding sentences) without the prior written approval of Landlord in each
instance; provided, however, that the Manager may grant a security interest in
its right to receive payments under the Management Agreement without Landlord's
prior written approval.
ARTICLE 6
IMPROVEMENTS, ETC.
6.1 Improvements to the Leased Property. Tenant shall not make,
construct or install (and shall direct the Manager not to construct or install)
any Capital Additions (other than Capital Additions of the type described in
Section 5.1.2(a)(ii) and approved pursuant to Section 5.1.2(c)) without, in
each instance, obtaining Landlord's prior written consent, which consent shall
not be unreasonably withheld, delayed or conditioned provided that (a)
construction or installation of the same would not adversely affect or violate
any Legal Requirement or Insurance Requirement applicable to the Leased
Property and (b) Landlord
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shall have received an Officer's Certificate certifying as to the satisfaction
of the conditions set out in clause (a) above; provided, however, that no such
consent shall be required in the event immediate action is required to prevent
imminent danger to person or property. Prior to commencing construction of any
Capital Addition, Tenant shall submit, or shall direct the Manager to submit,
to Landlord, in writing, a proposal setting forth, in reasonable detail, any
such proposed improvement and shall provide to Landlord such plans and
specifications, and such permits, licenses, contracts and such other
information concerning the same as Landlord may reasonably request. Landlord
shall have thirty (30) days to review all materials submitted to Landlord in
connection with any such proposal. Failure of Landlord to respond to Tenant's
or the Manager's proposal within thirty (30) days after receipt of all
information and materials requested by Landlord in connection with the proposed
improvement shall be deemed to constitute approval of the same. Without
limiting the generality of the foregoing, such proposal shall indicate the
approximate projected cost of constructing such proposed improvement and the
use or uses to which it will be put. No Capital Addition shall be made which
would tie in or connect any Leased Improvement with any other improvements on
property adjacent to the Leased Property (and not part of the Land) including,
without limitation, tie-ins of buildings or other structures or utilities.
Tenant shall not finance, and shall direct the Manager not to finance, the cost
of any construction of such improvement by the granting of a lien on or
security interest in the Leased Property or such improvement, or Tenant's
interest therein, without the prior written consent of Landlord, which consent
may be withheld by Landlord in Landlord's sole discretion. Any such
improvements shall, upon the expiration or sooner termination of this
Agreement, remain or pass to and become the property of Landlord, free and
clear of all encumbrances other than Permitted Encumbrances.
6.2 Salvage. All materials which are scrapped or removed in
connection with the making of either Capital Additions or non-Capital Additions
or repairs required by Article 5 shall be or become the property of the party
that paid for such work.
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ARTICLE 7
LIENS
7.1 Liens. Subject to Article 8, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Leased Property or Tenant's leasehold interest therein or any
attachment, levy, claim or encumbrance in respect of the Rent, other than (a)
Permitted Encumbrances, (b) restrictions, liens and other encumbrances which
are consented to in writing by Landlord, (c) liens for those taxes of Landlord
which Tenant is not required to pay hereunder, (d) subleases permitted by
Article 17, (e) liens for Impositions or for sums resulting from noncompliance
with Legal Requirements so long as (i) the same are not yet due and payable, or
(ii) are being contested in accordance with Article 8, (f) liens of mechanics,
laborers, materialmen, suppliers or vendors incurred in the ordinary course of
business that are not yet due and payable or are for sums that are being
contested in accordance with Article 8, (g) any Hotel Mortgages or other liens
which are the responsibility of Landlord pursuant to the provisions of Article
21, (h) Landlord Liens and any other voluntary liens created by Landlord and
(i) Leasehold Mortgages.
7.2 Landlord's Lien. In addition to any statutory landlord's lien
and in order to secure payment of the Rent and all other sums payable hereunder
by Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants
unto Landlord a security interest in and an express contractual lien upon
Tenant's Personal Property (except motor vehicles and liquor licenses and
permits), and Tenant's interest in all ledger sheets, files, records, documents
and instruments (including, without limitation, computer programs, tapes and
related electronic data processing) relating to the operation of the Hotels
(the "Records") and all proceeds therefrom, subject to any Permitted
Encumbrances; and such Tenant's Personal Property shall not be removed from the
Leased Property at any time when a Default or an Event of Default has occurred
and is continuing.
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Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in Tenant's Personal Property and the proceeds thereof in accordance
with the provisions of the applicable laws of the State. Tenant hereby grants
Landlord an irrevocable limited power of attorney, coupled with an interest, to
execute all such financing statements in Tenant's name, place and stead. The
security interest herein granted is in addition to any statutory lien for the
Rent.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation,
lien, attachment, levy, encumbrance, charge or claim (collectively, "Claims")
as to the Leased Property, by appropriate legal proceedings, conducted in good
faith and with due diligence, provided that (a) the foregoing shall in no way
be construed as relieving, modifying or extending Tenant's obligation to pay
any Claims as finally determined, (b) such contest shall not cause Landlord or
Tenant to be in default under any mortgage or deed of trust encumbering the
Leased Property (Landlord agreeing that any such mortgage or deed of trust
shall permit Tenant to exercise the rights granted pursuant to this Article 8)
or any interest therein or result in or reasonably be expected to result in a
lien attaching to the Leased Property, (c) no part of the Leased Property nor
any Rent therefrom shall be in any immediate danger of sale, forfeiture,
attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord
from and against any cost, claim, damage, penalty or reasonable expense,
including reasonable attorneys' fees, incurred by Landlord in connection
therewith or as a result thereof. Landlord agrees to join in any such
proceedings if required legally to prosecute such contest, provided that
Landlord shall not thereby be subjected to any liability therefor (including,
without limitation, for the payment of any costs or expenses in connection
therewith) unless Tenant agrees by agreement in form and substance reasonably
satisfactory to Landlord, to assume and indemnify Landlord with respect to the
same. Tenant shall be entitled to any refund of any Claims and
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such charges and penalties or interest thereon which have been paid by Tenant
or paid by Landlord to the extent that Landlord has been fully reimbursed by
Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when
finally determined, (y) to provide reasonable security therefor, or (z) to
prosecute or cause to be prosecuted any such contest diligently and in good
faith, Landlord may, upon reasonable notice to Tenant (which notice shall not
be required if Landlord shall reasonably determine that the same is not
practicable), pay such charges, together with interest and penalties due with
respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as
Additional Charges.
ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 General Insurance Requirements. Tenant shall, at all times
during the Term and at any other time Tenant shall be in possession of the
Leased Property, keep the Leased Property and all property located therein or
thereon, insured against the risks and in the amounts as follows and shall
maintain the following insurance:
(a) "All-risk" property insurance, including insurance against
loss or damage by fire, vandalism and malicious mischief, earthquake,
explosion of steam boilers, pressure vessels or other similar apparatus,
now or hereafter installed in the Hotel located at the Leased Property,
with the usual extended coverage endorsements, in an amount equal to one
hundred percent (100%) of the then full Replacement Cost thereof (as
defined in Section 9.2);
(b) Business interruption insurance covering risk of loss
during the lesser of the first twelve (12) months of reconstruction or
the actual reconstruction period necessitated by the occurrence of any
of the hazards described in subparagraph (a) above, in such amounts as
may be customary for comparable properties in the area and in an amount
sufficient to prevent Landlord or Tenant from becoming a co-insurer;
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(c) Comprehensive general liability insurance, including
bodily injury and property damage in a form reasonably satisfactory to
Landlord (and including, without limitation, broad form contractual
liability, independent contractor's hazard and completed operations
coverage) in an amount not less than One Million Dollars ($1,000,000)
per occurrence, Three Million Dollars ($3,000,000) in the aggregate and
umbrella coverage of all such claims in an amount not less than Fifty
Million Dollars ($50,000,000);
(d) Flood (if the Leased Property is located in whole or in
part within an area identified as an area having special flood hazards
and in which flood insurance has been made available under the National
Flood Insurance Act of 1968, as amended, or the Flood Disaster
Protection Act of 1973, as amended (or any successor acts thereto)) and
such other hazards and in such amounts as may be customary for
comparable properties in the area;
(e) Worker's compensation insurance coverage if required by
applicable law for all persons employed by Tenant on the Leased Property
with statutory limits and otherwise with limits of and provisions in
accordance with the requirements of applicable local, State and federal
law, and employer's liability insurance as is customarily carried by
similar employers; and
(f) Such additional insurance as may be reasonably required,
from time to time, by Landlord or any Hotel Mortgagee and which is
customarily carried by comparable lodging properties in the area.
9.2 Replacement Cost. "Replacement Cost" as used herein, shall mean
the actual replacement cost of the property requiring replacement from time to
time, including an increased cost of construction endorsement, less exclusions
provided in the standard form of fire insurance policy. In the event either
party believes that the then full Replacement Cost has increased or decreased
at any time during the Term, such party, at its own cost, shall have the right
to have such full Replacement Cost redetermined by an independent accredited
appraiser approved by the other, which approval shall not be unreasonably
withheld or delayed. The party desiring to have the full Replacement Cost so
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redetermined shall forthwith, on receipt of such determination by such
appraiser, give Notice thereof to the other. The determination of such
appraiser shall be final and binding on the parties hereto until any subsequent
determination under this Section 9.2, and Tenant shall forthwith conform the
amount of the insurance carried to the amount so determined by the appraiser.
9.3 Waiver of Subrogation. Landlord and Tenant agree that (insofar
as and to the extent that such agreement may be effective without invalidating
or making it impossible to secure insurance coverage from responsible insurance
companies doing business in the State) with respect to any property loss which
is covered by insurance then being carried by Landlord or Tenant, respectively,
the party carrying such insurance and suffering said loss releases the other of
and from any and all claims with respect to such loss; and they further agree
that their respective insurance companies shall have no right of subrogation
against the other on account thereof, even though extra premium may result
therefrom. In the event that any extra premium is payable by Tenant as a
result of this provision, Landlord shall not be liable for reimbursement to
Tenant for such extra premium.
9.4 Form Satisfactory, Etc. All insurance policies and endorsements
required pursuant to this Article 9 shall be fully paid for, nonassessable and
be issued by insurance carriers authorized to do business in the State, having
a general policy holder's rating of no less than B++ in Best's latest rating
guide. All such policies described in Sections 9.1(a) through (d) shall
include no deductible in excess of Two Hundred Fifty Thousand Dollars
($250,000) and, with the exception of the insurance described in Sections
9.1(e), shall name Landlord and any Hotel Mortgagee as additional insureds, as
their interests may appear. All loss adjustments shall be payable as provided
in Article 10. Tenant shall cause all insurance premiums to be paid and shall
deliver policies or certificates thereof to Landlord prior to their effective
date (and, with respect to any renewal policy, prior to the expiration of the
existing policy). All such policies shall provide Landlord (and any Hotel
Mortgagee if required by the same) thirty (30) days prior written notice of any
material change or cancellation of such policy. In the event Tenant shall fail
to effect such insurance as herein required, to pay the premiums therefor or to
deliver such policies or certificates to Landlord or any Hotel Mortgagee at the
times
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required, Landlord shall have the right, but not the obligation, subject to the
provisions of Section 12.5, to acquire such insurance and pay the premiums
therefor, which amounts shall be payable to Landlord, upon demand, as
Additional Charges, together with interest accrued thereon at the Overdue Rate
from the date such payment is made until (but excluding) the date repaid.
9.5 Blanket Policy. Notwithstanding anything to the contrary
contained in this Article 9, Tenant's obligation to maintain the insurance
herein required may be brought within the coverage of a so-called blanket
policy or policies of insurance carried and maintained by Tenant, provided,
that (a) the coverage thereby afforded will not be reduced or diminished from
that which would exist under a separate policy meeting all other requirements
of this Agreement, and (b) the requirements of this Article 9 are otherwise
satisfied. Without limiting the foregoing, the amounts of insurance that are
required to be maintained pursuant to Section 9.1 shall be on a Hotel by Hotel
basis, and shall not be subject to an aggregate limit, except for flood,
earthquake, umbrella and such other coverages as may be approved by Landlord.
9.6 No Separate Insurance. Tenant shall not take out separate
insurance, concurrent in form or contributing in the event of loss with that
required by this Article 9, or increase the amount of any existing insurance by
securing an additional policy or additional policies, unless all parties having
an insurable interest in the subject matter of such insurance, including
Landlord and all Hotel Mortgagees, are included therein as additional insureds
and the loss is payable under such insurance in the same manner as losses are
payable under this Agreement. In the event Tenant shall take out any such
separate insurance or increase any of the amounts of the then existing
insurance, Tenant shall give Landlord prompt Notice thereof.
9.7 Indemnification of Landlord. Notwithstanding the existence of
any insurance provided for herein and without regard to the policy limits of
any such insurance, Tenant shall protect, indemnify and hold harmless Landlord
for, from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against
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Landlord by reason of: (a) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Leased Property or adjoining
sidewalks or rights of way, (b) any past, present or future use, misuse,
non-use, condition, management, maintenance or repair by Tenant or anyone
claiming under Tenant of the Leased Property or Tenant's Personal Property or
any litigation, proceeding or claim by governmental entities or other third
parties to which Landlord is made a party or participant relating to the Leased
Property or Tenant's Personal Property or such use, misuse, non-use, condition,
management, maintenance, or repair thereof including, failure to perform
obligations (other than Condemnation proceedings) to which Landlord is made a
party, (c) any Impositions that are the obligations of Tenant to pay pursuant
to the applicable provisions of this Agreement, and (d) any failure on the part
of Tenant or anyone claiming under Tenant to perform or comply with any of the
terms of this Agreement. Tenant, at its expense, shall contest, resist and
defend any such claim, action or proceeding asserted or instituted against
Landlord (and shall not be responsible for any duplicative attorneys' fees
incurred by Landlord) or may compromise or otherwise dispose of the same, with
Landlord's prior written consent (which consent may not be unreasonably
withheld or delayed). In the event Landlord shall unreasonably withhold or
delay its consent, Tenant shall not be liable pursuant to this Section 9.7 for
any incremental increase in costs or expenses resulting therefrom. The
obligations of Tenant under this Section 9.7 are in addition to the obligations
set forth in Section 4.3 and shall survive the termination of this Agreement.
ARTICLE 10
CASUALTY
10.1 Insurance Proceeds. Except as provided in the last clause of
this sentence, all proceeds payable by reason of any loss or damage to the
Leased Property, or any portion thereof, and insured under any policy of
insurance required by Article 9 (other than the proceeds of any business
interruption insurance) shall be paid directly to Landlord (subject to the
provisions of Section 10.2) and all loss adjustments with respect to losses
payable to Landlord shall require the prior written consent of
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Landlord; provided, however, that, so long as no Event of Default shall have
occurred and be continuing, all such proceeds less than or equal to Two Hundred
Fifty Thousand Dollars ($250,000) shall be paid directly to Tenant and such
losses may be adjusted without Landlord's consent. If Tenant is required to
reconstruct or repair the Leased Property as provided herein, such proceeds
shall be paid out by Landlord from time to time for the reasonable costs of
reconstruction or repair of the Leased Property necessitated by such damage or
destruction, subject to and in accordance with the provisions of Section
10.2.4. Provided no Default or Event of Default has occurred and is
continuing, any excess proceeds of insurance remaining after the completion of
the restoration shall be paid to Tenant. In the event that the provisions of
Section 10.2.1 are applicable, the insurance proceeds shall be retained by the
party entitled thereto pursuant to Section 10.2.1. All salvage resulting from
any risk covered by insurance shall belong to Landlord, provided any rights to
the same have been waived by the insurer.
10.2 Damage or Destruction.
10.2.1 Damage or Destruction of Leased Property. If, during
the Term, the Leased Property shall be totally or partially destroyed and the
Hotel located thereon is thereby rendered Unsuitable for Its Permitted Use,
either Landlord or Tenant may, by the giving of Notice thereof to the other,
terminate this Agreement, whereupon, this Agreement shall terminate, Landlord
shall be entitled to retain the insurance proceeds payable on account of such
damage and Tenant shall thereafter have no obligation to pay Rent for periods
arising after the effective date of termination.
10.2.2 Partial Damage or Destruction. If, during the Term,
the Leased Property shall be totally or partially destroyed but the Hotel is
not rendered Unsuitable for Its Permitted Use, Tenant shall, subject to Section
10.2.3, promptly restore the Hotel as provided in Section 10.2.4.
10.2.3 Insufficient Insurance Proceeds. If this Agreement is
not otherwise terminated pursuant to this Article 10 and the cost of the repair
or restoration of the Leased Property exceeds the amount of insurance proceeds
received by Landlord and Tenant pursuant to Article 9(a), (c), (d) or, if
applicable, (e),
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Tenant shall give Landlord Notice thereof which notice shall set forth in
reasonable detail the nature of such deficiency and whether Tenant shall pay
and assume the amount of such deficiency (Tenant having no obligation to do so,
except that, if Tenant shall elect to make such funds available, the same shall
become an irrevocable obligation of Tenant pursuant to this Agreement). In the
event Tenant shall elect not to pay and assume the amount of such deficiency,
Landlord shall have the right (but not the obligation), exercisable at
Landlord's sole election by Notice to Tenant, given within sixty (60) days
after Tenant's notice of the deficiency, to elect to make available for
application to the cost of repair or restoration the amount of such deficiency;
provided, however, in such event, upon any disbursement by Landlord thereof,
the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In the
event that neither Landlord nor Tenant shall elect to make such deficiency
available for restoration, either Landlord or Tenant may terminate this
Agreement by Notice to the other, whereupon, this Agreement shall terminate as
provided in Section 10.2.1. It is expressly understood and agreed, however,
that, notwithstanding anything in this Agreement to the contrary, Tenant shall
be strictly liable and solely responsible for the amount of any deductible and
shall, upon any insurable loss, pay over the amount of such deductible to
Landlord at the time and in the manner herein provided for payment of the
applicable proceeds to Landlord.
10.2.4 Disbursement of Proceeds. In the event Tenant is
required to restore the Leased Property pursuant to Section 10.2, Tenant shall
(or shall direct the Manager to) commence promptly and continue diligently to
perform the repair and restoration of the Leased Property (hereinafter called
the "Work"), so as to restore the Leased Property in compliance with all Legal
Requirements and so that the Leased Property shall be, to the extent
practicable, substantially equivalent in value and general utility to its
general utility and value immediately prior to such damage or destruction.
Subject to the terms hereof, Landlord shall advance the insurance proceeds and
any additional amounts payable by Landlord pursuant to Section 10.2.3 to Tenant
regularly during the repair and restoration period so as to permit payment for
the cost of any such restoration and repair. Any such advances shall be made
not more than monthly within ten (10) Business Days after Tenant submits to
Landlord a written requisition and substantiation therefor on AIA Forms G702
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and G703 (or on such other form or forms as may be reasonably acceptable to
Landlord). Landlord may, at its option, condition advancement of said
insurance proceeds and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld,
delayed or conditioned), (iii) general contractors' estimates, (iv) architect's
certificates, (v) unconditional lien waivers of general contractors, if
available, (vi) evidence of approval by all governmental authorities and other
regulatory bodies whose approval is required and (vii) such other certificates
as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this Article
10 during the last two (2) years of the Term shall be subject to the release of
such proceeds by any Hotel Mortgagee to Landlord; otherwise each such Hotel
Mortgagee shall be obligated to make such funds available for Landlord's use in
accordance with the terms of this Agreement. If any Hotel Mortgagee shall be
unwilling to disburse insurance proceeds in accordance with this Agreement,
Tenant shall have the right to terminate this Agreement and Tenant shall
thereafter have no obligation to pay Rent for periods arising after the
effective date of termination.
Tenant's obligation to restore the Leased Property pursuant to this
Article 10 shall be subject to the release of available insurance proceeds by
the applicable Hotel Mortgagee to Landlord or directly to Tenant and, in the
event such proceeds are insufficient, Landlord electing to make such deficiency
available therefor (and disbursement of such deficiency).
10.3 Damage Near End of Term. Notwithstanding any provisions of
Section 10.1 or 10.2 to the contrary, if damage to or destruction of the Leased
Property occurs during the last twelve (12) months of the Term (including any
exercised Extended Terms) and if such damage or destruction cannot reasonably
be expected to be fully repaired and restored prior to the date that is six (6)
months prior to the end of such Term, the provisions of Section 10.2.1 shall
apply as if the Leased Property had been totally or partially destroyed and the
Hotel rendered Unsuitable for its Permitted Use.
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10.4 Tenant's Property. All insurance proceeds payable by reason of
any loss of or damage to any of Tenant's Personal Property shall be paid to
Tenant and, to the extent necessary to repair or replace Tenant's Personal
Property in accordance with Section 10.5, Tenant shall hold such proceeds in
trust to pay the cost of repairing or replacing damaged Tenant's Personal
Property.
10.5 Restoration of Tenant's Property. If Tenant is required to
restore the Leased Property as hereinabove provided, Tenant shall either (a)
restore all alterations and improvements made by Tenant and Tenant's Personal
Property, or (b) replace such alterations and improvements and Tenant's
Personal Property with improvements or items of the same or better quality and
utility in the operation of the Leased Property.
10.6 No Abatement of Rent. This Agreement shall remain in full force
and effect and Tenant's obligation to make all payments of Rent and to pay all
other charges as and when required under this Agreement shall remain unabated
during the Term notwithstanding any damage involving the Leased Property
(provided that Landlord shall credit against such payments any amounts paid to
Landlord as a consequence of such damage under any business interruption
insurance obtained by Tenant hereunder). The provisions of this Article 10
shall be considered an express agreement governing any cause of damage or
destruction to the Leased Property and, to the maximum extent permitted by law,
no local or State statute, laws, rules, regulation or ordinance in effect
during the Term which provide for such a contingency shall have any application
in such case.
10.7 Waiver. Tenant hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction of the
Leased Property.
10.8 Effect on Other Leases. Any termination of this Agreement
pursuant to this Article 10 shall not terminate or otherwise affect the Other
Leases or Tenant's ability to extend the Other Leases pursuant to the terms and
provisions thereof.
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ARTICLE 11
CONDEMNATION
11.1 Total Condemnation, Etc. If either (i) the whole of the Leased
Property shall be taken by Condemnation or (ii) a Condemnation of less than the
whole of the Leased Property renders the Leased Property Unsuitable for Its
Permitted Use, this Agreement shall terminate, Tenant and Landlord shall seek
the Award for their interests in the Leased Property as provided in Section
11.5 and Tenant shall thereafter have no obligation to pay Rent for periods
arising after the effective date of termination.
11.2 Partial Condemnation. In the event of a Condemnation of less
than the whole of the Leased Property such that the Leased Property is still
suitable for its Permitted Use, Tenant shall, to the extent of the Award
actually received by Tenant and any additional amounts disbursed by Landlord as
hereinafter provided, commence promptly and continue diligently to restore the
untaken portion of the Leased Improvements so that such Leased Improvements
shall constitute a complete architectural unit of the same general character
and condition (as nearly as may be possible under the circumstances) as the
Leased Improvements existing immediately prior to such Condemnation, in full
compliance with all Legal Requirements, subject to the provisions of this
Section 11.2. If the cost of the repair or restoration of the Leased Property
exceeds the amount of the Award, Tenant shall give Landlord Notice thereof
which notice shall set forth in reasonable detail the nature of such deficiency
and whether Tenant shall pay and assume the amount of such deficiency (Tenant
having no obligation to do so, except that if Tenant shall elect to make such
funds available, the same shall become an irrevocable obligation of Tenant
pursuant to this Agreement). In the event Tenant shall elect not to pay and
assume the amount of such deficiency, Landlord shall have the right (but not
the obligation), exercisable at Landlord's sole election by Notice to Tenant
given within sixty (60) days after Tenant's Notice of the deficiency, to elect
to make available for application to the cost of repair or restoration the
amount of such deficiency; provided, however, in such event, upon any
disbursement by Landlord thereof, the Minimum Rent shall be adjusted as
provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant
shall elect to make such deficiency available for restoration, either Landlord
or Tenant may
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terminate this Agreement, whereupon, the entire Award shall be retained by
Landlord and Tenant shall thereafter have no obligation to pay Rent for periods
arising after the effective date of termination.
Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements and any deficiency Landlord has agreed to disburse, to
Tenant regularly during the restoration period so as to permit payment for the
cost of such repair or restoration. Landlord may, at its option, condition
advancement of such Award and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld or
delayed), (iii) general contractors' estimates, (iv) architect's certificates,
(v) unconditional lien waivers of general contractors, if available, (vi)
evidence of approval by all governmental authorities and other regulatory
bodies whose approval is required and (vii) such other certificates as Landlord
may, from time to time, reasonably require. Landlord's obligation under this
Section 11.2 to disburse the Award and such other amounts shall be subject to
(x) the collection thereof by Landlord and (y) during the last two (2) years of
the Term, the release of such Award by the applicable Hotel Mortgagee;
otherwise each such Hotel Mortgagee shall be obligated to make such funds
available for Landlord's use in accordance with the terms of this Agreement.
Tenant's obligation to restore the Leased Property shall be subject to the
release of the Award by the applicable Hotel Mortgagee to Landlord. If any
Hotel Mortgagee shall be unwilling to release such Award in accordance with
this Agreement, Tenant shall have the right to terminate this Agreement.
11.3 Abatement of Rent. Other than as specifically provided in this
Agreement, this Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and
when required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Leased Property. The provisions
of this Article 11 shall be considered an express agreement governing any
Condemnation involving the Leased Property and, to
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the maximum extent permitted by law, no local or State statute, law, rule,
regulation or ordinance in effect during the Term which provides for such a
contingency shall have any application in such case.
11.4 Temporary Condemnation. In the event of any temporary
Condemnation of the Leased Property or Tenant's interest therein, this
Agreement shall continue in full force and effect and Tenant shall continue to
pay, in the manner and on the terms herein specified, the full amount of the
Rent. Tenant shall continue to perform and observe all of the other terms and
conditions of this Agreement on the part of the Tenant to be performed and
observed. Provided no Event of Default has occurred and is continuing, the
entire amount of any Award made for such temporary Condemnation allocable to
the Term, whether paid by way of damages, rent or otherwise, shall be paid to
Tenant. Tenant shall, promptly upon the termination of any such period of
temporary Condemnation, at its sole cost and expense, restore the Leased
Property to the condition that existed immediately prior to such Condemnation,
in full compliance with all Legal Requirements, unless such period of temporary
Condemnation shall extend beyond the expiration of the Term, in which event
Tenant shall not be required to make such restoration. For purposes of this
Section 11.4, a Condemnation shall be deemed to be temporary if the period of
such Condemnation is not expected to, and does not, exceed twelve (12) months.
11.5 Allocation of Award. Except as provided in Section 11.4 and the
second sentence of this Section 11.5, the total Award shall be solely the
property of and payable to Landlord. Any portion of the Award made for the
taking of Tenant's leasehold interest in the Leased Property, loss of business
during the remainder of the Term, the taking of Tenant's Personal Property, or
Tenant's removal and relocation expenses shall be the sole property of and
payable to Tenant (subject to the provisions of Section 11.2). In any
Condemnation proceedings, Landlord and Tenant shall each seek its own Award in
conformity herewith, at its own expense.
11.6 Effect on Other Leases. Any termination of this Agreement
pursuant to this Article 11 shall not terminate or otherwise affect the Other
Leases or Tenant's ability to extend the Other Leases pursuant to the terms and
provisions thereof.
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ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a) should Tenant fail to make any payment of the Rent or any
other sum (including, but not limited to, funding of the FF&E Reserve)
payable hereunder when due; or
(b) should Tenant fail to maintain the insurance coverages
required under Article 9 and such failure shall continue for ten (10)
Business Days after Notice thereof (except that no Notice shall be
required if any such insurance coverages shall have lapsed); or
(c) should Tenant default in the due observance or performance
of any of the terms, covenants or agreements contained herein to be
performed or observed by it (other than as specified in clauses (a) and
(b) above) and such default shall continue for a period of fifteen (15)
Business Days after Notice thereof from Landlord to Tenant; provided,
however, that if such default is susceptible of cure but such cure cannot
be accomplished with due diligence within such period of time and if, in
addition, Tenant commences to cure or cause to be cured such default
within fifteen (15) Business Days after Notice thereof from Landlord and
thereafter prosecutes the curing of such default with all due diligence,
such period of time shall be extended to such period of time (not to
exceed an additional one hundred eighty (180) days in the aggregate) as
may be necessary to cure such default with all due diligence; or
(d) should an event of default by Tenant or any Affiliated
Person as to Tenant occur and be continuing beyond the expiration of any
applicable cure period under any of the Incidental Documents, the Other
Leases or the Management Agreement; or
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(e) should there occur a final unappealable determination by
applicable state authorities of the revocation or limitation of any
material license, permit, certification or approval required for the
lawful operation of the Hotel in accordance with its Permitted Use or the
loss or material limitation of any material license, permit,
certification or approval under any other circumstances under which
Tenant is required to cease its operation of the Hotel in accordance
with its Permitted Use at the time of such loss or limitation; or
(f) should any material representation or warranty made by
Tenant or, at any time prior to the required assignment pursuant to
Section 16.5, by the Seller (as defined in the Purchase Agreement) under
or in connection with this Agreement, any Incidental Document, the Other
Leases or the Purchase Agreement, or in any document, certificate or
agreement delivered in connection herewith or therewith prove to have
been false or misleading in any material respect on the date when made or
deemed made and the same shall continue for five (5) Business Days
after Notice thereof from Landlord; or
(g) should Tenant generally not be paying its debts as they
become due or should Tenant make a general assignment for the benefit
of creditors; or
(h) should any petition be filed by or against Tenant under
the Federal bankruptcy laws, or should any other proceeding be instituted
by or against Tenant seeking to adjudicate Tenant a bankrupt or
insolvent, or seeking liquidation, reorganization, arrangement,
adjustment or composition of Tenant's debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking
the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for Tenant or for any
substantial part of the property of Tenant and such proceeding is not
dismissed within ninety (90) days after institution thereof, or should
Tenant take any action to authorize or effect any of the actions set
forth above in this paragraph; or
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(i) should Tenant cause or institute any proceeding for its
dissolution or termination, except as contemplated by or in connection
with the assignment contemplated by Section 16.5; or
(j) should the estate or interest of Tenant in the Leased
Property or any part thereof be levied upon or attached in any proceeding
and the same shall not be vacated or discharged within the later of (x)
one hundred and twenty (120) days after commencement thereof, unless the
amount in dispute is less than $250,000, in which case Tenant shall give
notice to Landlord of the dispute but Tenant may defend in any suitable
way, and (y) thirty (30) days after receipt by Tenant of Notice thereof
from Landlord (unless Tenant shall be contesting such lien or attachment
in good faith in accordance with Article 8); or
(k) at any time after the assignment required by Section 16.5,
should Tenant at any time cease to be a wholly owned direct or indirect
Subsidiary of Wyndham;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement by giving Notice thereof to
Tenant and upon the expiration of the time, if any, fixed in such Notice, this
Agreement shall terminate and all rights of Tenant under this Agreement shall
cease. Landlord shall have and may exercise all rights and remedies available
at law and in equity to Landlord as a result of Tenant's breach of this
Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to
any other remedies provided herein, enter upon the Leased Property or any
portion thereof and take possession of any and all of Tenant's Personal
Property, if any, and the Records, without liability for trespass or conversion
(Tenant hereby waiving any right to notice or hearing prior to such taking of
possession by Landlord) and sell the same at public or private sale, after
giving Tenant reasonable Notice of the time and place of any public or private
sale, at which sale Landlord or its assigns may purchase all or any portion of
Tenant's Personal Property, if any, unless otherwise prohibited by law. Unless
otherwise provided by law and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement
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of reasonable Notice shall be met if such Notice is given at least ten (10)
days before the date of sale. The proceeds from any such disposition, less all
expenses incurred in connection with the taking of possession, holding and
selling of such property (including, reasonable attorneys' fees) shall be
applied as a credit against the indebtedness which is secured by the security
interest granted in Section 7.2. Any surplus shall be paid to Tenant or as
otherwise required by law and Tenant shall pay any deficiency to Landlord, as
Additional Charges, upon demand.
12.2 Remedies. None of (a) the termination of this Agreement
pursuant to Section 12.1, (b) the repossession of the Leased Property or any
portion thereof, (c) the failure of Landlord to re-let the Leased Property or
any portion thereof, nor (d) the reletting of all or any of portion of the
Leased Property, shall relieve Tenant of its liability and obligations
hereunder, all of which shall survive any such termination, repossession or
re-letting. In the event of any such termination, Tenant shall forthwith pay
to Landlord all Rent due and payable with respect to the Leased Property
through and including the date of such termination. Thereafter, Tenant, until
the end of what would have been the Term of this Agreement in the absence of
such termination, and whether or not the Leased Property or any portion thereof
shall have been re-let, shall be liable to Landlord for, and shall pay to
Landlord, as current damages, the Rent and other charges which would be payable
hereunder for the remainder of the Term had such termination not occurred, less
the net proceeds, if any, of any re-letting of the Leased Property, after
deducting all reasonable expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising, expenses of employees, alteration costs
and expenses of preparation for such reletting. Tenant shall pay such current
damages to Landlord monthly on the days on which the Minimum Rent would have
been payable hereunder if this Agreement had not been so terminated with
respect to such of the Leased Property.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord an
amount equal to the
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present value (discounted at the Interest Rate) of the excess, if any, of the
Rent and other charges which would be payable hereunder from the date of such
termination (assuming that, for the purposes of this paragraph, annual payments
by Tenant on account of Impositions and Additional Rent would be the same as
payments required for the immediately preceding twelve calendar months, or if
less than twelve calendar months have expired since the Commencement Date, the
payments required for such lesser period projected to an annual amount) for
what would be the then unexpired term of this Agreement if the same remained in
effect, over the fair market rental for the same period. Nothing contained in
this Agreement shall, however, limit or prejudice the right of Landlord to
prove and obtain in proceedings for bankruptcy or insolvency an amount equal to
the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, the damages are to be proved, whether
or not the amount be greater than, equal to, or less than the amount of the
loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession
by summary proceedings or otherwise, Landlord may (a) relet the Leased Property
or any part or parts thereof, either in the name of Landlord or otherwise, for
a term or terms which may at Landlord's option, be equal to, less than or
exceed the period which would otherwise have constituted the balance of the
Term and may grant concessions or free rent to the extent that Landlord
considers advisable and necessary to relet the same, and (b) may make such
reasonable alterations, repairs and decorations in the Leased Property or any
portion thereof as Landlord, in its sole and absolute discretion, considers
advisable and necessary for the purpose of reletting the Leased Property; and
the making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Subject to
the last sentence of this paragraph, Landlord shall in no event be liable in
any way whatsoever for any failure to relet all or any portion of the Leased
Property, or, in the event that the Leased Property is relet, for failure to
collect the rent under such reletting. To the maximum extent permitted by law,
Tenant hereby expressly waives any and all rights of redemption granted under
any present or future laws in the event of Tenant being evicted or
dispossessed, or in the event of Landlord obtaining possession of the Leased
Property, by reason of the occurrence and continuation
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of an Event of Default hereunder. Landlord covenants and agrees, in the event
of any termination of this Agreement as a result of an Event of Default, to use
reasonable efforts to mitigate its damages.
12.3 Tenant's Waiver. IF THIS AGREEMENT IS TERMINATED PURSUANT TO
SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT
TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES
SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN
FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT. IN ADDITION,
TENANT UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT, IN THE EVENT THIS AGREEMENT
IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, THE RETAINED FUNDS (AS SUCH
TERM IS DEFINED IN THE PURCHASE AGREEMENT) SHALL NOT BE PAID OR PAYABLE (TENANT
WAIVING, ON BEHALF OF ITSELF AND ITS AFFILIATED PERSONS, ALL CLAIMS AND CAUSES
OF ACTION WITH RESPECT THERETO).
12.4 Application of Funds. Any payments received by Landlord under
any of the provisions of this Agreement during the existence or continuance of
any Event of Default (and any payment made to Landlord rather than Tenant due
to the existence of any Event of Default) shall be applied to Tenant's current
and past due obligations under this Agreement in such order as Landlord may
determine or as may be prescribed by the laws of the State.
12.5 Landlord's Right to Cure Tenant's Default. If an Event of
Default shall have occurred and be continuing, Landlord, after Notice to Tenant
(which Notice shall not be required if Landlord shall reasonably determine
immediate action is necessary to protect person or property), without waiving
or releasing any obligation of Tenant and without waiving or releasing any
Event of Default, may (but shall not be obligated to), at any time thereafter,
make such payment or perform such act for the account and at the expense of
Tenant, and may, to the maximum extent permitted by law, enter upon the Leased
Property or any portion thereof for such purpose and take all such action
thereon as, in Landlord's sole and absolute discretion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of Tenant.
All reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred by Landlord in connection therewith, together with
interest thereon (to the extent permitted by law) at the Overdue Rate from the
date such
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sums are paid by Landlord until repaid, shall be paid by Tenant to Landlord, on
demand.
ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination of
this Agreement shall be treated as a daily tenancy at sufferance at a rate
equal to two (2) times the Minimum Rent and other charges herein provided
(prorated on a daily basis). Tenant shall also pay to Landlord all damages
(direct or indirect) sustained by reason of any such holding over. Otherwise,
such holding over shall be on the terms and conditions set forth in this
Agreement, to the extent applicable. Nothing contained herein shall constitute
the consent, express or implied, of Landlord to the holding over of Tenant
after the expiration or earlier termination of this Agreement.
ARTICLE 14
LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT
14.1 Landlord Notice Obligation. Landlord shall give prompt Notice
to Tenant of any matters affecting the Leased Property of which Landlord
receives written notice or actual knowledge and, to the extent Tenant otherwise
has no notice or actual knowledge thereof, Landlord shall be liable for any
liabilities arising from the failure to deliver such Notice to Tenant.
14.2 Landlord's Default. If Landlord shall default in the
performance or observance of any of its covenants or obligations set forth in
this Agreement or any obligation of Landlord, if any, under any agreement
affecting the Leased Property, the performance of which is not Tenant's
obligation pursuant to this Agreement, and any such default shall continue for
a period of ten (10) days after Notice thereof with respect to monetary
defaults and thirty (30) days after Notice thereof with respect to non-monetary
defaults from Tenant to Landlord and any applicable Hotel Mortgagee, or such
additional period as may be
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reasonably required to correct the same, Tenant may declare the occurrence of a
"Landlord Default" by a second Notice to Landlord and to such Hotel Mortgagee.
Thereafter, Tenant may forthwith cure the same and, subject to the provisions
of the following paragraph, invoice Landlord for costs and expenses (including
reasonable attorneys' fees and court costs) incurred by Tenant in curing the
same, together with interest thereon (to the extent permitted by law) from the
date Landlord receives Tenant's invoice, at the Overdue Rate. Tenant shall
have no right to terminate this Agreement for any default by Landlord hereunder
and no right, for any such default, to offset or counterclaim against any Rent
or other charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period,
shall give Notice thereof to Tenant, setting forth, in reasonable detail, the
basis therefor, no Landlord Default shall be deemed to have occurred and
Landlord shall have no obligation with respect thereto until final adverse
determination thereof; provided, however, that in the event of any such adverse
determination, Landlord shall pay to Tenant interest on any disputed funds at
the Interest Rate, from the date demand for such funds was made by Tenant until
the date of final adverse determination and, thereafter, at the Overdue Rate
until paid. If Tenant and Landlord shall fail, in good faith, to resolve any
such dispute within ten (10) days after Landlord's Notice of dispute, either
may submit the matter for resolution to a court of competent jurisdiction.
ARTICLE 15
PURCHASE RIGHTS
15.1 First Refusal to Purchase. Provided, (a) no Default or Event of
Default shall have occurred and be continuing, (b) this Agreement shall be of
full force and effect, and (c) other than as expressly permitted or required by
Section 16, Tenant shall not have assigned this Agreement (other than a
collateral assignment to or from a Leasehold Mortgagee or as contemplated by
Section 16.5) or subleased all or any portion of the Leased Property, Tenant
shall have a first refusal option to purchase the Leased Property upon the same
price, terms and conditions as
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Landlord shall propose to sell the Leased Property, or upon the same price,
terms and conditions of any offer from a third party to purchase the Leased
Property which Landlord intends to accept (or has accepted subject to Tenant's
right of first refusal herein provided); provided, however, that, if the
proposed purchase price is for other than cash, Tenant shall have the right to
purchase the Leased Property on cash equivalent terms determined by the
agreement of the parties or, if they cannot agree within ten (10) Business
Days, by arbitration in accordance with the rules of the American Arbitration
Association then in effect. If, during the Term, Landlord reaches such
agreement with a third party or proposes to offer the Leased Property for sale,
Landlord shall promptly give written notice to Tenant of the purchase price and
all other material terms and conditions of such agreement or proposed sale and
Tenant shall have sixty (60) days thereafter to exercise Tenant's option to
purchase by written notice to Landlord thereof. Failure of Tenant to respond
within such 60-day period shall be deemed a waiver of Tenant's right to
purchase the Leased Property with respect to such offer pursuant to this
Section 15.1. If Tenant exercises its option, the sale to Tenant shall be
consummated upon the same terms and conditions as contained in such agreement
or Landlord's notice of the proposed sale. If Tenant shall not exercise its
option to purchase within the time period and in the manner above provided,
Landlord shall be free to sell the Leased Property to such third party at the
price and upon terms substantially similar to those offered to Tenant. The
rights granted to Tenant pursuant to this Section 15.1 shall not apply to any
financing or sale- leaseback transaction or any transaction pursuant to which
Landlord is merged or consolidated with another Person; provided, however, that
any Person who shall acquire the Leased Premises shall acquire them subject to,
and shall be bound by, the provisions of this Section 15.1. The provisions of
this Section 15.1 shall inure to the benefit of Tenant and any permitted
successors and assigns of Tenant pursuant to this Agreement.
15.2 Landlord's Option to Purchase the Tenant's Personal Property;
Transfer of Licenses. Landlord shall have the option to purchase Tenant's
Personal Property, at the expiration or termination of this Agreement, for an
amount equal to the then net market value thereof (current replacement cost as
determined by appraisal less accumulated depreciation on Tenant's books
pertaining thereto), subject to, and with appropriate price
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adjustments for, all equipment leases, conditional sale contracts, UCC-1
financing statements and other encumbrances to which such Personal Property is
subject. Upon the expiration or sooner termination of this Agreement, Tenant
shall use its best efforts to transfer and assign to Landlord or its designee,
or assist Landlord or its designee in obtaining, any contracts, licenses, and
certificates required for the then operation of the Leased Property.
ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1 Subletting and Assignment. Except as provided in Section 16.3
and Article 19, Tenant shall not, without Landlord's prior written consent
(which consent may be given or withheld in Landlord's sole and absolute
discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer this Agreement or sublease (which term shall be deemed to include the
granting of concessions, licenses and the like), all or any part of the Leased
Property or suffer or permit this Agreement or the leasehold estate created
hereby or any other rights arising under this Agreement to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law, or permit the
use or operation of the Leased Property by anyone other than Tenant and the
Manager, or the Leased Property to be offered or advertised for assignment or
subletting. From and after the assignment required by Section 16.5, for
purposes of this Section 16.1, an assignment of this Agreement shall be deemed
to include any direct or indirect transfer of any interest in Tenant such that
Tenant shall cease to be a wholly owned direct or indirect Subsidiary of
Wyndham or any transaction pursuant to which Tenant is merged or consolidated
with another Entity or pursuant to which all or substantially all of Tenant's
assets are transferred to any other Entity, as if such change in control or
transaction were an assignment of this Agreement; provided, however, that the
foregoing shall not be construed to prohibit collateral assignments or pledges
of the capital stock of Tenant to Lending Institutions otherwise permitted by
this Agreement.
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If this Agreement is assigned or if the Leased Property or any part
thereof are sublet (or occupied by anybody other than Tenant, the Manager and
their respective employees or hotel guests) Landlord may collect the rents from
such assignee, subtenant or occupant, as the case may be, and apply the net
amount collected to the Rent herein reserved, but no such collection shall be
deemed a waiver of the provisions set forth in the first paragraph of this
Section 16.1, the acceptance by Landlord of such assignee, subtenant or
occupant, as the case may be, as a tenant, or a release of Tenant from the
future performance by Tenant of its covenants, agreements or obligations
contained in this Agreement.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder (unless Landlord and Tenant expressly
otherwise agree that Tenant shall be released from all obligations hereunder),
and no consent to any subletting or assignment in a particular instance shall
be deemed to be a waiver of the prohibition set forth in this Section 16.1. No
assignment, subletting or occupancy shall affect any Permitted Use. Any
subletting, assignment or other transfer of Tenant's interest under this
Agreement in contravention of this Section 16.1 shall be voidable at Landlord's
option.
16.2 Required Sublease Provisions. Any sublease of all or any
portion of the Leased Property entered into on or after the date hereof shall
provide (a) that it is subject and subordinate to this Agreement and to the
matters to which this Agreement is or shall be subject or subordinate; (b) that
in the event of termination of this Agreement or reentry or dispossession of
Tenant by Landlord under this Agreement, Landlord may, at its option, terminate
such sublease or take over all of the right, title and interest of Tenant, as
sublessor under such sublease, and such subtenant shall, at Landlord's option,
attorn to Landlord pursuant to the then executory provisions of such sublease,
except that neither Landlord nor any Hotel Mortgagee, as holder of a mortgage
or as Landlord under this Agreement, if such mortgagee succeeds to that
position, shall (i) be liable for any act or omission of Tenant under such
sublease, (ii) be subject to any credit, counterclaim, offset or defense which
theretofore accrued to such subtenant against Tenant, (iii) be bound by any
previous modification of such sublease not consented to in writing by Landlord
or by any previous prepayment of more
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than one (1) month's Rent, (iv) be bound by any covenant of Tenant to undertake
or complete any construction of the Leased Property or any portion thereof, (v)
be required to account for any security deposit of the subtenant other than any
security deposit actually delivered to Landlord by Tenant, (vi) be bound by any
obligation to make any payment to such subtenant or grant any credits, except
for services, repairs, maintenance and restoration provided for under the
sublease that are performed after the date of such attornment, (vii) be
responsible for any monies owing by Tenant to the credit of such subtenant, or
(viii) be required to remove any Person occupying any portion of the Leased
Property; and (c), in the event that such subtenant receives a written Notice
from Landlord or any Hotel Mortgagee stating that an Event of Default has
occurred and is continuing, such subtenant shall thereafter be obligated to pay
all rentals accruing under such sublease directly to the party giving such
Notice or as such party may direct. All rentals received from such subtenant
by Landlord or the Hotel Mortgagee, as the case may be, shall be credited
against the amounts owing by Tenant under this Agreement and such sublease
shall provide that the subtenant thereunder shall, at the request of Landlord,
execute a suitable instrument in confirmation of such agreement to attorn. An
original counterpart of each such sublease and assignment and assumption, duly
executed by Tenant and such subtenant or assignee, as the case may be, in form
and substance reasonably satisfactory to Landlord, shall be delivered promptly
to Landlord and (a) in the case of an assignment, the assignee shall assume in
writing and agree to keep and perform all of the terms of this Agreement on the
part of Tenant to be kept and performed and shall be, and become, jointly and
severally liable with Tenant for the performance thereof and (b) in case of
either an assignment or subletting, Tenant shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Tenant hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of Section 16.1.
16.3 Permitted Sublease. Notwithstanding the foregoing, including,
without limitation, Section 16.2, but subject to the provisions of Section 16.4
and any other express conditions or
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limitations set forth herein, Tenant may, in each instance after Notice to
Landlord, sublease space at the Leased Property for newsstand, gift shop,
parking garage, health club, restaurant, bar or commissary purposes or similar
concessions in furtherance of the Permitted Use, so long as such subleases do
not demise, in the aggregate, in excess of two thousand (2,000) square feet,
will not violate or affect any Legal Requirement or Insurance Requirement, and
Tenant shall provide such additional insurance coverage applicable to the
activities to be conducted in such subleased space as Landlord and any Hotel
Mortgagee may reasonably require.
16.4 Sublease Limitation. For so long as Landlord or any Affiliated
Person as to Landlord shall seek to qualify as a real estate investment trust,
anything contained in this Agreement to the contrary notwithstanding, Tenant
shall not sublet the Leased Property on any basis such that the rental to be
paid by any sublessee thereunder would be based, in whole or in part, on the
income or profits derived by the business activities of such sublessee, any
other formula such that any portion of such sublease rental would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the Code, or any similar or successor provision thereto or would otherwise
disqualify Landlord for treatment as a real estate investment trust.
16.5 Required Assignment. Upon the consummation of the initial
public offering of the shares of WHC as currently contemplated for at least
Twenty Five Million Dollars ($25,000,000), the initial Tenant named herein
shall be required to assign its interest under this Agreement, directly or
indirectly, to a corporate subsidiary of WHC, wholly owned by WHC.
Simultaneously with the foregoing assignment, Wyndham shall execute and deliver
to Landlord the Stock Pledge Agreement, which pledge Landlord agrees to
subordinate to the lien of a Lending Institution as provided in this Agreement.
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ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 Estoppel Certificates. At any time and from time to time, upon
not less than ten (10) Business Days prior Notice by either party, the party
receiving such Notice shall furnish to the other an Officer's Certificate
certifying that this Agreement is unmodified and in full force and effect (or
that this Agreement is in full force and effect as modified and setting forth
the modifications), the date to which the Rent has been paid, that no Default
or an Event of Default has occurred and is continuing or, if a Default or an
Event of Default shall exist, specifying in reasonable detail the nature
thereof, and the steps being taken to remedy the same, and such additional
information as the requesting party may reasonably request. Any such
certificate furnished pursuant to this Section 17.1 may be relied upon by the
requesting party, its lenders and any prospective purchaser or mortgagee of the
Leased Property or the leasehold estate created hereby.
17.2 Financial Statements.
(a) Prior to the assignment contemplated by Section
16.5, Tenant shall furnish the following statements to Landlord:
(i) within ninety (90) days after the end of each Fiscal Year, an
audited balance sheet and operating statement for such year,
certified by an independent certified public accountant reasonably
satisfactory to Landlord and accompanied by a Financial Officer's
Certificate;
(ii) within thirty (30) days after the end of each month, an unaudited
operating statement prepared on a Hotel by Hotel basis, including
occupancy percentages and average rate, accompanied by a Financial
Officer's Certificate;
(iii) at any time and from time to time upon not less than twenty (20)
days Notice from Landlord, any financial reporting information
required to be filed by
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Landlord with any securities and exchange commission, the SEC or
any successor agency, or any other governmental authority or
required pursuant to any order issued by any court, governmental
authority or arbitrator in any litigation to which Landlord is a
party, for purposes of compliance therewith; and
(iv) promptly, upon Notice from Landlord, such other information
concerning the business, financial condition and affairs of Tenant
as Landlord reasonably may request from time to time.
(b) From and after the assignment contemplated by
Section 16.5, Tenant shall furnish the following statements to Landlord:
(i) within forty-five (45) days after each of the first three
quarters of any Fiscal Year, the most recent Consolidated
Financials, accompanied by the Financial Officer's Certificate;
(ii) within ninety (90) days after the end of each Fiscal Year, the
most recent Consolidated Financials for such year, certified by an
independent certified public accountant reasonably satisfactory to
Landlord and accompanied by a Financial Officer's Certificate;
(iii) within thirty (30) days after the end of each month, an unaudited
operating statement prepared on a Hotel by Hotel basis, including
occupancy percentages and average rate, accompanied by a Financial
Officer's Certificate;
(iv) promptly after the sending or filing thereof, copies of all
reports which Tenant or Wyndham sends to its security holders
generally, and copies of all periodic reports which Tenant or
Wyndham files with the SEC or any stock exchange on which its
shares are listed or traded;
(v) at any time and from time to time upon not less than twenty (20)
days Notice from Landlord, any Consolidated Financials or any
other financial
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reporting information required to be filed by Landlord with any
securities and exchange commission, the SEC or any successor
agency, or any other governmental authority, or required pursuant
to any order issued by any court, governmental authority or
arbitrator in any litigation to which Landlord is a party, for
purposes of compliance therewith; and
(vi) promptly, upon Notice from Landlord, such other information
concerning the business, financial condition and affairs of Tenant
and Wyndham as Landlord reasonably may request from time to time.
Landlord may at any time, and from time to time, provide any Hotel Mortgagee
with copies of any of the foregoing statements.
In addition, Landlord shall have the right, from time to time at
Landlord's sole cost and expense, upon reasonable Notice, during Tenant's
customary business hours, to cause Tenant's books and records with respect to
the Leased Property to be audited by auditors selected by Landlord at the place
where such books and records are customarily kept.
17.3 General Operations. Tenant shall furnish to Landlord:
(a) Within thirty (30) days after receipt or modification
thereof, copies of all licenses authorizing Tenant and/or the Manager
to operate the Hotel for its Permitted Use;
(b) Not less than thirty (30) days after the commencement of
any Fiscal Year, proposed annual income and ordinary expense and capital
improvement budgets setting forth projected income and costs and expenses
projected to be incurred by Tenant in managing, owning, maintaining and
operating the Hotel during the next succeeding Fiscal Year; and
(c) Promptly after receipt or sending thereof, copies of all
notices given or received by Tenant under the Management Agreement.
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ARTICLE 18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit, and shall direct the Manager to permit, Landlord
and its authorized representatives to inspect the Leased Property during usual
business hours upon not less than twenty-four (24) hours' notice and to make
such repairs as Landlord is permitted or required to make pursuant to the terms
of this Agreement, provided that any inspection or repair by Landlord or its
representatives will not unreasonably interfere with Tenant's use and operation
of the Leased Property and further provided that in the event of an emergency,
as determined by Landlord in its reasonable discretion, prior Notice shall not
be necessary.
ARTICLE 19
LEASEHOLD MORTGAGES
19.1 Leasehold Mortgages Authorized. Notwithstanding anything to the
contrary contained herein, on one or more occasions, without Landlord's prior
consent, Tenant may grant one or more Leasehold Mortgages on its leasehold
interest in the Leased Property and security interests in Tenant's rights to
the Retained Funds, the FF&E Reserve and Tenant's Personal Property
(collectively, the "Leasehold Estate") to one or more Lending Institutions to
secure Indebtedness permitted hereunder.
19.2 Notices to Landlord. Promptly upon the granting of any
Leasehold Mortgage, Tenant or the applicable Leasehold Mortgagee shall give
Notice thereof to Landlord, such notice to identify the name and address of the
Leasehold Mortgagee and to be accompanied by a copy of the applicable Leasehold
Mortgage, as recorded. In the event of a change of address of a Leasehold
Mortgagee or of any amendment to or assignment of a Leasehold Mortgage, Tenant
or the applicable Leasehold Mortgagee shall promptly provide notice of such new
address, amendment or assignment to Landlord, together with a copy of each such
amendment or assignment.
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19.3 Cure by Leasehold Mortgagee. Any Leasehold Mortgagee shall have
the right, at any time during the Term hereof, while this Agreement is in full
force and effect:
(a) To do any act required by Tenant hereunder, and all such
acts done or performed shall be effective as to prevent a forfeiture of
Tenant's rights hereunder as if the same had been done or performed by
Tenant; and
(b) To rely on the security afforded by the Leasehold Estate,
and to acquire and to succeed to the interest of Tenant hereunder by
foreclosure, whether by judicial sale, by power of sale contained in any
security instrument, or by assignment of leasehold interest given in
lieu of foreclosure, and thereafter convey or assign title to the
Leasehold Estate so required to any other person, firm or corporation.
If the Leasehold Mortgagee or Tenant shall have furnished, in writing,
to Landlord a request for Notice of any Event of Default, in the event of any
Event of Default by Tenant, Landlord will not terminate this Lease by reason of
such Event of Default if the Leasehold Mortgagee shall, prior to the expiration
of the applicable cure period, cure any monetary Event of Default or, if such
Event of Default cannot be cured by the payment of money, provide Landlord with
a written undertaking, in form and substance satisfactory to Landlord, to
perform all covenants and obligations of Tenant under this Agreement upon
foreclosure and, thereafter, such Leasehold Mortgagee shall proceed in a timely
and diligent manner to accomplish the foreclosure of the Leasehold Estate.
19.4 Landlord Estoppel Certificates. Landlord agrees, from time to
time, to provide to any Leasehold Mortgagee, promptly after written request
therefor, an estoppel certificate substantially in the form of Exhibit E or
otherwise in such form as any Leasehold Mortgagee may reasonably request.
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ARTICLE 20
HOTEL MORTGAGES
20.1 Landlord May Grant Liens. Without the consent of Tenant,
Landlord may, subject to the terms and conditions set forth in this Section
20.1, from time to time, directly or indirectly, create or otherwise cause to
exist any lien, encumbrance or title retention agreement ("Encumbrance") upon
the Leased Property, or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing.
Notwithstanding anything to the contrary set forth in Section 20.2, any such
Encumbrance shall include the right to prepay (whether or not subject to a
prepayment penalty) and shall provide (subject to Section 20.2) that it is
subject to the rights of Tenant under this Agreement.
20.2 Subordination of Lease. Subject to Section 20.1 and this
Section 20.2, this Agreement, any and all rights of Tenant hereunder, are and
shall be subject and subordinate to any ground or master lease, and all
renewals, extensions, modifications and replacements thereof, and to all
mortgages and deeds of trust, which may now or hereafter affect the Leased
Property or any improvements thereon and/or any of such leases, whether or not
such mortgages or deeds of trust shall also cover other lands and/or buildings
and/or leases, to each and every advance made or hereafter to be made under
such mortgages and deeds of trust, and to all renewals, modifications,
replacements and extensions of such leases and such mortgages and deeds of
trust and all consolidations of such mortgages and deeds of trust. This
section shall be self-operative and no further instrument of subordination
shall be required provided that Tenant has received a nondisturbance and
attornment agreement from each Superior Mortgagee, consistent with the
provisions of this Section 20.2 and otherwise in form and substance reasonably
satisfactory to Tenant, the benefits of which agreement shall also extend to
any Leasehold Mortgagee. In confirmation of such subordination, Tenant shall
promptly execute, acknowledge and deliver any instrument that Landlord, the
lessor under any such lease or the holder of any such mortgage or the trustee
or beneficiary of any deed of trust or any of their respective successors in
interest may reasonably request to evidence such subordination. Any lease to
which this Agreement is, at the time referred to, subject and
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subordinate is herein called "Superior Lease" and the lessor of a Superior
Lease or its successor in interest at the time referred to, is herein called
"Superior Landlord" and any mortgage or deed of trust to which this Agreement
is, at the time referred to, subject and subordinate, is herein called
"Superior Mortgage" and the holder, trustee or beneficiary of a Superior
Mortgage is herein called "Superior Mortgagee". Tenant shall have no
obligations under any Superior Lease or Superior Mortgage other than those
expressly set forth in this Section 20.2.
If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under this Agreement (any such person, "Successor
Landlord"), whether through possession or foreclosure action or delivery of a
new lease or deed, or otherwise, such Successor Landlord shall recognize
Tenant's rights under this Agreement as herein provided and Tenant shall attorn
to and recognize the Successor Landlord as Tenant's landlord under this
Agreement and Tenant shall promptly execute and deliver any instrument that
such Successor Landlord may reasonably request to evidence such attornment
(provided that such instrument does not alter the terms of this Agreement),
whereupon, this Agreement shall continue in full force and effect as a direct
lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Agreement, except that the
Successor Landlord (unless formerly the landlord under this Agreement or its
nominee or designee) shall not be (a) liable in any way to Tenant for any act
or omission, neglect or default on the part of any prior Landlord under this
Agreement, (b) responsible for any monies owing by or on deposit with any prior
Landlord to the credit of Tenant (except to the extent actually paid or
delivered to the Successor Landlord), (c) subject to any counterclaim or setoff
which theretofore accrued to Tenant against any prior Landlord, (d) bound by
any modification of this Agreement subsequent to such Superior Lease or
Mortgage, or by any previous prepayment of Minimum Rent or Additional Rent for
more than one (1) month in advance of the date due hereunder, which was not
approved in writing by the Superior Landlord or the Superior Mortgagee thereto,
(e) liable to Tenant beyond the Successor Landlord's interest in the Leased
Property and the rents, income, receipts, revenues, issues and profits issuing
from the Leased Property, (f) responsible for the performance of any work to be
done by the
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Landlord under this Agreement to render the Leased Property ready for occupancy
by Tenant (subject to Landlord's obligations under Section 5.1.2(b) or with
respect to any insurance or Condemnation proceeds), or (g) required to remove
any Person occupying the Leased Property or any part thereof, except if such
person claims by, through or under the Successor Landlord. Tenant agrees at
any time and from time to time to execute a suitable instrument in confirmation
of Tenant's agreement to attorn, as aforesaid and Landlord agrees to provide
Tenant with an instrument of nondisturbance and attornment from each such
Superior Mortgagee and Superior Landlord in form and substance reasonably
satisfactory to Tenant. Nothing contained in this Section 20.2 shall relieve
Landlord from any liability to Tenant under this Agreement following the
exercise of remedies by a Superior Mortgagee.
20.3 Notice to Mortgagee and Superior Landlord. Subsequent to the
receipt by Tenant of Notice from Landlord as to the identity of any Hotel
Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee,
which includes the Leased Property as part of the demised premises and which
complies with Section 20.1 and 20.2 (which Notice shall be accompanied by a
copy of the applicable mortgage or lease), no notice from Tenant to Landlord as
to the Leased Property shall be effective unless and until a copy of the same
is given to such Hotel Mortgagee or Superior Landlord at the address set forth
in the above described Notice, and the curing of any of Landlord's defaults by
such Hotel Mortgagee or Superior Landlord shall be treated as performance by
Landlord.
ARTICLE 21
ADDITIONAL COVENANTS OF TENANT
21.1 Prompt Payment of Indebtedness. Tenant shall (a) pay or cause
to be paid when due all payments of principal of and premium and interest on
Tenant's Indebtedness for money borrowed and shall not permit or suffer any
such Indebtedness to become or remain in default beyond any applicable grace or
cure period, (b) pay or cause to be paid when due all lawful claims for labor
and rents with respect to the Leased Property, (c) pay or cause to be paid when
due all trade payables and (d) pay or cause to be paid
<PAGE> 84
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when due all other of Tenant's Indebtedness upon which it is or becomes
obligated, except, in each case, other than that referred to in clause (a), to
the extent payment is being contested in good faith by appropriate proceedings
in accordance with Article 8 and if Tenant shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP, if appropriate,
or unless and until foreclosure, distraint sale or other similar proceedings
shall have been commenced.
21.2 Conduct of Business. Tenant shall not engage in any business
other than the leasing and operation of the Collective Leased Properties and
shall do or cause to be done all things necessary to preserve, renew and keep
in full force and effect and in good standing its corporate or partnership
existence, as applicable, and its rights and licenses necessary to conduct such
business.
21.3 Maintenance of Accounts and Records. Tenant shall keep true
records and books of account of Tenant in which full, true and correct entries
will be made of dealings and transactions in relation to the business and
affairs of Tenant in accordance with GAAP, where applicable, Tenant shall apply
accounting principles in the preparation of the financial statements of Tenant
which, in the judgment of and the opinion of its independent public
accountants, are in accordance with GAAP, where applicable, except for changes
approved by such independent public accountants. Tenant shall provide to
Landlord either in a footnote to the financial statements delivered under
Section 17.2 which relate to the period in which such change occurs, or in
separate schedules to such financial statements, information sufficient to show
the effect of any such changes on such financial statements.
21.4 Notice of Litigation, Etc. Tenant shall give prompt Notice to
Landlord of any litigation or any administrative proceeding to which it may
hereafter become a party of which Tenant has notice or actual knowledge which
involves a potential uninsured liability equal to or greater than Two Hundred
Fifty Thousand Dollars ($250,000) or which, in Tenant's reasonable opinion, may
otherwise result in any material adverse change in the business, operations,
property, prospects, results of operation or condition, financial or other, of
Tenant. Forthwith upon Tenant obtaining knowledge of any Default, Event of
Default
<PAGE> 85
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or any default or event of default under any agreement relating to Indebtedness
for money borrowed in an aggregate amount exceeding, at any one time, Two
Hundred Fifty Thousand Dollars ($250,000), or any event or condition that would
be required to be disclosed in a current report filed by Tenant on Form 8-K or
in Part II of a quarterly report on Form 10-Q if Tenant were required to file
such reports under the Securities Exchange Act of 1934, as amended, Tenant
shall furnish Notice thereof to Landlord specifying the nature and period of
existence thereof and what action Tenant has taken or is taking or proposes to
take with respect thereto.
21.5 Indebtedness of Tenant. Tenant shall not create, incur, assume
or guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for Impositions, to the extent that
payment thereof shall not at the time be required to be made in
accordance with the provisions of Article 8;
(c) Indebtedness of Tenant in respect of judgments or awards
(i) which have been in force for less than the applicable appeal period
and in respect of which execution thereof shall have been stayed pending
such appeal or review, or (ii) which are fully covered by insurance
payable to Tenant, or (iii) which are for an amount not in excess of
$250,000 in the aggregate at any one time outstanding and (x) which have
been in force for not longer than the applicable appeal period, so long
as execution is not levied thereunder or (y) in respect of which an
appeal or proceedings for review shall at the time be prosecuted in good
faith in accordance with the provisions of Article 8, and in respect of
which execution thereof shall have been stayed pending such appeal or
review;
(d) unsecured borrowings of Tenant from its Affiliated Persons
which are by their terms expressly subordinate pursuant to a
Subordination Agreement to the payment and performance of Tenant's
obligations under this Agreement;
<PAGE> 86
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(e) Indebtedness for purchase money financing in accordance
with Section 21.9(a) and other operating liabilities incurred in the
ordinary course of Tenant's business;
(f) Deferred fees to the Manager as provided in the Management
Agreement, provided that such fees shall be, from and after the
occurrence of a Default or Event of Default, subordinate to all amounts
owing to Landlord; or
(g) Indebtedness of any Affiliated Persons as to Tenant
secured by a Leasehold Mortgage or otherwise guaranteed by Tenant.
21.6 Financial Condition of Tenant. Tenant shall at all times
maintain Tangible Net Worth (except as provided in the last clause of this
sentence) in an amount at least equal to the aggregate of one year's Minimum
Rent payable pursuant to this Agreement and the Other Leases in effect from
time to time; it being expressly understood and agreed that the sum of the
Retained Funds (as defined in the Purchase Agreement) may for such purpose be
counted as equity at the full amount thereof if such amounts are contributed to
Tenant.
21.7 Distributions, Payments to Affiliated Persons, Etc. Tenant
shall not declare, order, pay or make, directly or indirectly, any
Distributions or any payment to any Affiliated Person of Tenant (including
payments in the ordinary course of business and payments pursuant to management
agreements with any such Affiliated Person) or set apart any sum or property
therefor, or agree to do so, if, at the time of such proposed action, or
immediately after giving effect thereto, any Event of Default shall exist.
21.8 Prohibited Transactions. Tenant shall not permit to exist or
enter into any agreement or arrangement whereby it engages in a transaction of
any kind with any Affiliated Person as to Tenant, except on terms and
conditions which are commercially reasonable or as otherwise described in
Wyndham's draft prospectus for its initial public offering or as provided in
Section 21.5.
<PAGE> 87
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21.9 Liens and Encumbrances. Except as permitted by Section 7.1,
Article 19 and Section 21.5, Tenant shall not create or incur or suffer to be
created or incurred or to exist any Lien on this Agreement or any of Tenant's
assets, properties, rights or income, or any of its interest therein, now or at
any time hereafter owned, other than:
(a) Security interests securing the purchase price of
equipment or personal property whether acquired before or after the
Commencement Date; provided, however, that (i) such Lien shall at all
times be confined solely to the asset in question and (ii) the aggregate
principal amount of Indebtedness secured by any such Lien shall not
exceed the cost of acquisition or construction of the property subject
thereto;
(b) Permitted Encumbrances; and
(c) As permitted pursuant to Article 19 and Section 21.5.
21.10 Merger; Sale of Assets; Etc. Except as otherwise permitted by
this Agreement, Tenant shall not (i) sell, lease (as lessor or sublessor),
transfer or otherwise dispose of, or abandon, all or any material portion of
its assets (including capital stock) or business to any Person, (ii) merge into
or with or consolidate with any other Entity, or (iii) sell, lease (as lessor
or sublessor), transfer or otherwise dispose of, or abandon, any personal
property or fixtures or any real property; provided, however, that,
notwithstanding the provisions of clause (iii) preceding, Tenant may dispose of
equipment or fixtures which have become inadequate, obsolete, worn-out,
unsuitable, undesirable or unnecessary, provided substitute equipment or
fixtures having equal or greater value and utility (but not necessarily having
the same function) have been provided.
ARTICLE 22
MISCELLANEOUS
22.1 Limitation on Payment of Rent. All agreements between Landlord
and Tenant herein are hereby expressly limited so that
<PAGE> 88
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in no contingency or event whatsoever, whether by reason of acceleration of
Rent, or otherwise, shall the Rent or any other amounts payable to Landlord
under this Agreement exceed the maximum permissible under applicable law, the
benefit of which may be asserted by Tenant as a defense, and if, from any
circumstance whatsoever, fulfillment of any provision of this Agreement, at the
time performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law, or if from any circumstances Landlord
should ever receive as fulfillment of such provision such an excessive amount,
then, ipso facto, the amount which would be excessive shall be applied to the
reduction of the installment(s) of Minimum Rent next due and not to the payment
of such excessive amount. This provision shall control every other provision
of this Agreement and any other agreements between Landlord and Tenant.
22.2 No Waiver. No failure by Landlord or Tenant to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the maximum extent permitted by law,
no waiver of any breach shall affect or alter this Agreement, which shall
continue in full force and effect with respect to any other then existing or
subsequent breach.
22.3 Remedies Cumulative. To the maximum extent permitted by law,
each legal, equitable or contractual right, power and remedy of Landlord or
Tenant, now or hereafter provided either in this Agreement or by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord of any or all of such other rights, powers and remedies.
22.4 Severability. Any clause, sentence, paragraph, section or
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement, but rather the effect thereof shall be confined to
the clause, sentence, paragraph, section or provision so held to be
<PAGE> 89
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invalid, illegal or ineffective, and this Agreement shall be construed as if
such invalid, illegal or ineffective provisions had never been contained
therein.
22.5 Acceptance of Surrender. No surrender to Landlord of this
Agreement or of the Leased Property or any part thereof, or of any interest
therein, shall be valid or effective unless agreed to and accepted in writing
by Landlord and no act by Landlord or any representative or agent of Landlord,
other than such a written acceptance by Landlord, shall constitute an
acceptance of any such surrender.
22.6 No Merger of Title. It is expressly acknowledged and agreed
that it is the intent of the parties that there shall be no merger of this
Agreement or of the leasehold estate created hereby by reason of the fact that
the same Person may acquire, own or hold, directly or indirectly this Agreement
or the leasehold estate created hereby and the fee estate or ground landlord's
interest in the Leased Property.
22.7 Conveyance by Landlord. If Landlord or any successor owner of
all or any portion of the Leased Property shall convey all or any portion of
the Leased Property in accordance with the terms hereof other than as security
for a debt, and the grantee or transferee of such of the Leased Property shall
expressly assume all obligations of Landlord hereunder arising or accruing from
and after the date of such conveyance or transfer, Landlord or such successor
owner, as the case may be, shall, provided such successor owner shall have a
Tangible Net Worth of not less than Fifty Million ($50,000,000) Dollars
thereupon be released from all future liabilities and obligations of Landlord
under this Agreement with respect to such of the Leased Property arising or
accruing from and after the date of such conveyance or other transfer and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.
22.8 Quiet Enjoyment. Provided that no Event of Default shall have
occurred and be continuing, Tenant shall peaceably and quietly have, hold and
enjoy the Leased Property for the Term, free of hindrance or molestation by
Landlord or anyone claiming by, through or under Landlord, but subject to (a)
any Encumbrance permitted under Article 20 or otherwise permitted to be created
by Landlord hereunder provided that the holder of such
<PAGE> 90
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Encumbrance has, to the extent appropriate, executed a nondisturbance agreement
pursuant to Section 20.2 or a subordination agreement in form and substance
reasonably acceptable to Tenant, (b) all Permitted Encumbrances, (c) liens as
to obligations of Landlord that are either not yet due or which are being
contested in good faith and by proper proceedings, provided the same do not
materially interfere with Tenant's ability to operate the Hotel and (d) liens
that have been consented to in writing by Tenant. Except as otherwise provided
in this Agreement, no failure by Landlord to comply with the foregoing covenant
shall give Tenant any right to cancel or terminate this Agreement or abate,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Agreement, or to fail to perform any other obligation of
Tenant hereunder.
22.9 Memorandum of Lease. Neither Landlord nor Tenant shall record
this Agreement. However, Landlord and Tenant shall promptly, upon the request
of the other, enter into a short form memorandum of this Agreement, in form
suitable for recording under the laws of the State in which reference to this
Agreement, and all options contained herein, shall be made. The parties shall
share equally all costs and expenses of recording such memorandum.
22.10 Notices.
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same
shall be delivered either in hand, by telecopier with written
acknowledgment of receipt, or by mail or Federal Express or similar
expedited commercial carrier, addressed to the recipient of the notice,
postpaid and registered or certified with return receipt requested (if
by mail), or with all freight charges prepaid (if by Federal Express or
similar carrier).
(b) All notices required or permitted to be sent hereunder
shall be deemed to have been given for all purposes of this Agreement
upon the date of acknowledged receipt, in the case of a notice by
telecopier, and, in all other cases, upon the date of receipt or
refusal, except
<PAGE> 91
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that whenever under this Agreement a notice is either received on a day
which is not a Business Day or is required to be delivered on or before
a specific day which is not a Business Day, the day of receipt or
required delivery shall automatically be extended to the next Business
Day.
(c) All such notices shall be addressed,
if to Landlord to:
Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Attn: Mr. John G. Murray
[Telecopier No. (617) 969-5730]
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Jennifer B. Clark, Esq.
[Telecopier No. (617) 338-2880]
if to Tenant to:
Wyndham Hotels and Resorts
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attn: Ms. Anne L. Raymond
[Telecopier No. (214) 863-1262]
with a copy to:
Locke, Purnell, Rain, Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Attn: Mitchell Bell, Esq.
[Telecopier No. (214) 740-8800]
(d) By notice given as herein provided, the parties hereto and
their respective successor and assigns shall have the right from time to
time and at any time during the term
<PAGE> 92
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of this Agreement to change their respective addresses effective upon
receipt by the other parties of such notice and each shall have the
right to specify as its address any other address within the United
States of America.
22.11 Trade Area Restriction. Neither Tenant nor any of its
Affiliated Persons shall own, build, franchise, manage or operate any Wyndham
Garden hotel within the designated area on Exhibit D, at any time during the
Term; it being expressly understood and agreed that hotels other than Wyndham
Garden hotels (e.g. full service hotels or resort hotels) are not subject to
the foregoing restriction.
22.12 Construction. Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the Leased Property shall survive such termination or
expiration. In no event shall Landlord be liable for any consequential damages
suffered by Tenant as the result of a breach of this Agreement by Landlord.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
to be charged. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Each term or provision of this Agreement to be
performed by Tenant shall be construed as an independent covenant and
condition. Time is of the essence with respect to the provisions of this
Agreement. Except as otherwise set forth in this Agreement, any obligations of
Tenant (including without limitation, any monetary, repair and indemnification
obligations) and Landlord shall survive the expiration or sooner termination of
this Agreement. Whenever it is provided in this Agreement that Tenant shall
direct the Manager to take any action, Tenant shall not be deemed to have
satisfied such obligation unless Tenant shall have exhausted all applicable
rights and remedies of Tenant as "Owner" under the Management Agreement.
22.13 Counterparts; Headings. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but which,
when taken together, shall constitute but one instrument and shall become
effective as of the date hereof when copies hereof, which, when taken together,
<PAGE> 93
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bear the signatures of each of the parties hereto shall have been signed.
Headings in this Agreement are for purposes of reference only and shall not
limit or affect the meaning of the provisions hereof.
22.14 Applicable Law, Etc. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of the State
applicable to contracts between residents of the State which are to be
performed entirely within the State, regardless of (i) where this Agreement is
executed or delivered; or (ii) where any payment or other performance required
by this Agreement is made or required to be made; or (iii) where any breach of
any provision of this Agreement occurs, or any cause of action otherwise
accrues; or (iv) where any action or other proceeding is instituted or pending;
or (v) the nationality, citizenship, domicile, principal place of business, or
jurisdiction of organization or domestication of any party; or (vi) whether the
laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction
other than the State; or (vii) any combination of the foregoing.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
the State as is provided by law; and the parties consent to the jurisdiction of
said court or courts located in the State and to service of process by
registered mail, return receipt requested, or by any other manner provided by
law.
22.15 Right to Make Agreement. Each party warrants, with respect to
itself, that neither the execution of this Agreement, nor the consummation of
any transaction contemplated hereby, shall violate any provision of any law, or
any judgment, writ, injunction, order or decree of any court or governmental
authority having jurisdiction over it; nor result in or constitute a breach or
default under any indenture, contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or
approval which has not been given or taken, or at the time of the transaction
involved shall not have been given or taken. Each party covenants that it has
and will continue to have throughout the term of this Agreement and any
extensions thereof, the full
<PAGE> 94
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right to enter into this Agreement and perform its obligations hereunder.
22.16 Nonrecourse. Nothing contained in this Agreement shall be
construed to impose any liabilities or obligations on Wyndham or any of its
shareholders for the payment or performance of the obligations or liabilities
of Tenant under this Agreement.
22.17 Confidentiality. Except to prospective lenders and purchasers
or as may be required by law, the SEC or any securities and exchange
commission, Landlord shall not disclose any of Tenant's confidential or
proprietary information to any Person.
<PAGE> 95
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IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
LANDLORD:
HPTWN CORPORATION
By:
---------------------------------
Its:
----------------------
TENANT:
GARDEN HOTEL ASSOCIATES TWO LP
By: Garden Hotel Partners LP,
General Partner
By: Garden Hotel Corporation
No. 2, General Partner
By:
---------------------------------
Its:
----------------------
<PAGE> 96
EXHIBIT A
Annual Minimum Rent
$_______ which is allocated as follows:
Portion of Annual
Portion of Annual Minimum Minimum Rent Allocated
Rent Allocated to Leased to Leased Personal
Property and Leased Property and Leased
Year Intangible Property Intangible Property
1996
1997
1998
1999
2000 and beyond All 0
<PAGE> 97
EXHIBIT B
Other Leases
[See attached copy.]
<PAGE> 98
EXHIBIT C
The Land
[See attached copy.]
<PAGE> 99
EXHIBIT D
Restricted Trade Area
[See attached copy.]
<PAGE> 100
EXHIBIT E
Form of Landlord Estoppel Certificate
[See attached copy.]
<PAGE> 1
EXHIBIT 10.3 (k)
LEASE AGREEMENT
DATED AS OF JANUARY 8, 1997
BY AND BETWEEN
HPTSLC CORPORATION,
AS LANDLORD
AND
WHC SALT LAKE CITY CORPORATION,
AS TENANT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Additional Charges . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Affiliated Person . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Base Total Hotel Sales . . . . . . . . . . . . . . . . . . . . 3
1.8 Base Year . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Capital Addition . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Capital Expenditure . . . . . . . . . . . . . . . . . . . . . 4
1.12 Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Commencement Date . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Condemnor . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Consolidated Financials . . . . . . . . . . . . . . . . . . . 4
1.18 Date of Taking . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Disbursement Rate . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.22 Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Environment . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Environmental Obligation . . . . . . . . . . . . . . . . . . . 5
1.26 Environmental Notice . . . . . . . . . . . . . . . . . . . . . 5
1.27 Event of Default . . . . . . . . . . . . . . . . . . . . . . . 5
1.28 Excess Total Hotel Sales . . . . . . . . . . . . . . . . . . . 5
1.29 Extended Terms . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 FF&E Estimate . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.31 FF&E Reserve . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.32 Financial Officer's Certificate . . . . . . . . . . . . . . . 5
1.33 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 Fixed Term . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.35 Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.36 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.37 Government Agencies . . . . . . . . . . . . . . . . . . . . . . 6
1.38 Hazardous Substances . . . . . . . . . . . . . . . . . . . . . 6
1.39 Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.40 Hotel Mortgage . . . . . . . . . . . . . . . . . . . . . . . . 7
1.41 Hotel Mortgagee . . . . . . . . . . . . . . . . . . . . . . . 7
1.42 Immediate Family . . . . . . . . . . . . . . . . . . . . . . . 7
1.43 Impositions . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
-ii-
<TABLE>
<S> <C> <C>
1.44 Incidental Documents . . . . . . . . . . . . . . . . . . . . . 8
1.45 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.46 Insurance Requirements . . . . . . . . . . . . . . . . . . . . 9
1.47 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.48 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.49 Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.50 Landlord Liens . . . . . . . . . . . . . . . . . . . . . . . . 9
1.51 Lease Year . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.52 Leased Improvements . . . . . . . . . . . . . . . . . . . . . 9
1.53 Leased Intangible Property . . . . . . . . . . . . . . . . . . 9
1.54 Leased Personal Property . . . . . . . . . . . . . . . . . . . 10
1.55 Leased Property . . . . . . . . . . . . . . . . . . . . . . . 10
1.56 Leasehold Mortgage . . . . . . . . . . . . . . . . . . . . . . 10
1.57 Leasehold Mortgagee . . . . . . . . . . . . . . . . . . . . . . 10
1.58 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . 10
1.59 Lending Institution . . . . . . . . . . . . . . . . . . . . . 10
1.60 Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.61 Limited Guaranty . . . . . . . . . . . . . . . . . . . . . . . 11
1.63 Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.64 Minimum Rent . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.65 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.66 Officer's Certificate . . . . . . . . . . . . . . . . . . . . 11
1.67 Overdue Rate . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.68 Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.69 Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . 11
1.70 Permitted Liens . . . . . . . . . . . . . . . . . . . . . . . 11
1.71 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . 11
1.72 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.73 Pledge and Security Agreement . . . . . . . . . . . . . . . . . 12
1.74 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.75 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.76 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.77 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . 12
1.78 State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.79 Stock Pledge Agreement . . . . . . . . . . . . . . . . . . . . 12
1.80 Subordinated Creditor . . . . . . . . . . . . . . . . . . . . 12
1.81 Subordination Agreement . . . . . . . . . . . . . . . . . . . 12
1.82 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.83 Successor Landlord . . . . . . . . . . . . . . . . . . . . . . 12
1.84 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . 12
1.85 Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.86 Tenant's Personal Property . . . . . . . . . . . . . . . . . . 13
1.87 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.88 Total Hotel Sales . . . . . . . . . . . . . . . . . . . . . . . 13
1.89 Uniform System of Accounts . . . . . . . . . . . . . . . . . . 14
1.90 Unsuitable for Its Permitted Use . . . . . . . . . . . . . . . 14
1.91 Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.92 Wyndham . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
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ARTICLE 2: LEASED PROPERTY AND TERM . . . . . . . . . . . . . . . . . . . . 14
2.1 Leased Property . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Condition of Leased Property . . . . . . . . . . . . . . . . . 16
2.3 Fixed Term . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Extended Term . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3: RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1.1 Minimum Rent . . . . . . . . . . . . . . . . . . . . . 17
3.1.2 Additional Rent . . . . . . . . . . . . . . . . . . . . 18
3.1.3 Additional Charges . . . . . . . . . . . . . . . . . . 20
3.2 Late Payment of Rent, Etc. . . . . . . . . . . . . . . . . . . 22
3.3 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 No Termination, Abatement, Etc. . . . . . . . . . . . . . . . . 23
3.5 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4: USE OF THE LEASED PROPERTY . . . . . . . . . . . . . . . . . . . 25
4.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . 25
4.1.2 Necessary Approvals . . . . . . . . . . . . . . . . . . 26
4.1.3 Lawful Use, Etc. . . . . . . . . . . . . . . . . . . . 26
4.2 Compliance with Legal/Insurance Requirements, Etc . . . . . . . 26
4.3 Environmental Matters . . . . . . . . . . . . . . . . . . . . 26
4.3.1 Restriction on Use, Etc. . . . . . . . . . . . . . . . 26
4.3.2 Indemnification of Landlord . . . . . . . . . . . . . . 27
4.3.3 Survival . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5: MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . 28
5.1 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . 28
5.1.1 Tenant's General Obligations . . . . . . . . . . . . . 29
5.1.2 FF&E Reserve . . . . . . . . . . . . . . . . . . . . . 29
5.1.3 Landlord's Obligations . . . . . . . . . . . . . . . . 31
5.1.4 Nonresponsibility of Landlord, Etc. . . . . . . . . . . 32
5.2 Tenant's Personal Property . . . . . . . . . . . . . . . . . . 32
5.3 Yield Up . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.4 Management Agreement . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 6: IMPROVEMENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Improvements to the Leased Property. . . . . . . . . . . . . . 34
6.2 Improvement Advances . . . . . . . . . . . . . . . . . . . . . 35
6.3 Improvements Financed by Landlord . . . . . . . . . . . . . . 36
6.4 Salvage . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
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<TABLE>
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ARTICLE 7: LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Landlord's Lien . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 8: PERMITTED CONTESTS . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 9: INSURANCE AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . 38
9.1 General Insurance Requirements . . . . . . . . . . . . . . . . . 38
9.2 Replacement Cost . . . . . . . . . . . . . . . . . . . . . . . . 39
9.3 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . 40
9.4 Form Satisfactory, Etc . . . . . . . . . . . . . . . . . . . . . 40
9.5 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.6 No Separate Insurance . . . . . . . . . . . . . . . . . . . . . 41
9.7 Indemnification of Landlord . . . . . . . . . . . . . . . . . . 41
ARTICLE 10: CASUALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.1 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . 42
10.2 Damage or Destruction . . . . . . . . . . . . . . . . . . . . . 42
10.2.1 Damage or Destruction of Leased Property . . . . . . . . 42
10.2.2 Partial Damage or Destruction . . . . . . . . . . . . . 43
10.2.3 Insufficient Insurance Proceeds . . . . . . . . . . . . 43
10.2.4 Disbursement of Proceeds . . . . . . . . . . . . . . . 43
</TABLE>
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<TABLE>
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10.3 Damage Near End of Term . . . . . . . . . . . . . . . . . . . . 44
10.4 Tenant's Property . . . . . . . . . . . . . . . . . . . . . . . 45
10.5 Restoration of Tenant's Property . . . . . . . . . . . . . . . 45
10.6 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . 45
10.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 11: CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.1 Total Condemnation, Etc. . . . . . . . . . . . . . . . . . . . 45
11.2 Partial Condemnation . . . . . . . . . . . . . . . . . . . . . 46
11.3 Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . 47
11.4 Temporary Condemnation . . . . . . . . . . . . . . . . . . . . 47
11.5 Allocation of Award . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 12: DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 48
12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 48
12.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.3 Tenant's Waiver . . . . . . . . . . . . . . . . . . . . . . . . 52
12.4 Application of Funds . . . . . . . . . . . . . . . . . . . . . 52
12.5 Landlord's Right to Cure Tenant's Default . . . . . . . . . . . 52
ARTICLE 13: HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 14: LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT . . . . . . . . 53
14.1 Landlord Notice Obligation . . . . . . . . . . . . . . . . . . 53
14.2 Landlord's Default . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 15: PURCHASE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 54
15.1 First Refusal to Purchase . . . . . . . . . . . . . . . . . . . 54
15.2 Landlord's Option to Purchase the Tenant's
Personal Property; Transfer of Licenses . . . . . . . . 55
ARTICLE 16: SUBLETTING AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . 56
16.1 Subletting and Assignment . . . . . . . . . . . . . . . . . . . 56
16.2 Required Sublease Provisions . . . . . . . . . . . . . . . . . 57
16.3 Permitted Sublease . . . . . . . . . . . . . . . . . . . . . . 58
16.4 Sublease Limitation . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 17: ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS . . . . . . . . . 58
17.1 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . 58
17.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . 59
17.3 General Operations . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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ARTICLE 18: LANDLORD'S RIGHT TO INSPECT . . . . . . . . . . . . . . . . . . 60
ARTICLE 19: LEASEHOLD MORTGAGES . . . . . . . . . . . . . . . . . . . . . . 61
19.1 Leasehold Mortgages Authorized . . . . . . . . . . . . . . . . 61
19.2 Notices to Landlord . . . . . . . . . . . . . . . . . . . . . . 61
19.3 Cure by Leasehold Mortgagee . . . . . . . . . . . . . . . . . . 61
19.4 Landlord Estoppel Certificates. . . . . . . . . . . . . . . . 62
ARTICLE 20: HOTEL MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . 62
20.1 Landlord May Grant Liens . . . . . . . . . . . . . . . . . . . 62
20.2 Subordination of Lease . . . . . . . . . . . . . . . . . . . . 62
20.3 Notice to Mortgagee and Superior Landlord . . . . . . . . . . . 64
ARTICLE 21: ADDITIONAL COVENANTS OF TENANT . . . . . . . . . . . . . . . . . 64
21.1 Prompt Payment of Indebtedness . . . . . . . . . . . . . . . . 64
21.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 65
21.3 Maintenance of Accounts and Records . . . . . . . . . . . . . . 65
21.4 Notice of Litigation, Etc. . . . . . . . . . . . . . . . . . . 65
21.5 Indebtedness of Tenant . . . . . . . . . . . . . . . . . . . . 65
21.6 Financial Condition of Tenant . . . . . . . . . . . . . . . . . 66
21.7 Distributions, Payments to Affiliated
Persons, Etc . . . . . . . . . . . . . . . . . . . . . 66
21.8 Prohibited Transactions . . . . . . . . . . . . . . . . . . . . 67
21.9 Liens and Encumbrances . . . . . . . . . . . . . . . . . . . . 67
21.10 Merger; Sale of Assets; Etc . . . . . . . . . . . . . . . . . 67
ARTICLE 22: REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 68
22.1 Representations of Tenant . . . . . . . . . . . . . . . . . . . 68
22.1.1 Status and Authority of Tenant . . . . . . . . . . . 68
22.1.2 Action of Tenant . . . . . . . . . . . . . . . . . . 68
22.1.3 No Violations of Agreements . . . . . . . . . . . . . 68
22.1.4 Litigation . . . . . . . . . . . . . . . . . . . . . 68
22.1.5 Existing Leases, Agreements, Etc. . . . . . . . . . . 69
22.1.6 Disclosure . . . . . . . . . . . . . . . . . . . . . 69
22.1.7 Utilities, Etc. . . . . . . . . . . . . . . . . . . . 69
22.1.8 Compliance With Law . . . . . . . . . . . . . . . . . 69
22.1.9 Hazardous Substances . . . . . . . . . . . . . . . . 69
22.2 Representations of Landlord . . . . . . . . . . . . . . . . . . 70
22.2.1 Status and Authority of Landlord . . . . . . . . . . 70
22.2.2 Action of Landlord . . . . . . . . . . . . . . . . . 70
22.2.3 No Violations of Agreements . . . . . . . . . . . . . 70
22.2.4 Litigation . . . . . . . . . . . . . . . . . . . . . 70
22.3 Survival, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
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<TABLE>
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ARTICLE 23: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 71
23.1 Limitation on Payment of Rent . . . . . . . . . . . . . . . . . 71
23.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
23.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . 72
23.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 72
23.5 Acceptance of Surrender . . . . . . . . . . . . . . . . . . . . 72
23.6 No Merger of Title . . . . . . . . . . . . . . . . . . . . . . 72
23.7 Conveyance by Landlord . . . . . . . . . . . . . . . . . . . . 72
23.8 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . 73
23.9 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . 73
23.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
23.11 Trade Area Restriction . . . . . . . . . . . . . . . . . . . . 75
23.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . . 75
23.13 Counterparts; Headings . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
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23.14 Applicable Law, Etc. . . . . . . . . . . . . . . . . . . . . . 75
23.15 Special Landlord Option . . . . . . . . . . . . . . . . . . . . 76
23.16 Nonrecourse. . . . . . . . . . . . . . . . . . . . . . . . . 77
23.17 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
EXHIBITS
A - The Land
B - Approved Budget and Improvements
C - Form of Landlord Estoppel
D - Restricted Trade Area
E - Rent Allocation
<PAGE> 10
LEASE AGREEMENT
THIS LEASE AGREEMENT is entered into as of this ___ day of January,
1997, by and between HPTSLC CORPORATION, a Delaware corporation, as landlord
("Landlord"), and WHC SALT LAKE CITY CORPORATION, a Delaware corporation, as
tenant ("Tenant").
W I T N E S S E T H :
WHEREAS, Landlord owns fee simple title to the Leased Property (this and
other capitalized terms used and not otherwise defined herein having the
meanings ascribed to such terms in Article 1); and
WHEREAS, Landlord wishes to lease the Leased Property to Tenant and
Tenant wishes to lease the Leased Property from Landlord, all subject to and
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in
this Article shall have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein shall have the meanings assigned to them in accordance
with GAAP, (iii) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of this Agreement, and (iv) the words "herein," "hereof,"
"hereunder" and
<PAGE> 11
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other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Additional Rent" shall have the meaning given such term
in Section 3.1.2(a).
1.2 "Additional Charges" shall have the meaning given such
term in Section 3.1.3.
1.3 "Affiliated Person" shall mean, with respect to any
Person, (a) in the case of any such Person which is a partnership, any partner
in such partnership, (b) in the case of any such Person which is a limited
liability company, any member of such company, (c) any other Person which is a
Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person
or to one or more of the Persons referred to in the preceding clauses (a) and
(b), (d) any other Person who is an officer, director, trustee or employee of,
or partner in or member of, such Person or any Person referred to in the
preceding clauses (a), (b) and (c), and (e) any other Person who is a member of
the Immediate Family of such Person or of any Person referred to in the
preceding clauses (a) through (d).
1.4 "Agreement" shall mean this Lease Agreement, including
Exhibits A to D hereto, as it and they may be amended from time to time as
herein provided.
1.5 "Applicable Laws" shall mean all applicable laws,
statutes, regulations, rules, ordinances, codes, licenses, permits and orders,
from time to time in existence, of all courts of competent jurisdiction and
Government Agencies, and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, real or personal
property or human health (except those requirements which, by definition, are
solely the responsibility of employers) or the Environment, including, without
limitation, all valid and lawful requirements of courts and other Government
Agencies pertaining to reporting, licensing, permitting, investigation,
remediation and removal of underground improvements (including, without
limitation, treatment or storage tanks, or water, gas or oil wells), or
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pesti-
<PAGE> 12
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cides, petroleum or petroleum products, pollutants, contaminants or hazardous
or toxic substances, materials or wastes whether solid, liquid or gaseous in
nature, into the Environment, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, underground improvements (including, without limitation,
treatment or storage tanks, or water, gas or oil wells), or pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature.
1.6 "Award" shall mean all compensation, sums or other value
awarded, paid or received by virtue of a total or partial Condemnation of the
Leased Property (after deduction of all reasonable legal fees and other
reasonable costs and expenses, including, without limitation, expert witness
fees, incurred by Landlord, in connection with obtaining any such award).
1.7 "Base Total Hotel Sales" shall mean Total Hotel Sales for
the Base Year; provided, however, that in the event that, with respect to any
Lease Year, or portion thereof, for any reason (including, without limitation,
a casualty or Condemnation) there shall be, for two hundred seventy (270) days
or more in any Lease Year, a reduction in the number of rooms at the Hotel or a
change in the services provided at the Hotel (including, without limitation,
closing of restaurants or the discontinuation of food or beverage services)
from the number of rooms or the services provided during the Base Year, in
determining Additional Rent payable with respect to such Lease Year, Base Total
Hotel Sales shall be reduced as follows: (a) in the event of and for the
duration of a complete closing of the Hotel following application of any
business interruption or Award proceeds collected with respect thereto, Total
Hotel Sales during the applicable period of the Base Year throughout the period
of such closing shall be subtracted from Base Total Hotel Sales; (b) in the
event of a partial closing of the Hotel affecting any number of guest rooms in
the Hotel and following application of any business interruption or Award
proceeds collected with respect thereto, Total Hotel Sales attributable to
guest room occupancy or guest room services at the Hotel during the Base Year
shall be ratably allocated among all guest rooms in service at the Hotel during
the Base Year and all such Total Hotel Sales attributable to rooms no longer in
service shall be subtracted
<PAGE> 13
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from Base Total Hotel Sales throughout the period of such closing; (c) in the
event of a closing of a restaurant not, simultaneously with such closing,
replaced by reasonably equivalent dining facilities and following application
of any business interruption or Award proceeds collected with respect thereto,
all Total Hotel Sales attributable to such restaurant during the Base Year
shall be subtracted from Base Total Hotel Sales throughout the period of such
closing; and (d) in the event of any other change in circumstances affecting
the Hotel, Base Total Hotel Sales shall be equitably adjusted in such manner as
Landlord and Tenant shall reasonably agree.
1.8 "Base Year" shall mean, with respect to the 1998 Fiscal
Year, the 1997 calendar year and, with respect to all subsequent years, the
1998 calendar year.
1.9 "Business Day" shall mean any day other than Saturday,
Sunday, or any other day on which banking institutions in The Commonwealth of
Massachusetts or the State of Texas are authorized by law or executive action
to close.
1.10 "Capital Addition" shall mean any renovation, repair or
improvement to the Leased Property (or portion thereof), the cost of which
constitutes a Capital Expenditure.
1.11 "Capital Expenditure" shall mean any expenditure treated
as capital in nature in accordance with GAAP.
1.12 "Claim" shall have the meaning given such term in Article
8.
1.13 "Code" shall mean the Internal Revenue Code of 1986 and,
to the extent applicable, the Treasury Regulations promulgated thereunder, each
as from time to time amended.
1.14 "Commencement Date" shall mean the date of this
Agreement.
1.15 "Condemnation" shall mean (a) the exercise of any
governmental power with respect to the Leased Property, whether by legal
proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a
voluntary sale or transfer of the Leased Property by Landlord to any Condemnor,
either under threat of
<PAGE> 14
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condemnation or while legal proceedings for condemnation are pending, or (c) a
taking or voluntary conveyance of all or part of the Leased Property, or any
interest therein, or right accruing thereto or use thereof, as the result or in
settlement of any Condemnation or other eminent domain proceeding affecting the
Leased Property, whether or not the same shall have actually been commenced.
1.16 "Condemnor" shall mean any public or quasi-public
authority, or private corporation or Person, having the power of Condemnation.
1.17 "Consolidated Financials" shall mean, for any Fiscal Year
or other accounting period of Tenant, annual audited and quarterly unaudited
financial statements of Wyndham prepared on a consolidated basis, including
Wyndham's consolidated balance sheet and the related statements of income and
cash flows, all in reasonable detail, and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding Fiscal
Year, and prepared in accordance with GAAP throughout the periods reflected.
1.18 "Date of Taking" shall mean the date the Condemnor has
the right to possession of the Leased Property, or any portion thereof, in
connection with a Condemnation.
1.19 "Default" shall mean any event or condition which with
the giving of notice and/or lapse of time may ripen into an Event of Default.
1.20 "Disbursement Rate" shall mean an annual rate of interest
equal to the greater of, as of the date of determination, (i) the Interest Rate
and (ii) the per annum rate for ten (10) year U.S. Treasury Obligations as
published in The Wall Street Journal plus three hundred fifty (350) basis
points.
1.21 "Distribution" shall mean (a) any declaration or payment
of any dividend (except dividends payable in common stock of Tenant) on or in
respect of any shares of any class of capital stock of Tenant, (b) any
purchase, redemption, retirement or other acquisition of any shares of any
class of capital stock of a corporation, (c) any other distribution on or in
respect of any
<PAGE> 15
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shares of any class of capital stock of a corporation, or (d) any return of
capital to shareholders.
1.22 "Encumbrance" shall have the meaning given such term in
Section 20.1.
1.23 "Entity" shall mean any corporation, general or limited
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, cooperative, any government or agency or political
subdivision thereof or any other entity.
1.24 "Environment" shall mean soil, surface waters, ground
waters, land, stream, sediments, surface or subsurface strata and ambient air.
1.25 "Environmental Obligation" shall have the meaning given
such term in Section 4.3.1.
1.26 "Environmental Notice" shall have the meaning given such
term in Section 4.3.1.
1.27 "Event of Default" shall have the meaning given such term
in Section 12.1.
1.28 "Excess Total Hotel Sales" shall mean, with respect to
any Lease Year, or portion thereof, the amount of Total Hotel Sales for such
Lease Year, or portion thereof, in excess of Base Total Hotel Sales for the
equivalent period.
1.29 "Extended Terms" shall have the meaning given such term
in Section 2.4.
1.30 "FF&E Estimate" shall have the meaning given such term in
Section 5.1.2(c).
1.31 "FF&E Reserve" shall have the meaning given such term in
Section 5.1.2(a).
1.32 "Financial Officer's Certificate" shall mean, as to any
Person, a certificate of the chief financial officer or chief accounting
officer (or such officers' authorized designee) of
<PAGE> 16
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such Person, duly authorized, accompanying the financial statements required to
be delivered by such Person pursuant to Section 17.2, in which such officer
shall certify (a) that such statements have been properly prepared in
accordance with GAAP and are true, correct and complete in all material
respects and fairly present the consolidated financial condition of such Person
at and as of the dates thereof and the results of its and their operations for
the periods covered thereby, and (b) certify that no Event of Default has
occurred and is continuing hereunder.
1.33 "Fiscal Year" shall mean the calendar year.
1.34 "Fixed Term" shall have the meaning given such term in
Section 2.3.
1.35 "Fixtures" shall have the meaning given such term in
Section 2.1(d).
1.36 "GAAP" shall mean generally accepted accounting
principles consistently applied.
1.37 "Government Agencies" shall mean any court, agency,
authority, board (including, without limitation, environmental protection,
planning and zoning), bureau, commission, department, office or instrumentality
of any nature whatsoever of any governmental or quasi-governmental unit of the
United States or the State or any county or any political subdivision of any of
the foregoing, whether now or hereafter in existence, having jurisdiction over
Tenant or the Leased Property or any portion thereof or the Hotel operated
thereon.
1.38 "Hazardous Substances" shall mean any substance:
(a) the presence of which requires or may hereafter
require notification, investigation or remediation under any
federal, state or local statute, regulation, rule, ordinance,
order, action or policy; or
(b) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future federal, state or local
statute, regulation, rule or ordi-
<PAGE> 17
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nance or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. et seq.) and the Resource Conservation and
Recovery Act (42 U.S.C. section 6901 et seq.) and the regulations
promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is or becomes regulated by any governmental
authority, agency, department, commission, board, agency or
instrumentality of the United States, any state of the United
States, or any political subdivision thereof; or
(d) the presence of which on the Leased Property causes
or materially threatens to cause an unlawful nuisance upon the
Leased Property or to adjacent properties or poses or materially
threatens to pose a hazard to the Leased Property or to the
health or safety of persons on or about the Leased Property; or
(e) without limitation, which contains gasoline, diesel
fuel or other petroleum hydrocarbons or volatile organic
compounds; or
(f) without limitation, which contains polychlorinated
biphenyls (PCBs) or asbestos or urea formaldehyde foam
insulation; or
(g) without limitation, which contains or emits
radioactive particles, waves or material; or
(h) without limitation, constitutes materials which are
now or may hereafter be subject to regulation pursuant to the
Material Waste Tracking Act of 1988, or any Applicable Laws
promulgated by any Government Agencies.
1.39 "Hotel" shall mean the hotel to be operated on the Leased
Property as a full-service Wyndham Hotel as of the Commencement Date.
1.40 "Hotel Mortgage" shall mean any Encumbrance placed upon
the Leased Property in accordance with Article 20.
<PAGE> 18
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1.41 "Hotel Mortgagee" shall mean the holder of any Hotel
Mortgage.
1.42 "Immediate Family" shall mean, with respect to any
individual, such individual's spouse, parents, brothers, sisters, children
(natural or adopted), stepchildren, grandchildren, grandparents, parents-in-
law, brothers-in-law, sisters-in-law, nephews and nieces.
1.43 "Impositions" shall mean collectively, all taxes
(including, without limitation, all taxes imposed under the laws of the State,
as such laws may be amended from time to time, and all ad valorem, sales and
use, or similar taxes as the same relate to or are imposed upon Landlord,
Tenant or the business conducted upon the Leased Property), assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof),
water, sewer or other rents and charges, excises, tax levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property or the business conducted thereon
by Tenant (including all interest and penalties thereon due to any failure in
payment by Tenant), which at any time prior to, during or in respect of the
Term hereof may be assessed or imposed on or in respect of or be a lien upon
(a) Landlord's interest in the Leased Property, (b) the Leased Property or any
part thereof or any rent therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from,
or activity conducted on, or in connection with the Leased Property or the
leasing or use of the Leased Property or any part thereof by Tenant; provided,
however, that nothing contained herein shall be construed to require Tenant to
pay (i) any tax based on net income imposed on Landlord, (ii) any net revenue
tax of Landlord, (iii) any transfer fee or other tax imposed with respect to
the sale, exchange or other disposition by Landlord of the Leased Property or
the proceeds thereof, (iv) any single business, gross receipts tax, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Landlord, (v) any interest or penalties imposed on Landlord as a result of the
failure of
<PAGE> 19
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Landlord to file any return or report timely and in the form prescribed by law
or to pay any tax or imposition, except to the extent such failure is a result
of a breach by Tenant of its obligations pursuant to Section 3.1.3, (vi) any
Impositions imposed on Landlord that are a result of Landlord not being
considered a "United States person" as defined in Section 7701(a)(30) of the
Code, (vii) any Impositions that are enacted or adopted by their express terms
as a substitute for any tax that would not have been payable by Tenant pursuant
to the terms of this Agreement or (viii) any Impositions imposed as a result of
a breach of covenant or representation by Landlord in any agreement governing
Landlord's conduct or operation or as a result of the gross negligence or
willful misconduct of Landlord.
1.44 "Incidental Documents" shall mean the Pledge and Security
Agreement, the Stock Pledge Agreement and the Limited Guaranty.
1.45 "Indebtedness" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the obligor's
balance sheet as liabilities.
1.46 "Insurance Requirements" shall mean all terms of any
insurance policy required by this Agreement and all requirements of the issuer
of any such policy and all orders, rules and regulations and any other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) binding upon Landlord, Tenant or the Leased
Property.
1.47 "Interest Rate" shall mean ten percent (10%) per annum.
1.48 "Land" shall have the meaning given such term in Section
2.1(a).
1.49 "Landlord" shall have the meaning given such term in the
preambles to this Agreement and shall also include its permitted successors and
assigns.
1.50 "Landlord Liens" shall mean liens on or against the
Leased Property or any payment of Rent (a) which result from any act of, or any
claim against, Landlord or any owner of a direct or indirect interest in the
Leased Property, or which result from
<PAGE> 20
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any violation by Landlord of any terms of this Agreement or the Purchase
Agreement, or (b) which result from liens in favor of any taxing authority by
reason of any tax owed by Landlord or any fee owner of a direct or indirect
interest in the Leased Property; provided, however, that "Landlord Lien" shall
not include any lien resulting from any tax for which Tenant is obligated to
pay or indemnify Landlord against until such time as Tenant shall have already
paid to or on behalf of Landlord the tax or the required indemnity with respect
to the same.
1.51 "Lease Year" shall mean any Fiscal Year or portion
thereof, commencing with the 1997 Fiscal Year, during the Term.
1.52 "Leased Improvements" shall have the meaning given such
term in Section 2.1(b).
1.53 "Leased Intangible Property" shall mean all hotel
licensing agreements and other service contracts, equipment leases, booking
agreements and other arrangements or agreements affecting the ownership,
repair, maintenance, management, leasing or operation of the Leased Property to
which Landlord is a party; all books, records and files relating to the
leasing, maintenance, management or operation of the Leased Property belonging
to Landlord; all transferable or assignable permits, certificates of occupancy,
operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, rights to deposits, trade
names, service marks, telephone exchange numbers identified with the Leased
Property, and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character belonging to Landlord with
respect to the Leased Property.
1.54 "Leased Personal Property" shall have the meaning given
such term in Section 2.1(e).
1.55 "Leased Property" shall have the meaning given such term
in Section 2.1.
1.56 "Leasehold Mortgage" shall mean a mortgage, a deed to
secure debt, or other security instrument by which the leasehold estate or any
other rights of Tenant (including, without limitation, rights created by this
Agreement) is mortgaged,
<PAGE> 21
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conveyed, assigned, or otherwise transferred by Tenant, to secure a loan or
loans obtained, or obligations incurred or guaranteed, by Tenant to a Lending
Institution.
1.57 "Leasehold Mortgagee" shall mean the holder of any
Leasehold Mortgage.
1.58 "Legal Requirements" shall mean all federal, state,
county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions affecting the
Leased Property or the maintenance, construction, alteration or operation
thereof, whether now or hereafter enacted or in existence, including, without
limitation, (a) all permits, licenses, authorizations, certificates and
regulations necessary to operate the Leased Property for its Permitted Use, and
(b) all covenants, agreements, restrictions and encumbrances contained in any
instruments at any time in force affecting the Leased Property, including those
which may (i) require material repairs, modifications or alterations in or to
the Leased Property or (ii) in any way materially and adversely affect the use
and enjoyment thereof, but excluding any requirements arising as a result of
Landlord's status as a real estate investment trust.
1.59 "Lending Institution" shall mean any United States
insurance company, banking corporation, federally insured commercial or savings
bank, national banking association, United States savings and loan association,
employees' welfare, pension or retirement fund or system, corporate profit
sharing or pension trust, college or university, or real estate investment
trust, including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust, such trust having a net worth of at
least $100,000,000 and shall also mean and include Bankers Trust Company and
any Person participating in a loan syndicate with Bankers Trust Company.
1.60 "Lien" shall mean any mortgage, security interest,
pledge, collateral assignment, or other encumbrance, lien or charge of any
kind, or any transfer of property or assets for the purpose of subjecting the
same to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors.
<PAGE> 22
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1.61 "Limited Guaranty" shall mean the Limited Guaranty
Agreement, dated as of the date hereof, made by Wyndham for the benefit of
Landlord.
1.62 "Management Agreement" shall mean the Management
Agreement, dated the date hereof, between Tenant and Wyndham, together with all
amendments, modifications and supplements thereto.
1.63 "Manager" shall mean Wyndham Management Corporation, a
Delaware corporation, and its permitted successors and assigns.
1.64 "Minimum Rent" shall mean, with respect to each calendar
year, the sum of Four Million Four Hundred Thousand and Four Dollars
($4,400,004), allocated as set forth in Exhibit E.
1.65 "Notice" shall mean a notice given in accordance with
Section 22.10.
1.66 "Officer's Certificate" shall mean a certificate signed
by an officer of the certifying Entity duly authorized by the board of
directors of the certifying Entity.
1.67 "Overdue Rate" shall mean, on any date, a per annum rate
of interest equal to the lesser of fifteen percent (15%) and the maximum rate
then permitted under applicable law.
1.68 "Parent" shall mean, with respect to any Person, any
Person which owns directly, or indirectly through one or more Subsidiaries or
Affiliated Persons, five percent (5%) or more of the voting or beneficial
interest in, or otherwise has the right or power (whether by contract, through
ownership of securities or otherwise) to control, such Person.
1.69 "Permitted Encumbrances" shall mean all rights,
restrictions, and easements of record set forth on Schedule B to the owner's
title insurance policy issued to Landlord on the date hereof, plus any other
such encumbrances as may have been consented to in writing by Landlord from
time to time.
1.70 "Permitted Liens" shall mean any Liens granted in
accordance with Section 21.9(a).
<PAGE> 23
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1.71 "Permitted Use" shall mean any use of the Leased Property
permitted pursuant to Section 4.1.1.
1.72 "Person" shall mean any individual or Entity, and the
heirs, executors, administrators, legal representatives, successors and assigns
of such Person where the context so admits.
1.73 "Pledge and Security Agreement" shall mean the Pledge and
Security Agreement, dated as of the date hereof, made by Tenant for the benefit
of Landlord.
1.74 "Records" shall have the meaning given such term in
Section 7.2.
1.75 "Rent" shall mean, collectively, the Minimum Rent,
Additional Rent and Additional Charges.
1.76 "SEC" shall mean the Securities and Exchange Commission.
1.77 "Security Deposit" shall mean a cash amount equal to Four
Million Seven Hundred Twenty-Five Thousand Dollars ($4,725,000).
1.78 "State" shall mean the State of Utah.
1.79 "Stock Pledge Agreement" shall mean the Stock Pledge
Agreement, dated as of the date hereof, made by Wyndham to Landlord with
respect to the stock of Tenant.
1.80 "Subordinated Creditor" shall mean any creditor of Tenant
which is a party to a Subordination Agreement in favor of Landlord.
1.81 "Subordination Agreement" shall mean any agreement
executed by a Subordinated Creditor pursuant to which the payment and
performance of Tenant's obligations to such Subordinated Creditor are
subordinated to the payment and performance of Tenant's obligations to Landlord
under this Agreement.
1.82 "Subsidiary" shall mean, with respect to any Person, any
Entity (a) in which such Person owns directly, or indirectly through one or
more Subsidiaries, forty-nine percent (49%) or more of the voting or beneficial
interest or (b) which such
<PAGE> 24
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Person otherwise has the right or power to control (whether by contract,
through ownership of securities or otherwise).
1.83 "Successor Landlord" shall have the meaning given such
term in Section 20.2.
1.84 "Tangible Net Worth" shall mean the excess of total
assets over total liabilities, total assets and total liabilities each to be
determined in accordance with GAAP, excluding, however, from the determination
of total assets: (a) goodwill, organizational expenses, research and
development expenses, trademarks, trade names, copyrights, patents, patent
applications, licenses and rights in any thereof, and other similar
intangibles; (b) all deferred charges or unamortized debt discount and expense;
(c) all reserves carried and not deducted from assets; (d) treasury stock and
capital stock, obligations or other securities of, or capital contributions to,
or investments in, any Subsidiary; (e) securities which are not readily
marketable; (f) any write-up in the book value of any asset resulting from a
revaluation thereof subsequent to the Commencement Date; (g) deferred gain; and
(h) any items not included in clauses (a) through (g) above that are treated as
intangibles in conformity with GAAP; and excluding, however, from the
determination of total liabilities deferred fees payable to the Manager in
accordance with the Management Agreement.
1.85 "Tenant" shall have the meaning given such term in the
preambles to this Agreement and shall also include its permitted successors and
assigns.
1.86 "Tenant's Personal Property" shall mean all motor
vehicles and consumable inventory and supplies, furniture, furnishings, movable
walls and partitions, equipment and machinery and all other tangible personal
property of Tenant, if any, acquired by Tenant on and after the date hereof and
located at the Leased Property or used in Tenant's business at the Leased
Property and all modifications, replacements, alterations and additions to such
personal property installed at the expense of Tenant, other than any items
included within the definition of Fixtures or Leased Personal Property.
1.87 "Term" shall mean, collectively, the Fixed Term and the
Extended Terms, to the extent properly exercised pursuant to
<PAGE> 25
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the provisions of Section 2.4, unless sooner terminated pursuant to the
provisions of this Agreement.
1.88 "Total Hotel Sales" shall mean, for each Fiscal Year
during the Term, all revenues and receipts of every kind derived by Tenant from
operating the Leased Property and parts thereof, including, but not limited to:
income (from both cash and credit transactions), after deductions for bad
debts, and discounts for prompt or cash payments and refunds, from rental of
rooms, stores, offices, meeting, exhibit or sales space of every kind; license,
lease and concession fees and rentals (not including gross receipts of
licensees, lessees and concessionaires); income from vending machines; health
club membership fees; food and beverage sales; wholesale and retail sales of
merchandise (other than proceeds from the sale of furnishings, fixture and
equipment no longer necessary to the operation of the Hotel, which shall be
deposited in the FF&E Reserve); service charges, to the extent not distributed
to the employees at the Hotel as gratuities; and proceeds, if any, from
business interruption or other loss of income insurance; provided, however,
that Total Hotel Sales shall not include the following: gratuities to Hotel
employees; 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; insurance proceeds (other than proceeds from
business interruption or other loss of income insurance); Award proceeds (other
than for a temporary Condemnation); any proceeds from any sale of the Leased
Property or from the refinancing of any debt encumbering the Leased Property;
proceeds from the disposition of furnishings, fixture and equipment no longer
necessary for the operation of the Hotel; interest which accrues on amounts
deposited in the FF&E Reserve; and recoveries against predecessors in title to
the extent such recoveries are compensation attributable to items not otherwise
includable in the calculation of Total Hotel Sales.
1.89 "Uniform System of Accounts" shall mean A Uniform System
of Accounts for Hotels, Eighth Revised Edition, 1986, as published by the Hotel
Association of New York City, as the same may be further revised from time to
time.
1.90 "Unsuitable for Its Permitted Use" shall mean a state or
condition of the Hotel such that (a) following any damage or destruction
involving the Hotel, the Hotel cannot be operated in
<PAGE> 26
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the good faith judgment of Tenant on a commercially practicable basis for its
Permitted Use and it cannot reasonably be expected to be restored to
substantially the same condition as existed immediately before such damage or
destruction, and as otherwise required by Section 10.2.4, within twelve (12)
months following such damage or destruction or such shorter period of time as
to which business interruption insurance is available to cover Rent and other
costs related to the Leased Property following such damage or destruction, or
(b) as the result of a partial taking by Condemnation, the Hotel cannot be
operated, in the good faith judgment of Tenant or the Manager on a commercially
practicable basis for its Permitted Use.
1.91 "Work" shall have the meaning given such term in Section
10.2.4.
1.92 "Wyndham" shall mean Wyndham Hotel Corporation, a
Delaware corporation.
ARTICLE 2
LEASED PROPERTY AND TERM
2.1 Leased Property. Upon and subject to the terms and
conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases
from Landlord all of Landlord's right, title and interest in and to all of the
following (collectively, the "Leased Property"):
(a) those certain tracts, pieces and parcels of land, as
more particularly described in Exhibit A, attached hereto and
made a part hereof (the "Land");
(b) all buildings, structures and other improvements of
every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines
(on-site and off-site), parking areas and roadways appurtenant to
such buildings and structures presently situated upon the Land
(collectively, the "Leased Improvements");
<PAGE> 27
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(c) all easements, rights and appurtenances relating to
the Land and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items
of property, now or hereafter permanently affixed to or
incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal,
air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which, to
the maximum extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto,
but specifically excluding all items included within the category
of Tenant's Personal Property (collectively, the "Fixtures");
(e) all machinery, equipment, furniture, furnishings,
moveable walls or partitions, computers or trade fixtures or
other personal property of any kind or description used or useful
in Tenant's business on or in the Leased Improvements, and
located on or in the Leased Improvements, and all modifications,
replacements, alterations and additions to such personal
property, except items, if any, included within the category of
Fixtures, but specifically excluding all items included within
the category of Tenant's Personal Property (collectively, the
"Leased Personal Property");
(f) all of the Leased Intangible Property; and
(g) any and all leases of space (including any security
deposits held by Tenant or the Manager pursuant thereto) in the
Leased Improvements to tenants thereof.
2.2 Condition of Leased Property. Tenant acknowledges receipt
and delivery of possession of the Leased Property and Tenant accepts the Leased
Property in its "as is" condition, subject to the rights of parties in
possession, the existing state of title, including all covenants, conditions,
restrictions, reservations, mineral leases, easements and other
<PAGE> 28
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matters of record or that are visible or apparent on the Leased Property, all
applicable Legal Requirements, the lien of any financing instruments, mortgages
and deeds of trust existing prior to the Commencement Date or permitted by the
terms of this Agreement, and such other matters which would be disclosed by an
inspection of the Leased Property and the record title thereto or by an
accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED
PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF
SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD
OR LANDLORD'S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY
CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED
PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS
FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS
TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT
BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum
extent permitted by law, however, Landlord hereby assigns to Tenant all of
Landlord's rights to proceed against any predecessor in title for breaches of
warranties or representations or for latent defects in the Leased Property.
Landlord shall fully cooperate with Tenant in the prosecution of any such
claims, in Landlord's or Tenant's name, all at Tenant's sole cost and expense.
Tenant shall indemnify, defend, and hold harmless Landlord from and against any
loss, cost, damage or liability (including reasonable attorneys' fees) incurred
by Landlord in connection with such cooperation.
2.3 Fixed Term. The initial term of this Agreement (the "Fixed
Term ") shall commence on the Commencement Date and shall expire December 31,
2012.
2.4 Extended Term. Provided that no Event of Default shall have
occurred and be continuing, this Agreement shall be in full force and effect,
the Term shall be automatically extended for four (4) consecutive renewal terms
of twelve (12) years each (collectively, the "Extended Terms"), unless Tenant
shall give Landlord Notice, not later than two (2) years prior to the scheduled
expiration of the then current Term of this Agreement (Fixed or Extended, as
the case may be), that Tenant elects not so to extend the term of this
Agreement (and time shall be of the essence with respect to the giving of such
Notice).
<PAGE> 29
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Each Extended Term shall commence on the day succeeding the expiration
of the Fixed Term or the preceding Extended Term, as the case may be. All of
the terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall give Notice that it
elects not to extend the Term in accordance with this Section 2.4, this
Agreement shall automatically terminate at the end of the Term then in effect
and Tenant shall have no further option to extend the Term of this Agreement.
Otherwise, the extension of this Agreement shall be automatically effected
without the execution of any additional documents; it being understood and
agreed, however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the same.
ARTICLE 3
RENT
3.1 Rent. Tenant shall pay, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, without offset, abatement, demand or deduction (unless otherwise
expressly provided in this Agreement), Minimum Rent and Additional Rent to
Landlord and Additional Charges to the party to whom such Additional Charges
are payable, during the Term. All payments to Landlord shall be made by wire
transfer of immediately available federal funds or by other means acceptable to
Landlord in its sole discretion. Rent for any partial Accounting Period shall
be prorated on a per diem basis.
3.1.1 Minimum Rent.
(a) Minimum Rent shall be paid in advance on the first
Business Day of each month; provided, however, that the first
payment of Minimum Rent shall be payable on the Commencement
Date (and, if applicable, such payment shall be prorated as
provided in the last sentence of the first paragraph of
Section 3.1).
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(b) Adjustments of Minimum Rent Following
Disbursements Under Sections 5.1.3(b), 10.2.4 or 11.2.
Effective on the date of each disbursement to pay for the
cost of any repairs, maintenance, renovations or
replacements pursuant to Sections 5.1.3(b), 10.2.4 or
11.2, the Minimum Rent shall be increased by a per annum
amount equal to the Disbursement Rate times the amount so
disbursed. If any such disbursement is made during any
month on a day other than the first day of a month, Tenant
shall pay to Landlord on the first day of the immediately
following month (in addition to the amount of Minimum Rent
payable with respect to such month, as adjusted pursuant
to this paragraph (b)) the amount by which Minimum Rent
for the preceding month, as adjusted for such disbursement
on a per diem basis, exceeded the amount of Minimum Rent
paid by Tenant for such preceding month.
(c) Adjustments of Minimum Rent Following
Disbursements Under Section 6.2. Effective on the date of
each disbursement to pay for the cost of any repairs,
maintenance, renovations or replacements pursuant to
Section 6.2, the Minimum Rent shall be increased by a per
annum amount equal to the Interest Rate times the amount
so disbursed. If any such disbursement is made during any
month on a day other than the first day of a month, Tenant
shall pay to Landlord on the first day of the immediately
following month (in addition to the amount of Minimum Rent
payable with respect to such month, as adjusted pursuant
to this paragraph (c)) the amount by which Minimum Rent
for the preceding month, as adjusted for such
disbursement on a per diem basis, exceeded the amount of
Minimum Rent paid by Tenant for such preceding month.
(d) Credits Against Minimum Rent. On the date
on which Minimum Rent is payable pursuant to this
Agreement, Landlord shall credit against the Minimum Rent
then due accrued interest on the Guaranty Deposit (as
defined therein) pursuant to the Guaranty.
3.1.2 Additional Rent.
(a) Amount. Commencing with the Second Lease
Year, for each Lease Year or portion thereof, Tenant shall
pay an
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aggregate amount of additional rent ("Additional Rent")
with respect to such Lease Year, pursuant to this
Agreement, in an amount, not less than zero, equal to five
percent (5%) of Excess Total Hotel Sales for the second
Lease Year and (y) eight percent (8%) of Excess Total
Hotel Sales for the third Lease Year and each Lease Year
thereafter.
(b) Monthly Installments. Commencing with the
Second Lease Year, installments of Additional Rent for
each Lease Year or portion thereof shall be calculated and
paid monthly in arrears, together with an Officer's
Certificate setting forth the calculation of Additional
Rent due and payable for such month.
(c) Reconciliation of Additional Rent. In addition,
on or before April 30, of each year, commencing April 30,
1998, Tenant shall deliver to Landlord an Officer's
Certificate setting forth the Total Hotel Sales for the
Leased Property for such preceding Lease Year, together
with an audit of Tenant's revenues for the preceding Lease
Year, conducted by Arthur Anderson and Co., or another
"Big Six", so-called, firm of independent certified public
accountants proposed by Tenant and approved by Landlord
(which approval shall not be unreasonably withheld or
delayed).
If the annual Additional Rent for such preceding Lease
Year as shown in the Officer's Certificate exceeds the amount
previously paid with respect thereto by Tenant, Tenant shall pay
such excess to Landlord at such time as the Officer's Certificate
is delivered, together with interest at the Interest Rate, which
interest shall accrue from the close of such preceding Lease Year
until the date that such certificate is required to be delivered
and, thereafter, such interest shall accrue at the Overdue Rate,
until the amount of such difference shall be paid or otherwise
discharged. If the annual Additional Rent for such preceding
Lease Year as shown in the Officer's Certificate is less than the
amount previously paid with respect thereto by Tenant, provided
that no Event of Default shall have occurred and be continuing,
Landlord shall grant Tenant a credit against the Rent next coming
due in the amount of such difference, together with interest at
the Interest Rate, which interest shall accrue from the date of
payment by Tenant until the date such credit is applied or paid,
as the case may be. If such credit cannot be made because the
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Term has expired prior to application in full thereof, provided no Event
of Default has occurred and is continuing, Landlord shall pay the
unapplied balance of such credit to Tenant, together with interest at
the Interest Rate, which interest shall accrue from the date of payment
by Tenant until the date of payment by Landlord.
(d) Confirmation of Additional Rent.
Tenant shall utilize, or cause to be utilized, an
accounting system for the Leased Property in accordance
with its usual and customary practices and in accordance
with GAAP, which will accurately record all Total Hotel
Sales and Tenant shall retain, for at least three (3)
years after the expiration of each Lease Year, reasonably
adequate records conforming to such accounting system
showing all Total Hotel Sales for such Lease Year.
Landlord, at its own expense, except as provided
hereinbelow, shall have the right, exercisable by Notice
to Tenant within one (1) year after receipt of the
applicable Officer's Certificate, by its accountants or
representatives to audit the information set forth in the
Officer's Certificate referred to in subparagraph (c)
above and, in connection with such audits, to examine
Tenant's and the Manager's books and records with respect
thereto (including supporting data and sales and excise
tax returns). If any such audit discloses a deficiency in
the payment of Additional Rent and, either Tenant agrees
with the result of such audit or the matter is otherwise
compromised with Landlord, Tenant shall forthwith pay to
Landlord the amount of the deficiency, as finally agreed
or determined, together with interest at the Interest
Rate, from the date such payment should have been made to
the date of payment thereof. If such deficiency, as
agreed upon or compromised as aforesaid, is more than four
percent (4%) of the Total Hotel Sales reported by Tenant
for such Lease Year and, as a result, Landlord did not
receive at least ninety-five percent (95%) of the
Additional Rent payable with respect to such Lease Year,
Tenant shall pay the reasonable cost of such audit and
examination. If any such audit discloses that Tenant paid
more Additional Rent for any Lease Year than was due
hereunder, and either Landlord agrees with the result of
such audit or the matter is otherwise determined, provided
no Event of Default has occurred and is continuing,
Landlord shall grant Tenant a
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credit equal to the amount of such overpayment against the Rent next
coming due in the amount of such difference, as finally agreed or
determined, together with interest at the Interest Rate, which interest
shall accrue from the time of payment by Tenant until the date such
credit is applied or paid, as the case may be. If such a credit cannot
be made because the Term has expired before the credit can be applied in
full, provided no Event of Default has occurred and is continuing,
Landlord shall pay the unapplied balance of such credit to Tenant,
together with interest at the Interest Rate, which interest shall accrue
from the date of payment by Tenant until the date of payment from
Landlord.
Any proprietary information obtained by Landlord with respect to Tenant
pursuant to the provisions of this Agreement shall be treated as confidential,
except that such information may be used, subject to appropriate
confidentiality safeguards, in any litigation between the parties and except
further that Landlord may disclose such information to its prospective lenders,
provided that Landlord shall direct and obtain the agreement of such lenders to
maintain such information as confidential. The obligations of Tenant and
Landlord contained in this Section 3.1.2 shall survive the expiration or
earlier termination of this Agreement.
3.1.3 Additional Charges. In addition to the Minimum Rent and
Additional Rent payable hereunder, Tenant shall pay to the appropriate parties
and discharge as and when due and payable the following (collectively,
"Additional Charges"):
(a) Impositions. Subject to Article 8 relating to permitted
contests, Tenant shall pay, or cause to be paid, all Impositions before
any fine, penalty, interest or cost (other than any opportunity cost as
a result of a failure to take advantage of any discount for early
payment) may be added for non-payment, such payments to be made directly
to the taxing authorities where feasible, and shall promptly, upon
request, furnish to Landlord copies of official receipts or other
reasonably satisfactory proof evidencing such payments. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid balance
of such Imposition), Tenant may exercise the option to pay the same
<PAGE> 34
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(and any accrued interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments during the
Term as the same become due and before any fine, penalty, premium,
further interest or cost may be added thereto. Landlord, at its
expense, shall, to the extent required or permitted by Applicable Law,
prepare and file all tax returns and pay all taxes due in respect of
Landlord's net income, gross receipts, sales and use, single business,
transaction privilege, rent, ad valorem, franchise taxes and taxes on
its capital stock, and Tenant, at its expense, shall, to the extent
required or permitted by Applicable Laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as
may be required by Government Agencies. Provided no Event of Default
shall have occurred and be continuing, if any refund shall be due from
any taxing authority in respect of any Imposition paid by Tenant, the
same shall be paid over to or retained by Tenant. Landlord and Tenant
shall, upon request of the other, provide such data as is maintained by
the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and
reports. In the event Government Agencies classify any property covered
by this Agreement as personal property, Tenant shall file all personal
property tax returns in such jurisdictions where it may legally so file.
Each party shall, to the extent it possesses the same, provide the
other, upon request, with cost and depreciation records necessary for
filing returns for any property so classified as personal property.
Where Landlord is legally required to file personal property tax returns
for property covered by this Agreement, Landlord shall provide Tenant
with copies of assessment notices in sufficient time for Tenant to file
a protest. All Impositions assessed against such personal property
shall be (irrespective of whether Landlord or Tenant shall file the
relevant return) paid by Tenant not later than the last date on which
the same may be made without interest or penalty.
Landlord shall give prompt Notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has knowledge;
provided, however, that Landlord's failure to give any such notice shall
in no way diminish Tenant's obligation hereunder to pay such
Impositions,
<PAGE> 35
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unless such failure continues for more than twelve (12)
months after the date Landlord learned of such Imposition.
(b) Utility Charges. Tenant shall pay
or cause to be paid all charges for electricity, power,
gas, oil, water and other utilities used in connection
with the Leased Property.
(c) Insurance Premiums. Tenant shall
pay or cause to be paid all premiums for the insurance
coverage required to be maintained pursuant to Article 9.
(d) Other Charges. Tenant shall pay or
cause to be paid all other amounts, liabilities and
obligations with respect to the Leased Property and this
Agreement, including, without limitation, all amounts
payable under any equipment leases and all agreements to
indemnify Landlord under Sections 4.3.2 and 9.7.
(e) Reimbursement for Additional
Charges. If Tenant pays or causes to be paid property
taxes or similar or other Additional Charges attributable
to periods after the end of the Term, whether upon
expiration or sooner termination of this Agreement (other
than termination by reason of an Event of Default), Tenant
may, within a reasonable time after the end of the Term,
provide Notice to Landlord of its estimate of such
amounts. Landlord shall promptly reimburse Tenant for all
payments of such taxes and other similar Additional
Charges that are attributable to any period after the Term
of this Agreement.
3.2 Late Payment of Rent, Etc. If any installment of
Minimum Rent, Additional Rent or Additional Charges (but only as
to those Additional Charges which are payable directly to
Landlord) shall not be paid within ten (10) days after its due
date, Tenant shall pay Landlord, on demand, as Additional
Charges, a late charge (to the extent permitted by law) computed
at the Overdue Rate on the amount of such installment, from the
due date of such installment to the date of payment thereof. To
the extent that Tenant pays any Additional Charges directly to
Landlord or any Hotel Mortgagee pursuant to any requirement of
this Agreement, Tenant shall be relieved of its obligation to pay
such Additional Charges to the Entity to which they would
otherwise be due. If any payments due from Landlord to Tenant
<PAGE> 36
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shall not be paid within ten (10) days after its due date, Landlord shall pay
to Tenant, on demand, a late charge (to the extent permitted by law) computed
at the Overdue Rate on the amount of such installment from the due date of such
installment to the date of payment thereof.
In the event of any failure by Tenant to pay any Additional Charges when
due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost which is added for non-payment or late payment
of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Agreement or by statute or
otherwise in the case of non-payment of the Additional Charges as in the case
of non-payment of the Minimum Rent and Additional Rent.
3.3 Net Lease. The Rent shall be absolutely net to Landlord
so that this Agreement shall yield to Landlord the full amount of the
installments or amounts of the Rent throughout the Term, subject to any other
provisions of this Agreement which expressly provide otherwise, including those
provisions for adjustment or abatement of such Rent.
3.4 No Termination, Abatement, Etc. Except as otherwise
specifically provided in this Agreement, each of Landlord and Tenant, to the
maximum extent permitted by law, shall remain bound by this Agreement in
accordance with its terms and shall not take any action without the consent of
the other to modify, surrender or terminate this Agreement. In addition,
except as otherwise expressly provided in this Agreement, Tenant shall not
seek, or be entitled to, any abatement, deduction, deferment or reduction of
the Rent, or set-off against the Rent, nor shall the respective obligations of
Landlord and Tenant be otherwise affected by reason of (a) any damage to or
destruction of the Leased Property or any portion thereof from whatever cause
or any Condemnation, (b) the lawful or unlawful prohibition of, or restriction
upon, Tenant's use of the Leased Property, or any portion thereof, or the
interference with such use by any Person or by reason of eviction by paramount
title; (c) any claim which Tenant may have against Landlord by reason of any
default (other than a monetary default) or breach of any warranty by Landlord
under this Agreement or any other agreement between Landlord and Tenant, or to
which Landlord and Tenant are parties; (d) any
<PAGE> 37
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bankruptcy, insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceedings affecting Landlord or any assignee
or transferee of Landlord; or (e) for any other cause whether similar or
dissimilar to any of the foregoing (other than a monetary default by Landlord);
provided, however, that the foregoing shall not apply or be construed to
restrict Tenant's rights in the event of any act or omission by Landlord
constituting gross negligence or willful misconduct. Except as otherwise
specifically provided in this Agreement, Tenant hereby waives all rights
arising from any occurrence whatsoever, which may now or hereafter be conferred
upon it by law (a) to modify, surrender or terminate this Agreement or quit or
surrender the Leased Property or any portion thereof, or (b) which would
entitle Tenant to any abatement, reduction, suspension or deferment of the Rent
or other sums payable or other obligations to be performed by Tenant hereunder.
The obligations of each party hereunder shall be separate and independent
covenants and agreements, and the Rent and all other sums payable by Tenant
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Agreement. In any instance where, after the occurrence of an Event of Default,
Landlord retains funds which, but for the occurrence of such Event of Default,
would be payable to Tenant, Landlord shall refund such funds to Tenant to the
extent the amount thereof exceeds the amount necessary to compensate Landlord
for any cost, loss or damage incurred in connection with such Event of Default.
3.5 Security Deposit. Upon execution of this Agreement,
Tenant shall deposit with Landlord the Security Deposit. The Security Deposit
shall be held by Landlord as security for the faithful observance and
performance by Tenant of all the terms, covenants and conditions of this
Agreement by Tenant to be observed and performed. The Security Deposit shall
not be mortgaged, assigned, transferred or otherwise encumbered by Tenant
without the prior written consent of Landlord and any such act on the part of
Tenant without first having obtained Landlord's consent (which consent may be
given or withheld by Landlord in Landlord's sole and absolute discretion) shall
be without force and effect and shall not be binding upon Landlord; provided,
however, that such consent shall not be required to the extent permitted by
Article 19.
<PAGE> 38
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If any Event of Default shall occur and be continuing, Landlord may, at
its option and without prejudice to any other remedy which Landlord may have on
account thereof, appropriate and apply the entire Security Deposit or so much
thereof as may be necessary to compensate Landlord toward the payment of the
Rent or other sums or loss or damage sustained by Landlord due to such breach
by Tenant and Tenant shall, upon demand, restore the Security Deposit to the
original sum deposited. It is understood and agreed that the Security Deposit
is not to be considered as prepaid rent, nor shall damages be limited to the
amount of the Security Deposit. Should Tenant comply with all the terms,
covenants and conditions of this Agreement, the Security Deposit shall be
returned in full to Tenant at the end of the Term. Landlord shall have no
obligation to pay interest on the Security Deposit and shall have the right to
commingle the same with Landlord's other funds. If Landlord conveys Landlord's
interest under this Agreement, the Security Deposit, or any part thereof not
previously applied, may be turned over by Landlord to Landlord's grantee, and,
if so turned over, Tenant shall look solely to such grantee for proper
application of the Security Deposit in accordance with the terms of this
Section 3.5 and the return thereof in accordance herewith. No Hotel Mortgagee
shall be responsible to Tenant for the return or application of the Security
Deposit, whether or not it succeeds to the position of Landlord hereunder,
unless the Security Deposit shall have been received in hand by such holder.
In the event of bankruptcy or other creditor-debtor proceedings against
Tenant, the Security Deposit shall be deemed to be applied first to the payment
of the Rent and other charges due Landlord for all periods prior to the filing
of such proceedings.
<PAGE> 39
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ARTICLE 4
USE OF THE LEASED PROPERTY
4.1 Permitted Use.
4.1.1 Permitted Use.
(a) Tenant shall, at all times during
the Term and at any other time that Tenant shall be in
possession of the Leased Property, continuously use and
operate, and cause the Manager to use and operate, the
Leased Property as a Wyndham Hotel and any uses incidental
thereto. Tenant shall not use (and shall direct the
Manager not to use) the Leased Property or any portion
thereof for any other use without the prior written
consent of Landlord. No use shall be made or permitted to
be made of the Leased Property and no acts shall be done
thereon which will cause the cancellation of any insurance
policy covering the Leased Property or any part thereof
(unless another adequate policy is available), nor shall
Tenant sell or otherwise provide or permit to be kept,
used or sold in or about the Leased Property any article
which may be prohibited by law or by the standard form of
fire insurance policies, or any other insurance policies
required to be carried hereunder, or fire underwriter's
regulations. Tenant shall, at its sole cost (except as
expressly provided in Section 5.1.3(b)), comply (or direct
the Manager to comply) with all Insurance Requirements.
Tenant shall not take or omit to take (and Tenant shall
direct the Manager not to take or omit to take) any
action, the taking or omission of which materially impairs
the value or the usefulness of the Leased Property or any
part thereof for its Permitted Use.
(b) In the event that, in the reasonable
determination of Tenant, it shall no longer be
economically practical to operate the Leased Property as a
Wyndham Hotel, Tenant shall give Landlord Notice thereof,
which Notice shall set forth in reasonable detail the
reasons therefor. Thereafter, Landlord and Tenant shall
negotiate in good faith to agree on an alternative use for
the Leased Property or substitution of one or more other
properties for the Leased Property, appropriate
adjustments to the Additional Rent and other related
matters; provided, however, in no such event shall the
Minimum Rent be reduced or abated.
4.1.2 Necessary Approvals. Tenant shall proceed
with all due diligence and exercise best efforts to obtain and
maintain, and shall direct the Manager to obtain and maintain,
all approvals necessary to use and operate, for its Permitted
<PAGE> 40
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Use, the Leased Property and the Hotel located thereon under applicable law.
4.1.3 Lawful Use, Etc. Tenant shall not, and shall
direct the Manager not to, use or suffer or permit the use of the Leased
Property or Tenant's Personal Property, if any, for any unlawful purpose.
Tenant shall not, and shall direct the Manager not to, commit or suffer to be
committed any waste on the Leased Property, or in the Hotel, nor shall Tenant
cause or permit any unlawful nuisance thereon or therein. Tenant shall not,
and shall direct the Manager not to, suffer nor permit the Leased Property, or
any portion thereof, to be used in such a manner as (i) might reasonably impair
Landlord's title thereto or to any portion thereof, or (ii) may reasonably
allow a claim or claims for adverse usage or adverse possession by the public,
as such, or of implied dedication of the Leased Property or any portion
thereof.
4.2 Compliance with Legal/Insurance Requirements, Etc.
Subject to the provisions of Article 8 and Section 5.1.3(b), Tenant, at its
sole expense, shall (or shall direct the Manager to) (i) comply with all
material Legal Requirements and Insurance Requirements in respect of the use,
operation, maintenance, repair, alteration and restoration of the Leased
Property and with the terms and conditions of any ground lease affecting the
Leased Property and (ii) procure, maintain and comply with all appropriate
licenses, and other authorizations and agreements required for any use of the
Leased Property and Tenant's Personal Property, if any, then being made, and
for the proper erection, installation, operation and maintenance of the Leased
Property or any part thereof.
4.3 Environmental Matters.
4.3.1 Restriction on Use, Etc. During the Term
and any other time that Tenant shall be in possession of the Leased Property,
Tenant shall not (and shall direct the Manager not to) store, spill upon,
dispose of or transfer to or from the Leased Property any Hazardous Substance,
except in compliance with all Applicable Laws. During the Term and any other
time that Tenant shall be in possession of the Leased Property, Tenant shall
maintain (and shall direct the Manager to maintain) the Leased Property at all
times free of any Hazardous Substance (except in
<PAGE> 41
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compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt
of notice or knowledge and shall direct the Manager upon receipt of notice or
knowledge promptly to, notify Landlord in writing of any material change in the
nature or extent of Hazardous Substances at the Leased Property, (b) transmit
to Landlord a copy of any Community Right to Know report which is required to
be filed by Tenant or the Manager with respect to the Leased Property pursuant
to SARA Title III or any other Applicable Law, (c) transmit to Landlord copies
of any citations, orders, notices or other governmental communications received
by Tenant or the Manager or their respective agents or representatives with
respect thereto (collectively, "Environmental Notice"), which Environmental
Notice requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or presents a material risk of any
material violation of any Applicable Law and/or presents a material risk of any
material cost, expense, loss or damage (an "Environmental Obligation"), (d)
observe and comply (and direct the Manager to observe and comply) with all
Applicable Laws relating to the use, maintenance and disposal of Hazardous
Substances and all orders or directives from any official, court or agency of
competent jurisdiction relating to the use or maintenance or requiring the
removal, treatment, containment or other disposition thereof, and (e) pay or
otherwise dispose of any fine, charge or Imposition related thereto, unless
Tenant or the Manager shall contest the same in good faith and by appropriate
proceedings and the right to use and the value of the Leased Property is not
materially and adversely affected thereby.
If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those maintained in accordance with Applicable Laws) are
discovered on the Leased Property, subject to Tenant's and the Manager's right
to contest the same in accordance with Article 8, Tenant shall take (and shall
direct the Manager to take) all actions and incur any and all expenses, as are
required by any Government Agency and by Applicable Law, (i) to clean up and
remove from and about the Leased Property all Hazardous Substances thereon,
(ii) to contain and prevent any further release or threat of release of
Hazardous Substances on or about the Leased Property and (iii) to use good
faith efforts to eliminate any further release or threat of release of
Hazardous Substances on or about the Leased Property.
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4.3.2 Indemnification of Landlord. Tenant shall
protect, indemnify and hold harmless Landlord and each Hotel Mortgagee, their
trustees, officers, agents, employees and beneficiaries, and any of their
respective successors or assigns with respect to this Agreement (collectively,
the "Indemnitees" and, individually, an "Indemnitee") for, from and against any
and all debts, liens, claims, causes of action, administrative orders or
notices, costs, fines, penalties or expenses (including, without limitation,
reasonable attorney's fees and expenses) imposed upon, incurred by or asserted
against any Indemnitee resulting from, either directly or indirectly, the
presence during the Term (or any other time Tenant shall be in possession of
the Leased Property) in, upon or under the soil or ground water of the Leased
Property or any properties surrounding the Leased Property of any Hazardous
Substances in violation of any Applicable Law or otherwise, provided that any
of the foregoing arises by reason of any failure by Tenant, the Manager or any
Person claiming by, through or under Tenant or the Manager to perform or comply
with any of the terms of this Section 4.3, except to the extent the same arise
from the acts or omissions of Landlord or any other Indemnitee or during any
period that Landlord or a Person designated by Landlord (other than Tenant) is
in possession of the Leased Property. Tenant's duty herein includes, but is
not limited to, costs associated with personal injury or property damage claims
as a result of the presence prior to the expiration or sooner termination of
the Term and the surrender of the Leased Property to Landlord in accordance
with the terms of this Agreement of Hazardous Substances in, upon or under the
soil or ground water of the Leased Property in violation of any Applicable Law.
Upon Notice from Landlord and any other of the Indemnitees, Tenant shall
undertake the defense, at Tenant's sole cost and expense, of any
indemnification duties set forth herein, in which event, Tenant shall not be
liable for payment of any duplicative attorneys' fees incurred by any
Indemnitee.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge, any
cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) reasonably incurred by Landlord and arising from a failure of
Tenant to observe and
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perform the requirements of this Section 4.3, which amounts shall bear interest
from the date ten (10) days after written demand therefor is given to Tenant
until paid by Tenant to Landlord at the Overdue Rate.
4.3.3 Survival. The provisions of this Section
4.3 shall survive the expiration or sooner termination of this Agreement.
ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 Maintenance and Repair.
5.1.1 Tenant's General Obligations. Tenant shall, at
its sole cost and expense (except as expressly provided in Sections 5.1.3(b),
10.2.3 or 11.2), or shall direct the Manager to, keep the Leased Property and
all private roadways, sidewalks and curbs appurtenant thereto (and Tenant's
Personal Property) in good order and repair, reasonable wear and tear excepted
(whether or not the need for such repairs occurs as a result of Tenant's or the
Manager's use, any prior use, the elements or the age of the Leased Property or
Tenant's Personal Property or any portion thereof), and shall promptly make (or
cause the Manager to make) all necessary and appropriate repairs and
replacements thereto of every kind and nature, whether interior or exterior,
structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition existing prior to the commencement of the
Term (concealed or otherwise). All repairs shall be made in a good,
workmanlike manner, consistent with the Manager's and industry standards for
like hotels in like locales, in accordance with all applicable federal, state
and local statutes, ordinances, by-laws, codes, rules and regulations relating
to any such work. Tenant shall not take or omit to take (and shall direct the
Manager not to take or omit to take) any action, the taking or omission of
which would materially and adversely impair the value or the usefulness of the
Leased Property or any part thereof for its Permitted Use. Tenant's
obligations under this Section 5.1.1(a) shall be limited in the event of any
casualty or Condemnation as set forth in Sections 10.2 and 11.2 and also as set
forth in Section 5.1.3(b) and
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Tenant's obligations with respect to Hazardous Substances are as set forth in
Section 4.3.
5.1.2 FF&E Reserve.
(a) Upon execution of this Agreement, Tenant
shall establish a reserve account (the "FF&E Reserve") in a bank
designated by Tenant and approved by Landlord. The purpose of
the FF&E Reserve is to cover the cost of:
(i) Replacements and renewals to the Hotel's
furnishings, fixtures and equipment;
(ii) Certain routine repairs and maintenance to the
Hotel building which are normally capitalized under
GAAP such as exterior and interior repainting,
resurfacing building walls, floors, roofs and
parking areas, and replacing folding walls and the
like; and
(iii) Major repairs, alterations, improvements, renewals
or replacements to the Hotel's buildings'
structure, roof, or exterior facade, or to its
mechanical, electrical, heating, ventilating, air
conditioning, plumbing or vertical transportation
systems.
Tenant agrees that it will, from time to time,
execute such reasonable documentation as may be requested by
Landlord and any Hotel Mortgagee to assist Landlord and such
Hotel Mortgagee in establishing or perfecting its security
interest in Landlord's residual interest in the funds which are
in the FF&E Reserve, it being acknowledged and agreed that the
funds in the FF&E Reserve are the property of Tenant; provided,
however, that no such documentation shall contain any amendment
or modification of any of the provisions of this Agreement. It
is understood and agreed that, during the Term, the FF&E Reserve
may not be applied against debts secured by a Hotel Mortgage nor
shall any Hotel Mortgagee have the right to approve the release
of such funds pursuant to the terms of this Agreement unless and
until Landlord shall default in its obligations to such Hotel
Mortgagee.
(b) Throughout the Term, Tenant shall transfer
(as of the end of each month of the Term) into the FF&E Reserve an
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amount equal to five percent (5%) of Total Hotel Sales for
such month. Together with the documentation provided to
Landlord pursuant to Section 3.1.2(c), Tenant shall
deliver to Landlord an Officer's Certificate setting forth
the total amount of deposits made to and expenditures from
the FF&E Reserve for the preceding Fiscal Year, together
with a reconciliation of such expenditures with the
applicable FF&E Estimate.
(c) Prior to execution of this Agreement
with respect to the 1997 calendar year and, thereafter,
each year, on or before December 1 of the preceding year,
Tenant shall prepare an estimate (the "FF&E Estimate") of
FF&E Reserve expenditures necessary during the ensuing
Fiscal Year, and shall submit such FF&E Estimate to
Landlord for its review and approval, which approval shall
not be unreasonably withheld or delayed. In the event
Landlord shall fail to respond within thirty (30) days
after receipt of the FF&E Estimate, such FF&E Estimate
shall be deemed approved by Landlord. All expenditures
from the FF&E Reserve shall be (as to both the amount of
each such expenditure and the timing thereof) both
reasonable and necessary, given the objective that the
Hotel will be maintained and operated to a standard
comparable to competitive hotels.
(d) Tenant shall, consistent with the
FF&E Estimate approved by Landlord, from time to time make
expenditures from the FF&E Reserve as it deems necessary
provided that Tenant shall not materially deviate from the
FF&E Estimate approved by Landlord without the prior
approval of Landlord, except in the case of emergency
where immediate action is necessary to prevent imminent
danger to person or property.
(e) Upon the expiration or sooner
termination of this Agreement, funds in the FF&E Reserve
and all property purchased with funds from the FF&E
Reserve during the Term shall be paid, granted and
assigned to Landlord as Additional Charges.
5.1.3 Landlord's Obligations.
(a) Except as otherwise expressly
provided in this Agreement, Landlord shall not, under any
circumstances, be required to build or rebuild any
improvement on the Leased
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Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the
Leased Property, whether ordinary or extraordinary, structural or
nonstructural, foreseen or unforeseen, or, except as provided in
Sections 5.1.3(b), 6,2, 10.2 and 11.2, to make any expenditure
whatsoever with respect thereto, or to maintain the Leased
Property in any way. Except as otherwise expressly provided in
this Agreement, Tenant hereby waives, to the maximum extent
permitted by law, the right to make repairs at the expense of
Landlord pursuant to any law in effect on the date hereof or
hereafter enacted. Landlord shall have the right to give, record
and post, as appropriate, notices of nonresponsibility under any
mechanic's lien laws now or hereafter existing.
(b) If, at any time, funds in the FF&E Reserve
shall be insufficient for necessary and permitted expenditures
thereof or, pursuant to the terms of this Agreement, Tenant is
required to make any expenditures in connection with any repair,
maintenance or renovation with respect to the Leased Property and
the amount of such disbursements or expenditures exceeds the
amount on deposit in the FF&E Reserve or such repair, maintenance
or renovation is not a permitted expenditure from the FF&E
Reserve as described in Section 5.1.2(a)(i), (ii) and (iii),
Tenant may, at its election, give Landlord Notice thereof, which
Notice shall set forth, in reasonable detail, the nature of the
required repair, renovation or replacement, the estimated cost
thereof and such other information with respect thereto as
Landlord may reasonably require. Provided that no Event of
Default shall have occurred and be continuing and Tenant shall
otherwise comply with the applicable provisions of Article 6,
Landlord shall, within ten (10) Business Days after such Notice,
subject to and in accordance with the applicable provisions of
Article 6, disburse such required funds to Tenant (or, if Tenant
shall so elect, directly to the Manager or any other Person
performing the required work) and, upon such disbursement, the
Minimum Rent shall be adjusted as provided in Section 3.1.1(b);
provided, however, that, in the event that Landlord shall elect
not to disburse any funds pursuant to this Section 5.1.3(b),
Tenant's sole recourse shall be to elect not to make the
applicable repair, maintenance or renovation.
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5.1.4 Nonresponsibility of Landlord, Etc. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting
with Tenant with respect to the Leased Property, or any part thereof, are
hereby charged with notice that liens on the Leased Property or on Landlord's
interest therein are expressly prohibited and that they must look solely to
Tenant to secure payment for any work done or material furnished by Tenant, the
Manager or for any other purpose during the term of this Agreement.
Nothing contained in this Agreement shall be deemed or construed in any
way as constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or
materialmen for the performance of any labor or the furnishing of any materials
for any alteration, addition, improvement or repair to the Leased Property or
any part thereof or as giving Tenant any right, power or authority to contract
for or permit the rendering of any services or the furnishing of any materials
that would give rise to the filing of any lien against the Leased Property or
any part thereof nor to subject Landlord's estate in the Leased Property or any
part thereof to liability under any Mechanic's Lien Law of the State in any
way, it being expressly understood Landlord's estate shall not be subject to
any such liability.
5.2 Tenant's Personal Property. Tenant shall provide and maintain
throughout the Term all such Tenant's Personal Property as shall be necessary
in order to operate in compliance with applicable Legal Requirements and
Insurance Requirements and otherwise in accordance with customary practice in
the industry for the Permitted Use and all of such Personal Property shall,
upon the expiration or earlier termination of this Agreement, become the
property of Landlord. If, from and after the Commencement Date, Tenant
acquires an interest in any item of tangible personal property (other than
motor vehicles) on, or in connection with, the Leased Property which belongs to
anyone other than Tenant, Tenant shall require the agreements permitting such
use to provide that Landlord or its designee may assume Tenant's rights and
obligations under such agreement upon the termination of this Agreement and the
assumption of management or operation of the Hotel by Landlord or its designee.
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5.3 Yield Up. Upon the expiration or sooner termination of this
Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in
substantially the same condition in which the Leased Property was in on the
Commencement Date, except as repaired, rebuilt, restored, altered or added to
as permitted or required by the provisions of this Agreement, reasonable wear
and tear excepted (and casualty damage and Condemnation, in the event that this
Agreement is terminated following a casualty or total Condemnation in
accordance with Article 10 or Article 11 excepted).
In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its good
faith efforts to transfer to and cooperate with Landlord or Landlord's nominee
in connection with the processing of all applications for licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental Entities which may be
necessary for the use and operation of the Hotel as then operated. If
requested by Landlord, Tenant will direct the Manager to continue to manage the
Hotel after the expiration of the Term and for up to one hundred twenty (120)
days, on such reasonable terms (which shall include a market rate management
fee and an agreement to reimburse the Manager for its reasonable out-of-pocket
costs and expenses, and reasonable administrative costs), as Landlord shall
reasonably request.
5.4 Management Agreement. Tenant shall not, without Landlord's prior
written consent, amend or modify the provisions of the Management Agreement
which provide (i) that, from and after the occurrence of any Default or Event
of Default, all amounts due from Tenant to the Manager shall be subordinate to
all amounts due from Tenant to Landlord, (ii) for operation of the Leased
Property under the "Wyndham" name, (iii) that Wyndham, the Manager and their
Affiliated Persons are prohibited from operating, managing or franchising
another full-service Wyndham Hotel (as opposed to Wyndham Garden or resort
hotels) within the designated area on Exhibit D and (iv) for termination
thereof, at Landlord's option, upon the termination of this Agreement. Tenant
shall not take any action, grant any consent or permit any action under the
Management Agreement which might have a material adverse effect on Landlord,
without the prior written consent of Landlord; provided, however, that
Landlord's consent shall not be
<PAGE> 49
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required in connection with any assignment of the Manager's rights under the
Management Agreement to (x) any Affiliated Person of the Manager having the
full power, right and authority to provide all services and organizational
expertise as contemplated and required by the Management Agreement or (y) any
Person (including, but not limited to, any Lending Institution) who acquires
all or substantially all of the management contracts of the Manager, provided
that, in either such case, the Leased Property will retain the right to use the
"Wyndham" name. In the event of an assignment pursuant to clause (y)
preceding, provided that the successor Manager (i) assumes, in writing all
obligations of the Manager under the Management Agreement, and (ii) has a
Tangible Net Worth, as of the date of assignment, equal to the greater of the
Tangible Net Worth of the Manager as of the date of this Agreement, and the
Tangible Net Worth of the Manager as of the date of such assignment, the
Manager shall be released from all liabilities arising under the Management
Agreement from and after the effective date of such assignment. Tenant shall
not agree to any change in the Manager (except as provided in the preceding
sentences), to any change in the Management Agreement (except as provided in
the preceding sentences), terminate the Management Agreement or permit the
Manager to assign the Management Agreement (except as provided in the preceding
sentences) without the prior written approval of Landlord in each instance;
provided, however, that the Manager may grant a security interest in its right
to receive payments under the Management Agreement without Landlord's prior
written approval.
ARTICLE 6
IMPROVEMENTS, ETC.
6.1 Improvements to the Leased Property. Tenant shall not make,
construct or install (and shall direct the Manager not to construct or install)
any Capital Additions (other than Capital Additions of the type described in
Section 5.1.2(a)(ii) and approved pursuant to Section 5.1.2(c) or which are
described in Exhibit B, attached hereto and made a part hereof, without, in
each instance, obtaining Landlord's prior written consent, which consent shall
not be unreasonably withheld, delayed or conditioned provided that (a)
construction or installation of the
<PAGE> 50
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same would not adversely affect or violate any Legal Requirement or Insurance
Requirement applicable to the Leased Property and (b) Landlord shall have
received an Officer's Certificate certifying as to the satisfaction of the
conditions set out in clause (a) above; provided, however, that no such consent
shall be required in the event immediate action is required to prevent imminent
danger to person or property. Prior to commencing construction of any Capital
Addition, Tenant shall submit, or shall direct the Manager to submit, to
Landlord, in writing, a proposal setting forth, in reasonable detail, any such
proposed improvement and shall provide to Landlord such plans and
specifications, and such permits, licenses, contracts and such other
information concerning the same as Landlord may reasonably request. Landlord
shall have thirty (30) days to review all materials submitted to Landlord in
connection with any such proposal. Failure of Landlord to respond to Tenant's
or the Manager's proposal within thirty (30) days after receipt of all
information and materials requested by Landlord in connection with the proposed
improvement shall be deemed to constitute approval of the same. Without
limiting the generality of the foregoing, such proposal shall indicate the
approximate projected cost of constructing such proposed improvement and the
use or uses to which it will be put. No Capital Addition shall be made which
would tie in or connect any Leased Improvement with any other improvements on
property adjacent to the Leased Property (and not part of the Land) including,
without limitation, tie-ins of buildings or other structures or utilities.
Tenant shall not finance, and shall direct the Manager not to finance, the cost
of any construction of such improvement by the granting of a lien on or
security interest in the Leased Property or such improvement, or Tenant's
interest therein, without the prior written consent of Landlord, which consent
may be withheld by Landlord in Landlord's sole discretion. Any such
improvements shall, upon the expiration or sooner termination of this
Agreement, remain or pass to and become the property of Landlord, free and
clear of all encumbrances other than Permitted Encumbrances.
6.2 Improvement Advances. At any time during that portion of the
Term commencing on the Commencement Date and expiring one year thereafter,
Landlord agrees to advance to Tenant, from time to time, as hereinafter
provided, an aggregate amount of up to Three Million Two Hundred Fifty Thousand
Dollars ($3,250,000) for the purpose of making improvements to the Leased
Property in
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accordance with Exhibit B. The obligation of Landlord to make each advance
pursuant to this Section 6.2 shall be subject to the prior or simultaneous
satisfaction of the following conditions:
(a) At the time of each disbursement, no Default or
Event of Default shall have occurred and be continuing;
(b) At least fifteen (15) Business Days before the date
on which Tenant desires a disbursement to be made hereunder (but
in no event subsequent to the first anniversary of the
Commencement Date), Tenant shall submit to Landlord a written
requisition and the substantiation therefor which shall include
bills and invoices with respect to the work for which payment or
reimbursement is sought, together with such other information
with respect thereto as Landlord may reasonably require,
including, without limitation, the items identified in Section
6.3, if applicable. Any such requisition shall be for not less
than $250,000 (or such lesser amount as shall constitute the
difference between $3,250,000 and the aggregate of all prior
disbursements). Such requisitions shall be made not more
frequently than monthly; and
(c) The aggregate amount paid or payable to Tenant and
its Affiliated Persons shall not exceed One Hundred Three
Thousand Dollars ($103,000).
6.3 Improvements Financed by Landlord. In connection with the
Landlord's funding of any improvements pursuant to Section 6.2), Tenant shall
provide Landlord with such information as Landlord may from time to time
reasonably request, including, without limitation, the following:
(a) Evidence that such improvement will be, and, upon
completion, has been, completed in compliance with all Applicable
Laws;
(b) Copies of all building, zoning and land use permits
and approvals and upon completion of such improvement, a copy of
the certificate of occupancy for such improvement, if required;
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(c) Such information, certificates, licenses, permits
or other documents necessary to confirm that Tenant will be able
to use the improvement upon completion thereof in accordance with
the Permitted Use, including all required federal, State or local
government licenses and approvals;
(d) An Officer's Certificate and a certificate from
Tenant's architect setting forth, in reasonable detail, the
projected (or actual, if available) improvement cost and invoices
and lien waivers from Tenant's contractors for such work as is
completed and paid for through the last advance date; and
(e) Prints of architectural and engineering drawings
relating to such improvement and such other certificates,
documents and surveys as Landlord may reasonably require.
6.4 Salvage. All materials which are scrapped or removed in
connection with the making of either Capital Additions or non-Capital Additions
or repairs required by Article 5 shall be or become the property of the party
that paid for such work.
ARTICLE 7
LIENS
7.1 Liens. Subject to Article 8, Tenant shall not, directly
or indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Leased Property or Tenant's leasehold interest therein or any
attachment, levy, claim or encumbrance in respect of the Rent, other than (a)
Permitted Encumbrances, (b) restrictions, liens and other encumbrances which
are consented to in writing by Landlord, (c) liens for those taxes of Landlord
which Tenant is not required to pay hereunder, (d) subleases permitted by
Article 17, (e) liens for Impositions or for sums resulting from noncompliance
with Legal Requirements so long as (i) the same are not yet due and payable, or
(ii) are being contested in accordance with Article 8, (f) liens of mechanics,
laborers, materialmen, suppliers or vendors incurred in the ordinary course of
business that are not yet due and payable or are for sums that
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are being contested in accordance with Article 8, (g) any Hotel Mortgages or
other liens which are the responsibility of Landlord pursuant to the provisions
of Article 21, (h) Landlord Liens and any other voluntary liens created by
Landlord and (i) Leasehold Mortgages.
7.2 Landlord's Lien. In addition to any statutory landlord's lien
and in order to secure payment of the Rent and all other sums payable hereunder
by Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants
unto Landlord a security interest in and an express contractual lien upon
Tenant's Personal Property (except motor vehicles and liquor licenses and
permits), and Tenant's interest in all ledger sheets, files, records, documents
and instruments (including, without limitation, computer programs, tapes and
related electronic data processing) relating to the operation of the Hotels
(the "Records") and all proceeds therefrom, subject to any Permitted
Encumbrances; and such Tenant's Personal Property shall not be removed from the
Leased Property at any time when a Default or an Event of Default has occurred
and is continuing.
Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in Tenant's Personal Property and the proceeds thereof in accordance
with the provisions of the applicable laws of the State. Tenant hereby grants
Landlord an irrevocable limited power of attorney, coupled with an interest, to
execute all such financing statements in Tenant's name, place and stead. The
security interest herein granted is in addition to any statutory lien for the
Rent.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation,
lien, attachment, levy, encumbrance, charge or claim (collectively, "Claims")
as to the Leased Property, by appropriate legal proceedings, conducted in good
faith and with due diligence, provided that (a) the
<PAGE> 54
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foregoing shall in no way be construed as relieving, modifying or extending
Tenant's obligation to pay any Claims as finally determined, (b) such contest
shall not cause Landlord or Tenant to be in default under any mortgage or deed
of trust encumbering the Leased Property (Landlord agreeing that any such
mortgage or deed of trust shall permit Tenant to exercise the rights granted
pursuant to this Article 8) or any interest therein or result in or reasonably
be expected to result in a lien attaching to the Leased Property, (c) no part
of the Leased Property nor any Rent therefrom shall be in any immediate danger
of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and
hold harmless Landlord from and against any cost, claim, damage, penalty or
reasonable expense, including reasonable attorneys' fees, incurred by Landlord
in connection therewith or as a result thereof. Landlord agrees to join in any
such proceedings if required legally to prosecute such contest, provided that
Landlord shall not thereby be subjected to any liability therefor (including,
without limitation, for the payment of any costs or expenses in connection
therewith) unless Tenant agrees by agreement in form and substance reasonably
satisfactory to Landlord, to assume and indemnify Landlord with respect to the
same. Tenant shall be entitled to any refund of any Claims and such charges
and penalties or interest thereon which have been paid by Tenant or paid by
Landlord to the extent that Landlord has been fully reimbursed by Tenant. If
Tenant shall fail (x) to pay or cause to be paid any Claims when finally
determined, (y) to provide reasonable security therefor, or (z) to prosecute or
cause to be prosecuted any such contest diligently and in good faith, Landlord
may, upon reasonable notice to Tenant (which notice shall not be required if
Landlord shall reasonably determine that the same is not practicable), pay such
charges, together with interest and penalties due with respect thereto, and
Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.
ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 General Insurance Requirements. Tenant shall, at all times
during the Term and at any other time Tenant shall be in possession of the
Leased Property, keep the Leased Property and
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all property located therein or thereon, insured against the risks and in the
amounts as follows and shall maintain the following insurance:
(a) "All-risk" property insurance, including insurance
against loss or damage by fire, vandalism and malicious mischief,
earthquake, explosion of steam boilers, pressure vessels or other
similar apparatus, now or hereafter installed in the Hotel
located at the Leased Property, with the usual extended coverage
endorsements, in an amount equal to one hundred percent (100%) of
the then full Replacement Cost thereof (as defined in Section
9.2);
(b) Business interruption insurance covering risk of
loss during the lesser of the first twelve (12) months of
reconstruction or the actual reconstruction period necessitated
by the occurrence of any of the hazards described in subparagraph
(a) above, in such amounts as may be customary for comparable
properties in the area and in an amount sufficient to prevent
Landlord or Tenant from becoming a co-insurer;
(c) Comprehensive general liability insurance, including
bodily injury and property damage in a form reasonably
satisfactory to Landlord (and including, without limitation,
broad form contractual liability, independent contractor's hazard
and completed operations coverage) in an amount not less than One
Million Dollars ($1,000,000) per occurrence, Three Million
Dollars ($3,000,000) in the aggregate and umbrella coverage of
all such claims in an amount not less than Fifty Million Dollars
($50,000,000);
(d) Flood (if the Leased Property is located in whole
or in part within an area identified as an area having special
flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968, as
amended, or the Flood Disaster Protection Act of 1973, as amended
(or any successor acts thereto)) and such other hazards and in
such amounts as may be customary for comparable properties in the
area;
(e) Worker's compensation insurance coverage if required
by applicable law for all persons employed by
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Tenant on the Leased Property with statutory limits and otherwise
with limits of and provisions in accordance with the requirements
of applicable local, State and federal law, and employer's
liability insurance as is customarily carried by similar
employers; and
(f) Such additional insurance as may be reasonably
required, from time to time, by Landlord or any Hotel Mortgagee
and which is customarily carried by comparable lodging properties
in the area.
9.2 Replacement Cost. "Replacement Cost" as used herein shall
mean the actual replacement cost of the property requiring replacement from
time to time, including an increased cost of construction endorsement, less
exclusions provided in the standard form of fire insurance policy. In the
event either party believes that the then full Replacement Cost has increased
or decreased at any time during the Term, such party, at its own cost, shall
have the right to have such full Replacement Cost redetermined by an
independent accredited appraiser approved by the other, which approval shall
not be unreasonably withheld or delayed. The party desiring to have the full
Replacement Cost so redetermined shall forthwith, on receipt of such
determination by such appraiser, give Notice thereof to the other. The
determination of such appraiser shall be final and binding on the parties
hereto until any subsequent determination under this Section 9.2, and Tenant
shall forthwith conform the amount of the insurance carried to the amount so
determined by the appraiser.
9.3 Waiver of Subrogation. Landlord and Tenant agree that
(insofar as and to the extent that such agreement may be effective without
invalidating or making it impossible to secure insurance coverage from
responsible insurance companies doing business in the State) with respect to
any property loss which is covered by insurance then being carried by Landlord
or Tenant, respectively, the party carrying such insurance and suffering said
loss releases the other of and from any and all claims with respect to such
loss; and they further agree that their respective insurance companies shall
have no right of subrogation against the other on account thereof, even though
extra premium may result therefrom. In the event that any extra premium is
payable by Tenant as a result of this provision, Landlord shall not be liable
for reimbursement to Tenant for such extra premium.
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9.4 Form Satisfactory, Etc. All insurance policies and
endorsements required pursuant to this Article 9 shall be fully paid for,
nonassessable and be issued by insurance carriers authorized to do business in
the State, having a general policy holder's rating of no less than B++ in
Best's latest rating guide. All such policies described in Sections 9.1(a)
through (d) shall include no deductible in excess of Two Hundred Fifty Thousand
Dollars ($250,000) and, with the exception of the insurance described in
Sections 9.1(e), shall name Landlord and any Hotel Mortgagee as additional
insureds, as their interests may appear. All loss adjustments shall be payable
as provided in Article 10. Tenant shall cause all insurance premiums to be
paid and shall deliver certificates of insurance to Landlord prior to their
effective date (and, with respect to any renewal policy, prior to the
expiration of the existing policy). All such policies shall provide Landlord
(and any Hotel Mortgagee if required by the same) thirty (30) days prior
written notice of any material change or cancellation of such policy. In the
event Tenant shall fail to effect such insurance as herein required, to pay the
premiums therefor or to deliver such certificates to Landlord or any Hotel
Mortgagee at the times required, Landlord shall have the right, but not the
obligation, subject to the provisions of Section 12.5, to acquire such
insurance and pay the premiums therefor, which amounts shall be payable to
Landlord, upon demand, as Additional Charges, together with interest accrued
thereon at the Overdue Rate from the date such payment is made until (but
excluding) the date repaid.
9.5 Blanket Policy. Notwithstanding anything to the contrary
contained in this Article 9, Tenant's obligation to maintain the insurance
herein required may be brought within the coverage of a so-called blanket
policy or policies of insurance carried and maintained by Tenant, provided,
that (a) the coverage thereby afforded will not be reduced or diminished from
that which would exist under a separate policy meeting all other requirements
of this Agreement, and (b) the requirements of this Article 9 are otherwise
satisfied.
9.6 No Separate Insurance. Tenant shall not take out separate
insurance, concurrent in form or contributing in the event of loss with that
required by this Article 9, or increase the amount of any existing insurance by
securing an additional
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policy or additional policies, unless all parties having an insurable interest
in the subject matter of such insurance, including Landlord and all Hotel
Mortgagees, are included therein as additional insureds and the loss is payable
under such insurance in the same manner as losses are payable under this
Agreement. In the event Tenant shall take out any such separate insurance or
increase any of the amounts of the then existing insurance, Tenant shall give
Landlord prompt Notice thereof.
9.7 Indemnification of Landlord. Notwithstanding the
existence of any insurance provided for herein and without regard to the policy
limits of any such insurance, Tenant shall protect, indemnify and hold harmless
Landlord for, from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and reasonable expenses (including, without
limitation, reasonable attorneys' fees), to the maximum extent permitted by
law, imposed upon or incurred by or asserted against Landlord by reason of: (a)
any accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks or rights of
way, (b) any past, present or future use, misuse, non-use, condition,
management, maintenance or repair by Tenant or anyone claiming under Tenant of
the Leased Property or Tenant's Personal Property or any litigation, proceeding
or claim by governmental entities or other third parties to which Landlord is
made a party or participant relating to the Leased Property or Tenant's
Personal Property or such use, misuse, non-use, condition, management,
maintenance, or repair thereof including, failure to perform obligations (other
than Condemnation proceedings) to which Landlord is made a party, (c) any
Impositions that are the obligations of Tenant to pay pursuant to the
applicable provisions of this Agreement, and (d) any failure on the part of
Tenant or anyone claiming under Tenant to perform or comply with any of the
terms of this Agreement. Tenant, at its expense, shall contest, resist and
defend any such claim, action or proceeding asserted or instituted against
Landlord (and shall not be responsible for any duplicative attorneys' fees
incurred by Landlord) or may compromise or otherwise dispose of the same, with
Landlord's prior written consent (which consent may not be unreasonably
withheld or delayed). In the event Landlord shall unreasonably withhold or
delay its consent, Tenant shall not be liable pursuant to this Section 9.7 for
any incremental increase in costs or expenses resulting therefrom. The
obligations of
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Tenant under this Section 9.7 are in addition to the obligations set forth in
Section 4.3 and shall survive the termination of this Agreement.
ARTICLE 10
CASUALTY
10.1 Insurance Proceeds. Except as provided in the last
clause of this sentence, all proceeds payable by reason of any loss or damage
to the Leased Property, or any portion thereof, and insured under any policy of
insurance required by Article 9 (other than the proceeds of any business
interruption insurance) shall be paid directly to Landlord (subject to the
provisions of Section 10.2) and all loss adjustments with respect to losses
payable to Landlord shall require the prior written consent of Landlord;
provided, however, that, so long as no Event of Default shall have occurred and
be continuing, all such proceeds less than or equal to Two Hundred Fifty
Thousand Dollars ($250,000) shall be paid directly to Tenant and such losses
may be adjusted without Landlord's consent. If Tenant is required to
reconstruct or repair the Leased Property as provided herein, such proceeds
shall be paid out by Landlord from time to time for the reasonable costs of
reconstruction or repair of the Leased Property necessitated by such damage or
destruction, subject to and in accordance with the provisions of Section
10.2.4. Provided no Default or Event of Default has occurred and is
continuing, any excess proceeds of insurance remaining after the completion of
the restoration shall be paid to Tenant. In the event that the provisions of
Section 10.2.1 are applicable, the insurance proceeds shall be retained by the
party entitled thereto pursuant to Section 10.2.1. All salvage resulting from
any risk covered by insurance shall belong to Landlord, provided any rights to
the same have been waived by the insurer.
10.2 Damage or Destruction.
10.2.1 Damage or Destruction of Leased Property.
If, during the Term, the Leased Property shall be totally or partially
destroyed and the Hotel located thereon is thereby rendered Unsuitable for Its
Permitted Use, either Landlord or Tenant may, by the giving of Notice thereof
to the other,
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terminate this Agreement, whereupon, this Agreement shall terminate, Landlord
shall be entitled to retain the insurance proceeds payable on account of such
damage and Tenant shall thereafter have no obligation to pay Rent for periods
arising after the effective date of termination.
10.2.2 Partial Damage or Destruction. If, during the
Term, the Leased Property shall be totally or partially destroyed but the Hotel
is not rendered Unsuitable for Its Permitted Use, Tenant shall, subject to
Section 10.2.3, promptly restore the Hotel as provided in Section 10.2.4.
10.2.3 Insufficient Insurance Proceeds. If this
Agreement is not otherwise terminated pursuant to this Article 10 and the cost
of the repair or restoration of the Leased Property exceeds the amount of
insurance proceeds received by Landlord and Tenant pursuant to Article 9(a),
(c), (d) or, if applicable, (e), Tenant shall give Landlord Notice thereof
which notice shall set forth in reasonable detail the nature of such deficiency
and whether Tenant shall pay and assume the amount of such deficiency (Tenant
having no obligation to do so, except that, if Tenant shall elect to make such
funds available, the same shall become an irrevocable obligation of Tenant
pursuant to this Agreement). In the event Tenant shall elect not to pay and
assume the amount of such deficiency, Landlord shall have the right (but not
the obligation), exercisable at Landlord's sole election by Notice to Tenant,
given within sixty (60) days after Tenant's notice of the deficiency, to elect
to make available for application to the cost of repair or restoration the
amount of such deficiency; provided, however, in such event, upon any
disbursement by Landlord thereof, the Minimum Rent shall be adjusted as
provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant
shall elect to make such deficiency available for restoration, either Landlord
or Tenant may terminate this Agreement by Notice to the other, whereupon, this
Agreement shall terminate as provided in Section 10.2.1. It is expressly
understood and agreed, however, that, notwithstanding anything in this
Agreement to the contrary, Tenant shall be strictly liable and solely
responsible for the amount of any deductible and shall, upon any insurable
loss, pay over the amount of such deductible to Landlord at the time and in the
manner herein provided for payment of the applicable proceeds to Landlord.
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10.2.4 Disbursement of Proceeds. In the event Tenant is
required to restore the Leased Property pursuant to Section 10.2, Tenant shall
(or shall direct the Manager to) commence promptly and continue diligently to
perform the repair and restoration of the Leased Property (hereinafter called
the "Work"), so as to restore the Leased Property in compliance with all Legal
Requirements and so that the Leased Property shall be, to the extent
practicable, substantially equivalent in value and general utility to its
general utility and value immediately prior to such damage or destruction.
Subject to the terms hereof, Landlord shall advance the insurance proceeds and
any additional amounts payable by Landlord pursuant to Section 10.2.3 to Tenant
regularly during the repair and restoration period so as to permit payment for
the cost of any such restoration and repair. Any such advances shall be made
not more than monthly within ten (10) Business Days after Tenant submits to
Landlord a written requisition and substantiation therefor on AIA Forms G702
and G703 (or on such other form or forms as may be reasonably acceptable to
Landlord). Landlord may, at its option, condition advancement of said
insurance proceeds and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld,
delayed or conditioned), (iii) general contractors' estimates, (iv) architect's
certificates, (v) unconditional lien waivers of general contractors, if
available, (vi) evidence of approval by all governmental authorities and other
regulatory bodies whose approval is required and (vii) such other certificates
as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this Article
10 during the last two (2) years of the Term shall be subject to the release of
such proceeds by any Hotel Mortgagee to Landlord; otherwise each such Hotel
Mortgagee shall be obligated to make such funds available for Landlord's use in
accordance with the terms of this Agreement. If any Hotel Mortgagee shall be
unwilling to disburse insurance proceeds in accordance with this Agreement,
Tenant shall have the right to terminate this Agreement and Tenant shall
thereafter have no obligation to pay Rent for periods arising after the
effective date of termination.
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Tenant's obligation to restore the Leased Property pursuant to
this Article 10 shall be subject to the release of available insurance proceeds
by the applicable Hotel Mortgagee to Landlord or directly to Tenant and, in the
event such proceeds are insufficient, Landlord electing to make such deficiency
available therefor (and disbursement of such deficiency).
10.3 Damage Near End of Term. Notwithstanding any provisions
of Section 10.1 or 10.2 to the contrary, if damage to or destruction of the
Leased Property occurs during the last twelve (12) months of the Term
(including any exercised Extended Terms) and if such damage or destruction
cannot reasonably be expected to be fully repaired and restored prior to the
date that is six (6) months prior to the end of such Term, the provisions of
Section 10.2.1 shall apply as if the Leased Property had been totally or
partially destroyed and the Hotel rendered Unsuitable for its Permitted Use.
10.4 Tenant's Property. All insurance proceeds payable by
reason of any loss of or damage to any of Tenant's Personal Property shall be
paid to Tenant and, to the extent necessary to repair or replace Tenant's
Personal Property in accordance with Section 10.5, Tenant shall hold such
proceeds in trust to pay the cost of repairing or replacing damaged Tenant's
Personal Property.
10.5 Restoration of Tenant's Property. If Tenant is required
to restore the Leased Property as hereinabove provided, Tenant shall either (a)
restore all alterations and improvements made by Tenant and Tenant's Personal
Property, or (b) replace such alterations and improvements and Tenant's
Personal Property with improvements or items of the same or better quality and
utility in the operation of the Leased Property.
10.6 No Abatement of Rent. This Agreement shall remain in
full force and effect and Tenant's obligation to make all payments of Rent and
to pay all other charges as and when required under this Agreement shall remain
unabated during the Term notwithstanding any damage involving the Leased
Property (provided that Landlord shall credit against such payments any amounts
paid to Landlord as a consequence of such damage under any business
interruption insurance obtained by Tenant hereunder). The provisions of this
Article 10 shall be
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considered an express agreement governing any cause of damage or destruction to
the Leased Property and, to the maximum extent permitted by law, no local or
State statute, laws, rules, regulation or ordinance in effect during the Term
which provide for such a contingency shall have any application in such case.
10.7 Waiver. Tenant hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction of the
Leased Property.
ARTICLE 11
CONDEMNATION
11.1 Total Condemnation, Etc. If either (i) the whole of the
Leased Property shall be taken by Condemnation or (ii) a Condemnation of less
than the whole of the Leased Property renders the Leased Property Unsuitable
for Its Permitted Use, this Agreement shall terminate, Tenant and Landlord
shall seek the Award for their interests in the Leased Property as provided in
Section 11.5 and Tenant shall thereafter have no obligation to pay Rent for
periods arising after the effective date of termination.
11.2 Partial Condemnation. In the event of a Condemnation of
less than the whole of the Leased Property such that the Leased Property is
still suitable for its Permitted Use, Tenant shall, to the extent of the Award
actually received by Tenant and any additional amounts disbursed by Landlord as
hereinafter provided, commence promptly and continue diligently to restore the
untaken portion of the Leased Improvements so that such Leased Improvements
shall constitute a complete architectural unit of the same general character
and condition (as nearly as may be possible under the circumstances) as the
Leased Improvements existing immediately prior to such Condemnation, in full
compliance with all Legal Requirements, subject to the provisions of this
Section 11.2. If the cost of the repair or restoration of the Leased Property
exceeds the amount of the Award, Tenant shall give Landlord Notice thereof
which notice shall set forth in reasonable detail the nature of such deficiency
and whether Tenant shall pay and assume the amount of such deficiency (Tenant
having no obligation to do so, except
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that if Tenant shall elect to make such funds available, the same shall become
an irrevocable obligation of Tenant pursuant to this Agreement). In the event
Tenant shall elect not to pay and assume the amount of such deficiency,
Landlord shall have the right (but not the obligation), exercisable at
Landlord's sole election by Notice to Tenant given within sixty (60) days after
Tenant's Notice of the deficiency, to elect to make available for application
to the cost of repair or restoration the amount of such deficiency; provided,
however, in such event, upon any disbursement by Landlord thereof, the Minimum
Rent shall be adjusted as provided in Section 3.1.1(b). In the event that
neither Landlord nor Tenant shall elect to make such deficiency available for
restoration, either Landlord or Tenant may terminate this Agreement, whereupon,
the entire Award shall be retained by Landlord and Tenant shall thereafter have
no obligation to pay Rent for periods arising after the effective date of
termination.
Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements and any deficiency Landlord has agreed to disburse, to
Tenant regularly during the restoration period so as to permit payment for the
cost of such repair or restoration. Landlord may, at its option, condition
advancement of such Award and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld or
delayed), (iii) general contractors' estimates, (iv) architect's certificates,
(v) unconditional lien waivers of general contractors, if available, (vi)
evidence of approval by all governmental authorities and other regulatory
bodies whose approval is required and (vii) such other certificates as Landlord
may, from time to time, reasonably require. Landlord's obligation under this
Section 11.2 to disburse the Award and such other amounts shall be subject to
(x) the collection thereof by Landlord and (y) during the last two (2) years of
the Term, the release of such Award by the applicable Hotel Mortgagee;
otherwise each such Hotel Mortgagee shall be obligated to make such funds
available for Landlord's use in accordance with the terms of this Agreement.
Tenant's obligation to restore the Leased Property shall be subject to the
release of the Award by the applicable
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Hotel Mortgagee to Landlord. If any Hotel Mortgagee shall be unwilling to
release such Award in accordance with this Agreement, Tenant shall have the
right to terminate this Agreement.
11.3 Abatement of Rent. Other than as specifically provided
in this Agreement, this Agreement shall remain in full force and effect and
Tenant's obligation to make all payments of Rent and to pay all other charges
as and when required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Leased Property. The provisions
of this Article 11 shall be considered an express agreement governing any
Condemnation involving the Leased Property and, to the maximum extent permitted
by law, no local or State statute, law, rule, regulation or ordinance in effect
during the Term which provides for such a contingency shall have any
application in such case.
11.4 Temporary Condemnation. In the event of any temporary
Condemnation of the Leased Property or Tenant's interest therein, this
Agreement shall continue in full force and effect and Tenant shall continue to
pay, in the manner and on the terms herein specified, the full amount of the
Rent. Tenant shall continue to perform and observe all of the other terms and
conditions of this Agreement on the part of the Tenant to be performed and
observed. Provided no Event of Default has occurred and is continuing, the
entire amount of any Award made for such temporary Condemnation allocable to
the Term, whether paid by way of damages, rent or otherwise, shall be paid to
Tenant. Tenant shall, promptly upon the termination of any such period of
temporary Condemnation, at its sole cost and expense, restore the Leased
Property to the condition that existed immediately prior to such Condemnation,
in full compliance with all Legal Requirements, unless such period of temporary
Condemnation shall extend beyond the expiration of the Term, in which event
Tenant shall not be required to make such restoration. For purposes of this
Section 11.4, a Condemnation shall be deemed to be temporary if the period of
such Condemnation is not expected to, and does not, exceed twelve (12) months.
11.5 Allocation of Award. Except as provided in Section 11.4
and the second sentence of this Section 11.5, the total Award shall be solely
the property of and payable to Landlord.
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Any portion of the Award made for the taking of Tenant's leasehold interest in
the Leased Property, loss of business during the remainder of the Term, the
taking of Tenant's Personal Property, or Tenant's removal and relocation
expenses shall be the sole property of and payable to Tenant (subject to the
provisions of Section 11.2). In any Condemnation proceedings, Landlord and
Tenant shall each seek its own Award in conformity herewith, at its own
expense.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default" hereunder:
(a) should Tenant fail to make any payment of the Rent
or any other sum (including, but not limited to, funding of the
FF&E Reserve) payable hereunder when due; or
(b) should Tenant fail to maintain the insurance
coverages required under Article 9 and such failure shall
continue for ten (10) Business Days after Notice thereof (except
that no Notice shall be required if any such insurance
coverages shall have lapsed); or
(c) should Tenant default in the due observance or
performance of any of the terms, covenants or agreements
contained herein to be performed or observed by it (other than as
specified in clauses (a) and (b) above) and such default shall
continue for a period of fifteen (15) Business Days after Notice
thereof from Landlord to Tenant; provided, however, that if such
default is susceptible of cure but such cure cannot be
accomplished with due diligence within such period of time and
if, in addition, Tenant commences to cure or cause to be cured
such default within fifteen (15) Business Days after Notice
thereof from Landlord and thereafter prosecutes the curing of
such default with all due diligence, such period of time shall
be extended to such period of time (not to exceed an additional
one hundred
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eighty (180) days in the aggregate) as may be necessary to cure
such default with all due diligence; or
(d) should an event of default by Tenant or any
Affiliated Person as to Tenant occur and be continuing beyond the
expiration of any applicable cure period under any of the
Incidental Documents, the Other Leases or the Management
Agreement; or
(e) should there occur a final unappealable
determination by applicable state authorities of the revocation
or limitation of any material license, permit, certification or
approval required for the lawful operation of the Hotel in
accordance with its Permitted Use or the loss or material
limitation of any material license, permit, certification or
approval under any other circumstances under which Tenant is
required to cease its operation of the Hotel in accordance
with its Permitted Use at the time of such loss or limitation; or
(f) should any material representation or warranty made
by Tenant or any Affiliated Person as to Tenant under or in
connection with this Agreement or any Incidental Document or in
any document, certificate or agreement delivered in connection
herewith or therewith prove to have been false or misleading in
any material respect on the date when made or deemed made and the
same shall continue for five (5) Business Days after Notice
thereof from Landlord; or
(g) should Tenant generally not be paying its debts as
they become due or should Tenant make a general assignment for
the benefit of creditors; or
(h) should any petition be filed by or against Tenant
under the Federal bankruptcy laws, or should any other proceeding
be instituted by or against Tenant seeking to adjudicate Tenant a
bankrupt or insolvent, or seeking liquidation, reorganization,
arrangement, adjustment or composition of Tenant's debts under
any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other
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similar official for Tenant or for any substantial part of the
property of Tenant and such proceeding is not dismissed within
ninety (90) days after institution thereof, or should Tenant take
any action to authorize or effect any of the actions set forth
above in this paragraph; or
(i) should Tenant cause or institute any proceeding for
its dissolution or termination, except as contemplated by or in
connection with the assignment contemplated by Section 16.5; or
(j) should the estate or interest of Tenant in the Leased
Property or any part thereof be levied upon or attached in any
proceeding and the same shall not be vacated or discharged within
the later of (x) one hundred and twenty (120) days after
commencement thereof, unless the amount in dispute is less than
$250,000, in which case Tenant shall give notice to Landlord of
the dispute but Tenant may defend in any suitable way, and (y)
thirty (30) days after receipt by Tenant of Notice thereof from
Landlord (unless Tenant shall be contesting such lien or
attachment in good faith in accordance with Article 8); or
(k) should Tenant at any time cease to be a wholly owned
direct or indirect Subsidiary of Wyndham; or
(l) should the Limited Guaranty be disaffirmed, disavowed
or challenged by Wyndham;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement by giving Notice thereof to
Tenant and upon the expiration of the time, if any, fixed in such Notice, this
Agreement shall terminate and all rights of Tenant under this Agreement shall
cease. Landlord shall have and may exercise all rights and remedies available
at law and in equity to Landlord as a result of Tenant's breach of this
Agreement.
Upon the occurrence of an Event of Default, Landlord may, in
addition to any other remedies provided herein, enter upon the Leased Property
or any portion thereof and take possession of any and all of Tenant's Personal
Property, if any, and the Records, without liability for trespass or conversion
(Tenant hereby waiv-
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ing any right to notice or hearing prior to such taking of possession by
Landlord) and sell the same at public or private sale, after giving Tenant
reasonable Notice of the time and place of any public or private sale, at which
sale Landlord or its assigns may purchase all or any portion of Tenant's
Personal Property, if any, unless otherwise prohibited by law. Unless
otherwise provided by law and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement of reasonable Notice shall be
met if such Notice is given at least ten (10) days before the date of sale.
The proceeds from any such disposition, less all expenses incurred in
connection with the taking of possession, holding and selling of such property
(including, reasonable attorneys' fees) shall be applied as a credit against
the indebtedness which is secured by the security interest granted in Section
7.2. Any surplus shall be paid to Tenant or as otherwise required by law and
Tenant shall pay any deficiency to Landlord, as Additional Charges, upon
demand.
12.2 Remedies. None of (a) the termination of this Agreement
pursuant to Section 12.1, (b) the repossession of the Leased Property or any
portion thereof, (c) the failure of Landlord to re-let the Leased Property or
any portion thereof, nor (d) the reletting of all or any of portion of the
Leased Property, shall relieve Tenant of its liability and obligations
hereunder, all of which shall survive any such termination, repossession or re-
letting. In the event of any such termination, Tenant shall forthwith pay to
Landlord all Rent due and payable with respect to the Leased Property through
and including the date of such termination. Thereafter, Tenant, until the end
of what would have been the Term of this Agreement in the absence of such
termination, and whether or not the Leased Property or any portion thereof
shall have been re-let, shall be liable to Landlord for, and shall pay to
Landlord, as current damages, the Rent and other charges which would be payable
hereunder for the remainder of the Term had such termination not occurred, less
the net proceeds, if any, of any re-letting of the Leased Property, after
deducting all reasonable expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising, expenses of employees, alteration costs
and expenses of preparation for such reletting. Tenant shall pay such current
damages to Landlord monthly on the days on
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which the Minimum Rent would have been payable hereunder if this Agreement had
not been so terminated with respect to such of the Leased Property.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord an
amount equal to the present value (discounted at the Interest Rate) of the
excess, if any, of the Rent and other charges which would be payable hereunder
from the date of such termination (assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Impositions and Additional
Rent would be the same as payments required for the immediately preceding
twelve calendar months, or if less than twelve calendar months have expired
since the Commencement Date, the payments required for such lesser period
projected to an annual amount) for what would be the then unexpired term of
this Agreement if the same remained in effect, over the fair market rental for
the same period. Nothing contained in this Agreement shall, however, limit or
prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater than,
equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession
by summary proceedings or otherwise, Landlord may (a) relet the Leased Property
or any part or parts thereof, either in the name of Landlord or otherwise, for
a term or terms which may at Landlord's option, be equal to, less than or
exceed the period which would otherwise have constituted the balance of the
Term and may grant concessions or free rent to the extent that Landlord
considers advisable and necessary to relet the same, and (b) may make such
reasonable alterations, repairs and decorations in the Leased Property or any
portion thereof as Landlord, in its sole and absolute discretion, considers
advisable and necessary for the purpose of reletting the Leased Property; and
the making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Subject to
the last sentence of this paragraph, Landlord shall in no event be liable
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in any way whatsoever for any failure to relet all or any portion of the Leased
Property, or, in the event that the Leased Property is relet, for failure to
collect the rent under such reletting. To the maximum extent permitted by law,
Tenant hereby expressly waives any and all rights of redemption granted under
any present or future laws in the event of Tenant being evicted or
dispossessed, or in the event of Landlord obtaining possession of the Leased
Property, by reason of the occurrence and continuation of an Event of Default
hereunder. Landlord covenants and agrees, in the event of any termination of
this Agreement as a result of an Event of Default, to use reasonable efforts to
mitigate its damages.
12.3 Tenant's Waiver. IF THIS AGREEMENT IS TERMINATED
PURSUANT TO SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY
LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO
ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS
NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR
DEBT.
12.4 Application of Funds. Any payments received by Landlord
under any of the provisions of this Agreement during the existence or
continuance of any Event of Default (and any payment made to Landlord rather
than Tenant due to the existence of any Event of Default) shall be applied to
Tenant's current and past due obligations under this Agreement in such order as
Landlord may determine or as may be prescribed by the laws of the State.
12.5 Landlord's Right to Cure Tenant's Default. If an Event
of Default shall have occurred and be continuing, Landlord, after Notice to
Tenant (which Notice shall not be required if Landlord shall reasonably
determine immediate action is necessary to protect person or property), without
waiving or releasing any obligation of Tenant and without waiving or releasing
any Event of Default, may (but shall not be obligated to), at any time
thereafter, make such payment or perform such act for the account and at the
expense of Tenant, and may, to the maximum extent permitted by law, enter upon
the Leased Property or any portion thereof for such purpose and take all such
action thereon as, in Landlord's sole and absolute discretion, may be necessary
or appropriate therefor. No such entry shall be deemed an eviction of Tenant.
All reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred by Landlord in
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connection therewith, together with interest thereon (to the extent permitted
by law) at the Overdue Rate from the date such sums are paid by Landlord until
repaid, shall be paid by Tenant to Landlord, on demand.
ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination of
this Agreement shall be treated as a daily tenancy at sufferance at a rate
equal to two (2) times the Minimum Rent and other charges herein provided
(prorated on a daily basis). Tenant shall also pay to Landlord all damages
(direct or indirect) sustained by reason of any such holding over. Otherwise,
such holding over shall be on the terms and conditions set forth in this
Agreement, to the extent applicable. Nothing contained herein shall constitute
the consent, express or implied, of Landlord to the holding over of Tenant
after the expiration or earlier termination of this Agreement.
ARTICLE 14
LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT
14.1 Landlord Notice Obligation. Landlord shall give prompt
Notice to Tenant of any matters affecting the Leased Property of which Landlord
receives written notice or actual knowledge and, to the extent Tenant otherwise
has no notice or actual knowledge thereof, Landlord shall be liable for any
liabilities arising from the failure to deliver such Notice to Tenant.
14.2 Landlord's Default. If Landlord shall default in the
performance or observance of any of its covenants or obligations set forth in
this Agreement or any obligation of Landlord, if any, under any agreement
affecting the Leased Property, the performance of which is not Tenant's
obligation pursuant to this Agreement, and any such default shall continue for
a period of ten (10) days after Notice thereof with respect to monetary
defaults and thirty (30) days after Notice thereof with respect
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to non-monetary defaults from Tenant to Landlord and any applicable Hotel
Mortgagee, or such additional period as may be reasonably required to correct
the same, Tenant may declare the occurrence of a "Landlord Default" by a second
Notice to Landlord and to such Hotel Mortgagee. Thereafter, Tenant may
forthwith cure the same and, subject to the provisions of the following
paragraph, invoice Landlord for costs and expenses (including reasonable
attorneys' fees and court costs) incurred by Tenant in curing the same,
together with interest thereon (to the extent permitted by law) from the date
Landlord receives Tenant's invoice, at the Overdue Rate. Tenant shall have no
right to terminate this Agreement for any default by Landlord hereunder and no
right, for any such default, to offset or counterclaim against any Rent or
other charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period,
shall give Notice thereof to Tenant, setting forth, in reasonable detail, the
basis therefor, no Landlord Default shall be deemed to have occurred and
Landlord shall have no obligation with respect thereto until final adverse
determination thereof; provided, however, that in the event of any such adverse
determination, Landlord shall pay to Tenant interest on any disputed funds at
the Interest Rate, from the date demand for such funds was made by Tenant until
the date of final adverse determination and, thereafter, at the Overdue Rate
until paid. If Tenant and Landlord shall fail, in good faith, to resolve any
such dispute within ten (10) days after Landlord's Notice of dispute, either
may submit the matter for resolution to a court of competent jurisdiction.
ARTICLE 15
PURCHASE RIGHTS
15.1 First Refusal to Purchase. Provided, (a) no Default or
Event of Default shall have occurred and be continuing, (b) this Agreement
shall be of full force and effect, and (c) other than as expressly permitted or
required by Section 16, Tenant shall not have assigned this Agreement (other
than a collateral assignment to or from a Leasehold Mortgagee or as
contemplated by Section 16.5) or subleased all or any portion of the Leased
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Property, Tenant shall have a first refusal option to purchase the Leased
Property upon the same price, terms and conditions as Landlord shall propose to
sell the Leased Property, or upon the same price, terms and conditions of any
offer from a third party to purchase the Leased Property which Landlord intends
to accept (or has accepted subject to Tenant's right of first refusal herein
provided); provided, however, that, if the proposed purchase price is for other
than cash, Tenant shall have the right to purchase the Leased Property on cash
equivalent terms determined by the agreement of the parties or, if they cannot
agree within ten (10) Business Days, by arbitration in accordance with the
rules of the American Arbitration Association then in effect. If, during the
Term, Landlord reaches such agreement with a third party or proposes to offer
the Leased Property for sale, Landlord shall promptly give written notice to
Tenant of the purchase price and all other material terms and conditions of
such agreement or proposed sale and Tenant shall have sixty (60) days
thereafter to exercise Tenant's option to purchase by written notice to
Landlord thereof. Failure of Tenant to respond within such 60-day period shall
be deemed a waiver of Tenant's right to purchase the Leased Property with
respect to such offer pursuant to this Section 15.1. If Tenant exercises its
option, the sale to Tenant shall be consummated upon the same terms and
conditions as contained in such agreement or Landlord's notice of the proposed
sale. If Tenant shall not exercise its option to purchase within the time
period and in the manner above provided, Landlord shall be free to sell the
Leased Property to such third party at the price and upon terms substantially
similar to those offered to Tenant. The rights granted to Tenant pursuant to
this Section 15.1 shall not apply to any financing or sale-leaseback
transaction or any transaction pursuant to which Landlord is merged or
consolidated with another Person; provided, however, that any Person who shall
acquire the Leased Premises shall acquire them subject to, and shall be bound
by, the provisions of this Section 15.1. The provisions of this Section 15.1
shall inure to the benefit of Tenant and any permitted successors and assigns
of Tenant pursuant to this Agreement.
15.2 Landlord's Option to Purchase the Tenant's Personal
Property; Transfer of Licenses. Landlord shall have the option to purchase
Tenant's Personal Property, at the expiration or termination of this Agreement,
for an amount equal to the then net market value thereof (current replacement
cost as determined
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by appraisal less accumulated depreciation on Tenant's books pertaining
thereto), subject to, and with appropriate price adjustments for, all equipment
leases, conditional sale contracts, UCC-1 financing statements and other
encumbrances to which such Personal Property is subject. Upon the expiration
or sooner termination of this Agreement, Tenant shall use its best efforts to
transfer and assign to Landlord or its designee, or assist Landlord or its
designee in obtaining, any contracts, licenses, and certificates required for
the then operation of the Leased Property.
ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1 Subletting and Assignment. Except as provided in Section
16.3 and Article 19, Tenant shall not, without Landlord's prior written consent
(which consent may be given or withheld in Landlord's sole and absolute
discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer this Agreement or sublease (which term shall be deemed to include the
granting of concessions, licenses and the like), all or any part of the Leased
Property or suffer or permit this Agreement or the leasehold estate created
hereby or any other rights arising under this Agreement to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law, or permit the
use or operation of the Leased Property by anyone other than Tenant and the
Manager, or the Leased Property to be offered or advertised for assignment or
subletting. For purposes of this Section 16.1, an assignment of this Agreement
shall be deemed to include any direct or indirect transfer of any interest in
Tenant such that Tenant shall cease to be a wholly owned direct or indirect
Subsidiary of Wyndham or any transaction pursuant to which Tenant is merged or
consolidated with another Entity or pursuant to which all or substantially all
of Tenant's assets are transferred to any other Entity, as if such change in
control or transaction were an assignment of this Agreement; provided, however,
that the foregoing shall not be construed to prohibit collateral assignments or
pledges of the capital stock of Tenant to Lending Institutions otherwise
permitted by this Agreement.
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If this Agreement is assigned or if the Leased Property or any part
thereof are sublet (or occupied by anybody other than Tenant, the Manager and
their respective employees or hotel guests) Landlord may collect the rents from
such assignee, subtenant or occupant, as the case may be, and apply the net
amount collected to the Rent herein reserved, but no such collection shall be
deemed a waiver of the provisions set forth in the first paragraph of this
Section 16.1, the acceptance by Landlord of such assignee, subtenant or
occupant, as the case may be, as a tenant, or a release of Tenant from the
future performance by Tenant of its covenants, agreements or obligations
contained in this Agreement.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder (unless Landlord and Tenant expressly
otherwise agree that Tenant shall be released from all obligations hereunder),
and no consent to any subletting or assignment in a particular instance shall
be deemed to be a waiver of the prohibition set forth in this Section 16.1. No
assignment, subletting or occupancy shall affect any Permitted Use. Any
subletting, assignment or other transfer of Tenant's interest under this
Agreement in contravention of this Section 16.1 shall be voidable at Landlord's
option.
16.2 Required Sublease Provisions. Any sublease of all or any
portion of the Leased Property entered into on or after the date hereof shall
provide (a) that it is subject and subordinate to this Agreement and to the
matters to which this Agreement is or shall be subject or subordinate; (b) that
in the event of termination of this Agreement or reentry or dispossession of
Tenant by Landlord under this Agreement, Landlord may, at its option, terminate
such sublease or take over all of the right, title and interest of Tenant, as
sublessor under such sublease, and such subtenant shall, at Landlord's option,
attorn to Landlord pursuant to the then executory provisions of such sublease,
except that neither Landlord nor any Hotel Mortgagee, as holder of a mortgage
or as Landlord under this Agreement, if such mortgagee succeeds to that
position, shall (i) be liable for any act or omission of Tenant under such
sublease, (ii) be subject to any credit, counterclaim, offset or defense which
theretofore accrued to such subtenant against Tenant, (iii) be bound by any
previous modification of such sublease not consented to in writing by Landlord
or by any previous prepayment of more
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than one (1) month's Rent, (iv) be bound by any covenant of Tenant to undertake
or complete any construction of the Leased Property or any portion thereof, (v)
be required to account for any security deposit of the subtenant other than any
security deposit actually delivered to Landlord by Tenant, (vi) be bound by any
obligation to make any payment to such subtenant or grant any credits, except
for services, repairs, maintenance and restoration provided for under the
sublease that are performed after the date of such attornment, (vii) be
responsible for any monies owing by Tenant to the credit of such subtenant, or
(viii) be required to remove any Person occupying any portion of the Leased
Property; and (c), in the event that such subtenant receives a written Notice
from Landlord or any Hotel Mortgagee stating that an Event of Default has
occurred and is continuing, such subtenant shall thereafter be obligated to pay
all rentals accruing under such sublease directly to the party giving such
Notice or as such party may direct. All rentals received from such subtenant
by Landlord or the Hotel Mortgagee, as the case may be, shall be credited
against the amounts owing by Tenant under this Agreement and such sublease
shall provide that the subtenant thereunder shall, at the request of Landlord,
execute a suitable instrument in confirmation of such agreement to attorn. An
original counterpart of each such sublease and assignment and assumption, duly
executed by Tenant and such subtenant or assignee, as the case may be, in form
and substance reasonably satisfactory to Landlord, shall be delivered promptly
to Landlord and (a) in the case of an assignment, the assignee shall assume in
writing and agree to keep and perform all of the terms of this Agreement on the
part of Tenant to be kept and performed and shall be, and become, jointly and
severally liable with Tenant for the performance thereof and (b) in case of
either an assignment or subletting, Tenant shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Tenant hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of Section 16.1.
16.3 Permitted Sublease. Notwithstanding the foregoing, including,
without limitation, Section 16.2, but subject to the provisions of Section 16.4
and any other express conditions or
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limitations set forth herein, Tenant may, in each instance after Notice to
Landlord, sublease space at the Leased Property for newsstand, gift shop,
parking garage, health club, restaurant, bar or commissary purposes or similar
concessions in furtherance of the Permitted Use, so long as such subleases do
not demise, in the aggregate, in excess of two thousand (2,000) square feet,
will not violate or affect any Legal Requirement or Insurance Requirement, and
Tenant shall provide such additional insurance coverage applicable to the
activities to be conducted in such subleased space as Landlord and any Hotel
Mortgagee may reasonably require.
16.4 Sublease Limitation. For so long as Landlord or any Affiliated
Person as to Landlord shall seek to qualify as a real estate investment trust,
anything contained in this Agreement to the contrary notwithstanding, Tenant
shall not sublet the Leased Property on any basis such that the rental to be
paid by any sublessee thereunder would be based, in whole or in part, on the
income or profits derived by the business activities of such sublessee, any
other formula such that any portion of such sublease rental would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the Code, or any similar or successor provision thereto or would otherwise
disqualify Landlord for treatment as a real estate investment trust.
ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 Estoppel Certificates. At any time and from time to time, upon
not less than ten (10) Business Days prior Notice by either party, the party
receiving such Notice shall furnish to the other an Officer's Certificate
certifying that this Agreement is unmodified and in full force and effect (or
that this Agreement is in full force and effect as modified and setting forth
the modifications), the date to which the Rent has been paid, that no Default
or an Event of Default has occurred and is continuing or, if a Default or an
Event of Default shall exist, specifying in reasonable detail the nature
thereof, and the steps being taken to remedy the same, and such additional
information as the requesting party may reasonably request. Any such
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certificate furnished pursuant to this Section 17.1 may be relied
upon by the requesting party, its lenders and any prospective
purchaser or mortgagee of the Leased Property or the leasehold
estate created hereby.
17.2 Financial Statements.
(a) within forty-five (45) days after each of the
first three quarters of any Fiscal Year, the most recent
Consolidated Financials, accompanied by the Financial
Officer's Certificate;
(b) within ninety (90) days after the end of each
Fiscal Year, the most recent Consolidated Financials for
such year, certified by an independent certified public
accountant reasonably satisfactory to Landlord and
accompanied by a Financial Officer's Certificate;
(c) within thirty (30) days after the end of each
month, an unaudited operating statement, including
occupancy percentages and average rate, accompanied by
a Financial Officer's Certificate;
(d) promptly after the sending or filing thereof,
copies of all reports which Tenant or Wyndham sends to its
security holders generally, and copies of all periodic
reports which Tenant or Wyndham files with the SEC or any
stock exchange on which its shares are listed or traded;
(e) at any time and from time to time upon not
less than twenty (20) days Notice from Landlord, any
Consolidated Financials or any other financial reporting
information required to be filed by Landlord with any
securities and exchange commission, the SEC or any
successor agency, or any other governmental authority, or
required pursuant to any order issued by any court,
governmental authority or arbitrator in any litigation to
which Landlord is a party, for purposes of compliance
therewith; and
(f) promptly, upon Notice from Landlord, such
other information concerning the business, financial
condition and affairs of Tenant and Wyndham as Landlord
reasonably may request from time to time.
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Landlord may at any time, and from time to time, provide any Hotel Mortgagee
with copies of any of the foregoing statements.
In addition, Landlord shall have the right, from time to time at
Landlord's sole cost and expense, upon reasonable Notice, during Tenant's
customary business hours, to cause Tenant's books and records with respect to
the Leased Property to be audited by auditors selected by Landlord at the place
where such books and records are customarily kept.
17.3 General Operations. Tenant shall furnish to Landlord:
(a) Within thirty (30) days after receipt or modification
thereof, copies of all licenses authorizing Tenant and/or the Manager
to operate the Hotel for its Permitted Use;
(b) Not less than thirty (30) days after the commencement of
any Fiscal Year, proposed annual income and ordinary expense and capital
improvement budgets setting forth projected income and costs and
expenses projected to be incurred by Tenant in managing, owning,
maintaining and operating the Hotel during the next succeeding Fiscal
Year; and
(c) Promptly after receipt or sending thereof, copies of all
notices given or received by Tenant under the Management Agreement.
ARTICLE 18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit, and shall direct the Manager to permit, Landlord
and its authorized representatives to inspect the Leased Property during usual
business hours upon not less than twenty-four (24) hours' notice and to make
such repairs as Landlord is permitted or required to make pursuant to the terms
of this Agreement, provided that any inspection or repair by Landlord or its
representatives will not unreasonably interfere with Tenant's use and operation
of the Leased Property and further provided
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that in the event of an emergency, as determined by Landlord in its reasonable
discretion, prior Notice shall not be necessary.
ARTICLE 19
LEASEHOLD MORTGAGES
19.1 Leasehold Mortgages Authorized. Notwithstanding anything to the
contrary contained herein, on one or more occasions, without Landlord's prior
consent, Tenant may grant one or more Leasehold Mortgages on its leasehold
interest in the Security Deposit, the Leased Property and security interests in
Tenant's rights to the FF&E Reserve and Tenant's Personal Property
(collectively, the "Leasehold Estate") to one or more Lending Institutions to
secure Indebtedness permitted hereunder.
19.2 Notices to Landlord. Promptly upon the granting of any
Leasehold Mortgage, Tenant or the applicable Leasehold Mortgagee shall give
Notice thereof to Landlord, such notice to identify the name and address of the
Leasehold Mortgagee and to be accompanied by a copy of the applicable Leasehold
Mortgage, as recorded. In the event of a change of address of a Leasehold
Mortgagee or of any amendment to or assignment of a Leasehold Mortgage, Tenant
or the applicable Leasehold Mortgagee shall promptly provide notice of such new
address, amendment or assignment to Landlord, together with a copy of each such
amendment or assignment.
19.3 Cure by Leasehold Mortgagee. Any Leasehold Mortgagee shall have
the right, at any time during the Term hereof, while this Agreement is in full
force and effect:
(a) To do any act required by Tenant hereunder, and all such
acts done or performed shall be effective as to prevent a forfeiture of
Tenant's rights hereunder as if the same had been done or performed by
Tenant; and
(b) To rely on the security afforded by the Leasehold Estate,
and to acquire and to succeed to the interest of Tenant hereunder by
foreclosure, whether by judicial sale, by power of sale contained in any
security instrument, or by assignment of leasehold interest given in
lieu of
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foreclosure, and thereafter convey or assign title to the Leasehold
Estate so required to any other person, firm or corporation.
If the Leasehold Mortgagee or Tenant shall have furnished, in writing,
to Landlord a request for Notice of any Event of Default, in the event of any
Event of Default by Tenant, Landlord will not terminate this Lease by reason of
such Event of Default if the Leasehold Mortgagee shall, prior to the expiration
of the applicable cure period, cure any monetary Event of Default or, if such
Event of Default cannot be cured by the payment of money, provide Landlord with
a written undertaking, in form and substance satisfactory to Landlord, to
perform all covenants and obligations of Tenant under this Agreement upon
foreclosure and, thereafter, such Leasehold Mortgagee shall proceed in a timely
and diligent manner to accomplish the foreclosure of the Leasehold Estate.
19.4 Landlord Estoppel Certificates. Landlord agrees, from time to
time, to provide to any Leasehold Mortgagee, promptly after written request
therefor, an estoppel certificate substantially in the form of Exhibit C or
otherwise in such form as any Leasehold Mortgagee may reasonably request.
ARTICLE 20
HOTEL MORTGAGES
20.1 Landlord May Grant Liens. Without the consent of Tenant,
Landlord may, subject to the terms and conditions set forth in this Section
20.1, from time to time, directly or indirectly, create or otherwise cause to
exist any lien, encumbrance or title retention agreement ("Encumbrance") upon
the Leased Property, or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing.
Notwithstanding anything to the contrary set forth in Section 20.2, any such
Encumbrance shall include the right to prepay (whether or not subject to a
prepayment penalty) and shall provide (subject to Section 20.2) that it is
subject to the rights of Tenant under this Agreement.
20.2 Subordination of Lease. Subject to Section 20.1 and this
Section 20.2, this Agreement, any and all rights of Tenant
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hereunder, are and shall be subject and subordinate to any ground or master
lease, and all renewals, extensions, modifications and replacements thereof,
and to all mortgages and deeds of trust, which may now or hereafter affect the
Leased Property or any improvements thereon and/or any of such leases, whether
or not such mortgages or deeds of trust shall also cover other lands and/or
buildings and/or leases, to each and every advance made or hereafter to be made
under such mortgages and deeds of trust, and to all renewals, modifications,
replacements and extensions of such leases and such mortgages and deeds of
trust and all consolidations of such mortgages and deeds of trust. This
section shall be self-operative and no further instrument of subordination
shall be required provided that Tenant has received a nondisturbance and
attornment agreement from each Superior Mortgagee and/or Superior Landlord,
consistent with the provisions of this Section 20.2 and otherwise in form and
substance reasonably satisfactory to Tenant, the benefits of which agreement
shall also extend to any Leasehold Mortgagee. In confirmation of such
subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, the lessor under any such lease or the holder of any
such mortgage or the trustee or beneficiary of any deed of trust or any of
their respective successors in interest may reasonably request to evidence such
subordination. Any lease to which this Agreement is, at the time referred to,
subject and subordinate is herein called "Superior Lease" and the lessor of a
Superior Lease or its successor in interest at the time referred to, is herein
called "Superior Landlord" and any mortgage or deed of trust to which this
Agreement is, at the time referred to, subject and subordinate, is herein
called "Superior Mortgage" and the holder, trustee or beneficiary of a Superior
Mortgage is herein called "Superior Mortgagee". Tenant shall have no
obligations under any Superior Lease or Superior Mortgage other than those
expressly set forth in this Section 20.2.
If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under this Agreement (any such person, "Successor
Landlord"), whether through possession or foreclosure action or delivery of a
new lease or deed, or otherwise, such Successor Landlord shall recognize
Tenant's rights under this Agreement as herein provided and Tenant shall attorn
to and recognize the Successor Landlord
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as Tenant's landlord under this Agreement and Tenant shall promptly execute and
deliver any instrument that such Successor Landlord may reasonably request to
evidence such attornment (provided that such instrument does not alter the
terms of this Agreement), whereupon, this Agreement shall continue in full
force and effect as a direct lease between the Successor Landlord and Tenant
upon all of the terms, conditions and covenants as are set forth in this
Agreement, except that the Successor Landlord (unless formerly the landlord
under this Agreement or its nominee or designee) shall not be (a) liable in any
way to Tenant for any act or omission, neglect or default on the part of any
prior Landlord under this Agreement, (b) responsible for any monies owing by or
on deposit with any prior Landlord to the credit of Tenant (except to the
extent actually paid or delivered to the Successor Landlord), (c) subject to
any counterclaim or setoff which theretofore accrued to Tenant against any
prior Landlord, (d) bound by any modification of this Agreement subsequent to
such Superior Lease or Mortgage, or by any previous prepayment of Minimum Rent
or Additional Rent for more than one (1) month in advance of the date due
hereunder, which was not approved in writing by the Superior Landlord or the
Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor
Landlord's interest in the Leased Property and the rents, income, receipts,
revenues, issues and profits issuing from the Leased Property, (f) responsible
for the performance of any work to be done by the Landlord under this Agreement
to render the Leased Property ready for occupancy by Tenant (subject to
Landlord's obligations under Section 5.1.2(b) or with respect to any insurance
or Condemnation proceeds), or (g) required to remove any Person occupying the
Leased Property or any part thereof, except if such person claims by, through
or under the Successor Landlord. Tenant agrees at any time and from time to
time to execute a suitable instrument in confirmation of Tenant's agreement to
attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument
of nondisturbance and attornment from each such Superior Mortgagee and Superior
Landlord in form and substance reasonably satisfactory to Tenant. Nothing
contained in this Section 20.2 shall relieve Landlord from any liability to
Tenant under this Agreement following the exercise of remedies by a Superior
Mortgagee.
20.3 Notice to Mortgagee and Superior Landlord. Subsequent to the
receipt by Tenant of Notice from Landlord as to the
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identity of any Hotel Mortgagee or Superior Landlord under a lease with
Landlord, as ground lessee, which includes the Leased Property as part of the
demised premises and which complies with Section 20.1 and 20.2 (which Notice
shall be accompanied by a copy of the applicable mortgage or lease), no notice
from Tenant to Landlord as to the Leased Property shall be effective unless and
until a copy of the same is given to such Hotel Mortgagee or Superior Landlord
at the address set forth in the above described Notice, and the curing of any
of Landlord's defaults by such Hotel Mortgagee or Superior Landlord shall be
treated as performance by Landlord.
ARTICLE 21
ADDITIONAL COVENANTS OF TENANT
21.1 Prompt Payment of Indebtedness. Tenant shall (a) pay or cause
to be paid when due all payments of principal of and premium and interest on
Tenant's Indebtedness for money borrowed and shall not permit or suffer any
such Indebtedness to become or remain in default beyond any applicable grace or
cure period, (b) pay or cause to be paid when due all lawful claims for labor
and rents with respect to the Leased Property, (c) pay or cause to be paid when
due all trade payables and (d) pay or cause to be paid when due all other of
Tenant's Indebtedness upon which it is or becomes obligated, except, in each
case, other than that referred to in clause (a), to the extent payment is being
contested in good faith by appropriate proceedings in accordance with Article 8
and if Tenant shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP, if appropriate, or unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.
21.2 Conduct of Business. Tenant shall not engage in any business
other than the leasing and operation of the Leased Property and shall do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect and in good standing its corporate or partnership existence, as
applicable, and its rights and licenses necessary to conduct such business.
21.3 Maintenance of Accounts and Records. Tenant shall keep true
records and books of account of Tenant in which full,
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true and correct entries will be made of dealings and transactions in relation
to the business and affairs of Tenant in accordance with GAAP, where
applicable, Tenant shall apply accounting principles in the preparation of the
financial statements of Tenant which, in the judgment of and the opinion of its
independent public accountants, are in accordance with GAAP, where applicable,
except for changes approved by such independent public accountants. Tenant
shall provide to Landlord either in a footnote to the financial statements
delivered under Section 17.2 which relate to the period in which such change
occurs, or in separate schedules to such financial statements, information
sufficient to show the effect of any such changes on such financial statements.
21.4 Notice of Litigation, Etc. Tenant shall give prompt Notice to
Landlord of any litigation or any administrative proceeding to which it may
hereafter become a party of which Tenant has notice or actual knowledge which
involves a potential uninsured liability equal to or greater than Two Hundred
Fifty Thousand Dollars ($250,000) or which, in Tenant's reasonable opinion, may
otherwise result in any material adverse change in the business, operations,
property, prospects, results of operation or condition, financial or other, of
Tenant. Forthwith upon Tenant obtaining knowledge of any Default, Event of
Default or any default or event of default under any agreement relating to
Indebtedness for money borrowed in an aggregate amount exceeding, at any one
time, Two Hundred Fifty Thousand Dollars ($250,000), or any event or condition
that would be required to be disclosed in a current report filed by Tenant on
Form 8-K or in Part II of a quarterly report on Form 10-Q if Tenant were
required to file such reports under the Securities Exchange Act of 1934, as
amended, Tenant shall furnish Notice thereof to Landlord specifying the nature
and period of existence thereof and what action Tenant has taken or is taking
or proposes to take with respect thereto.
21.5 Indebtedness of Tenant. Tenant shall not create, incur, assume
or guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
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(b) Indebtedness of Tenant for Impositions, to the extent that
payment thereof shall not at the time be required to be made in
accordance with the provisions of Article 8;
(c) Indebtedness of Tenant in respect of judgments or awards
(i) which have been in force for less than the applicable appeal period
and in respect of which execution thereof shall have been stayed pending
such appeal or review, or (ii) which are fully covered by insurance
payable to Tenant, or (iii) which are for an amount not in excess of
$250,000 in the aggregate at any one time outstanding and (x) which have
been in force for not longer than the applicable appeal period, so long
as execution is not levied thereunder or (y) in respect of which an
appeal or proceedings for review shall at the time be prosecuted in good
faith in accordance with the provisions of Article 8, and in respect of
which execution thereof shall have been stayed pending such appeal or
review;
(d) unsecured borrowings of Tenant from its Affiliated Persons
which are by their terms expressly subordinate pursuant to a
Subordination Agreement to the payment and performance of Tenant's
obligations under this Agreement;
(e) Indebtedness for purchase money financing in accordance
with Section 21.9(a) and other operating liabilities incurred in the
ordinary course of Tenant's business;
(f) Deferred fees to the Manager as provided in the Management
Agreement, provided that such fees shall be, from and after the
occurrence of a Default or Event of Default, subordinate to all amounts
owing to Landlord; or
(g) Indebtedness of Wyndham secured by a Leasehold Mortgage or
otherwise guaranteed by Tenant.
21.6 Financial Condition of Tenant. Tenant shall at all times
maintain Tangible Net Worth (except as provided in the last clause of this
sentence) in an amount at least equal to the aggregate of one year's Minimum
Rent payable pursuant to this Agreement; it being expressly understood and
agreed that the
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amount of the Security Deposit may for such purpose be counted as equity at the
full amount thereof.
21.7 Distributions, Payments to Affiliated Persons, Etc. Tenant shall
not declare, order, pay or make, directly or indirectly, any Distributions or
any payment to any Affiliated Person of Tenant (including payments in the
ordinary course of business and payments pursuant to management agreements with
any such Affiliated Person) or set apart any sum or property therefor, or agree
to do so, if, at the time of such proposed action, or immediately after giving
effect thereto, any Event of Default shall exist.
21.8 Prohibited Transactions. Tenant shall not permit to exist or
enter into any agreement or arrangement whereby it engages in a transaction of
any kind with any Affiliated Person as to Tenant, except on terms and
conditions which are commercially reasonable or as otherwise provided in
Section 21.5.
21.9 Liens and Encumbrances. Except as permitted by Section 7.1,
Article 19 and Section 21.5, Tenant shall not create or incur or suffer to be
created or incurred or to exist any Lien on this Agreement or any of Tenant's
assets, properties, rights or income, or any of its interest therein, now or at
any time hereafter owned, other than:
(a) Security interests securing the purchase price of
equipment or personal property whether acquired before or after the
Commencement Date; provided, however, that (i) such Lien shall at all
times be confined solely to the asset in question and (ii) the aggregate
principal amount of Indebtedness secured by any such Lien shall not
exceed the cost of acquisition or construction of the property subject
thereto;
(b) Permitted Encumbrances; and
(c) As permitted pursuant to Article 19 and Section 21.5.
21.10 Merger; Sale of Assets; Etc. Except as otherwise permitted by
this Agreement, Tenant shall not (i) sell, lease (as lessor or sublessor),
transfer or otherwise dispose of, or
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abandon, all or any material portion of its assets (including capital stock) or
business to any Person, (ii) merge into or with or consolidate with any other
Entity, or (iii) sell, lease (as lessor or sublessor), transfer or otherwise
dispose of, or abandon, any personal property or fixtures or any real property;
provided, however, that, notwithstanding the provisions of clause (iii)
preceding, Tenant may dispose of equipment or fixtures which have become
inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary,
provided substitute equipment or fixtures having equal or greater value and
utility (but not necessarily having the same function) have been provided.
ARTICLE 22
REPRESENTATIONS AND WARRANTIES
22.1 Representations of Tenant. To induce Landlord to enter into
this Agreement, Tenant represents and warrants to Landlord as follows:
22.1.1 Status and Authority of Tenant. Tenant is a
corporation duly organized, validly existing and in corporate good standing
under the laws of its state of incorporation. Tenant has all requisite power
and authority under the laws of its state of formation and its respective
charter documents to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. Tenant has
duly qualified to transact business in each jurisdiction in which the nature of
the business conducted by it requires such qualification.
22.1.2 Action of Tenant. Tenant has taken all necessary
action to authorize the execution, delivery and performance of this Agreement;
this Agreement constitutes the valid and binding obligation and agreement of
Tenant, enforceable against Tenant in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors.
22.1.3 No Violations of Agreements. Neither the execution,
delivery or performance of this Agreement by Tenant,
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nor compliance with the terms and provisions hereof, will result in any breach
of the terms, conditions or provisions of, or conflict with or constitute a
default under, or result in the creation of any lien, charge or encumbrance
upon Tenant or the Leased Property pursuant to the terms of any indenture,
mortgage, deed of trust, note, evidence of indebtedness or any other material
agreement or instrument by which Tenant or, to Tenant's knowledge, the Leased
Property is bound, other than a Leasehold Mortgage.
22.1.4 Litigation. To Tenant's knowledge, no action or
proceeding is pending or threatened and no investigation looking toward such an
action or proceeding has begun, which questions the validity of this Agreement
or any action taken or to be taken pursuant hereto, will result in any
material adverse change in the business, operation, affairs or condition of the
Leased Property or Tenant, result in or subject the Leased Property or Tenant
to a material liability, or involves condemnation or eminent domain proceedings
against any part of the Leased Property.
22.1.5 Existing Leases, Agreements, Etc. To Tenant's
knowledge, other than any agreements provided to Landlord prior to the date
hereof, there are no material agreements affecting the Leased Property which
will be binding on Landlord subsequent to the Commencement Date.
22.1.6 Disclosure. To Tenant's knowledge, there is no fact
or condition which materially and adversely affects the business or condition
of the Leased Property which has not been set forth in this Agreement or in the
other documents, certificates or statements furnished to Landlord in connection
with the transactions contemplated hereby.
22.1.7 Utilities, Etc. To Tenant's knowledge, all utilities
and services necessary for the use and operation of the Leased Property
(including, without limitation, road access, gas, water, electricity and
telephone) are available thereto, are of sufficient capacity to meet adequately
all needs and requirements necessary for the current use and operation of the
Leased Property and for its intended purposes. To Tenant's knowledge, no fact,
condition or proceeding exists which would result in the
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termination or material impairment of the furnishing of such utilities to the
Leased Property.
22.1.8 Compliance With Law. To Tenant's knowledge, the
Leased Property and the use and operation thereof do not violate any material
federal, state, municipal and other governmental statutes, ordinances, by-laws,
rules, regulations or any other legal requirements, including, without
limitation, those relating to construction, occupancy, zoning, adequacy of
parking, environmental protection, occupational health and safety and fire
safety applicable thereto; and there are presently in effect all material
licenses, permits and other authorizations necessary for the current use,
occupancy and operation thereof. To Tenant's knowledge, there is no threatened
request, application, proceeding, plan, study or effort which would materially
adversely affect the present use or zoning of the Leased Property or which
would modify or realign any adjacent street or highway in a manner which would
materially adversely affect the use and operation of the Leased Property.
22.1.9 Hazardous Substances. Except as disclosed to
Landlord in writing or as described in any environmental report delivered to
Landlord, to Tenant's knowledge, no tenant or other occupant or user of the
Leased Property, or any portion thereof, has stored or disposed of (or engaged
in the business of storing or disposing of) or has released or caused the
release of any Hazardous Substances, and, to Tenant's knowledge, except as
disclosed to Landlord in writing or as described in any environmental report
delivered to Landlord, the Leased Property is free from any such Hazardous
Substances, except any such materials maintained in accordance with Applicable
Law.
<PAGE> 92
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22.2 Representations of Landlord. To induce Tenant to enter
in this Agreement, Landlord represents and warrants to Tenant as follows:
22.2.1 Status and Authority of Landlord. Landlord is
a corporation duly organized, validly existing and in corporate good standing
under the laws of its state of incorporation. Landlord has all requisite power
and authority under the laws of its state of formation and its respective
charter documents to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. Landlord has
duly qualified to transact business in each jurisdiction in which the nature of
the business conducted by it requires such qualification.
22.2.2 Action of Landlord. Landlord has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement; this Agreement constitutes the valid and binding obligation and
agreement of Landlord, enforceable against Landlord in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
rights and remedies of creditors.
22.2.3 No Violations of Agreements. Neither the
execution, delivery or performance of this Agreement by Landlord, nor
compliance with the terms and provisions hereof, will result in any material
breach of the terms, conditions or provisions of, or conflict with or
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any material property or assets of Landlord pursuant to the
terms of any material indenture, mortgage, deed of trust, note, evidence of
indebtedness or any other agreement or instrument by which Landlord is bound.
22.2.4 Litigation. No investigation, action or
proceeding is pending and, to Landlord's knowledge, no action or proceeding is
threatened and no investigation looking toward such an action or proceeding has
begun, which questions the validity of this Agreement or any action taken or to
be taken pursuant hereto.
<PAGE> 93
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22.3 Survival, Etc. The representations and warranties set
forth in Sections 22.1.5 shall remain in effect only for a one-year period
after the date hereof. Except as otherwise expressly provided in this
Agreement, Tenant disclaims the making of any representations or warranties,
express or implied, regarding the Leased Property or matters affecting the
Leased Property, whether made by Tenant, on Tenant's behalf or otherwise,
including, without limitation, the physical condition of the Leased Property,
title to or the boundaries of the Land, pest control matters, soil conditions,
the presence, existence or absence of hazardous wastes, toxic substances or
other environmental matters, compliance with building, health, safety, land use
and zoning laws, regulations and orders, structural and other engineering
characteristics, traffic patterns, market data, economic conditions or
projections, and any other information pertaining to the Leased Property or the
market and physical environments in which it is located. Landlord acknowledges
(i) that Landlord has entered into this Agreement with the intention of making
and relying upon its own investigation or that of third parties with respect to
the physical, environmental, economic and legal condition of the Leased
Property and (ii) that Landlord is not relying upon any statements,
representations or warranties of any kind, other than those specifically set
forth in this Agreement or in any document to be delivered to Landlord by
Tenant. Landlord further acknowledges that it has not received from or on
behalf of Tenant any accounting, tax, legal, architectural, engineering,
property management or other advice with respect to this transaction and is
relying solely upon the advice of third party accounting, tax, legal,
architectural, engineering, property management and other advisors. Subject to
the provisions of this Agreement, Landlord shall purchase the Leased Property
in its "as is" condition on the date hereof.
ARTICLE 23
MISCELLANEOUS
23.1 Limitation on Payment of Rent. All agreements between
Landlord and Tenant herein are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of Rent, or
otherwise, shall the Rent or any other amounts payable to Landlord under this
Agreement exceed the
<PAGE> 94
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maximum permissible under applicable law, the benefit of which may be asserted
by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment
of any provision of this Agreement, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, or if from any circumstances Landlord should ever receive as fulfillment
of such provision such an excessive amount, then, ipso facto, the amount which
would be excessive shall be applied to the reduction of the installment(s) of
Minimum Rent next due and not to the payment of such excessive amount. This
provision shall control every other provision of this Agreement and any other
agreements between Landlord and Tenant.
23.2 No Waiver. No failure by Landlord or Tenant to insist
upon the strict performance of any term hereof or to exercise any right, power
or remedy consequent upon a breach thereof, and no acceptance of full or
partial payment of Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of any such term. To the maximum
extent permitted by law, no waiver of any breach shall affect or alter this
Agreement, which shall continue in full force and effect with respect to any
other then existing or subsequent breach.
23.3 Remedies Cumulative. To the maximum extent permitted by
law, each legal, equitable or contractual right, power and remedy of Landlord
or Tenant, now or hereafter provided either in this Agreement or by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord of any or all of such other rights, powers and remedies.
23.4 Severability. Any clause, sentence, paragraph, section
or provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement, but rather the effect thereof shall be confined to
the clause, sentence, paragraph, section or provision so held to be invalid,
illegal or ineffective, and this Agreement shall be construed as if such
invalid, illegal or ineffective provisions had never been contained therein.
<PAGE> 95
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23.5 Acceptance of Surrender. No surrender to Landlord of
this Agreement or of the Leased Property or any part thereof, or of any
interest therein, shall be valid or effective unless agreed to and accepted in
writing by Landlord and no act by Landlord or any representative or agent of
Landlord, other than such a written acceptance by Landlord, shall constitute an
acceptance of any such surrender.
23.6 No Merger of Title. It is expressly acknowledged and
agreed that it is the intent of the parties that there shall be no merger of
this Agreement or of the leasehold estate created hereby by reason of the fact
that the same Person may acquire, own or hold, directly or indirectly this
Agreement or the leasehold estate created hereby and the fee estate or ground
landlord's interest in the Leased Property.
23.7 Conveyance by Landlord. If Landlord or any successor
owner of all or any portion of the Leased Property shall convey all or any
portion of the Leased Property in accordance with the terms hereof other than
as security for a debt, and the grantee or transferee of such of the Leased
Property shall expressly assume all obligations of Landlord hereunder arising
or accruing from and after the date of such conveyance or transfer, Landlord or
such successor owner, as the case may be, shall, provided such successor owner
shall have a Tangible Net Worth of not less than Five Million Dollars
($5,000,000), (y) such conveyance shall occur subsequent to the first
anniversary of the Commencement Date and (z) Landlord shall transfer in cash
any unapplied balance of the Security Deposit to such successor owner,
thereupon be released from all future liabilities and obligations of Landlord
under this Agreement with respect to such of the Leased Property arising or
accruing from and after the date of such conveyance or other transfer and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.
23.8 Quiet Enjoyment. Provided that no Event of Default shall
have occurred and be continuing, Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term, free of hindrance or molestation by
Landlord or anyone claiming by, through or under Landlord, but subject to (a)
any Encumbrance permitted under Article 20 or otherwise permitted to be created
by Landlord hereunder provided that the holder of such
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Encumbrance has, to the extent appropriate, executed a nondisturbance agreement
pursuant to Section 20.2 or a subordination agreement in form and substance
reasonably acceptable to Tenant, (b) all Permitted Encumbrances, (c) liens as
to obligations of Landlord that are either not yet due or which are being
contested in good faith and by proper proceedings, provided the same do not
materially interfere with Tenant's ability to operate the Hotel and (d) liens
that have been consented to in writing by Tenant. Except as otherwise provided
in this Agreement, no failure by Landlord to comply with the foregoing covenant
shall give Tenant any right to cancel or terminate this Agreement or abate,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Agreement, or to fail to perform any other obligation of
Tenant hereunder.
23.9 Memorandum of Lease. Neither Landlord nor Tenant shall
record this Agreement. However, Landlord and Tenant shall promptly, upon the
request of the other, enter into a short form memorandum of this Agreement, in
form suitable for recording under the laws of the State in which reference to
this Agreement, and all options contained herein, shall be made. The parties
shall share equally all costs and expenses of recording such memorandum.
23.10 Notices.
(a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted
under this Agreement shall be deemed adequately given if in
writing and the same shall be delivered either in hand, by
telecopier with written acknowledgment of receipt, or by mail or
Federal Express or similar expedited commercial carrier,
addressed to the recipient of the notice, postpaid and registered
or certified with return receipt requested (if by mail), or with
all freight charges prepaid (if by Federal Express or similar
carrier).
(b) All notices required or permitted to be sent
hereunder shall be deemed to have been given for all purposes of
this Agreement upon the date of acknowledged receipt, in the case
of a notice by telecopier, and, in all other cases, upon the date
of receipt or refusal, except
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that whenever under this Agreement a notice is either received on a day
which is not a Business Day or is required to be delivered on or before
a specific day which is not a Business Day, the day of receipt or
required delivery shall automatically be extended to the next Business
Day.
(c) All such notices shall be addressed,
if to Landlord to:
c/o Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Attn: Mr. John G. Murray
[Telecopier No. (617) 969-5730]
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Jennifer B. Clark, Esq.
[Telecopier No. (617) 338-2880]
if to Tenant to:
c/o Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attn: Ms. Anne L. Raymond
[Telecopier No. (214) 863-1262]
with a copy to:
Locke, Purnell, Rain, Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Attn: J. Mitchell Bell, Esq.
[Telecopier No. (214) 740-8800]
(d) By notice given as herein provided, the parties hereto and
their respective successor and assigns shall have the right from time to
time and at any time during the term
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of this Agreement to change their respective addresses effective upon
receipt by the other parties of such notice and each shall have the
right to specify as its address any other address within the United
States of America.
23.11 Trade Area Restriction. Neither Tenant nor any of its
Affiliated Persons shall own, build, franchise, manage or operate any full-
service Wyndham Hotel within the designated area on Exhibit D, at any time
during the Term; it being expressly understood and agreed that hotels other
than Wyndham Hotels (e.g. garden hotels or resort hotels) are not subject to
the foregoing restriction.
23.12 Construction. Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the Leased Property shall survive such termination or
expiration. In no event shall Landlord be liable for any consequential damages
suffered by Tenant as the result of a breach of this Agreement by Landlord.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
to be charged. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Each term or provision of this Agreement to be
performed by Tenant shall be construed as an independent covenant and
condition. Time is of the essence with respect to the provisions of this
Agreement. Except as otherwise set forth in this Agreement, any obligations of
Tenant (including without limitation, any monetary, repair and indemnification
obligations) and Landlord shall survive the expiration or sooner termination of
this Agreement.
23.13 Counterparts; Headings. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but which,
when taken together, shall constitute but one instrument and shall become
effective as of the date hereof when copies hereof, which, when taken together,
bear the signatures of each of the parties hereto shall have been signed.
Headings in this Agreement are for purposes of reference only and shall not
limit or affect the meaning of the provisions hereof.
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23.14 Applicable Law, Etc. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of the State
applicable to contracts between residents of the State which are to be
performed entirely within the State, regardless of (i) where this Agreement is
executed or delivered; or (ii) where any payment or other performance required
by this Agreement is made or required to be made; or (iii) where any breach of
any provision of this Agreement occurs, or any cause of action otherwise
accrues; or (iv) where any action or other proceeding is instituted or pending;
or (v) the nationality, citizenship, domicile, principal place of business, or
jurisdiction of organization or domestication of any party; or (vi) whether the
laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction
other than the State; or (vii) any combination of the foregoing.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
the State as is provided by law; and the parties consent to the jurisdiction of
said court or courts located in the State and to service of process by
registered mail, return receipt requested, or by any other manner provided by
law.
23.15 Special Landlord Option. GHALP Corporation, a Subsidiary of
Wyndham, currently leases eleven Wyndham Garden Hotel properties from HPTWN
Corporation, an Affiliated Person as to Landlord. Landlord shall have the
right, exercisable by notice given at any time on or before the fifth
anniversary of the Commencement Date, at Landlord's sole cost and expense, to
require (a) that Tenant enter into an amendment to this Agreement and cause
GHALP Corporation to enter into an amendment to its leases (collectively, the
"GHALP Leases"), providing (i) that any Event of Default under any GHALP Lease
is an Event of Default under this Agreement and that any Event of Default under
this Agreement is an Event of Default under the GHALP Leases; (ii) that GHALP
Corporation may not elect not to extend the term of the GHALP Leases for the
Extended Terms (as defined therein) unless Tenant elects not to extend the Term
of this Agreement for the Extended Terms and that Tenant may not elect not to
extend the Term of this Agreement for the Extended Terms unless GHALP
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Corporation elects not to extend the term of its the GHALP Leases for the
Extended Terms; and (iii) that amounts (as defined therein) in the FF&E Reserve
under this Agreement be pooled and consolidated with amounts in the FF&E
Reserve under the GHALP Leases; or (b) that Tenant be merged into GHALP
Corporation and that the GHALP Leases be amended to designate this Agreement an
"Other Lease" (as defined therein) under the GHALP Leases and that this
Agreement be amended accordingly. In the event Landlord shall exercise either
of the aforesaid options, Landlord and Tenant shall enter into an amendment to
this Agreement (and shall cause their respective Affiliated Persons to enter
into amendments to the GHALP Leases) within thirty (30) days after Landlord's
Notice to Tenant. The form and substance of any such amendments shall be
reasonably satisfactory to Landlord and Tenant.
23.16 Nonrecourse. Nothing contained in this Agreement shall be
construed to impose any liabilities or obligations on Wyndham or any of its
shareholders for the payment or performance of the obligations or liabilities
of Tenant under this Agreement.
23.17 Confidentiality. Except to prospective lenders and purchasers
or as may be required by law, the SEC or any securities and exchange
commission, Landlord shall not disclose any of Tenant's confidential or
proprietary information to any Person.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
LANDLORD:
HPTSLC CORPORATION
By: /s/ JOHN G. MURRAY
----------------------------------
Its President
TENANT:
WHC SALT LAKE CITY CORPORATION
By: /s/ DIANE C. PARMERLEE
----------------------------------
Authorized Signatory
<PAGE> 101
EXHIBIT A
The Land
[See attached copy.]
<PAGE> 102
EXHIBIT B
Approved Budget and Improvements
[See attached copy.]
<PAGE> 103
EXHIBIT C
Form of Landlord Estoppel Certificate
[See attached copy.]
<PAGE> 104
EXHIBIT D
Restricted Trade Area
[See attached copy.]
<PAGE> 105
EXHIBIT E
Annual Minimum Rent
Minimum Rent is allocated as follows:
<TABLE>
<CAPTION>
Portion of Annual Minimum Portion of Annual
Rent Allocated to Leased Minimum Rent
Real Property and Leased Allocated to Leased
Year Intangible Property Personal Property
- ---- ------------------------- -------------------
<S> <C> <C>
1997 94.0% 6.0%
1998 95.5% 4.5%
1999 97.0% 3.0%
2000 98.5% 1.5%
2001 and beyond 100.0% 0%
</TABLE>
<PAGE> 1
EXHIBIT 10.4
MASTER ALLIANCE AGREEMENT
This MASTER ALLIANCE AGREEMENT (this "AGREEMENT") is made and entered
into as of January 9, 1997 by and among American General Hospitality
Corporation, a Maryland corporation, which operates as a real estate investment
trust (the "COMPANY"), American General Hospitality Operating Partnership,
L.P., a Delaware limited partnership (the "OPERATING PARTNERSHIP" and together
with the Company, "AGT"), WHC Franchise Corporation ("WYNDHAM"), a Delaware
corporation and a wholly-owned subsidiary of Wyndham Hotel Corporation ("WYN"),
and WHC Development Corporation, a Delaware corporation ("WHC"). For the
limited purposes set forth herein, WYN shall be a party to this Agreement.
WHEREAS, the Company was formed for the purpose of continuing and
expanding the hotel acquisition, development and repositioning operations of
American General Hospitality, Inc. ("AGHI");
WHEREAS, the Company owns a portfolio of sixteen hotels and intends to
continue to purchase and acquire hotels; and
WHEREAS, the Company and Wyndham desire to pursue a strategic alliance
pursuant to which (i) Wyndham would have the non-exclusive right, but not the
obligation, to franchise hotels acquired by AGT after the date of this
Agreement if the Company shall determine that any such hotel should undergo
brand conversion, (ii) Wyndham shall purchase a certain number of shares of
Common Stock or OP Units (as hereinafter defined) with respect to certain
hotels acquired by AGT that Wyndham shall franchise, and (iii) with respect to
hotels acquired by Wyndham or WHC after the date of this Agreement, AGT would
have the non-exclusive right to be included in any solicitation of real estate
investment trusts ("REITS") to (A) purchase those hotels with respect to which
Wyndham or WHC intends to assign the purchase agreement to a REIT or (B) enter
into a sale-leaseback arrangement with Wyndham or WHC pursuant to those sale-
leaseback arrangements that Wyndham or WHC intend to enter into with a REIT
simultaneously upon the acquisition of such hotel by Wyndham or WHC.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"ACCEPTED FINANCIAL PROJECTIONS" shall have the meaning set forth in
Section 2(d) hereof.
"ACQUISITION NOTICE" shall have the meaning set forth in Section 2(c)
hereof.
<PAGE> 2
"AGHI" shall mean American General Hospitality, Inc., a Texas
corporation.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"AGT'S REPRESENTATIVES" shall mean any of AGT's affiliates, directors,
officers, employees and representatives (including, without limitation,
lenders, financial advisors, attorneys and accountants).
"BANK FACILITY" shall have the meaning set forth in Section 2(b)
hereof.
"CLOSING" shall have the meaning set forth in Section 4(c) hereof.
"COMMON STOCK" shall mean shares of common stock, $0.01 par value per
share, of the Company.
"COMPANY" shall have the meaning set forth in the Preamble and also
shall include the Company's successors.
"CONTROL" shall have the meaning set forth in Section 3 hereof.
"CONTROLLING INTEREST" shall have the meaning set forth in Section 3
hereof.
"CROW INTERESTS" shall have the meaning set forth in Section 13(b)
hereof.
"ENTITIES" shall have the meaning set forth in Section 13 hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"FRANCHISE AGREEMENT" shall have the meaning set forth in Section 2(a)
hereof.
"FRANCHISED HOTEL" shall have the meaning set forth in Section 2(a)
hereof.
"FTC RULE" shall have the meaning set forth in Section 3 hereof.
"HSR ACT" shall have the meaning set forth in Section 4(g) hereof.
"LENDERS" shall have the meaning set forth in Section 4(a) hereof.
"LESSEE" shall mean AGH Leasing, L.P., a Delaware limited partnership.
"LESSEE ENTITIES" shall have the meaning set forth in Section 3 hereof.
-2-
<PAGE> 3
"LINE OF CREDIT" shall mean AGT's $100 million line of credit with
Societe General, Southwest Agency, Bank One, Texas, N.A.
"MANAGEMENT AGREEMENT" shall have the meaning set forth in Section 2(b)
hereof.
"NYSE" shall have the meaning set forth in Section 6(e) hereof.
"OFFER" shall have the meaning set forth in Section 2(d) hereof.
"OP UNITS" shall have the meaning set forth in Section 4(a) hereof.
"OPERATING PARTNERSHIP" shall mean set forth in the Preamble.
"PENDING HOTEL" shall have the meaning set forth in Section 2(a) hereof.
"PERSON" shall mean an individual, partnership, corporation, trust,
estate, or unincorporated organization, or other entity, or a government or
agency or political subdivision thereof.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning set forth in
Section 9.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time.
"WHC" shall have the meaning set forth in the Preamble.
"WYNDHAM'S REPRESENTATIVES" shall mean any of Wyndham's affiliates,
directors, officers, employees and representatives (including, without
limitation, lenders, financial advisors, attorneys and accountants).
2. Right to Franchise.
(a) Non-Exclusive Right. Wyndham shall have a non-exclusive
right during the term of this Agreement, but not an obligation, to franchise
each hotel acquired by AGT, or as to which it enters into an acquisition
agreement, during the term hereof and to cause such hotel to be operated under
the "Wyndham" name (a "FRANCHISED HOTEL") pursuant to a franchise agreement
substantially in the form attached hereto as Exhibit A (the "FRANCHISE
AGREEMENT"); provided, however, that Wyndham shall only have such non-exclusive
right pursuant to this Section 2(a) in the event that (i) AGT shall
affirmatively elect, in AGT's sole and absolute discretion, to change or
otherwise replace the existing franchise under which such hotel shall be
operating at the time of such hotel's acquisition by AGT and (ii) AGT shall
acquire the Franchised Hotel and elect to lease such hotel to the Lessee and
the Lessee shall elect to retain AGHI to manage and operate such hotel.
(b) Pending Hotel. The parties hereby agree that the hotel set
forth on Exhibit B (the "PENDING HOTEL") hereto will be a Franchised Hotel for
purposes of this Agreement subject to the
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satisfaction of the conditions to be set forth in the Franchise Agreement to be
entered into with respect to such hotel and all applicable franchise regulatory
requirements, as determined by Wyndham, whether pursuant to Section 3 or
otherwise. The parties further agree that such Franchise Agreement will be
entered into not later than fifteen (15) days following the date of this
Agreement.
(c) Management. Each Franchised Hotel shall initially be (i)
leased by AGT to the Lessee and (ii) managed by AGHI. Wyndham shall have the
right to approve any management agreement between the Lessee and AGHI with
respect to any Franchised Hotel that is other than substantially in the form
attached hereto as Exhibit C (the "MANAGEMENT AGREEMENT"). The Company
represents and warrants to Wyndham that the form of the Management Agreement is
substantially the form of management agreement that is utilized as of the date
hereof between the Lessee and AGHI with respect to the management of hotels
owned by AGT.
(d) Notice of Acquisition Agreement. AGT shall notify Wyndham
in writing no later than fifteen (15) calendar days (or at such earlier time as
any other non-affiliated AGT Person shall be so notified by AGT) following the
execution by AGT of any definitive agreement to purchase a hotel that is
eligible to become a Franchised Hotel (each, an "ACQUISITION NOTICE").
Following delivery of the Acquisition Notice, AGT shall promptly provide to
Wyndham such information as Wyndham shall reasonably request concerning the
hotel or hotels referred to in such notice, including AGT's bona fide pro forma
financial projections for such hotel or hotels following its or their
conversion to the "Wyndham" name and any such other information as Wyndham
shall reasonably request to substantiate its compliance with all federal and
state franchise laws and whether Common Stock or OP Units would be issued to
Wyndham pursuant to Section 4 hereof.
(e) Offer and Election to Franchise. Wyndham shall have
fourteen (14) calendar days immediately following the receipt by Wyndham of the
information described in Section 2(d) hereof to deliver to AGT in writing
Wyndham's irrevocable, binding offer (the "OFFER") to AGT to make the hotel(s)
that are the subject of the Acquisition Notice a Franchised Hotel. In the
event that Wyndham shall make such Offer, Wyndham shall be deemed to have
affirmatively accepted the pro forma projections (the "ACCEPTED FINANCIAL
PROJECTIONS") provided to Wyndham by AGT pursuant to Section 2(d) hereof;
provided, however, that Wyndham's acceptance of the Accepted Financial
Projections shall not be deemed to constitute, and the Company hereby
acknowledges that such acceptance shall not constitute, a representation by
Wyndham that such Accepted Financial Projections shall be achieved or realized
at such hotel or hotels. AGT shall have fourteen (14) calendar days after the
receipt of the Offer (or such longer period as may be required by applicable
law) to deliver to Wyndham a notice (the "Acceptance Notice") accepting the
Offer.
(f) Execution of Franchise Agreement. In the event that AGT
shall accept the Offer, Wyndham, AGT and the Lessee shall enter into and
execute a Franchise Agreement with respect to such hotel or hotels on or prior
to the date on which the acquisition of such hotel by AGT shall be consummated,
or at such other time as shall be mutually agreed upon by the parties thereto.
(g) Confidentiality. Any and all information provided by AGT or
any of the AGT's Representatives to Wyndham or any of Wyndham's Representatives
pursuant to Section 2(d) hereof shall be kept confidential and, except as may
be required by law or pursuant to a request by a governmental department or
agency, shall not, without AGT's prior written consent, be disclosed
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<PAGE> 5
by Wyndham or Wyndham's Representatives, in any manner whatsoever, in whole or
in part, and shall not be used for any other purposes.
3. Fractional Franchise. The transactions contemplated by Section
2(b) of this Agreement (as well as certain other future transactions
contemplated by Section 2(a) hereof) are intended to satisfy the requirements
of the fractional franchise exemption pursuant to the Federal Trade
Commission's Trade Regulation Rule entitled "Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity Ventures" ("FTC
RULE") and other exemptions under applicable state laws. Accordingly, on the
date of this Agreement and as a condition to the execution of a Franchise
Agreement, AGT shall be required to represent and warrant to Wyndham the
following: (a) that the Lessee and/or its current directors or executive
officers (or the directors or executive officers of the Lessee's corporate
general partner) have been in the type of business represented by the franchise
relationship for more than the past two (2) years; (b) that the Lessee does not
anticipate that it will execute more than one (1) Franchise Agreement in any
one (1) year, or, if the Lessee anticipates that it will execute more than one
(1) Franchise Agreement in any one (1) year, that the aggregate sales arising
from the relationships by the Franchise Agreements to be executed pursuant
hereto will not represent more than twenty percent (20%) of the sales in dollar
volume of the Lessee or, in Wyndham's discretion and if applicable, of the
Lessee Entities (as hereinafter defined); and (c) that neither the Lessee nor,
as applicable, the Lessee Entities, have any present plans to sell, prior to
one (1) year after the opening of any of the Pending Hotels any portion of
their business, where such sale would result in a decrease in the aggregate of
the Lessee's, or as applicable, the Lessee Entities', gross sales, such that
the gross sales of such Pending Hotels would represent more than twenty percent
(20%) of such aggregate gross sales. "LESSEE ENTITIES" means the Lessee,
together with any subsidiaries in which Lessee owns a Controlling Interest (as
hereinafter defined), and any Person with a Controlling Interest in the Lessee.
"CONTROLLING INTEREST" means, with respect to the Lessee, any other Person
controlling, controlled by or under common control with the Lessee as
determined by Wyndham in its sole discretion. For purposes of this Section 3,
"CONTROL" means the ability to direct the policies and operations of a Person.
4. Subscription of Common Stock and OP Units.
(a) Subscription. Except with respect to the Pending Hotel and
those other hotels set forth below in this Section 4(a), for each and every
Franchised Hotel with respect to which a Franchise Agreement shall be entered
into, Wyndham will be deemed to have subscribed to and shall purchase shares of
Common Stock, in an amount and at a purchase price as provided in Section 4(b)
hereof; provided, however, that if the issuance of the Common Stock will (i)
violate the Company's share ownership limitations set forth in its articles of
incorporation that are designed to preserve its status as a REIT, or (ii)
violate the Securities Act or the Exchange Act, or any of the rules promulgated
under either the Securities Act or the Exchange Act, including, without
limitation, the integration of that issuance with any other securities offering
by the Company, as shall be reasonably determined by the Company based upon the
advice of independent legal counsel, then Wyndham (i) shall have no right or
obligation pursuant to this Section 4(a) to purchase shares of Common Stock,
and (ii) will be deemed to have subscribed to and shall purchase units of
limited partnership interest ("OP UNITS") in the Operating Partnership, in an
amount and at a purchase price as provided in Section 4(b) hereof. In the
event the Pending Hotel becomes a Franchised Hotel, Wyndham will be deemed to
have subscribed to and shall purchase 112,969 shares of Common Stock at a price
of
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$22.13 per share, equal to an aggregate purchase price of $2,500,000; provided,
however, that Wyndham shall have no right or obligation to purchase such shares
of Common Stock unless it obtains the prior written consent of its lenders
under its bank credit facility (whether current or future, the "BANK
FACILITY"); provided, further, however that in the event that Wyndham shall not
obtain such prior written consent of its lenders under the Bank Facility prior
to the date of the Closing, Wyndham's franchise fees with respect to the
Pending Hotel shall be reduced by fifty (50) basis points. For purposes of
this Section 4(a), the Four Points by Sheraton located in Marietta, Georgia,
the Fred Harvey Albuquerque Airport Hotel located in Albuquerque, New Mexico
and the Days Inn located in Orlando, Florida shall not, upon their conversion
to a Wyndham brand, be considered a Franchised Hotel. The obligation to
purchase Common Stock or OP Units pursuant to this Agreement is subject to the
satisfaction of the conditions set forth in Section 4(g) and Section 11 of this
Agreement and to Wyndham obtaining the prior written consent of its lenders
under the Bank Facility; provided, however, that in the event that Wyndham
shall not obtain such prior written consent of its lenders under the Bank
Facility prior to the date of a Closing, Wyndham's franchise fees with respect
to the hotel in question shall be reduced by fifty (50) basis points.
(b) Number of Shares of Common Stock and OP Units; Purchase
Price. The number of shares of Common Stock or OP Units to be purchased
pursuant to Section 4(a) hereof shall be equal to the nearest whole number
determined by dividing (i) an amount equal to nine (9) times the total
estimated franchise fees, based on the Accepted Financial Projections, to be
paid to Wyndham in respect of the Franchised Hotel during the first twelve (12)
months following conversion to the "Wyndham" name, by (ii) the price per share
of Common Stock or per OP Unit to be paid by Wyndham determined as set forth
below. The price per share of Common Stock or OP Unit to be paid by Wyndham
shall be paid in cash and shall be equal to the average closing sale price of
the Common Stock on the New York Stock Exchange for the thirty (30) trading
days immediately preceding the earlier of (i) the public announcement by AGT of
its proposed acquisition of the hotel in question or (ii) Wyndham's Offer to
AGT to make the hotel a Franchised Hotel.
(c) Closing. Each and every closing (a "CLOSING") for the
purchase of the shares of Common Stock or OP Units by Wyndham pursuant to
Section 4(a) hereof shall be held not later than thirty (30) calendar days
immediately following the conversion of a Franchised Hotel by AGT to the
"Wyndham" name pursuant to a Franchise Agreement.
(d) Certificates. At each and every Closing at which Common
Stock is issued pursuant to this Agreement, the Company shall issue to Wyndham
one or more certificates representing the whole number of shares of Common
Stock that shall have been purchased by Wyndham pursuant to Section 4(a)
hereof. All certificates representing shares of Common Stock issued pursuant
to this Section 4 shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND NEITHER THE
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS
OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR
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THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE ISSUER, IS AVAILABLE.
(e) Issuance of OP Units. In the event that the Company shall
issue to Wyndham OP Units pursuant to Section 4(a) hereof, (i) the Company
shall cause the books and records of the Operating Partnership to reflect the
ownership and purchase of such OP Units by Wyndham, and if requested by
Wyndham, cause the Operating Partnership to furnish to Wyndham evidence of such
ownership, and (ii) the Company, the Operating Partnership and Wyndham shall
enter into and execute on the date of the Closing of such issuance an Exchange
Rights Agreement substantially in the form attached hereto as Exhibit D.
(f) Payment for Common Stock and Units. Upon receipt by Wyndham
of certificates representing shares of Common Stock or OP Units, Wyndham shall
promptly pay to the Company or the Operating Partnership, as the case may be,
by wire transfer in immediately available funds or by certified or bank
cashier's check, the purchase price for such shares of Common Stock or OP Units
as shall be calculated pursuant to Section 4(b) hereof.
(g) Certain Filings. If necessary and as required by
applicable law in order to permit the sale of Common Stock or OP Units to occur
pursuant to this Agreement, the Company and Wyndham shall together, or pursuant
to an allocation of responsibility to be agreed upon between them, coordinate
and cooperate in any action by or in respect of, or filing with, the Federal
Trade Commission or the United States Department of Justice pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT") or any other action by or in respect of, or filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency. If required by applicable law, the expiration or early
termination of the waiting period under the HSR Act shall be a condition to
Closing any sale of Common Stock or OP Units pursuant to this Agreement.
5. Lock-up. In the event that Wyndham shall purchase or otherwise
acquire shares of Common Stock or OP Units pursuant to Section 4 hereof,
Wyndham hereby irrevocably agrees that, without the prior written consent of
the Company, Wyndham shall not (and shall not announce or disclose any
intention to), and shall cause each of its affiliates not to, sell, offer to
sell, solicit an offer to buy, contract to sell, grant any option to purchase,
or otherwise transfer or dispose of, any shares of Common Stock or OP Units
acquired pursuant to this Agreement, for a period of 180 calendar days
immediately following the date such shares of Common Stock or OP Units shall
have been issued to Wyndham pursuant to Section 4(d) or Section 4(e) hereof;
provided, however, that the foregoing shall not restrict any transfer of Common
Stock or OP Units acquired pursuant to this Agreement to WYN or any direct or
indirect wholly-owned subsidiary of WYN, or any bona fide pledge to secure
indebtedness or any transfer upon foreclosure thereof, if the transfer or
pledge is subject to the condition that the transferee is bound by the
foregoing restrictions. At each Closing, Wyndham shall enter into a lock-up
letter substantially in the form attached hereto as Exhibit E.
6. Representations and Warranties of the Company and the Operating
Partnership.
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<PAGE> 8
The Company and the Operating Partnership hereby represent and
warrant to Wyndham as follows:
(a) Organization of the Company and the Operating Partnership.
The Company is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Maryland, has full power and
authority to conduct its business as presently being conducted and to own and
lease its properties and assets. The Operating Partnership is duly organized,
validly existing and in good standing as a limited partnership under the laws
of the State of Delaware, has full power and authority to conduct its business
as presently being conducted and to own and lease its properties and assets.
Each of the Company and the Operating Partnership is duly qualified to do
business and is in good standing in each jurisdiction in which such
qualification is necessary under applicable laws as the result of the conduct
of its business, or the ownership of its properties, except where the failure
to be so qualified and in good standing would not have a material adverse
effect.
(b) Authorization. Each of the Company and the Operating
Partnership has all necessary power and authority and has taken all corporate
or partnership action (as the case may be) and has obtained all corporate or
partnership approvals (as the case may be) necessary to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby, and no other proceedings on the part of the Company or the
Operating Partnership are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and the Operating Partnership and is a valid, binding
and enforceable obligation of the Company and the Operating Partnership,
enforceable against each of them in accordance with its terms.
(c) No Conflict or Violation. Except for the consents
required under the Line of Credit with respect to the issuance of OP Units
pursuant to Section 4(a) hereof, neither the execution, delivery and
performance of this Agreement by the Company or the Operating Partnership nor
the consummation of the transactions contemplated hereby will result in (i) a
violation of or a conflict with any provision of the certificate of
incorporation or by-laws of the Company, or the limited partnership agreement
of the Operating Partnership, (ii) a breach of, or a default under any term or
provision of any contract, agreement, indebtedness, lease, commitment, license,
franchise, permit, authorization or concession to which the Company or the
Operating Partnership is a party, which breach or default would have a material
adverse effect, or (iii) a violation by the Company or the Operating
Partnership of any law, statute, rule, regulation, ordinance, standard, code,
order, judgment, decision, writ, injunction, decree, award or other
governmental restriction including, without limitation, any policy or procedure
issued or enforced by any governmental authority, which violation would have a
material adverse effect.
(d) Authorized Shares of Common Stock and the Operating
Partnership. Any and all shares of Common Stock and OP Units that may be
issued to Wyndham pursuant to this Agreement shall be duly and validly issued,
fully paid and nonassessable, and shall be delivered free and clear of all
liens, charges, claims, and encumbrances of any kind or nature whatsoever
(other than those created by Wyndham or pursuant to Section 5 hereof),
including any preemptive rights.
(e) Consents and Approvals. Except for all filings, consents
and approvals as may be required under, and other applicable requirements of,
the HSR Act, the consent and approval
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<PAGE> 9
of the Lenders in connection with the issuance of OP Units pursuant to Section
4(a) hereof, and any Company stockholder approvals required by the rules of the
New York Stock Exchange, Inc. (the "NYSE"), no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
authority, or any other person, organization or entity, is required to be made
or obtained by the Company or the Operating Partnership in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
The foregoing representations and warranties are true and
accurate as of the date hereof, or such other date as of which they are deemed
to be made, and shall be true and accurate as of the date of each Closing as a
condition to the obligation of Wyndham to purchase Common Stock and OP Units on
the Closing.
7. Representations and Warranties of Wyndham and WHC.
Wyndham and WHC hereby represent and warrant to the Company and
the Operating Partnership as follows:
(a) Organization of Wyndham. Each of Wyndham and WHC is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has full power and authority to conduct its business as presently
being conducted and to own and lease its properties and assets. Each of
Wyndham and WHC is duly qualified to do business and is in good standing in
each jurisdiction in which such qualification is necessary under applicable
laws as the result of the conduct of its business, or the ownership of its
properties, except where the failure to be so qualified and in good standing
would not have a material adverse effect.
(b) Authorization. Each of Wyndham and WHC has all necessary
corporate power and authority and has taken all corporate action and has
obtained all corporate approvals necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby, and no other proceedings on the part of Wyndham or WHC are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Wyndham and WHC and is a
valid, binding and enforceable obligation of Wyndham and WHC, enforceable
against each of them in accordance with its terms.
(c) No Conflict or Violation. Except for the consents
required under the Bank Facility, neither the execution, delivery and
performance of this Agreement by Wyndham or WHC nor the consummation of the
transactions contemplated hereby will result in (i) a violation of or a
conflict with any provision of the certificate of incorporation, by-laws of
Wyndham or WHC, (ii) a breach of, or a default under any term or provision of
any contract, agreement, indebtedness, lease, commitment, license, franchise,
permit, authorization or concession to which Wyndham or WHC is a party, which
breach or default would have a material adverse effect, or (iii) a violation by
Wyndham or WHC of any law, statute, rule, regulation, ordinance, standard,
code, order, judgment, decision, writ, injunction, decree, award or other
governmental restriction including, without limitation, any policy or procedure
issued or enforced by any governmental authority, which violation would have a
material adverse effect.
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<PAGE> 10
(d) Consents and Approvals. Except for all filings, consents
and approvals as may be required under, and other applicable requirements of,
the Bank Facility and the HSR Act, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental authority, or any
other person, organization or entity, is required to be made or obtained by
Wyndham or WHC in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby.
(e) Purchase Not for Distribution. Each of Wyndham and WHC
understands that neither the shares of Common Stock nor the OP Units to be
issued hereby have been registered under the Securities Act, or any state
securities acts, and are instead being offered and sold in reliance on an
exemption from such registration requirements. The shares of Common Stock and
OP Units for which Wyndham hereby subscribes are being acquired solely for its
own account, for investment, and are not being purchased with a view to, or for
resale in connection with, any distribution, subdivision or fractionalization
thereof, in violation of such laws and Wyndham has no present intention to
enter into any contract, undertaking, agreement or arrangement with respect to
any such resale.
(f) Awareness of Risks. Wyndham is aware of the risks
involved in making an investment in the shares of Common Stock and in the OP
Units. Wyndham has had an opportunity to ask questions of, and to receive
answers from, the Company and the Operating Partnership, or a person or persons
authorized to act on their behalf, concerning the terms and conditions of this
investment.
(g) Accredited Investor. Wyndham is an accredited investor as
that term is defined in Rule 501 and Regulation D of the Securities Act.
The foregoing representations and warranties are true and
accurate as of the date hereof, or such other date as of which they are deemed
to be made, and shall be true and accurate as of the date of each Closing as a
condition to the obligation of the Company and the Operating Partnership to
issue shares of Common Stock and OP Units on the Closing.
8. Non-Exclusive Right to Purchase. (a) During the term of this
Agreement, in the event that (x) WYN or WHC shall enter into a definitive
agreement to purchase a hotel or a group of hotels, and (y) WYN or WHC either
(A) intends to assign such agreement to a REIT or (B) intends to enter into a
sale-leaseback arrangement with a REIT simultaneously with such purchase, WYN
or WHC, as the case may be, shall, prior to assigning such agreement or
entering into such sale-leaseback arrangement, include AGT in any solicitation
of REITs to acquire such hotels by sending AGT a copy of such definitive
agreement not later than the time it is furnished to any other REIT. The
confidentiality of the information provided in this Section 8(a) shall be
maintained by AGT on the same basis as is set forth in Section 2(g) hereof.
(b) WYN covenants and agrees that during the term of this
Agreement if any direct or indirect wholly-owned subsidiary of WYN other than
WHC proposes to enter into a transaction of the type described in Section 8(a)
hereof, WYN shall cause such subsidiary to comply in all respects with the
requirements set forth above.
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9. Registration Rights Agreement. At the initial Closing, the
parties hereto shall enter into and execute a registration rights agreement
substantially in the form attached hereto as Exhibit F (the "REGISTRATION
RIGHTS AGREEMENT") with respect to shares of Common Stock issued to Wyndham
pursuant to Section 4(a) hereof or upon exchange of OP Units.
10. NYSE Listing. The Company shall use its best efforts to list
prior to a Closing any and all shares of Common Stock issued to Wyndham
pursuant to Section 4(a) hereof on the NYSE.
11. Stockholder Approval. In the event that any NYSE rule or
regulation shall require stockholder approval of any action taken by the
Company pursuant to this Agreement, the Company shall not be required to issue
shares of Common Stock or OP Units to Wyndham pursuant to Section 4(a) hereof
without first obtaining such stockholder approval pursuant to such NYSE rule or
regulation, and the Company shall use its reasonable best efforts to cause such
approval to be effectuated as soon as practicable.
12. Consent of Lenders. Wyndham shall use its reasonable best
efforts to obtain the written consent of its lenders under its Bank Facility
prior to the consummation of any Closing.
13. Termination. (a) Consent of Lenders. In the event that Wyndham
shall not obtain the prior written consent of its lenders under its Bank
Facility in any two Closings during the term hereof, the Company shall have the
right to terminate this Agreement; provided, however, that any transactions
consummated prior to such termination shall not be terminated and shall remain
valid and in full force and effect, and such termination shall have no effect
on any Franchise Agreement, Registration Rights Agreement, Exchange Rights
Agreement or lock-up letter executed pursuant to this Agreement.
(b) Change of Control. Upon the occurrence of a "change in
control" (as hereinafter defined) in any of the Lessee, WYN, AGHI or AGT
(collectively, the "ENTITIES"), each of Wyndham and AGT shall have the right at
any time following such occurrence to terminate this Agreement; provided,
however, that any transactions consummated prior to such termination shall not
be terminated and shall remain valid and in full force and effect, and such
termination shall have no effect on any Franchise Agreement, Registration
Rights Agreement, Exchange Rights Agreement or lock-up letter executed pursuant
to this Agreement. For purposes of this Section 13, "change of control" shall
mean:
(x) any merger or consolidation of any of the Entities with or
into any Person, or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the
assets of any of the Entities, in one transaction or a series of
related transactions, if, immediately after giving effect to such
transaction any "person" or "group" (as such terms are used for
purposes of Section 13(d) and 14(d) of the Exchange Act, whether
or not applicable), is or becomes the beneficial owner, directly
or indirectly, of more than fifty percent (50%) of the shares of
the total voting power of such Entity; provided, however, that
the foregoing shall not apply to the acquisition of such shares
by any "person" or "group" comprised solely of Trammell or
Margaret Crow, or any lineal descendant of Trammell and Margaret
Crow, or any trust of which not less than 75% of the beneficial
interests are held by
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<PAGE> 12
Trammell or Margaret Crow or such lineal descendants, or any
partnership, corporation or other entity of which not less than
75% of the outstanding equity interests are owned directly or
indirectly by Trammell or Margaret Crow or such descendants (the
"CROW INTERESTS");
(y) any "person" or "group" (as such terms are used for purposes
of Section 13(d) and 14(d) of the Exchange Act, whether or not
applicable) is or becomes the beneficial owner, directly or
indirectly, of more than fifty percent (50%) of the total voting
power of such Entity provided, however, that the foregoing shall
not apply to the acquisition of such voting power by any "person"
or "group" comprised solely of the Crow Interests; or
(z) during any period of twelve (12) consecutive months,
individuals who at the beginning of such twelve-month period
constituted the Board of Directors of any of the Entities cease
for any reason to constitute a majority of the Board of Directors
of such Entity then in office.
14. Miscellaneous.
(a) Term. Except as otherwise provided in Section 13 hereof, the
terms and provisions of this Agreement shall commence on the date hereof and
shall terminate on December 31, 1999.
(b) Public Announcements. So long as this Agreement is in effect,
neither the Company nor Wyndham nor any of the affiliates which either of them
control shall issue or cause the publication of any press release or other
public statement or announcement with respect to this Agreement or the
transactions contemplated hereby (including those under the Registration Rights
Agreement) without the prior consultation of the other party, except as may be
required by law or by obligations pursuant to any listing agreement with a
national securities exchange, provided that each party shall use its best
efforts to consult with the other party prior to any such issuance.
(c) Expenses. Except as otherwise provided in the Registration
Rights Agreement and the Franchise Agreement, all costs and expenses incurred
in connection with this Agreement, the Registration Rights Agreement and the
Franchise Agreement, and the consummation of the transactions contemplated
hereby and thereby shall be paid by the party incurring such expenses.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and Wyndham.
(e) Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given: (i) upon receipt if personally
delivered; (ii) when transmitted with confirmation of transmission if
transmitted by telecopy or facsimile; (iii) the day after it is sent, if sent
for next day delivery to a domestic address by recognized overnight courier
service (e.g., Federal Express); and
-12-
<PAGE> 13
(iv) upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent:
If to the Company, to:
American General Hospitality Corporation
3860 West Northwest Highway
Suite 300
Dallas, Texas 75220
Facsimile: (214) 351-0568
Attention: Steven D. Jorns
with a copy to:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Facsimile: (212) 856-7823
Attention: Steven L. Lichtenfeld, Esq.
If to Wyndham, to:
Wyndham Hotel & Resorts
2001 Bryan Street
Suite 2300
Dallas, Texas 75201-3075
Facsimile: (214) 863-1262
Attention: Michael R. Silverman
with a copy to:
Locke Purnell Rain Harrell
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201-6776
Facsimile: (214) 740-8800
Attention: M. Charles Jennings, Esq.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
-13-
<PAGE> 14
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW PROVISIONS THEREOF.
(i) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Assignability. The parties to this Agreement may not assign
their rights or obligations under this Agreement without the prior written
consent of the other party to this Agreement.
-14-
<PAGE> 15
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of
the date first written above.
AMERICAN GENERAL HOSPITALITY CORPORATION
By: /s/ STEVEN D. JORNS
-------------------------------------
Name: Steven D. Jorns
Title:
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: /s/ STEVEN D. JORNS
-------------------------------------
Name: Steven D. Jorns
Title:
WHC FRANCHISE CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-------------------------------------
Name: Michael R. Silverman
Title: Authorized Agent
WHC DEVELOPMENT CORPORATION
By: /s/ MICHAEL R. SILVERMAN
-------------------------------------
Name: Michael R. Silverman
Title: Authorized Agent
Accepted and agreed with
respect to Section 8(b) hereof:
WYNDHAM HOTEL CORPORATION
By: /s/ MICHAEL R. SILVERMAN
--------------------------------------------
Name: Michael R. Silverman
Title: Authorized Agent
<PAGE> 16
================================================================================
MASTER ALLIANCE AGREEMENT
Dated as of January 9, 1997
by and among
AMERICAN GENERAL HOSPITALITY CORPORATION,
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
and
WHC FRANCHISE CORPORATION,
WHC DEVELOPMENT CORPORATION
================================================================================
<PAGE> 17
EXHIBIT A
[FORM OF FRANCHISE AGREEMENT]
<PAGE> 18
EXHIBIT B
1. LeBarron Hotel in San Jose, California
<PAGE> 19
EXHIBIT C
[FORM OF MANAGEMENT AGREEMENT]
<PAGE> 20
EXHIBIT D
[FORM OF EXCHANGE RIGHTS AGREEMENT]
<PAGE> 21
EXHIBIT E
[FORM OF LOCK-UP LETTER]
<PAGE> 22
EXHIBIT F
[FORM OF REGISTRATION RIGHTS AGREEMENT]
<PAGE> 1
EXHIBIT 10.5
LIMITED GUARANTY AGREEMENT
THIS LIMITED GUARANTY AGREEMENT (this "Agreement") is made and given
as of this 8 day of January, 1997, by WYNDHAM HOTEL CORPORATION, a Delaware
corporation (the "Guarantor"), for the benefit of HPTSLC CORPORATION, a
Delaware corporation, and HOSPITALITY PROPERTIES TRUST, a Maryland real estate
investment trust (collectively, together with their successors and assigns,
"HPT").
W I T N E S S E T H :
WHEREAS, pursuant to a Lease Agreement, dated as of the date hereof
(the "Lease"), HPTSLC Corporation has agreed to lease to WHC Salt Lake City
Corporation, a Delaware corporation (the "Tenant"), certain real property, the
related improvements and personal property, located in Salt Lake City, Utah, as
more particularly described in the Lease; and
WHEREAS, it is a condition precedent to HPTSLC Corporation's entering
into the Lease that the Guarantor guarantee all of the payment and performance
obligations of the Tenant with respect to the Lease; and
WHEREAS, the transactions contemplated by the Lease are of direct
material benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Terms. Capitalized terms used and not otherwise
defined in this Agreement shall have the meanings ascribed to such terms in the
Lease. The Lease and the Incidental Documents are herein referred collectively
referred to as the "Transaction Documents."
2. Guaranteed Obligations. For purposes of this Agreement, the
term "Guaranteed Obligations" shall mean the payment and performance of each
and every obligation of the Tenant to HPT, whether under the Transaction
Documents, or otherwise, whether now existing or hereafter arising, and
including, without limitation, the payment of the full amount of the Rent
payable under the Lease.
3. Representations and Covenants. The Guarantor represents,
warrants, covenants and agrees that:
3.1 Performance of Covenants and Agreements. The
Guarantor will cause the Tenant duly and punctually to perform all of the
covenants and agreements set forth in the Transaction Documents.
<PAGE> 2
-2-
3.2 Validity of Agreement. The Guarantor has duly and
validly executed and delivered this Agreement; this Agreement constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms; and the execution, delivery and
performance of this Agreement have been duly authorized by all requisite action
of the Guarantor and such execution, delivery and performance by the Guarantor
will not result in any breach of the terms, conditions or provisions of, or
conflict with or constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any of the property or assets of the Guarantor
pursuant to the terms of, any indenture, mortgage, deed of trust, note, other
evidence of indebtedness, agreement or other instrument to which the Guarantor
may be a party or by which the Guarantor or any property or assets of the
Guarantor may be bound, or violate any provision of law, or any applicable
order, writ, injunction, judgement or decree of any court or any order or other
public regulation of any governmental commission, bureau or administrative
agency.
3.3 Payment of Expenses. The Guarantor agrees, as
principal obligor and not as Guarantor only, to pay to HPT forthwith, upon
demand, in immediately available Federal funds, all costs and expenses
(including court costs and reasonable legal expenses) incurred or expended by
HPT in connection with the enforcement of this Agreement, together with
interest on amounts recoverable under this Agreement from the time such amounts
become due until payment at the Disbursement Rate, but recourse therefor shall
be limited as provided in Section 20.
3.4 Reports. The Guarantor shall promptly provide to HPT
each of the financial reports, certificates and other documents required of the
Guarantor under the Transaction Documents.
3.5 Legal Existence. The Guarantor shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence.
4. Guarantee. The Guarantor hereby unconditionally guarantees
that the Guaranteed Obligations which are monetary obligations shall be paid in
full when due and payable, whether upon demand, at the stated or accelerated
maturity thereof or upon any mandatory or voluntary prepayment pursuant to any
Transaction Document, or otherwise, and that the Guaranteed Obligations which
are performance obligations shall be fully performed at the times and in the
manner such performance is required by the Transaction Documents. With respect
to the Guaranteed Obligations which are monetary obligations, this guarantee is
a guarantee of payment and not of collectibility and is absolute and in no way
conditional or contingent. In case any part of the Guaranteed obligations shall
not have been paid when due and payable or performed at the time performance is
required, the Guarantor shall, within five (5) days after receipt of notice
from HPT, pay or cause to be paid to HPT the amount thereof as is then due and
payable and unpaid (including interest and other charges, if any, due thereon
through the date of payment in accordance with the applicable provisions of the
Transaction
<PAGE> 3
-3-
Documents) or perform or cause to be performed such obligations in accordance
with the Transaction Documents.
5. Unenforceability of Guaranteed Obligations, Etc. If the Tenant
is for any reason under no legal obligation to discharge any of the Guaranteed
Obligations, or if any other moneys included in the Guaranteed Obligations have
become unrecoverable from the Tenant by operation of law or for any other
reason, including, without limitation, the invalidity or irregularity in whole
or in part of any Guaranteed Obligation or of any Transaction Document or any
limitation on the liability of the Tenant thereunder or any limitation on the
method or terms of payment thereunder which may now or hereafter be caused or
imposed in any manner whatsoever, the guarantees contained in this Agreement
shall nevertheless remain in full force and effect and shall be binding upon
the Guarantor to the same extent as if the Guarantor at all times had been the
principal debtor on all such Guaranteed Obligations.
6. Additional Guarantees. This Agreement shall be in addition to
any other guarantee or other security for the Guaranteed Obligations and it
shall not be prejudiced or rendered unenforceable by the invalidity of any such
other guarantee or security or by any waiver, amendment, release or
modification thereof.
7. Consents and Waivers, Etc. The Guarantor hereby acknowledges
receipt of correct and complete copies of each of the Transaction Documents and
consents to all of the terms and provisions thereof, as the same may be from
time to time hereafter amended or changed in accordance therewith, and waives
(a) presentment, demand for payment, and protest of nonpayment, of any
principal of or interest on any of the Guaranteed Obligations, (b) notice of
acceptance of this Agreement and of diligence, presentment, demand and protest,
(c) notice of any default hereunder and any default, breach or nonperformance
or Event of Default under any of the Guaranteed Obligations or the Transaction
Documents, except as expressly provided in Section 4, (d) notice of the terms,
time and place of any private or public sale of collateral held as security for
the Guaranteed Obligations, (e) demand for performance or observance of, and
any enforcement of any provision of, or any pursuit or exhaustion of rights or
remedies against the Tenant or any other guarantor of the Guaranteed
Obligations, under or pursuant to the Transaction Documents, or any agreement
directly or indirectly relating thereto and any requirements of diligence or
promptness on the part of the holders of the Guaranteed Obligations in
connection therewith, and (f) to the extent the Guarantor lawfully may do so,
any and all demands and notices of every kind and description with respect to
the foregoing or which may be required to be given by any statute or rule of
law and any defense of any kind which it may now or hereafter have with respect
to this Agreement or any of the Transaction Documents or the Guaranteed
Obligations.
8. No Impairment, Etc. The obligations, covenants, agreements and
duties of the Guarantor under this Agreement shall not be affected or impaired
by any assignment or transfer in
<PAGE> 4
-4-
whole or in part of any of the Guaranteed Obligations without notice to the
Guarantor, or any waiver by HPT or any holder of any of the Guaranteed
Obligations or by the holders of all of the Guaranteed Obligations of the
performance or observance by the Tenant or any other guarantor of any of the
agreements, covenants, terms or conditions contained in the Guaranteed
Obligations or the Transaction Documents or any indulgence in or the extension
of the time for payment by the Tenant or any other guarantor of any amounts
payable under or in connection with the Guaranteed Obligations or the
Transaction Documents or any other instrument or agreement relating to the
Guaranteed Obligations or of the time for performance by the Tenant or any
other guarantor of any other obligations under or arising out of any of the
foregoing or the extension or renewal thereof, or the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Tenant or any other guarantor set forth in any of the foregoing, or the
voluntary or involuntary sale or other disposition of all or substantially all
the assets of the Tenant or any other guarantor or insolvency, bankruptcy, or
other similar proceedings affecting the Tenant or any other guarantor or any
assets of the Tenant or any such other guarantor, or the release or discharge
of the Tenant or any such other guarantor from the performance or observance of
any agreement, covenant, term or condition contained in any of the foregoing
without the consent of the holders of the Guaranteed Obligations by operation
of law, or any other cause, whether similar or dissimilar to the foregoing.
9. Reimbursement, Subrogation, Etc. The Guarantor hereby
covenants and agrees that the Guarantor will not enforce or otherwise exercise
any rights of reimbursement, subrogation, contribution or other similar rights
against the Tenant or any other person with respect to the Guaranteed
Obligations prior to the payment in full of all amounts owing with respect to
the Lease, and until all indebtedness of the Tenant to HPT shall have been paid
in full, the Guarantor shall not have any right of subrogation, and the
Guarantor waives any defense it may have based upon any election of remedies by
HPT which destroys the Guarantor's subrogation rights or the Guarantor's rights
to proceed against the Tenant for reimbursement, including, without limitation,
any loss of rights the Guarantor may suffer by reason of any rights, powers or
remedies of the Tenant in connection with any anti-deficiency laws or any other
laws limiting, qualifying or discharging the indebtedness to HPT. Until all
obligations of the Tenant pursuant to the Transaction Documents shall have been
paid and satisfied in full, the Guarantor further waives any right to enforce
any remedy which HPT now has or may in the future have against the Tenant, any
other guarantor or any other person and any benefit of, or any right to
participate in, any security whatsoever now or in the future held by HPT.
10. Defeasance. (a) Except as expressly provided in paragraph (b)
below, this Agreement shall terminate at such time as the Guaranteed
Obligations have been paid and performed in full and all other obligations of
the Guarantor to HPT under this Agreement have been satisfied in full;
provided, however, if at any time, all or any part of any payment applied on
account of the Guaranteed Obligations is or must be rescinded or returned
<PAGE> 5
-5-
for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Tenant), this Agreement, to the extent such
payment is or must be rescinded or returned, shall be deemed to have continued
in existence notwithstanding any such termination.
(b) Provided that (x) no monetary Default, Default as to which
Notice thereof has been previously given to Tenant or Event of Default shall
have occurred and be continuing under the Lease, (y) Cash Flow (as defined
below) for a period of twelve (12) consecutive months commencing on or after
January 1, 1998 equals or exceeds 1.4 times the aggregate Minimum Rent payable
with respect to such period, and (z) HPT shall receive a supplemental schedule
included with the audited financial statements evidencing the foregoing, in
form and substance reasonably satisfactory to HPT prepared by a, so-called,
"Big-Six" accounting firm or such other certified public accountants as are
reasonably satisfactory to HPT, this Agreement shall terminate ten (10)
Business Days after delivery to HPT of the financial statements described in
clause (z) preceding, and HPT shall, within thirty (30) days after the written
request of the Guarantor, confirm such termination by executing a release of
the Guarantor from all obligations and liabilities arising under this Agreement
subsequent to the release date and returning any unapplied balance of the
Guaranty Deposit (as hereinafter defined) to the Guarantor, together with any
accrued and unpaid interest thereon. In the event that the foregoing conditions
shall be satisfied except that HPT shall have previously given Notice of
Default pursuant to the Lease, provided that HPT shall determine that the
applicable Default can be cured by payment of a liquidated sum, HPT shall
refund, in accordance with the foregoing provisions, that portion of the
Guaranty Deposit, if any, in excess of such liquidated sum and HPT shall
thereafter hold such retained portion of the Guaranty Deposit in accordance
with this Agreement and pay the same to the Guarantor upon the curing of the
applicable Default.
As used herein, "Cash Flow" shall mean the net income (or loss) of
Tenant in connection with the operation of the Hotel before income taxes,
calculated in accordance with GAAP, plus (a) all extraordinary expense items,
(b) depreciation and amortization, (c) interest expense on Indebtedness
permitted under the Lease, (d) base management fees, incentive management fees,
trade name fees and central marketing fees paid to the Manager to the extent
subordinate to payment of rent pursuant to the Lease from and after the
occurrence of an Event of Default minus (e) required contributions to the FF&E
Reserve and (f) all extraordinary income items; provided, however, that in the
event HPT shall exercise its option described in Section 23.15 of the Lease,
Cash Flow and Minimum Rent for purposes of clause (y) above shall be calculated
on an aggregate basis for all the Hotels subject to the Lease and the GHALP
Leases.
11. Notices. (a) Any and all notices, demands, consents,
approvals, offers, elections and other communications required or permitted
under this Agreement shall be deemed adequately given if in writing and the
same shall be delivered either in hand, by telecopier with written
acknowledgment of receipt, or by mail or
<PAGE> 6
-6-
Federal Express or similar expedited commercial carrier, addressed to the
recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall
be deemed to have been given for all purposes of this Agreement upon the date
of acknowledged receipt, in the case of a notice by telecopier, and, in all
other cases, upon the date of receipt or refusal, except that whenever under
this Agreement a notice is either received on a day which is not a Business Day
or is required to be delivered on or before a specific day which is not a
Business Day, the day of receipt or required delivery shall automatically be
extended to the next Business Day.
(c) All such notices shall be addressed,
if to HPT to:
c/o Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Attn: Mr. John G. Murray
[Telecopier No. (617) 969-5730]
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Jennifer B. Clark, Esq.
[Telecopier No. (617) 338-2880]
if to the Guarantor to:
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attn: Ms. Anne L. Raymond
[Telecopier No. (214) 863-1262]
with a copy to:
Locke, Purnell, Rain, Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Attn: J. Mitchell Bell, Esq.
[Telecopier No. (214) 740-8800]
(d) By notice given as herein provided, the parties hereto and
their respective successor and assigns shall have the right from time to time
and at any time during the term of this Agreement to change their respective
addresses effective upon receipt by the other parties of such notice and each
shall have the right to specify as its address any other address within the
United States of America.
<PAGE> 7
-7-
12. Successors and Assigns. Whenever in this Agreement, any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party, including without limitation the holders,
from time to time, of the Guaranteed Obligations; and all representations,
warranties, covenants and agreements by or on behalf of the Guarantor which are
contained in this Agreement shall inure to the benefit of HPT's successors and
assigns, including without limitation said holders, whether so expressed or
not.
13. Applicable Law. Except as to matters regarding the internal
affairs of HPT and issues of or limitations on any personal liability of the
shareholders and trustees of HPT for obligations of HPT, as to which the laws
of the State of Maryland shall govern, this Agreement, the Transaction
Documents and any other instruments executed and delivered to evidence,
complete or perfect the transactions contemplated hereby and thereby shall be
interpreted, construed, applied and enforced in accordance with the laws of the
State applicable to contracts between residents of the State which are to be
performed entirely within the State, regardless of (i) where any such
instrument is executed or delivered; or (ii) where any payment or other
performance required by any such instrument is made or required to be made; or
(iii) where any breach of any provision of any such instrument occurs, or any
cause of action otherwise accrues; or (iv) where any action or other proceeding
is instituted or pending; or (v) the nationality, citizenship, domicile,
principal place of business, or jurisdiction of organization or domestication
of any party; or (vi) whether the laws of the forum jurisdiction otherwise
would apply the laws of a jurisdiction other than the State; or (vii) any
combination of the foregoing.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
the State as may be provided by law; and the parties consent to the
jurisdiction of said court or courts located in the State and to service of
process by registered mail, return receipt requested, or by any other manner
provided by law.
14. Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by the Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by HPT, and such modification, waiver or consent shall be effective
only in the specific instances and for the purpose for which given. No notice
to or demand on the Guarantor in any case shall entitle the Guarantor to any
other or further notice or demand in the same, similar or other circumstances.
15. Waiver of Rights by HPT. Neither any failure nor any delay on
HPT's part in exercising any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise or the exercise of any other
right, power or privilege.
<PAGE> 8
-8-
16. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby, but this
Agreement shall be reformed and construed and enforced to the maximum extent
permitted by applicable law.
17. Entire Contract. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede and take the place of any other instruments purporting to
be an agreement of the parties hereto relating to the subject matter hereof.
18. Headings; Counterparts. Headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument, and in pleading or proving any provision of this Agreement, it
shall not be necessary to produce more than one of such counterparts.
19. Remedies Cumulative. No remedy herein conferred upon HPT is
intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise.
20. Limitation on Guarantor's Liability. Notwithstanding anything
to the contrary contained herein, the liability of the Guarantor hereunder, and
HPT's recourse to the assets of the Guarantor hereunder, shall be limited to
the sum (the "Guaranty Deposit") of Five Million Two Hundred Seventy-Five
Thousand Dollars ($5,275,000), which amount has been deposited with HPT on the
date hereof. HPT shall have no obligation to hold the Guaranty Deposit in a
segregated account and may commingle the same with its general funds. Provided
that no Event of Default shall have occurred and be continuing, HPT shall
credit the Guarantor or its assigns with interest on any unapplied balance of
the Guaranty Deposit at a rate of 11.11% per annum. Such interest shall be
credited in arrears and pro rated with respect to any partial month. Upon the
termination of this Agreement in accordance with paragraph 10, HPT shall refund
any unapplied balance of the Guaranty Deposit, together with any accrued and
unpaid interest with respect thereto, to the Guarantor. In the event HPT shall
fail to refund any unapplied balance of the Guaranty Deposit and accrued
interest to the Guarantor on the date due, HPT shall thereafter pay the
Guarantor interest thereon at the Overdue Rate until paid. HPT shall credit
accrued interest on the Guaranty Deposit against the monthly Minimum Rent.
<PAGE> 9
-9-
WITNESS the execution hereof under seal as of the date above first written.
WYNDHAM HOTEL CORPORATION
By: /s/ ILLEGIBLE
-------------------------------------
Its (Vice) President
ACKNOWLEDGED AND AGREED:
HPTSLC CORPORATION
By: /s/ JOHN G. MURRAY
---------------------------
Its President
HOSPITALITY PROPERTIES TRUST
By: /s/ JOHN G. MURRAY
---------------------------
Its President
<PAGE> 1
EXHIBIT 10.6(a)
Wyndham Form
SERVICE AGREEMENT
MAY 21, 1996
between
WYNDHAM HOTEL CORPORATION
and
ISIS 2000 LP
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I
ENGAGEMENT OF SERVICE MANAGER
Section 1.1 General Engagement . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
SERVICE MANAGER DUTIES
Section 2.1 Business Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Entity Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Disposition Services . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4 Legal Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5 Retention of Third Parties . . . . . . . . . . . . . . . . . . . . . 4
Section 2.6 Books, Records and Reports . . . . . . . . . . . . . . . . . . . . . 5
Section 2.7 Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . 5
Section 2.8 Insufficiency of Revenues . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3
OWNER'S DUTIES
Section 3.1 Information and Cooperation . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Approval Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4
COMPENSATION
Section 4.1 Service Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Reimbursable Expenses . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3 Additional Services . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4 Emergency Expenditures . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
<TABLE>
ARTICLE 5
LIABILITY INSURANCE AND RISK ALLOCATION
<S> <C> <C> <C>
Section 5.1 Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.2 Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.3 Evidence of Insurance . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.4 Mutual Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . 8
Section 5.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6
TERM
Section 6.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.2 Duties on Termination or Expiration . . . . . . . . . . . . . . . . . 9
ARTICLE 7
MISCELLANEOUS
Section 7.1 Assignment; Change of Ownership Interest . . . . . . . . . . . . . 10
Section 7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.3 Number: Gender; Captions; and References . . . . . . . . . . . . . 11
Section 7.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.5 No Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.7 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.9 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.10 Relationship of the Parties . . . . . . . . . . . . . . . . . . . . 12
Section 7.11 Representations and Warranties . . . . . . . . . . . . . . . . . . 12
Section 7.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.13 Liability of Owner . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.14 Liability of Service Manager . . . . . . . . . . . . . . . . . . . 13
Section 7.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
ii
<PAGE> 4
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Disposition Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Hotel Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Hotel Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Property Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Refinancing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Service Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
iii
<PAGE> 5
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Agreement"), is entered into by ISIS 2000
LP, a Texas corporation (the "Owner"), and WYNDHAM HOTEL CORPORATION, a
Delaware corporation (the "Service Manager"), effective as of May 21, 1996 (the
"Effective Date").
RECITAL
Wyndham Hotel Company LTD, a Texas limited partnership, has been
providing certain services for Owner. Pursuant to that certain Formation
Agreement dated as of March 10, 1996, the Entities and operations of Wyndham
Hotel Company LTD will be "rolled-up", together with other Entities, into
Service Manager or its subsidiaries. Owner and Service Manager desire to
evidence and formalize their agreements with respect to these services.
ARTICLE I
ENGAGEMENT OF SERVICE MANAGER
Section 1.1 GENERAL ENGAGEMENT. Owner engages Service Manager as an
independent contractor to provide certain services described in this Agreement
relating to the administration and servicing of certain aspects of Owner's
legal entity and the legal entities (whether partnerships, corporations or
other business associations) that comprise Owner (the "ENTITIES" and each an
"ENTITY"). Owner and Service Manager may from time to time agree to expand or
reduce the scope of services to be provided hereunder and either party, upon
request of the other shall execute a schedule that properly evidences the scope
of services then being provided hereunder. The Service Manager shall in good
faith provide the services set forth in this Agreement in accordance with
normal and prudent practices and shall have the authority to take all actions
necessary or appropriate to fulfill its obligations.
ARTICLE 2
SERVICE MANAGER DUTIES
Section 2.1 ENTITY SERVICES. The Service Manager will provide the
following services with regard to the Entities:
(1) ACCOUNTING SERVICES. (i) Perform all normal and customary
accounting functions for Owner's legal entity and for all
entities that comprise Owner's legal entity and maintain all
necessary books and records in connection therewith; and (ii)
monitor the actual monthly income and expenses of the Entities,
collect revenues and pay operating expenses, compare actual
results to the relevant operating budgets, and report to Owner.
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(2) RISK MANAGEMENT SERVICES. Assist Owner in review of the insurable
risks of each Entity and the determination of levels of insurance
coverage; develop, administer and implement a risk management
program for the Entities; procure insurance coverage in
accordance with Owner's instructions; and subject to Owner's
guidelines and approval, oversee the investigation and resolution
of all casualty and liability claims brought by or against the
Entities.
(3) TAX SERVICES. Prepare all state and federal income tax returns
for Owner and, to the extent requested by Owner, for those
constituent ownership entities that comprise Owner;
prepare all sales tax filings and state unemployment tax
filings; and coordinate with Owner and oversee any
challenges, disputes and audits of any income, sales or
unemployment taxes.
(4) HUMAN RESOURCES. Upon Owner's request, provide Service Manager's
standard human resource services including implementation
and oversight of interview and hiring guidelines and
services; implementation and oversight of employment
policies and procedures; conduct periodic employee
reviews; and to the extent permitted by applicable law and
governmental regulations, employee benefits in accordance
with Service Manager's standard benefits.
(5) REGULATORY COMPLIANCE REVIEW. Assist Owner (if requested) in (a)
reviewing Entities to assure compliance with applicable
governmental regulations (including environmental
regulations and the Americans With Disabilities Act); (b)
subject to Owner's budgetary constraints, implementing a
program to bring any non-complying Entities into
compliance with applicable regulations; and (c)
implementing a program to monitor continuing compliance
with governmental regulations.
(6) FINANCING SERVICES. From time to time, upon Owner's request and
in accordance with Owner's business plan, Service Manager shall
act as Owner's agent in financing or refinancing indebtedness
with respect to the Entities. Service Manager shall:
(a) monitor existing financing;
(b) negotiate and finalize existing financing renewals as
required;
(c) monitor and negotiate any equity partner requirements on
behalf of Owner;
(d) negotiate any required refinancing; and
(e) negotiate any required restructuring/workout of existing
financing (debt or equity).
Although Service Manager shall make recommendations to Owner concerning
terms and conditions of any financing or refinancing and the lender(s)
to provide the same and shall negotiate the terms thereof and shall
assist in consummating the transactions, Owner shall have the sole
authority to execute the requisite agreements therefor.
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Section 2.4 LEGAL SERVICES. Service Manager is authorized to
engage attorneys and other advisors (including, without limitation, Service
Manager's in-house legal staff) as necessary to provide legal services in
connection with the day-to-day operation of the Entities, including enforcement
of contracts; review of contracts, leases, and other documents; maintenance of
the Entities; and implementing and defending legal actions.
Section 2.5 RETENTION OF THIRD PARTIES. Service Manager is
authorized and empowered, as Owner's agent, to engage and enter into contracts
with third parties to provide the services referred to in this Article 2, and
may delegate performance of its duties to third parties, including Service
Manager's subsidiaries and affiliates. Such contracts shall be on such terms as
Service Manager approves, provided the same are in compliance with Owner's
budget and guidelines. Without limiting the generality of the foregoing, the
services of third parties which may be engaged include tax services, brokerage
services, data processing services, consulting services, and legal services.
Service Manager shall not engage or enter into a contract with an Affiliate
(defined below) unless the compensation payable to the Affiliate for such
services does not exceed that which would be payable to a comparably qualified
third party service provider that is not affiliated with Service Manager. For
the purposes of this Agreement, an "Affiliate" of any person shall mean any
other person that is directly or indirectly controlling, controlled by, or under
common control with that person, where the term "control" means the possession,
directly or indirectly, of the actual power to direct the affairs of the
controlled person.
Section 2.6 BOOKS, RECORDS AND REPORTS.
(1) BOOKS AND RECORDS. Service Manager shall maintain at its
principal place of business, or at such other location as it may reasonably
designate, a complete and accurate set of files, books and records of all
business activities and operations conducted by Service Manager with respect to
the Entities. All financial records shall be kept in accordance with sound
accounting principles and practices, with such modifications as Owner may
request or approve. During the Term (defined below) and during the one (1) year
period following the expiration or termination of this Agreement, Owner and its
duly authorized agents may, at reasonable times, examine, inspect, audit, and
copy Service Manager's books, records, files, and reports pertaining to the
Entities.
(2) MONTHLY REPORTS. Service Manager shall make available to
Owner, within 20 days after the end of each calendar month, reports detailing
the operations of the Entities which shall be in the format specified in
Schedule 2.6(b).
(3) QUARTERLY REPORTS. Service Manager shall make available to
Owner, within 45 days after the end of each calendar quarter, reports detailing
the operations of the Entities which shall be in the format specified in
Schedule 2.6(c).
(4) ANNUAL REPORTS. Service Manager shall, within ninety (90)
days after the end of each calendar year, make available to Owner the following
reports and statements, having been
3
<PAGE> 8
prepared in accordance with sound accounting principles (as modified at Owner's
request and with Owner's approval):
(a) a balance sheet and statements of income and
expenses as of the end of such year; and
(b) a cash flow statement for such year.
(5) OTHER REPORTS. Service Manager shall make available to
Owner reports listed on Schedule 2.
(6) SPECIAL REPORTS. Service Manager shall also, at Owner's
expense, provide any other reports, summaries, statements or schedules
reasonably requested by Owner.
Section 2.7 PAYMENT OF COSTS AND EXPENSES. Service Manager is
authorized to pay out of Entity revenues all of the costs and expenses incurred
by Service Manager in performing its duties hereunder. Service Manager shall
maintain detailed records of all such payments with appropriate cash and
disbursement controls in compliance with Owner's requirements.
Section 2.8 INSUFFICIENCY OF REVENUES. If the Entity revenues are
insufficient to enable Service Manager to perform its duties, Service Manager
shall notify Owner, specifying the amounts necessary to enable Service Manager
to perform its duties. Owner shall fund such amounts within ten (10) days of
the receipt of Service Managers' notice, failing which, Service Manager shall
be released from all responsibilities for which it has not been provided
sufficient funds. Service Manager shall not be obligated to pay any expense of
Owner with Service Manager's funds to discharge its duties and responsibilities
hereunder.
ARTICLE 3
OWNER'S DUTIES
Section 3.1 INFORMATION AND COOPERATION. Owner shall (1) provide
Service Manager one copy of all files in its possession pertaining to the
Entities and their respective operations, (2) furnish Service Manager with all
information in Owner's possession reasonably necessary to enable Service
Manager to perform its duties, and (3) otherwise cooperate with, and assist
Service Manager in, performance of Service Manager's duties.
Section 3.2 APPROVAL POLICY. Owner has delivered to Service Manager a
list of those parties empowered to approve matters requiring Owner's approval
under this Agreement. Owner may revise such list from time to time by
delivering written notice to Service Manager. Owner shall cooperate with
Service Manager in granting or withholding approvals required under this
Agreement in a timely manner. If Service Manager seeks approval of any matter
of Owner hereunder and Owner does not respond to such request for approval
within five (5) business days following such request, then Owner shall be
deemed to have approved the matter in question. When seeking Owner's approval
of matters hereunder, Service Manager shall endeavor to provide
4
<PAGE> 9
such supporting information as may be reasonably necessary to enable Owner to
evaluate the matter in question.
Section 3.3 FUNDING. Owner shall provide all funds required to enable
Service Manager to perform its duties hereunder and for Service Manager's
compensation.
ARTICLE 4
COMPENSATION
Section 4.1 SERVICE FEE. For performing its servicing and
administration duties, Owner shall pay to Service Manager a fee equal to a
reasonable cost allocation of all salaries, cost and overhead of Service
Manager for the time devoted to performing the duties and services herein
described (the "SERVICE FEE"). The Service Fee shall be payable in arrears on
or before the twentieth (20th) day of each calendar quarter in respect of the
services provided during the preceding quarter.
Section 4.2 REIMBURSABLE EXPENSES. Without duplication of the items
included in the cost allocation determination for the Service Fee, Owner shall
reimburse Service Manager for all expenses incurred by Service Manager in
performing its duties hereunder, including, without limitation, expenses of
third parties engaged pursuant to this Agreement; travel and other
out-of-pocket expenses; and filing or other fees paid to third parties. Service
Manager shall not be reimbursed for legal fees and expenses relating to the
negotiation and preparation of this Agreement.
Section 4.3 ADDITIONAL SERVICES. If Owner requests Service Manager to
perform services other than those required hereunder, such additional services,
if performed, shall be compensated separately on terms agreed upon by Service
Manager and Owner prior to the performance of such services, which terms shall
not be (1) less favorable to Service Manager than the terms under which
qualified unaffiliated persons are then performing such services for comparable
organizations, or (2) less favorable to Owner than the terms under which Owner
could obtain such services from qualified unaffiliated third persons.
Section 4.4 EMERGENCY EXPENDITURES. In case of an emergency, Service
Manager may make expenditures for the protection and preservation of the
Entities, without Owner's prior written approval if, in the reasonable judgment
of Service Manager, such expenditures are necessary to prevent damage or
material diminution in value to the Entities or to preserve the health or
safety of any person. Service Manager shall inform Owner of any such
expenditures as soon as reasonably practicable but in no event later than the
end of the next business day succeeding the date upon which such expenditures
are made.
ARTICLE 5
LIABILITY INSURANCE AND RISK ALLOCATION
Section 5.1 FIDELITY BOND. Service Manager shall, at Owner's expense,
maintain a blanket fidelity bond with responsible companies with broad coverage
of all officers, employees or other persons acting in any capacity with respect
to the Entities or handling funds, money,
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<PAGE> 10
documents and papers relating to the Entities, insuring Owner against losses
including those arising from theft, embezzlement, fraud, or misplacement of
funds, money, or documents. The minimum coverage under any such bond shall be
at least equal to the amount specified in Schedule 5.
Section 5.2 LIABILITY INSURANCE. Service Manager shall, at Owner's
expense, maintain comprehensive general liability, automobile liability,
workers' compensation and other insurance to protect the interests of Service
Manager and Owner as their interests may appear in connection with the
performance of this Agreement in accordance with the coverage, amounts, and
deductibles set forth in Schedule 5.
Section 5.3 EVIDENCE OF INSURANCE.. Upon request, Service Manager
shall provide to Owner certificates of insurance or other proof evidencing the
insurance coverage required under this Article 5.
Section 5.4 MUTUAL WAIVER OF SUBROGATION. Each party waives on behalf
of the insurers of such party's property any and all claims or rights of
subrogation of any such insurer against the other party hereto for loss or
damage to any property so insured.
Section 5.5 INDEMNIFICATION.
(1) PARTIES' INDEMNITIES. Subject to Section 5.4, Service
Manager shall indemnify and defend Owner, and Owner's directors, officers and
employees from and against any and all loss, cost, damage, liability and
expense, including reasonable counsel fees, incurred by Owner, resulting from
Service Manager's gross negligence, willful misconduct, fraud, or breach of this
Agreement. Except for the matters against which Service Manager has afforded
Owner indemnity in accordance with the preceding sentence and subject to Section
5.4, Owner shall indemnify and defend Service Manager, and Service Manager's
directors, officers and employees from and against any and all loss, cost,
damage, liability and expense, including reasonable counsel fees, incurred by
Service Manager and resulting from Service Manager's performance of its duties
and obligations in accordance with this Agreement, including those which arise
from Service Managers' negligence. The provisions of this Section 5.5(1) are not
in lieu of, but are in addition to, any other rights and obligations of an
indemnified party.
(2) NOTICE. Upon receipt by any party entitled to
indemnification under Section 5.5(1) (an "INDEMNIFIED PARTY") of a complaint,
claim or other notice of any loss, damage or liability giving rise to a claim
for indemnification under Section 5.5(1), such Indemnified Party shall promptly
notify the party from whom indemnification is sought (the "INDEMNIFYING
PARTY"), but failure to provide such Notice shall not relieve the Indemnifying
Party from its duty to indemnify unless the Indemnifying Party is materially
prejudiced by such failure and had no actual knowledge of such complaint, claim
or other notice.
(3) INDEMNIFICATION RIGHTS. With respect to any claim made or
threatened against any party for which such party is or may be entitled to
indemnification hereunder, the Indemnifying Party shall have the right, upon
reasonable prior notice, in its sole discretion and at its sole expense, but
subject to the right of any insurance company having an interest in the
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outcome of such claim to exercise any rights it may have under any applicable
insurance coverage, to (a) participate in the investigation, defense and
settlement of such claims and (b) control the defense of such claim, including
the right to designate counsel and to control all negotiations, litigation,
arbitration, settlements, compromises and appeals of any such claim, provided
that the Indemnifying Party shall have advised the Indemnified Party that such
party is entitled to be fully indemnified with respect to such claim. The
Indemnified Party and the Indemnifying Party shall cooperate and act in good
faith in the conduct of the defense of any claims to be indemnified hereunder.
(4) SURVIVAL. The terms and provisions of this Section 5.5
shall survive the expiration or termination of this Agreement.
ARTICLE 6
TERM
Section 6.1 TERM. This Agreement shall commence on the Effective Date
and continue unless terminated by either party giving written notice of
termination to the other at least 30 days prior to the effective termination
date (the "Term"). The Term is subject to earlier termination as provided below
and shall also end as to any particular Entity upon the transfer of majority
ownership therein by Owner to a third party that is not an Affiliate.
Section 6.2 DUTIES ON TERMINATION OR EXPIRATION.
(1) SERVICE MANAGER'S DUTIES. Upon termination or expiration of
this Agreement, as to any Entities, Service Manager shall within fifteen (15)
days thereafter deliver to Owner complete copies of all books and records of the
Entities in question and all funds in possession of Service Manager belonging to
Owner or received by Service Manager with regard to such Entities. Service
Manager shall also be available for a period of not less than thirty (30) days
following termination or expiration to consult with Owner concerning operation
of the Entities in question; Service Manager shall not receive a fee for such
consultation, but shall be reimbursed for all costs incurred in connection
therewith.
(2) OWNER'S DUTIES. Owner shall, within five (5) days
following the end of the Term compensate Service Manager for all fees and
reimbursements due hereunder through the date of termination or expiration.
ARTICLE 7
MISCELLANEOUS
Section 7.1 ASSIGNMENT; CHANGE OF OWNERSHIP INTEREST. Service Manager
may not, without the prior written consent of Owner, assign this Agreement, and
any transfer, assignment, or other conveyance or exchange of any ownership
interest in Service Manager, other than to an Affiliate (which is hereby
permitted), shall be considered an assignment hereunder. Service Manager may,
however, from time to time delegate its duties to Affiliates. Subject to the
foregoing, this Agreement shall be binding upon, and inure to the benefit of,
Service Manager and Owner and their respective successors and assigns, and all
references in this Agreement to
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<PAGE> 12
"Service Manager" and "Owner" shall include the respective successors and
assigns of such parties permitted under this Agreement.
NOTICES. Any notice provided for permitted to be given hereunder shall
be in writing and may be given by (1) depositing in the U.S. Mail, postage
prepaid and certified with return receipt requested; (2) delivery service; or
(3) facsimile transmission. Notice shall be effective upon the earlier of
refusal of receipt by addressee or actual receipt at the address of the
intended addressee. The addresses of the parties, until changed by notice given
as provided herein, shall be as follows:
Owner: c/o: Susan T. Groenteman
Crow Family Holdings
2001 Ross Avenue, Suite 3200
Dallas, Texas 75201
Telephone No. (214) 863-4265
Fax No. (214) 863-4249
Service Manager: 2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Anne Raymond
Telephone No. (214) 863-1266
Fax No. (214) 863-1262
with copy to:
Legal Department
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Telephone No. (214) 863-1100
Fax No. (214) 863-1262
Section 7.3 NUMBER: GENDER, CAPTIONS; AND REFERENCES. Pronouns,
wherever used, and whatever gender, shall include natural persons,
corporations, and associates of every kind and character and the singular shall
include the plural wherever and as often as may be appropriate. Section
headings are for convenience of reference and shall not affect the construction
or interpretation of this Agreement. Whenever the terms "hereof", "hereby",
"herein", or words of similar import are used in this Agreement, they shall be
construed as referring to this Agreement in its entirety rather than to a
particular section or provision. Any reference to a particular "section" shall
be construed as referring to the indicated section of this Agreement. The term
"including" shall mean "including, without limitation", except where the
context otherwise specifically requires.
Section 7.4 SEVERABILITY. If any term or provision of this Agreement
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
8
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thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
Section 7.5 NO WAIVER OF DEFAULT. The failure by Owner or Service
Manager to insist upon the strict performance of any one of the terms or
conditions of this Agreement or to exercise any right, remedy or election
herein contained or permitted by law shall not constitute or be construed as
waiver or relinquishment for the future of that term, condition, right, remedy
or election, which shall continue and remain in full force and effect. All
rights and remedies that Owner or Service Manager may have at law, in equity or
otherwise for any breach of any term or condition of this Agreement shall be
distinct, separate and cumulative rights and remedies and no one of them shall
be deemed to be in exclusion of any other right or remedy of Owner or Service
Manager.
Section 7.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
constitutes the entire agreement between the parties with respect to the
matters herein contained and any agreement hereafter made shall be ineffective
unless made in writing and signed by the parties hereto. No provision of this
Agreement shall be modified, waived or terminated except by an instrument in
writing signed by the party against whom such modification, waiver or
termination is to be enforced.
Section 7.7 COMPETITION. Nothing in this Agreement will prevent the
Service Manager or Owner from, directly or indirectly, engaging in the
ownership, financing, leasing, operation, management, brokerage, development,
or sale of real property, including projects similar to the Entities and
whether or not competitive with the Entities.
Section 7.8 GOVERNING LAW. This Agreement shall be governed by and
constructed in accordance with the laws of the State of Texas.
Section 7.9 ATTORNEYS' FEES. Should either party employ attorneys to
enforce the provisions hereof or to recover damages for the breach of this
Agreement, the non-prevailing party in any such action agrees to pay the
prevailing party all reasonable costs, damages and expenses, including
reasonable attorneys' fees, expended or incurred by the prevailing party in
connection therewith.
Section 7.10 RELATIONSHIP OF THE PARTIES. The relationship of Owner and
Service Manager shall be that of principal and agent, and nothing contained in
this Agreement, nor any acts of the parties shall create the relationship of a
partnership or a joint venture, or cause the Service Manager to be responsible
in any way for the debts or obligations of Owner or any other party.
Section 7.11 REPRESENTATIONS AND WARRANTIES.
(1) SERVICE MANAGER. Service Manager represents and warrants
to Owner that (a) Service Manager is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to carry on its business as now conducted and
to execute, deliver and perform this Agreement; (b) the execution,
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delivery and performance by Service Manager of this Agreement is within its
power, has been authorized by all necessary corporate action and does not
contravene any provision of its organizational documents; (c) this Agreement
has been duly executed and delivered by a person authorized to do so on Service
Manager's behalf; and (d) this Agreement constitutes the valid and binding
obligation of Service Manager.
(2) OWNER. Owner represents and warrants to Service Manager
that (a) Owner is a corporation, duly organized and validly existing under the
laws of the State of Texas, and has all requisite power and authority to carry
on its business as now conducted and to execute, deliver and perform this
Agreement; (b) the execution, delivery and performance by Owner of this
Agreement is within its power, has been authorized by all necessary partnership
action and does not contravene any provision of its organizational documents;
(c) this Agreement has been duly executed and delivered by a person authorized
to do so on Owner's behalf; and (d) this Agreement constitutes the valid and
binding obligations of Owner.
Section 7.12 CONFIDENTIALITY. Owner and Service Manager shall keep
confidential all information obtained by one from the other in connection with
this Agreement. The parties shall not disclose such information to any person
(other than their respective agents, representatives and legal counsel), unless
specifically authorized in writing by the other party or if disclosure is
required by subpoena, court order, judicial decree, or law, or is otherwise
required to enable Service Manager to perform its duties. This confidentiality
obligation shall not be binding on any party with respect to information in the
public domain or information that enters the public domain through no fault of
that party. The provisions of this Section 7.12 shall survive the expiration or
termination of this Agreement.
Section 7.13 LIABILITY OF OWNER. Service Manager shall look solely to
Owner's interest in the Entities subject to this Agreement at the time any such
claim accrued for recovery of any judgment or claim against Owner relating or
arising out of this Agreement, and Owner, its partners, officers, directors,
shareholders, agents and representatives shall not be liable otherwise for any
claim of Service Manager arising out of or relating to this Agreement.
Section 7.14 LIABILITY OF SERVICE MANAGER. Owner shall look solely to
Service Manager's corporate Entities for recovery of any judgment or claim
against Service Manager relating or arising out of this Agreement, and Service
Manager's officers, employees, directors, shareholders, agents and
representatives shall not be liable for any claim of Owner arising out of or
relating to this Agreement.
Section 7.15 COUNTERPARTS. This Agreement may be executed in a number
of counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same Agreement.
10
<PAGE> 15
Executed as of the day and year first above written.
OWNER: ISIS 2000 LP, A TEXAS CORPORATION
By: /s/ ELISE M. TURNER
----------------------
Name: Elise M. Turner
-------------------
Title: Secretary
-------------------
SERVICE MANAGER: WYNDHAM HOTEL CORPORATION,
A DELAWARE CORPORATION
By: /s/ CARLA S. MORELAND
----------------------
Name: Carla S. Moreland
-------------------
Title: Vice President
-------------------
11
<PAGE> 16
SCHEDULE 2
OWNERSHIP ACCOUNTING AND REPORTING REQUIREMENTS
o Monthly and Quarterly Tax and Legal Processing
o Quarterly Capital Transaction Report
o Annual Accrual Financial Statements
o Reserve Estimation as needed
o Quarterly Pool Cash Forecast for Operations
o Annual Database Update
o Annual Budgetary Process
o Annual Tax Return Preparation
o Quarterly Estimate of Crow Equity and Liability
o Monthly EAB cash report and, where applicable,
mortgage payment cash flow reporting
o Annual valuation of each Crow Entity on the
Estimated Value Balance Sheet (EVBS) Basis
12
<PAGE> 17
LIST OF SCHEDULES
Schedule 1 Entities List
Schedule 2.2 Form of Business Plan
Schedule 2.11(b) Form of Monthly Report
Schedule 2.11(c) Form of Quarterly Report
Schedule 5 List of Insurance Coverage
13
<PAGE> 18
SCHEDULE 2.11(b)
FORM OF MONTHLY REPORT
BALANCE SHEET See Schedule 2.11(c)
INCOME STATEMENT See Schedule 2.11(c)
CASH FLOW STATEMENT See Schedule 2.11(c)
14
<PAGE> 19
SCHEDULE 2.11(c)
FORM OF QUARTERLY REPORT
BALANCE SHEET ATTACHED
INCOME STATEMENT ATTACHED
CASHFLOW STATEMENT ATTACHED
15
<PAGE> 20
SCHEDULE 5
LIST OF INSURANCE COVERAGE
FIDELITY BOND $
LIABILITY INSURANCE $
16
<PAGE> 1
EXHIBIT 10.6(b)
Wyndham Form
SERVICE AGREEMENT
MAY 21, 1996
between
WYNDHAM HOTEL CORPORATION
and
WYNRIGHT INSURANCE
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
ENGAGEMENT OF SERVICE MANAGER
Section 1.1 General Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
SERVICE MANAGER DUTIES
Section 2.1 Business Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Entity Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Disposition Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4 Legal Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5 Retention of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.6 Books, Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.7 Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.8 Insufficiency of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3
OWNER'S DUTIES
Section 3.1 Information and Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Approval Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4
COMPENSATION
Section 4.1 Service Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Reimbursable Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3 Additional Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4 Emergency Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
<TABLE>
ARTICLE 5
LIABILITY INSURANCE AND RISK ALLOCATION
<S> <C> <C>
Section 5.1 Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.2 Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.3 Evidence of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.4 Mutual Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6
TERM
Section 6.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.2 Duties on Termination or Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 7
MISCELLANEOUS
Section 7.1 Assignment; Change of Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.3 Number: Gender; Captions; and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.5 No Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.7 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.9 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.10 Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.11 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.13 Liability of Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.14 Liability of Service Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
ii
<PAGE> 4
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
Page No.
<S> <C>
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Disposition Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Hotel Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Hotel Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Property Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Refinancing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Service Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
iii
<PAGE> 5
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Agreement"), is entered into by WYNRIGHT
INSURANCE, a Texas corporation (the "Owner"), and WYNDHAM HOTEL CORPORATION, a
Delaware corporation (the "Service Manager"), effective as of May 21, 1996 (the
"Effective Date").
RECITAL
Wyndham Hotel Company LTD, a Texas limited partnership, has been
providing certain services for Owner. Pursuant to that certain Formation
Agreement dated as of March 10, 1996, the Entities and operations of Wyndham
Hotel Company LTD will be "rolled-up", together with other Entities, into
Service Manager or its subsidiaries. Owner and Service Manager desire to
evidence and formalize their agreements with respect to these services.
ARTICLE 1
ENGAGEMENT OF SERVICE MANAGER
Section 1.1 GENERAL ENGAGEMENT. Owner engages Service Manager as
an independent contractor to provide certain services described in this
Agreement relating to the administration and servicing of certain aspects of
Owner's legal entity and the legal entities (whether partnerships, corporations
or other business associations) that comprise Owner (the "ENTITIES" and each an
"ENTITY"). Owner and Service Manager may from time to time agree to expand or
reduce the scope of services to be provided hereunder and either party, upon
request of the other shall execute a schedule that properly evidences the scope
of services then being provided hereunder. The Service Manager shall in good
faith provide the services set forth in this Agreement in accordance with
normal and prudent practices and shall have the authority to take all actions
necessary or appropriate to fulfill its obligations.
ARTICLE 2
SERVICE MANAGER DUTIES
Section 2.1 ENTITY SERVICES. The Service Manager will provide the
following services with regard to the Entities:
(1) ACCOUNTING SERVICES. (i) Perform all normal and customary
accounting functions for Owner's legal entity and for all entities
that comprise Owner's legal entity and maintain all necessary
books and records in connection therewith; and (ii) monitor the
actual monthly income and expenses of the Entities, collect
revenues and pay operating expenses, compare actual results to the
relevant operating budgets, and report to Owner.
1
<PAGE> 6
(2) RISK MANAGEMENT SERVICES. Assist Owner in review of the insurable
risks of each Entity and the determination of levels of insurance
coverage; develop, administer and implement a risk management
program for the Entities; procure insurance coverage in accordance
with Owner's instructions; and subject to Owner's guidelines and
approval, oversee the investigation and resolution of all casualty
and liability claims brought by or against the Entities.
(3) TAX SERVICES. Prepare all state and federal income tax returns for
Owner and, to the extent requested by Owner, for those constituent
ownership entities that comprise Owner; prepare all sales tax
filings and state unemployment tax filings; and coordinate with
Owner and oversee any challenges, disputes and audits of any
income, sales or unemployment taxes.
(4) HUMAN RESOURCES. Upon Owner's request, provide Service Manager's
standard human resource services including implementation and
oversight of interview and hiring guidelines and services;
implementation and oversight of employment policies and procedures;
conduct periodic employee reviews; and to the extent permitted by
applicable law and governmental regulations, employee benefits in
accordance with Service Manager's standard benefits.
(5) REGULATORY COMPLIANCE REVIEW. Assist Owner (if requested) in (a)
reviewing Entities to assure compliance with applicable
governmental regulations (including environmental regulations and
the Americans With Disabilities Act); (b) subject to Owner's
budgetary constraints, implementing a program to bring any non-
complying Entities into compliance with applicable regulations; and
(c) implementing a program to monitor continuing compliance with
governmental regulations.
(6) FINANCING SERVICES. From time to time, upon Owner's request and in
accordance with Owner's business plan, Service Manager shall act as
Owner's agent in financing or refinancing indebtedness with respect
to the Entities. Service Manager shall:
(a) monitor existing financing;
(b) negotiate and finalize existing financing renewals as required;
(c) monitor and negotiate any equity partner requirements on behalf
of Owner;
(d) negotiate any required refinancing; and
(e) negotiate any required restructuring/workout of existing
financing (debt or equity).
Although Service Manager shall make recommendations to Owner concerning
terms and conditions of any financing or refinancing and the lender(s)
to provide the same and shall
2
<PAGE> 7
negotiate the terms thereof and shall assist in consummating the
transactions, Owner shall have the sole authority to execute the
requisite agreements therefor.
Section 2.4 LEGAL SERVICES. Service Manager is authorized to
engage attorneys and other advisors (including, without limitation, Service
Manager's in-house legal staff) as necessary to provide legal services in
connection with the day-to-day operation of the Entities, including enforcement
of contracts; review of contracts, leases, and other documents; maintenance of
the Entities; and implementing and defending legal actions.
Section 2.5 RETENTION OF THIRD PARTIES. Service Manager is
authorized and empowered, as Owner's agent, to engage and enter into
contracts with third parties to provide the services referred to in this
Article 2, and may delegate performance of its duties to third parties,
including Service Manager's subsidiaries and affiliates. Such contracts shall
be on such terms as Service Manager approves, provided the same are in
compliance with Owner's budget and guidelines. Without limiting the generality
of the foregoing, the services of third parties which may be engaged include
tax services, brokerage services, data processing services, consulting
services, and legal services. Service Manager shall not engage or enter into a
contract with an Affiliate (defined below) unless the compensation payable to
the Affiliate for such services does not exceed that which would be payable to
a comparably qualified third party service provider that is not affiliated with
Service Manager. For the purposes of this Agreement, an "Affiliate" of any
person shall mean any other person that is directly or indirectly controlling,
controlled by, or under common control with that person, where the term
"control" means the possession, directly or indirectly, of the actual power to
direct the affairs of the controlled person.
Section 2.6 BOOKS, RECORDS AND REPORTS.
(1) BOOKS AND RECORDS. Service Manager shall maintain at its
principal place of business, or at such other location as it may reasonably
designate, a complete and accurate set of files, books and records of all
business activities and operations conducted by Service Manager with respect to
the Entities. All financial records shall be kept in accordance with sound
accounting principles and practices, with such modifications as Owner may
request or approve. During the Term (defined below) and during the one (1)
year period following the expiration or termination of this Agreement, Owner
and its duly authorized agents may, at reasonable times, examine, inspect,
audit, and copy Service Manager's books, records, files, and reports pertaining
to the Entities.
(2) MONTHLY REPORTS. Service Manager shall make available to Owner,
within 20 days after the end of each calendar month, reports detailing the
operations of the Entities which shall be in the format specified in Schedule
2.6(b).
(3) QUARTERLY REPORTS. Service Manager shall make available to
Owner, within 45 days after the end of each calendar quarter, reports detailing
the operations of the Entities which shall be in the format specified in
Schedule 2.6(c).
3
<PAGE> 8
(4) ANNUAL REPORTS. Service Manager shall, within ninety (90) days
after the end of each calendar year, make available to Owner the following
reports and statements, having been prepared in accordance with sound
accounting principles (as modified at Owner's request and with Owner's
approval):
(a) a balance sheet and statements of income and expenses as of
the end of such year; and
(b) a cash flow statement for such year.
(5) OTHER REPORTS. Service Manager shall make available to Owner
reports listed on Schedule 2.
(6) SPECIAL REPORTS. Service Manager shall also, at Owner's
expense, provide any other reports, summaries, statements or schedules
reasonably requested by Owner.
Section 2.7 PAYMENT OF COSTS AND EXPENSES. Service Manager is
authorized to pay out of Entity revenues all of the costs and expenses incurred
by Service Manager in performing its duties hereunder. Service Manager shall
maintain detailed records of all such payments with appropriate cash and
disbursement controls in compliance with Owner's requirements.
Section 2.8 INSUFFICIENCY OF REVENUES. If the Entity revenues are
insufficient to enable Service Manager to perform its duties, Service Manager
shall notify Owner, specifying the amounts necessary to enable Service Manager
to perform its duties. Owner shall fund such amounts within ten (10) days of
the receipt of Service Manager's notice, failing which, Service Manager shall
be released from all responsibilities for which it has not been provided
sufficient funds. Service Manager shall not be obligated to pay any expense of
Owner with Service Manager's funds to discharge its duties and responsibilities
hereunder.
ARTICLE 3
OWNER'S DUTIES
Section 3.1 INFORMATION AND COOPERATION. Owner shall (1) provide
Service Manager one copy of all files in its possession pertaining to the
Entities and their respective operations, (2) furnish Service Manager with all
information in Owner's possession reasonably necessary to enable Service
Manager to perform its duties, and (3) otherwise cooperate with, and assist
Service Manager in, performance of Service Manager's duties.
Section 3.2 APPROVAL POLICY. Owner has delivered to Service
Manager a list of those parties empowered to approve matters requiring Owner's
approval under this Agreement. Owner may revise such list from time to time by
delivering written notice to Service Manager. Owner shall cooperate with
Service Manager in granting or withholding approvals required under this
Agreement in a timely manner. If Service Manager seeks approval of any matter
of Owner hereunder and Owner does not respond to such request for approval
within five (5) business days following such request, then Owner shall be
deemed to have approved the matter in question.
4
<PAGE> 9
When seeking Owner's approval of matters hereunder, Service Manager shall
endeavor to provide such supporting information as may be reasonably necessary
to enable Owner to evaluate the matter in question.
Section 3.3 FUNDING. Owner shall provide all funds required to
enable Service Manager to perform its duties hereunder and for Service
Manager's compensation.
ARTICLE 4
COMPENSATION
Section 4.1 SERVICE FEE. For performing its servicing and
administration duties, Owner shall pay to Service Manager a fee equal to a
reasonable cost allocation of all salaries, cost and overhead of Service
Manager for the time devoted to performing the duties and services herein
described (the "SERVICE FEE"). The Service Fee shall be payable in arrears on
or before the twentieth (20th) day of each calendar quarter in respect of the
services provided during the preceding quarter.
Section 4.2 REIMBURSABLE EXPENSES. Without duplication of the
items included in the cost allocation determination for the Service Fee, Owner
shall reimburse Service Manager for all expenses incurred by Service Manager in
performing its duties hereunder, including, without limitation, expenses of
third parties engaged pursuant to this Agreement; travel and other
out-of-pocket expenses; and filing or other fees paid to third parties. Service
Manager shall not be reimbursed for legal fees and expenses relating to the
negotiation and preparation of this Agreement.
Section 4.3 ADDITIONAL SERVICES. If Owner requests Service
Manager to perform services other than those required hereunder, such
additional services, if performed, shall be compensated separately on terms
agreed upon by Service Manager and Owner prior to the performance of such
services, which terms shall not be (1) less favorable to Service Manager than
the terms under which qualified unaffiliated persons are then performing such
services for comparable organizations, or (2) less favorable to Owner than the
terms under which Owner could obtain such services from qualified unaffiliated
third persons.
Section 4.4 EMERGENCY EXPENDITURES. In case of an emergency,
Service Manager may make expenditures for the protection and preservation of
the Entities, without Owner's prior written approval if, in the reasonable
judgment of Service Manager, such expenditures are necessary to prevent damage
or material diminution in value to the Entities or to preserve the health or
safety of any person. Service Manager shall inform Owner of any such
expenditures as soon as reasonably practicable but in no event later than the
end of the next business day succeeding the date upon which such expenditures
are made.
ARTICLE 5
LIABILITY INSURANCE AND RISK ALLOCATION
Section 5.1 FIDELITY BOND. Service Manager shall, at Owner's
expense, maintain a blanket fidelity bond with responsible companies with broad
coverage of all officers, employees or
5
<PAGE> 10
other persons acting in any capacity with respect to the Entities or handling
funds, money, documents and papers relating to the Entities, insuring Owner
against losses including those arising from theft, embezzlement, fraud, or
misplacement of funds, money, or documents. The minimum coverage under any such
bond shall be at least equal to the amount specified in Schedule 5.
Section 5.2 LIABILITY INSURANCE. Service Manager shall, at
Owner's expense, maintain comprehensive general liability, automobile
liability, workers' compensation and other insurance to protect the interests
of Service Manager and Owner as their interests may appear in connection with
the performance of this Agreement in accordance with the coverage, amounts, and
deductibles set forth in Schedule 5.
Section 5.3 EVIDENCE OF INSURANCE. Upon request, Service Manager
shall provide to Owner certificates of insurance or other proof evidencing the
insurance coverage required under this Article 5.
Section 5.4 MUTUAL WAIVER OF SUBROGATION. Each party waives on
behalf of the insurers of such party's property any and all claims or rights of
subrogation of any such insurer against the other party hereto for loss or
damage to any property so insured.
Section 5.5 INDEMNIFICATION.
(1) PARTIES' INDEMNITIES. Subject to Section 5.4, Service
Manager shall indemnify and defend Owner, and Owner's directors, officers and
employees from and against any and all loss, cost, damage, liability and
expense, including reasonable counsel fees, incurred by Owner, resulting from
Service Manager's gross negligence, willful misconduct, fraud, or breach of
this Agreement. Except for the matters against which Service Manager has
afforded Owner indemnity in accordance with the preceding sentence and subject
to Section 5.4, Owner shall indemnify and defend Service Manager, and Service
Manager's directors, officers and employees from and against any and all loss,
cost, damage, liability and expense, including reasonable counsel fees,
incurred by Service Manager and resulting from Service Manager's performance of
its duties and obligations in accordance with this Agreement, including those
which arise from Service Manager's negligence. The provisions of this Section
5.5(l) are not in lieu of, but are in addition to, any other rights and
obligations of an indemnified party.
(2) NOTICE. Upon receipt by any party entitled to
indemnification under Section 5.5(1) (an "INDEMNIFIED PARTY") of a complaint,
claim or other notice of any loss, damage or liability giving rise to a claim
for indemnification under Section 5.5(l), such Indemnified Party shall promptly
notify the party from whom indemnification is sought (the "INDEMNIFYING
PARTY"), but failure to provide such Notice shall not relieve the Indemnifying
Party from its duty to indemnify unless the Indemnifying Party is materially
prejudiced by such failure and had no actual knowledge of such complaint, claim
or other notice.
(3) INDEMNIFICATION RIGHTS. With respect to any claim made or
threatened against any party for which such party is or may be entitled to
indemnification hereunder, the Indemnifying Party shall have the right, upon
reasonable prior notice, in its sole discretion and at
6
<PAGE> 11
its sole expense, but subject to the right of any insurance company having an
interest in the outcome of such claim to exercise any rights it may have under
any applicable insurance coverage, to (a) participate in the investigation,
defense and settlement of such claims and (b) control the defense of such
claim, including the right to designate counsel and to control all
negotiations, litigation, arbitration, settlements, compromises and appeals of
any such claim, provided that the Indemnifying Party shall have advised the
Indemnified Party that such party is entitled to be fully indemnified with
respect to such claim. The Indemnified Party and the Indemnifying Party shall
cooperate and act in good faith in the conduct of the defense of any claims to
be indemnified hereunder.
(4) SURVIVAL. The terms and provisions of this Section 5.5
shall survive the expiration or termination of this Agreement.
ARTICLE 6
TERM
Section 6.1 TERM. This Agreement shall commence on the Effective
Date and continue unless terminated by either party giving written notice of
termination to the other at least 30 days prior to the effective termination
date (the "TERM"). The Term is subject to earlier termination as provided below
and shall also end as to any particular Entity upon the transfer of majority
ownership therein by Owner to a third party that is not an Affiliate.
Section 6.2 DUTIES ON TERMINATION OR EXPIRATION.
(1) SERVICE MANAGER'S DUTIES. Upon termination or expiration
of this Agreement, as to any Entities, Service Manager shall within fifteen (15)
days thereafter deliver to Owner complete copies of all books and records of
the Entities in question and all funds in possession of Service Manager
belonging to Owner or received by Service Manager with regard to such Entities.
Service Manager shall also be available for a period of not less than thirty
(30) days following termination or expiration to consult with Owner concerning
operation of the Entities in question; Service Manager shall not receive a fee
for such consultation, but shall be reimbursed for all costs incurred in
connection therewith.
(2) OWNER'S DUTIES. Owner shall, within five (5) days
following the end of the Term compensate Service Manager for all fees and
reimbursements due hereunder through the date of termination or expiration.
ARTICLE 7
MISCELLANEOUS
Section 7.1 ASSIGNMENT; CHANGE OF OWNERSHIP INTEREST. Service
Manager may not, without the prior written consent of Owner, assign this
Agreement, and any transfer, assignment, or other conveyance or exchange of any
ownership interest in Service Manager, other than to an Affiliate (which is
hereby permitted), shall be considered an assignment hereunder. Service Manager
may, however, from time to time delegate its duties to Affiliates. Subject to
the foregoing, this Agreement shall be binding upon, and inure to the benefit
of, Service Manager and
7
<PAGE> 12
Owner and their respective successors and assigns, and all references in this
Agreement to "Service Manager" and "Owner" shall include the respective
successors and assigns of such parties permitted under this Agreement.
NOTICES. Any notice provided for permitted to be given hereunder shall
be in writing and may be given by (1) depositing in the U.S. Mail, postage
prepaid and certified with return receipt requested; (2) delivery service; or
(3) facsimile transmission. Notice shall be effective upon the earlier of
refusal of receipt by addressee or actual receipt at the address of the
intended addressee. The addresses of the parties, until changed by notice given
as provided herein, shall be as follows:
Owner: c/o: Susan T. Groenteman
Crow Family Holdings
2001 Ross Avenue, Suite 3200
Dallas, Texas 75201
Telephone No. (214) 863-4265
Fax No. (214) 863-4249
Service Manager: 2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Anne Raymond
Telephone No. (214) 863-1266
Fax No. (214) 863-1262
with copy to:
Legal Department
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Telephone No. (214) 863-1100
Fax No. (214) 863-1262
Section 7.3 NUMBER: GENDER; CAPTIONS; AND REFERENCES. Pronouns,
wherever used, and whatever gender, shall include natural persons,
corporations, and associates of every kind and character and the singular shall
include the plural wherever and as often as may be appropriate. Section
headings are for convenience of reference and shall not affect the construction
or interpretation of this Agreement. Whenever the terms "hereof", "hereby",
"herein", or words of similar import are used in this Agreement, they shall be
construed as referring to this Agreement in its entirety rather than to a
particular section or provision. Any reference to a particular "section" shall
be construed as referring to the indicated section of this Agreement. The term
"including" shall mean "including, without limitation", except where the
context otherwise specifically requires.
Section 7.4 SEVERABILITY. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of that term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected
8
<PAGE> 13
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
Section 7.5 NO WAIVER OF DEFAULT. The failure by Owner or Service
Manager to insist upon the strict performance of any one of the terms or
conditions of this Agreement or to exercise any right, remedy or election
herein contained or permitted by law shall not constitute or be construed as
waiver or relinquishment for the future of that term, condition, right, remedy
or election, which shall continue and remain in full force and effect. All
rights and remedies that Owner or Service Manager may have at law, in equity or
otherwise for any breach of any term or condition of this Agreement shall be
distinct, separate and cumulative rights and remedies and no one of them shall
be deemed to be in exclusion of any other right or remedy of Owner or Service
Manager.
Section 7.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
constitutes the entire agreement between the parties with respect to the
matters herein contained and any agreement hereafter made shall be ineffective
unless made in writing and signed by the parties hereto. No provision of this
Agreement shall be modified, waived or terminated except by an instrument in
writing signed by the party against whom such modification, waiver or
termination is to be enforced.
Section 7.7 COMPETITION. Nothing in this Agreement will prevent
the Service Manager or Owner from, directly or indirectly, engaging in the
ownership, financing, leasing, operation, management, brokerage, development,
or sale of real property, including projects similar to the Entities and
whether or not competitive with the Entities.
Section 7.8 GOVERNING LAW. This Agreement shall be governed by
and constructed in accordance with the laws of the State of Texas.
Section 7.9 ATTORNEYS' FEES. Should either party employ attorneys
to enforce the provisions hereof or to recover damages for the breach of this
Agreement, the non-prevailing party in any such action agrees to pay the
prevailing party all reasonable costs, damages and expenses, including
reasonable attorneys' fees, expended or incurred by the prevailing party in
connection therewith.
Section 7.10 RELATIONSHIP OF THE PARTIES. The relationship of
Owner and Service Manager shall be that of principal and agent, and nothing
contained in this Agreement, nor any acts of the parties shall create the
relationship of a partnership or a joint venture, or cause the Service Manager
to be responsible in any way for the debts or obligations of Owner or any other
party.
Section 7.11 REPRESENTATIONS AND WARRANTIES.
(1) SERVICE MANAGER. Service Manager represents and warrants
to Owner that (a) Service Manager is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to carry on its business as now conducted and
to execute, deliver and perform this Agreement; (b) the execution,
9
<PAGE> 14
delivery and performance by Service Manager of this Agreement is within its
power, has been authorized by all necessary corporate action and does not
contravene any provision of its organizational documents; (c) this Agreement
has been duly executed and delivered by a person authorized to do so on Service
Manager's behalf, and (d) this Agreement constitutes the valid and binding
obligation of Service Manager.
(2) OWNER. Owner represents and warrants to Service Manager
that (a) Owner is a corporation, duly organized and validly existing under the
laws of the State of Texas, and has all requisite power and authority to carry
on its business as now conducted and to execute, deliver and perform this
Agreement; (b) the execution, delivery and performance by Owner of this
Agreement is within its power, has been authorized by all necessary partnership
action and does not contravene any provision of its organizational documents;
(c) this Agreement has been duly executed and delivered by a person authorized
to do so on Owner's behalf, and (d) this Agreement constitutes the valid and
binding obligations of Owner.
Section 7.12 CONFIDENTIALITY. Owner and Service Manager shall keep
confidential all information obtained by one from the other in connection with
this Agreement. The parties shall not disclose such information to any person
(other than their respective agents, representatives and legal counsel), unless
specifically authorized in writing by the other party or if disclosure is
required by subpoena, court order, judicial decree, or law, or is otherwise
required to enable Service Manager to perform its duties. This confidentiality
obligation shall not be binding on any party with respect to information in the
public domain or information that enters the public domain through no fault of
that party. The provisions of this Section 7.12 shall survive the expiration
or termination of this Agreement.
Section 7.13 LIABILITY OF OWNER. Service Manager shall look solely
to Owner's interest in the Entities subject to this Agreement at the time any
such claim accrued for recovery of any judgment or claim against Owner relating
or arising out of this Agreement, and Owner, its partners, officers, directors,
shareholders, agents and representatives shall not be liable otherwise for any
claim of Service Manager arising out of or relating to this Agreement.
Section 7.14 LIABILITY OF SERVICE MANAGER. Owner shall look solely
to Service Manager's corporate Entities for recovery of any judgment or claim
against Service Manager relating or arising out of this Agreement, and Service
Manager's officers, employees, directors, shareholders, agents and
representatives shall not be liable for any claim of Owner arising out of or
relating to this Agreement.
Section 7.15 COUNTERPARTS. This Agreement may be executed in a
number of counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same Agreement.
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<PAGE> 15
Executed as of the day and year first above written.
OWNER: WYNRIGHT INSURANCE, A TEXAS CORPORATION
By: /s/ ELISE M. TURNER
-------------------------------------
Name: Elise M. Turner
-----------------------------------
Title: Secretary
----------------------------------
SERVICE MANAGER: WYNDHAM HOTEL CORPORATION,
A DELAWARE CORPORATION
By: /s/ CARLA S. MORELAND
-------------------------------------
Name: Carla S. Moreland
-----------------------------------
Title: Vice President
----------------------------------
11
<PAGE> 16
SCHEDULE 2
OWNERSHIP ACCOUNTING AND REPORTING REQUIREMENTS
o Monthly and Quarterly Tax and Legal Processing
o Quarterly Capital Transaction Report
o Annual Accrual Financial Statements
o Reserve Estimation as needed
o Quarterly Pool Cash Forecast for Operations
o Annual Database Update
o Annual Budgetary Process
o Annual Tax Return Preparation
o Quarterly Estimate of Crow Equity and Liability
o Monthly EAB cash report and, where applicable,
mortgage payment cash flow reporting
o Annual valuation of each Crow Entity on the Estimated
Value Balance Sheet (EVBS) Basis
12
<PAGE> 17
LIST OF SCHEDULES
Schedule 1 Entities List
Schedule 2.2 Form of Business Plan
Schedule 2.11(b) Form of Monthly Report
Schedule 2.11(c) Form of Quarterly Report
Schedule 5 List of Insurance Coverage
13
<PAGE> 18
SCHEDULE 2.11(b)
FORM OF MONTHLY REPORT
BALANCE SHEET See Schedule 2.11(c)
INCOME STATEMENT See Schedule 2.11(c)
CASHFLOW STATEMENT See Schedule 2.11(c)
14
<PAGE> 19
SCHEDULE 2.11(c)
FORM OF QUARTERLY REPORT
BALANCE SHEET ATTACHED
INCOME STATEMENT ATTACHED
CASHFLOW STATEMENT ATTACHED
15
<PAGE> 20
SCHEDULE 5
LIST OF INSURANCE COVERAGE
FIDELITY BOND $
LIABILITY INSURANCE $
16
<PAGE> 1
EXHIBIT 10.6(c)
Wyndham Form
SERVICE AGREEMENT
MAY 21, 1996
between
WYNDHAM HOTEL CORPORATION
and
CW SYNERGISTECH, LP
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I
ENGAGEMENT OF SERVICE MANAGER
Section 1.1 General Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
SERVICE MANAGER DUTIES
Section 2.1 Business Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Entity Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Disposition Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4 Legal Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5 Retention of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.6 Books, Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.7 Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.8 Insufficiency of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3
OWNER'S DUTIES
Section 3.1 Information and Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Approval Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4
COMPENSATION
Section 4.1 Service Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Reimbursable Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3 Additional Services 7
Section 4.4 Emergency Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
ARTICLE 5
LIABILITY INSURANCE AND RISK ALLOCATION
Section 5.1 Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.2 Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.3 Evidence of Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.4 Mutual Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6
TERM
Section 6.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.2 Duties on Termination or Expiration. . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 7
MISCELLANEOUS
Section 7.1 Assignment; Change of Ownership Interest . . . . . . . . . . . . . . . . . . . 10
Section 7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.3 Number: Gender; Captions; and References . . . . . . . . . . . . . . . . . . . 11
Section 7.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.5 No Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.7 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.9 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.10 Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.11 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.13 Liability of Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.14 Liability of Service Manager . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
ii
<PAGE> 4
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Disposition Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Hotel Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Hotel Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Property Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Refinancing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Service Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
iii
<PAGE> 5
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Agreement"), is entered into by CW
SYNERGISTECH, LP, a Texas corporation (the "Owner"), and WYNDHAM HOTEL
CORPORATION, a Delaware corporation (the "Service Manager"), effective as of
May __, 1996 (the "Effective Date").
RECITAL
Wyndham Hotel Company LTD, a Texas limited partnership, has been
providing certain services for Owner. Pursuant to that certain Formation
Agreement dated as of March 10, 1996, the Entities and operations of Wyndham
Hotel Company LTD will be "rolled-up", together with other Entities, into
Service Manager or its subsidiaries. Owner and Service Manager desire to
evidence and formalize their agreements with respect to these services.
ARTICLE 1
ENGAGEMENT OF SERVICE MANAGER
Section 1.1 GENERAL ENGAGEMENT. Owner engages Service Manager as an
independent contractor to provide certain services described in this Agreement
relating to the administration and servicing of certain aspects of Owner's
legal entity and the legal entities (whether partnerships, corporations or
other business associations) that comprise Owner (the "ENTITIES" and each an
"ENTITY"). Owner and Service Manager may from time to time agree to expand or
reduce the scope of services to be provided hereunder and either party, upon
request of the other shall execute a schedule that properly evidences the scope
of services then being provided hereunder. The Service Manager shall in good
faith provide the services set forth in this Agreement in accordance with
normal and prudent practices and shall have the authority to take all actions
necessary or appropriate to fulfill its obligations.
ARTICLE 2
SERVICE MANAGER DUTIES
Section 2.1 ENTITY SERVICES. The Service Manager will provide
the following services with regard to the Entities:
(1) ACCOUNTING SERVICES. (i) Perform all normal and customary
accounting functions for Owner's legal entity and for all
entities that comprise Owner's legal entity and maintain
all necessary books and records in connection therewith;
and (ii) monitor the actual monthly income and expenses of
the Entities, collect revenues and pay operating expenses,
compare actual results to the relevant operating budgets,
and report to Owner.
1
<PAGE> 6
(2) RISK MANAGEMENT SERVICES. Assist Owner in review of the
insurable risks of each Entity and the determination of
levels of insurance coverage; develop, administer and
implement a risk management program for the Entities;
procure insurance coverage in accordance with Owner's
instructions; and subject to Owner's guidelines and
approval, oversee the investigation and resolution of all
casualty and liability claims brought by or against the
Entities.
(3) TAX SERVICES. Prepare all state and federal income tax
returns for Owner and, to the extent requested by Owner,
for those constituent ownership entities that comprise
Owner; prepare all sales tax filings and state
unemployment tax filings; and coordinate with Owner and
oversee any challenges, disputes and audits of any income,
sales or unemployment taxes.
(4) HUMAN RESOURCES. Upon Owner's request, provide Service
Manager's standard human resource services including
implementation and oversight of interview and hiring
guidelines and services; implementation and oversight of
employment policies and procedures; conduct periodic
employee reviews; and to the extent permitted by
applicable law and governmental regulations, employee
benefits in accordance with Service Manager's standard
benefits.
(5) REGULATORY COMPLIANCE REVIEW. Assist Owner (if
requested) in (a) reviewing Entities to assure compliance
with applicable governmental regulations (including
environmental regulations and the Americans With
Disabilities Act); (b) subject to Owner's budgetary
constraints, implementing a program to bring any
non-complying Entities into compliance with applicable
regulations; and (c) implementing a program to monitor
continuing compliance with governmental regulations.
(6) FINANCING SERVICES. From time to time, upon Owner's
request and in accordance with Owner's business plan,
Service Manager shall act as Owner's agent in financing or
refinancing indebtedness with respect to the Entities.
Service Manager shall:
(a) monitor existing financing;
(b) negotiate and finalize existing financing renewals
as required;
(c) monitor and negotiate any equity partner
requirements on behalf of Owner;
(d) negotiate any required refinancing; and
(e) negotiate any required restructuring/workout of
existing financing (debt or equity).
Although Service Manager shall make recommendations to Owner
concerning terms and conditions of any financing or refinancing
and the lender(s) to provide the same and shall
2
<PAGE> 7
negotiate the terms thereof and shall assist in consummating the
transactions, Owner shall have the sole authority to execute the
requisite agreements therefor.
Section 2.4 LEGAL SERVICES. Service Manager is authorized to engage
attorneys and other advisors (including, without limitation, Service Manager's
in-house legal staff) as necessary to provide legal services in connection with
the day-to-day operation of the Entities, including enforcement of contracts;
review of contracts, leases, and other documents; maintenance of the Entities;
and implementing and defending legal actions.
Section 2.5 RETENTION OF THIRD PARTIES. Service Manager is authorized
and empowered, as Owner's agent, to engage and enter into contracts with third
parties to provide the services referred to in this Article 2, and may delegate
performance of its duties to third parties, including Service Manager's
subsidiaries and affiliates. Such contracts shall be on such terms as Service
Manager approves, provided the same are in compliance with Owner's budget and
guidelines. Without limiting the generality of the foregoing, the services of
third parties which may be engaged include tax services, brokerage services,
data processing services, consulting services, and legal services. Service
Manager shall not engage or enter into a contract with an Affiliate (defined
below) unless the compensation payable to the Affiliate for such services does
not exceed that which would be payable to a comparably qualified third party
service provider that is not affiliated with Service Manager. For the purposes
of this Agreement, an "Affiliate" of any person shall mean any other person
that is directly or indirectly controlling, controlled by, or under common
control with that person, where the term "control" means the possession,
directly or indirectly, of the actual power to direct the affairs of the
controlled person.
Section 2.6 BOOKS, RECORDS AND REPORTS.
(1) BOOKS AND RECORDS. Service Manager shall maintain at its
principal place of business, or at such other location as it may reasonably
designate, a complete and accurate set of files, books and records of all
business activities and operations conducted by Service Manager with respect to
the Entities. All financial records shall be kept in accordance with sound
accounting principles and practices, with such modifications as Owner may
request or approve. During the Term (defined below) and during the one (1)
year period following the expiration or termination of this Agreement, Owner
and its duly authorized agents may, at reasonable times, examine, inspect,
audit, and copy Service Manager's books, records, files, and reports pertaining
to the Entities.
(2) MONTHLY REPORTS. Service Manager shall make available to
Owner, within 20 days after the end of each calendar month, reports detailing
the operations of the Entities which shall be in the format specified in
Schedule 2.6(b).
(3) QUARTERLY REPORTS. Service Manager shall make available to
Owner, within 45 days after the end of each calendar quarter, reports detailing
the operations of the Entities which shall be in the format specified in
Schedule 2.6(c).
3
<PAGE> 8
(4) ANNUAL REPORTS. Service Manager shall, within ninety (90)
days after the end of each calendar year, make available to Owner the following
reports and statements, having been prepared in accordance with sound
accounting principles (as modified at Owner's request and with Owner's
approval):
(a) a balance sheet and statements of income and
expenses as of the end of such year; and
(b) a cash flow statement for such year.
(5) OTHER REPORTS. Service Manager shall make available to
Owner reports listed on Schedule 2.
(6) SPECIAL REPORTS. Service Manager shall also, at Owner's
expense, provide any other reports, summaries, statements or schedules
reasonably requested by Owner.
Section 2.7 PAYMENT OF COSTS AND EXPENSES. Service Manager is
authorized to pay out of Entity revenues all of the costs and expenses incurred
by Service Manager in performing its duties hereunder. Service Manager shall
maintain detailed records of all such payments with appropriate cash and
disbursement controls in compliance with Owner's requirements.
Section 2.8 INSUFFICIENCY OF REVENUES. If the Entity revenues are
insufficient to enable Service Manager to perform its duties, Service Manager
shall notify Owner, specifying the amounts necessary to enable Service Manager
to perform its duties. Owner shall fund such amounts within ten (10) days of
the receipt of Service Manager's notice, failing which, Service Manager shall
be released from all responsibilities for which it has not been provided
sufficient funds. Service Manager shall not be obligated to pay any expense of
Owner with Service Manager's funds to discharge its duties and responsibilities
hereunder.
ARTICLE 3
OWNER'S DUTIES
Section 3.1 INFORMATION AND COOPERATION. Owner shall (1)
provide Service Manager one copy of all files in its possession pertaining to
the Entities and their respective operations, (2) furnish Service Manager with
all information in Owner's possession reasonably necessary to enable Service
Manager to perform its duties, and (3) otherwise cooperate with, and assist
Service Manager in, performance of Service Manager's duties.
Section 3.2 APPROVAL POLICY. Owner has delivered to Service
Manager a list of those parties empowered to approve matters requiring Owner's
approval under this Agreement. Owner may revise such list from time to time by
delivering written notice to Service Manager. Owner shall cooperate with
Service Manager in granting or withholding approvals required under this
Agreement in a timely manner. If Service Manager seeks approval of any matter
of Owner hereunder and Owner does not respond to such request for approval
within five (5) business days following such request, then Owner shall be
deemed to have approved the matter in question.
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When seeking Owner's approval of matters hereunder, Service Manager shall
endeavor to provide such supporting information as may be reasonably necessary
to enable Owner to evaluate the matter in question.
Section 3.3 FUNDING. Owner shall provide all funds required to enable
Service Manager to perform its duties hereunder and for Service Manager's
compensation.
ARTICLE 4
COMPENSATION
Section 4.1 SERVICE FEE. For performing its servicing and
administration duties, Owner shall pay to Service Manager a fee equal to a
reasonable cost allocation of all salaries, cost and overhead of Service
Manager for the time devoted to performing the duties and services herein
described (the "SERVICE FEE"). The Service Fee shall be payable in arrears on
or before the twentieth (20th) day of each calendar quarter in respect of the
services provided during the preceding quarter.
Section 4.2 REIMBURSABLE EXPENSES. Without duplication of the items
included in the cost allocation determination for the Service Fee, Owner shall
reimburse Service Manager for all expenses incurred by Service Manager in
performing its duties hereunder, including, without limitation, expenses of
third parties engaged pursuant to this Agreement; travel and other
out-of-pocket expenses; and filing or other fees paid to third parties. Service
Manager shall not be reimbursed for legal fees and expenses relating to the
negotiation and preparation of this Agreement.
Section 4.3 ADDITIONAL SERVICES. If Owner requests Service Manager to
perform services other than those required hereunder, such additional services,
if performed, shall be compensated separately on terms agreed upon by Service
Manager and Owner prior to the performance of such services, which terms shall
not be (1) less favorable to Service Manager than the terms under which
qualified unaffiliated persons are then performing such services for comparable
organizations, or (2) less favorable to Owner than the terms under which Owner
could obtain such services from qualified unaffiliated third persons.
Section 4.4 EMERGENCY EXPENDITURES. In case of an emergency, Service
Manager may make expenditures for the protection and preservation of the
Entities, without Owner's prior written approval if, in the reasonable judgment
of Service Manager, such expenditures are necessary to prevent damage or
material diminution in value to the Entities or to preserve the health or
safety of any person. Service Manager shall inform Owner of any such
expenditures as soon as reasonably practicable but in no event later than the
end of the next business day succeeding the date upon which such expenditures
are made.
ARTICLE 5
LIABILITY INSURANCE AND RISK ALLOCATION
Section 5.1 FIDELITY BOND. Service Manager shall, at Owner's expense,
maintain a blanket fidelity bond with responsible companies with broad coverage
of all officers, employees or
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other persons acting in any capacity with respect to the Entities or handling
funds, money, documents and papers relating to the Entities, insuring Owner
against losses including those arising from theft, embezzlement, fraud, or
misplacement of funds, money, or documents. The minimum coverage under any such
bond shall be at least equal to the amount specified in Schedule 5.
Section 5.2 LIABILITY INSURANCE. Service Manager shall, at Owner's
expense, maintain comprehensive general liability, automobile liability,
workers' compensation and other insurance to protect the interests of Service
Manager and Owner as their interests may appear in connection with the
performance of this Agreement in accordance with the coverage, amounts, and
deductibles set forth in Schedule 5.
Section 5.3 EVIDENCE OF INSURANCE. Upon request, Service Manager shall
provide to Owner certificates of insurance or other proof evidencing the
insurance coverage required under this Article 5.
Section 5.4 MUTUAL WAIVER OF SUBROGATION. Each party waives on behalf
of the insurers of such party's property any and all claims or rights of
subrogation of any such insurer against the other party hereto for loss or
damage to any property so insured.
Section 5.5 INDEMNIFICATION.
(1) PARTIES' INDEMNITIES. Subject to Section 5.4, Service
Manager shall indemnify and defend Owner, and Owner's directors, officers
and employees from and against any and all loss, cost, damage, liability
and expense, including reasonable counsel fees, incurred by Owner, resulting
from Service Manager's gross negligence, willful misconduct, fraud,
or breach of this Agreement. Except for the matters against which Service
Manager has afforded Owner indemnity in accordance with the preceding sentence
and subject to Section 5.4, Owner shall indemnify and defend Service Manager,
and Service Manager's directors, officers and employees from and against any
and all loss, cost, damage, liability and expense, including reasonable counsel
fees, incurred by Service Manager and resulting from Service Manager's
performance of its duties and obligations in accordance with this Agreement,
including those which arise from Service Manager's negligence. The provisions
of this Section 5.5(l) are not in lieu of, but are in addition to, any other
rights and obligations of an indemnified party.
(2) NOTICE. Upon receipt by any party entitled to
indemnification under Section 5.5(l) (an "INDEMNIFIED PARTY") of a complaint,
claim or other notice of any loss, damage or liability giving rise to a claim
for indemnification under Section 5.5(l), such Indemnified Party shall promptly
notify the party from whom indemnification is sought (the "INDEMNIFYING
PARTY"), but failure to provide such Notice shall not relieve the Indemnifying
Party from its duty to indemnify unless the Indemnifying Party is materially
prejudiced by such failure and had no actual knowledge of such complaint, claim
or other notice.
(3) INDEMNIFICATION RIGHTS. With respect to any claim made or
threatened against any party for which such party is or may be entitled to
indemnification hereunder, the Indemnifying Party shall have the right, upon
reasonable prior notice, in its sole discretion and at
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its sole expense, but subject to the right of any insurance company having an
interest in the outcome of such claim to exercise any rights it may have under
any applicable insurance coverage, to (a) participate in the investigation,
defense and settlement of such claims and (b) control the defense of such
claim, including the right to designate counsel and to control all
negotiations, litigation, arbitration, settlements, compromises and appeals of
any such claim, provided that the Indemnifying Party shall have advised the
Indemnified Party that such party is entitled to be fully indemnified with
respect to such claim. The Indemnified Party and the Indemnifying Party shall
cooperate and act in good faith in the conduct of the defense of any claims to
be indemnified hereunder.
(4) SURVIVAL. The terms and provisions of this Section 5.5
shall survive the expiration or termination of this Agreement.
ARTICLE 6
TERM
Section 6.1 TERM. This Agreement shall commence on the Effective Date
and continue unless terminated by either party giving written notice of
termination to the other at least 30 days prior to the effective termination
date (the "TERM"). The Term is subject to earlier termination as provided below
and shall also end as to any particular Entity upon the transfer of majority
ownership therein by Owner to a third party that is not an Affiliate.
Section 6.2 DUTIES ON TERMINATION OR EXPIRATION.
(1) SERVICE MANAGER'S DUTIES. Upon termination or expiration
of this Agreement, as to any Entities, Service Manager shall within fifteen
(15) days thereafter deliver to Owner complete copies of all books and records
of the Entities in question and all funds in possession of Service Manager
belonging to Owner or received by Service Manager with regard to such Entities.
Service Manager shall also be available for a period of not less than thirty
(30) days following termination or expiration to consult with Owner concerning
operation of the Entities in question; Service Manager shall not receive a fee
for such consultation, but shall be reimbursed for all costs incurred in
connection therewith.
(2) OWNER'S DUTIES. Owner shall, within five (5) days
following the end of the Term compensate Service Manager for all fees and
reimbursements due hereunder through the date of termination or expiration.
ARTICLE 7
MISCELLANEOUS
Section 7.1 ASSIGNMENT; CHANGE OF OWNERSHIP INTEREST. Service Manager
may not, without the prior written consent of Owner, assign this Agreement, and
any transfer, assignment, or other conveyance or exchange of any ownership
interest in Service Manager, other than to an Affiliate (which is hereby
permitted), shall be considered an assignment hereunder. Service Manager may,
however, from time to time delegate its duties to Affiliates. Subject to the
foregoing, this Agreement shall be binding upon, and inure to the benefit of,
Service Manager and
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Owner and their respective successors and assigns, and all references in this
Agreement to "Service Manager" and "Owner" shall include the respective
successors and assigns of such parties permitted under this Agreement.
NOTICES. Any notice provided for permitted to be given hereunder shall
be in writing and may be given by (1) depositing in the U.S. Mail, postage
prepaid and certified with return receipt requested; (2) delivery service; or
(3) facsimile transmission. Notice shall be effective upon the earlier of
refusal of receipt by addressee or actual receipt at the address of the
intended addressee. The addresses of the parties, until changed by notice given
as provided herein, shall be as follows:
Owner: c/o: Susan T. Groenteman
Crow Family Holdings
2001 Ross Avenue, Suite 3200
Dallas, Texas 75201
Telephone No. (214) 863-4265
Fax No. (214) 863-4249
Service Manager: 2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: Anne Raymond
Telephone No. (214) 863-1266
Fax No. (214) 863-1262
with copy to:
Legal Department
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Telephone No. (214) 863-1100
Fax No. (214) 863-1262
Section 7.3 NUMBER: GENDER; CAPTIONS; AND REFERENCES. Pronouns,
wherever used, and whatever gender, shall include natural persons,
corporations, and associates of every kind and character and the singular shall
include the plural wherever and as often as may be appropriate. Section
headings are for convenience of reference and shall not affect the construction
or interpretation of this Agreement. Whenever the terms "hereof', "hereby",
"herein", or words of similar import are used in this Agreement, they shall be
construed as referring to this Agreement in its entirety rather than to a
particular section or provision. Any reference to a particular "section" shall
be construed as referring to the indicated section of this Agreement. The term
"including" shall mean "including, without limitation", except where the
context otherwise specifically requires.
Section 7.4 SEVERABILITY. If any term or provision of this Agreement
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
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thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
Section 7.5 NO WAIVER OF DEFAULT. The failure by Owner or Service
Manager to insist upon the strict performance of any one of the terms or
conditions of this Agreement or to exercise any right, remedy or election
herein contained or permitted by law shall not constitute or be construed as
waiver or relinquishment for the future of that term, condition, right, remedy
or election, which shall continue and remain in full force and effect. All
rights and remedies that Owner or Service Manager may have at law, in equity or
otherwise for any breach of any term or condition of this Agreement shall be
distinct, separate and cumulative rights and remedies and no one of them shall
be deemed to be in exclusion of any other right or remedy of Owner or Service
Manager.
Section 7.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
constitutes the entire agreement between the parties with respect to the
matters herein contained and any agreement hereafter made shall be ineffective
unless made in writing and signed by the parties hereto. No provision of this
Agreement shall be modified, waived or terminated except by an instrument in
writing signed by the party against whom such modification, waiver or
termination is to be enforced.
Section 7.7 COMPETITION. Nothing in this Agreement will prevent the
Service Manager or Owner from, directly or indirectly, engaging in the
ownership, financing, leasing, operation, management, brokerage, development,
or sale of real property, including projects similar to the Entities and
whether or not competitive with the Entities.
Section 7.8 GOVERNING LAW. This Agreement shall be governed by and
constructed in accordance with the laws of the State of Texas.
Section 7.9 ATTORNEYS' FEES. Should either party employ attorneys to
enforce the provisions hereof or to recover damages for the breach of this
Agreement, the non-prevailing party in any such action agrees to pay the
prevailing party all reasonable costs, damages and expenses, including
reasonable attorneys' fees, expended or incurred by the prevailing party in
connection therewith.
Section 7.10 RELATIONSHIP OF THE PARTIES. The relationship of Owner and
Service Manager shall be that of principal and agent, and nothing contained in
this Agreement, nor any acts of the parties shall create the relationship of a
partnership or a joint venture, or cause the Service Manager to be responsible
in any way for the debts or obligations of Owner or any other party.
Section 7.11 REPRESENTATIONS AND WARRANTIES.
(1) SERVICE MANAGER. Service Manager represents and
warrants to Owner that (a) Service Manager is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite power and authority to carry on its business as now
conducted and to execute, deliver and perform this Agreement; (b) the
execution,
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delivery and performance by Service Manager of this Agreement is within its
power, has been authorized by all necessary corporate action and does not
contravene any provision of its organizational documents; (c) this Agreement
has been duly executed and delivered by a person authorized to do so on Service
Manager's behalf, and (d) this Agreement constitutes the valid and binding
obligation of Service Manager.
(2) OWNER. Owner represents and warrants to Service Manager
that (a) Owner is a corporation, duly organized and validly existing under the
laws of the State of Texas, and has all requisite power and authority to carry
on its business as now conducted and to execute, deliver and perform this
Agreement; (b) the execution, delivery and performance by Owner of this
Agreement is within its power, has been authorized by all necessary partnership
action and does not contravene any provision of its organizational documents;
(c) this Agreement has been duly executed and delivered by a person authorized
to do so on Owner's behalf, and (d) this Agreement constitutes the valid and
binding obligations of Owner.
Section 7.12 CONFIDENTIALITY. Owner and Service Manager shall keep
confidential all information obtained by one from the other in connection with
this Agreement. The parties shall not disclose such information to any person
(other than their respective agents, representatives and legal counsel), unless
specifically authorized in writing by the other party or if disclosure is
required by subpoena, court order, judicial decree, or law, or is otherwise
required to enable Service Manager to perform its duties. This confidentiality
obligation shall not be binding on any party with respect to information in the
public domain or information that enters the public domain through no fault of
that party. The provisions of this Section 7.12 shall survive the expiration or
termination of this Agreement.
Section 7.13 LIABILITY OF OWNER. Service Manager shall look solely to
Owner's interest in the Entities subject to this Agreement at the time any such
claim accrued for recovery of any judgment or claim against Owner relating or
arising out of this Agreement, and Owner, its partners, officers, directors,
shareholders, agents and representatives shall not be liable otherwise for any
claim of Service Manager arising out of or relating to this Agreement.
Section 7.14 LIABILITY OF SERVICE MANAGER. Owner shall look solely to
Service Manager's corporate Entities for recovery of any judgment or claim
against Service Manager relating or arising out of this Agreement, and Service
Manager's officers, employees, directors, shareholders, agents and
representatives shall not be liable for any claim of Owner arising out of or
relating to this Agreement.
Section 7.15 COUNTERPARTS. This Agreement may be executed in a number
of counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same Agreement.
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Executed as of the day and year first above written.
OWNER: CW SYNERGISTECH, LP,
A TEXAS CORPORATION
By CW Synergistech I, Inc.
By: /s/ ELISE M. TURNER
------------------------
Name: Elise M. Turner
----------------------
Title: Secretary
---------------------
SERVICE MANAGER: WYNDHAM HOTEL CORPORATION,
A DELAWARE CORPORATION
By: /s/ CARLA S. MORELAND
-----------------------
Name: Carla S. Moreland
--------------------
Title: Vice President
-------------------
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SCHEDULE 2
----------
OWNERSHIP ACCOUNTING AND REPORTING REQUIREMENTS
-----------------------------------------------
o Monthly and Quarterly Tax and Legal Processing
o Quarterly Capital Transaction Report
o Annual Accrual Financial Statements
o Reserve Estimation as needed
o Quarterly Pool Cash Forecast for Operations
o Annual Database Update
o Annual Budgetary Process
o Annual Tax Return Preparation
o Quarterly Estimate of Crow Equity and Liability
o Monthly EAB cash report and, where applicable,
mortgage payment cash flow reporting
o Annual valuation of each Crow Entity on the
Estimated Value Balance Sheet (EVBS) Basis
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LIST OF SCHEDULES
Schedule 1 Entities List
Schedule 2.2 Form of Business Plan
Schedule 2.11(b) Form of Monthly Report
Schedule 2.11(c) Form of Quarterly Report
Schedule 5 List of Insurance Coverage
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SCHEDULE 2.11(b)
FORM OF MONTHLY REPORT
BALANCE SHEET See Schedule 2.11 (c)
INCOME STATEMENT See Schedule 2.11 (c)
CASHFLOW STATEMENT See Schedule 2.11 (c)
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SCHEDULE 2.11(c)
FORM OF QUARTERLY REPORT
BALANCE SHEET ATTACHED
INCOME STATEMENT ATTACHED
CASHFLOW STATEMENT ATTACHED
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SCHEDULE 5
LIST OF INSURANCE COVERAGE
FIDELITY BOND $
LIABILITY INSURANCE $
16
<PAGE> 1
Exhibit 10.10
================================================================================
WYNDHAM HOTEL CORPORATION
AS THE COMPANY
THE SUBSIDIARIES LISTED ON THE
SIGNATURE PAGES HERETO,
AS GUARANTORS
AND
BANK ONE, COLUMBUS, N.A.
AS TRUSTEE
-----------------------------------
INDENTURE
DATED AS OF MAY 24, 1996
-----------------------------------
10 1/2% SENIOR SUBORDINATED NOTES DUE 2006
================================================================================
<PAGE> 2
TABLE OF CONTENTS*
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RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 1.3 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . 26
SECTION 1.4 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE TWO
THE NOTES
SECTION 2.1 Form, Dating and Denomination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.2 Additional Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.3 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.4 Registrar and Paying Agent; Agents Generally . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.5 Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.6 Holders Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.7 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.8 Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.9 Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.10 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.12 CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.13 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE THREE
REDEMPTION
SECTION 3.1 Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.2 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.3 Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.4 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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*Note: The Table of Contents shall not for any purposes be deemed to
be a part of the Indenture.
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SECTION 3.5 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.6 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.7 Payment of Notes Called for Redemption . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.8 Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE FOUR
COVENANTS
SECTION 4.1 Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.3 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.4 Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.5 Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.6 Limitation on the Issuance of Capital Stock of Restricted Subsidiaries . . . . . . . . 46
SECTION 4.7 Limitation on Issuances of Guarantees by Restricted Subsidiaries . . . . . . . . . . . 47
SECTION 4.8 Limitation on Transactions with Stockholders and Affiliates . . . . . . . . . . . . . 47
SECTION 4.9 Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.10 Limitation on Other Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.11 Limitation on Line of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.12 Repurchase of Notes upon a Change of Control . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.13 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 4.14 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.15 Maintenance of Properties and Insurance . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.16 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.17 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.18 Commission Reports and Reports to Holders . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.19 Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 5.2 Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.5 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.6 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.7 Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.8 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.9 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.12 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.13 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.14 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE SEVEN
TRUSTEE
SECTION 7.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.2 Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 7.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.9 Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.10 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.11 Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.12 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.1 Termination of Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.2 Defeasance and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.3 Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.4 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.5 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 9.2 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 9.3 Revocation and Effect of Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 9.4 Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 9.5 Trustee to Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 9.6 Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE TEN
SUBORDINATION
SECTION 10.1 Notes Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.2 No Payment on Notes in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . 86
SECTION 10.3 Notes Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization of Company . . . . . . . . . . . . . . . 88
SECTION 10.4 Securityholders to be Subrogated to Rights of Holders of Senior Indebtedness . . . . . 89
SECTION 10.5 Obligations of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 10.6 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice . . . . . . . 90
SECTION 10.7 Application by Trustee of Assets Deposited with It . . . . . . . . . . . . . . . . . . 91
SECTION 10.8 Subordination Rights Not Impaired by Acts or Omissions of the Company, any
Guarantor, the Trustee or Holders of Senior Indebtedness . . . . . . . . . . . . . . . 91
SECTION 10.9 Securityholders Authorize Trustee to Effectuate Subordination of Notes . . . . . . . . 92
SECTION 10.10 Right of Trustee to Hold Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.11 Article Ten Not to Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness . . . . . . . . . . . . 93
SECTION 10.13 No Security for Notes or Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.14 No Action by Guarantors or Other Subsidiaries . . . . . . . . . . . . . . . . . . . . 94
SECTION 10.15 Indefeasible Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
</TABLE>
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ARTICLE ELEVEN
SUBSIDIARY GUARANTEES
SECTION 11.1 Subsidiary Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 11.2 Subordination of Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.3 Limits of Subsidiary Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.4 Release of a Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 12.3 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . 99
SECTION 12.4 Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . 99
SECTION 12.5 Rules by Trustee, Paying Agent or Registrar . . . . . . . . . . . . . . . . . . . . . 99
SECTION 12.6 Payment Date Other Than a Business Day . . . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 12.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 12.8 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . 100
SECTION 12.9 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 12.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 12.11 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 12.12 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 12.13 Table of Contents and Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SIGNATURES
EXHIBIT A Form of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
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INDENTURE, dated as of May 24, 1996, among Wyndham Hotel
Corporation, a Delaware corporation, as the Company, the Subsidiaries listed on
the signature pages hereto, as Guarantors (each, a "Guarantor") and Bank One,
Columbus, N.A., a national banking association, as Trustee (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of up to $100,000,000
aggregate principal amount of the Company's 10 1/2% Senior Notes Due 2006 (the
"Notes") issuable as provided in this Indenture (plus up to an additional
$50,000,000 aggregate principal amount of Notes issuable as provided in Section
2.2); and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE: In consideration of the premises and the
purchases of the Notes by the holders thereof, the Company, the Guarantors and
the Trustee mutually covenant and agree for the equal and proportionate benefit
of the respective holders from time to time of the Notes as follows:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (i)
existing at the time such Person merged with or into the Company or a
Restricted Subsidiary or became a Restricted Subsidiary or (ii) assumed in
connection with the acquisition by the Company or a Restricted Subsidiary of
assets from such Person.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of any Person that is not a
Restricted Subsidiary, except to the extent of the amount of dividends or other
distributions that both (x) are actually paid in cash to the Company or any of
its Restricted Subsidiaries by such Person during such period
<PAGE> 8
and (y) when taken together with all other dividends and distributions paid
during such period in cash to the Company or any of its Restricted Subsidiaries
by such Person, are not in excess of the Company's or any of its Restricted
Subsidiaries' pro rata share of such other Person's aggregate net income earned
during such period; (ii) solely for the purposes of calculating the amount of
Restricted Payments that may be made pursuant to clause (C) of the first
paragraph of Section 4.4 (and in such case, except to the extent includable
pursuant to clause (i) above), the net income of any Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or consolidated
with the Company or any of its Restricted Subsidiaries or all or substantially
all of the property and assets of such Person are acquired by the Company or
any of its Restricted Subsidiaries; (iii) the net income (or loss) of any
Restricted Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary of such net
income is not permitted by its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
Restricted Subsidiary; (iv) any net gains or losses (on an after-tax basis)
attributable to Asset Sales; and (v) all net after-tax extraordinary gains and
extraordinary losses.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For 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 such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent, transfer agent or
Authenticating Agent or co-Registrar.
"Asset Acquisition" means (i) an investment by the Company or any
of its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary or shall be merged into or
consolidated with the Company or any of its Restricted Subsidiaries; (ii) an
acquisition by the Company or any of its Restricted Subsidiaries of property or
assets of any Person other than the Company or any of its Restricted
Subsidiaries that constitute substantially all of a division or line of
business, or one or more hotel properties or other material properties to be
used in a Hospitality-Related Business, of
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<PAGE> 9
such Person or (iii) the entering into by the Company or any of its Restricted
Subsidiaries of a contract to manage, lease, operate or franchise one or more
hotel properties or other material properties to be used in a Hospitality-
Related Business, but only in a transaction or series of related transactions
involving three or more of such contracts.
"Asset Disposition" means (i) the sale or other disposition by
the Company or any of its Restricted Subsidiaries (other than to the Company or
another Restricted Subsidiary) of (A) all or substantially all of the Capital
Stock of any Restricted Subsidiary or (B) all or substantially all of the
assets that constitute a division or line of business, or one or more hotel
properties or other material properties used in a Hospitality-Related Business,
of the Company or any of its Restricted Subsidiaries or (ii) the termination of
a contract to manage, lease, operate or franchise one or more hotel properties
or other material properties used in a Hospitality-Related Business to which
the Company or any of its Restricted Subsidiaries was a party, but only in a
transaction or series of related transactions involving three or more of such
contracts.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by the Company or any of
its Restricted Subsidiaries of all or any of its property, business or assets
(including, without limitation, the Capital Stock of any Restricted
Subsidiary); provided that the following shall not be included within the
meaning of "Asset Sale": (i) any conveyance, sale, lease, transfer or other
disposition by a Restricted Subsidiary of the Company of any or all of its
assets (upon voluntary liquidation or otherwise) to the Company or a Restricted
Subsidiary of the Company that is a Guarantor; (ii) any conveyance, sale,
lease, transfer or other disposition by the Company or any Restricted
Subsidiary of the Company in the ordinary course of business of assets acquired
and held for resale in the ordinary course of business; (iii) any conveyance,
sale, lease, transfer or other disposition by the Company and its Restricted
Subsidiaries of assets pursuant to and in accordance with the provisions
described under Section 5.1; (iv) any sale, lease, transfer or other
disposition by the Company or any Restricted Subsidiary of the Company of
damaged, worn out or other obsolete property in the ordinary course of
business; (v) any abandonment by the Company or any Restricted Subsidiary of
the Company of assets and properties that are no longer useful in its business
and cannot be sold; or (vi) any transfer by the Company or any Restricted
Subsidiary of the Company of any Capital Stock of
3
<PAGE> 10
any Restricted Subsidiary of the Company to the Company or any Restricted
Subsidiary of the Company that is a Guarantor.
"Average Life" means, at any date of determination with respect
to any debt security, the quotient obtained by dividing (i) the sum of the
products of (A) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(B) the amount of such principal payment by (ii) the sum of all such principal
payments.
"Board of Directors" means the Board of Directors of the Company
or any committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a resolution, certified by the Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in The City of New York or
in the city in which the Corporate Trust Office of the Trustee is located.
"Capital Contribution Notes" means those three certain promissory
notes, each payable to Wyndham Management Corporation, a Subsidiary of the
Company, one executed as of December 22, 1995 by WHC-LG Hotel Partners L.P., a
Texas limited partnership, in the original principal amount of $4,115,263,
another executed as of October 2, 1995 by Pleasanton Hotel Partners, L.P., a
Texas limited partnership, in the original principal amount of $1,350,000, and
another executed as of May 26, 1995 by New Orleans Hotel I, L.P., a Texas
limited partnership, in the original principal amount of $966,000.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's capital stock or other ownership
interests, whether now outstanding or issued after the date of this Indenture,
including, without limitation, all common stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person; and
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<PAGE> 11
"Capitalized Lease Obligation" means the rental obligations, as aforesaid,
under such lease.
"Change of Control" means (i) any sale, transfer or other
conveyance, whether direct or indirect, of a majority of the fair market value
of the assets of the Company, on a consolidated basis, in one transaction or
series of related transactions, to any Person or Persons other than the Company
or one or more of its Restricted Subsidiaries; (ii) any "person" or "group" (as
such terms are used for the purposes of Section 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than an Excluded Person or Excluded
Group, is or becomes the "beneficial owner" (as such term is used in Rule 13d-3
promulgated pursuant to the Exchange Act), directly or indirectly, of more than
45% 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; or (iii) during any period of two consecutive years after the
Closing Date, individuals who at the beginning of any such period constituted
the Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a majority of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office.
"Closing Date" means the date and time at which the Notes are
originally issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
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<PAGE> 12
"Company Order" means a written request or order signed in the
name of the Company (i) by its Chairman, its President, an Executive Vice
President or a Vice President and (ii) by its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee; provided, however, that such written request or order
may be signed by any two of the officers or directors listed in clause (i)
above in lieu of being signed by one of such officers or directors listed in
such clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, the sum of the
amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) income taxes, to the extent such amount
was deducted in calculating Adjusted Consolidated Net Income (other than income
taxes (either positive or negative) attributable to extraordinary and
non-recurring gains or losses or sales of assets), (iv) depreciation expense,
to the extent such amount was deducted in calculating Adjusted Consolidated Net
Income, (v) amortization expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, (vi) all other non-cash items
reducing Adjusted Consolidated Net Income (including all non-cash compensation
expenses) less all non-cash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP and (vii) all but the principal component
of rentals in respect of Capitalized Lease Obligations paid, accrued or
scheduled to be paid or to be accrued by the Company and its Restricted
Subsidiaries during such period; provided, that, if any Restricted Subsidiary
is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA shall be
reduced (to the extent not otherwise reduced in accordance with GAAP) by an
amount equal to (A) the amount of the Adjusted Consolidated Net Income
attributable to such Subsidiary multiplied by (B) the quotient of (1) the
number of shares of outstanding Common Stock of such Subsidiary not owned on
the last day of such period by the Company or any of its Restricted
Subsidiaries divided by (2) the total number of shares of outstanding Common
Stock of such Subsidiary on the last day of such period.
"Consolidated Fixed Charge Coverage Ratio" means, on any
Transaction Date, the ratio of (i) the sum of (x) the aggregate amount of
Consolidated EBITDA for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to such
Transaction Date (the "Reference Period") and (y) one-third of the rental
expense of the Company and its Restricted Subsidiaries during such period
attributable to operating leases with an initial term,
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<PAGE> 13
including any renewals at the option of either party, in excess of one year to
(ii) the aggregate Consolidated Fixed Charges during such Reference Period. In
making the foregoing calculation, (A) pro forma effect shall be given to (1)
any Indebtedness Incurred subsequent to the end of the Reference Period and
prior to the Transaction Date, (2) any Indebtedness Incurred during such
Reference Period to the extent such Indebtedness is outstanding at the
Transaction Date and (3) any Indebtedness to be Incurred on the Transaction
Date, in each case as if such Indebtedness had been Incurred on the first day
of such Reference Period and after giving pro forma effect to the application
of the proceeds thereof as if such application had occurred on such first day;
(B) Consolidated Interest Expense attributable to interest on any Indebtedness
(whether existing or being Incurred) computed on a pro forma basis and bearing
a floating interest rate shall be computed as if the rate in effect on the
Transaction Date (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection Agreement has
a remaining term in excess of 12 months) had been the applicable rate for the
entire period; (C) there shall be excluded from Consolidated Fixed Charges any
Consolidated Fixed Charges related to any amount of Indebtedness, Redeemable
Stock or obligations under leases that was outstanding during such Reference
Period or thereafter but that is not outstanding or is to be repaid on the
Transaction Date, except for Consolidated Interest Expense accrued (as adjusted
pursuant to clause (B) above) during such Reference Period under a revolving
credit or similar arrangement to the extent of the commitment thereunder (or
under any successor revolving credit or similar arrangement) in effect on the
Transaction Date; (D) pro forma effect shall be given to Asset Dispositions and
Asset Acquisitions (including those in connection with the Formation)
(including giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur during such Reference Period or thereafter and on or
prior to the Transaction Date as if they had occurred and such proceeds had
been applied on the first day of such Reference Period; (E) with respect to any
such Reference Period commencing prior to the Closing Date, the issuance of the
Notes and the consummation of the other transactions constituting the Formation
and the Financing Plan shall be deemed to have taken place on the first day of
such Reference Period; and (F) pro forma effect shall be given to asset
dispositions and asset acquisitions (including giving pro forma effect to the
application of proceeds of any asset disposition) that have been made by any
Person that has become a Restricted Subsidiary or has been merged with or into
the Company or any Restricted Subsidiary during such Reference Period or
subsequent to such period and prior to the Transaction Date and that would have
constituted Asset
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<PAGE> 14
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions, respectively, that
occurred on the first day of such Reference Period; provided that to the extent
that clause (D) or (F) of this sentence requires that pro forma effect be given
to an asset acquisition or asset disposition, such pro forma calculation shall
be based upon the four full fiscal quarters immediately preceding the
Transaction Date of the Person, or property or assets of the Person (if such
property or assets consist of a division or line of business of such Person),
that is acquired or disposed for which financial information is available.
"Consolidated Fixed Charges" means, for any period, the sum
(without duplication) of (i) Consolidated Interest Expense for such period,
(ii) the interest component of rentals in respect of Capitalized Lease
Obligations paid, accrued or scheduled to be paid or to be accrued by the
Company and its Restricted Subsidiaries during such period, (iii) one-third of
the rental expense of the Company and its Restricted Subsidiaries during such
period attributable to operating leases with an initial term, including any
renewals at the option of either party, in excess of one year, (iv) any amount
paid as dividends on Preferred Stock of the Company during such period and (v)
the product of (x) cash and non-cash dividends (except dividends payable solely
in shares of Capital Stock that are not Redeemable Stock) paid, declared,
accrued or accumulated on any Redeemable Stock of the Company or a Restricted
Subsidiary that is held by a Person other than the Company or a Restricted
Subsidiary and (y) a fraction, the numerator of which is one and the
denominator of which is one minus the sum of the currently effective combined
Federal, state, local and foreign tax rate of the Company and its Restricted
Securities.
"Consolidated Interest Expense" means, for any period, without
duplication, the aggregate amount of interest in respect of Indebtedness of the
Company and its Restricted Subsidiaries (including amortization of original
issue discount on any Indebtedness and the interest portion of any deferred
payment obligation, calculated in accordance with the effective interest method
of accounting; all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing; the net costs
associated with Interest Rate Protection Agreements; and interest on
Indebtedness that is Guaranteed by the Company or any of its Restricted
Subsidiaries); excluding, however, any amount of such interest of any
Restricted Subsidiary if the net income of such Restricted Subsidiary is
excluded in the calculation of Adjusted Consolidated Net Income pursuant to
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<PAGE> 15
clause (iii) of the definition thereof (but only in the same proportion as the
net income of such Restricted Subsidiary is excluded from the calculation of
Adjusted Consolidated Net Income pursuant to clause (iii) of the definition
thereof).
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity of the Company and its Restricted Subsidiaries, less, if
included in such stockholders' equity, any amounts attributable to Redeemable
Stock or any equity security convertible into or exchangeable for Indebtedness
prior to the Stated Maturity of the Notes.
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at First Chicago Trust Company, c/o Bank One, Columbus, N.A., 14 Wall
Street, 8th Floor, Suite 4607, New York, New York 10002. Attention: Corporate
Trust Administration.
"Credit Agreement" means the Revolving Credit Facility (or, if
the Revolving Credit Facility is not entered into with Bankers Trust Company,
or with Bankers Trust Company and one or more other banks and other lenders, a
similar senior credit or loan facility entered into by the Company, one or more
of its subsidiaries and one or more lenders), as such may be amended,
supplemented, extended, renewed, replaced or modified from time to time,
including, without limitation, by adding parties thereto or increasing the
commitment thereunder. Without limiting the foregoing, any replacement of the
Revolving Credit Facility (or a replacement facility) need not consist solely
of a revolving credit facility, need not be entered into (or effective)
contemporaneously with the termination of the Revolving Credit Facility (or
such replacement) and need not involve the same lenders as the Revolving Credit
Facility (or such replacement). There can only be one such credit agreement
designated to be the "Credit Agreement" at any one time, although there may be
more than one facility thereunder.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any of its Restricted Subsidiaries against fluctuations
in currency values to or under which the Company or any of its Restricted
Subsidiaries is a party or a beneficiary on the date of this Indenture or
becomes a party or a beneficiary thereafter.
"DAB Notes" means those certain Notes dated March 20, 1996
representing the outstanding principal and accrued interest severally owing by
James D. Carreker, Leslie V.
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<PAGE> 16
Bentley, Eric A. Danziger, Anne L. Raymond, Stanley M. Koonce, Jr. and Wyndham
Employees Ltd. to Wyndham Finance Limited Partnership.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default as defined in Section 6.1.
"Depositary" means The Depositary Trust Company until a successor
Depositary shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Depositary" shall mean or include each Person who is
then a Depositary hereunder.
"Designated Senior Indebtedness" means Senior Indebtedness of the
Company in respect of the Revolving Credit Facility or, after all Senior
Indebtedness of the Company in respect of the Revolving Credit Facility has
been paid in full and the Revolving Credit Facility shall have been terminated,
Indebtedness that otherwise would constitute Senior Indebtedness in respect of
any refinancing or replacement thereof or, if there is no such refinancing or
replacement thereof, or after all Indebtedness of the Company in respect of any
such refinancing or replacement has been paid in full, "Designated Senior
Indebtedness" shall mean any class of Senior Indebtedness the aggregate
principal amount outstanding of which exceeds $10 million and which is
specifically designated in the instrument evidencing such Senior Indebtedness
or the agreement under which such Senior Indebtedness arises as "Designated
Senior Indebtedness."
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Group" means a "group" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) that includes one or more
Excluded Persons; provided that the voting power of the Capital Stock of the
Company "beneficially owned" (as such term is used in Rule 13d-3 promulgated
under the Exchange Act) by such Excluded Persons (without attribution to such
Excluded Persons of the ownership by other members of the "group") represents
not less than 75% of the voting power of the Capital Stock "beneficially owned"
(as such term is used in Rule 13d-3 promulgated under the Exchange Act) by such
group.
"Excluded Person" means each of (i) Mr. or Mrs. Trammell Crow,
any lineal descendant of Mr. or Mrs. Trammell Crow, any trust of which not
less than 75% of the beneficial interests are held by Mr. or Mrs. Trammell Crow
or such lineal descendants or any partnership, corporation or other entity of
10
<PAGE> 17
which not less than 75% of the outstanding equity interests are owned directly
or indirectly by Mr. or Mrs. Trammell Crow or such lineal descendants, (ii)
Wynopt Investment Partnership Level II, a Delaware limited partnership ("Wynopt
II"), Wynopt Investment Partnership, a Delaware limited partnership ("Wynopt"),
or an Affiliate of Wynopt II or Wynopt (x) of which not less than 75% of the
outstanding equity interests are owned directly or indirectly by the direct or
indirect owners of the outstanding equity interests of Wynopt II and Wynopt as
of the Closing Date and (y) the business and affairs of which are controlled by
Donald J. McNamara, Robert A. Whitman and Daniel A. Decker or any one or more
of them and (iii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company.
"Existing Real Estate" means any real estate owned, leased or
optioned by the Company or any of its Subsidiaries on the Closing Date, or any
real estate on which the Company or any of its Subsidiaries holds a mortgage on
the Closing Date.
"Financing Plan" means the transactions referred to as the
"Financing Plan" in the Prospectus.
"Formation" means the transactions contemplated by the Formation
Agreement dated as of March 10, 1996, among the Company and the parties
identified on the signature pages thereof, the Transfer Agreement dated as of
March 14, 1996, among the Company, The Bank of Nova Scotia, The Bank of Nova
Scotia Jamaica Limited and Caribbean Hotel Management Company, and the Exchange
Agreement dated as of March 10, 1996, among the Company, Wyndham Hotel Company
Ltd., 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.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including, without limitation, those set forth in the 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 or in such other statements by such other entity as
approved by a significant segment of the accounting profession.
"GHALP Lease" means collectively, those eleven certain Lease
Agreements, each dated as of May 2 or May 3, 1996, between HPTWN Corporation, a
Delaware corporation, as landlord, and Garden Hotel Associates Two LP, a Texas
limited partnership, as tenant.
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<PAGE> 18
"Global Note" means a Note in global registered form evidencing
all or a part of the Notes and issued to the Depositary in accordance with
Section 2.1.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
Notwithstanding the foregoing, the term "Guarantee" shall not include any
customary contractual indemnity obligation entered into by a Person in the
ordinary course of business consistent with past practice, which obligation (i)
is in the nature of a "completion guarantee", "shortfall guarantee",
"performance guarantee" or similar obligation entered into in connection with
the acquisition, amendment or other modification of a contract to manage,
lease, operate or franchise a hotel property (or other property or asset used
or to be used in a Hospitality-Related Business) not owned by the Company or
the extension of such a contract beyond its stated terms (provided that, if
such hotel property (or other property or asset used or to be used in a
Hospitality-Related Business) is owned by a Related Party, such Investment must
satisfy the requirements of the provisions described under Section 4.8) or (ii)
relates to fraud, willful misconduct, misrepresentation, misapplication of
funds, reckless damage to assets or matters of similar import or customary
undertakings with respect to environmental matters or construction defects.
"Guarantor" means (i) each party named as such in the first
paragraph of this Indenture until a successor replaces it and thereafter means
the successor and (ii) each Person that becomes obligated with respect to a
Subsidiary Guarantee subsequent to the date hereof by means of an indenture
supplemental hereto.
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"Guarantor Designated Senior Indebtedness" means Guarantor Senior
Indebtedness (including any Guarantee) of any Guarantor in respect of the
Revolving Credit Facility or, after all Guarantor Senior Indebtedness of the
Guarantor in respect of the Revolving Credit Facility has been paid in full and
the Revolving Credit Facility shall have been terminated, Indebtedness of such
Guarantor that otherwise would constitute Guarantor Senior Indebtedness in
respect of any refinancing or replacement thereof or, if there is no such
refinancing or replacement thereof, or after all Indebtedness of the Guarantor
in respect of any such refinancing or replacement has been paid in full,
"Guarantor Designated Senior Indebtedness" shall mean any class of Guarantor
Senior Indebtedness the aggregate principal amount outstanding of which exceeds
$10 million and which is specifically designated in the instrument evidencing
such Guarantor Senior Indebtedness or the agreement under which such Guarantor
Senior Indebtedness arises as "Guarantor Designated Senior Indebtedness".
"Guarantor Senior Indebtedness" means (i) Indebtedness of any
Guarantor (other than, as to each Subsidiary Guarantee, the other Subsidiary
Guarantees), except (A) Redeemable Stock of such Guarantor, (B) any obligation
of such Guarantor to the Company or any Subsidiary of the Company, (C) any
Indebtedness of such Guarantor that, by its terms or the terms of the
instrument creating or evidencing such Indebtedness, is pari passu with or
expressly subordinate in right of payment to the Subsidiary Guarantee of such
Guarantor and (D) any Indebtedness of such Guarantor incurred in violation of
the covenant described under Section 4.10 and (ii) obligations of GHALP
Corporation under the GHALP Lease.
"Holder" means the holder of a Note.
"Hospitality-Related Business" means the hotel, resort, extended
stay lodging, senior living, travel, travel agency, other hospitality, vacation
or travel-related business or any casino, recreational or athletic-related
business and other businesses necessary for, incident to, in support of, in
connection with or arising out of such business, including, without limitation,
(i) developing , managing, operating, improving or acquiring lodging
facilities, restaurants and other food-service facilities, sports or other
entertainment facilities or club, convention or meeting facilities, and
marketing services related thereto, (ii) acquiring, developing, managing or
improving the Existing Real Estate, any real estate taken in foreclosure (or
similar settlement) by the Company or any of its Subsidiaries, or any real
estate ancillary or connected to any hotel, resort, extended stay lodging,
senior living, travel, travel agency, other
13
<PAGE> 20
hospitality, vacation or travel-related business or any casino, recreational or
athletic-related business constructed, leased, owned, managed or operated (or
proposed to be constructed, leased, owned, managed or operated) by the Company
or any of its Restricted Subsidiaries at any time and (iii) other activities
related thereto.
"Incur" means, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness; provided that (i) the Indebtedness of a Person existing at the
time such Person became a Subsidiary or a Restricted Subsidiary, as the case
may be, shall be deemed to have been Incurred by such Subsidiary or Restricted
Subsidiary, as the case may be, and (ii) that neither the accrual of interest
nor the accretion of original issue discount shall be considered an Incurrence
of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), whether or not Incurred at the date of
this Indenture (i) all indebtedness of such Person for borrowed money
(including all Obligations in respect thereof, but excluding indebtedness
resulting from the inadvertent honoring by a financial institution, against
insufficient funds, of a check, draft or similar instrument (provided that such
indebtedness is extinguished within four business days)), (ii) all Obligations
of such Person evidenced by or in respect of bonds, debentures, notes or other
similar instruments, (iii) all Obligations of such Person in respect of
bankers' acceptance, letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) all obligations of such Person as lessee
under Capitalized Leases, (vi) all Indebtedness of other Persons secured by a
Lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person; (provided that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset at such date of determination
and (B) the amount of such Indebtedness), (vii) all Indebtedness of other
Persons Guaranteed by such Person to the extent such Indebtedness is Guaranteed
by such Person, (viii) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Protection Agreements,
(ix) the liquidation preference and any mandatory redemption payment
obligations (without duplication) of any Restricted Subsidiary of such Person
in respect of Preferred Stock issued by such
14
<PAGE> 21
Restricted Subsidiary and (x) the maximum fixed redemption or repurchase price
of any Redeemable Stock issued by such Person. In addition, "Indebtedness" of
any Person shall include Indebtedness described in the foregoing clauses (i),
(ii) or (iv) that would not appear as a liability on the balance sheet of such
Person if (1) such Indebtedness is the obligation of a partnership or joint
venture that is not a Restricted Subsidiary of such Person (a "Joint Venture"),
(2) such Person or a Restricted Subsidiary is a general partner of the Joint
Venture (a "General Partner") and (3) there is recourse, by contract or
operation of law, with respect to the payment of such Indebtedness to property
or assets of such Person or a Restricted Subsidiary; and such Indebtedness
shall be included in an amount not to exceed (x) the greater of (A) the net
assets of the General Partner and (B) the amount of such obligations to the
extent that there is recourse, by contract or operation of law, to the property
or assets of such Person or a Restricted Subsidiary of such Person (other than
the General Partner) or (y) if less than the amount determined pursuant to
clause (x) immediately above, the actual amount of such Indebtedness that is
recourse to such Person, if the Indebtedness is evidenced by a writing and is
for a determinable amount. Without limiting the foregoing, there shall not be
considered to be recourse, by contract or operation of law, with respect to the
payment of any Indebtedness to property or assets of such Person or a
Restricted Subsidiary solely by reason of the existence of any customary
contractual indemnity obligation entered into by such Person or a Restricted
Subsidiary in the ordinary course of business consistent with past practice and
in connection with the Incurrence of such Indebtedness, which obligation (i) is
in the nature of a "completion guarantee," "shortfall guarantee," "performance
guarantee" or similar obligation entered into in connection with the
acquisition, amendment or other modification of a contract to manage, lease,
operate or franchise a hotel property (or other property or asset used or to be
used in a Hospitality-Related Business) not owned by the Company or the
extension of such a contract beyond its stated term (provided that, if such
hotel property (or other property or asset used or to be used in a
Hospitality-Related Business) is owned by a Related Party, such Investment must
satisfy the requirements of the provisions described under Section 4.8) or (ii)
relates to fraud, willful misconduct, misrepresentation, misapplication of
funds, reckless damage to assets or matters of similar import or customary
undertakings with respect to environmental matters or construction defects.
The amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP.
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<PAGE> 22
"Independent Directors" means any director of the Company who is
not employed by the Company or employed by, a director of or otherwise
affiliated with any Related Party.
"Indenture" means this Indenture as originally executed or as it
may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Interest Payment Date" has the meaning set forth in Exhibit A.
"Interest Rate Protection Agreement" means any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement designed to protect the Company or any of its Restricted
Subsidiaries against fluctuations in interest rates to or under which the
Company or any of its Restricted Subsidiaries is a party or a beneficiary on
the date of this Indenture or becomes a party or a beneficiary hereafter.
"Investment" means any direct or indirect advance, loan or other
extension of credit (other than advances to customers in the ordinary course of
business that are, in conformity with GAAP, recorded as accounts receivable on
the balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by any other Person. For purposes of the definition
of "Unrestricted Subsidiary" and Section 4.4, (i) "Investment" shall include
the fair market value of the assets (net of liabilities) of any Restricted
Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary and shall exclude the fair market value of the assets
(net of liabilities) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) any
property transferred to or from any Person shall be valued at its fair market
value at the time of such transfer, in each case as determined by the Board of
Directors in good faith.
"Investment Company Act of 1940" means the Investment Company
Act of 1940, as amended.
16
<PAGE> 23
"Junior Indebtedness" means Indebtedness of any Person that (i)
requires no payment of Principal prior to or on the date on which all Principal
of, premium, if any, and interest on the Notes is paid in full and (ii) is
subordinate and junior in right of payment to the Notes in all respects.
"Junior Securities" of any Person means securities (including
shares of Capital Stock that is not Redeemable Junior Stock) issued by such
Person to a Holder on account of the Notes pursuant to an order or decree of a
court of competent jurisdiction in a Reorganization, which securities (i) have
a maturity, mandatory redemption obligation or put right, if any, longer than,
or occurring after the scheduled maturity date of, all Senior Indebtedness
outstanding on the date of issuance of such Junior Securities (and to any
securities issued in exchange for any Senior Indebtedness), (ii) are unsecured
and (iii) by their terms or by law are subordinated to the Senior Indebtedness
of such Person outstanding on the date of issuance of such Junior Securities
(and to any securities in exchange of any such Senior Indebtedness) at least to
the same extent as the Notes are subordinated to the payment of the Senior
Indebtedness pursuant to this Indenture.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any option or other agreement to sell, or any filing of or any
agreement to give any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary) and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of (i) brokerage commissions and
other fees and expenses (including fees and expenses of counsel, Qualified
Appraisers, accountants and investment bankers) related to such Asset Sale,
(ii) provisions for all taxes (whether or not such taxes will actually be paid
or are payable, and specifically including, without limitation, taxes
attributable to required prepayments or repayments of Indebtedness with the
proceeds of such Asset Sale) as a result of such Asset Sale without regard to
the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to prepay or repay
17
<PAGE> 24
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on the property or assets sold or (B) is
required to be paid as a result of such sale, (iv) appropriate amounts to be
provided by the Company or any Restricted Subsidiary as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP and
(v) amounts required to be paid to any Person (other than the Company or a
Restricted Subsidiary) in respect of such Person's ownership interest in the
property or assets that are the subject of such Asset Sale.
"Non-Recourse Indebtedness" means Indebtedness (i) as to which
neither the Company nor any of its Significant Subsidiaries (A) provides credit
support (other than in the form of a Lien on an asset serving as security for
Non-Recourse Indebtedness) pursuant to any undertaking, agreement or instrument
that would constitute Indebtedness, (B) is directly or indirectly liable (other
than in the form of a Lien on an asset serving as security for Non-Recourse
Indebtedness) or (C) is the lender and (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against a Subsidiary of the Company that is not a Significant
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness (other than Indebtedness arising under the Credit Agreement)
of the Company or any of its Significant Subsidiaries to declare a default on
such Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity. Without limiting the foregoing, no Indebtedness
shall be considered Recourse Indebtedness solely by reason of the existence of
any customary contractual indemnity obligation entered into by the Company or a
Restricted Subsidiary in the ordinary course of business consistent with past
practice and in connection with the Incurrence of such Indebtedness, which
obligation (i) is in the nature of a "completion guarantee," "shortfall
guarantee," "performance guarantee" or similar obligation entered into in
connection with the acquisition, amendment or other modification of a contract
to manage, lease, operate or franchise a hotel property (or other property or
asset used or to be used in a Hospitality-Related Business) not owned by the
Company or the extension of such a contract beyond its stated term (provided
that, if such hotel property (or other property or asset used or to be used in
a Hospitality-Related Business) is owned by a Related Party, such Investment
must satisfy the requirements of the provisions described under Section 4.8) or
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(ii) relates to fraud, willful misconduct, misrepresentation, misapplication of
funds, reckless damage to assets or matters of similar import or customary
undertakings with respect to environmental matters or construction defects.
"Notes" means any of the securities, as defined in the first
paragraph of the recitals hereof, that are authenticated and delivered under
this Indenture.
"Obligations" means all obligations (whether in existence on the
date of this Indenture or arising thereafter) for, or guaranteeing the payment
of, Principal, premium, interest (including, without limitation, all interest
accrued or accruing after the commencement of any Reorganization of any Person
obligated with respect thereto in accordance with and at the contract rate
(including, without limitation, any rate applicable upon default) specified in
the agreement or instrument creating, evidencing or governing any Indebtedness,
whether or not, pursuant to applicable law or otherwise, the claim for such
interest is allowed as a claim in such case or proceeding), penalties, fees,
indemnifications, reimbursements and other amounts in respect of any
Indebtedness, and any amendment, extension or refunding of any of the
foregoing, without duplication.
"Officer" means, with respect to the Company, the Chairman of the
Board, the President, the Chief Executive Officer, any Executive Vice
President, any Vice President, the Chief Financial Officer, the Treasurer or
any Assistant Treasurer, or the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed in the name of
the Company (i) by the Chairman of the Board, the President or the Chief
Executive Officer, or an Executive Vice President or a Vice President and (ii)
by the Chief Financial Officer, the Treasurer or any Assistant Treasurer, or
the Secretary or any Assistant Secretary, complying with Sections 12.3 (as
applicable) and 12.4 and delivered to the Trustee. Each such Certificate
shall comply with Section 314 of the Trust Indenture Act.
"Opinion of Counsel" means a written opinion signed by legal
counsel, who may be an employee of or counsel to the Company, satisfactory to
the Trustee and complying with Sections 12.3 (as applicable) and 12.4. Each
such Opinion of Counsel shall comply with Section 314 of the Trust Indenture
Act and include the statements provided in Sections 12.3 (as applicable) and
12.4, if and to the extent required thereby.
"Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a
19
<PAGE> 26
trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of this Indenture, including,
without limitation, all series and classes of such preferred or preference
stock.
"Principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Prospectus" means the Company's Prospectus, dated May 20, 1996,
relating to the Notes, which Prospectus forms a part of the Company's
registration statement on Form S-1, File No. 333-2458.
"Qualified Appraiser" means an appraiser that is a member of the
American Institute of Real Estate Appraisers (or any successor organization)
and is not an Affiliate of the Company or a holder of 5% or more of any class
of Capital Stock of the Company.
"Recourse Indebtedness" means Indebtedness that is not
Non-Recourse Indebtedness.
"Redeemable Junior Stock" of any Person means any class or series
of Capital Stock of any Person issued to a Holder on account of the Notes
pursuant to an order or decree of a court of competent jurisdiction in a
Reorganization, which securities are (i) required to be redeemed prior to the
scheduled final maturity date of all Senior Indebtedness outstanding on the
date of issuance of such Redeemable Junior Stock (and of any securities issued
in exchange for any Senior Indebtedness), (ii) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to such
scheduled final maturity date or (iii) convertible into or exchangeable for
Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity as to any principal amount prior to such scheduled final
maturity date; provided that Capital Stock shall not be deemed to be Redeemable
Junior Stock if it may only be so redeemed solely in consideration of Capital
Stock that is not Redeemable Junior Stock.
"Redeemable Stock" means any class or series of Capital Stock of
any Person that by its terms or otherwise is
20
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(i) required to be redeemed prior to the Stated Maturity of the Notes, (ii)
redeemable at the option of the holder of such class or series of Capital Stock
at any time prior to the Stated Maturity of the Notes or (iii) convertible into
or exchangeable for Capital Stock referred to in clause (i) or (ii) above or
Indebtedness having a scheduled maturity prior to the Stated Maturity of the
Notes; provided that any Capital Stock that would not constitute Redeemable
Stock but for provisions thereof giving holders thereof the right to require
such Person to repurchase or redeem such Capital Stock upon the occurrence of
an "asset sale" or "change of control" occurring prior to the Stated Maturity
of the Notes shall not constitute Redeemable Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained in
Section 4.9 and Section 4.12 and such Capital Stock specifically provides that
such Person will not repurchase or redeem any such stock pursuant to such
provision prior to the Company's repurchase of such Notes as are required to be
repurchased pursuant to the provisions of Section 4.9 and Section 4.12.
Notwithstanding the foregoing, Capital Stock shall not be deemed to be
Redeemable Stock if it may only be so redeemed solely in consideration of
Capital Stock that is not Redeemable Stock.
"Redemption Date", when used with respect to any Notes to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which such Note is to be redeemed pursuant to this
Indenture.
"Regular Record Date" has the meaning set forth in Exhibit A.
"Related Party" means any Affiliate of the Company or any holder
(or any Affiliate of such a holder) of 5% or more of any class of Capital Stock
of the Company.
"Representative" means the indenture trustee or other trustee,
agent under the Credit Agreement or any agent, trustee or representative, in
each case in respect of any Senior Indebtedness; provided that if, and so long
as, any Senior Indebtedness lacks such a representative, then the holders of a
majority in outstanding principal amount of such Senior Indebtedness shall
constitute the Representative in respect of such Senior Indebtedness.
"Reorganization" means, with respect to any Person, any
reorganization, bankruptcy, insolvency, receivership or
21
<PAGE> 28
other similar statutory or common law proceedings or arrangements, including
without limitation any proceeding under Title 11, United States Code or any
similar federal, state or foreign law for the relief of debtors, involving such
Person or the readjustment of such Person's liabilities or any assignment for
the benefit of creditors or any marshaling of the assets or liabilities of such
Person.
"Responsible Officer" means, when used with respect to the
Trustee, any senior trust officer, any vice president, any trust officer, any
assistant trust officer, or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Investment" means any Investment in any Person other
than (i) an Investment in a Restricted Subsidiary that is a Guarantor or in any
Person that, as a result of such Investment, becomes a Restricted Subsidiary
that is a Guarantor, (ii) cash, (iii) U.S. Government Obligations, (iv) time
deposits and certificates of deposit or Eurodollar deposits due within one year
of any commercial bank whose outstanding senior long-term debt securities are
rated either A- or higher by Standard & Poor's Incorporated or A3 or higher by
Moody's Investors Service, Inc., (v) repurchase obligations with a term of not
more than 7 days for underlying securities of the types described in clause
(iii) of this paragraph with any bank meeting the qualifications specified in
clause (iv) of this paragraph, (vi) commercial paper rated at least A-1 or the
equivalent thereof by Standard & Poor's Incorporated or at least P-1 or the
equivalent thereof by Moody's Investor Service, Inc., maturing within one year
after the date of acquisition, (vii) an Investment in a money market mutual
fund substantially all of the assets of which are comprised of securities of
the types described in clauses (iii) through (vi) of this paragraph, (viii)
loans or advances made to employees in the ordinary course of business that do
not in the aggregate exceed $3 million at any time outstanding, (ix) other
Investments that do not in the aggregate exceed $10 million at any time
outstanding or (x) an Investment made in connection with the Formation.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Revolving Credit Facility" means any credit or loan facility
established with Bankers Trust Company, or with Bankers Trust Company and one
or more other banks and other lenders, whether or not such facility is entered
into before,
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<PAGE> 29
contemporaneously with or after the Closing Date and whether or not such
facility conforms to the description thereof in the Prospectus, as such may be
amended, supplemented, extended, renewed or modified from time to time
including, without limitation, by adding parties thereto or increasing the
commitment thereunder.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means (i) Indebtedness of the Company and
all Obligations in respect thereof (other than, as to each Note, the other
Notes), whether or not Incurred in violation of this Indenture (except as
provided in clause (E) below), except (A) Redeemable Stock of the Company, (B)
any obligation of the Company to any Subsidiary of the Company, (C) any
Indebtedness of the Company that, by its terms or the terms of the instrument
creating or evidencing such Indebtedness, is pari passu with or expressly
subordinate in right of payment to the Notes and (D) any Indebtedness of the
Company Incurred in violation of the provisions of Section 4.10 and (ii)
Indebtedness evidenced by or in respect of debt securities issued by any person
to a holder of any Indebtedness referred to in clause (i) on account of such
Indebtedness pursuant to an order or decree of a court of competent
jurisdiction.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X promulgated under the Securities Act, as such Regulation is in
effect on the date hereof.
"Stated Maturity" means, (i) with respect to any debt security,
the date specified in such debt security as the fixed date on which the final
installment of Principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of Principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the outstanding
Voting Stock is owned, directly or indirectly, by such Person and one or more
other Subsidiaries of such Person.
"Subsidiary Guarantee" means the Obligations of a Guarantor
pursuant to Article Eleven hereof.
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<PAGE> 30
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and, with respect to any Restricted
Payment, the date such Restricted Payment is to be made.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa- 77bbb), as it may be amended from time
to time.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article Seven of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Reform Act
of 1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"U.S. Government Obligations" means securities issued or directly
and fully guaranteed or insured by the United States of America or any agent or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof).
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Restricted Subsidiary of the Company (including any newly acquired or newly
formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, the Company or any Restricted Subsidiary; provided that (i) such
designation would be permitted under Section 4.4, (ii) no portion of the
Indebtedness or any other obligation (contingent or otherwise) of such
Subsidiary (A) is Guaranteed by the Company or any Restricted Subsidiary, (B)
is Recourse Indebtedness or (C) subjects any property or asset of the Company
or any Restricted Subsidiary, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, and (iii) no default or event of
default with respect to any Indebtedness of such Subsidiary would permit any
holder of any Indebtedness of the Company or any Restricted Subsidiary to
declare such Indebtedness of the Company or any
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<PAGE> 31
Restricted Subsidiary due and payable prior to its maturity. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary of the Company; provided that immediately after giving effect to
such designation (x) the Company could Incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) and (y) no Default or Event of Default
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"Vinings Indebtedness" means the industrial revenue bond
Indebtedness, not to exceed $9.8 million in principal amount, to be assumed by
a Subsidiary of the Company in connection with the acquisition of the Vinings
Wyndham Garden Hotel, as defined in the Prospectus.
"Voting Stock" means with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any
Person, such Subsidiary if all of the outstanding Common Stock or other similar
equity ownership interests (but not including Preferred Stock) in such
Subsidiary (other than any director's qualifying shares or Investments by
foreign nationals mandated by applicable law) is owned directly or indirectly
by such Person.
SECTION 1.2 Other Definitions. Each of the following terms
is defined in the section set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Acceleration Notice 6.2
Appraisable Assets 4.8
Additional Notes 2.2
Authenticating Agent 2.3
Change of Control Offer 4.12
Change of Control Payment 4.12
Change of Control Payment Date 4.12(ii)
Event of Default 6.1
Excess Proceeds 4.9
Excess Proceeds Offer 4.9
Excess Proceeds Payment 4.9
Excess Proceeds Payment Date 4.9(ii)
Guaranteed Indebtedness 4.7
Payment Blockage Period 10.2(b)
</TABLE>
25
<PAGE> 32
<TABLE>
<S> <C>
Permitted Indebtedness 4.3
Permitted Refinancing Indebtedness 4.3(iii)
Related Party Transaction 4.8
Restricted Payments 4.4
Security Register 2.4
Vinings Bond Documents 6.1(iv)
</TABLE>
SECTION 1.3 Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the Trust Indenture Act,
the provision is incorporated by reference in and made a part of this
Indenture. The following terms used in this Indenture that are defined by the
Trust Indenture Act have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company, the
Guarantor, or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the
Trust Indenture Act, defined by reference in the Trust Indenture Act to another
statute or defined by a rule of the Commission and not otherwise defined herein
have the meanings assigned to them therein.
SECTION 1.4 Rules of Construction. Unless the context
otherwise requires:
(i) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(ii) defined terms in the singular include the plural, and
defined terms in the plural include the singular;
(iii) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(iv) all references to Sections or Articles refer to Sections
or Articles of this Indenture unless otherwise indicated; and
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<PAGE> 33
(v) use of masculine, feminine or neuter pronouns should not
be deemed a limitation, and the use of any such pronouns should be
construed to include, where appropriate, the other pronouns.
ARTICLE TWO
THE NOTES
SECTION 2.1 Form, Dating and Denomination. The Notes
(except as otherwise provided in this paragraph) and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A, which is
part of this Indenture. Subject to Sections 2.2 and 2.8 hereof, the Notes
shall be in an aggregate principal amount of $100,000,000. The Notes may have
imprinted or otherwise reproduced thereon such notations, legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law, or with any rules of any securities exchange
or usage, all as may be determined by the officers executing such Notes as
evidenced by their execution of the Notes. Each Note shall be dated the date
of its authentication. The Notes shall be issued initially in denominations of
$1,000 of principal amount and integral multiples thereof.
The Notes are to be issued in the form of one or more Global
Notes. The Company shall execute and the Trustee shall authenticate and
deliver one or more Global Notes that (i) shall represent and shall be
denominated in an amount equal to the aggregate principal amount of all of the
Notes, (ii) shall be registered in the name of the Depositary or the nominee of
such Depositary, (iii) shall be delivered by the Trustee to the Depositary or
its custodian or pursuant to the Depositary's instructions and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Notes in definitive registered form, this
Note may not be transferred except as a whole by the Depositary to the nominee
of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
SECTION 2.2 Additional Notes. The Company may issue
additional Notes under this Indenture in an aggregate principal amount not to
exceed $50,000,000 (the "Additional Notes"); provided that after giving effect
to any issuance of the Additional Notes and the application of the proceeds
therefrom, the Company could incur at least $1.00 of Indebtedness (other than
Permitted Indebtedness). If issued,
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<PAGE> 34
the Holders of any Additional Notes will be entitled to all the benefits of
this Indenture granted to the Holders of Notes and to the benefit of any
Subsidiary Guarantees. Additional Notes, if any, will be treated for all
purposes as Notes under this Indenture.
SECTION 2.3 Execution and Authentication. Two Officers
shall execute the Notes for the Company by facsimile or manual signature in the
name and on behalf of the Company. The seal of the Company, if any, shall be
reproduced on the Notes. If an Officer whose signature is on a Note no longer
holds that office at the time the Note is authenticated, the Note shall
nevertheless be valid.
The Trustee, at the expense of the Company, may appoint an
authenticating agent (the "Authenticating Agent") to authenticate Notes. The
Authenticating Agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such Authenticating Agent.
A Note shall not be valid until the Trustee or Authenticating
Agent manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall, upon a Company Order, authenticate Notes for
original issue up to an aggregate principal amount stated in Section 2.1
hereof, except as provided in Section 2.2. The aggregate principal amount of
Notes outstanding at any time may not exceed the amount set forth herein,
except as provided in Sections 2.2 and 2.8.
SECTION 2.4 Registrar and Paying Agent; Agents Generally.
The Company shall maintain an office or agency where Notes may be presented for
registration, registration of transfer or for exchange (the "Registrar") and an
office or agency where Notes may be presented for payment (the "Paying Agent"),
which shall be in the Borough of Manhattan, The City of New York. The Company
may appoint one or more co-registrars and one or more additional paying agents.
The term "Paying Agent" includes any additional paying agent. The Company
shall cause the Registrar to keep a register of the Registered Notes and of
their registration, transfer and exchange (the "Security Register"). At the
option of the Company, payment of interest may be made by check mailed to the
address of the Holders at such address as appears in the Security Register.
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<PAGE> 35
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture and the Trust Indenture Act that relate to such
Agent. The Company shall give prompt written notice to the Trustee of the name
and address of any Agent and any change in the name or address of an Agent. If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such. The Company may remove any Agent upon written notice to such
Agent and the Trustee; provided that no such removal shall become effective
until (i) the acceptance of an appointment by a successor Agent to such Agent
as evidenced by an appropriate agency agreement entered into by the Company and
such successor Agent and delivered to the Trustee or (ii) notification to the
Trustee that the Trustee shall serve as such Agent until the appointment of a
successor Agent in accordance with clause (i) of this proviso. The Company or
any Affiliate of the Company may act as Paying Agent or Registrar; provided
that neither the Company nor an Affiliate of the Company shall act as Paying
Agent in connection with the defeasance of the Notes or the discharge of this
Indenture under Article Eight.
The Company initially appoints the Trustee as Registrar, Paying
Agent and Authenticating Agent. If, at any time, the Trustee is not the
Registrar, the Registrar shall make available to the Trustee ten (10) days
prior to each interest payment date and at such other time as the Trustee may
reasonably request the names and addresses of the Holders as they appear in the
Security Register.
SECTION 2.5 Paying Agent to Hold Money in Trust. Not later
than 10:00 a.m. New York City time on each due date of any Principal or
interest on any Notes, the Company shall deposit with the Paying Agent money in
immediately available funds sufficient to pay such Principal or interest. The
Company shall require each Paying Agent other than the Trustee to agree in
writing that such Paying Agent shall hold in trust for the benefit of the
Holders of such Notes or the Trustee all money held by the Paying Agent for the
payment of Principal of, premium, if any, or interest on such Notes and shall
promptly notify the Trustee of any default by the Company or Guarantor, if any,
in making any such payment. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee and account for any funds disbursed,
and the Trustee may at any time during the continuance of any payment default,
upon written request to a Paying Agent, require such Paying Agent to pay all
money held by it to the Trustee and to account for any funds disbursed. Upon
doing so, the Paying Agent (if other than the Company) shall have no further
liability for the money so paid over to
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<PAGE> 36
the Trustee. If the Company or any affiliate of the Company acts as Paying
Agent, it will, on or before each due date of any Principal of or interest on
any Notes, segregate and hold in a separate trust fund for the benefit of the
Holders thereof a sum of money sufficient to pay such Principal or interest so
becoming due until such sum of money shall be paid to such Holders or otherwise
disposed of as provided in this Indenture, and will promptly notify the Trustee
in writing of its action or failure to act as required by this Section 2.5.
SECTION 2.6 Holders Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders and shall otherwise comply with the
Trust Indenture Act Section 312(a). If the Trustee is not the Registrar, the
Company shall furnish to the Trustee at least seven (7) Business Days before
each interest payment date and at such other times as the Trustee may require
in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Holders, including the
aggregate principal amount thereof, and the Company shall otherwise comply with
the Trust Indenture Act Section 312(a).
SECTION 2.7 Transfer and Exchange. When Notes are presented
to the Registrar with a request to register, transfer or exchange such Notes
for an equal principal amount of Notes of other authorized denominations, the
Register shall register the transfer or make the exchange as requested if its
reasonable requirements for such transactions are met; provided, however, that
any Note presented or surrendered for registration of transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Registrar and the Trustee duly executed by the Holder
or his or her attorney duly authorized in writing. To permit registrations of
transfer and exchanges, the Company shall issue and the Trustee shall
authenticate Notes at the Registrar's request, subject to such rules as the
Trustee may reasonably require.
Neither the Registrar nor the Company shall be required (i) to
issue, authenticate, register the transfer of or exchange Notes for a period of
15 days before a selection of such Notes to be redeemed pursuant to Article
Three, or the mailing of a notice of a Change of Control Offer or (ii) to
register the transfer of or exchange any Note selected for redemption in whole
or in part pursuant to Article Three, except the unredeemed portion of any Note
being redeemed in part.
Notwithstanding any other provision of this Section 2.7, unless
and until it is exchanged in whole or in part for
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<PAGE> 37
Notes in definitive registered form, a Global Note representing all or a
portion of the Notes may not be transferred except as a whole by the Depositary
to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the Depositary
shall no longer be eligible under applicable law, the Company shall appoint a
successor Depositary eligible under applicable law. If a successor Depositary
eligible under applicable law is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility,
the Company will execute, and the Trustee, upon receipt of the Company's order
for the authentication and delivery of definitive Notes, will authenticate and
deliver certificated Notes, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of such Global Notes, in
exchange for such Global Notes. In addition, the Company may at any time and
in its sole discretion determine not to have any of the Notes represented by
one or more Global Notes and, in such event, will issue Notes in definitive
form in exchange for all of the Global Note or Global Notes representing such
Notes. Any Notes issued in definitive form in exchange for a Global Note will
be registered in such name or names as the Depositary shall instruct the
Trustee.
Any time the Notes are not in the form of Global Notes pursuant
to the preceding paragraph, the Company agrees to supply the Trustee with a
reasonable supply of certificated Notes without the legend required by Section
2.1 and the Trustee agrees to hold such Notes in safekeeping until
authenticated and delivered pursuant to the terms of this Indenture.
The Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Notes. No service charge shall be made
for any such transaction.
All Notes issued upon any transfer or exchange of Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
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<PAGE> 38
SECTION 2.8 Replacement Notes. If a defaced or mutilated
Note is surrendered to the Trustee or if a Holder claims that its Note has been
lost, destroyed or wrongfully taken, the Company shall, subject to the further
provisions of this Section 2.8, issue and the Trustee shall authenticate a
replacement Note of such tenor and principal amount bearing a number not
contemporaneously outstanding. The Company may charge such Holder for any tax
or other governmental charge that may be imposed as a result of or in
connection with replacing a Note and for its expenses and the expenses of the
Trustee (including without limitation attorneys' fees and expenses) in
replacing a Note. In case any such mutilated, defaced, lost, destroyed or
wrongfully taken Note has become or is about to become due and payable, the
Company in its discretion may pay such Note instead of issuing a new Note in
replacement thereof. If required by the Trustee or the Company, (i) an
indemnity bond must be furnished that is sufficient in the judgment of both the
Trustee and the Company to protect the Company, the Trustee and any Agent from
any loss that any of them may suffer if a Note is replaced or paid as provided
in this Section 2.8 and (ii) in the case of a lost, destroyed or wrongfully
taken Note, evidence must be furnished to the satisfaction of both the Trustee
and the Company of the loss, destruction or wrongful taking of such Note.
Notwithstanding the foregoing, the Company and the Trustee shall have no
obligation to replace or pay a Note pursuant to this Section 2.8 if either the
Company or the Trustee has notice that such Note has been acquired by a bona
fide purchaser.
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
To the extent permitted by law, the foregoing provisions of this
Section 2.8 are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or wrongfully taken Notes.
SECTION 2.9 Outstanding Notes. Notes outstanding at any
time are all Notes that have been authenticated and delivered by the Trustee
except for those canceled by it, those delivered to it for cancellation and
those described in this Section 2.9 as not outstanding.
If a Note is replaced pursuant to Section 2.8, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced Note is held by a holder in due course.
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<PAGE> 39
If the Paying Agent (other than the Company or an Affiliate of
the Company) holds on the maturity date or any redemption date or date for
repurchase of the Notes money sufficient to pay Notes payable or to be redeemed
or repurchased on that date, then on and after that date such Notes cease to be
outstanding and interest on them shall cease to accrue.
A Note does not cease to be outstanding because the Company or
one of its Affiliates holds such Note, provided, however, that, in determining
whether the Holders of the requisite principal amount of the outstanding Notes
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any Affiliate of the Company
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes as to which a Responsible Officer of the Trustee has received written
notice to be so owned shall be so disregarded. Any Notes so owned which are
pledged by the Company, or by any Affiliate of the Company, as security for
loans or other obligations, otherwise than to another such Affiliate of the
Company, shall be deemed to be outstanding, if the pledgee is entitled pursuant
to the terms of its pledge agreement and is free to exercise in its, his or her
discretion the right to vote such securities, uncontrolled by the Company or by
any such Affiliate.
SECTION 2.10 Temporary Notes. Until definitive Notes are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the Officers executing the temporary
Notes, as evidenced by their execution of such temporary Notes. If temporary
Notes are issued, the Company will cause definitive Notes to be prepared
without unreasonable delay. After the preparation of definitive Notes, the
temporary Notes shall be exchangeable for definitive Notes upon surrender of
such temporary Notes at the office or agency of the Company designated for such
purpose pursuant to Section 4.2, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Notes the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes and authorized denominations. Until so
exchanged, the temporary Notes shall be entitled to the same benefits under
this Indenture as definitive Notes.
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SECTION 2.11 Cancellation. The Company at any time may
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee for cancellation any Notes
previously authenticated hereunder which the Company has not issued and sold.
The Registrar, any transfer agent and the Paying Agent shall forward to the
Trustee any Notes surrendered to them for transfer, exchange or payment. The
Trustee shall cancel and destroy all Notes surrendered for transfer, exchange,
payment or cancellation and shall deliver a certificate of destruction to the
Company. The Company may not issue new Notes to replace Notes it has paid in
full or delivered to the Trustee for cancellation.
SECTION 2.12 CUSIP Number. The Company in issuing the Notes
may use a "CUSIP" number, and, if it does so, the Trustee shall use the CUSIP
number in notices of redemption or exchange as a convenience to Holders and no
representation shall be made as to the correctness of such number either as
printed on the Notes or as contained in any notice of redemption or exchange.
SECTION 2.13 Defaulted Interest. If the Company defaults in
a payment of interest on the Notes, it shall pay, or shall deposit with the
Paying Agent money in immediately available funds sufficient to pay the
defaulted interest plus (to the extent lawful) any interest payable on the
defaulted interest to the Persons who are Holders on a subsequent special
record date, which shall mean the 15th day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before such special record date, the Company
shall mail to each Holder and to the Trustee a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
ARTICLE THREE
REDEMPTION
SECTION 3.1 Right of Redemption. (a) The Notes may be
redeemed, at the Company's option, in whole or in part, at any time on or
after May 15, 2001 and prior to maturity, upon not less than 30 nor more than
60 days' prior notice mailed by first class mail to each Holders' last address
as it appears in the Security Register, at the following Redemption Prices
(expressed in percentages of principal amount), plus accrued and unpaid
interest, if any, to the Redemption Date (subject to the right of Holders of
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record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the 12-month period commencing May 15 of the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 105.250%
2002 103.500%
2003 101.750%
2004 and thereafter 100.000%
</TABLE>
SECTION 3.2 Notices to Trustee. If the Company elects to
redeem Notes pursuant to Section 3.1, it shall notify the Trustee in writing of
the Redemption Date and the principal amount of Notes to be redeemed.
The Company shall give each notice provided for in this Section
3.2 in an Officers' Certificate at least 45 days before the Redemption Date
(unless a shorter period shall be satisfactory to the Trustee).
SECTION 3.3 Selection of Notes to Be Redeemed. If less than
all of the Notes are to be redeemed at any time, the Trustee shall select the
Notes to be redeemed in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not listed on a national securities exchange, on a pro rata basis, by
lot or by such other method as the Trustee in its sole discretion shall deem to
be fair and appropriate; provided that no Note of $1,000 in principal amount or
less shall be redeemed in part.
The Trustee shall make the selection from the Notes outstanding
and not previously called for redemption. Notes in denominations of $1,000 in
principal amount may only be redeemed in whole. The Trustee may select for
redemption portions (equal to $1,000 in principal amount or any integral
multiple thereof) of Notes that have denominations larger than $1,000 in
principal amount. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption. The Trustee
shall notify the Company and the Registrar promptly in writing of the Notes to
be redeemed and, if any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note.
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SECTION 3.4 Notice of Redemption. At least 30 days but not
more than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first class mail to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall
state:
(i) the Redemption Date;
(ii) the Redemption Price and the amount of accrued and unpaid
interest to be paid upon such redemption;
(iii) the name, address and telephone number of the Paying
Agent;
(iv) that Notes called for redemption must be surrendered to
the Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of
the Holders is to receive payment of the Redemption Price plus accrued
interest to the Redemption Date upon surrender of the Notes to the
Paying Agent;
(vi) if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be
reissued;
(v) if less than all the Notes are to be redeemed, the
identification of the particular Notes (or portions thereof) to be
redeemed, as well as the aggregate principal amount of such Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption;
(vi) that, if any Note contains a CUSIP number as provided in
Section 2.12, no representation is being made as to the correctness of
the CUSIP number either as printed on the Notes or as contained in the
notice of redemption and that reliance may be placed only on the other
identification numbers printed on the Notes; and
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(vii) that the notice is being sent pursuant to this Section
3.4.
At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have given
such notice to the Holders), made in writing to the Trustee at least 60 days
(or such shorter period as shall be satisfactory to the Trustee) before a
Redemption Date, the Trustee shall give the notice of redemption in the name
and at the expense of the Company. If, however, the Company gives such notice
to the Holders, the Company shall concurrently deliver to the Trustee an
Officers' Certificate stating that such notice has been given.
SECTION 3.5 Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Notes to
the Paying Agent, such Notes shall be paid at the Redemption Price, plus
accrued interest to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of Notes held by Holders to whom such notice was
properly given.
SECTION 3.6 Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company is acting as its own Paying Agent, shall segregate and hold in trust as
provided in Section 2.5) money sufficient to pay the Redemption Price of and
accrued interest on all Notes to be redeemed on the date other than Notes or
portions thereof called for redemption on that date that have been delivered by
the Company to the Trustee for cancellation.
SECTION 3.7 Payment of Notes Called for Redemption. If
notice of redemption has been given in the manner provided above, the Notes or
portion of securities specified in such notice to be redeemed shall become due
and payable on the Redemption Date at the Redemption Price stated therein,
together with accrued interest to such Redemption Date, and on and after such
date (unless the Company shall default in the payment of such Notes at the
Redemption Price and accrued interest to the Redemption Date, in which case the
Principal until paid shall bear interest from the Redemption Date at the rate
prescribed in the Notes), such Notes shall cease to accrue interest. Upon
surrender of any Note for redemption in accordance with a notice of redemption,
such
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Note shall be paid and redeemed by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders registered as such at the close of
business on the relevant Regular Record Date.
SECTION 3.8 Notes Redeemed in Part. Upon surrender of any
Note that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Note equal in principal amount to
the unredeemed portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.1 Payment of Notes. The Company shall pay the
Principal of, premium, if any, and interest on the Notes on the dates and in
the manner provided in the Notes and this Indenture. An installment of
Principal, premium, if any, or interest shall be considered paid on the date
due if the Trustee or Paying Agent (other than the Company, a Subsidiary of the
Company, or any Affiliate of any of them) holds on that date money designated
for and sufficient to pay the installment. If the Company or any Subsidiary of
the Company or any Affiliate of any of them, acts as Paying Agent, an
installment of Principal, premium, if any, or interest shall be considered paid
on the due date if the entity acting as Paying Agent complies with the last
sentence of Section 2.5. As provided in Section 6.9, upon any bankruptcy or
reorganization procedure relative to the Company, the Trustee shall serve as
the Paying Agent and conversion agent, if any, for the Notes.
The Company shall pay interest on overdue Principal, premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
the rate per annum specified in the Notes.
SECTION 4.2 Maintenance of Office or Agency. The Company
will maintain in the Borough of Manhattan, the City of New York an office or
agency where Notes may be surrendered for registration of transfer or exchange
or for presentation for payment and where notices and demands to or upon the
Company in respect of the Notes and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail
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to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 12.2.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust
Office of the Trustee, located in the Borough of Manhattan, the City of New
York, as such office of the Company in accordance with Section 2.4.
SECTION 4.3 Limitation on Indebtedness. (a) The Company
will not, and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than Permitted Indebtedness, Indebtedness evidenced by the
Notes and the Subsidiary Guarantees and Indebtedness existing on the Closing
Date) unless, after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds therefrom, the Consolidated Fixed
Charge Coverage Ratio would be greater than 1.75:1 with respect to any
Incurrence prior to May 31, 1997, or 2.00:1 with respect to any Incurrence on
or after May 31, 1997.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following
(each, "Permitted Indebtedness"):
(i) Indebtedness of the Company or any of its Restricted
Subsidiaries outstanding at any time in an aggregate principal amount
not to exceed an amount equal to $150 million under the Credit
Agreement, less any amount by which Senior Indebtedness created under
the Credit Agreement is permanently reduced and, in the event the Credit
Agreement is a revolving credit facility, but without duplication, the
commitments and availability under the Credit Facility are permanently
reduced as provided under Section 4.9 and Guarantees of such
Indebtedness by any of the Company's Subsidiaries;
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(ii) Indebtedness to the Company or any of its Restricted
Subsidiaries as long as such Indebtedness continues to be owed to the
Company or any of its Restricted Subsidiaries;
(iii) Indebtedness ("Permitted Refinancing Indebtedness")
issued in exchange for, or the net proceeds of which are used to
refinance (whether by amendment, renewal, extension or otherwise) or
refund, then outstanding Indebtedness, other than Indebtedness Incurred
under clause (i), (v), (vii) or (x) of this paragraph, and any
successive refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that is pari passu with,
or subordinated in right of payment to, the Notes shall only be
permitted under this clause (iii) if (A) in case the Notes are
refinanced in part or the Indebtedness to be refinanced is pari passu
with the Notes, such new Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made pari passu with, or subordinate in right
of payment to, the remaining Notes, (B) in case the Indebtedness to be
refinanced is subordinated in right of payment to the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is outstanding, is
expressly made subordinate in right of payment to the Notes at least to
the extent that the Indebtedness to be refinanced is subordinated to the
Notes and (C) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the Stated
Maturity of the Indebtedness to be refinanced or refunded, and the
Average Life of such new Indebtedness is at least equal to the remaining
Average Life of the Indebtedness to be refinanced or refunded; and
provided further that in no event may Indebtedness of the Company be
refinanced pursuant to this clause (iii) by means of any Indebtedness of
any Restricted Subsidiary;
(iv) Indebtedness (A) in respect of performance, surety or
appeal bonds provided in the ordinary course of business consistent with
past practice, (B) under Currency Agreements and Interest Rate
Protection Agreements (provided that, in the case of Currency Agreements
that relate to other Indebtedness, such Currency Agreements do not
increase the Indebtedness of the obligor outstanding at any time other
than as a result of fluctuations in foreign currency exchange rates
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or by reason of fees, indemnities and compensation payable thereunder)
and (C) arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from Guarantees
or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries
pursuant to such agreements, in any case Incurred in connection with the
disposition of any business, assets or Restricted Subsidiary (other than
Guarantees of Indebtedness Incurred by any Person acquiring all or any
portion of such business, assets or Restricted 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
Restricted Subsidiary in connection with such disposition;
(v) Indebtedness under letters of credit and bankers'
acceptances issued in the ordinary course of business;
(vi) Acquired Indebtedness; provided that, with respect to
this clause (vi), after giving effect to the Incurrence thereof, the
Company could Incur at least $1.00 of Indebtedness (other than Permitted
Indebtedness);
(vii) Indebtedness, in an amount not to exceed $3 million at
any one time outstanding, Incurred by the Company in connection with the
purchase, redemption, acquisition, cancellation or other retirement for
value of shares of Capital Stock of the Company, options on any such
shares or related stock appreciation rights or similar securities held
by officers or employees or former officers or employees of the Company
or any of its Subsidiaries (or their estates or beneficiaries under
their estates), upon death, disability, retirement, severance or
termination of employment or pursuant to any agreement under which such
shares of stock or related rights were issued;
(viii) Indebtedness consisting of a Guarantee permitted by the
provisions described under Section 4.7 by a Restricted Subsidiary of
Indebtedness of the Company or another Restricted Subsidiary or a
Guarantee by the Company of Indebtedness of a Restricted Subsidiary;
(ix) the Vinings Indebtedness; and
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(x) Indebtedness of the Company or any of its Restricted
Subsidiaries in an aggregate principal amount at any time outstanding
not to exceed $25 million.
(b) For purposes of determining compliance with Section
4.3(a), (A) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described in the above clauses, the
Company, in its sole discretion, shall classify such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses and (B) the amount of Indebtedness issued at a price that is less
than the principal amount thereof shall be equal to the amount of the liability
in respect thereof determined in conformity with GAAP.
SECTION 4.4 Limitation on Restricted Payments. So long as
any of the Notes are outstanding, the Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, after the Closing Date:
(i) declare or pay any dividend or make any distribution on
its Capital Stock (other than dividends or distributions payable solely
in shares of its Capital Stock (other than Redeemable Stock) of the same
class or in options, warrants, or other rights to acquire such shares of
Capital Stock) held by Persons other than the Company or any of its
Wholly Owned Restricted Subsidiaries that are Guarantors;
(ii) purchase, redeem, retire or otherwise acquire for value
any shares of Capital Stock of the Company or any Restricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by Persons other than the Company or any of its
Wholly Owned Restricted Subsidiaries that are Guarantors;
(iii) make any voluntary or optional Principal payment, or
voluntary or optional redemption, repurchase, defeasance, or other
acquisition or retirement for value (other than for value payable solely
in Junior Indebtedness or in shares of Capital Stock that is not
Redeemable Stock), of Indebtedness of the Company that is pari passu with
or subordinated in right of payment to the Notes; or
(iv) make any Investment that is a Restricted Investment
(such payments or any other actions described in clauses (i) through (iv) being
collectively "Restricted Payments") if, at the time of, and after giving effect
to, the proposed
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Restricted Payment: (A) a Default or Event of Default shall have occurred and
be continuing, (B) the Company could not Incur at least $1.00 of Indebtedness
(other than Permitted Indebtedness) or (C) the aggregate amount expended for
all Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination shall
be conclusive and evidenced by a Board Resolution) after the Closing Date shall
exceed the sum of (1) 50% of the aggregate amount of the Adjusted Consolidated
Net Income (or, if the Adjusted Consolidated Net Income is a loss, minus 100%
of such amount) (determined by excluding income created by transfers of assets
received by the Company or a Restricted Subsidiary from an Unrestricted
Subsidiary) accrued on a cumulative basis during the period (taken as one
accounting period) beginning on April 1, 1996 and ending on the last day of the
Company's last fiscal quarter ended before the Transaction Date plus (2) the
aggregate net proceeds (including the fair market value of non-cash proceeds as
determined in good faith by the Board of Directors) received by the Company
from the issuance and sale permitted by this Indenture of its Capital Stock
(other than Redeemable Stock) to a Person who is not a Subsidiary of the
Company, including an issuance or sale permitted by this Indenture for cash or
other property upon the conversion of any Indebtedness of the Company
subsequent to the Closing Date, or from the issuance of any options, warrants
or other rights to acquire Capital Stock of the Company (in each case,
exclusive of any Redeemable Stock or any options, warrants or other rights that
are redeemable at the option of the holder, or are required to be redeemed,
prior to the Stated Maturity of the Notes) plus (3) an amount equal to the net
reduction in Investments in Persons that are not Restricted Subsidiaries
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Company or
any Restricted Subsidiary from Persons that are not Restricted Subsidiaries, or
from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments"), not to
exceed, in the case of any Person that is not a Restricted Subsidiary, the
amount of Investments previously made by the Company and any Restricted
Subsidiary in such Person, plus (4) $15 million.
The foregoing provision shall not take into account, and shall
not be violated by reason of:
(i) the payment of any dividend within 60 days after the date
of declaration thereof if, at said date of declaration, such payment
would comply with the foregoing paragraph;
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(ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Junior Indebtedness including
premium, if any, and accrued and unpaid interest, with the proceeds of,
or in exchange for, Permitted Refinancing Indebtedness;
(iii) the repurchase, redemption or other acquisition of
Capital Stock of the Company in exchange for, or out of the proceeds of
a substantially concurrent offering of, shares of Capital Stock (other
than Redeemable Stock) of the Company;
(iv) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Junior Indebtedness of the
Company in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock of the Company
(other than Redeemable Stock);
(v) the purchase, redemption, acquisition, cancellation or
other retirement for value of shares of Capital Stock of the Company,
options on any such shares or related stock appreciation rights or
similar securities held by officers or employees or former officers or
employees of the Company or any of its Subsidiaries (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 stock or related options or other rights
were issued; provided that the aggregate consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of
such shares of Capital Stock or related rights after the Closing Date
does not exceed an aggregate amount of $1 million in any one fiscal
year, with amounts unused in a given fiscal year being available for use
in subsequent fiscal years;
(vi) payments or distributions pursuant to or in connection
with a consolidation, merger or transfer of property or assets that
complies with the provisions of this Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the property
and assets of the Company;
(vii) Investments made in connection with (and, in the case of
any Investment in excess of $5 million, determined in good faith by the
Board of Directors to be reasonably necessary to consummate) the
acquisition, amendment or other modification of a contract to manage,
lease, operate or franchise a hotel property (or other
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property or asset used or to be used in a Hospitality-Related Business)
not owned by the Company or the extension of such a contract beyond its
stated term (provided that, if such hotel property (or other property or
asset used or to be used in a Hospitality-Related Business) is owned by
a Related Party, such Investment must satisfy the requirements of the
provisions described under Section 4.8); and
(viii) the transactions constituting the Formation and the
Financing Plan; provided that, except in the case of clauses (i) and
(iii), no Default or Event of Default shall have occurred and be
continuing or occur as a consequence of the actions or payments set
forth therein.
Notwithstanding the foregoing, in the event of an issuance of
Capital Stock of the Company and (l) the repurchase, redemption or other
acquisition of Capital Stock out of the proceeds of such issuance or (2) the
acquisition of Notes or Indebtedness that is subordinated in right of payment
to the Notes out of the proceeds of such issuance, then, in calculating whether
the conditions of clause (C) of the first paragraph of this Section 4.4 have
been met with respect to any subsequent Restricted Payments, the proceeds of
any such issuance shall be included under such clause (C) only to the extent
such proceeds are not applied as described in clause (1) or (2) of this
paragraph.
SECTION 4.5 Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. So long as any of the Notes
are outstanding, the Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary, (ii) pay any
Indebtedness or other obligations owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other Restricted
Subsidiary or (iv) transfer any of its property or assets to the Company or any
other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances
or restrictions:
(i) contained in the Credit Agreement or created pursuant
thereto or existing on the Closing Date in this Indenture or any other
agreements in effect on the Closing Date, and any extensions,
refinancings, renewals
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or replacements of any of the foregoing; provided that the encumbrances
and restrictions in any such extensions, refinancings, renewals or
replacements are no less favorable in any material respect to the
Holders than those encumbrances or restrictions that are then in effect
and that are being extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property
or assets of such Person acquired by the Company or any Restricted
Subsidiary and existing at the time of such acquisition, which
encumbrances or restrictions (A) are not applicable to any Person or the
property or assets of any Person other than such Person or the property
or assets of such Person so acquired and (B) were not put in place in
anticipation of such acquisition, and any extensions, refinancings,
renewals or replacements of any of the foregoing; provided that the
encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(iv) in the case of clause (iv) of the first paragraph of
this Section 4.5, arising or agreed to in the ordinary course of business
(A) that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) existing by virtue of any
transfer of, agreement to transfer or option or right with respect to any
property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by this Indenture or (C) not relating to any
Indebtedness and, in each of cases (A), (B) or (C), that do not,
individually or in the aggregate, detract from the value of property or
assets of the Company or any Restricted Subsidiary in any manner material
to the Company or any Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary; or
(vi) in the nature of customary capital expenditure,
furniture, fixture and equipment or similar reserves
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contained in contracts of Restricted Subsidiaries for the management,
lease, operation or franchise of hotel properties (or other property or
asset used or to be used in a Hospitality-Related Business).
Nothing contained in this Section 4.5 shall prevent the Company or any
Restricted Subsidiary from restricting the sale or other disposition of
property or assets of the Company or any of its Restricted Subsidiaries that
secure Indebtedness of the Company of any of its Restricted Subsidiaries.
SECTION 4.6 Limitation on the Issuance of Capital Stock of
Restricted Subsidiaries. The Company will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell any shares of its Capital
Stock (including options, warrants or other rights to purchase shares of such
Capital Stock) except (i) to the Company or a Wholly Owned Restricted
Subsidiary of the Company that is a Guarantor or (ii) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary.
SECTION 4.7 Limitation on Issuances of Guarantees by
Restricted Subsidiaries. The Company will not permit any Restricted
Subsidiary, directly or indirectly, to Guarantee any Indebtedness of the
Company ("Guaranteed Indebtedness"), unless (i) such Guarantee is not otherwise
in violation of the terms of this Indenture, (ii) except in the event such
Guarantee relates to Indebtedness under the Credit Agreement, such Restricted
Subsidiary is a Guarantor, (iii) except in the event such Guarantee relates to
Indebtedness under the Credit Agreement, such Restricted Subsidiary waives and
will not in any manner whatsoever claim or take the benefit or advantage of,
any rights of reimbursement, indemnity or subrogation or any other rights
against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under such Guarantee; and (iv) (A) if the
Guaranteed Indebtedness is pari passu with the Notes in right of payment, then
the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee of such Restricted Subsidiary in
right of payment, or (B) if the Guaranteed Indebtedness is subordinated to the
Notes, then the Guarantee of such Guaranteed Indebtedness shall be subordinated
to the Subsidiary Guarantee of such Restricted Subsidiary at least to the
extent that the Guaranteed Indebtedness is subordinated to the Notes; provided
that this Section 4.7 shall not be applicable to any Guarantee of any
Restricted Subsidiary that (x) existed at the time such Person became a
Restricted Subsidiary and (y) was not Incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary.
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SECTION 4.8 Limitation on Transactions with Stockholders and
Affiliates. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service, or the making
of any Investment) with any Related Party (each a "Related Party Transaction"),
except upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than could be obtained, at the time of such transaction
or at the time of the execution of the agreement providing therefor, in a
comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
Without limiting the foregoing, (a) any Related Party
Transaction or series of Related Party Transactions with an aggregate value in
excess of $1 million (or, in the case of a Related Party Transaction or series
of related Related Party Transactions that relate predominantly to the
provision of services, which relate to services with an aggregate value in
excess of $1 million in any fiscal year) must first be approved by a majority
of the directors of the Company who are disinterested in the subject matter of
the transaction, if any, pursuant to a Board Resolution, (b) with respect to
any Related Party Transaction or series of related Related Party Transactions
(other than a Related Party Transaction or series of related Related Party
Transactions that relate predominantly to the provision of services) with an
aggregate value in excess of $10 million but not more than $25 million, the
Company must first obtain either (i) a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Restricted
Subsidiary, as the case may be or (ii) in the event such Related Party
Transaction relates solely to real estate or other property or assets to be
used in a Hospitality-Related Business (other than stock or other securities)
("Appraisable Assets") or an entity that holds no material assets other than
Appraisable Assets and engages in no material business other than the holding
of Appraisable Assets, a certificate of a Qualified Appraiser as to the fair
value of such Appraisable Assets and (c) with respect to any Related Party
Transaction or series of related Related Party Transactions (other than a
Related Party Transaction or series of related Related Party Transactions that
relate predominantly to the provision of services) with an aggregate value in
excess of $25 million, the Company must first obtain a favorable written
opinion of an independent financial advisor of national reputation as to the
fairness from a financial point of view of such transaction to the Company or
such Restricted Subsidiary, as
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the case may be. In the case of any Related Party Transaction among the
Company or any of its Restricted Subsidiaries, a Related Party and one or more
other Persons, only the value of such Related Party Transaction attributable to
the Company shall be considered in calculating the aggregate value of such
Related Party Transaction pursuant to the immediately preceding sentence.
The foregoing limitation does not limit, and shall not apply
to:
(i) the payment of reasonable and customary regular fees
to directors of the Company who are not employees of the Company;
(ii) any Restricted Payments not prohibited by Section 4.4;
(iii) any loans or advances by the Company to employees of
the Company or a Restricted Subsidiary in the ordinary course of
business and in furtherance of the Company's business, in an aggregate
amount not to exceed $2 million at any one time outstanding;
(iv) any extension of a DAB Note or a Capital Contribution
Note on terms substantially identical to its then existing terms or,
with the approval of a majority of the directors of the Company who are
disinterested in the subject matter of the transaction, if any, as
evidenced by a Board Resolution, any extension, renewal, amendment or
modification of a DAB Note or a Capital Contribution Note on terms not
substantially less favorable to the Company then its then existing
terms;
(v) Related Party Transactions between or among the
Company and/or its Wholly Owned Restricted Subsidiaries;
(vi) any grant of stock options or other rights to
employees or directors of the Company or any of its Subsidiaries
pursuant to benefit plans or agreements adopted or authorized by the
Company's Independent Directors;
(vii) payments by the Company or a Restricted Subsidiary to
employees of the Company or any of its Subsidiaries (A) of salary, bonus
and other ordinary compensation in the ordinary course of business and
(B) pursuant to employment agreements entered into in compliance with
the foregoing two paragraphs of this Section 4.8;
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(viii) the transactions constituting the Formation and the
Financing Plan; and
(ix) any transaction or series of transactions pursuant to
agreements entered into on or before the date of this Indenture and
disclosed in the Prospectus.
SECTION 4.9 Limitation on Asset Sales. The Company shall
not effect or permit any Asset Sale unless (i) such Asset Sale is effected at
fair market value (as determined, either at the time of such Asset Sales or at
the time of execution of the agreement providing therefor, in good faith by the
Board of Directors), (ii) in the case of any Asset Sale or series of related
Asset Sales for a total consideration in excess of $5 million, at least 75% of
the consideration is received in cash (provided that the amount of any Senior
Indebtedness of the Company or any Guarantor Senior Indebtedness of any
Guarantor making such Asset Sale that is assumed by a transferee of the
property or assets that are the subject of such Asset Sale in connection with
such Asset Sale shall be deemed to be cash for purposes of this Section
4.9(ii)) and (iii) in the event and to the extent that the Net Cash Proceeds
received by the Company or any of its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed $5 million, then the Company shall or shall cause the
relevant Restricted Subsidiary to (A) within 12 months after the date Net Cash
Proceeds so received exceed $5 million in any period of 12 consecutive months
(x) apply an amount equal to such excess Net Cash Proceeds to permanently repay
Senior Indebtedness of the Company or Indebtedness of any Restricted
Subsidiary, in each case owing to a Person other than the Company or any of its
Restricted Subsidiaries, and, in the case of repayment of Senior Indebtedness
arising under the Credit Agreement or other revolving credit facility, effect a
permanent reduction in the commitments or availability under the Credit
Agreement or such other facility or (y) invest an equal amount, or the amount
not so applied pursuant to clause (x) (or enter into a definitive agreement
committing to so invest within 12 months after the date of such agreement), in
property or assets that are used in a Hospitality-Related Business (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive and evidenced by a Board Resolution) and (B) apply (no later than
the end of the 12-month period referred to in clause (A) above) such excess Net
Cash Proceeds (to the extent not applied pursuant to clause (A) above) as
provided in the following paragraphs of this Section 4.9. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set
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forth in clause (A) of the preceding sentence and not applied as so required by
the end of such period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Excess Proceeds Offer
(as defined below) totals at least $5 million, the Company must, not later than
the fifteenth Business Day of such month, make an offer (an "Excess Proceeds
Offer") to purchase from the Holders on a pro rata basis an aggregate principal
amount of Notes equal to the Excess Proceeds on such date, at a purchase price
equal to 100% of the principal amount of the Notes, plus, in each case, accrued
interest (if any) to the date of purchase (the "Excess Proceeds Payment").
The Company shall commence an Excess Proceeds Offer by mailing
a notice to the Trustee and each Holder stating:
(i) that the Excess Proceeds Offer is being made pursuant
to this Section 4.9 and that all Notes validly tendered will be accepted
for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which
shall be the date 20 Business Days from the date such notice is mailed)
(the "Excess Proceeds Payment Date");
(iii) that any Note not tendered will continue to accrue
interest pursuant to its terms;
(iv) that, unless the Company defaults in the payment of
the Excess Proceeds Payment, any Note accepted for payment pursuant to
the Excess Proceeds Offer shall cease to accrue interest on and after
the Excess Proceeds Payment Date;
(v) that Holders electing to have a Note purchased
pursuant to the Excess Proceeds Offer will be required to surrender the
Note, together with the form entitled "Option of the Holder to Elect
Purchase" on the reverse side of the Note completed, to the Paying Agent
at the address specified in the notice prior to the close of business on
the Business Day immediately preceding the Excess Proceeds Payment Date;
(vi) that such Holder will be entitled to withdraw his or
her election if the Paying Agent receives, not later than the close of
business on the third Business Day immediately preceding the Excess
Proceeds Payment
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Date, a telegram, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Notes delivered for
purchase and a statement that such Holder is withdrawing his or her
election to have such Notes purchased; and
(vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of
$1,000 or integral multiples thereof.
On the Excess Proceeds Payment Date, the Company shall (i)
accept for payment on a pro rata basis Notes or portions thereof
tendered pursuant to the Excess Proceeds Offer; (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Notes or
portions thereof so accepted; and (iii) deliver, or cause to be
delivered, to the Trustee all Notes or portions thereof so accepted
together with an Officers' Certificate specifying the Notes or portions
thereof accepted for payment by the Company. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount
equal to the purchase price, and the Trustee shall promptly authenticate
and mail to such Holders a new Note equal in principal amount to any
unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of
$1,000 or integral multiples thereof. The Company will publicly
announce the results of the Excess Proceeds Offer as soon as practicable
after the Excess Proceeds Payment Date. For purposes of this Section
4.9, the Trustee shall act as the Paying Agent.
The Company will comply with Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable, in the event that such Excess Proceeds are
received by the Company under this Section 4.9 and the Company is required to
repurchase Notes as described above.
Notwithstanding the provisions of the preceding paragraphs of
this Section 4.9, the Company and its Restricted Subsidiaries may, in the
ordinary course of business (or, if otherwise than in the ordinary course of
business, upon receipt of (i) a favorable written opinion from an independent
financial advisor of national reputation as to the fairness from a financial
point of view to the Company or such Restricted Subsidiary of the proposed
transaction or (ii) in the case of a transaction or series of related
transactions with an aggregate value of not more than $25 million that
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relates solely to Appraisable Assets or an entity that holds no material assets
other than Appraisable Assets and engages in no material business other than
the holding of Appraisable Assets, a certificate of a Qualified Appraiser as to
the fair value of such Appraisable Assets), exchange all or a portion of its
property, businesses or assets for property, businesses or assets that, or
Capital Stock of a Person all or substantially all of whose assets, are of a
type used in a Hospitality-Related Business (provided that such Person shall
initially be designated a Restricted Subsidiary if such Person becomes a
Subsidiary of the Company by virtue of such Asset Sale), or a combination of
any such property, businesses or assets, or Capital Stock of such a Person and
cash or cash equivalents; provided that (i) there shall not exist immediately
prior or subsequent thereto a Default or an Event of Default, (ii) a majority
of the Independent Directors of the Company shall have approved a Board
Resolution that such exchange is fair to the Company or such Restricted
Subsidiary, as the case may be, and (iii) any cash or cash equivalents received
pursuant to any such exchange shall be applied in the manner applicable to Net
Cash Proceeds from an Asset Sale as set forth pursuant to the provisions of the
preceding paragraphs of this Section 4.9; and provided, further, that any
Capital Stock of a Person received in an Asset Sale pursuant to this paragraph
shall be owned directly by the Company or a Restricted Subsidiary and, when
combined with the Capital Stock of such Person already owned by the Company and
its Restricted Subsidiaries, shall constitute a majority of the voting power
and Capital Stock of such Person.
SECTION 4.10 Limitation on Other Subordinated Indebtedness.
The Company will not Incur any Indebtedness that is both subordinate in right
of payment to any Senior Indebtedness and senior in right of payment to the
Notes, and no Guarantor will Incur any Indebtedness that is both subordinate in
right of payment to any Guarantor Senior Indebtedness of such Guarantor and
senior in right of payment to such Guarantor's Guarantee of the Notes.
SECTION 4.11 Limitation on Line of Business. For so long as
any of the Notes are outstanding, the Company will not, and will not permit any
of its Restricted Subsidiaries to, engage in any business or activity other
than a Hospitality-Related Business.
SECTION 4.12 Repurchase of Notes upon a Change of Control.
Upon the occurrence of a Change of Control, each Holder shall have the right to
require the repurchase of his or her Notes by the Company in cash pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the principal amount thereof, plus
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accrued interest (if any) to the date of purchase (the "Change of Control
Payment"). Prior to the mailing of the notice to Holders provided for in the
succeeding paragraph of this Section 4.12, but in any event within 30 days
following any Change of Control, the Company covenants to (i) repay in full all
indebtedness of the Company that would prohibit the repurchase of the Notes as
provided for in the succeeding paragraph of this Section 4.12 or (ii) obtain
any requisite consents under instruments governing any such indebtedness of the
Company to permit the repurchase of the Notes as provided for in the succeeding
paragraph of this Section 4.12. The Company shall first comply with the
covenant in the preceding sentence before it shall be required to repurchase
Notes pursuant to this Section 4.12. Notwithstanding the foregoing, a third
party may make the Change of Control Offer on behalf of the Company, provided
such Change of Control Offer is made in the manner, at the times and otherwise
in accordance with the requirements applicable to a Change of Control made by
the Company and such third party purchases all Notes validly tendered and not
withdrawn pursuant to such Change of Control Offer.
Within 30 days of the Change of Control, the Company shall
mail a notice to the Trustee and each Holder stating:
(i) that a Change of Control has occurred (and a brief
description of the events resulting in such Change of Control), that the
Change of Control Offer is being made pursuant to this Section 4.12 and
that all Notes validly tendered will be accepted for payment;
(ii) the purchase price and the date of purchase (which
shall be the date 20 Business Days from the date such notice is mailed)
(the "Change of Control Payment Date");
(iii) that any Note not tendered will continue to accrue
interest pursuant to its terms;
(iv) that, unless the Company defaults in the payment of
the Change of Control Payment, any Note accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest on and after
the Change of Control of Payment Date;
(v) that Holders electing to have any Note or portion
thereof purchased pursuant to the Change of Control Offer will be
required to surrender such Note, together with the form entitled "Option
of the Holder to Elect Purchase" on the reverse side of such Note
completed, to the Paying Agent at the address specified
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in the notice prior to the close of business on the Business Day
immediately preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the third Business Day immediately preceding the Change of
Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Notes delivered for purchase and a statement that such Holder is
withdrawing his or her election to have such Notes purchased; and
(vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of
$1,000 or integral multiples thereof.
On or before the Change of Control Payment Date, the Company
shall: (i) accept for payment Notes or portion thereof tendered pursuant to
the Change of Control Offer; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee, all
Notes or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail, to the Holders of Notes so accepted,
payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail to such Holders a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered; provided that each
Note purchased and each new Note issued shall be in a principal amount of
$1,000 or integral multiples thereof. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For purposes of this Section 4.12, the Trustee
shall act as Paying Agent.
The Company will comply with Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in the event that a Change of Control
occurs and the Company is required to repurchase the Notes under this Section
4.12.
If the Company is unable to repay all of its indebtedness that
would prohibit repurchase of the Notes or is
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unable to obtain the consents of the holders of indebtedness, if any, of the
Company outstanding at the time of a Change of Control whose consent would be
so required to permit the repurchase of Notes, then the Company will have
breached this Section 4.12. This breach will constitute an Event of Default if
it continues for a period of 30 consecutive days after written notice is given
to the Company by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes outstanding. In addition, the failure by the
Company to repurchase Notes at the conclusion of the Change of Control Offer
will constitute an Event of Default without any waiting period or notice
requirements.
SECTION 4.13 Existence. Subject to Articles Four and Five of
this Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each such Subsidiary and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided that the Company shall not be required to preserve any
such right, license or franchise, or the existence of any Restricted
Subsidiary, if the maintenance or preservation thereof is no longer desirable
in the conduct of the business of the Company and its Restricted Subsidiaries
taken as a whole.
SECTION 4.14 Payment of Taxes and Other Claims. The Company
will pay or discharge and shall cause each of its Restricted Subsidiaries to
pay or discharge, or cause to be paid or discharged, before the same shall
become delinquent (i) all material taxes, assessments and governmental charges
levied or imposed upon (a) the Company or any such Restricted Subsidiary, (b)
the income or profits of any such Restricted Subsidiary which is a corporation
or (c) the property of the Company or any such Restricted Subsidiary and (ii)
all material lawful claims for labor, materials and supplies that, if unpaid,
might by law become a Lien upon the property of the Company or any such
Subsidiary; provided that neither the Company nor any such Restricted
Subsidiary shall not be required to pay or discharge, or cause to be paid or
discharged, any such tax, assessment, charge or claim the amount, applicability
or validity of which is being contested in good faith by appropriate
proceedings and for which adequate reserves have been established.
SECTION 4.15 Maintenance of Properties and Insurance. The
Company will cause all properties used or useful in the conduct of its business
or the business of any
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of its Restricted Subsidiaries to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be advantageously
conducted at all times; provided that nothing in this Section 4.15 shall
prevent the Company or any such Subsidiary from discontinuing the use,
operation or maintenance of any of such properties or disposing of any of them,
if such discontinuance or disposal is, in the judgment of the Company,
desirable in the conduct of the business of the Company or such Subsidiary.
The Company will provide or cause to be provided, for itself
and its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, public liability insurance, with reputable insurers or with the
government of the United States of America, or an agency or instrumentality
thereof, in such amounts, with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry in which the
Company or such Restricted Subsidiary, as the case may be, is then conducting
business.
SECTION 4.16 Notice of Defaults. In the event that the
Company becomes aware of any Default or Event of Default the Company, promptly
after it becomes aware thereof, will give written notice thereof to the
Trustee.
SECTION 4.17 Compliance Certificates. (a) The Company shall
deliver to the Trustee, within 45 days after the end of each fiscal quarter
(120 days after the end of the last fiscal quarter of each year), an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that occurred during such fiscal quarter. In the case of the Officers'
Certificate delivered on or before a date not more than 120 days of the end of
each fiscal year, such certificate shall contain a certification from the
principal executive officer, principal financial officer or principal
accounting officer that he or she has conducted or supervised a review of the
activities of the Company and its Restricted Subsidiaries and of the Company's
and its Restricted Subsidiaries' performance under this Indenture and that to
the best of such officer's knowledge, based upon such review, the Company has
complied with all conditions and covenants under this Indenture. For purposes
of this Section 4.17, such compliance shall be determined without regard to any
period of grace or requirement of notice provided under this Indenture.
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If he or she does know of such a Default or Event of Default, the certificate
shall describe any such Default or Event of Default and its nature and status
thereof. The first certificate to be delivered pursuant to clause (a) of this
Section 4.17 shall be for the first fiscal quarter beginning after the
execution of this Indenture.
(b) The Company shall deliver to the Trustee, within 90
days after the end of the Company's fiscal year, a certificate signed by the
Company's independent certified public accountants stating (i) that their audit
examination has included a review of the terms of this Indenture and the Notes
as they relate to accounting matters, (ii) that they have read the most recent
Officers' Certificate delivered to the Trustee pursuant to paragraph (a) of
this Section 4.17 and (iii) whether, in connection with their audit
examination, anything came to their attention that caused them to believe that
the Company was not in compliance with any of the terms, covenants, provisions
or conditions of Article Four and Section 5.1 of this Indenture as they pertain
to accounting matters and, if any Default or Event of Default has come to their
attention, specifying the nature and period of existence thereof; provided that
such independent certified public accountants shall not be liable in respect of
such statement by reason of any failure to obtain knowledge of any such Default
or Event of Default that would not be disclosed in the course of an audit
examination conducted in accordance with generally accepted auditing standards
in effect at the date of such examination.
(c) Within 90 days of the end of each of the Company's
fiscal years, the Company shall deliver to the Trustee a list of all
Significant Subsidiaries. The Trustee shall have no duty with respect to any
such list except to keep it on file and available for inspection by the
Holders.
SECTION 4.18 Commission Reports and Reports to Holders.
Whether or not required by the rules and regulations of the Commission, so long
as any Notes are outstanding, the Company will furnish to the Holders all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants. In addition, whether or not required by the rules and
regulations of the Commission, the Company will submit a copy of all such
information with the Commission for public availability (unless the Commission
will not accept such a submission) and file such information with the Trustee
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and make such information available to investors and securities analysts who
request it in writing.
SECTION 4.19 Waiver of Stay, Extension or Usury Laws. The
Company covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the Principal of, premium, if any, or interest on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or that may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge, Etc. The Company shall
not consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to any Person (other than a consolidation with or merger with or
into a Wholly Owned Restricted Subsidiary that is a Guarantor and has a
positive net worth); provided that, in connection with any such merger of the
Company with such a Wholly Owned Restricted Subsidiary, no consideration (other
than Common Stock in the surviving Person or the Company) shall be issued or
distributed to the stockholders of the Company) nor permit any Person to merge
with or into the Company unless:
(i) the Company shall be the continuing Person, or the
Person (if other than the Company) formed by such consolidation or into
which the Company is merged or that acquired or leased such property and
assets of the Company shall be a corporation organized and validly
existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of the obligations
of the Company on all of the Notes and under this Indenture;
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(ii) immediately prior to and immediately after giving
effect to such transaction, no Default or Event of Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction on
a pro forma basis, the Company or any Person becoming the successor
obligor of the Notes shall have a Consolidated Net Worth equal to or
greater than the Consolidated Net Worth of the Company immediately prior
to such transaction;
(iv) immediately after giving effect to such transaction on
a pro forma basis, the Company or any Person becoming the successor
obligor of the Notes could Incur at least $1.00 of Indebtedness (other
than Permitted Indebtedness); and
(v) the Company delivers to the Trustee an Officers'
Certificate (attaching the arithmetic computations to demonstrate
compliance with clauses (iii) and (iv) of this Section 5.1) and Opinion
of Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with this Section 5.1
and that all conditions precedent provided for herein relating to such
transaction have been complied with;
provided, however, that clauses (iii) and (iv) of this Section 5.1 do not apply
if, in the good faith determination of the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of the
Company; and provided further that any such transaction shall not have as one
of its purposes the evasion of the foregoing limitations.
SECTION 5.2 Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.1 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer, lease or other disposition is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein.
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default. An "Event of Default" shall
occur with respect to the Notes if:
(i) the Company defaults in the payment of the Principal
of or premium, if any, on any Note when the same becomes due and payable
at maturity, upon acceleration, redemption or otherwise;
(ii) the Company defaults in the payment of interest on any
Note when the same becomes due and payable, and such default continues
for a period of 30 days;
(iii) the Company or any Guarantor defaults in the
performance of or breaches any other covenant or agreement of the
Company in this Indenture (other than those contained in Sections 10.1,
10.2 and 10.3) or under the Notes and such default or breach continues
for a period of 45 consecutive days after written notice by the Trustee
or the Holders of 25% or more in aggregate principal amount of the
Notes;
(iv) there occurs with respect to any issue or issues of
(A) Recourse Indebtedness of the Company or any of its Significant
Subsidiaries having an outstanding principal amount, in the aggregate
for all such issues of all such Persons, of $10 million or more, whether
such Indebtedness now exists or shall hereafter be created, or (B)
Non-Recourse Indebtedness of the Company or any of its Significant
Subsidiaries having an outstanding principal amount, in the aggregate
for all such issues of all such Persons, in excess of the greater of (x)
$15 million or (y) 10% of the aggregate assets of the Company and its
Restricted Subsidiaries, measured as of the end of the Company's most
recent fiscal quarter for which internal financial statements are
available immediately preceding the date on which such default occurred,
determined on a pro forma basis, whether such Non-Recourse Indebtedness
now exists or shall hereafter be created, an event of default that has
caused the holder thereof to declare such Indebtedness to be due and
payable prior to its Stated Maturity or a failure to pay such
Indebtedness at its Stated Maturity, provided that with respect to both
clause (A) and clause (B), such declaration and acceleration or such
failure to pay, as the case may be, is not rescinded or cured within 10
days after the later of (I) the Closing Date and (II) the date of such
declaration and acceleration or such failure to
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pay, and provided further that for purposes of calculating any amount
pursuant to this Section 6.1(iv), the principal amount of the Vinings
Indebtedness shall be zero if and so long as no Person shall have any
right by law, contract, ownership of securities or otherwise, to
exercise any default remedy under the Vinings Indebtedness or any
related instrument, agreement or other document (collectively, the
"Vinings Bond Documents"), to take any other action to enforce against
any Person the obligation to pay any principal amount of, interest on or
other amount payable in respect of, the Vinings Bond Documents or any
Indebtedness or other Obligations created or evidenced thereby or to
exercise any right to foreclose, draw or otherwise realize on any letter
of credit, other credit enhancement, mortgage, pledge or other security
for the Vinings Bond Documents or any such Indebtedness or other
Obligations;
(v) any final judgment or order (other than that portion
of a final judgment or order as to which a reputable insurance company
has accepted full liability) for the payment of money in excess of $10
million (or, in the case of such a judgment in respect of Non-Recourse
Indebtedness, in excess of the greater of (A) $15 million or (B) 10% of
the aggregate assets of the Company and its Restricted Subsidiaries,
measured as of the end of the Company's most recent fiscal quarter for
which internal financial statements are available immediately preceding
the date on which such default occurred, determined on a pro forma
basis) in the aggregate for all such final judgments or orders shall be
rendered against the Company or any of its Significant Subsidiaries and
shall not be paid or discharged, and there shall be any period of 30
consecutive days following entry of the final judgment or order that
causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to
exceed $10 million (or, in the case all such judgments are in respect of
Non-Recourse Indebtedness, in excess of the greater of (A) $15 million
or (B) 10% of the aggregate assets of the Company and its Restricted
Subsidiaries, measured as of the end of the Company's most recent fiscal
quarter for which internal financial statements are available
immediately preceding the date on which such default occurred,
determined on a pro forma basis) during which a stay of enforcement of
such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(vi) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the
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Company or any of its Significant Subsidiaries in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Company or any of its Significant Subsidiaries or for all or
substantially all of the property and assets of the Company or any of
its Significant Subsidiaries or (C) the winding up or liquidation of the
affairs of the Company or any of its Significant Subsidiaries and, in
each case, such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or
(vii) the Company or any of its Significant Subsidiaries (A)
commences a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law,
(B) consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any of its Significant Subsidiaries or for
all or substantially all of the property and assets of the Company or
any of its Significant Subsidiaries or (C) effects any general
assignment for the benefit of creditors.
SECTION 6.2 Acceleration. If an Event of Default (other
than an Event of Default specified in clause (vi) or (vii) of Section 6.1 that
occurs with respect to the Company) occurs and is continuing under this
Indenture, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding, by written notice to the Company (and to
the Trustee if such notice is given by the Holders) (the "Acceleration
Notice"), may, and the Trustee at the request of such Holders shall, declare
the Principal of, premium, if any, and accrued interest on the Notes to be
immediately due and payable. Upon a declaration of acceleration, such
Principal of, premium, if any, and accrued interest shall be immediately due
and payable. In the event of a declaration of acceleration because an Event of
Default set forth in clause (iv) of Section 6.1 has occurred and is continuing,
such declaration of acceleration shall be automatically rescinded and annulled
if the event of default or payment default triggering such Event of Default
pursuant to clause (iv) of Section 6.1 shall be remedied or cured by the
Company and/or the relevant Significant Subsidiaries or waived by the holders
of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in clause
(vi) or
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(vii) of Section 6.1 occurs with respect to the Company, the Principal of,
premium, if any, and accrued interest on the Notes then outstanding shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
The Holders of at least a majority in principal amount of the
outstanding Notes, by written notice to the Company and to the Trustee, may
waive all past Defaults and rescind and annul a declaration of acceleration and
its consequences if (i) all existing Events of Default, other than the
nonpayment of the Principal of, premium, if any, and interest on the Notes that
have become due solely by such declaration of acceleration, have been cured or
waived and (ii) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction.
SECTION 6.3 Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue, in its own name or as trustee of an
express trust, any available remedy by proceeding at law or in equity to
collect the payment of Principal of, premium, if any, or interest on the Notes
or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding.
SECTION 6.4 Waiver of Past Defaults. Subject to Sections
6.2, 6.7 and 9.2, the Holders of at least a majority in principal amount of the
outstanding Notes, by notice to the Trustee, may waive an existing Default or
Event of Default and its consequences, except a Default in the payment of
Principal of, premium, if any, or interest on any Note as specified in clause
(i) or (ii) of Section 6.1 or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of the holder
of each outstanding Note affected. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 6.5 Control by Majority. The Holders of at least a
majority in aggregate principal amount of the outstanding Notes may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any
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direction that conflicts with law or this Indenture, that may involve the
Trustee in personal liability, or that the Trustee determines in good faith may
be unduly prejudicial to the rights of Holders of Notes not joining in the
giving of such direction and may take any other action it deems proper that is
not inconsistent with any such direction received from Holders of Notes
pursuant to this Section 6.5.
SECTION 6.6 Limitation on Suits. A Holder may not institute
any proceeding, judicial or otherwise, with respect to this Indenture or the
Notes, or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) the Holder gives the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal
amount of outstanding Notes makes a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer the Trustee indemnity
reasonably satisfactory to the Trustee against any costs, liabilities or
expenses to be incurred in compliance with such request;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and offer of indemnity; and
(v) during such 60-day period, the Holders of at least a
majority in aggregate principal amount of the outstanding Notes do not
give the Trustee a direction that is inconsistent with such written
request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of Principal of, premium, if any, or interest on,
such Note or to bring suit for the enforcement of any such payment, on or after
the respective due dates expressed on such Note, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of
Default in payment of Principal, premium or interest specified in clause (i) or
(ii) of Section 6.1 occurs and is continuing, the Trustee may recover judgment
in its own name
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and as trustee of an express trust against the Company, any Guarantor, or any
other obligor of the Notes for the whole amount of Principal, premium, if any,
and accrued interest remaining unpaid, together with interest on overdue
Principal, premium, if any, and, to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each case at the rate
specified in the Notes, and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.9 Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim
for the compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.7)
and the Holders allowed in any judicial proceedings relative to the Company (or
any other obligor of the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any monies, securities or other
property payable or deliverable upon conversion or exchange of the Notes or
upon any such claims and to distribute the same, and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee under Section 7.7. Nothing herein contained shall be deemed to empower
the Trustee to authorize or consent to, or accept or adopt on behalf of any
Holder, any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities. If the Trustee collects any money
pursuant to this Article Six, it shall pay out the money in the following
order:
First: to the Trustee for all amounts due under Section 7.7;
Second: to Holders for amounts then due and unpaid for
Principal of, premium, if any, and interest on the Notes in respect of
which or for the benefit of which such money has been collected,
ratably, without
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preference or priority of any kind, according to the amounts due and
payable on such Notes for Principal, premium, if any, and interest,
respectively; and
Third: to the Company or any other obligors of the Notes, as
their interests may appear, or as a court of competent jurisdiction may
direct.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Holders pursuant to this
Section 6.10.
SECTION 6.11 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court may
require any party litigant in such suit (other than the Trustee) to file an
undertaking to pay the costs of the suit, and the court may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant (other
than the Trustee) in the suit having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section 6.11 does not
apply to a suit by a Holder pursuant to Section 6.7, or a suit by Holders of
more than 10% in principal amount of the outstanding Notes.
SECTION 6.12 Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then, and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Company, Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 6.13 Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or wrongfully taken Notes in Section 2.8, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 6.14 Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Six or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.1 General. The duties and responsibilities of the
Trustee shall be as provided by the Trust Indenture Act and as set forth
herein. Notwithstanding the foregoing, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, unless it receives indemnity
satisfactory to it against any loss, liability or expense. Whether or not
therein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Article Seven.
SECTION 7.2 Certain Rights of Trustee. Subject to Trust
Indenture Act Sections 315(a) through (d):
(i) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(ii) before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Section 12.4. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
certificate or opinion;
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(iii) the Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any
agent appointed with due care;
(iv) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized
or within its rights or powers or for any action it takes or omits to
take in accordance with the direction of the Holders of a majority in
principal amount of the outstanding Notes relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture; and
(vi) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon.
SECTION 7.3 Individual Rights of Trustee. The Trustee, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Trust Indenture Act Sections 310(b)
and 311. For purposes of Trust Indenture Act Section 311(b)(4) and (6):
(a) "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after delivery
of the goods or securities in currency or in checks or other orders drawn upon
banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or incurred
by the Company for the purpose of financing the purchase, processing,
manufacturing, shipment, storage or sale of goods, wares or merchandise and
which is secured by documents evidencing title to, possession of, or a lien
upon, the goods, wares or merchandise or the receivables
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or proceeds arising from the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the Company
arising from the making, drawing, negotiating or incurring of the draft, bill
of exchange, acceptance or obligation.
SECTION 7.4 Trustee's Disclaimer. Neither the Trustee nor
any of its agents (i) makes any representation as to the validity or adequacy
of this Indenture or the Notes, (ii) shall be accountable for the Company's use
or application of the proceeds from the Notes and (iii) shall be responsible
for any statement in the Notes other than its certificate of authentication.
SECTION 7.5 Notice of Default. If any Default or any Event
of Default occurs and is continuing and if such Default or Event of Default is
known to the Trustee, the Trustee shall mail to each Holder in the manner and
to the extent provided in Trust Indenture Act Section 313(c) notice of Default
or Event of Default within 45 days after it occurs, unless such Default or
Event of Default has been cured; provided, however, that, except in the case of
a default in the payment of the Principal of, premium, if any, or interest on
any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interest of the Holders.
SECTION 7.6 Reports by Trustee to Holders. Within 60 days
after each May 15, beginning with May 15, 1997, the Trustee shall mail to each
Holder as provided in Trust Indenture Act Section 313(c) a brief report dated
as of such May 15, if required by Trust Indenture Act Section 313(a).
SECTION 7.7 Compensation and Indemnity. The Company shall
pay to the Trustee such compensation as shall be agreed upon in writing for its
services. The compensation of the Trustee shall not be limited by any law on
compensation of a Trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by the Trustee without negligence or bad faith or
willful misconduct on its part arising out of or in connection with the
acceptance or administration of this Indenture and its duties under this
Indenture and the Notes. Such expenses shall include the reasonable
compensation and expenses of the Trustee's agents and counsel.
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The Company shall indemnify the Trustee for, and hold it
harmless against, any loss or liability or expense incurred by it without
negligence or bad faith or willful misconduct on its part arising out of or in
connection with the acceptance or administration of this Indenture and its
duties under this Indenture and the Notes, including the costs and expenses of
defending itself against any claim or liability and of complying with any
process served upon it or any of its officers in connection with the exercise
or performance of any of its powers or duties under this Indenture and the
Notes.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a lien prior to the Notes on all money or property
held or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay Principal of, premium, if any, and interest on
particular Notes.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (vi) or (vii) of Section
6.1, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
SECTION 7.8 Replacement of Trustee. A resignation or
removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance of appointment as
provided in this Section 7.8.
The Trustee may resign at any time by so notifying the Company
in writing. The Holders of a majority in principal amount of the outstanding
Notes may remove the Trustee by so notifying the Trustee in writing and may
appoint a successor Trustee with the consent of the Company. The Company may
remove the Trustee if: (i) the Trustee is no longer eligible under Section 7.10
of this Indenture; (ii) the Trustee is adjudged a bankrupt or an insolvent;
(iii) a receiver or other public officer takes charge of the Trustee or its
property; or (iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the outstanding Notes may
appoint a successor Trustee to replace the successor Trustee
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appointed by the Company. If the successor Trustee does not deliver its
written acceptance required by the next succeeding paragraph of this Section
7.8 within 30 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of a majority in principal amount
of the outstanding Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.7, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in the preceding paragraph.
If the Trustee is no longer eligible under Section 7.10, any
Holder who satisfies the requirements of Trust Indenture Act Section 310(b) may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
The Company shall give notice of any resignation and any
removal of the Trustee and each appointment of a successor Trustee to all
Holders. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligation under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
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SECTION 7.10 Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of Trust Indenture Act Section
310(a)(1). The Trustee shall have a combined capital and surplus of at least
$25,000,000 as set forth in its most recent published annual report of
condition.
SECTION 7.11 Money Held in Trust. The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
with the Company. Money held in trust by the Trustee need to be segregated
from other funds except to the extent required by law and except for money held
in trust under Article Eight of this Indenture.
SECTION 7.12 Withholding Taxes. The Trustee, as agent for
the Company, shall exclude and withhold from each payment of Principal and
interest and other amounts due hereunder or under the Notes any and all
withholding taxes applicable thereto as required by law. The Trustee agrees to
act as such withholding agent and, in connection therewith, whenever any
present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Notes, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the holders of the Notes, that it will file any necessary
withholding tax returns or statements when due, and that, as promptly as
possible after the payment thereof, it will deliver to each holder of a Note
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such holders may reasonably request from
time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.1 Termination of Company's Obligations. Except as
otherwise provided in this Section 8.1, the Company and each Guarantor may
terminate their respective obligations under the Notes, the Subsidiary
Guarantees and this Indenture if:
(i) all Notes previously authenticated and delivered
(other than destroyed, lost or stolen Notes that have been replaced or
Notes that are paid pursuant to Section 4.1 or Notes for whose payment
money or securities have theretofore been held in trust and thereafter
repaid to the Company, as provided in Section 8.5) have been delivered
to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder; or
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(ii) (A) the Notes mature within one year or all of them
are to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption, (B) the
Company irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely
for the benefit of the Holders for that purpose, money or U.S.
Government Obligations sufficient (in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee), without consideration
of any reinvestment of any interest thereon, to pay Principal, premium,
if any, and interest on the Notes to maturity or redemption, as the case
may be, and to pay all other sums payable by it hereunder, (C) no
Default or Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit, (D) such deposit
will not result in a breach or violation of, or constitute a default
under, this Indenture or any other agreement or instrument to which the
Company is a party or by which it is bound and (E) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, in each case stating that all conditions precedent provided for
herein relating to the satisfaction and discharge of this Indenture have
been complied with.
With respect to the foregoing clause (i), the Company's
obligations under Section 7.7 shall survive. With respect to the foregoing
clause (ii), the Company's obligations in Sections 2.2, 2.3, 2.4, 2.5, 2.6,
2.7, 2.8, 2.13, 4.1, 4.2, 7.7, 7.8, 8.4, 8.5 and 8.6 and the Guarantors'
obligations in Article Eleven shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Sections 7.7, 8.5
and 8.6 shall survive. After any such irrevocable deposit, the Trustee upon
request shall acknowledge in writing the discharge of the Company's and the
Guarantors' obligations under the Notes, the Subsidiary Guarantees and this
Indenture except for those surviving obligations specified above.
SECTION 8.2 Defeasance and Discharge of Indenture. Except
as otherwise provided in this Section 8.2, the Company will be deemed to have
paid and will be discharged from any and all obligations in respect of the
Notes (and each Guarantor will be discharged from any and all obligations in
respect of the Subsidiary Guarantees) on the 123rd day after the date of the
deposit referred to in clause (A) of this Section 8.2, and the provisions of
this Indenture will no longer be in effect with respect to the Notes and the
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Subsidiary Guarantees, and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same, provided that the following
conditions shall have been satisfied:
(A) with reference to this Section 8.2, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.10
of this Indenture) and conveyed all right, title and interest for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the Principal of, premium, if
any, and interest, if any, on the Notes, and dedicated solely to, the
benefit of the Holders, in and to (1) money in an amount, (2) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and Principal in respect thereof in accordance with their terms,
will provide, not later than one day before the due date of any payment
referred to in this clause (A), money in an amount or (3) a combination
thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
without consideration of the reinvestment of such interest and after
payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the Principal of,
premium, if any, and accrued interest on the outstanding Notes at the
Stated Maturity of such Principal or interest; provided that the Trustee
shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of such
Principal, premium, if any, and interest with respect to the Notes;
(B) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement
or instrument to which the Company or any Guarantor is a party or by
which it is bound;
(C) immediately after giving effect to such deposit on a
pro forma basis, no Event of Default, or event that after the giving of
notice or lapse of time or both would become an Event of Default, shall
have occurred and be continuing on the date of such deposit or during
the period ending on the 123rd day after such date of deposit;
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(D) the Company shall have delivered to the Trustee (i)
either (x) an Opinion of Counsel directed to the Trustee to the effect
that the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of the Company's exercise of its option
under this Section 8.2 and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not
occurred, which Opinion of Counsel must be based upon (and accompanied
by a copy of) a ruling of the Internal Revenue Service to the same
effect unless there has been a change in the applicable federal income
tax law after the date of this Indenture such that a ruling from the
Internal Revenue Service is no longer required or (y) a ruling directed
to the Trustee received from the Internal Revenue Service to the same
effect as the Opinion of Counsel described in clause (x) above and (ii)
an Opinion of Counsel to the effect that (x) the creation of the
defeasance trust does not violate the Investment Company Act of 1940,
(y) the Holders have a valid first priority security interest in the
trust funds subject to Section 7.7 and (z) after the passage of 123 days
following the deposit (except, with respect to any trust funds for the
account of any Holder who may be deemed to be an "insider" for purposes
of the United States Bankruptcy Code, after one year following the
deposit), the trust funds will not be subject to the effect of Section
547 of the United States Bankruptcy Code or Section 15 of the New York
Debtor and Creditor Law in a case commenced by or against the Company
under either such statute, and either (I) the trust funds will no longer
remain the property of the Company (and therefore will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (II) if a court
were to rule under any such law in any case or proceeding that the trust
funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold, for
the benefit of the Holders, a valid and perfected first priority
security interest in such trust funds that is not avoidable in
bankruptcy or otherwise except for the effect of Section 552(b) of the
United States Bankruptcy Code on interest on the trust funds accruing
after the commencement of a case under such statute and (b) the Holders
will be entitled to receive adequate protection of their interests in
such trust funds if such trust funds are used in such case or
proceeding;
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(E) if the Notes are then listed on a national securities
exchange, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit, defeasance and discharge will
not cause the Notes to be delisted; and
(F) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.2 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day
(or one year) period referred to in clause (D)(ii)(y) of this Section 8.2, none
of the Company's or the Guarantors' obligations under this Indenture shall be
discharged. Subsequent to the end of such 123-day (or one year) period with
respect to this Section 8.2, the Company's obligations in Sections 2.2, 2.3,
2.4, 2.5, 2.6, 2.7, 2.8, 2.13, 4.1, 4.2, 7.7, 7.8, 8.5 and 8.6 and the
Guarantors' obligations in Article Eleven shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Sections
7.7, 8.5 and 8.6 shall survive. If and when a ruling from the Internal Revenue
Service or an Opinion of Counsel referred to in clause (D)(i) of this Section
8.2 is able to be provided specifically without regard to, and not in reliance
upon, the continuance of the Company's obligations under Section 4.1, then the
Company's obligations under such Section 4.1 shall cease upon delivery to the
Trustee of such ruling or Opinion of Counsel and compliance with the other
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.2.
After any such irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.3 Defeasance of Certain Obligations. The Company
may omit to comply with any term, provision or condition set forth in (x)
clauses (iii) and (iv) of Section 5.1 (and clause (v) of Section 5.1 shall be
interpreted not to require compliance of such clauses (iii) and (iv))and all of
the covenants described under Sections 4.3 through 4.18, and (y) clause (iii)
of Section 6.1 with respect to such clauses and covenants and clauses (iv) and
(v) of Section 6.1 shall be deemed not to be Events of Default, in each case
with respect to the outstanding Notes if:
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(i) with reference to this Section 8.3, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.10)
and conveyed all right, title and interest to the Trustee for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the Principal of, premium, if
any, and interest, if any, on the Notes, and dedicated solely to, the
benefit of the Holders, in and to (A) money in an amount, (B) U.S.
Government Obligations that, through the payment of interest and
Principal in respect thereof in accordance with their terms, will
provide, not later than one day before the due date of any payment
referred to in this clause (i), money in an amount or (C) a combination
thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
without consideration of the reinvestment of such interest and after
payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the Principal of,
premium, if any, and interest on the outstanding Notes on the Stated
Maturity of such Principal or interest; provided that the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of such Principal,
premium, if any, and interest with respect to the Notes;
(ii) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement
or instrument to which the Company or any Guarantor is a party or by
which it is bound;
(iii) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit;
(iv) the Company has delivered to the Trustee an Opinion of
Counsel to the effect that (A) the creation of the defeasance trust does
not violate the Investment Company Act of 1940, (B) the Holders have a
valid first-priority security interest in the trust funds, (C) the
Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain
obligations and Events of Default and will be subject to federal income
tax on the same amount and in the same manner and at the same times
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as would have been the case if such deposit and defeasance had not
occurred and (D) after the passage of 123 days following the deposit
(except, with respect to any trust funds for the account of any Holder
who may be deemed to be an "insider" for purposes of the United States
Bankruptcy Code, after one year following the deposit), the trust funds
will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in
a case commenced by or against the Company under either such statute,
and either (1) the trust funds will no longer remain the property of the
Company (and therefore will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (2) if a court were to rule
under any such law in any case or proceeding that the trust funds
remained property of the Company, (x) assuming such trust funds remained
in the possession of the Trustee prior to such court ruling to the
extent not paid to the Holders, the Trustee will hold, for the benefit
of the Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise (except for the
effect of Section 552(b) of the United States Bankruptcy Code on
interest on the trust funds accruing after the commencement of a case
under such statute), (y) the Holders will be entitled to receive
adequate protection of their interests in such trust funds if such trust
funds are used in such case or proceeding and (z) no property, rights in
property or other interests granted to the Trustee or the Holders in
exchange for, or with respect to, such trust funds will be subject to
any prior rights of holders of other Indebtedness of the Company or any
of its Subsidiaries;
(v) if the Notes are then listed on a national securities
exchange, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit defeasance and discharge will
not cause the Notes to be delisted; and
(vi) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.3 have been complied with.
SECTION 8.4 Application of Trust Money. Subject to Section
8.6, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.1, 8.2 or 8.3, as the case
may be, and
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shall apply the deposited money and the money from U.S. Government Obligations
in accordance with the Notes and this Indenture to the payment of Principal of,
premium, if any, and interest on the Notes; but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.5 Repayment to Company. Subject to Sections 7.7,
8.1, 8.2 and 8.3, the Trustee and the Paying Agent shall promptly pay to the
Company upon request set forth in an Officers' Certificate any excess money
held by them at any time and thereupon shall be relieved from all liability
with respect to such money. The Trustee and the Paying Agent shall pay to the
Company upon request any money held by them for the payment of Principal,
premium, if any, or interest that remains unclaimed for two years; provided
that the Trustee or such Paying Agent before being required to make any payment
may cause to be published at the expense of the Company once in a newspaper of
general circulation in the City of New York or mail to each Holder entitled to
such money at such Holder's address (as set forth in the Security Register)
notice that such money remains unclaimed and that after a date specified
therein (which shall be at least 30 days from the date of such publication or
mailing) any unclaimed balance of such money then remaining will be repaid to
the Company. After payment to the Company, Holders entitled to such money must
look to the Company for payment as general creditors unless an applicable law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
SECTION 8.6 Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
Section 8.1, 8.2 or 8.3, as the case may be, by reason of any legal proceeding
or by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.1, 8.2 or 8.3, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with Section
8.1, 8.2 or 8.3, as the case may be; provided that, if the Company has made any
payment of Principal of, premium, if any, or interest on any Notes because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders. The Company when
authorized by a resolution of its Board of Directors, the Guarantors and the
Trustee may amend or supplement this Indenture or the Notes without notice to
or the consent of any Holder to:
(i) cure any ambiguity, defect or inconsistency in this
Indenture; provided that such amendments or supplements shall not
adversely affect the interests of the Holders in any material respect;
(ii) comply with Article Five;
(iii) comply with any requirements of the Commission in
connection with the qualification of this Indenture under the Trust
Indenture Act;
(iv) evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(v) make any other change that does not materially and
adversely affect the rights of any Holder.
SECTION 9.2 With Consent of Holders. Subject to Sections
6.4 and 6.7 and without prior notice to the Holders, the Company when
authorized by its Board of Directors (as evidenced by a Board Resolution), the
Guarantors, and the Trustee may amend this Indenture and the Notes with the
written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding, and the Holders of not less
than a majority in aggregate principal amount of the Notes then outstanding by
written notice to the Trustee may waive future compliance by the Company with
any provision of this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.2, without
the consent of each Holder affected, a modification, amendment or waiver,
including a waiver pursuant to Section 6.4, may not:
(i) change the Stated Maturity of the Principal of, or any
installment of interest on, any Note;
(ii) reduce the principal amount of, or premium, if any, or
interest on, any Note;
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(iii) change the place or currency of payment of Principal
of, premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the enforcement
of any payment on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date) of any Note;
(v) reduce the percentage stated in this Section 9.2 in
principal amount of outstanding Notes the consent of whose Holders is
necessary to modify or amend this Indenture;
(vi) waive a default in the payment of Principal of,
premium, if any, or interest on the Notes;
(vii) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver
of compliance with certain provisions of this Indenture or for waiver of
certain defaults;
(viii) modify or change any provision of this Indenture
affecting the ranking of the Notes or the Subsidiary Guarantees in a
manner adverse to the holders of the Notes; or
(ix) release any Guarantor from any of its obligations
under its Subsidiary Guarantee or this Indenture other than in
accordance with the provisions of this Indenture, or amend or modify any
provision relating to such release.
Notwithstanding anything to the contrary elsewhere in this
Indenture, for so long as the Credit Agreement is in effect, no amendment under
this Section 9.2 may (i) modify the subordination provision under Article Ten
in a manner adverse to the holders of Indebtedness under the Credit Agreement,
(ii) change the definition of either Designated Senior Indebtedness or Senior
Indebtedness, (iii) increase the rate of interest on the Notes, (iv) change the
maturity date of the Notes to a date prior to May 15, 2006, (v) increase any
Redemption Price or (vi) change the provisions of this Indenture relating to
the events constituting an Event of Default under Section 6.1, or acceleration
of the Notes under Section 6.2, may be effective unless the holders of a
majority of the Senior Indebtedness then outstanding under the Credit Agreement
shall have previously consented thereto in writing.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form
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of any proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company
will mail supplemental indentures to Holders upon request. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
Neither the Company nor any of its Subsidiaries will, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
SECTION 9.3 Revocation and Effect of Consent. Until an
amendment or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the Note of the consenting
Holder, even if notation of the consent is not made on any Note. However, any
such Holder or subsequent Holder may revoke the consent as to its Note or
portion of its Note. Such revocation shall be effective only if the Trustee
receives the notice of revocation before the date the amendment, supplement or
waiver becomes effective. An amendment, supplement or waiver shall become
effective on receipt by the Trustee of written consents from the Holders of the
requisite percentage in principal amount of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last two sentences of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
proxies) and only those persons shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date, but
any action that shall become
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effective prior to the expiration of such 90 days shall remain effective
thereafter.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it is of the type described in any of clauses
(i) through (ix) of Section 9.2. In case of an amendment or waiver of the type
described in clauses (i) through (ix) of Section 9.2, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Note that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.4 Notation on or Exchange of Notes. If an
amendment, supplement or waiver changes the terms of a Note, the Trustee may
require the Holder to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Note about the changed terms and return it to the
Holder and the Trustee may place an appropriate notation on any Note thereafter
authenticated. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms.
SECTION 9.5 Trustee to Sign Amendments, Etc. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture. Subject to the preceding sentence, the Trustee shall sign such
amendment, supplement or waiver if the same does not adversely affect the
rights of the Trustee. The Trustee may, but shall not be obligated to, execute
any such amendment, supplement or waiver that affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.6 Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the Trust Indenture Act as then in effect.
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ARTICLE TEN
SUBORDINATION
SECTION 10.1 Notes Subordinated to Senior Indebtedness. The
Company, for itself and its successors, and each Holder, by his or her
acceptance of Notes, agrees that the payment of the Principal of and interest
on the Notes is subordinated, to the extent and in the manner provided in this
Article Ten, to the right of payment in full to all present and future Senior
Indebtedness, and that these subordination provisions are for the benefit of
the holders of Senior Indebtedness.
The provisions of this Article Ten are for the benefit of the
holders of the Senior Indebtedness from time to time (and their successors and
assigns) and shall be enforceable directly by them and their respective
Representatives directly against the Company, each Guarantor, the Trustee and
the Holders (and their successors and assigns). The provisions of this Article
Ten shall be a continuing agreement and shall be irrevocable and shall remain
in full force and effect until payment in the full of the Senior Indebtedness
in cash or cash equivalents, and shall constitute a continuing and irrevocable
offer to all Persons who become holders of, or continue to hold, Senior
Indebtedness (whether such Senior Indebtedness was created or acquired before
or after the issuance of the Notes), each of which holders shall be deemed for
the purposes hereof to have acquired Senior Indebtedness in reliance upon the
provisions of this Article Ten. The provision of this Article Ten shall
survive the commencement of any reorganization or other proceedings with
respect to the Company, any Guarantor or any other Person and the discharge of
any claim in connection with such Reorganization or other proceedings,
including, without limitation, the discharge of any Senior Indebtedness or the
Guarantee.
The holders of the Senior Indebtedness and their respective
Representatives are hereby authorized to demand specific performance of the
provisions of this Article Ten at any time when the Company, any Guarantor or
any Holder shall have failed to comply with any provision of this Article Ten
applicable to it, and the Company, each Guarantor, and each Holder hereby
irrevocably waives any defense based on the adequacy of a remedy at law that
might be asserted as a bar to the remedy of specific performance hereof in any
action brought therefor by the holders of the Senior Indebtedness and their
respective Representatives.
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SECTION 10.2 No Payment on Notes in Certain Circumstances.
(a) No payment (by conversion, exchange, set-off or otherwise) shall be made
by or on behalf of the Company on account of any Obligation or, to the extent
the subordination thereof is permitted by applicable law, claim in respect of
the Notes, including the Principal of, premium, if any, or interest on the
Notes, or to redeem (or make a deposit in redemption of), defease (other than
payments made by the Trustee pursuant to Article Eight with respect to a
defeasance permitted by this Indenture, including the subordination provisions
herein) or acquire any of the Notes for cash, property or securities (other
than Junior Securities of the Company), (i) upon the maturity of the Designated
Senior Indebtedness or any other Senior Indebtedness with an aggregate
principal amount in excess of $1 million by lapse of time, acceleration or
otherwise, unless and until all Principal of, premium, if any, and interest on
such Senior Indebtedness and all other obligations in respect thereof shall
first be paid in full in cash or cash equivalents or such payment is duly
provided for, or unless and until any such maturity by acceleration has been
rescinded or waived or (ii) in the event of default in payment of any Principal
of, premium, if any, or interest on or any other amount payable in respect of
the Designated Senior Indebtedness or any other Senior Indebtedness with an
aggregate principal amount in excess of $1 million when it becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise, unless and until such payment default has been cured
or waived or has otherwise ceased to exist.
(b) Upon the happening of a default (any event that, after
notice or passage of time would be an event of default) or an event of default
(any event that permits the holders of Senior Indebtedness or their
representative or representatives immediately to accelerate its maturity) with
respect to any Designated Senior Indebtedness, other than a default in payment
of the Principal of, premium, if any, or interest on such Designated Senior
Indebtedness, upon written notice of such default or event of default given to
the Company and the Trustee by the holders of a majority of the principal
amount outstanding of such Designated Senior Indebtedness or their
representative or representatives or, if such default or event of default
results from the acceleration of the Notes, immediately upon such acceleration,
then, unless and until such default or event of default has been cured or
waived or otherwise has ceased to exist, no payment may be made by or on behalf
of the Company with respect to any Obligation or claim in respect of the Notes,
including the Principal of, premium, if any, or interest on the Notes or to
redeem (or make a deposit in redemption of), defease or
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acquire any of the Notes for cash, property or securities (other than Junior
Securities of the Company). Notwithstanding the foregoing, unless the
Designated Senior Indebtedness in respect of which such default or event of
default exists has been declared due and payable in its entirety within 180
days after the date written notice of such default or event of default is
delivered as set forth above or the date of such acceleration, as the case may
be (the "Payment Blockage Period"), and such declaration or acceleration has
not been rescinded, the Company shall be required then to pay all sums not paid
to the Holders of the Notes during the Payment Blockage Period due to the
foregoing prohibitions and to resume all other payments as and when due on the
Notes. Any number of such notices may be given; provided, however, that (i)
during any 360 consecutive days, only one Payment Blockage Period shall
commence and (ii) any such default or event of default that existed upon the
commencement of a Payment Blockage Period may not be the basis for the
commencement of any other Payment Blockage Period, unless such default or event
of default shall have been cured or waived for a period of not less than 90
consecutive days.
(c) In the event that, notwithstanding the foregoing
provisions of this Section 10.2, any payment or distribution of assets of the
Company from any source whether in cash, property or securities (other than
Junior Securities of the Company), shall be received by the Trustee or the
Holders on account of any Obligation or claim in respect of the Notes at a time
when such payment or distribution is prohibited by the foregoing provisions,
such payment or distribution shall be held in trust for the benefit of the
holders of Senior Indebtedness, and shall be paid or delivered by the Trustee
or such Holders, as the case may be, to the holders of the Senior Indebtedness
remaining unpaid or unprovided for or their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness held or represented by each, for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to pay or
to provide for the payment in full in cash or cash equivalents of all such
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of
any default or event of default, and any cure or waiver thereof, or any
acceleration under any Senior Indebtedness or under any agreement pursuant to
which Senior Indebtedness may have been issued.
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SECTION 10.3 Notes Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation or Reorganization of Company.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization or readjustment of the
Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or similar proceeding or upon assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of the
Company or otherwise:
(a) the holders of all Senior Indebtedness would first be
entitled to receive payment in full in cash or cash equivalents (or have such
payment duly provided for) of the Principal, premium, if any, and interest
payable in respect thereof before the Holders would be entitled to receive any
payment on account of the Principal of, premium, if any, and interest on the
Notes, in respect of the Redemption Price or Change of Control Payment or
otherwise in respect of the Notes;
(b) any payment or distribution of assets of the Company
of any kind or character, from any source, whether in cash, property or
securities (other than Junior Securities of the Company) to which the Holders
or the Trustee on behalf of the Holders would be entitled, except for the
subordination provisions of this Article Ten, would be paid by the liquidating
trustee or agent or other person making such a payment or distribution directly
to the holders of Senior Indebtedness remaining unpaid or unprovided for or
their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay or provide for the payment in full in
cash or cash equivalents of all such Senior Indebtedness, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company from any source, whether in
cash, property or securities (other than Junior Securities of the Company),
shall be received by the Trustee or the Holders on account of Principal of or
interest on the Notes before all Senior Indebtedness is paid in full in cash or
cash equivalents (or such payment is duly provided for), such payment or
distribution (subject to the provision of Section 10.6 and 10.7) shall be held
in trust by the Trustee or such Holders
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for the benefit of the holders of the Senior Indebtedness, or their
Representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full (except as such payment otherwise shall have been provided for)
of all Senior Indebtedness remaining unpaid after giving effect to all
concurrent payments and distributions and all provisions therefor to the
holders of such Senior Indebtedness, but only to the extent that as to any
holder of Senior Indebtedness, as promptly as practicable following notice from
the Trustee to the holders of Senior Indebtedness that such prohibited payment
has been received by the Trustee or Holder(s), such holder (or a Representative
therefor) notifies the Trustee of the amounts then due and owing on the Senior
Indebtedness, if any, held by such holder and only the amounts specified in
such notices to the Trustee shall be paid to the holders of Senior
Indebtedness.
The Company shall give prompt written notice to the Trustee of
any dissolution, winding up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
SECTION 10.4 Securityholders to be Subrogated to Rights of
Holders of Senior Indebtedness. Subject to the payment in full in cash or cash
equivalents of all Senior Indebtedness (or provision made for its payment), the
Holders of Notes shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness until all amounts owing on the
Notes shall be paid in full, in cash or cash equivalents and for the purpose of
such subrogation no such payments or distributions to the holders of Senior
Indebtedness by or on behalf of the Company, or by or on behalf of the Holders
by virtue of this Article Ten, which otherwise would have been made to the
Holders shall, as between the Company and the Holders, be deemed to be payment
by the Company to or on account of the Senior Indebtedness, it being understood
that the provisions of this Article Ten are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and
the holders of Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Ten shall
have been applied, pursuant to the provisions of this Article Ten, to the
payment of amounts payable under Senior Indebtedness, then the Holders shall be
entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount
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sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full in cash or cash equivalents.
SECTION 10.5 Obligations of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture or in the
Notes is intended to or shall impair, as between the Company and the Holders,
the obligation of the Company, which is absolute and unconditional, to pay to
the Holders the Principal of, premium, if any, and interest on the Notes as and
when the same shall become due and payable in accordance with their terms, or
is intended to or shall affect the relative rights of the Holders and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or any Holder from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article Ten, of the
holders of Senior Indebtedness in respect of cash, property or securities of
the Company received upon the exercise of any such remedy. Notwithstanding
anything to the contrary in this Article Ten or elsewhere in this Indenture or
in the Notes, upon any distribution of assets of the Company referred to in
this Article Ten, the Trustee, subject to the provisions of Sections 8.1, 8.2
and 8.3, and the Holders shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution, winding
up, liquidation or reorganization proceeding are pending, or a certificate of
the liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Ten. Nothing in this Section 10.5 shall apply to
the claims of, or payments to, the Trustee under or pursuant to Section 7.7.
Except as otherwise provided in this Section 10.5, in the
event of any inconsistency between the provisions of this Article Ten, on the
one part, and any other provision of this Indenture or any provision of the
Notes, on the other part, the provisions of this Article Ten shall govern.
SECTION 10.6 Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice. The Trustee shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment to or by the Trustee unless and until a Trust Officer of the
Trustee shall have received, no later than three Business Days prior to such
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payment, written notice thereof from the Company or from one or more holders of
Senior Indebtedness or from any representative therefor and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 8.1 and 8.2, shall be entitled in all respects conclusively to assume
that no such fact exists.
SECTION 10.7 Application by Trustee of Assets Deposited with
It. U.S. Legal Tender or U.S. Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Section 8.1 shall be for the
sole benefit of Securityholders and, to the extent (i) the making of such
deposit by the Company shall not have been in contravention of any term or
provision of any agreement creating or evidencing Senior Indebtedness and (ii)
allocated for the payment of Notes, shall not be subject to the subordination
provisions of this Article Ten. Otherwise, any deposit of assets by the
Company with the Trustee or any Paying Agent (whether or not in trust) for the
payment of Principal of or interest on any Notes shall be subject to the
provisions of Sections 10.1, 10.2, 10.3 and 10.4; provided, that, if prior to
the second Business Day preceding the date on which by the terms of this
Indenture any such assets may become distributable for any purpose (including
without limitation, the payment of either Principal of or interest on any Note)
the Trustee or such Paying Agent shall not have received with respect to such
assets the written notice provided for in Section 10.6, then the Trustee or
such Paying Agent shall have full power and authority to receive such assets
and to apply the same to the purpose for which they were received, and shall
not be affected by any notice to the contrary which may be received by it on or
after such date.
SECTION 10.8 Subordination Rights Not Impaired by Acts or
Omissions of the Company, any Guarantor, the Trustee or Holders of Senior
Indebtedness. No act, or failure to act, of any holder of the Senior
Indebtedness or their respective Representatives (including without limitation,
any action referred to in this Section 10.8), the Company, any Guarantor, the
Trustee, any Holder or any other Person with the terms, covenants or the
provisions of this Article Ten (regardless of any knowledge thereof which any
such holder of the Senior Indebtedness may have or otherwise be charged with)
or any Reorganization or similar proceeding with respect to the Company or any
Guarantor, shall affect the provisions of this Article Ten, the obligations
owed by the Company, any Guarantor, the Trustee or any Holder to the holders of
the Senior Indebtedness under this Article Ten or the rights of any holder of
Senior Indebtedness under this Article Ten.
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The Company, each Guarantor, the Trustee and each Holder each
hereby agrees that the taking of any of the following actions, with or without
notice, by the holders of the Senior Indebtedness and their respective
Representatives, will not in any way affect the provisions of this Article Ten:
(i) changing the manner, place or terms of payment or extending the time of
payment of, or renewing or altering, any agreement or instrument creating,
evidencing or governing any Senior Indebtedness (including under the Revolving
Credit Facility), or consenting to any amendment or change of any terms of any
such agreement or instrument, each as amended from time to time; (ii) granting
extensions or renewals of any such agreement or instrument and any other
indulgence with respect thereto, or effecting any release, compromise or
settlement with respect thereto; (iii) releasing any Person liable in any
manner for the payment or collection of any Senior Indebtedness; (iv)
substituting, exchanging or releasing or otherwise disposing of any item of
security at any time securing any Senior Indebtedness, whether or not the
collateral, if any, received upon the exercise of such power shall be of a
character or value the same as or different from the character or value of the
item of security released; (v) exercising or refraining from exercising any
rights or remedies against the Company, any Guarantor or any other Person; and
(vi) taking any other action, or refraining from taking any action, that, in
the absence of authority granted hereby, could have the effect of impairing,
invalidating or rendering unenforceable, in whole or in part, or otherwise
affecting, any of the provisions of this Article Ten.
SECTION 10.9 Securityholders Authorize Trustee to Effectuate
Subordination of Notes. Each Holder of the Notes by his or her acceptance
thereof authorizes and expressly directs the Trustee on his or her behalf to
take such action in accordance with the terms of this Indenture as may be
necessary or appropriate to effectuate the subordination provisions contained
in this Article Ten and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his or her attorney-in-fact for such
purpose, including, in the event of any dissolution, winding up, liquidation or
any Reorganization or similar preceding with respect to the Company (whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of assets and liabilities of
the Company) tending towards liquidation of the business and assets of the
Company, the immediate filing of a claim for the unpaid balance of his or her
Notes in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim
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or claims, then the holders of the Senior Indebtedness or their respective
Representatives are hereby authorized to have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the Holders of
said Notes. Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Senior Indebtedness or their respective Representatives to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee or the
holders of Senior Indebtedness or their respective Representatives to vote in
respect of the claim of any Securityholder in any such proceeding.
SECTION 10.10 Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this Article
Ten in respect of any Senior Indebtedness at any time held by it to the same
extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
SECTION 10.11 Article Ten Not to Prevent Events of Default.
The failure to make a payment on account of Principal of or interest on the
Notes by reason of any provision of this Article Ten shall not be construed as
preventing the occurrence of a Default or an Event of Default under Section 6.1
or in any way prevent the Holders from exercising any right hereunder other
than the right to receive payment on the Notes.
SECTION 10.12 No Fiduciary Duty of Trustee to Holders of
Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness, and shall not be liable to any such
holders (other than for its willful misconduct, bad faith or negligence) if it
shall in good faith mistakenly pay over or distribute to the Holders of Notes
or the Company or any other person, cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article Ten
or otherwise. Nothing in this Section 10.12 shall affect the obligation of any
other such person to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Indebtedness or their representative.
SECTION 10.13 No Security for Notes or Subsidiary Guarantee.
For so long as the Credit Agreement is in effect, none of the Company, the
Guarantors and the other Subsidiaries of the Company shall give, and the
Trustee and each Holder shall not demand, accept or receive from any of the
Company, any Guarantor, any other Subsidiary of the Company or any
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other Person, any security, direct or indirect, for any Notes or any Subsidiary
Guarantee, unless in any such case the holder of a majority of the Senior
Indebtedness then outstanding under the Credit Agreement shall have previously
consented thereto in writing.
SECTION 10.14 No Action by Guarantors or Other Subsidiaries.
No payment, distribution, purchase or other action may be taken by any
Guarantor or other Subsidiary of the Company with respect to the Notes or the
Subsidiary Guarantees if the Company would be prohibited by this Article Ten
from taking such action.
SECTION 10.15 Indefeasible Payment. To the extent any payment
of the Senior Indebtedness (whether by or on behalf of the Company, any
Guarantor, other Subsidiary of the Company or any other Person, as proceeds of
security or enforcement of any right of setoff or otherwise) is declared to be
fraudulent or preferential and is for this or any other reason set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, solely for the
purpose of this Article Ten, if such payment is recovered by, or paid over to,
such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Indebtedness or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such
payment had not occurred.
ARTICLE ELEVEN
SUBSIDIARY GUARANTEES
SECTION 11.1 Subsidiary Guarantees. Subject to the
provisions of this Article Eleven, each Guarantor from time to time hereby
jointly and severally, fully and unconditionally Guarantees to each Holder of a
Note authenticated and delivered by the Trustee, and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the Obligations of the Company under this Indenture or
the Notes, that: (i) the Principal of, premium, if any, and interest on the
Notes will be promptly paid in full when due, whether at the maturity, by
acceleration, redemption or otherwise, and interest on the overdue Principal of
and interest and premium, if any, on the Notes, if any, to the extent lawful,
and all other Obligations of the Company to the Holders or the Trustee under
this Indenture and the Notes will be promptly paid in full, all in accordance
with the terms of this Indenture and
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the Notes; (ii) in case of any extension of time of payment or renewal of any
Notes or any of such other Obligations, that the Notes will be promptly paid in
full when due in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise; and (iii) any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under any Subsidiary Guarantee will be paid.
Failing payment when due of any amount so guaranteed for whatever reason, each
Guarantor will be obligated to pay the same whether or not such failure to pay
has become an Event of Default which could cause acceleration pursuant to
Section 6.2 hereof. An Event of Default under this Indenture or the Notes
shall constitute an event of default under each Subsidiary Guarantee, and shall
entitle the Holders of Notes to accelerate the Obligations of each Guarantor
hereunder in the same manner and to the same extent as the Obligations of the
company. Each Guarantor hereby further agrees that its Obligations under this
Indenture and the Notes shall be unconditional, regardless of the validity,
legality or enforceability of this Indenture or the Notes, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions of this Indenture or the Notes, any modification
or amendment of, or supplement to, this Indenture or the Notes, the recovery of
any judgment against the Company or any action to enforce any such judgment or
any other circumstance that might otherwise constitute a legal or equitable
discharge or defense of each Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that the Subsidiary Guarantee will not be discharged
except by complete performance by the Company of such Obligations. If any
Holder or the Trustee is required by any court or otherwise to return to the
Company, any Guarantor or any custodian, Trustee, liquidator or other similar
official acting in relation to either the Company or any Guarantor any amount
paid by any such entity to the Trustee or such Holder, each Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor hereby acknowledges and agrees that, as
between it, on the one hand, and the Holders of Notes and the Trustee, on the
other hand, (x) the maturity of the Obligations under this Indenture and the
Notes may be accelerated as provided in Article 6 hereof for purposes of the
Subsidiary Guarantee notwithstanding any stay, injunction or other prohibition
preventing such acceleration, and (y) in the event of any declaration of
acceleration of such Obligations under this Indenture and the Notes as provided
in Article 6 hereof, such Obligations
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(whether or not due and payable) shall forthwith become due and payable by such
Guarantor for the purpose of such Subsidiary Guarantee.
Each Guarantor hereby waives all rights of subrogation,
contribution, reimbursement and indemnity, and all other rights, that any
Guarantor would have against the Company at any time as a result of any payment
in respect of the Subsidiary Guarantee (whether contractual, under Section 509
of the Bankruptcy Code, or otherwise).
SECTION 11.2 Subordination of Subsidiary Guarantees. Each
Guarantor's Obligations under its Subsidiary Guarantee shall be junior and
subordinated in right of payment to any Guarantor Senior Indebtedness of such
Guarantor in the same manner and to the same extent as the Notes are
subordinated to Senior Indebtedness of the Company pursuant to Article Ten and
the provisions of Article Ten and any terms defined therein or incorporated by
reference into such defined terms will apply to the Subsidiary Guarantee as if
references in Article Ten to the "Note(s)", the "Company", "Senior
Indebtedness", "Designated Senior Indebtedness" and "this Article Ten" are
references to such "Subsidiary Guarantee", such "Guarantor", such Guarantor's
"Guarantor Senior Indebtedness", such Guarantor's "Guarantor Designated Senior
Indebtedness" and "Article Ten as read to apply to each Guarantor's Subsidiary
Guarantee pursuant to this Section 11.2", respectively, except that reference
in Section 10.5 to "the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the Principal of, premium, if any, and
interest on the Notes as and when the same shall become due and payable in
accordance with their terms", or any words of similar meaning, are references
to "such Guarantor's Obligations under its Subsidiary Guarantee". Any notice of
a default or event of default given to the Trustee in respect of Designated
Senior Indebtedness pursuant to Section 10.2(b) shall be deemed to be a notice
a default or event of default given to the Trustee in respect of such
Guarantor's Guarantor Designated Senior Indebtedness and any notice of a
default or event of default given to the Trustee in respect of such Guarantor's
Guarantor Designated Senior Indebtedness pursuant to this Section 11.2 shall be
deemed to be a notice of a default or event of default given to the Trustee in
respect of Designated Senior Indebtedness.
In the event of a conflict between the provisions of Section
10.2(b) and the provisions of Section 10.2(b) as read to apply to the
Guarantor's Subsidiary Guarantee pursuant to this Section 11.2, the provisions
of Section 10.2(b) shall apply and govern this Indenture.
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SECTION 11.3 Limits of Subsidiary Guarantees.
Notwithstanding anything to the contrary in this Article Eleven, each
Guarantor's liability will be that amount from time to time equal to the
aggregate amount of the Obligations guaranteed under this Indenture, but shall
be limited to the lesser of (i) the maximum amount that would not render such
Guarantor's obligations subject to avoidance under applicable fraudulent
conveyance provisions of the United States Bankruptcy Code or any comparable
provision of any applicable state law; or (ii) the maximum amount that would
not render such Guarantor's Subsidiary Guarantee an improper corporate
distribution by such Guarantor under state law. In addition, such Guarantor's
Subsidiary Guarantee will cease to be effective if and to the extent that prior
to the date it is probable to be called upon, such Guarantor would be required
to reflect the amount of its Subsidiary Guarantee on the face of its balance
sheet under GAAP and to do so would prevent such Guarantor from distributing to
the Company amounts sufficient to pay Principal of, premium, if any, or
interest on the Notes when due.
SECTION 11.4 Release of a Guarantor. In the event of a sale,
exchange or transfer, to any Person not an Affiliate of the Company, of (i) all
of the Capital Stock owned by the Company or any Subsidiary of the Company of,
or (ii) all or substantially all the assets of, a Guarantor (which sale,
exchange or transfer is not prohibited by this Indenture or is effected
pursuant to the foreclosure or other enforcement (effected in accordance with
any applicable law) of any lien, pledge or other security interest securing the
payment of any Senior Indebtedness or Guarantor Senior Indebtedness), such
Guarantor will be automatically and unconditionally released and discharged of
any obligations as a Guarantor under this Indenture, and shall thereafter not
be a "Guarantor" under this Indenture. The Trustee shall deliver an
appropriate instrument evidencing any such release under this Section 11.4 upon
receipt of a request by the Company accompanied by an Officers' Certificate and
an Opinion of Counsel certifying as to the compliance with this Section 11.4.
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act of 1939. This Indenture
shall incorporate and be governed by the provisions of the Trust Indenture Act
that are required to be part of and to govern indentures qualified under the
Trust Indenture Act. If any provision of this Indenture limits, qualifies or
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conflicts with the duties imposed by operation of Section 318(c) of the Trust
Indenture Act, the imposed duties shall control.
SECTION 12.2 Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail addressed as follows:
if to the Company or any Guarantor:
Wyndham Hotel Corporation
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attention: General Counsel
if to the Trustee:
Bank One, Columbus, N.A.
100 East Broad Street, 8th Floor
Columbus, OH 43271-0181
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to him or her at his or her address as it appears on the Security Register by
first class mail and shall be sufficiently given to him or her if so mailed
within the time prescribed. Copies of any such communication or notice to a
Holder shall also be mailed to the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received,
and except as otherwise provided in this Indenture, if a notice or
communication is mailed in the manner provided in this Section 12.2, it is duly
given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
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In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 12.3 Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such Counsel, all such conditions precedent have been complied with.
SECTION 12.4 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each person signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person,
he or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of
each such person, such condition or covenant has been complied with;
provided, however, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 12.5 Rules by Trustee, Paying Agent or Registrar.
The Trustee may make reasonable rules for action
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by or at a meeting of Holders. The Paying Agent or Registrar may make
reasonable rules for its functions.
SECTION 12.6 Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Change of Control Payment Date, Excess
Proceeds Payment Date, Stated Maturity or date of maturity of any Note shall
not be a Business Day at any place of payment, then payment of Principal of,
premium, if any, or interest on such Note, as the case may be, need not be made
on such date, but may be made on the next succeeding Business Day at any place
of payment with the same force and effect as if made on the Interest Payment
Date, Change of Control Payment Date, Excess Proceeds Payment Date, or
Redemption Date, or at the Stated Maturity or date of maturity of such Note;
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Change of Control Payment Date, Excess Proceeds Payment
Date, Redemption Date, Stated Maturity or date of maturity, as the case may be.
SECTION 12.7 Governing Law. The laws of the State of New
York shall govern this Indenture and the Notes. The Trustee, the Company and
the Holders agree to submit to the jurisdiction of the courts of the State of
New York in any action or proceeding arising out of or relating to this
Indenture or the Notes.
SECTION 12.8 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.9 No Recourse Against Others. No recourse for the
payment of the Principal of, premium, if any, or interest on any of the Notes
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company contained in
this Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future stockholder, officer, director, employee or
controlling person, as such, of the Company, any of its Subsidiaries or of any
predecessor or successor Person, either directly or through the Company, any of
its Subsidiaries or any predecessor or successor Person, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.
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SECTION 12.10 Successors. All agreements of the Company in
this Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 12.11 Duplicate Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.
SECTION 12.12 Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.13 Table of Contents and Headings. The Table of
Contents and headings of the Article and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms and provisions
hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
WYNDHAM HOTEL CORPORATION
as Issuer
By: /s/ JAMES D. CARREKER
--------------------------------------------
Name: James D. Carreker
Title: President and Chief Executive Officer
WYNDHAM MANAGEMENT CORPORATION
as Guarantor
By: /s/ JAMES D. CARREKER
--------------------------------------------
Name: James D. Carreker
Title: President
GHALP CORPORATION
as Guarantor
By: /s/ JAMES D. CARREKER
--------------------------------------------
Name: James D. Carreker
Title: President
WYNDHAM IP CORPORATION
as Guarantor
By: /s/ JAMES D. CARREKER
--------------------------------------------
Name: James D. Carreker
Title: President
WH INTEREST, INC.
as Guarantor
By: /s/ JAMES D. CARREKER
--------------------------------------------
Name: James D. Carreker
Title: President
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ROSE HALL ASSOCIATES LIMITED
PARTNERSHIP as Guarantor
By: WHC CARIBBEAN LIMITED,
its General Partner
By: /s/ SUSAN T. GROENTEMAN
------------------------------------
Name: Susan T. Groenteman
Title: Director
By: /s/ VINCENT CUCCI
------------------------------------
Name: Vincent Cucci
Title: Secretary and General Manager
[SEAL]
WHC CARIBBEAN LIMITED
as Guarantor
By: /s/ SUSAN T. GROENTEMAN
------------------------------------------
Name: Susan T. Groenteman
Title: Director
By: /s/ VINCENT CUCCI
------------------------------------------
Name: Vincent Cucci
Title: Secretary and General Manager
[SEAL]
WATERFRONT MANAGEMENT CORPORATION
as Guarantor
By: /s/ JAMES D. CARREKER
------------------------------------------
Name: James D. Carreker
Title: President
WHCMB, INC.
as Guarantor
By: /s/ JAMES D. CARREKER
--------------------------------------------
Name: James D. Carreker
Title: President
<PAGE> 110
WYNDHAM HOTELS & RESORTS (ARUBA)
N.V. as Guarantor
By: /s/ JAMES D. CARREKER
---------------------------------------
Name: James D. Carreker
Title: President and Managing Director
WHC VININGS CORPORATION
as Guarantor
By: /s/ JAMES D. CARREKER
---------------------------------------
Name: James D. Carreker
Title: President
XERXES LIMITED
as Guarantor
By: /s/ JAMES D. CARREKER
---------------------------------------
Name: James D. Carreker
Title: Director
By: /s/ ELISE TURNER
---------------------------------------
Name: Elise Turner
Title: Secretary
BANK ONE, COLUMBUS, N.A.
as Trustee
By: /s/ TED KRAVITS
---------------------------
Name: Ted Kravits
Title: Authorized Signer
<PAGE> 111
EXHIBIT A
[FACE OF NOTE]
CUSIP No. 983100AA6 $100,000,000
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Company or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
WYNDHAM HOTEL CORPORATION
10 1/2% Senior Subordinated Note due 2006
WYNDHAM HOTEL CORPORATION, a Delaware corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, at the office or agency of the Company in New York, New
York, the principal sum of One Hundred Million Dollars on May 15, 2006, in the
coin or currency of the United States, and to pay interest, semi-annually on
May 15 and November 15 of each year (each, an "Interest Payment Date")
commencing November 15, 1996, on said principal sum at said office or agency,
in like coin or currency, at the rate per annum specified in the title of this
Note, from the Interest Payment Date, as the case may be, next preceding the
date of this Note to which interest has been paid or duly provided for, unless
the date hereof is a date to which interest has been paid or duly provided for,
in which case from the date of this Note, or unless no interest has been paid
or duly provided for on these Notes, in which case from May 24, 1996, until
payment of said principal sum has been made or duly provided for; provided,
that payment of interest may be made at the option of the Company by check
mailed to the address of the person entitled thereto as such address shall
appear on the Security Register as provided in the Indenture. Notwithstanding
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<PAGE> 112
the foregoing, if the date hereof is after May 1 or November 1 (each, a
"Regular Record Date"), as the case may be, and before the following Interest
Payment Date, this Note shall bear interest from such Interest Payment Date;
provided, that if the Company shall default in the payment of interest due on
such Interest Payment Date, then this Note shall bear interest from the next
preceding Interest Payment Date, to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on these
Notes, from May 24, 1996. The interest so payable on any Interest Payment Date
will, subject to certain exceptions provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Note is registered
at the close of business on the Regular Record Date, as the case may be, next
preceding such Interest Payment Date, whether or not such day is a Business
Day.
Reference is made to the further provisions of this Note set forth
on the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, WYNDHAM HOTEL CORPORATION has caused this
instrument to be signed manually or by facsimile by its duly authorized
officers and has caused a facsimile of its corporate seal to be affixed
hereunto or imprinted hereon.
Dated:
(SEAL) WYNDHAM HOTEL CORPORATION
By
-----------------------------
By
-----------------------------
Attest:
- --------------------
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<PAGE> 113
CERTIFICATE OF AUTHENTICATION
This is one of the 10 1/2% Senior Subordinated Notes due 2006
referred to in the within-mentioned Indenture.
Dated: Bank One, Columbus, N.A.,
as Trustee
By
----------------------
Authorized Signatory
<PAGE> 114
[REVERSE OF NOTE]
WYNDHAM HOTEL CORPORATION
10 1/2% Senior Subordinated Note due 2006
1. Indenture.
This Note is one of a duly authorized issue of 10 1/2% Senior
Subordinated Notes due 2006 of the Company (hereinafter called the "Notes"),
all issued or to be issued under and pursuant to an indenture dated as of May
24, 1996 (herein called the "Indenture"), duly executed and delivered by the
Company and certain Subsidiaries of the Company, as Guarantors, to Bank One,
Columbus, N.A., as Trustee (herein called the "Trustee"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company, the Guarantors and the
Holders of the Notes. The Notes are limited in aggregate principal amount to
$100,000,000, except as provided in the Indenture.
2. Defined Terms.
Terms used herein which are defined in the Indenture shall have
the respective meanings assigned thereto in the Indenture.
3. Interest; Payment Dates.
Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal and, to the
extent lawful, on overdue installments of interest at the rate per annum borne
by this Note. If a payment date is not a Business Day as defined in the
Indenture at a place of payment, payment may be made at that place on the next
succeeding day that is a Business Day, and no interest shall accrue for the
intervening period.
4. Form and Denomination.
The Notes are issuable initially only in global registered form
without coupons in denominations of $1,000 and any multiple of $1,000 at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, and in the manner and subject to the limitations provided in the
Indenture, but, without the payment of any service charge, Notes may be
<PAGE> 115
exchanged for a like aggregate principal amount of Notes of other authorized
denominations.
5. Transfer and Exchange.
Upon due presentment for registration of transfer of this Note at
the office or agency of the Company in the Borough of Manhattan, The City of
New York, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Indenture, without charge
except for any tax or other governmental charge imposed in connection
therewith.
6. Optional Redemption.
The Notes may be redeemed, at the Company's option, in whole or in
part, at any time on or after May 15, 2001 and prior to maturity, upon not less
than 30 nor more than 60 days' prior notice mailed by first class mail to each
Holder's last address as it appears in the Security Register, at the following
Redemption Prices (expressed in percentages of principal amount), plus accrued
and unpaid interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due
on an Interest Payment Date that is on or prior to the Redemption Date), if
redeemed during the 12-month period commencing May 15 of the years set forth
below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 105.250%
2002 103.500%
2003 101.750%
2004 and thereafter 100.000%
</TABLE>
Any such redemption will comply with the Indenture.
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Notes to be redeemed
at such Holder's last address as it appears in the Security Register. Notes in
original denominations larger than $1,000 may be redeemed in part. On and after
the Redemption Date, interest ceases to accrue on Notes or portions of Notes
called or redemption, unless the Company defaults in the payment of the
Redemption Price.
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<PAGE> 116
7. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company, its Restricted Subsidiaries and the Guarantors, among other things, to
Incur additional Indebtedness, make Restricted Payments, make Asset Sales,
engage in transactions with Affiliates or merge, consolidate or transfer
substantially all of its assets. Within 45 days after the end of each fiscal
quarter (120 days after the end of the last fiscal quarter of each year), the
Company must report to the Trustee on compliance with such limitations.
8. Repurchase upon a Change of Control.
Upon the occurrence of a Change of Control, as defined in the
Indenture, each Holder shall have the right to require the repurchase of its
Notes by the Company in cash pursuant to the offer described in the Indenture
(the "Change of Control Offer") at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest (if any) to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Security Register. Notes in original denominations larger than
$1,000 may be sold to the Company in part. On and after the Change of Control
Payment Date, interest ceases to accrue on Notes or portions of Notes
surrendered for purchase by the Company, unless the Company defaults in the
payment of the Change of Control Payment.
9. Default and Remedies.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal hereof and the interest accrued
hereon, if any, may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
10. Amendments, Supplements and Waivers.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a least a majority in principal amount of the
Notes then outstanding. Without notice to or the
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<PAGE> 117
consent of any Holder, the parties thereto may amend or supplement the
Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency and make any change that does not materially and adversely affect
the rights of any Holder.
11. Subordination.
The Company, for itself and its successors, and each Holder, by
accepting the Notes, agrees that the payment of the principal of and interest on
the Notes is subordinated, to the extent and in the manner provided in the
Indenture, to the right of payment in full of all present and future Senior
Indebtedness, and that the subordination provisions in the Indenture are for the
benefit of the holders of Senior Indebtedness.
12. Subsidiary Guarantees.
Each Guarantor from time to time jointly and severally, fully and
unconditionally Guarantees the prompt payment when due of the Principal of,
premium, if any, and interest on the Notes, whether at maturity, by
acceleration, redemption or otherwise, and the payment of any and all costs and
expense incurred by the Trustee or any Holder in enforcing any rights under any
Subsidiary Guarantee, to the extent and in the manner provided in the
Indenture. Each Guarantor's liability is limited to the lesser of (a) the
maximum amount that would not render such Guarantor's obligations subject to
avoidance under applicable fraudulent conveyance provisions of the United
States Bankruptcy Code or any comparable provision of any applicable state law
or (b) the maximum amount that would not render such Guarantor's Subsidiary
Guarantee an improper corporate distribution by such Guarantor under state law.
In addition, the Subsidiary Guarantee will cease to be effective if and to the
extent that prior to the date it is probable to be called upon, the Guarantor
would be required to reflect the amount of such Subsidiary Guarantee on the
face of its balance sheet under GAAP and to do so would prevent the Guarantor
from distributing to the Company amounts sufficient to pay Principal of,
premium, if any, or interest on the Notes when due.
To the extent and in the manner provided in the Indenture, each
Guarantor's Obligations under its Subsidiary Guarantee shall be junior and
subordinated in right of payment to any Guarantor Senior Indebtedness of such
Guarantor to the same extent as the Notes are subordinated to Senior
Indebtedness of the Company pursuant to the Indenture.
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<PAGE> 118
13. Holder Treated as Owner.
The Company, the Guarantors, the Trustee and any agent of the
Company, the Guarantors or the Trustee may deem and treat the registered Holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon),
for the purpose of receiving payment of, or on account of, the Principal hereof
and, subject to the provisions hereof, interest hereon, and for all other
purposes, and none of the Company, the Guarantors, the Trustee and any agent of
the Company or the Trustee shall be affected by any notice to the contrary.
14. No Recourse Against Others.
No recourse for the payment of the Principal of, premium, if any,
or interest on any of the Notes, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company contained in the Indenture, or in any of the Notes, or
because of the creation of any Indebtedness represented thereby, shall be had
against any incorporator or against any past, present or future stockholder,
officer, director, employee or controlling person, as such, of the Company or of
any predecessor or successor Person, either directly or through the Company or
any predecessor or successor Person, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of the Indenture and the issue of the Notes.
15. Obligations Absolute.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the Principal of, premium, if any, and
interest on this Note in the manner, at the place, at the respective times, at
the rate and in the coin or currency herein prescribed.
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<PAGE> 119
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
- --------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
- ------------------------------------------------------------
the within Note and all rights thereunder, hereby
- ------------------------------------------------------------
irrevocably constituting and appointing such person attorney
- ------------------------------------------------------------
to transfer such Note on the books of the Issuer, with full
- ------------------------------------------------------------
power of substitution in the premises.
Dated:
--------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular
without alteration or enlargement or any change whatsoever.
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<PAGE> 1
EXHIBIT 10.13
STOCKHOLDERS' AGREEMENT
dated as of May 24, 1996
among
WYNDHAM HOTEL CORPORATION
and
The Stockholders Listed on the Signature Pages Hereto
<PAGE> 2
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement") is made and entered
into as of May 24, 1996, by and among Wyndham Hotel Corporation, a Delaware
corporation ("Wyndham"), and each of the Stockholders (as hereinafter defined)
listed on the signature pages hereto.
RECITALS:
A. Pursuant to a Buy-Sell Agreement (the "Buy-Sell Agreement") dated
as of May 2, 1994 among Wynopt Investment Partnership Level II, L.P. (formerly
known as Ross Investment Partners 2, L.P.), a Delaware limited partnership
("Hampstead"), Wyndham Hotel Company Ltd., a Texas limited partnership
("Wyndham Partnership"), and certain other persons, the parties thereto agreed
to impose certain restrictions and obligations with respect to the ownership,
retention and disposition of equity interests in Wyndham Partnership, as well
as certain corporate governance matters.
B. As contemplated by the Buy-Sell Agreement, Wyndham, directly or
through one or more subsidiaries, has succeeded to substantially all of the
assets of Wyndham Partnership, parties to the Buy-Sell Agreement have acquired
Shares (as hereinafter defined) in Wyndham and Wyndham has consummated an
initial public offering ("IPO") of its Shares.
C. The Buy-Sell Agreement contained restrictions and obligations that
were to apply both before and after the IPO and, for the sake of clarity, the
parties desire to set forth fully in this Agreement the restrictions and
obligations that are to apply after the IPO and to terminate the Buy-Sell
Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. DEFINITIONS
1.1. Defined Terms. In addition to the terms defined
elsewhere herein, terms used herein which are defined below have
the meanings set forth below when used in this Agreement with
initial capital letters:
Affiliate. With respect to any Person, any other Person
controlling, controlled by or under common control with, the first
Person. For purposes of this definition and this Agreement, the term
"control" (and correlative terms) means the power, whether by
contract, equity ownership or otherwise, to direct the policies or
management of a Person.
<PAGE> 3
Business Day. Any day, excluding Saturday, Sunday and any day
which is a legal holiday or a day on which banking institutions in New
York City or Dallas, Texas are authorized by law or other governmental
actions to close.
Covered Shares. Shares held by Stockholders that are subject
to the provisions of Article II as provided in Section 4.5. If any
Stockholder holds Shares that are not Covered Shares ("Uncovered
Shares"), Article II will apply on a "last- in-first-out" basis, with
the result that such Stockholder may freely Transfer (as hereafter
defined) a number of Shares equal to up to the total number of
Uncovered Shares held by such Stockholder before the provisions of
Article II apply to any Transfer of Covered Shares.
Crow/Wyndham Stockholder. The stockholders, other than the
Hampstead Stockholders, listed on the signature page of this Agreement
and the Transferees of such stockholders (except a Hampstead
Stockholder) authorized under this Agreement, excluding, however, a
Transferee in an Exempt Transfer or Third-Party Sale.
Exempt Transfer. Any (i) open-market sales of Shares by a
Stockholder not exceeding the volume limitations imposed by Rule 144
under the Securities Act, (ii) sales by a Stockholder in the IPO,
including any sales pursuant to the exercise by the underwriters of
the over-allotment option and (iii) Transfer of Shares by WEL to the
direct or indirect owners of equity interests in WEL, whether in
connection with the dissolution of WEL or otherwise.
Hampstead's Allocable Percentage. A fraction, expressed as a
percentage, (i) the numerator of which is the sum of (a) the number of
Covered Shares owned by the Hampstead Stockholders (excluding from
such Shares those that were acquired from the Crow/Wyndham
Stockholders) multiplied by the Net Option Factor, and (b) the number
of Covered Shares that were acquired by the Hampstead Stockholders
from the Crow/Wyndham Stockholders and (ii) the denominator of which
is the total number of Shares outstanding.
Hampstead Principals. Donald J. McNamara, Robert A.
Whitman and Daniel A. Decker.
Hampstead Stock Percentage. The percentage of the outstanding
Shares held by the Hampstead Stockholders immediately following the
IPO (but giving effect to any exercise by the IPO underwriters of the
over-allotment option).
2
<PAGE> 4
Hampstead Stockholders. Wynopt Investment Partnership,
L.P. and Wynopt Investment Partnership Level II, L.P.
(formerly known as Ross Investment Partners 2, L.P.) and the
Transferees of such stockholders (except a Crow/Wyndham
Stockholder) authorized under this Agreement, excluding,
however, a Transferee in an Exempt Transfer or Third-Party
Sale.
Immediate Family. The spouse of an individual and the
parents, children and grandchildren of the individual or his or her
spouse. An adopted child will be treated as the child of his or her
adoptive parent or parents if (but only if) he or she was adopted
before he or she reached 21 years of age.
Inside Director. A director serving on the Wyndham Board who
is employed by Wyndham or who is employed by, or an equity investor
in, a Crow/Wyndham Stockholder or a Hampstead Stockholder or any
Affiliate (other than Wyndham) of any such Stockholder.
Investment Agreement. The Investment Agreement dated as
of May 2, 1994 among The Hampstead Group, Inc., Wyndham Hotel
Company Ltd. and certain other persons.
Investment Program Cutback. Terms used in this definition
shall have the meanings assigned to them in the Investment Agreement.
An "Investment Program Cutback" shall be deemed to have occurred if
(i) as of December 31 of any year, Property Management Agreements have
been terminated such that the total Management Revenue represented by
Subject Hotels that are subject to Property Management Agreements
under the Investment Program as of such date is less than $8,520,000
and (ii) as of December 31 of the immediately following year, the
total Management Revenue with respect to the Subject Hotels then
subject to Property Management Agreements under the Investment Program
does not equal or exceed $8,520,000. Termination of Property
Management Agreements under the following circumstances shall not
reduce Management Revenue for purposes of the foregoing calculation:
(i) any termination of the Property Management Agreement by the owner
of the Subject Hotel by reason of a default on the part of the manager
or by reason of a right to terminate based on the performance of the
Subject Hotel, (ii) any termination of the Property Management
Agreement for The Checkers Hotel in Los Angeles, California, or (iii)
any termination by consent of the owner of the Subject Hotel and the
manager under the Property Management Agreement. For purpose of the
foregoing calculation, Hampstead shall be deemed to have a 100% equity
interest in the Hotel Investments covering the Subject Hotels in
question.
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<PAGE> 5
Market Price. The closing sale price of the Shares on
the date in question on the principal securities exchange on
which the Shares are traded.
Net Option Factor. The quotient yielded by dividing
37.5% by the Hampstead Stock Percentage.
Outside Director. A director serving on the Wyndham Board who
is not an Inside Director and who qualifies as an "independent
director" within the meaning of the New York Stock Exchange Listed
Company Manual.
Permitted Transferee. (a) With respect to a Stockholder who
is an individual, a member of the Immediate Family of the Stockholder
or a trust whose sole beneficiaries are members of the Immediate
Family of the Stockholder, (b) with respect to a Stockholder that is a
corporation, partnership or other entity (other than a trust), an
equity owner of the corporation, partnership or other legal entity,
(c) with respect to a Stockholder that is a trust, any member of the
Immediate Family of the grantor of the trust, and (d) with respect to
Trammell Crow, Margaret Crow and their direct descendants, a
charitable trust or foundation that meets the requirements of Section
501(c)(3) of the Internal Revenue Code of 1986, as amended.
Person. Any individual or a legal entity.
Securities Act. The Securities Act of 1933, as amended.
Shares. The common stock, $.01 par value per share, of
Wyndham.
Stockholder Group. The Crow/Wyndham Stockholders, as a
group, or the Hampstead Stockholders, as a group.
Stockholders. The Crow/Wyndham Stockholders and the
Hampstead Stockholders.
WEL. Wyndham Employees Ltd., a Texas limited
partnership.
Wyndham Board. The board of directors of Wyndham.
II. TRANSFERS OF SHARES
2.1. (a) Restriction on Transfers. (i) General Rule. No
Stockholder may effect any direct or indirect sale, transfer,
pledge or other disposition, whether directly or in connection with
or as a result of any merger, consolidation or other transaction
that results in any Person not included within the categories of
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<PAGE> 6
authorized Transferees specified in Section 2.1(a)(ii) obtaining beneficial
ownership of Covered Shares (any such direct or indirect sale, transfer, pledge
or other disposition being a "Transfer"), except in connection with an Exempt
Sale or otherwise in accordance with this Agreement. Notwithstanding the
foregoing, any transfer that might otherwise be deemed to result from the
merger or consolidation of Wyndham with or into another entity or any
recapitalization of the Shares shall not be deemed to constitute a "Transfer"
for purpose of this Agreement.
(ii) Permitted Transfers. Any Stockholder may Transfer any
Shares (A) to any wholly-owned Affiliate of the Stockholder, (B) to any Person
who is a Permitted Transferee, (C) to Trammell or Margaret Crow or any lineal
descendant of Trammell and Margaret Crow or any trust of which not less than
75% of the beneficial interests are held by Trammell or Margaret Crow or such
lineal descendants or any partnership, corporation or other entity of which not
less than 75% of the outstanding equity interests are owned directly or
indirectly by Trammell or Margaret Crow or such descendants (collectively, the
"Crow Interests"), (D) to Wyndham or to any then-existing Crow/Wyndham
Stockholder or to any individual employed substantially full time in Wyndham's
business as a senior executive officer, (E) as a pledge to secure indebtedness,
provided that the pledgee agrees that, upon any foreclosure of the pledge, the
pledgee shall immediately comply with the provisions of Section 2.1(e) below
with respect to the pledged Shares and (F) to the owners of equity interests in
a Stockholder upon a partial or complete liquidation or dissolution of such
Stockholder. For purposes of this Agreement, as to any Stockholder which is a
legal entity and does not have assets valued, on a cost basis, in excess of
$1,000,000, other than Shares, any Transfer of any equity interest in such
Stockholder which, in one or a series of Transfers, involves in the aggregate
more than a 50% equity interest in such Stockholder will be a "Transfer" unless
such Transfer is solely to other existing equity holders of such entity. Each
Transfer permitted by this Section 2.1(a)(ii) will also require the execution
and delivery of an instrument in form and substance satisfactory to the Wyndham
Board pursuant to which the Transferee agrees to be bound by this Agreement.
(b) Procedures for Effecting Third-Party Sales. (i)
Right of First Offer. Prior to consummating any Transfer of Covered Shares to
any Person, other than in connection with an Exempt Transfer or as permitted
pursuant to Section 2.1 (a)(ii) (a "Third-Party Sale"), the Stockholder
proposing to effect the Third- Party Sale (the "Offering Stockholder") will
deliver to each of the other Stockholders and to Wyndham a written Notice (an
"Offer Notice") specifying (A) the aggregate amount of cash consideration (the
"Offer Price") for which the Offering Stockholder proposes in good faith to sell
the Shares to be offered in such Third-Party Sale (the "Offered Shares"), (B)
the identity of the purchaser in
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<PAGE> 7
such Third-Party Sale (if then known), and (C) all other material terms of the
proposed Third-Party Sale. The procedures set forth in this Section 2.1(b)
shall be subject to the special provisions set forth below in Sections 2.1(c),
(d) and (e) with respect to proposed Third Party Sales in connection with an
underwritten public offering, registered public sales pursuant to a shelf
registration under the Securities Act and pledge foreclosures.
(ii) Rights To Purchase Offered Shares. For purposes of this
Agreement, (A) the Hampstead Stockholders (collectively and as they may
allocate among themselves as set forth below) will be the "Non-Offering
Stockholder" with respect to a proposed Third-Party Sale by any Crow/Wyndham
Stockholder (including the Crow Interests), and (B) the Crow/Wyndham
Stockholders (collectively and as they may allocate among themselves as set
forth below) will be the "Non-Offering Stockholder" with respect to a proposed
Third- Party Sale by any Hampstead Stockholder. If a Non-Offering Stockholder
delivers to the Offering Stockholder a written Notice (an "Acceptance Notice")
within 10 Business Days following delivery of the Offer Notice (such 10
Business Day period being referred to herein as the "ROFO Acceptance Period")
stating that such Non- Offering Stockholder is willing to purchase all of the
Offered Shares for the Offer Price and on the other terms set forth in the
Offer Notice, the Offering Stockholder will sell all (but not less than all) of
the Offered Shares to such Non-Offering Stockholder, and such Non-Offering
Stockholder will purchase such Offered Shares from the Offering Stockholder, on
the proposed terms and subject to the conditions set forth below. In such case,
the Hampstead Stockholders, with the Offered Shares allocated based on the
number of Offered Shares requested to be purchased by each of the Hampstead
Stockholders, will be the "Purchasing Stockholder" with respect to a proposed
Third-Party Sale by any Crow/Wyndham Stockholder, and the Crow/Wyndham
Stockholders, with the Offered Shares allocated (unless otherwise agreed by the
Crow/Wyndham Stockholders requesting to purchase Offered Shares) based on the
number of Shares owned by each of the Crow/Wyndham Stockholders who request to
purchase Offered Shares (but in no event so as to require any Stockholder to
purchase in excess of the number of Offered Shares requested by such
Stockholder), will be the "Purchasing Stockholder" with respect to a proposed
Third-Party Sale by any Hampstead Stockholder. Notwithstanding the foregoing,
Wyndham will have the prior right to elect to purchase Offered Shares proposed
to be sold by the Crow Interests by delivery of an Acceptance Notice to the
Offering Stockholder and the Non-Offering Stockholder during the ROFO
Acceptance Period, but only if the Offered Shares constitute all of the Shares
owned by the Crow Interests and only to the extent the Offered Shares, if
purchased by the Hampstead Stockholders, would cause the Hampstead Stockholders
to own in excess of 40% of the outstanding Shares. Any such purchase of Offered
Shares by Wyndham will be on the same terms and conditions as a purchase by a
Purchasing Stockholder as
6
<PAGE> 8
provided for herein. No Third-Party Sale may be effected for consideration
other than cash.
(iii) The ROFO Closing. The consummation of any purchase of
the Offered Shares by the Purchasing Stockholder pursuant to this Section
2.1(b) (the "ROFO Closing") will occur no more than 10 Business Days following
the delivery of the Acceptance Notice (such 10 Business Day period being
referred to herein as the "ROFO Closing Period") at such time and place as may
be agreed upon by the Offering Stockholder and the Purchasing Stockholder or,
if such parties fail to agree to such time and place, at the principal
executive offices of Wyndham at 10:00 a.m. (Central Time) on the tenth Business
Day following the expiration of the ROFO Acceptance Period. At the ROFO
Closing, (A) the Purchasing Stockholder will deliver to the Offering
Stockholder by certified or official bank check or wire transfer to an account
designated by the Offering Stockholder an amount in immediately available funds
equal to the Offer Price, (B) the Offering Stockholder will deliver one or more
certificates evidencing the Offered Shares, together with such other duly
executed instruments or documents (executed by the Offering Stockholder) as may
be reasonably requested by the Purchasing Stockholder to acquire the Offered
Shares free and clear of any and all claims, liens, pledges, charges,
encumbrances, security interests, options, trusts, commitments and other
restrictions of any kind whatsoever (collectively, "Encumbrances"), except for
Encumbrances created by this Agreement, federal or state securities laws or the
Purchasing Stockholder or as specified in the Offer Notice, and (C) the
Offering Stockholder will be deemed to represent and warrant to the Purchasing
Stockholder that, upon the ROFO Closing, the Offering Stockholder will convey
and the Purchasing Stockholder will acquire the entire record and beneficial
ownership of, and good and valid title to, the Offered Shares, free and clear
of any and all Encumbrances, except for Encumbrances created by this Agreement,
federal and state securities laws or the Purchasing Stockholder or as described
in the Offer Notice.
(iv) Right To Consummate Third-Party Sale. If no Acceptance
Notice relating to the proposed Third-Party Sale is delivered to the Offering
Stockholder prior to the expiration of the ROFO Acceptance Period, or an
Acceptance Notice is so delivered to the Offering Stockholder but the ROFO
Closing fails to occur prior to the expiration of the ROFO Closing Period
(unless the Purchasing Stockholder was ready, willing and able prior to the
expiration of the ROFO Closing Period to consummate the transactions to be
consummated by the Purchasing Stockholder at the ROFO Closing), the Offering
Stockholder may (without affecting its rights, if any, arising out of such
failure) consummate the Third- Party Sale, but only (A) during the 60 calendar
day period immediately following the expiration of the ROFO Acceptance Period
(in the event that no Acceptance Notice was timely delivered to the
7
<PAGE> 9
Offering Stockholder) or the 60 calendar day period immediately following the
expiration of the ROFO Closing Period (in the event that an Acceptance Notice
was timely delivered to the Offering Stockholder but the ROFO Closing failed
timely to occur), (B) at a price at least equal to 95% of the Offer Price, and
(C) upon other terms not materially less favorable to the Offering Stockholder
than those set forth in the Offer Notice.
(v) Right to Consummate Third-Party Sale if No Proposed
Transferee Identified. The Offering Stockholder may consummate a Third-Party
Sale for which no purchaser has been identified at the time of delivery of the
Offer Notice that it is otherwise entitled to consummate pursuant to Section
2.1(b)(iv) only (A) during the 90 calendar day period immediately following the
expiration of the ROFO Acceptance Period (in the event that no Acceptance
Notice was timely delivered to the Offering Stockholder) or the 90 calendar day
period immediately following the expiration of the ROFO Closing Period (in the
event that an Acceptance Notice was timely delivered to the Offering
Stockholder but the ROFO Closing failed timely to occur), (B) at a price at
least equal to 95% of the Offer Price, and (C) upon other terms not materially
less favorable to the Offering Stockholder than those set forth in the Offer
Notice.
(c) Special Procedures Applicable to Proposed Underwritten
Offerings. The procedures set forth above in Section 2.1(b) will be applicable
to proposed Third Party Sales in connection with an underwritten public
offering (a "Public Offering") except that (i) the Offer Price shall be a good
faith estimate by the Offering Stockholder of the price to the public at which
the Offering Stockholder would be willing to sell in the proposed Public
Offering (the "Public Offering Estimate") and (ii) if as described in Section
2.1(b)(iv) an Acceptance Notice is not delivered or a sale to the Non-Offering
Stockholder does not occur, the Offering Stockholder may consummate the
Third-Party Sale in the proposed Public Offering without regard to the price at
which such Third-Party Sale is completed, but only if the Public Offering is
consummated during the 150 calendar day period immediately following the
expiration of the ROFO Acceptance Period. In the event the Non-Offering
Stockholder does not deliver an Acceptance Notice during the ROFO Acceptance
Period, the Non-Offering Stockholder may nevertheless elect by a Notice (the
"Special Allocation Notice") delivered during the ROFO Acceptance Period to the
Offering Stockholder and to Wyndham to purchase in the Public Offering a
percentage (equal to the greater of the Hampstead Stock Percentage and the
percentage permitted by the Public Offering underwriters) (the "Special
Allocation Percentage") of the Shares sold in the Public Offering at the price
to the public (the "Public Offering Price"). In the event the Non-Offering
Stockholder delivers a Special Allocation Notice, (x) the Public Offering may
be consummated only if arrangements are made with the underwriters in the
Public Offering to make available for purchase by the Non-
8
<PAGE> 10
Offering Stockholder the Special Allocation Percentage of the Shares to be sold
in the Public Offering at the Public Offering Price and (y) subject to the
terms of such arrangements, the Non- Offering Stockholder shall be obligated to
purchase such Shares at the Public Offering Price even though the Public
Offering Price is above the Public Offering Estimate.
(d) Special Procedures Applicable to Sales under Shelf
Registrations. The procedures set forth above in Section 2.1(b) shall be
applicable to proposed open-market Third-Party Sales pursuant to a shelf
registration statement under the Securities Act (a "Shelf Registration"),
except that (i) the Offer Notice shall set forth a minimum price at which the
Offering Stockholder intends to sell the Offered Shares during the 90 calendar
day period following the ROFO Acceptance Period (the "Shelf Minimum Price"),
(ii) the number of Offered Shares will represent a good faith estimate by the
Offering Stockholder of the Shares the Offering Stockholder intends to sell at
prices equal to or greater than the Shelf Minimum Price during the Shelf
Period, (iii) the Acceptance Notice will constitute a commitment on the part of
the Non-Offering Stockholder to purchase, upon notice by the Offering
Stockholder (a "Sale Notice"), all of the Offered Shares that the Offering
Stockholder elects to sell during the Shelf Period at the Market Price of the
Shares on the date of the Sale Notice, provided such Market Price is within a
range specified in the Acceptance Notice by the Non-Offering Stockholder
between the Shelf Minimum Price and a price in excess thereof, in which case
such Market Price will constitute the Offer Price for purposes of the ROFO
Closing and the ROFO Closing Period will commence on the date of the Sale
Notice, and (iv) if as described in Section 2.1(b)(iv) an Acceptance Notice is
not delivered or a sale to the Non-Offering Stockholder does not occur, the
Offering Stockholder may (without affecting its rights, if any, arising out of
any failure to close on the part of the Non- Offering Stockholder) consummate
one or more public Third-Party Sales pursuant to the Shelf Registration at any
price at or above the Shelf Minimum Price at any time during the Shelf Period.
(e) Special Procedures Applicable to Pledge Foreclosures.
Within 10 Business Days following the foreclosure of a pledge of Shares
permitted under Section 2.1(a)(ii)(E), the pledgee shall send an Offer Notice
pursuant to Section 2.1 (b)(i) and the procedures set forth in Section 2.1(b)
shall apply to such Offer Notice, except that (i) the Non-Offering Stockholder
shall be the Crow/Wyndham Stockholders in the case of a pledge by a Hampstead
Stockholder and the Hampstead Stockholders shall be the Non-Offering
Stockholder in the case of a pledge by a Crow/Wyndham Stockholder and (ii) the
Offer Price shall be the Market Price on the Business Day immediately preceding
the date of the Offer Notice.
9
<PAGE> 11
(f) Unauthorized Transfers. Any purported Transfer of Shares
in violation of this Agreement (an "Unauthorized Transfer") will be null and
void. Wyndham will not register, recognize or give effect to any Unauthorized
Transfer and the purported Transferee of any Shares pursuant to an Unauthorized
Transfer will not thereby acquire any rights in such Shares.
III. CERTAIN CORPORATE GOVERNANCE MATTERS
3.1. Board of Directors. The Stockholders agree that the Wyndham Board
will consist of such number of directors as may be fixed from time to time by a
majority of the entire Wyndham Board then in office and the number of such
directors that shall be Inside Directors and the number that shall be Outside
Directors shall be determined in like manner.
3.2. Right to Nominate Directors. (a) The Hampstead Stockholders will
be entitled to nominate a portion of the Wyndham Board. The portion of the
Wyndham Board that Hampstead shall be entitled to nominate shall be equal to
the nearest whole number obtained by multiplying the Hampstead Allocable
Percentage times the number of directors that are to serve on the Wyndham
Board, and such number shall be allocated as proportionally as practicable
between Inside Directors and Outside Directors based on the total number of
Inside Directors and Outside Directors. Each Inside Director nominated by the
Hampstead Stockholders shall be a Hampstead Principal or such other Inside
Director as is reasonably acceptable to the Crow/Wyndham Stockholders. The
Crow/Wyndham Stockholders (acting with the approval of the holders of a
majority of the Shares held by the Crow/Wyndham Stockholders) shall be entitled
to nominate all Inside Directors and all Outside Directors other than those
that the Hampstead Stockholders have the right to nominate. The Inside
Directors and the Outside Directors that the Stockholder Groups are entitled to
nominate are sometimes referred to in this Agreement as "Stockholder Nominees."
(b) If at any time during the term of this Agreement the
relationship between Hampstead's Allocable Percentage and the number of
directors constituting the Wyndham Board is such that a Stockholder Group has a
number of Stockholder Nominees on the Wyndham Board that exceeds the number to
which such Stockholder Group is entitled (whether one or more, an "Excess
Nominee"), such Stockholder Group, if requested to do so by the other
Stockholder Group, will select the Stockholder Nominee who is to be designated
the Excess Nominee and will cause the Excess Nominee to resign from his or her
position on the Wyndham Board, and in the event the Excess Nominee fails to
resign, the Excess Nominee will be removed as provided in this Agreement.
10
<PAGE> 12
3.3. Election of Stockholder Nominees. (a) Each Stockholder will use
its best efforts to cause the Stockholder Nominees to be elected in any and all
elections of directors of Wyndham held during the term of this Agreement.
Notwithstanding any other provision of this Agreement, however, no Stockholder
will be required to cause the election of any Stockholder Nominee, or to
support the continued service of any Stockholder Nominee, if the Wyndham Board
determines in good faith, based as to legal matters on the advice of outside
counsel, that the election or continued service of such Stockholder Nominee
would be inconsistent with the fiduciary duty owed by the Wyndham Board to all
the stockholders of Wyndham, provided, however, that the foregoing shall not
detract from the right of the Stockholder Group who nominated such Stockholder
Nominee to nominate another Stockholder Nominee for such position. In addition,
continued service on the Wyndham Board by Persons who are also officers of
Wyndham (an "Officer Nominee") will be conditioned upon such Persons continuing
to hold their positions as officers of Wyndham. Any officer who does not
continue to hold such office will, in the absence of a resignation by the
Officer Nominee, be removed from the Wyndham Board as provided in this
Agreement.
(b) Without limiting the generality or effect of
Section 3.3(a), each Stockholder will vote or cause to be voted for the
election of the Stockholder Nominees in any and all elections of directors of
Wyndham held during the term of this Agreement all Shares that such Stockholder
has the power to vote or in respect of which such Stockholder has the power to
direct the vote.
(c) Without limiting the generality or effect of
Section 3.3(a), at each meeting of the stockholders of Wyndham held during the
term of this Agreement at which the term of office of any Stockholder Nominee
(an "Expiring Nominee") expires, each such Expiring Nominee will be nominated
for election to another term as a director of Wyndham and will be included in
the slate of nominees recommended to stockholders for election as directors of
Wyndham in any proxy statement prepared by or on behalf of Wyndham with respect
to such meeting unless the election of the nominee would result in such nominee
becoming an Excess Nominee, in which case a nominee of the other Stockholder
Group shall be nominated and included in such slate; provided that, if the
Stockholder Group that nominated any Expiring Nominee so specifies, or any
Expiring Nominee declines or is unable to accept the nomination, another
individual designated by the Stockholder Group that nominated such Expiring
Nominee, in lieu of such Expiring Nominee, will be nominated for election as a
director of Wyndham and will be included in the slate of nominees recommended
to stockholders for election as directors of Wyndham in any such proxy
statement.
3.4. Vacancies Among Stockholder Nominees. (a) Each Stockholder
Nominee will hold his or her office as a director of
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<PAGE> 13
Wyndham for such term as is provided in Wyndham's constituent documents or
until his or her death, resignation or removal from the Wyndham Board or until
his or her successor has been duly elected and qualified in accordance with the
provisions of this Agreement, Wyndham's constituent documents and applicable
law. If any Stockholder Nominee ceases to serve as a director of Wyndham for
any reason during his or her term (a "Terminating Nominee"), a nominee for the
vacancy resulting therefrom will be designated by the Stockholder Group that
nominated the Terminating Nominee unless the election of the nominee would
result in such nominee becoming an Excess Nominee, in which case the vacancy
shall be filled by a nominee of the other Stockholder Group.
(b) If a Stockholder Group fails at any time to nominate the
maximum number of persons for election to the Board that such Stockholder Group
is entitled to nominate pursuant to Section 3.2, each directorship in respect
of which such Stockholder Group so failed to make a nomination will remain
vacant unless such vacancy results in there being fewer than the minimum number
of directors required by law, in which case such vacancy or vacancies will be
filled by a person or persons selected by a majority of the directors of
Wyndham then in office.
3.5. Removal of Stockholder Nominees. If (i) an Excess Nominee or an
Officer Nominee is to be removed from the Wyndham Board as provided in Section
3.2(b) or 3.3(a) above or (ii) at any time a Stockholder Group shall notify
Wyndham in writing of its desire to have removed from the Wyndham Board, with
or without cause, any Stockholder Nominee, each of the Stockholders will, if
necessary, subject to all applicable requirements of law, use its best efforts
to take or cause to be taken all such action as may be required to remove such
Stockholder Nominee from the Wyndham Board. Subject to the immediately
preceding sentence, no Stockholder will vote or cause to be voted any Shares
that such Stockholder has the power to vote or in respect of which such
Stockholder has the power to direct the vote for the removal, other than for
cause, of any Stockholder Nominee nominated solely by the other Stockholder
Group without the prior written consent of such other Stockholder Group (which
in the case of the Crow/Wyndham Stockholders shall be by action of the holders
of a majority of the Shares held by the Crow/Wyndham Stockholders). The
foregoing provisions shall be without prejudice to the right of the
stockholders of Wyndham to remove directors for cause as provided by the
Delaware General Corporation Law.
3.6. Committees. Throughout the term of this Agreement, each
Stockholder will use its best efforts to cause each committee of the Wyndham
Board to consist as nearly as practicable of Stockholder Nominees of each
Stockholder Group in the same proportions as the Stockholder Nominees of each
Stockholder Group
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<PAGE> 14
are to be represented on the Wyndham Board as provided in Section
3.2.
3.7. Chairman of the Board. As long as the Crow Interests own Covered
Shares that represent at least 30% of the outstanding Shares, the Chairman of
the Board of Wyndham shall be a Person designated by the Crow Interests. In the
event the Hampstead Stockholders own Covered Shares that represent at least 30%
of the outstanding Shares and the Crow Interests no longer own Covered Shares
that represent at least such percentage, the Chairman of the Board shall be a
Person designated by Hampstead.
IV. MISCELLANEOUS
4.1. Notices. All notices, demands, consents, approvals, requests or
other communications which any of the parties to this Agreement may desire or
be required to give hereunder (collectively, "Notices") will be in writing and
will be given by (a) personal delivery, (b) facsimile transmission, or (c)
Federal Express or another nationally recognized overnight courier service,
fees prepaid, addressed as follows:
If to any Hampstead Stockholder, to:
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201-6799
Attn: Richard M. Fitzpatrick
Facsimile (214) 220-4949
If to Wyndham or any Crow/Wyndham Stockholder, to:
Suite 2300
2001 Bryan Street
Dallas, Texas 75201
Attn: Carla S. Moreland
Facsimile (214) 978-4567
and
Suite 3200
2001 Ross Avenue
Dallas, Texas 75201
Attn: Susan T. Groenteman
Facsimile (214) 979-6249
Any party hereto may designate another addressee (and/or change its address)
for Notices hereunder by a Notice given pursuant to this Section. A Notice sent
in compliance with the provisions of this Section will be deemed given on the
date of receipt.
13
<PAGE> 15
4.2. Successors and Assigns. This Agreement will be binding upon the
parties hereto and their respective successors and assigns, and will inure to
the benefit of the parties hereto and, except as otherwise provided herein,
their respective successors and assigns, provided, however, that this Agreement
shall not be binding upon or inure to the benefit of any Transferee in an
Exempt Transfer or a Third-Party Sale. Except in connection with any Transfers
permitted by Article II, neither this Agreement nor any right or obligation
hereunder may be assigned or delegated by any party hereto without the prior
written consent of the other parties hereto.
4.3. Extension Not a Waiver. No delay or omission in the exercise of
any power, remedy or right herein provided or otherwise available to any party
hereto will impair or affect the right of such party thereafter to exercise the
same. Any extension of time or other indulgence granted to any party hereunder
will not otherwise alter or affect any power, remedy or right of any other
party hereto, or the obligations of the party to whom such extension or
indulgence is granted.
4.4. Entire Agreement; Amendments. This Agreement sets forth the
entire agreement between the parties relating to the subject matter hereof and
all prior agreements relative thereto which are not contained herein, including
the Buy-Sell Agreement, are terminated. Amendments, variations, modifications
or changes herein may be made effective and binding upon the parties hereto by,
and only by, a written agreement duly executed by each of (i) Wyndham, (ii) the
holders of at least 80% of the Shares held by the Crow/Wyndham Stockholders and
(iii) the holders of at least 80% of the Shares held by the Hampstead
Stockholders, and any alleged amendment, variation, modification, or change
herein which is not so documented will not be effective as to any party hereto.
4.5. After-Acquired Shares. The provisions of Article II of this
Agreement restricting the Transfer of Shares will apply to and include (i) all
Shares owned by the Stockholders on the date hereof until they are Transferred
in an Exempt Sale or Third-Party Sale and (ii) all voting securities received
in respect of Shares that remain subject to clause (i) in connection with any
merger or consolidation of Wyndham with or into another entity or any
recapitalization or stock split of, or stock dividend on, such Shares, but such
provisions will not otherwise apply to Shares or other voting securities
acquired by a Stockholder after the date hereof.
4.6. Counterparts. This Agreement may be executed in counterparts,
each of which will be an original, but all of which together will constitute
but one and the same agreement.
14
<PAGE> 16
4.7. Expenses. Each party hereto will bear its own legal and
other expenses incurred in connection with the preparation,
execution and performance of this Agreement.
4.8. Arbitration. (a) Any dispute relating to this Agreement or the
performance by the parties of their respective obligations under this
Agreement, which is not resolved after the parties' attempt at amicable
negotiations, will be finally settled by arbitration. If such a dispute arises,
any party hereto may initiate arbitration proceedings by filing a demand for
arbitration with the other parties and the Dallas, Texas office of the American
Arbitration Association ("AAA").
(b) All the arbitration proceedings will be conducted in
accordance with the rules of the AAA and will be held in Dallas, Texas. Within
a reasonable period of time following the conclusion of such proceedings, the
arbitration panel will render a written decision. Decisions of the arbitration
panel will be made by a majority of the panel members. The decision rendered by
the arbitration panel will be final and binding and be enforceable by
appropriate action brought in any state or federal court of competent
jurisdiction.
4.9. Further Assurances. Each of the parties will, at any time, upon
the request of another party hereto, take or cause to be taken, all actions and
do, or cause to be done, all things (including, without limitation, executing,
acknowledging and delivering any additional agreements, instruments and
documents) as may be reasonably necessary, proper or advisable in order to
consummate or make effective the intentions, purposes and transactions
contemplated by this Agreement.
4.10. Legend. A legend referring to the restrictions imposed by this
Agreement may be placed upon any certificate issued to evidence Shares.
4.11. Termination. This Agreement (a) may be terminated at any time by
an instrument duly executed by (i) Wyndham, (ii) the holders of at least 80% of
the Shares held by Crow/Wyndham Stockholders and (iii) the holders of at least
80% of the Shares held by Hampstead Stockholders and (b) will terminate without
further action upon the earliest of (i) the first date on which the Hampstead
Stockholders and the Crow/Wyndham Stockholders (including the Crow Interests)
have beneficial ownership (as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of less than 37.5%, in the
aggregate, of the outstanding Shares of Wyndham, (ii) the Hampstead
Stockholders own less than 50% of the number of Shares held by them immediately
following the IPO, (iii) the sixth anniversary of the date of this Agreement,
(iv) the occurrence of an Investment Program Cutback, (v) the first date on
which the Hampstead Principals, or any of them, do not
15
<PAGE> 17
control the business and affairs of the Hampstead Stockholders, including the
voting and disposition of Shares, unless the foregoing occurs by reason of the
death of the last of such individuals to control such business and affairs, in
which case this Agreement shall not terminate if within 90 days thereafter a
replacement satisfactory to the Crow/Wyndham Stockholders is placed in control
and such replacement (or a subsequent replacement who is likewise so
satisfactory) remains in control at all times thereafter or (vi) any
distribution or other Transfer of Shares by the Hampstead Stockholders to
direct or indirect owners of equity interests in the Hampstead Stockholders
which results in the Shares being held by any Person other than a Hampstead
Principal or a Person controlled by a Hampstead Principal.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WYNDHAM HOTEL CORPORATION
By: /s/ JAMES D. CARREKER
-------------------------------
Name: James D. Carreker
Title: President
STOCKHOLDERS:
/s/ JAMES D. CARREKER
-----------------------------------
James D. Carreker
THE CARREKER DESCENDANTS TRUST
By: /s/ JAMES D. CARREKER
-------------------------------
Name: James D. Carreker
Title: Special Trustee
/s/ LESLIE V. BENTLEY
-----------------------------------
Leslie V. Bentley
16
<PAGE> 18
THE BROOKE ANDREA BENTLEY TRUST
By: /s/ LESLIE V. BENTLEY
-------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
THE KRISTIN MICHELLE SCHAFFNER TRUST
By: /s/ LESLIE V. BENTLEY
-------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
THE LISA SUSANNE BENTLEY TRUST
By: /s/ LESLIE V. BENTLEY
-------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
THE WENDI ELIZABETH SCHAFFNER TRUST
By: /s/ LESLIE V. BENTLEY
-------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
/s/ ANNE L. RAYMOND
-----------------------------------
Anne L. Raymond
/s/ STANLEY M. KOONCE, JR.
-----------------------------------
Stanley M. Koonce, Jr.
/s/ ERIC A. DANZIGER
-----------------------------------
Eric A. Danziger
17
<PAGE> 19
WYNDHAM EMPLOYEES LTD.
By: Wyndham Hotel Management
Corporation, General Partner
By: /s/ JAMES D. CARREKER
--------------------------
Name: James D. Carreker
Title: President
WYNDHAM HOTEL MANAGEMENT CORPORATION
By: /s/ JAMES D. CARREKER
--------------------------
Name: James D. Carreker
Title: President
/s/ TRAMMELL S. CROW
-----------------------------------
Trammell S. Crow
CF SECURITIES, L.P.
By: Mill Spring Holdings, Inc.,
General Partner
By: /s/ SUSAN T. GROENTEMAN
---------------------------
Name: Susan T. Groenteman
-------------------------
Title: Vice President
------------------------
18
<PAGE> 20
WYNOPT INVESTMENT PARTNERSHIP
LEVEL II, L.P.
By: Hampstead GenPar, L.P., General
Partner
By: HH GenPar Partners, General
Partner
By: Hampstead Associates, Inc.,
General Partner
By: /s/ DANIEL A. DECKER
-------------------------------
Name: Daniel A. Decker
-----------------------------
Title: Authorized Officer
----------------------------
WYNOPT INVESTMENT PARTNERSHIP, L.P.
By: Wynopt Investment GenPar, Inc.,
General Partner
By: /s/ DANIEL A. DECKER
-------------------------------
Name: Daniel A. Decker
-----------------------------
Title: Authorized Officer
----------------------------
/s/ SUSAN T. GROENTEMAN
----------------------------------------
Susan T. Groenteman
19
<PAGE> 1
EXHIBIT 10.14
REGISTRATION RIGHTS AGREEMENT
dated as of May 24, 1996
among
WYNDHAM HOTEL CORPORATION
and
The Other Parties Listed on the Signature Pages Hereto
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and
entered into as of May 24, 1996, by and among Wyndham Hotel Corporation, a
Delaware corporation (the "Company"), and the other parties signatory hereto.
RECITALS
The parties hereto have entered into, or are equity owners in entities
that have entered into, other agreements which contemplate, among other things,
the execution and delivery of this Agreement by the parties hereto.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement, the
following terms have the following meanings when used herein with
initial capital letters:
Advice: As defined in Section 6 hereof.
Common Stock: The Common Stock, par value $0.01 per
share, of the Company.
Demand Notice: As defined in Section 3 hereof.
Demand Registration: As defined in Section 3 hereof.
GE Registration Rights: The rights to require the Company to
register shares of Common Stock pursuant to the Registration Rights Agreement
dated as of April 29, 1996 among Wyndham Hotel Company Ltd., General Electric
Investment Corporation and the Trustees of General Electric Pension Trust.
Losses: As defined in Section 8 hereof.
Other Equity Securities: Any shares of capital stock of the
Company and any other securities issued by the Company that are exercisable to
purchase, convertible into or exchangeable for shares of capital stock of the
Company that are owned by any party hereto (other than the Company) or any
affiliate of any party hereto (other than the Company), whether acquired prior
to, on or after the date hereof.
Piggyback Registration: As defined in Section 4 hereof.
Prospectus: The prospectus included in any Registration
Statement (including without limitation a prospectus that discloses
information previously omitted from a prospectus filed as part of
<PAGE> 3
an effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Registrable Securities: The Shares, other shares of Common
Stock held by a party that are not already saleable by such party without
registration and all Other Equity Securities, upon the respective original
issuance thereof, and at all times subsequent thereto, until, in the case of
any such security, (i) it is effectively registered under the Securities Act
and disposed of in accordance with the Registration Statement covering it, (ii)
it is saleable by the holder thereof pursuant to Rule 144(k), or (iii) it is
distributed to the public by the holder thereof pursuant to Rule 144.
Registration Expenses: As defined in Section 7 hereof.
Registration Statement: Any registration statement of the
Company under the Securities Act that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
Shares: All shares of Common Stock acquired by any party
hereto (other than the Company) pursuant to (i) the Formation Agreement dated
as of March 10, 1996, among the Company and the other parties identified on the
signature pages thereof, (ii) 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. and (iii) in the case of
Susan T. Groenteman, an indirect transfer from a party receiving shares of
Common Stock pursuant to the Formation Agreement referred to in clause (i)
above.
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Special Counsel: As defined in Section 7(b) hereof.
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
WEL: Wyndham Employees Ltd., a Texas limited
partnership.
2. WEL Registration. (a) Request for Registration. At any
time after the date hereof, WEL will have the right, exercisable
one time by written notice to the Company (a "WEL Notice"), to
require the Company to register (a "WEL Registration") the
distribution of the Registrable Securities held by WEL to direct or
indirect owners of equity interests in WEL, whether pursuant to the
dissolution of WEL or otherwise, under and in accordance with the
provisions of the Securities Act. A WEL Registration shall not be
considered a Demand Registration (as defined in Section 3(a)
hereof).
(b) Filing and Effectiveness. The Company will file a
Registration Statement relating to any WEL Registration within 60 calendar days
of the date on which the WEL Notice is given and will use all reasonable
efforts to cause the same to be declared effective by the SEC within 120
calendar days of the date on which the WEL Notice is first given. Any request
made pursuant to this Section 2 will specify the number of Registrable
Securities to be registered and will also specify the intended method of
distribution thereof.
3. Demand Registration. (a) Requests for Registration. At
any time and from time to time after the date that is six months following the
date of this Agreement, one or more holders of Registerable Securities will
have the right, by written notice delivered to the Company (a "Demand Notice"),
to require the Company to register (a "Demand Registration") Registrable
Securities under and in accordance with the provisions of the Securities Act;
provided, however, that (i) no such Demand Registration may be required unless
the total amount of Registrable Securities sought to be included in such Demand
Registration has a market value of at least $20,000,000 (calculated based on
the closing sale price of such securities on the principal securities exchange
on which such securities are listed on the business day immediately preceding
the date of the Demand Notice) as of the time a Demand Notice is given and (ii)
no Demand Notice may be given prior to six months after the effective date of
the immediately preceding Demand Registration. Notwithstanding the foregoing, a
good faith decision by a holder to withdraw Registrable Securities from
registration will not affect the Company's obligations hereunder even if the
amount remaining to be registered has a market value of less than $20,000,000
(calculated as aforesaid).
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<PAGE> 5
Subject to the foregoing, there shall be no limit on the number of Demand
Registrations that may be required pursuant to this Agreement.
(b) Filing and Effectiveness. The Company will file a
Registration Statement relating to any Demand Registration within 60 calendar
days of the date on which the Demand Notice is given and will use all
reasonable efforts to cause the same to be declared effective by the SEC within
120 calendar days of the date on which the holders of Registrable Securities
first give the Demand Notice required by Section 3(a) hereof with respect to
such Demand Registration.
All requests made pursuant to this Section 3 will specify the number
of Registrable Securities to be registered and will also specify the intended
methods of disposition thereof.
If any Demand Registration is requested to be effected as a "shelf"
registration by the holders of Registrable Securities demanding such Demand
Registration, the Company will keep the Registration Statement filed in respect
thereof effective for a period of up to six months from the date on which the
SEC declares such Registration Statement effective (subject to extension
pursuant to Sections 5 and 6 hereof) or such shorter period that will terminate
when all Registrable Securities covered by such Registration Statement have
been sold pursuant to such Registration Statement.
Within ten calendar days after receipt of such Demand Notice, the
Company will serve written notice thereof (the "Notice") to all other holders
of Registrable Securities and will, subject to the provisions of Section 3(c)
hereof, include in such registration all Registrable Securities with respect to
which the Company receives written requests for inclusion therein within 20
calendar days after the receipt of the Notice by the applicable holder. The
holders of Registrable Securities will be permitted to withdraw in good faith
all or part of the Registrable Securities from a Demand Registration at any
time prior to the effective date of such Demand Registration, in which event
the Company will promptly amend or, if applicable, withdraw the related
Registration Statement.
(c) Priority on Demand Registration. If Registrable
Securities are to be registered pursuant to a Demand Registration, the Company
shall provide written notice to the other holders of Registrable Securities and
will permit all such holders who request to be included in the Demand
Registration to include any or all Registrable Securities held by such holders
in such Demand Registration. Notwithstanding the foregoing, if the managing
underwriter or underwriters of an underwritten offering to which such Demand
Registration relates advises the holders of Registrable Securities that the
total amount of Registrable Securities that
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<PAGE> 6
such holders intend to include in such Demand Registration is in the aggregate
such as to materially and adversely affect the success of such offering, then
the number of Registrable Securities to be included in such Demand Registration
will, if necessary, be reduced and there will be included in such underwritten
offering the number of Registrable Securities that, in the opinion of such
managing underwriter or underwriters, can be sold without materially and
adversely affecting the success of such offering, allocated pro rata among the
holders of Registrable Securities on the basis of the amount of Registrable
Securities requested to be included therein by each such holder.
(d) Postponement of Demand Registration. The Company will be
entitled to postpone the filing period of any Demand Registration for a
reasonable period of time not in excess of 90 calendar days, if the Company
determines, in the good faith exercise of the business judgment of its Board of
Directors, that such registration and offering could materially interfere with
bona fide financing plans of the Company or would require disclosure of
information, the premature disclosure of which could materially and adversely
affect the Company. If the Company postpones the filing of a Registration
Statement, it will promptly notify the holders of Registrable Securities in
writing when the events or circumstances permitting such postponement have
ended.
4. Piggyback Registration. (a) Right to Piggyback. If at
any time the Company proposes to file a registration statement under the
Securities Act with respect to a primary offering of any class of equity
securities (or securities convertible into, exchangeable for or exercisable for
a class of equity securities of the Company) by the Company (other than a
registration statement (i) on Form S-4, S-8 or any successor form thereto, (ii)
filed in connection with an exchange offer or an offering of securities solely
to the Company's existing stockholders or (iii) filed solely in connection with
an offering made solely to employees of the Company or in connection with a WEL
Registration), then the Company will give written notice of such proposed
filing to the holders of Registrable Securities at least 30 calendar days
before the anticipated filing date. Such notice will offer such holders the
opportunity to register such amount of Registrable Securities as each such
holder may request (a "Piggyback Registration"). Subject to Section 4(b)
hereof, the Company will include in each such Piggyback Registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein. The holders of Registrable Securities will be
permitted to withdraw all or part of the Registrable Securities from a
Piggyback Registration at any time prior to the effective date of such
Piggyback Registration.
(b) Priority on Piggyback Registrations. The Company
will cause the managing underwriter or underwriters of a proposed
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<PAGE> 7
underwritten offering on behalf of the Company to permit holders of Registrable
Securities requested to be included in the registration for such offering to
include therein all such Registrable Securities requested to be so included on
the same terms and conditions as any securities of the Company included
therein. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver an opinion to the holders of Registrable
Securities to the effect that the total amount of securities which such holders
and the Company propose to include in such offering is such as to materially
and adversely affect the success of such offering, then the amount of
securities to be included therein for the account of holders of Registrable
Securities (allocated pro rata among such holders on the basis of the
Registrable Securities requested to be included therein by each such holder)
will be reduced (to zero if necessary) to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
underwriter or underwriters. The managing underwriter or underwriters, applying
the same standard, may also exclude entirely from such offering all
Registerable Securities proposed to be included in such offering to the extent
the Registrable Securities are not of the same class as securities of the
Company included in such offering.
(c) Registration of Securities Other than Registrable
Securities. Without the written consent of the holders of 90% of the
then-outstanding Registrable Securities and an appropriate amendment to this
Agreement pursuant to Section 11 (c), the Company will not grant to any person
the right to request the Company to register any securities of the Company
under the Securities Act, provided, however, that with the consent of the
holders of 66 2/3% of the then-outstanding Registrable Securities, the Company
may grant to any person the same rights as the rights of a holder of
Registrable Securities under this Agreement, either by an amendment making such
person a party to this Agreement or pursuant to a separate agreement. The
parties acknowledge the existence of the GE Registration Rights.
5. Restrictions on Sale by Holders of Registrable Securities. Each
holder of Registrable Securities agrees, if such holder is so requested
(pursuant to a timely written notice) by the managing underwriter or
underwriters in an underwritten offering of any class of securities that
constitutes Registrable Securities, not to effect any public sale or
distribution of any of the Company's securities of such class (except as part
of such underwritten offering), including a sale pursuant to Rule 144, during
the 10-calendar day period prior to, and during the 90- calendar day period
beginning on, the closing date of such underwritten offering.
6. Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 2, 3 and 4
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<PAGE> 8
hereof, the Company will effect such registrations to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible, in each case, to the extent applicable:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the holders thereof in
accordance with the intended method or methods of distribution thereof, and
cause each such Registration Statement to become effective and remain effective
as provided herein; provided, however, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto (including
documents that would be incorporated or deemed to be incorporated therein by
reference) the Company will furnish to the holders of the Registrable
Securities covered by such Registration Statement, the Special Counsel and the
managing underwriters, if any, copies of all such documents proposed to be
filed, which documents will be subject to the review of such holders, the
Special Counsel and such underwriters, and the Company will not file any such
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto (including such documents which, upon filing, would or would be
incorporated or deemed to be incorporated by reference therein) to which the
holders of a majority of the Registrable Securities covered by such
Registration Statement, the Special Counsel or the managing underwriter, if
any, shall reasonably object on a timely basis.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period specified in Section 3; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
as so amended or to such Prospectus as so supplemented.
(c) Notify the selling holders of Registrable Securities, the
Special Counsel and the managing underwriters, if any, promptly, and (if
requested by any such person) confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC
or any other federal or state governmental authority for
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<PAGE> 9
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iv) if at any time the representations and warranties of the
Company contained in any agreement contemplated by Section 6(n) hereof
(including any underwriting agreement) cease to be true and correct, (v) of the
receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the occurrence of any event which makes
any statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in a
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, in the case of the
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest possible moment.
(e) If requested by the managing underwriters, if any, or the
holders of a majority of the Registrable Securities being registered, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriters, if any, and such holder agree
should be included therein as may be required by applicable law and (ii) make
all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company will not be required to take any
actions under this Section 6(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law.
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<PAGE> 10
(f) Furnish to each selling holder of Registrable Securities,
the Special Counsel and each managing underwriter, if any, without charge, at
least one conformed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements (but excluding schedules, all
documents incorporated or deemed incorporated therein by reference and all
exhibits, unless requested in writing by such holder, counsel or underwriter).
(g) Deliver to each selling holder of Registrable Securities,
the Special Counsel and the underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses relating to such Registrable
Securities (including each preliminary prospectus) and any amendment or
supplement thereto as such persons may request; and the Company hereby consents
to the use of such Prospectus or each amendment or supplement thereto by each
of the selling holders or Registrable Securities and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities,
to register or qualify or cooperate with the selling holders of Registrable
Securities, the underwriters, if any , and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions within the
United States as any seller or underwriter reasonably requests in writing; use
all reasonable efforts to keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdiction of the Registrable
Securities covered by the applicable Registration Statement; provided, however,
that the Company will not be required to (i) qualify general to do business in
any jurisdiction in which it is not then so qualified or (ii) take any action
that would subject it to general service of process in any such jurisdiction in
which it is not then so subject.
(i) Cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, shall request at
least two business days prior to any sale of Registrable Securities to the
underwriters.
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<PAGE> 11
(j) Use all reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States except as may be required solely as a consequence of the nature
of such selling holder's business, in which case the Company will cooperate in
all reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities.
(k) Upon the occurrence of any event contemplated by Section
6(c)(vi) or 6(c)(vii) hereof, prepare a supplement or post-effective amendment
to each Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(l) Use all reasonable efforts to cause all Registrable
Securities covered by such Registration Statement to be (i) listed on each
securities exchange, if any, on which similar securities issued by the Company
are then listed or, if no similar securities issued by the Company are then so
listed, on the New York Stock Exchange or another national securities exchange
if the securities qualify to be so listed or (ii) authorized to be quoted on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or the National Market System of NASDAQ if the securities qualify to
be so quoted; in each case, if requested by the holders of a majority of the
Registrable Securities covered by such Registration Statement or the managing
underwriters, if any.
(m) Prior to the effective date of the first Demand
Registration or the first Piggyback Registration, whichever shall occur first,
(i) engage an appropriate transfer agent and provide the transfer agent with
printed certificates for the Registrable Securities in a form eligible for
deposit with The Depository Trust Company and (ii) provide a CUSIP number for
the Registrable Securities.
(n) Enter into such agreements (including, in the event of an
underwritten offering, an underwriting agreement in form, scope and substance
as is customary in underwritten offerings) and take all such other actions in
connection therewith (including those requested by the holders of a majority of
the Registrable Securities being sold or,in the event of an underwritten
offering, those requested by the managing underwriters) in order to expedite
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<PAGE> 12
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (i) make such
representations and warranties to the holders of such Registrable Securities
and the underwriters, if any, with respect to the business of the Company and
its subsidiaries, the Registration Statement, Prospectus and documents
incorporated by reference or deemed incorporated by reference, if any, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the holders of a
majority of the Registrable Securities being sold) addressed to such selling
holder of Registrable Securities and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such holders and
underwriters, including without limitation the matters referred to in Section
6(n)(i) hereof; (iii) use its best efforts to obtain "comfort" letters and
updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data is, or is required to be, included in
the Registration Statement), addressed to each selling holder of Registrable
Securities and each of the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"comfort" letters in connection with underwritten offerings; and (iv) deliver
such documents and certificates as may be requested by the holders of a
majority of the Registrable Securities being sold, the Special Counsel and the
managing underwriters, if any, to evidence the continued validity of the
representations and warranties of the Company and its subsidiaries made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or similar agreement entered
into by the Company. The foregoing actions will be taken in connection with
each closing under such underwriting or similar agreement as and to the extent
required thereunder.
(o) Make available for inspection by a representative of the
holders of Registrable Securities being sold, any underwriter participating in
any disposition of Registrable Securities, and any attorney or accountant
retained by such selling holders or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company
and its subsidiaries to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in
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<PAGE> 13
connection with such Registration Statement; provided, however, that any
records, information or documents that are designated by the Company in writing
as confidential at the time of delivery of such records, information or
documents will be kept confidential by such persons unless (i) such records,
information or documents are in the public domain or otherwise publicly
available, (ii) disclosure of such records, information or documents is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, or (iii) disclosure of such records,
information or documents, in the opinion of counsel to such person, is
otherwise required by law (including, without limitation, pursuant to the
requirements of the Securities Act).
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 calendar days after the end of any 12-month period (or 90 calendar days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten
offering, and (ii) if not sold to underwriters in such an offering, commencing
on the first day of the first fiscal quarter of the Company, after the
effective date of a Registration Statement, which statements shall cover said
12-month period.
(q) In connection with any underwritten offering, cause
appropriate members of its management to cooperate and participate on a
reasonable basis in the underwriters' "road show" conferences related to such
offering.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing and the Company
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each holder of Registrable Securities will be deemed to have agreed by
virtue of its acquisition of such Registrable Securities that, upon receipt of
any notice from the Company of the occurrence of any event of the kind
described in Section 6(c)(ii), 6(c)(iii), 6(c)(v), 6(c)(vi) or 6(c)(vii)
hereof, such holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(k) hereof, or until it is advised in
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<PAGE> 14
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus. In the event the Company shall give any such notice, the time
period prescribed in Section 3(a) hereof will be extended by the number of days
during the time period from and including the date of the giving of such notice
to and including the date when each seller of Registrable Securities covered by
such Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 6(k) hereof or (y)
the Advice.
7. Registration Expenses. (a) All fees and expenses incident to the
performance of or compliance with this Agreement by the Company will be borne
by the Company whether or not any of the Registration Statements become
effective, provided, however, that with respect to any Registration Statement
in connection with a Demand Registration required to be filed by the Company
prior to the date that is one year from the date of this Agreement, the holders
of Registrable Securities delivering the Demand Notice, pro rata based on the
amount of Registrable Securities included therein, shall pay up to $250,000
($125,000 in the case of a shelf registration) of the fees and expenses
incurred by the Company in connection therewith and the Company shall bear the
remainder. Such fees and expenses will include, without limitation, (i) all
registration and filing fees (including without limitation fees and expenses
(x) with respect to filings required to be made with the National Association
of Securities Dealers, Inc. and (y) of compliance with securities or "blue sky"
laws (including without limitation fees and disbursements of counsel for the
underwriters or selling holders in connection with "blue sky" qualifications of
the Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions as
the managing underwriters, if any, or holders of a majority of the Registrable
Securities being sold may designate)), (ii) printing expenses (including
without limitation expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in any
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and the Special Counsel for
the sellers of the Registrable Securities, (v) fees and disbursements of all
independent certified public accountants referred to in Section 6(n)(iii)
hereof (including the expenses of any special audit and "comfort" letters
required by or incident to such performance), (vi) any fees and expenses of any
"qualified independent underwriter" or other independent appraiser
participating in an offering pursuant to Section 3 of Schedule E to the By-laws
of the National Association of Securities Dealers, Inc., (vii) Securities Act
liability
-14-
<PAGE> 15
insurance if the Company so desires such insurance, and (viii) fees and
expenses of all other persons retained by the Company. In addition, the Company
will pay its internal expenses (including without limitation all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange
on which similar securities issued by the Company are then listed and the fees
and expenses of any person, including special experts, retained by the Company.
In no event, however, will the Company be responsible for any underwriting
discount or selling commission with respect to any sale of Registrable
Securities pursuant to this Agreement.
(b) In connection with any Demand Registration or Piggyback
Registration hereunder, the Company will reimburse the holders of the
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel (the "Special Counsel"),
together with appropriate local counsel, chosen by the holders of a majority of
the Registrable Securities being registered.
8. Indemnification. (a) Indemnification by the Company.
The Company will, without limitation as to time, indemnify and hold harmless,
to the fullest extent permitted by law, each holder of Registrable Securities
registered pursuant to this Agreement, the officers, directors and agents and
employees of each of them, each person who controls such holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, agents and employees of any such controlling
person, from and against all losses, claims, damages, liabilities, costs
(including without limitation the costs of investigation and attorneys' fees)
and expenses (collectively, "Losses"), as incurred, arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are based solely upon information
furnished in writing to the Company by such holder expressly for use therein;
provided, however, that the Company will not be liable to any holder of
Registrable Securities to the extent that any such Losses arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if either (A) (i) such
holder failed to send or deliver a copy of the Prospectus with or prior to the
delivery of written confirmation of the sale by such holder of a Registrable
Security to the person asserting the claim from which such Losses arise and
(ii) the Prospectus would have completely corrected such untrue
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<PAGE> 16
statement or alleged untrue statement or such omission or alleged omission; or
(B) such untrue statement or alleged untrue statement, omission or alleged
omission is completely corrected in an amendment or supplement to the
Prospectus previously furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, and such holder thereafter fails
to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the person asserting
the claim from which such Losses arise.
(b) Indemnification by Holders of Registrable Securities. In
connection with any Registration Statement in which a holder of Registrable
Securities is participating, such holder of Registrable Securities will furnish
to the Company in writing such information as the Company reasonably requests
for use in connection with any Registration statement or Prospectus and will
indemnify, to the fullest extent permitted by law, the Company, its directors
and officers, agents and employees, each person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling persons, from and against all Losses arising out of or based upon
any untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or arising out of or based upon
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished in writing by such holder to the Company expressly for use in such
Registration statement or Prospectus and was relied upon by the Company in the
preparation of such Registration Statement, Prospectus or preliminary
prospectus. In no event will the liability of any selling holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by such holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any person
shall become entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any action or proceeding with respect to which such indemnified
party seeks indemnification or contribution pursuant hereto; provided, however,
that the failure to so notify the indemnifying party will not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced materially by such failure. All fees
and expenses (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding)
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<PAGE> 17
will be paid to the indemnified party, as incurred, within five calendar days
of written notice thereof to the indemnifying party (regardless of whether it
is ultimately determined that an indemnified party is not entitled to
indemnification hereunder). The indemnifying party will not consent to entry of
any judgment or enter into any settlement or otherwise seek to terminate any
action or proceeding in which any indemnified party is or could be a party and
as to which indemnification or contribution could be sought by such indemnified
party under this Section 8, unless such judgment, settlement or other
termination includes as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release, in form and
substance satisfactory to the indemnified party, from all liability in respect
of such claim or litigation for which such indemnified party would be entitled
to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party under Section 8(a) or 8(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, will, jointly and severally, contribute to
the amount paid or payable by such indemnified party as a result of such
Losses, in such proportion as is appropriate to reflect the relative fault of
the indemnifying party or indemnifying parties, on the one hand, and such
indemnified party, on the other hand, in connection with the actions, statement
or omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, will be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been
taken or made by, or related to information supplied by, such indemnifying
party or indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses will
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Section 8(d), an indemnifying
party that is a selling holder of Registrable Securities will not be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities sold by
-17-
<PAGE> 18
such indemnifying party and distributed to the public were offered to the
public exceed the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
the Company hereunder will be in addition to any liability the Company may
otherwise have hereunder or otherwise. The provisions of this Section 8 will
survive so long as Registrable Securities remain outstanding, notwithstanding
any transfer of the Registrable Securities by any holder thereof or any
termination of this Agreement.
9. Rule 144. The Company will file the reports required to be filed
by it under the Securities Act and the Exchange Act, and will cooperate with
any holder of Registrable Securities (including without limitation by making
such representations as any such holder may reasonably request), all to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemptions provided by Rule 144. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such filing requirements.
Notwithstanding the foregoing, nothing in this Section 9 will be deemed to
require the Company to register any of its securities under any section of the
Exchange Act.
10. Underwritten Registrations. If any of the Registrable Securities
covered by any Demand Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the holders of a majority of the
Registrable Securities included in the Demand Notice; provided, that such
investment banker or manager shall be reasonably satisfactory to the Company.
If any Piggyback Registration is an underwritten offering, the Company will
have the right to select the investment banker or investment bankers and
managers to administer the offering.
11. Miscellaneous. (a) Remedies. In the event of a breach by the
Company of its obligations under this Agreement, each holder of Registrable
Securities, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement and hereby further
-18-
<PAGE> 19
agrees that, in the event of any action for specific performance in respect of
such breach, it will waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not, as of
the date hereof, and will not, on or after the date hereof, enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The parties to this Agreement, however,
acknowledge the existence of the GE Registration Rights.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
holders of 90% of the then-outstanding Registrable Securities, subject,
however, to the proviso of Section 4(c). Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of holders of Registrable Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least 75% of the
Registrable Securities being sold by such holders; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing and will be deemed given
(i) when made, if made by hand delivery, (ii) upon confirmation, if made by
telecopier, or (iii) one business day after being deposited with a reputable
next-day courier, to the parties as follows:
(x) if to the Company, initially at 2001 Bryan
Street, Suite 2300, Dallas, Texas 75201, Telecopier Number (214) 863-1262
Attention: General Counsel, and thereafter at such other address, notice of
which is given to the holders of Registrable Securities in accordance with the
provisions of this Section 11(d); and
(y) if to any holder of Registrable Securities,
at the most current address given by such holder to the Company in accordance
with the provisions of this Section 11(d).
(e) Owner of Registrable Securities. The Company will
maintain, or will cause its registrar and transfer agent to maintain, a stock
book with respect to the Common Stock, in which
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<PAGE> 20
all transfers of Registrable Securities of which the Company has received
notice will be recorded. The Company may deem and treat the person in whose
name Registrable Securities are registered in the stock book of the Company as
the owner thereof for all purposes, including without limitation the giving of
notices under this Agreement.
(f) Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon the successors and assigns of each of the
parties (including any pledgee acquiring securities by foreclosure) and will
inure to the benefit of each holder of any Registrable Securities.
Notwithstanding the foregoing, no transferee will have any of the rights
granted under this Agreement (i) until such transferee shall have acknowledged
its rights and obligations hereunder by a signed written statement of such
transferee's acceptance of such rights and obligations, (ii) if the transferor
notifies the Company in writing on or prior to such transfer that the
transferee shall not have such rights, or (iii) if such transferee was not a
party to this Agreement on the date hereof (or an affiliate of a party hereto)
and acquired Registrable Securities in open-market purchases or pursuant to an
underwritten public offering.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed will be deemed to be an original and all of which
taken together will constitute one and the same instrument.
(h) Headings. The headings in this Agreement are for
convenience of reference only and will not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF TEXAS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein will remain in full force and
effect and will in no way be affected, impaired or invalidated, and the parties
hereto will use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of
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<PAGE> 21
such which may be hereafter declared invalid, void or unenforceable.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the registration rights granted by the Company
with respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understandings among the parties with respect to such
registration rights.
(l) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, will be entitled to recover reasonable attorneys' fees in addition to
any other available remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
WYNDHAM HOTEL CORPORATION
By: /s/ JAMES D. CARREKER
--------------------------------
Name: James D. Carreker
-----------------------------
Title: President
-----------------------------
/s/ JAMES D. CARREKER
-----------------------------------
James D. Carreker
THE CARREKER DESCENDANTS TRUST
By: /s/ JAMES D. CARREKER
--------------------------------
Name: James D. Carreker
Title: Special Trustee
/s/ LESLIE V. BENTLEY
-----------------------------------
Leslie V. Bentley
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<PAGE> 22
THE BROOKE ANDREA BENTLEY TRUST
By: /s/ LESLIE V. BENTLEY
--------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
THE KRISTIN MICHELLE SCHAFFNER TRUST
By: /s/ LESLIE V. BENTLEY
--------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
THE LISA SUSANNE BENTLEY TRUST
By: /s/ LESLIE V. BENTLEY
--------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
THE WENDI ELIZABETH SCHAFFNER TRUST
By: /s/ LESLIE V. BENTLEY
--------------------------------
Name: Leslie V. Bentley
Title: Special Trustee
/s/ ANNE L. RAYMOND
-----------------------------------
Anne L. Raymond
/s/ STANLEY M. KOONCE, JR.
-----------------------------------
Stanley M. Koonce, Jr.
/s/ ERIC A. DANZIGER
-----------------------------------
Eric A. Danziger
-22-
<PAGE> 23
WYNDHAM EMPLOYEES LTD.
By: Wyndham Hotel Management
Corporation, General Partner
By: /s/ JAMES D. CARREKER
---------------------------
Name: James D. Carreker
Title: President
WYNDHAM HOTEL MANAGEMENT CORPORATION
By: /s/ JAMES D. CARREKER
--------------------------------
Name: James D. Carreker
Title: President
/s/ TRAMMELL S. CROW
-----------------------------------
Trammell S. Crow
CF SECURITIES, L.P.
By: Mill Spring Holdings, Inc.,
General Partner
By: /s/ S.T. GROENTEMAN
--------------------------------
Name: S.T. Groenteman
------------------------------
Title: Vice President
-----------------------------
-23-
<PAGE> 24
WYNOPT INVESTMENT PARTNERSHIP
LEVEL II, L.P.
By: Hampstead GenPar, L.P., General
Partner
By: HH GenPar Partners, General
Partner
By: Hampstead Associates, Inc.,
General Partner
By: /s/ DANIEL A. DECKER
-----------------------------
Name:
---------------------------
Title:
--------------------------
WYNOPT INVESTMENT PARTNERSHIP, L.P.
By: Wynopt Investment GenPar, Inc.,
General Partner
By: /s/ DANIEL A. DECKER
-----------------------------
Name:
---------------------------
Title:
--------------------------
/s/ SUSAN T. GROENTEMAN
-----------------------------------
Susan T. Groenteman
-24-
<PAGE> 1
EXHIBIT 10.15(a)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April 17,
1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned director and officer of the Company (the
"Indemnitee"), with reference to the following facts:
The Indemnitee is currently serving as a director and officer of the
Company and the Company desires that the Indemnitee continue in such capacity.
The Indemnitee is willing, under certain circumstances, to continue serving as
a director and officer of the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as a director and
officer of the Company and in consideration of his or her continued service,
the Company hereby agrees to indemnify the Indemnitee as follows:
<PAGE> 2
1. Indemnity. The Company shall indemnify the Indemnitee and
his or her executors, administrators or assigns, for any Expenses (as
defined below) that the Indemnitee is or becomes legally obligated to
pay in connection with any Proceeding. As used in this Agreement the
term "Proceeding" shall include any threatened, pending or completed
claim, action, suit, investigation or proceeding, whether brought by or
in the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, in which the
Indemnitee may be or may have been involved as a party, witness or
otherwise, by reason of the fact that Indemnitee is or was a director or
officer of the Company, by reason of any actual or alleged error or
misstatement or misleading statement made or suffered by the Indemnitee,
by reason of any action taken by him or her or of any inaction on his or
her part while acting as such director or officer, or by reason of the
fact that he or she was serving at the request of the Company as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; provided,
however, that in each such case Indemnitee acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company, and, in the case of a criminal
proceeding, in addition had no reasonable cause to believe that his or
her conduct was unlawful. As used in this Agreement, the term "other
enterprise" shall include (without limitation) employee
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax assessed with
respect to any employee benefit plan. Any corporation, partnership,
limited liability company or other entity on behalf of which Indemnitee
may be deemed to be acting in connection with his or her service to the
Company shall be entitled to the benefits of the indemnity provided for
by this Agreement to the same extent and under the same conditions upon
which Indemnitee is entitled to such indemnity.
2. Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, judgments, fines, penalties,
settlements and costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement
is not paid by the Company, or on its behalf, within 30 calendar days
after a written claim or request has been received by the Company, then
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such suit. The burden of proving that the
Indemnitee is not entitled to indemnification for any reason shall be
upon the Company.
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
4. Subrogation. Upon any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim made against
the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance
policy;
(b) to the extent that the Indemnitee is indemnified
and actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that any court in which
such action was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court
shall deem proper;
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained any
personal profit or advantage to which he or she was not legally
entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company
for some or a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion of such Expenses to which the Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee
in connection with any Proceeding, except the
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
amount of any settlement, shall be paid by the Company in advance upon
request of the Indemnitee that the Company pay such expenses. The
Indemnitee hereby undertakes to repay to the Company the amount of any
Expenses theretofore paid by the Company to the extent that it is
ultimately determined that such Expenses were not reasonable or that the
Indemnitee is not entitled to indemnification.
9. Notice of Claim. The Indemnitee, as a condition precedent
to his or her right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any claim
made against him or her for which indemnity will or could be sought
under this Agreement, but a failure to give such notice will affect the
obligations of the Company hereunder only to the extent that the Company
is actually and materially prejudiced thereby. Notice to the Company
shall be given at its corporate headquarters and shall be directed to
the corporate secretary (or such other addressee as the Company shall
designate in writing to the Indemnitee); notice shall be deemed received
if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall give the
Company such information and cooperation as it may reasonably require in
connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
instrument.
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
11. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right
to indemnification under any provision of the Certificate of
Incorporation or bylaws of the Company and amendments thereto or under
law.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with Delaware law, without giving effect to the
principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall apply
with respect to the Indemnitee's service as a [director and/or officer]
of the Company prior to the date of this Agreement and with respect to
all periods of such service after the date of this Agreement, even
though the Indemnitee may have ceased to be a director and officer of
the Company.
15. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, legal representatives, successors and permitted
assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ ANNE L. RAYMOND
-----------------------------------
"INDEMNITEE" /s/ JAMES D. CARREKER
-----------------------------------
James D. Carreker
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.15(b)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April 17,
1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned director and officer of the Company (the
"Indemnitee"), with reference to the following facts:
The Indemnitee is currently serving as a director and officer of the
Company and the Company desires that the Indemnitee continue in such capacity.
The Indemnitee is willing, under certain circumstances, to continue serving as
a director and officer of the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as a director and
officer of the Company and in consideration of his or her continued service,
the Company hereby agrees to indemnify the Indemnitee as follows:
<PAGE> 2
1. Indemnity. The Company shall indemnify the Indemnitee and
his or her executors, administrators or assigns, for any Expenses (as
defined below) that the Indemnitee is or becomes legally obligated to
pay in connection with any Proceeding. As used in this Agreement the
term "Proceeding" shall include any threatened, pending or completed
claim, action, suit, investigation or proceeding, whether brought by or
in the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, in which the
Indemnitee may be or may have been involved as a party, witness or
otherwise, by reason of the fact that Indemnitee is or was a director or
officer of the Company, by reason of any actual or alleged error or
misstatement or misleading statement made or suffered by the Indemnitee,
by reason of any action taken by him or her or of any inaction on his or
her part while acting as such director or officer, or by reason of the
fact that he or she was serving at the request of the Company as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; provided,
however, that in each such case Indemnitee acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company, and, in the case of a criminal
proceeding, in addition had no reasonable cause to believe that his or
her conduct was unlawful. As used in this Agreement, the term "other
enterprise" shall include (without limitation) employee
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax assessed with
respect to any employee benefit plan. Any corporation, partnership,
limited liability company or other entity on behalf of which Indemnitee
may be deemed to be acting in connection with his or her service to the
Company shall be entitled to the benefits of the indemnity provided for
by this Agreement to the same extent and under the same conditions upon
which Indemnitee is entitled to such indemnity.
2. Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, judgments, fines, penalties,
settlements and costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement
is not paid by the Company, or on its behalf, within 30 calendar days
after a written claim or request has been received by the Company, then
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such suit. The burden of proving that the
Indemnitee is not entitled to indemnification for any reason shall be
upon the Company.
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
4. Subrogation. Upon any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim made against
the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance
policy;
(b) to the extent that the Indemnitee is indemnified
and actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that any court in which
such action was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court
shall deem proper;
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained any
personal profit or advantage to which he or she was not legally
entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company
for some or a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion of such Expenses to which the Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee
in connection with any Proceeding, except the
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
amount of any settlement, shall be paid by the Company in advance upon
request of the Indemnitee that the Company pay such expenses. The
Indemnitee hereby undertakes to repay to the Company the amount of any
Expenses theretofore paid by the Company to the extent that it is
ultimately determined that such Expenses were not reasonable or that the
Indemnitee is not entitled to indemnification.
9. Notice of Claim. The Indemnitee, as a condition precedent
to his or her right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any claim
made against him or her for which indemnity will or could be sought
under this Agreement, but a failure to give such notice will affect the
obligations of the Company hereunder only to the extent that the Company
is actually and materially prejudiced thereby. Notice to the Company
shall be given at its corporate headquarters and shall be directed to
the corporate secretary (or such other addressee as the Company shall
designate in writing to the Indemnitee); notice shall be deemed received
if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall give the
Company such information and cooperation as it may reasonably require in
connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
instrument.
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
11. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right
to indemnification under any provision of the Certificate of
Incorporation or bylaws of the Company and amendments thereto or under
law.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with Delaware law, without giving effect to the
principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall apply
with respect to the Indemnitee's service as a [director and/or officer]
of the Company prior to the date of this Agreement and with respect to
all periods of such service after the date of this Agreement, even
though the Indemnitee may have ceased to be a director and officer of
the Company.
15. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, legal representatives, successors and permitted
assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ JAMES D. CARREKER
--------------------------------
/s/ ANNE L. RAYMOND
"INDEMNITEE" --------------------------------
Anne L. Raymond
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.15(c)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April 17,
1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned director of the Company (the "Indemnitee"),
with reference to the following facts:
The Indemnitee is currently serving as a director of the Company and the
Company desires that the Indemnitee continue in such capacity. The Indemnitee
is willing, under certain circumstances, to continue serving as a director of
the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as a director of
the Company and in consideration of his or her continued service, the Company
hereby agrees to indemnify the Indemnitee as follows:
1. Indemnity. The Company shall indemnify the Indemnitee and
his or her executors, administrators or
<PAGE> 2
assigns, for any Expenses (as defined below) that the Indemnitee is or
becomes legally obligated to pay in connection with any Proceeding. As
used in this Agreement the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit, investigation or
proceeding, whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been
involved as a party, witness or otherwise, by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of
any actual or alleged error or misstatement or misleading statement made
or suffered by the Indemnitee, by reason of any action taken by him or
her or of any inaction on his or her part while acting as such director
or officer, or by reason of the fact that he or she was serving at the
request of the Company as a director, trustee, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise; provided, however, that in each such case Indemnitee acted
in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Company, and, in the case
of a criminal proceeding, in addition had no reasonable cause to believe
that his or her conduct was unlawful. As used in this Agreement, the
term "other enterprise" shall include (without limitation) employee
benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
assessed with respect to any employee benefit plan. Any corporation,
partnership, limited liability company or other entity on behalf of
which Indemnitee may be deemed to be acting in connection with his or
her service to the Company shall be entitled to the benefits of the
indemnity provided for by this Agreement to the same extent and under
the same conditions upon which Indemnitee is entitled to such indemnity.
2. Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, judgments, fines, penalties,
settlements and costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement
is not paid by the Company, or on its behalf, within 30 calendar days
after a written claim or request has been received by the Company, then
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such suit. The burden of proving that the
Indemnitee is not entitled to indemnification for any reason shall be
upon the Company.
4. Subrogation. Upon any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim made against
the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance
policy;
(b) to the extent that the Indemnitee is indemnified
and actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that any court in which
such action was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court
shall deem proper;
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
any personal profit or advantage to which he or she was not
legally entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company
for some or a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion of such Expenses to which the Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee
in connection with any Proceeding, except the amount of any settlement,
shall be paid by the Company in advance upon request of the Indemnitee
that the Company pay such expenses. The Indemnitee hereby undertakes to
repay to
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
the Company the amount of any Expenses theretofore paid by the Company
to the extent that it is ultimately determined that such Expenses were
not reasonable or that the Indemnitee is not entitled to
indemnification.
9. Notice of Claim. The Indemnitee, as a condition precedent
to his or her right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any claim
made against him or her for which indemnity will or could be sought
under this Agreement, but a failure to give such notice will affect the
obligations of the Company hereunder only to the extent that the Company
is actually and materially prejudiced thereby. Notice to the Company
shall be given at its corporate headquarters and shall be directed to
the corporate secretary (or such other addressee as the Company shall
designate in writing to the Indemnitee); notice shall be deemed received
if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall give the
Company such information and cooperation as it may reasonably require in
connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
instrument.
11. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right
to indemnification under any provision of
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
the Certificate of Incorporation or bylaws of the Company and amendments
thereto or under law.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with Delaware law, without giving effect to the
principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall apply
with respect to the Indemnitee's service as a [director and/or officer]
of the Company prior to the date of this Agreement and with respect to
all periods of such service after the date of this Agreement, even
though the Indemnitee may have ceased to be a director of the Company.
15. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, legal representatives, successors and permitted
assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ JAMES D. CARREKER
---------------------------------
/s/ HARLAN R. CROW
"INDEMNITEE" ---------------------------------
Harlan R. Crow
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.15(d)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April 17,
1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned director of the Company (the "Indemnitee"),
with reference to the following facts:
The Indemnitee is currently serving as a director of the Company and the
Company desires that the Indemnitee continue in such capacity. The Indemnitee
is willing, under certain circumstances, to continue serving as a director of
the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as a director of
the Company and in consideration of his or her continued service, the Company
hereby agrees to indemnify the Indemnitee as follows:
1. Indemnity. The Company shall indemnify the Indemnitee and
his or her executors, administrators or
<PAGE> 2
assigns, for any Expenses (as defined below) that the Indemnitee is or
becomes legally obligated to pay in connection with any Proceeding. As
used in this Agreement the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit, investigation or
proceeding, whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been
involved as a party, witness or otherwise, by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of
any actual or alleged error or misstatement or misleading statement made
or suffered by the Indemnitee, by reason of any action taken by him or
her or of any inaction on his or her part while acting as such director
or officer, or by reason of the fact that he or she was serving at the
request of the Company as a director, trustee, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise; provided, however, that in each such case Indemnitee acted
in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Company, and, in the case
of a criminal proceeding, in addition had no reasonable cause to believe
that his or her conduct was unlawful. As used in this Agreement, the
term "other enterprise" shall include (without limitation) employee
benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
assessed with respect to any employee benefit plan. Any corporation,
partnership, limited liability company or other entity on behalf of
which Indemnitee may be deemed to be acting in connection with his or
her service to the Company shall be entitled to the benefits of the
indemnity provided for by this Agreement to the same extent and under
the same conditions upon which Indemnitee is entitled to such indemnity.
2. Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, judgments, fines, penalties,
settlements and costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement
is not paid by the Company, or on its behalf, within 30 calendar days
after a written claim or request has been received by the Company, then
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such suit. The burden of proving that the
Indemnitee is not entitled to indemnification for any reason shall be
upon the Company.
4. Subrogation. Upon any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim made against
the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance
policy;
(b) to the extent that the Indemnitee is indemnified
and actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that any court in which
such action was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court
shall deem proper;
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
any personal profit or advantage to which he or she was not
legally entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company
for some or a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion of such Expenses to which the Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee
in connection with any Proceeding, except the amount of any settlement,
shall be paid by the Company in advance upon request of the Indemnitee
that the Company pay such expenses. The Indemnitee hereby undertakes to
repay to
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
the Company the amount of any Expenses theretofore paid by the Company
to the extent that it is ultimately determined that such Expenses were
not reasonable or that the Indemnitee is not entitled to
indemnification.
9. Notice of Claim. The Indemnitee, as a condition precedent
to his or her right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any claim
made against him or her for which indemnity will or could be sought
under this Agreement, but a failure to give such notice will affect the
obligations of the Company hereunder only to the extent that the Company
is actually and materially prejudiced thereby. Notice to the Company
shall be given at its corporate headquarters and shall be directed to
the corporate secretary (or such other addressee as the Company shall
designate in writing to the Indemnitee); notice shall be deemed received
if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall give the
Company such information and cooperation as it may reasonably require in
connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
instrument.
11. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right
to indemnification under any provision of
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
the Certificate of Incorporation or bylaws of the Company and amendments
thereto or under law.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with Delaware law, without giving effect to the
principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall apply
with respect to the Indemnitee's service as a [director and/or officer]
of the Company prior to the date of this Agreement and with respect to
all periods of such service after the date of this Agreement, even
though the Indemnitee may have ceased to be a director of the Company.
15. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, legal representatives, successors and permitted
assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ JAMES D. CARREKER
----------------------------------
"INDEMNITEE" /s/ DANIEL A. DECKER
----------------------------------
Daniel A. Decker
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.15(e)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April 17,
1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned director of the Company (the "Indemnitee"),
with reference to the following facts:
The Indemnitee is currently serving as a director of the Company and the
Company desires that the Indemnitee continue in such capacity. The Indemnitee
is willing, under certain circumstances, to continue serving as a director of
the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as a director of
the Company and in consideration of his or her continued service, the Company
hereby agrees to indemnify the Indemnitee as follows:
1. Indemnity. The Company shall indemnify the Indemnitee and
his or her executors, administrators or
<PAGE> 2
assigns, for any Expenses (as defined below) that the Indemnitee is or
becomes legally obligated to pay in connection with any Proceeding. As
used in this Agreement the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit, investigation or
proceeding, whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been
involved as a party, witness or otherwise, by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of
any actual or alleged error or misstatement or misleading statement made
or suffered by the Indemnitee, by reason of any action taken by him or
her or of any inaction on his or her part while acting as such director
or officer, or by reason of the fact that he or she was serving at the
request of the Company as a director, trustee, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise; provided, however, that in each such case Indemnitee acted
in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Company, and, in the case
of a criminal proceeding, in addition had no reasonable cause to believe
that his or her conduct was unlawful. As used in this Agreement, the
term "other enterprise" shall include (without limitation) employee
benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
assessed with respect to any employee benefit plan. Any corporation,
partnership, limited liability company or other entity on behalf of
which Indemnitee may be deemed to be acting in connection with his or
her service to the Company shall be entitled to the benefits of the
indemnity provided for by this Agreement to the same extent and under
the same conditions upon which Indemnitee is entitled to such indemnity.
2. Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, judgments, fines, penalties,
settlements and costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement
is not paid by the Company, or on its behalf, within 30 calendar days
after a written claim or request has been received by the Company, then
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such suit. The burden of proving that the
Indemnitee is not entitled to indemnification for any reason shall be
upon the Company.
4. Subrogation. Upon any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim made against
the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance
policy;
(b) to the extent that the Indemnitee is indemnified
and actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that any court in which
such action was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court
shall deem proper;
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
any personal profit or advantage to which he or she was not
legally entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company
for some or a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion of such Expenses to which the Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee
in connection with any Proceeding, except the amount of any settlement,
shall be paid by the Company in advance upon request of the Indemnitee
that the Company pay such expenses. The Indemnitee hereby undertakes to
repay to
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
the Company the amount of any Expenses theretofore paid by the Company
to the extent that it is ultimately determined that such Expenses were
not reasonable or that the Indemnitee is not entitled to
indemnification.
9. Notice of Claim. The Indemnitee, as a condition precedent
to his or her right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any claim
made against him or her for which indemnity will or could be sought
under this Agreement, but a failure to give such notice will affect the
obligations of the Company hereunder only to the extent that the Company
is actually and materially prejudiced thereby. Notice to the Company
shall be given at its corporate headquarters and shall be directed to
the corporate secretary (or such other addressee as the Company shall
designate in writing to the Indemnitee); notice shall be deemed received
if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall give the
Company such information and cooperation as it may reasonably require in
connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
instrument.
11. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right
to indemnification under any provision of
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
the Certificate of Incorporation or bylaws of the Company and amendments
thereto or under law.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with Delaware law, without giving effect to the
principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall apply
with respect to the Indemnitee's service as a [director and/or officer]
of the Company prior to the date of this Agreement and with respect to
all periods of such service after the date of this Agreement, even
though the Indemnitee may have ceased to be a director of the Company.
15. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, legal representatives, successors and permitted
assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ JAMES D. CARREKER
----------------------------
/s/ SUSAN T. GROENTEMAN
"INDEMNITEE" ----------------------------
Susan T. Groenteman
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.15(f)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April 17,
1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned officer of the Company (the "Indemnitee"), with
reference to the following facts:
The Indemnitee is currently serving as an officer of the Company and the
Company desires that the Indemnitee continue in such capacity. The Indemnitee
is willing, under certain circumstances, to continue serving as an officer of
the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as an officer of
the Company and in consideration of his or her continued service, the Company
hereby agrees to indemnify the Indemnitee as follows:
1. Indemnity. The Company shall indemnify the Indemnitee and
his or her executors, administrators or
<PAGE> 2
assigns, for any Expenses (as defined below) that the Indemnitee is or
becomes legally obligated to pay in connection with any Proceeding. As
used in this Agreement the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit, investigation or
proceeding, whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been
involved as a party, witness or otherwise, by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of
any actual or alleged error or misstatement or misleading statement made
or suffered by the Indemnitee, by reason of any action taken by him or
her or of any inaction on his or her part while acting as such director
or officer, or by reason of the fact that he or she was serving at the
request of the Company as a director, trustee, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise; provided, however, that in each such case Indemnitee acted
in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Company, and, in the case
of a criminal proceeding, in addition had no reasonable cause to believe
that his or her conduct was unlawful. As used in this Agreement, the
term "other enterprise" shall include (without limitation) employee
benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
assessed with respect to any employee benefit plan. Any corporation,
partnership, limited liability company or other entity on behalf of
which Indemnitee may be deemed to be acting in connection with his or
her service to the Company shall be entitled to the benefits of the
indemnity provided for by this Agreement to the same extent and under
the same conditions upon which Indemnitee is entitled to such indemnity.
2. Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, judgments, fines, penalties,
settlements and costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement
is not paid by the Company, or on its behalf, within 30 calendar days
after a written claim or request has been received by the Company, then
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such suit. The burden of proving that the
Indemnitee is not entitled to indemnification for any reason shall be
upon the Company.
4. Subrogation. Upon any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim made against
the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance
policy;
(b) to the extent that the Indemnitee is indemnified
and actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that any court in which
such action was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court
shall deem proper;
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
any personal profit or advantage to which he or she was not legally
entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company
for some or a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion of such Expenses to which the Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee
in connection with any Proceeding, except the amount of any settlement,
shall be paid by the Company in advance upon request of the Indemnitee
that the Company pay such expenses. The Indemnitee hereby undertakes to
repay to
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
the Company the amount of any Expenses theretofore paid by the Company
to the extent that it is ultimately determined that such Expenses were
not reasonable or that the Indemnitee is not entitled to
indemnification.
9. Notice of Claim. The Indemnitee, as a condition precedent
to his or her right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any claim
made against him or her for which indemnity will or could be sought
under this Agreement, but a failure to give such notice will affect the
obligations of the Company hereunder only to the extent that the Company
is actually and materially prejudiced thereby. Notice to the Company
shall be given at its corporate headquarters and shall be directed to
the corporate secretary (or such other addressee as the Company shall
designate in writing to the Indemnitee); notice shall be deemed received
if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall give the
Company such information and cooperation as it may reasonably require in
connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
instrument.
11. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right
to indemnification under any provision of
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
the Certificate of Incorporation or bylaws of the Company and amendments
thereto or under law.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with Delaware law, without giving effect to the
principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall apply
with respect to the Indemnitee's service as a [director and/or officer]
of the Company prior to the date of this Agreement and with respect to
all periods of such service after the date of this Agreement, even
though the Indemnitee may have ceased to be an officer of the Company.
15. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, legal representatives, successors and permitted
assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ JAMES D. CARREKER
----------------------------
"INDEMNITEE" /s/ STANLEY M. KOONCE, JR.
-------------------------------
Stanley M. Koonce, Jr.
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.15(g)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April 17,
1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned officer of the Company (the "Indemnitee"), with
reference to the following facts:
The Indemnitee is currently serving as an officer of the Company and the
Company desires that the Indemnitee continue in such capacity. The Indemnitee
is willing, under certain circumstances, to continue serving as an officer of
the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as an officer of
the Company and in consideration of his or her continued service, the Company
hereby agrees to indemnify the Indemnitee as follows:
1. Indemnity. The Company shall indemnify the Indemnitee and
his or her executors, administrators or
<PAGE> 2
assigns, for any Expenses (as defined below) that the Indemnitee is or
becomes legally obligated to pay in connection with any Proceeding. As
used in this Agreement the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit, investigation or
proceeding, whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been
involved as a party, witness or otherwise, by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of
any actual or alleged error or misstatement or misleading statement made
or suffered by the Indemnitee, by reason of any action taken by him or
her or of any inaction on his or her part while acting as such director
or officer, or by reason of the fact that he or she was serving at the
request of the Company as a director, trustee, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise; provided, however, that in each such case Indemnitee acted
in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Company, and, in the case
of a criminal proceeding, in addition had no reasonable cause to believe
that his or her conduct was unlawful. As used in this Agreement, the
term "other enterprise" shall include (without limitation) employee
benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
assessed with respect to any employee benefit plan. Any corporation,
partnership, limited liability company or other entity on behalf of
which Indemnitee may be deemed to be acting in connection with his or
her service to the Company shall be entitled to the benefits of the
indemnity provided for by this Agreement to the same extent and under
the same conditions upon which Indemnitee is entitled to such indemnity.
2. Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, judgments, fines, penalties,
settlements and costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement
is not paid by the Company, or on its behalf, within 30 calendar days
after a written claim or request has been received by the Company, then
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such suit. The burden of proving that the
Indemnitee is not entitled to indemnification for any reason shall be
upon the Company.
4. Subrogation. Upon any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim made against
the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance
policy;
(b) to the extent that the Indemnitee is indemnified
and actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to
the Company unless and only to the extent that any court in which
such action was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court
shall deem proper;
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
any personal profit or advantage to which he or she was not
legally entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company
for some or a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion of such Expenses to which the Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee
in connection with any Proceeding, except the amount of any settlement,
shall be paid by the Company in advance upon request of the Indemnitee
that the Company pay such expenses. The Indemnitee hereby undertakes to
repay to
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
the Company the amount of any Expenses theretofore paid by the Company
to the extent that it is ultimately determined that such Expenses were
not reasonable or that the Indemnitee is not entitled to
indemnification.
9. Notice of Claim. The Indemnitee, as a condition precedent
to his or her right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any claim
made against him or her for which indemnity will or could be sought
under this Agreement, but a failure to give such notice will affect the
obligations of the Company hereunder only to the extent that the Company
is actually and materially prejudiced thereby. Notice to the Company
shall be given at its corporate headquarters and shall be directed to
the corporate secretary (or such other addressee as the Company shall
designate in writing to the Indemnitee); notice shall be deemed received
if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall give the
Company such information and cooperation as it may reasonably require in
connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
instrument.
11. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right
to indemnification under any provision of
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
the Certificate of Incorporation or bylaws of the Company and amendments
thereto or under law.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with Delaware law, without giving effect to the
principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall apply
with respect to the Indemnitee's service as a [director and/or officer]
of the Company prior to the date of this Agreement and with respect to
all periods of such service after the date of this Agreement, even
though the Indemnitee may have ceased to be an officer of the Company.
15. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, legal representatives, successors and permitted
assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ JAMES D. CARREKER
-----------------------------------
"INDEMNITEE" /s/ LESLIE V. BENTLEY
-----------------------------------
Leslie V. Bentley
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.15(h)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of April
17, 1996, is between Wyndham Hotel Corporation, a Delaware corporation (the
"Company"), and the undersigned director of the Company (the "Indemnitee"),
with reference to the following facts:
The Indemnitee is currently serving as a director of the Company and
the Company desires that the Indemnitee continue in such capacity. The
Indemnitee is willing, under certain circumstances, to continue serving as a
director of the Company.
Section 145 of the General Corporation Law of the State of Delaware,
under which Law the Company is organized, empowers a corporation to indemnify a
person serving as a director, officer, employee or agent of the corporation and
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and such Section 145 and the bylaws of the Company specify
that the indemnification set forth in said Section 145 and in the bylaws,
respectively, shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
In order to induce the Indemnitee to continue to serve as a director
of the Company and in consideration of his or her continued service, the
Company hereby agrees to indemnify the Indemnitee as follows:
1. Indemnity. The Company shall indemnify the
Indemnitee and his or her executors, administrators or
<PAGE> 2
assigns, for any Expenses (as defined below) that the Indemnitee is or
becomes legally obligated to pay in connection with any Proceeding.
As used in this Agreement the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit, investigation or
proceeding, whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been
involved as a party, witness or otherwise, by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason
of any actual or alleged error or misstatement or misleading statement
made or suffered by the Indemnitee, by reason of any action taken by
him or her or of any inaction on his or her part while acting as such
director or officer, or by reason of the fact that he or she was
serving at the request of the Company as a director, trustee, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise; provided, however, that in each such case
Indemnitee acted in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of
the Company, and, in the case of a criminal proceeding, in addition
had no reasonable cause to believe that his or her conduct was
unlawful. As used in this Agreement, the term "other enterprise"
shall include (without limitation) employee benefit plans and
administrative committees thereof, and the term "fines" shall include
(without limitation) any excise tax
INDEMNIFICATION AGREEMENT - Page 2
<PAGE> 3
assessed with respect to any employee benefit plan. Any corporation,
partnership, limited liability company or other entity on behalf of
which Indemnitee may be deemed to be acting in connection with his or
her service to the Company shall be entitled to the benefits of the
indemnity provided for by this Agreement to the same extent and under
the same conditions upon which Indemnitee is entitled to such
indemnity.
2. Expenses. As used in this Agreement, the term
"Expenses" shall include, without limitation, damages, judgments,
fines, penalties, settlements and costs, attorneys' fees and
disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to
indemnification under this Agreement.
3. Enforcement. If a claim or request under this
Agreement is not paid by the Company, or on its behalf, within 30
calendar days after a written claim or request has been received by
the Company, then the Indemnitee may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim or
request and if successful in whole or in part, the Indemnitee shall be
entitled to be paid also the Expenses of prosecuting such suit. The
burden of proving that the Indemnitee is not entitled to
indemnification for any reason shall be upon the Company.
4. Subrogation. Upon any payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall
INDEMNIFICATION AGREEMENT - Page 3
<PAGE> 4
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
5. Exclusions. The Company shall not be liable under
this Agreement to pay any Expenses in connection with any claim made
against the Indemnitee:
(a) to the extent that payment is actually made
to the Indemnitee under a valid, enforceable and collectible
insurance policy;
(b) to the extent that the Indemnitee is
indemnified and actually paid otherwise than pursuant to this
Agreement;
(c) in connection with a judicial action by or in
the right of the Company, in respect of any claim, issue or
matter as to which the Indemnitee shall have been adjudged to
be liable to the Company unless and only to the extent that
any court in which such action was brought shall determine
upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, the
Indemnitee is fairly and reasonably entitled to indemnity for
such expenses as such court shall deem proper;
(d) if it is proved by final judgment in a court
of law or other final adjudication to have been based upon or
attributable to the Indemnitee's in fact having gained
INDEMNIFICATION AGREEMENT - Page 4
<PAGE> 5
any personal profit or advantage to which he or she was not
legally entitled;
(e) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as
amended, and amendments thereto or similar provisions of any
state statutory law or common law; or
(f) for any judgment, fine or penalty which the
Company is prohibited by applicable law from paying.
6. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against any and all Expenses incurred in connection
therewith.
7. Partial Indemnification. If the Indemnitee is
entitled under any provision of this Agreement to indemnification by
the Company for some or a portion of Expenses, but not, however, for
the total amount thereof, the Company shall nevertheless indemnify the
Indemnitee for the portion of such Expenses to which the Indemnitee is
entitled.
8. Advance of Expenses. Expenses incurred by the
Indemnitee in connection with any Proceeding, except the amount of any
settlement, shall be paid by the Company in advance upon request of
the Indemnitee that the Company pay such expenses. The Indemnitee
hereby undertakes to repay to
INDEMNIFICATION AGREEMENT - Page 5
<PAGE> 6
the Company the amount of any Expenses theretofore paid by the Company
to the extent that it is ultimately determined that such Expenses were
not reasonable or that the Indemnitee is not entitled to
indemnification.
9. Notice of Claim. The Indemnitee, as a condition
precedent to his or her right to be indemnified under this Agreement,
shall give to the Company notice in writing as soon as practicable of
any claim made against him or her for which indemnity will or could be
sought under this Agreement, but a failure to give such notice will
affect the obligations of the Company hereunder only to the extent
that the Company is actually and materially prejudiced thereby.
Notice to the Company shall be given at its corporate headquarters and
shall be directed to the corporate secretary (or such other addressee
as the Company shall designate in writing to the Indemnitee); notice
shall be deemed received if sent by prepaid mail properly addressed,
the date of such notice being the date postmarked. In addition, the
Indemnitee shall give the Company such information and cooperation as
it may reasonably require in connection with such claim.
10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute
one instrument.
11. Indemnification Hereunder Not Exclusive. Nothing
herein shall be deemed to diminish or otherwise restrict the
Indemnitee's right to indemnification under any provision of
INDEMNIFICATION AGREEMENT - Page 6
<PAGE> 7
the Certificate of Incorporation or bylaws of the Company and
amendments thereto or under law.
12. Governing Law. This Agreement shall be governed by
and construed in accordance with Delaware law, without giving effect
to the principles of conflict of laws thereof.
13. Saving Clause. Wherever there is conflict between
any provision of this Agreement and any applicable present or future
statute, law or regulation contrary to which the Company and the
Indemnitee have no legal right to contract, the latter shall prevail,
but in such event the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements.
14. Coverage. The provisions of this Agreement shall
apply with respect to the Indemnitee's service as a [director and/or
officer] of the Company prior to the date of this Agreement and with
respect to all periods of such service after the date of this
Agreement, even though the Indemnitee may have ceased to be a director
of the Company.
15. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, legatees, legal representatives, successors and
permitted assigns.
INDEMNIFICATION AGREEMENT - Page 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and signed as of the day and year first above written.
"COMPANY" WYNDHAM HOTEL CORPORATION
By /s/ JAMES D. CARREKER
-------------------------------
"INDEMNITEE" /s/ ROBERT A. WHITMAN
---------------------------------
Robert A. Whitman
INDEMNIFICATION AGREEMENT - Page 8
<PAGE> 1
EXHIBIT 10.28
COMPUTERIZED RESERVATIONS
SERVICES AGREEMENT
This Agreement is made as of the 24th day of May, 1996, between ISIS
2000, a Texas limited partnership, having a principal office address at
_________________________________ ("ISIS 2000") and Wyndham Hotel Corporation,
a Delaware corporation, having a principal office address at 2001 Bryan Street,
Suite 2300, Dallas, Texas 75201 ("Wyndham").
WHEREAS, Wyndham is in the business of owning and operating hotels;
WHEREAS, ISIS 2000 is developing and will operate a centralized
reservations system and facility;
WHEREAS, ISIS 2000 also provides equipment and software that can be
linked to the centralized reservation facility to form a reservation network;
WHEREAS, Wyndham desires to have ISIS 2000 provide Wyndham with its
services in this regard;
NOW, THEREFORE, ISIS 2000 and Wyndham agree as follows:
I. OPERATION OF THEISIS 2000 SYSTEM.
1.1 Services Provided by ISIS. ISIS 2000 shall provide to and on
behalf of Wyndham, and Wyndham shall accept the following services (the "ISIS
Services"):
1.1.1 the data processing services and data base support services
set forth on Schedule 1.1.1 hereof;
1.1.2 the telephone sales services set forth on Schedule 1.1.2
hereof;
1.1.3 a data network for Wyndham Locations and Sites;
1.1.4 a single image property management system.
1.1.5 The ISIS Services provided under Sections 1.1.1, 1.1.2 and
1.1.3 will be provided beginning on the Cutover Date; the ISIS Services
described in Section 1.1.4 will be provided commencing in 1997.
<PAGE> 2
1.2 In order to provide the ISIS Services, ISIS 2000 shall install a
network of central computers connected by means of dedicated data access to
ISIS Workstations located at Wyndham Locations that will provide the
functionality described in Section 1.2 (the "ISIS System").
1.3 Services Support. In connection with the provision of the ISIS
Services, the parties will have the following rights and obligations:
1.3.1 ISIS 2000 shall provide the hardware, software,
supplies, utilities, facilities and staff, including a Dedicated Reservations
Staff, for the operation of the ISIS System and the ISIS Services, provided
that the software, equipment configuration and any changes thereto shall be at
the sole discretion of ISIS 2000. No change to the software or equipment shall
affect ISIS 2000's service obligations under Article 1.1.
1.3.2 ISIS 2000 shall provide toll-paid service to the
Reservation Center. In addition, ISIS 2000 shall provide telephone numbers that
can access the Reservations System using long distance services billed to the
caller, with at least one number to be available for use by Wyndham's customers
to make reservations and at least one number to be available for use by Wyndham
Properties for administrative purposes. The toll-paid numbers and the telephone
number provided for Wyndham's customers shall be defined as "TRC Numbers" and
calls to the Reservations Center, shall be defined herein as "TRC-number
Calls." Collect calls to the Reservations Center will not be accepted.
1.3.3 Wyndham will advertise, at no expense to ISIS 2000, the
TRC Numbers. All of Wyndham's advertising and promotional material shall bear
the TRC Numbers in size, placement and type style equal to or more prominent
than that of other information numbers on such materials, and Wyndham will use
its best efforts to cause the Hotel Property's advertising and promotional
material to conform to such standard. ISIS 2000 agrees that the TRC Numbers
will at all times remain proprietary to Wyndham. Wyndham will license all
current Wyndham toll-free numbers to ISIS 2000 for use with the ISIS Services.
Except as specifically directed by Wyndham in writing, ISIS 2000 will not
change or allow to be changed any TRC Number during the term of this Agreement,
but Wyndham will not withhold such direction for changes mandated by ISIS
2000's telecommunications carriers or regulatory authorities. At the
termination of this Agreement for any reason, ISIS will transfer to Wyndham all
TRC Numbers then in service.
1.3.4 ISIS 2000 will notify Wyndham, via certified mail, of
the availability of ISIS System as set forth in this Agreement. Wyndham will
have 5 business days after receipt of this letter to verify the system
functionality and to verify the initial Wyndham data base. The verification
procedure will consist of (1) a single test of each of the functions to certify
that all functions are accounted for, (2) a test of the connecting and
interaction functions of the Equipment based at the Properties with the
Reservation Center and (3) a comparison of the initial data base to the manual
records to certify the accuracy of data entry. ISIS 2000 shall use all
commercially reasonable efforts to complete any necessary correction as soon as
possible, but in any event, within days of the verification process. The
commencement of ISIS Services will
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<PAGE> 3
begin upon 1) the expiration of the five-day period, or the completion of the
verification procedure, whichever is earlier; or 2) if the verification
procedure results in the need for material corrections, immediately following
the verification procedure for such material corrections. Verification of the
ISIS System or the failure to object to the commencement of the ISIS Services
shall each constitute acceptance by Wyndham of the Reservations Center and the
ISIS Services for purposes of commencing the ISIS Services.
1.3.5 In the event the ISIS System is not operational by the
last permitted Cutover Date, Wyndham may terminate this Agreement without
liability.
1.4 System Performance and Integrity
1.4.1 ISIS 2000 shall provide adequate capacity in the
central computer of the ISIS System ("ISIS Central") for the ISIS Services so
as to maintain service levels as set forth in Schedules 1.1.1 and 1.1.2.
1.4.2 The ISIS System will meet scheduled available
performance standards set forth in Schedules 1.1.1 and 1.1.2. ISIS 2000 may
from time to time schedule downtime in order to accomplish normal system
maintenance and certain software implementations. Scheduled downtime will
normally occur on weekends and U.S. holidays. ISIS 2000 will provide Wyndham
with reasonable advance notice of any scheduled downtime and will coordinate
such downtime with Wyndham to allow Wyndham to make appropriate plans.
1.4.3 After receipt of a written notice from Wyndham, ISIS
2000 shall correct, within a commercially reasonable period, any performance
standard under this Agreement not fulfilled by ISIS 2000. Urgency of repair
shall be determined by ISIS 2000 in accordance with the severity of the
problem.
1.4.4 Upon reasonable advance notice to ISIS 2000, copies of
operating logs and performance reports maintained in connection with the
services herein performed will be available for Wyndham's review during
business hours at ISIS Central, or shall be sent by mail to Wyndham at its
request.
1.4.5 Wyndham acknowledges and agrees that ISIS 2000 has not
undertaken to perform any verification of any sort of the Wyndham Data Base,
and that ISIS 2000's function hereunder is solely to perform the services set
forth in Section 1.1 and to provide the equipment and software necessary for
the ISIS System, including software providing the functionality described in
Schedule 1.2 and the Equipment described in Section 2.1.
1.5 Maintenance.
1.5.1 ISIS 2000, either itself or through third-party
vendors, will maintain the ISIS Central hardware and software.
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1.6 Failure or Delay of Service.
1.6.1 ISIS 2000 shall maintain a disaster recovery plan, a
copy of which will be provided to Wyndham, as it pertains to Wyndham, within a
reasonable time after execution of this Agreement.
II. COMPUTER SERVICES
2.1 Distributed Computer Equipment and Software. By the Cutover Date,
or by such other date which the parties may mutually agree, ISIS 2000 will
provide each Wyndham Location one or more ISIS Workstation(s) and peripheral
equipment on a nonexclusive and nontransferable basis, and each Property shall
enter into a license and lease agreement substantially in the form attached
hereto as Schedule 2.1 and made a part hereof (the "License Agreement"). ISIS
2000 will provide each Property dedicated data access to ISIS Central upon the
installation at its premises of ISIS Workstations and peripheral equipment
2.1.1 Access to ISIS Central using the ISIS Workstation and
peripheral equipment will be provided at Hotel Properties and Sites that
Wyndham shall designate from time to time (i) but only to the extent not
prevented by governmental, technical or communications delays or problems not
within ISIS 2000's control; (ii) provided that upon its enrollment, the
Property satisfies all of its obligations hereunder, including causing its
applicable employees to be properly trained in the use of ISIS System and;
(iii) provided that ISIS 2000's data base information forms for the enrolling
Hotel Property are properly completed by the Hotel Property and delivered to
ISIS 2000.
2.1.2 Wyndham shall not and shall cause the Hotel Property not
to remove or alter any identifying names, logos, service marks or information
from any Equipment, software, documents or other materials provided by ISIS
2000.
2.2 Interfaces.
2.2.1 ISIS Central and the distributed ISIS Workstations will
interface so as to communicate property management and reservation information
between them. Initially, those communications will occur on a completed
transaction basis, but no later than December 31, 1997, ISIS 2000 will upgrade
the software to permit real time communication.
2.2.2 ISIS 2000 will cause connection of ISIS Central through
computer interfaces to GDS Vendors set forth in Schedule 2.2 attached hereto,
and made a part hereof and to other electronic reservation services that become
available from time to time to which Wyndham requests an interface. It is
expressly understood and agreed that: (a) ISIS Central's capabilities are
limited by the capabilities and functions of the particular GDS Vendor,
electronic service or property management system used and by that GDS Vendor,
electronic service or its system's interface to ISIS Central; and (b)
implementation of such GDS or electronic service
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<PAGE> 5
interface is subject to final agreement between ISIS 2000 and a particular GDS
Vendor or electronic service provider and upon certain technological and other
requirements contained in such agreement.
2.2.3 Wyndham shall pay any fees, including but not limited to
booking fees, associated with Bookings received from GDS Vendors and Bookings
received through other electronic reservation services.
2.3 Help Desk. ISIS 2000 will make available a telephone assistance
desk in a location within the United States determined solely by ISIS 2000
staffed by knowledgeable employees who will provide assistance to Wyndham at no
additional charge, regarding: (1) the use and operation of the ISIS
Workstation; (2) Equipment diagnostics; (3) network communication diagnostics;
and (4) GDS booking assistance.
III. DATABASE SERVICES
3.1 ISIS 2000 and Wyndham will jointly establish the initial data base
for Wyndham properties within the current functionality of the ISIS System.
3.1.1 Wyndham must accurately and fully complete or cause to be
accurately and fully completed ISIS 2000 data base information forms, based
upon which ISIS 2000 will initially input Hotel Property data into ISIS
Central. With data links provided through ISIS Workstations, Wyndham will: (a)
automatically modify and update room availability status band rates for Hotel
Properties by directly inputting such modification or update into ISIS Central
via ISIS Workstations; and (b) with regard to GDS Vendors to which ISIS Central
is connected: (i) automatically communicate rate changes or other descriptive
information in the GDS data base for their properties, after which the ISIS
System will perform a quality control check and directly input such rate or
descriptive information change into the GDS Vendor as soon as reasonably
practicable; and (ii) automatically modify and update room availability status
for their properties by directly inputting such modification or update into
ISIS Central via an ISIS Workstation, which will then be automatically
communicated to the GDS Vendor. ISIS 2000 shall be responsible for accurately
inputting information that Wyndham requests ISIS 2000 to enter into the ISIS
System. ISIS 2000 shall not be responsible for the timeliness or accuracy of
data base entries which Wyndham enters or causes to be entered into the ISIS
System.
3.1.2 For Properties not using ISIS Workstations, ISIS 2000 will
update Wyndham's data base in a timely manner at Wyndham's request. Information
to be updated includes property descriptions, property status, name changes and
any other information included in the existing system functionality or any
future enhancements. ISIS 2000 and Wyndham mutually agree to develop procedures
to control and document data base change requests and updates.
3.1.3 For Properties not using ISIS Workstations, ISIS 2000 will
update airline data bases through the GDS Vendors listed in Schedule 2.2 in a
timely manner to reflect changes
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<PAGE> 6
in room rates, property descriptions and property status pursuant to the terms
and conditions between GDS Vendors and Wyndham. ISIS 2000 will provide similar
services using other third party electronic reservation services that ISIS 2000
and Wyndham mutually agree to utilize.
3.2 Maintenance and Storage of Data
3.2.1 ISIS 2000 will maintain the Wyndham Data Base in the
Reservations Data Base. Except as set forth in Article 8.2.2, the Wyndham Data
Base shall be the sole property of Wyndham and only mutually agreed upon
terminals shall have access to the Wyndham Data Base; provided, however, that
ISIS 2000's personnel, including its third party contractors, shall have access
to the Wyndham Data Base to ensure the integrity and performance of the
Reservations Services, to measure Bookings, to make Enhancements, or for any
other purpose consistent with the terms of this Agreement. Any such access
shall be subject to Article VIII.
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<PAGE> 7
3.2.2 ISIS 2000 will store data from the Wyndham Data Base for
such periods as set forth in Schedule 3.2.2, at which time ISIS 2000 may delete
it from the Reservations Data Base. At Wyndham's request, ISIS 2000 will store
such data for longer periods, subject to appropriate price adjustments to
reflect any increased costs.
IV. USER PROFICIENCY.
4.1 Training. Wyndham will be provided with two all day (7 hours)
training courses at a "train the trainer" level on the use of ISIS Workstations
to each Property within a reasonable period of time after that Property
connects to the ISIS System.
4.2 Manuals. ISIS 2000 will also provide Wyndham with a reasonable
number of manuals on the use of the ISIS Workstation and the ISIS System.
4.3 Wyndham Responsibility. Wyndham will take all reasonable steps to
ensure that all of their employees who are authorized to use ISIS Workstations
have been trained appropriately and are proficient in such use. In the event
Wyndham requests additional training or ISIS 2000 and Wyndham determine that
users lack the requisite proficiency, Wyndham will arrange for users or
trainers to receive additional training at an additional charge to Wyndham
reasonably based on ISIS 2000's cost of providing such training.
V. OTHER SERVICES.
5.1 Services. ISIS 2000 may, from time to time, agree to provide other
services to Wyndham, including but not limited to the services described in
Schedule 5.1.
VI. ENHANCEMENTS.
6.1 System Changes. In its sole discretion, and at any time, ISIS 2000
may replace or relocate the software, hardware or other equipment or
technology, or any portion thereof, used to provide the ISIS Services. ISIS
2000 will have the right to change or substitute any parts, programs or systems
of the ISIS Workstation and peripheral equipment and to implement ISIS
Workstation Enhancements at any time in its discretion, which changes,
substitutions and Enhancements Wyndham must accept.
6.2 Effect of Changes. No replacement, relocation, change,
substitution or Enhancement permitted under Section 6.1 shall affect the terms
of this Agreement, including, but not limited to, ISIS 2000's service
obligation under Article 1.1, nor shall it have a material adverse effect on
performance or functionality of the ISIS System or the ISIS Workstation, or
result in any material increase in the charges payable to ISIS 2000 hereunder
unless such change results in the establishment of a new function therein not
previously available hereunder, in which case ISIS 2000 shall offer such new
functionality to Wyndham for a fee reasonably related to ISIS 2000's cost as
determined by ISIS 2000 in its sole discretion, but in any event not greater
than the fee charged to similarly situated customers for the same service. ISIS
2000 will give Wyndham, if
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<PAGE> 8
affected by such changes, reasonable advance notice thereof. Should an
Enhancement be implemented that results in a substantial change in ISIS
Workstation operation, ISIS 2000 will provide to Wyndham up to one (1) day of
training on such Enhancement at no additional cost to Wyndham.
6.3 Implementation of Enhancements. ISIS 2000 will provide Wyndham
with prior notice of the scheduled implementation of any Enhancements to the
ISIS System that, to ISIS 2000's knowledge, will materially affect Wyndham's
own operations. Wyndham may elect not to implement any such Enhancements.
6.4 Wyndham Enhancements. From time to time, Wyndham may
request that ISIS 2000 develop Enhancements to the ISIS System or the ISIS
Workstation.
6.4.1 If ISIS 2000 is willing to develop such an Enhancement, ISIS
2000 will provide Wyndham with a price quote, including rights to use
Enhancement after termination of the Agreement and maintenance costs, based on
whether the Enhancement is proprietary to Wyndham, and on time, materials and
operational expenses associated with both (i) the development, testing and
implementation of the Enhancement and (ii) its on-going operation and
maintenance, and a tentative schedule for developing the Enhancement. Within
forty-five (45) days following the submission of the price quote and schedule
to Wyndham, Wyndham will approve or cancel its request for the proposed
Enhancement. If Wyndham does not respond to the price quote within such
forty-five day period, it shall expire.
6.4.2 If Enhancements added to the ISIS System at the request of
another customer are generally offered to customers of the ISIS Services , they
will be offered to Wyndham provided that charges, if any, for such Enhancement
will be i) mutually agreed upon by Wyndham and ISIS 2000 and ii) comparable to
the charges to such other customers for such Enhancement. Enhancements to the
ISIS System that are added without Wyndham's consent shall not affect any of
Wyndham's fees under Article 7.
6.5 Availability of Enhancements.
6.5.1 ISIS 2000 will make Enhancements available to Wyndham on a
nonexclusive, nontransferable basis at the same time or prior to other ISIS
2000 customers, except that programs developed by ISIS 2000 on an exclusive
basis for anyone other than Wyndham will not be available to Wyndham.
Enhancements developed by or for ISIS 2000 upon request of Wyndham on an
exclusive basis for Wyndham will not be made available to other customers of
ISIS 2000
VII. FEES.
7.1 Basic Fees. Pursuant to the terms of this Agreement, ISIS 2000
will charge and Wyndham will pay to ISIS 2000, as applicable: (1) Initiation
Fee; (2) Booking Fees; and (3) Data and Equipment Fees; and (4) Other Service
Fees, at rates set forth below.
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<PAGE> 9
7.1.1 For each Property that connects to the ISIS System that is
not a Wyndham Property on the Cutover Date, Wyndham will pay an initiation fee
of $10,000 prior to its connection to the ISIS System.
7.1.2 For the ISIS Services, Wyndham shall pay ISIS 2000 a fee for
each net Booking made through the ISIS System. The number of net Bookings for a
particular month shall be the total number of Bookings less the number of
Cancellations. Counting functions of the ISIS System will be used to determine
the number of Bookings, Cancellations and Booking Fees. The Booking Fee will be
determined in accordance with Schedule 7.1.2.
7.1.3 Wyndham shall pay ISIS 2000 monthly fees of $1,000 per Site
for Equipment and software utilized by Wyndham at Sites and for the data
communication network. Any Property using the public-switched telephone network
for communicating with ISIS Central, whether by dial-in or dial-out computer
connection, fax, or voice, will be responsible for the cost of these
communications.
7.1.4 In the event that Wyndham desires ISIS 2000 to provide any
other services pursuant to Article V, and ISIS 2000 agrees to do so, such
services will be provided at fees reasonably related to costs agreed on by the
parties. If the parties are unable to negotiate a mutually acceptable fee, ISIS
2000 will have no obligation to provide such services.
7.2 Adjustments to Fees. At the end of each twelve-month period of
this Agreement, ISIS 2000 may increase any fees fixed herein in order to offset
any cumulative increases in ISIS 2000's total direct or indirect costs of
providing the ISIS System, but in no event shall the increase pursuant to this
Article 7.2 exceed eight percent (8%) per annum. ISIS 2000 shall give Wyndham
30 days' notice of any such fee increase, during which period ISIS 2000 shall
allow Wyndham to review, during reasonable business hours and at ISIS 2000's
place of business, documentation establishing that ISIS 2000's costs have been
increased.
7.3 Invoices and Payment. ISIS 2000 shall submit an itemized invoice
to Wyndham covering all charges under this Agreement for the previous month,
based upon reports generated by the ISIS System. Wyndham shall pay the amount
of such invoice by a single check to ISIS 2000 within seven days from the date
of such invoice. The payment of invoice amounts shall be the sole
responsibility of Wyndham, and shall not be dependent upon payment, approval or
audit by any third party, including any Affiliate of Wyndham. However, upon
reasonable notice to ISIS 2000 and during reasonable business hours, Wyndham
shall have the right to audit ISIS 2000's books and records used in connection
with preparing any such invoice. Any invoice that is not paid by Wyndham within
seven (7) days from the date of such invoice shall accrue interest at a rate of
five (5) percentage points above the prime rate of interest announced from time
to time by Bank One, Texas, N.A., or the highest lawful rate of interest,
whichever is lower.
7.3.1 By the last day of each Calendar Quarter, ISIS 2000 will
estimate the Booking Fees for the next ensuing Calendar Quarter, and ISIS will
invoice Wyndham for services rendered during that Calendar Quarter at rates
based on such estimates. Within 45 days
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following the end of each Calendar Quarter, the parties will conduct a true up
comparing the fees that were earned based on costs and the payments made based
on the estimates. If the true up establishes that Wyndham owes ISIS 2000
additional Booking Fees, Wyndham shall remit such additional Booking Fees by
the end of the 45-day true up period; if the true up establishes that ISIS 2000
was overpaid Booking Fees during the Calendar Quarter, the amount of the
overpayment will be credited against the next invoice rendered for Booking
Fees.
7.4 Taxes.
7.4.1 Wyndham covenants and agrees to pay when due or reimburse
and indemnify and hold ISIS 2000 harmless from and against all taxes, fees, or
other charges of any nature whatsoever (together with any related interest or
penalties, except such interest or penalties resulting solely from the failure
of ISIS 2000 to timely file personal property tax returns with respect to
Equipment leased to Wyndham) now or hereafter imposed or assessed by any
Federal, state, county, local or foreign governmental authority with respect to
services performed or equipment or software supplied by ISIS 2000 (whether by
sale, license, lease or otherwise) under this Agreement, or upon the ordering,
purchase, sale, ownership, delivery, leasing, possession, use, operation,
return or other disposition of such equipment, software or services, or upon
the rents, receipts or earnings arising there from (excepting only Federal,
state and local taxes based on or measured by the taxable income of ISIS 2000).
7.4.2 Any sales, use or other taxes levied on the ISIS Services,
ISIS Workstation, or any other services provided by ISIS 2000 to Wyndham
pursuant to this Agreement (other than taxes calculated on the basis of the net
income of ISIS 2000) may be paid by ISIS 2000 on Wyndham's behalf, to the
applicable taxing authority in which case ISIS 2000 will include the amount of
any such taxes in its monthly invoice to Wyndham, or by Wyndham directly to
such taxing authority, in which case ISIS 2000 shall have no obligation to
calculate, collect or pay any such taxes.
7.4.3 Notwithstanding the foregoing, ISIS 2000 will be responsible
for the filing of all personal property tax returns with respect to Equipment
leased to Wyndham and will pay all taxes indicated thereon. Wyndham will
reimburse ISIS 2000 for all such taxes within thirty (30) days of receipt of
ISIS 2000's invoice therefor.
7.5 Most Favored Nations. ISIS 2000 will not enter into an agreement
on or after the effective date of this Agreement, pursuant to which ISIS 2000
will charge another customer of the ISIS Services, with total average net
Bookings per month equal to or fewer than those of Wyndham, a better fee
structure for the same services provided to Wyndham, without offering such
better fee structure to Wyndham, commencing with the commencement date of such
other agreement.
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VIII. CONFIDENTIALITY OBLIGATION
8.1 Trade Secrets Information.
8.1.1 Title and full ownership and proprietary rights of a Trade
Secret Owner's Trade Secrets, trademarks, and Equipment shall be and remain
with that party. A Trade Secret Owner's Trade Secrets are agreed to be that
person's proprietary information and trade secret whether or not any portion
thereof is or may be validly copyrighted or patented. Trade Secrets provided to
a party pursuant to this Agreement in any form and any and all copies thereof,
and any parts or abstracts thereof which may be furnished to a party, are for
the use of that party for the limited purposes set forth herein, and will not
be disclosed or made available to any other person, firm, corporation or
governmental entity not granted the right to use such Trade Secrets under this
Agreement, in whole or in part or in any form or manner whatsoever by a party
who is not the Trade Secret Owner or any of its officers, directors, agents,
employees, shareholders, representatives, affiliates, or other persons or
entities acting in concert with that party without the prior written consent of
the Trade Secret Owner.
8.1.2 Wyndham and ISIS 2000 each will use its best efforts to
ensure that its employees, agents, consultants, and suppliers are aware of,
recognize, and agree that the terms of this Agreement and each party's Trade
Secrets acquired by virtue of or in connection with this Agreement, are
proprietary in nature and, therefore, are not to be disclosed by the other
party to third parties without the prior written consent of the owner thereof,
and may not be used by such other party for any purpose except to carry out its
obligations or to assert a right under this Agreement. Wyndham and ISIS 2000
each shall use its best efforts to ensure that all individuals having access to
software contained in the Reservations Data Base under this Agreement shall
observe this non-disclosure covenant and treat all data and materials of the
other party covered by this Agreement in a confidential manner.
8.2 Wyndham Information.
8.2.1 Notwithstanding anything herein to the contrary, it is
agreed that Wyndham will have sole ownership rights and title to its Database
and rate, pricing and inventory information ("Wyndham Trade Secrets"). Wyndham
Trade Secrets will not be disclosed by ISIS 2000 to any third party or to any
ISIS 2000 employees not directly connected with the services to be provided
hereunder or who have no need to know same without the prior written consent of
Wyndham.
8.2.2 Nothing in this Agreement will be construed to prohibit ISIS
2000's use, for any purpose, of statistical information or data obtained
through the ISIS System, as long as such statistics are not identifiably
related solely to Wyndham or any Wyndham Property.
8.2.3 In the event that ISIS 2000 provides reservations services
to third parties, such third parties will not be allowed access to the Wyndham
Data Base or other information provided by Wyndham pursuant to this Agreement,
without Wyndham's prior written approval.
8.3 Subpoenaed Information. Each party agrees that it will treat Trade
Secrets provided to it pursuant to this Agreement as it would treat its own
most sensitive trade secrets or
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confidential information. If any party receives a subpoena, court order or
directive, or discovery request (collectively referred to as "Subpoena")
pursuant to litigation, government inquiry, or otherwise, concerning any Trade
Secrets provided to it pursuant to this Agreement, such party will immediately
notify the Trade Secret Owner who will be permitted, at its option and expense,
to interpose objections or defenses to such Subpoena. In no event may any party
turn over, disclose, produce or discuss any Trade Secrets provided to it
pursuant to this Agreement for any purpose whatsoever without notifying the
party who is the Trade Secret Owner of the Subpoena and without the first to
occur of: (i) prior timely notice by the Trade Secret Owner waiving its rights
to object or defend as set forth above; or (ii) final, binding, non-appealable
court order or decree obtained in an action in which the Trade Secret Owner has
timely elected to defend, be a party or intervenor. Failure of a Trade Secret
Owner to give notice of waiver, or to object, defend, join or intervene in the
action prior to the production date set forth in the Subpoena will be deemed
waiver of rights to object or defend. In the event that a Subpoena directs
production in less than seven (7) days of receipt, the recipient of the
Subpoena will attempt to obtain extension and otherwise use its best efforts to
notify the Trade Secret Owner and permit the Trade Secret Owner to object,
defend, join or intervene the action. In all events, the Trade Secret Owner
will be responsible for all legal fees and expenses incurred by the other party
or parties in connection with a Subpoena concerning the Trade Secret Owner's
Trade Secrets.
8.4 Return of Materials. Upon termination of this Agreement for any
cause or reason, Wyndham agrees to deliver to ISIS 2000 all materials or
information supplied by ISIS 2000 pertaining to software contained in the
Reservations Data Base, and shall, after a due diligent search, certify to ISIS
2000 that all such copies have been returned to ISIS 2000 or destroyed.
8.5 Public Announcement. Neither party will make a public announcement
regarding this Agreement or the provision of Reservations Services provided for
herein, nor will either party use any name, logo, tradename, trademark or
service mark of the other party, without the other party's prior written
approval which may not be unreasonably withheld.
IX. REPRESENTATIONS AND WARRANTIES OF WYNDHAM. Wyndham represents and
warrants to ISIS 2000 as follows:
9.1 Organization of Wyndham. Wyndham is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. The execution
and delivery of this Agreement and the performance by Wyndham of its
obligations hereunder have been duly authorized by all necessary action on the
part of Wyndham. This Agreement is a legal, valid and binding obligation of
Wyndham enforceable against Wyndham in accordance with its terms except that
the enforceability hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally. Neither the execution and delivery of this
Agreement nor the performance by Wyndham of any of its obligations hereunder
nor the consummation of any of the transactions contemplated hereby will
violate any agreement to which Wyndham is a party or by which Wyndham or any of
its property may be bound, or any provision of Wyndham's Certificate of
Incorporation or By-Laws, or any applicable law, regulation, rule, judgment,
order or decree. No consent, approval or authorization
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of, or registration, declaration or filing with, any governmental authority on
the part of Wyndham is required as a condition to the valid execution, delivery
and performance of any of this Agreement by Wyndham pursuant hereto except for
such as have been duly made or obtained.
9.2 Employees and Affiliates, etc. Wyndham does not have any
outstanding contracts with officers, employees, agents, consultants, advisers,
salesmen, sales representatives, distributors or dealers connected with
providing services similar to or interchangeable with the ISIS Services that
are not cancelable by Wyndham on a schedule coordinated with the Cutover Date
without liability, penalty or premium.
9.3 Collective Bargaining Agreements. There are no collective
bargaining agreements of Wyndham with any labor union or other representative
of employees connected with the provision of services similar to or
interchangeable with the ISIS Services (including local agreements, amendments,
supplements, letter and memoranda of understanding of any kind).
9.4 Authorization to Execute. The undersigned signatory has authority
to execute this Agreement on behalf of Wyndham.
X. REPRESENTATIONS AND WARRANTIES OF ISIS 2000. ISIS 2000 represents and
warrants to Wyndham as follows:
10.1 Organization of ISIS 2000. ISIS 2000 is a limited partnership
duly organized, validly existing and in good standing under the laws of Texas
and has full power to conduct its business as it is now being conducted and to
own and operate the properties and assets now owned and operated by it. The
execution and delivery of this Agreement and the performance by ISIS 2000 of
its obligations hereunder have been duly authorized by all necessary action on
the part of ISIS 2000. This Agreement is a legal, valid and binding obligation
of ISIS 2000 enforceable against ISIS 2000 in accordance with its terms except
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditor's rights generally. Neither the execution and delivery of this
Agreement nor the performance by ISIS 2000 of any of its obligations hereunder
or the consummation of any of the transactions contemplated hereby will violate
any material agreement to which ISIS 2000 is a party or by which ISIS 2000 or
its properties may be bound or any provision of ISIS 2000's Partnership
Agreement or By-Laws or any applicable law, regulation, rule, judgment, order
or decree.
10.2 Authorization to Execute. The undersigned signatory has authority
to execute this Agreement on behalf ISIS 2000.
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XI. COVENANTS OF WYNDHAM.
11.1 Access to Information. Wyndham will give to ISIS 2000, its
programmers, consultants, counsel, employees and other representatives full
access to all of the properties, books, contracts, commitments, and reports and
records of Wyndham that relate to the implementation of the ISIS System and
will furnish to ISIS 2000 all such documents, records and information with
respect to its reservation system and copies of any working papers relating to
its reservation system as ISIS 2000 may from time to time reasonably request.
Wyndham shall cooperate with ISIS 2000 to facilitate the commencement of the
operation of the ISIS Services by ISIS 2000. In accordance with the foregoing,
Wyndham and ISIS 2000 agree to work together on a schedule for such
commencement and to keep each other adequately informed as to its progress.
ISIS 2000 will be entitled to maintain as many of its employees as is
reasonably necessary on the premises of Wyndham for the purposes of carrying
out this Agreement. If this Agreement is terminated prior to the Cutover Date
for any reason, all data, information, files, records and copies of documents,
work sheets and other materials obtained by ISIS 2000 in connection with this
Agreement shall be returned to Wyndham as soon as practicable after written
request therefor.
11.2 Notification. Wyndham will give notice to ISIS 2000 promptly upon
becoming aware of (a) any inaccuracy of a representation or warranty made by
Wyndham herein or (b) any event or state of facts that, if it had occurred or
existed on or prior to the date of this Agreement, would have caused any such
representation or warranty to be inaccurate, and any such notice will describe
such inaccuracy, event or state of facts in reasonable detail.
11.3 Honor Reservation. The availability of accommodations, any
inventory of accommodations or rates for such accommodations to be included in
the Reservations Data Base shall be no more restricted or limited than a
Wyndham Customer would encounter by contacting directly an individual Wyndham
Property. Wyndham shall cause the management of each Wyndham Property to honor
confirmed reservations effected via the ISIS System and shall provide the
accommodations thereby reserved and confirmed by ISIS 2000. If Wyndham is
unable to honor a confirmed reservation or to offer the accommodations reserved
due to oversales of accommodations, Wyndham shall be responsible for any
resulting liabilities, including the Booking Fee for such reservation. In the
event that an oversale of accommodation is due solely to the negligence or
willful misconduct of ISIS 2000, Wyndham's sole remedy shall be recovery of any
Booking Fee for the reservation. Wyndham shall, on request, certify the
accuracy of all data pertaining to it or its operations which has been supplied
to ISIS 2000 or put into the Reservations Data Base.
XII. FORCE MAJEURE; SUSPENSION AND TERMINATION
12.1 Effect of Force Majeure. In the event that either party is unable
to perform any of its obligations under this Agreement or to enjoy any of its
benefits because of Force Majeure, the party who has been so affected
immediately shall give notice to the other party and shall do everything
possible to resume performance. Upon receipt of such notice, the obligations
under
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this Agreement, except as otherwise set forth herein, shall immediately be
suspended. If the period of nonperformance exceeds thirty (30) days from the
receipt of notice of the Force Majeure event, the party whose ability to
perform has not been so affected may by giving written notice to the other
party terminate this Agreement. However, delays in delivery of the Equipment or
software due to Force Majeure events shall automatically extend the delivery
date for a period equal to the duration of such event. Neither party will be
relieved of the obligation to maintain confidentiality of Trade Secrets by the
occurrence of Force Majeure, and Wyndham will not be relieved of the
obligations to make payments to ISIS 2000 regardless of the occurrence of Force
Majeure, to the extent that such payments are for services received prior to
the event of Force Majeure.
XIII. LIMITED ISIS 2000 WARRANTY
13.1 ISIS Services. ISIS 2000 MAKES NO WARRANTY WITH REGARD TO THE
ISIS SERVICES OR ANY EQUIPMENT OR SOFTWARE FURNISHED HEREUNDER, INCLUDING ANY
WARRANTY OF FITNESS FOR INTENDED PURPOSE OR OF MERCHANTABILITY. ISIS 2000 WILL
ENFORCE, ON BEHALF OF WYNDHAM, ANY WARRANTIES IT HAS RECEIVED IN CONNECTION
WITH SOFTWARE OR HARDWARE SUPPLIED TO WYNDHAM.
XIV. LIMITATION OF ISIS 2000 LIABILITY
14.1 Exclusive Remedy. ISIS 2000's sole and exclusive liability for a
failure or delay in the performance of the ISIS System, including, without
limitation, any ISIS Workstation or implementation of Enhancements, or for any
limitation placed upon the functional capabilities or the data volumes of the
ISIS System, shall be as set forth in Schedule 14.1. ISIS 2000 shall have no
liability if such failure or delay was caused directly or indirectly by
Wyndham.
14.2 Other Claims. ISIS 2000'S LIABILITY FOR ANY AND ALL OTHER CLAIMS,
EXCEPT FOR CLAIMS RESULTING FROM THE INTENTIONAL TORT OR NEGLIGENCE OF ISIS
2000 OR ONE OF ITS AUTHORIZED EMPLOYEES, SHALL, IN THE AGGREGATE, NOT EXCEED
THREE MONTHS' AVERAGE BILLING TO THE DAMAGED PROPERTY TAKEN OVER THE 12 MONTHS
PRECEDING THE MONTH IN WHICH THE DAMAGE OR INJURY IS ALLEGED TO HAVE OCCURRED,
BUT IF THIS AGREEMENT HAS NOT BEEN IN EFFECT FOR 12 MONTHS PRECEDING SUCH DATE,
THEN OVER SUCH FEWER NUMBER OF PRECEDING MONTHS AS THE AGREEMENT HAS BEEN IN
EFFECT.
14.3 No Consequential Damages. EXCEPT IN CONNECTION WITH SUCH CLAIMS
FOR WHICH ISIS 2000 SHALL BE LIABLE AS INDEMNITOR PURSUANT TO ARTICLE XV
HEREOF, ISIS 2000 WILL NOT BE LIABLE FOR, AND WYNDHAM HEREBY WAIVES AND
RELEASES ALL CLAIMS AGAINST ISIS 2000 FOR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES, INCLUDING LOST REVENUES, LOST PROFITS, OR LOSS OF PROSPECTIVE ECONOMIC
ADVANTAGE, OR ANY
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CLAIMS OF THIRD PARTIES, INCLUDING BUT NOT LIMITED TO WYNDHAM CUSTOMERS,
WYNDHAM FRANCHISEES, AGENTS OF WYNDHAM OR ANY OTHER AFFILIATE OF WYNDHAM
RESULTING FROM PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT.
XV. INDEMNIFICATION.
15.1 Indemnification by Wyndham. Wyndham shall indemnify and hold
harmless ISIS 2000, and shall reimburse ISIS 2000 for any loss, liability,
claim, damage, expense (including, but not limited to, costs of investigation
and defense and reasonable attorney's fees) or diminution of value
(collectively, "Damages") arising from or in connection with liabilities
arising out of any failure by Wyndham to comply with its obligations under this
Agreement, any inaccuracy in any of the representations or warranties of
Wyndham in this Agreement, or any action by any third party with respect to the
functioning of the ISIS System or any of the services provided hereunder,
except for any actions resulting directly or indirectly from ISIS 2000's
negligence.
15.2 Indemnification by ISIS 2000. ISIS 2000 shall indemnify and hold
harmless Wyndham, and shall reimburse Wyndham for any Damages arising out of
any failure by ISIS 2000 to comply with its obligations under Article 14.1 of
this Agreement, or any inaccuracy in any of the representations or warranties
of ISIS 2000 in this Agreement, other than Damages for lost profits, or
incidental or consequential damages or Damages arising out of any action by any
third party with respect to the functioning of the ISIS System or any of the
services provided hereunder.
15.3 Patent Indemnity. ISIS 2000 shall indemnify and hold Wyndham
harmless against any Damages incurred by or against Wyndham as a result of or
in connection with any claim made or alleged that the ISIS System infringes any
United States patent, copyright, trade secret, trademark or other intellectual
property rights of any third party, conditioned on the following:
(A) That ISIS 2000 shall be notified promptly in writing by
Wyndham of any notice of such claims; and
(B) That ISIS 2000 shall have the sole control of the defense of any
action on such claim and all negotiations for its settlement or
compromise.
Should any aspect of the ISIS System be held, or in ISIS 2000's
opinion be likely to be held, to infringe such intellectual property rights,
ISIS 2000 shall, at its expense, (i) procure for Wyndham the right to continue
using the ISIS System, or (ii) replace or modify the same so that it becomes
non-infringing but still provides substantially the same functions as provided
prior to replacement or modification.
XVI. TERM; CANCELLATION OF CERTAIN SERVICES.
16.1 Base Term. This Agreement is effective upon execution and has an
initial term
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ending on the date five years from the Cutover Date, and will be renewed for
any number of consecutive one year terms unless terminated (a) by either party
by written notice to the other party at least 120 days prior to the end of the
then current term of the Agreement or (b) pursuant to Section 16.2 or Article
XVII hereof. Articles VIII, XIII, XIV and XV, and Sections 18.1, 18.4, 18.7 and
18.15 will survive termination of this Agreement.
16.2 Early Termination. Wyndham may elect to terminate this Agreement
upon one year's written notice given to ISIS 2000. If Wyndham so elects, it
will pay all costs ISIS 2000 has incurred through the date of termination in
setting up and providing service under this Agreement, including, without
limitation, financing costs, other than costs that have been recovered by ISIS
2000 through charges to Wyndham.
XVII. TERMINATION.
17.1 Breach. In the event of a material breach of the terms and
conditions of this Agreement, the non-breaching party may terminate this
Agreement without further liability upon thirty (30) prior written notice to
the other party (which notice shall describe, with as much particularity as
possible, the alleged material breach) provided, however, that the breaching
party shall have thirty (30) days to correct such breach following receipt of
such notice. In the event that a cure requires more than thirty (30) days to
complete, it shall be deemed sufficient if a cure is promptly commenced,
thereafter, is diligently prosecuted, and in any event cured within ninety (90)
days of the receipt of the original notice.
17.2 Non-Payment. If Wyndham does not make any payment to ISIS 2000
when it is due, which shall not be less than ___days from the date an invoice
is received, then ISIS 2000 may immediately terminate this Agreement upon ten
(10) days written notice to Wyndham, unless Wyndham makes such payment to ISIS
2000 on or before the expiration of such ten (10) day default, notice and grace
period.
17.3 Obligations Upon Termination.
17.3.1 Upon termination of this Agreement, ISIS 2000 will
provide a tape capture of the Wyndham Data Base to Wyndham at a mutually agreed
upon reasonable date and in a form to be reasonably agreed upon between the
parties in order to assist Wyndham in an efficient migration to another
reservations system. ISIS 2000 will provide good faith assistance to Wyndham as
requested by Wyndham for six (6) months from the date the Agreement is
terminated. ISIS 2000 will invoice Wyndham, and Wyndham will pay ISIS 2000,
monthly for the assistance provided at ISIS 2000's cost plus 20%.
17.3.2 Termination by ISIS 2000 in accordance with the
provisions of this Article XVII will be treated as an early termination by
Wyndham under Section 16.2 and will entitle ISIS 2000 to recover the payment
provided in that section.
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XVIII. GENERAL.
18.1 Expenses. Except as expressly provided herein, each of the
parties hereto will pay its own fees and expenses, including its own counsel
fees and accountants' fees, incurred in connection with the transaction
contemplated by this Agreement.
18.2 Exclusivity. ISIS 2000 will provide service exclusively to
Wyndham for three years following the Cutover Date. Wyndham understands and
agrees that this is a non-exclusive agreement after three years and that after
that time ISIS 2000 may provide similar services to other third parties.
Wyndham agrees until this Agreement is terminated that ISIS 2000 shall be sole
supplier to Wyndham and its Affiliates of services of the type provided under
this Agreement.
18.3 Competition. During the term of this Agreement, Wyndham will not,
in any manner directly or indirectly, (i) compete with or (ii) own, manage,
operate, join, control, participate in or be connected as a partner, advisor,
consultant, trustee or otherwise, with any system, business or business entity
that competes or could compete with, the activities of ISIS 2000 in connection
with the ISIS Services.
18.4 Governing Law This Agreement shall be construed and interpreted
according to the laws of the State of Texas.
18.5 Amendment and Modification. The parties hereto may amend, modify
and supplement this Agreement in such manner as may be agreed upon by them in
writing.
18.6 Assignment and Subcontracting. This Agreement and all of the
provisions hereof are and will be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, including a
purchaser of all or substantially all of the assets or outstanding stock of
Wyndham, but this Agreement and the rights, interests or obligations hereunder
may not be assigned by any of the parties hereto without the consent of the
other parties, except that either party may assign this Agreement or any
portion hereof to a subsidiary or Affiliate, or may subcontract any of its
obligations hereunder, without such consent.
18.7 Third Parties' Rights. No provision of this Agreement is intended
to create any rights in persons or entities other than the parties hereto,
their successors and assigns.
18.8 Counterparts. This Agreement may be executed simultaneously in
two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18.9 Headings. The headings of the sections of this Agreement are for
convenience only and do not constitute a part hereof.
18.10 Security. Various levels of restricted access will be
incorporated into ISIS Central and ISIS Workstation by password duty code,
individual sign-in code, job duty code, workstation location and computer
terminal access. It will be Wyndham's responsibility to assign password duty
codes to all persons using the ISIS Workstation on behalf of Wyndham.
18.11 Waiver. No waiver or breach of any provisions of this Agreement
shall constitute a waiver of any subsequent breach of the same or any other
provision hereof and no waiver shall be effective unless made in writing.
18.12 Independent Contractors. Nothing in this Agreement is intended
or will be construed to create or establish any agency, partnership or joint
venture relationship between the parties hereto.
18.13 Severability. In case any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but such provision or
provisions shall be ineffective only to the extent of such invalidity,
illegality or unenforceability without invalidating the remainder of such
provision or provisions or the remaining provisions of this Agreement, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein, unless the deletion of
such provision or provisions would result in such a material change as to cause
performance by a party to be unreasonable.
18.14 Entirety of Agreement. The terms and conditions of this
Agreement including the exhibits hereto, and the License Agreement, constitute
the entire agreement between the parties and supersede those of any previous
agreement, oral or written, between Wyndham and ISIS 2000 with respect to the
subject matter of this Agreement. There are no restrictions, promises,
warranties, covenants or undertakings, other than those expressly set forth
herein.
18.15 Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be valid and sufficient if dispatched either (i)
by hand delivery, (ii) by telex, cable or facsimile transceiver, with
confirming letter mailed promptly thereafter in accordance with clause (iv)
hereof, (iii) by reputable overnight express courier or (iv) by certified mail,
postage prepaid, return receipt requested, deposited in any post office in the
United States, in any case, addressed to the addresses set forth on the first
page of this Agreement, or such other addresses as may be provided from time to
time in the manner set forth above. When sent by cable or facsimile as
aforesaid, notices given as herein provided shall be considered to have been
received when sent during normal business
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hours; otherwise, notices shall be considered to have been received only upon
delivery or attempted delivery during normal business hours.
18.16 Use of Mark. ISIS 2000 grants Wyndham the right and license to
use the "ISIS 2000" name and mark in its promotional and marketing efforts,
subject to ISIS 2000's prior written approval of the use of any ISIS 2000
trademark, which approval shall not be unreasonably withheld.
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XIX. DEFINITIONS. As used herein, the following terms have the following
meanings:
Accommodation Segment--a portion of the GNR containing Property, room type, and
guest stay dates. Each different Reservation entry in the ISIS System, per
Property, room type, or guest stay date or dates, constitutes an Accommodation
Segment.
Affiliate--Any person or entity which, directly or indirectly, controls or is
controlled by one of the parties to this Agreement, or under common control
with such party or any partnership in which one of the parties to the Agreement
has at least a 5% interest.
Booking--A Reservation made through the ISIS System for a continuous stay in
one room or suite at a Wyndham Property.
Booking Fee--The fee charged for a Booking.
Calendar Quarter--a 3-month period beginning January 1, April 1, July 1 or
October 1.
Cancellation--The cancellation of a Booking in its entirety through the ISIS
System.
Cutover Date--the date ISIS Services commence in accordance with Section 1.3.4,
which the parties plan to occur on or about ____________, 1996, but which in no
event shall be later than December 31, 1996.
Dedicated Reservations Staff--A group of people, the individual members of
which may vary from time to time, that is solely dedicated to providing
Reservations Services for Wyndham.
Dollars and $--U.S. Dollars.
Enhancement--Any addition to the functionality of the ISIS System, including
but not limited to ad hoc report changes, beyond the functionality of the ISIS
System on the Cutover Date, including an ISIS Workstation programming or
Equipment modification, improvement or addition to an existing program or
Equipment.
Equipment--computer hardware, including personal computer terminals, screens,
keypads, fileservers, gateways and modems.
Force Majeure--any cause reasonably beyond a party's control, including,
without limitation, weather, acts of God, public enemies, war, insurrection,
third party labor disputes and strikes, acts or orders of governmental
authorities, electrical or power outage or interruption, fire, flood or
explosion.
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GDS Booking--A Booking from a GDS Vendor.
GDS Vendor--Global Distribution System computerized reservation vendor.
Guest Name Record or GNR--identifying information and reservation information
regarding a particular guest or guests of a Property entered into the ISIS
System.
Hotel Property or Property--the hotel, resort and condominium which is owned,
operated, managed by or contractually related to Wyndham or with regard to
which Wyndham has control over Reservations.
ISIS 2000--See the opening paragraph of this Agreement.
ISIS Central--the centralized computer hardware and software from which ISIS
Services are performed and through which the ISIS Workstations are
interconnected. ISIS System--the interconnected computerized reservation and
hotel management system at ISIS Central and Wyndham Sites, including
proprietary software therefor, owned by ISIS 2000 and operating from ISIS'
central computer system, which performs the functions, including hotel room
booking and inventory functions, set forth in Schedule 1.2 attached hereto and
made a part hereof.
ISIS Workstations--dedicated reservation workstations connected via dedicated
telecommunication lines to ISIS Central, including the proprietary software
package used by ISIS 2000, and related Equipment, that produces an intelligent
workstation and provides expanded booking and office management functionality.
Location--one of Wyndham's Properties or Sites.
Party--ISIS 2000, Wyndham or Hotel Property, as appropriate.
Reservation--the entry of an Accommodation Segment in the ISIS System.
Reservation Center--means the facility from which the ISIS Services are
performed.
Reservations Data Base--Information stored in the ISIS System.
Scripts or Macros--a stored sequence of computer screens that direct
reservation agent dialogue with Wyndham customers or travel agent and assist
the reservation agent in inputting data regarding a booking.
-22-
<PAGE> 23
Site--a business location of Wyndham which is not a Hotel Property but which is
connected to the ISIS System.
Terminal Booking--a Booking made through an ISIS Workstation.
Termination--termination of this Agreement.
Trade Secrets of a party ("Trade Secret Owner")--all confidential or
proprietary software, documentation, source code, screen display designs,
procedures, technical or financial materials, Wyndham lists, pricing, business
plans, technology and inventions developed in whole, or in part, by that party
and utilized or disclosed to the other party in connection with performance
under this Agreement. "Trade Secrets" do not include any materials or
information which is or becomes publicly known through no wrongful act of the
party who is not the Trade Secret Owner.
TRC Number--the toll-paid and toll telephone numbers ISIS 2000 makes available
for customers to call to make reservations through the Central Reservations
System.
TRC-Number Booking--a Booking on a TRC-number Call.
TRC-Number Call--See Article 1.3.2.
United States--the fifty (50) United States of America and the District of
Columbia.
Wyndham--See the first paragraph of this Agreement.
Wyndham Customer--Any person or entity who calls the Reservations Center for
the purpose of making a Booking or a Cancellation, or for any other reason
related to Wyndham.
Wyndham Data Base--Information stored in the Reservations Data Base relating to
Wyndham Properties or Wyndham Customers.
All definitions set forth herein apply to all exhibits hereto, and all
definitions set forth in exhibits hereto apply to the body of this Agreement.
-23-
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first written above.
WYNDHAM HOTEL CORPORATION
By:/s/ ANNE L. RAYMOND
-----------------------------
Its: Executive Vice President
-----------------------------
ISIS 2000 Limited Partnership, a Texas
limited partnership
By: ISIS CRO, Inc. a Texas corporation,
its general partner
By: /s/ STANLEY MACK KOONCE, JR.
-----------------------------
Stanley Mack Koonce, Jr.
President
Wyndham Reservation Agreement. Wyn
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<PAGE> 25
SCHEDULE 1.1.1
INFORMATION SYSTEM DATA BASE AND DATA NETWORK SERVICES
ISIS 2000 will provide the following Information System and Data Network
Services to Wyndham:
1. Single Image Central Reservation System
2. Global Distribution System Reservation Services
3. Property Management System Interface to and from the ISIS System for
hotels automated with an existing "Fidelio" PMS
4. Guest History Data Base
5. Yield and Room Merchandising Support System
6. Other systems as agreed by ISIS 2000 and Wyndham
ISIS Central Reservation System will he available at least 98% of scheduled
hours based upon monthly averages.
ISIS will develop and maintain a back-up manual reservation process.
<PAGE> 26
SCHEDULE 1.1.2
TELEPHONE SALES AND SUPPORT SERVICES
1. Telephone Sales Services - ISIS will handle telephone sales on
Wyndham's behalf with the general public and travel agents
2. Telephonic Support and Sales for Wholesaler's designated by Wyndham
3. Customer Service Calls from Wyndham's Customers
4. Brochure request handling - Fulfillment of these requests will be by
Wyndham or another Wyndham contracted Service
5. Help Desk for Wyndham Hotel Properties and other Wyndham locations
During the first three months of the agreement, telephone answering
service levels will be 70% answered within 20 seconds, thereafter 80%
within 20 seconds
ISIS 2000 will maintain a dedicated group of reservation sales agents to
provide service to Wyndham
ISIS 2000 and Wyndham will jointly develop the approach to handling sales
via the Telephone Sales Service
ISIS 2000 will provide music on hold and promotional announcements
ISIS will provide Wyndham with reports which measure actual telephone
sales performance
ISIS will provide Wyndham with the ability to access the reservation sales
data base report
ISIS 2000 will provide Wholesaler Reservations Services to Wyndham. The
Wholesaler Reservations Services are defined as:
a. Processing and delivering reservations booked by Wholesalers to
Wyndham Properties through an 800-number to be provided by ISIS 2000;
<PAGE> 27
b. Processing guarantees of reservations through vouchers, advanced
deposits and/or rooming lists, in accordance with the written
instructions provided to ISIS 2000;
c. Updating availability status between Wyndham Properties and
Wholesalers by opening and closing rooms inventory;
d. Administering guidelines established for Wholesalers as related to
availability, cut-off periods and room allotment;
e. Coordination with Wyndham Properties sales departments as related to
Wholesaler contract information, negotiated rates and guarantee
policies.
<PAGE> 28
SCHEDULE 1.2
ISIS SYSTEM CAPABILITIES
ISIS 2000 SYSTEM ARCHITECTURE
ISIS 2000 uses the Oracle data base management system and the Oracle
Developer 2000 tool kit. ISIS Central runs under the UNIX operating
system. Windows 95 is used as the operating system on ISIS
Workstations. WindowsNT will be used in local system servers.
SCREEN INFORMATION AND NAVIGATION CAPABILITIES
The sales agent is be presented with information screens and a method
of navigation between screens that provides flexible and rapid support
for the information needs of the telephone sales agent.
USE OF WINDOWS AND COLOR
Multiple "windows" of information are be available to the sales agent.
These multiple windows are presented on the screen to allow the agent
to rapidly access information required to support the specific nature
of the telephone sales call that is being handled
Color is used on the screen to enhance the ease of intuitive
understanding by the sales agent, as well as to call the agent's
attention to important information and to assist in navigation between
screens throughout the sales transaction
RESERVATION SALES DISPLAY
The sales agent can capture and retain information about the sale
throughout the call to avoid redundant data entry Typical information
that is captured in this manner includes:
o Arrival & Departure Dates
o Frequent guest number
o Airline frequent flier number
o Guest name and Address
o Name of person making the reservation
o Number of guests
o Number of rooms requested
o Characteristics or type of room requested
o Amenity requirements
o Travel agency name or IATA number
o Affiliation with a group or convention
o Eligibility for special rate programs
<PAGE> 29
o Corporate affiliation
o City or hotel requested
For those fields that require the guest or his agent to remember a
number, such as frequent guest number or IATA number, a look-up
feature is available to allow the sales agent to find the frequent
guest record based upon other information that the guest has
available.
Whenever a data field which has associated information in the data
base, such as Frequent Guest Number or IATA number or Corporate
Identifier, is entered, applicable information available from the data
base is automatically filled in for the sales agent.
CITY INFORMATION
This Information includes:
o Availability display of Wyndham hotels in the specified city and
for the guest's requested dates, room requirements, and amenity
requirements.
o Location of hotels within the city
o Location relative to airports, business centers and points of
interest
o Descriptions of nearby attractions
HOTEL PROPERTY INFORMATION
The sales agent has the ability to access well organized information
about a specific Wyndham hotel. This information includes:
o Hotel management
o Address and phone numbers/fax numbers
o A description of the hotel
o Descriptions of specific room types
o Recreational facilities at the hotel or available to hotel
guests
o Banquet and meeting facilities/restaurants
o Amenities and services offered by the hotel
o Driving directions from the airport, major highways and
business centers
o Description of hotel policies
o Fire/Safety
o Handicap access
o Smoking/non-smoking rooms
Wyndham has the ability to add new information categories as needed.
<PAGE> 30
AVAILABILITY AND RATE DISPLAY
The ISIS System provides an integrated availability and rate display
for the hotel which allows the agent to rapidly scan a range of dates
for rates or room-types that are available for sale.
Special rate plans are displayed only if the sales agent has
previously identified an attribute of the customer that allows
eligibility for the rate plan. These special rate plans could include
group and convention rates, negotiated corporate rates, special
marketing program rates, package plans, and negotiated travel agency
consortia rates.
The availability of rates displayed for sale on the screen are limited
by the following parameters, which are controlled by the hotel:
o Minimum length of stay
o Date of arrival
o Date of departure
o Advance booking requirement
o Participation in a group or convention
o Eligibility for a special rate program
Special booking requirements, such as advance deposit requirements or
refundability limitations, can be presented when applicable to allow
the agent to discuss the restriction with the guest before progressing
with a booking.
If the hotel requested by the guest is not available for the dates
requested, other Wyndham Properties that are available in the city are
identified to the sales agent so that they can be offered to the
guest.
<PAGE> 31
The ISIS System maintains current IATA and ARC travel agency names and
addresses to allow automatic insertion of the name and address data
for travel agencies when the IATA number is entered. Wyndham can add
to this list additional travel agents or distributors that are
proprietary to Wyndham and which are maintained separately by Wyndham.
These proprietary distributors will not be modified or deleted when an
updated IATA file is loaded.
In addition to automatic insertion of the above information, a guest
profile is available for those customers that Wyndham chooses to
designate in advance as frequent guests. The guest profile allows for
the automatic transfer of the necessary name, address, telephone,
corporate affiliation and special guest requests information into the
Guest Name Record (GNR).
The ISIS System is capable of capturing special service requests that
the guest may require, notifying the property of the request and
storing the requests with the GNR.
REGRETS AND DENIALS
If a telephone sales call does not result in a sale the ISIS System
presents the sales agent with a "Regrets and Denials" screen that
captures the reason, in the opinion of the sales agent, that the sale
was lost. The categories of regret and denial reasons are flexible,
allowing Wyndham to add and delete categories as desired. The city or
hotel requested and the guest's requested length of stay are captured
automatically.
Wyndham has the ability to add, delete or modify regret and denial
reason codes.
The regrets and denials information is collected as a part of a forced
wrap-up at the close of each sales dialogue.
GUEST DATA
Each sale results in the storage in the data base Reservations Data
Base of information about the sale and the guest. The GNR will store
the necessary information to document the sale that has been made and
to provide the Hotel Property with the necessary information about the
guest and the terms of sale. The guest name record includes:
o Record identifier or confirmation number
o Guest name
o Guest address
o Guest telephone Number
o Guest business telephone number
o Name of person making the reservation
o Date of arrival
<PAGE> 32
o Date of departure
o Rate-tier, rate-type confirmed
o Room-type confirmed
o Source of sale
o Travel agency IATA number
o Travel agency name and address and phone number
o Wholesaler identifier and name
o Reservation Center sales agent ID
o GDS system and agent identifier if a GDS sale
o Hotel property sales agent ID
o Any special service request
o Any free-form comments entered by the sales agent that will
be conveyed to the hotel property
With the exception of the free-form comments, which can be stored as
unedited text, this information is structured data that is edited for
accuracy and validity.
ROOM-TYPE AND RATE-TYPE
There is no technical limit to the number of room-types or rate-types
that can be offered by a hotel. The rates can be associated with a
rate tier allows all rates in a tier to have their sales restrictions
modified as part of a single data base update transaction.
The ISIS System allows both inventory allocation and
status/restriction capabilities to manage availability. The status
restrictions on display for sale include:
o Length of stay based upon either arrival date or stay through
o Closed to arrival
o Closed to departure
o Advance booking
o Day of week
The ISIS System can automatically price for quotation by the sales
agent to the guests
o Additional charges for:
Additional guests
Children by age category
o Meal plans
o Rollaway beds
o Taxes & service charges
The ISIS System can automatically enforce maximum room occupancy rules
by room type and hotel.
<PAGE> 33
DATA BASE
The data base of rates and availability can be accessible from the
Hotel Property. This access, with appropriate security control, must
be possible via the following methods:
o Dial-up access from a personal computer at the property
o An ISIS Workstation on property connected via ISIS 2000's
network
o An automatic update, received over a dedicated or shared
network, from a property management
system that is controlling a property's inventory
o An update made by a data base agent at the Reservation Center
on instruction from the property.
The rate and availability data base maintain an inventory and or
status for each room-type and rate tier. The ability to maintain an
inventory for group or wholesaler blocks is provided. These blocks are
room-type specific to meet the needs of certain wholesalers and run of
the house for others.
A history of the changes made to inventory levels, rate-tiers,
rate-types, and room-types is saved on the ISIS System to allow for
resolution of any problems with a hotel's status. This history will
include the change made, the date and time of the transaction and the
security sign in code of the individual making the change.
The ISIS System is capable of acting as a single data base for all
reservation activity. The central data base can be used as one
consistent source of availability, rate and guest reservation
information for Wyndham.
The central data base is capable of providing support for several
critical objectives:
o A single point of complete control of all inventory and price
offerings
o The ability to manage inventory and price across all
distribution channels
o The ability to provide a consistent source of information for
sales reporting and analysis
o A source of information for a customer direct marketing data
base
The ISIS System will be able to link to existing Fidelio property
management systems via a two-way reservation link. The new
single-image Property Management System will allow for a replicated
copy of a hotel's reservation and customer data locally.
GDS SYSTEM INTERFACE THROUGH THISCO'S ULTRASWITCH
The ISIS System has the capability to "link" to the various Global
Distribution Systems (GDS). This will include links with:
<PAGE> 34
o Sabre - Including "Direct Connect Availability"
o Galileo's RoomMaster - Including Inside availability
o Worldspan
o Amadeus
o System One
Wyndham may also establish links with other GDSs.
AVAILABILITY STATUS MESSAGES
The ISIS System is capable of automatically generating and sending
availability status messages to each Global Distribution System and
notifying the GDS of changes in availability status of a hotel
property's room-type or rate-level inventory.
The ISIS System provides the ability to translate, via flexible
translation tables, the room-types and rate-levels used by Wyndham to
the allowable structures for room-types and rate-levels within each
GDS.
GDS RATE UPDATE
The ISIS System can automatically pass updated rate information to GDS
in conjunction with the use of the LANYON RATES system.
<PAGE> 35
PROPERTY MANAGEMENT SYSTEM
An automated two way interface will be available for the Fidelio
property management systems ("PMS") currently installed at Wyndham. It
is Wyndham's intention to move to a centralized data base for all
hotels. This will occur in two steps:
o Automated Two way Interfaces with Fidelio PMSs. This will
include the actual guest stay data from the hotel PMS
o New "single image" property management system to be installed
beginning in 1997
During transition to Wyndham's new system and when Wyndham first takes
over a Property, there is a need to operate the ISIS System connection
to the Property with the following alternatives:
o The ISIS System is capable of sending reservations,
modifications and cancellations to the property via automated
FAX. The nature of modifications made to an existing reservation
will be clearly highlighted on this form to allow local
reservation personnel to accurately modify their local PMS data
base.
o A second option for Properties without a PMS interface is to
download reservations, cancellations and modifications to a
personal computer at the Property on either a dial-in basis or a
dial-out basis.
Wyndham intends to utilize the network which will grow as a result of
interfacing PMSs to the ISIS System as the basis for establishing a
corporate network which will support a number of functions which will
includes:
o Customer data base, the ISIS System will be capable of receiving
a daily upload of actual guest stay information following
completion of the property's night audit.
o Guest Recognition
o Guest History - Direct marketing
o Management Information
YIELD MANAGEMENT SYSTEM - ROOMS MERCHANDISING
While Wyndham does not currently utilize an automated yield management
system, a manual process is used to assess current advanced booking
patterns relative to a comparable period in the prior years. This
comparison of advanced booking levels is considered along with other
market and competitive factors known by property management to
determine which rate tiers will be restricted on which future dates.
To effectively manage yield, information about the sales build
progress for all sources or bookings needs to be accumulated for
review, not simply sales from the Reservation Center and GDS. As such,
the only current source at Wyndham for complete yield
<PAGE> 36
management data is the property management system at the hotel.
However, the ISIS System, using either a two-way link to Fidelio or
the new ISIS "Single-Image" property management system, will be used
as the single data base for all reservation activity. As such, the
ISIS System will be the source of information to support the yield
management process for some Wyndham Properties.
The following data will be captured in this process to assist in the
yield management and room merchandising process:
o Hotel identifier
o Date at which status file was produced
o For each rate tier and room type combination at the property:
The number of un-cancelled and currently residing bookings
for each future date up to a future date defined by the hotel
property.
It is anticipated that this future date will be at least 26
weeks out.
o For each future date, type of customer and source of sale
The number of new bookings
The number of cancellations
The number of modifications
o The booking restrictions in place for each future date, rate
tier and room-type.
A system that supports Wyndham's room merchandising process will be
developed using this data.
WHOLESALER REQUIREMENTS
Wyndham uses a number of wholesalers to support its sales and
marketing effort. Most capabilities required to support wholesalers,
such as the ability to inventory a block of rooms for a wholesaler,
are covered elsewhere in this requirement document. The following
section highlights additional capabilities that are provided to
support wholesalers:
o Wyndham may wish to enter reservations from wholesalers
from any designated Wyndham sales office or property.
o Wyndham's headquarters staff or sales office(s) will be able
to view inventory build for a particular wholesaler block.
o An ability to request a specific room from a Hotel Property
and note the status of the request as confirmed or denied in
the reservation detail.
<PAGE> 37
Confirmations will be printed when designated by a sales agent. The
confirmation includes:
o The hotel booked and its address and phone number
o The dates of arrival and departure
o Package or rate booked
o Package description
o Add ons or taxes
o Details of any special service requirements promised to the
guest
CUSTOMER DATA BASE
Wyndham will, as a second step following the activation of the ISIS
System, have the ability to establish a Customer Data Base that can be
used flexibly for direct marketing purposes. The ISIS System will
provide an ability store the sales and checkout record for each guest.
These records will be matched to link the various stays of a guest
across all Wyndham hotels. "Key data elements" will be used to match a
customer and will include: customer name, address, phone number,
business phone number, credit card type and number(s), frequent guest
number, airline frequent flier number(s). The source of booking for
the customer will also be identified in the customer data base. The
ISIS System will also be capable of capturing, and passing to the
Customer Data Base, a corporate identifier for those sales that are
made against a corporate agreement.
MARKETING INFORMATION QUERY AND ANALYSIS
Marketing information will be available by standard screen queries,
and if need printed via a flexible query. Information available in
query will include:
o Source of Sale for each Hotel Property:
By geographic area
By mode of distribution:
Direct from customer
Travel agency via telephone
Travel agency via GDS
Wholesalers
By individual travel agency
By travel agency group or consortia
By Wholesaler
o Sales received via the telephone from either a customer or
travel agency further reported as resulting from:
<PAGE> 38
Sales made by a Hotel Property and booked in the
ISIS System
Sales made by the Reservation Center
Sales made by an overseas sales office that has
booking access to the ISIS System.
o The above information for a property will also be available
in regional, division and corporate summaries as defined by
Wyndham.
o Based upon the regret and denial categories established by
Wyndham; daily, weekly and monthly summaries of regrets and
denials will be available for each hotel. This summary will
include the number of calls resulting in a regret or denial
for each reason defined and each date. Regrets and denials
will be reported for each Property and be summarized by
region, division and corporate. The categories of regrets and
denials to be reported will be defined by Wyndham and be
flexibly changed as required.
TELEPHONE SALES
The ISIS System will produce reports that measure the productivity of
the telephone sales operation. These reports will also provide
operational information useful to Reservation Center and Hotel
Property management in day-to-day management of the reservation
operation. These reports or displays will include:
o Telephone sales agent booking performance:
Number of hours that the agent was signed in with sales
agent duty code.
Number of bookings
Gross
Net of cancellations
o The ISIS System will be capable of exporting a file of
telephone sales activity by sales agent to a personal
computer for analysis of sales conversion rates on an agent
by agent basis. Alternatively, the ISIS System will be
capable of accepting a file from the Automated Call Director
(ACD) for production of sales conversion rate reports.
DATA BASE
Queries summarizing activity by each data base agent will be produced.
This activity will include the number of transactions of each type
entered by the data base agent and the number of hours signed in with
the data base agent duty code.
<PAGE> 39
Displays or reports will be available that allow an audit of the
changes made for each hotel and by each data base agent to the
availability/rate levels and restrictions, These reports will show the
time that the change was entered into the ISIS System, the agent that
made the change and the specific change that was made. These will be
displayable both by agent and by Property.
SECURITY
The ISIS System will provide a security system which allows for
assignment of security access from a central point, either at
Wyndham's headquarters or the Reservation Center. Security access will
be granted in proportion to the job responsibilities and location of
the individual who is granted the access
The ISIS System will append to each transaction the security access
code of the individual making a transaction and, if possible, an
identifier of the location from which the transaction was made.
FREQUENT GUEST RECOGNITION/REWARD PROGRAM
Wyndham may wish to reward frequent guests in a variety of manners in
the future. In order to achieve this objective the ISIS System will
provide the capability to track frequent guests using the customer
data base as previously described The frequent guest program will
allow for a related customer profile in the ISIS System providing
information about the guest that can be used during the reservation
process, as well as provide information about the guest's previous
stay history with Wyndham.
VIDEO AND MAP DATABASE AND DISPLAY
The ISIS System will maintain a data base of video images of the hotel
and related facilities and points of interest. In addition maps to the
property can be scanned into the ISIS System and stored. These images
and maps can be presented to the sales agent to assist in the sale and
providing help to the guest.
<PAGE> 40
EXHIBIT 2.1
ISIS WORKSTATION LICENSE AND LEASE AGREEMENT
This Agreement is made and entered into this _____ day of ________________ 199
, by and between ISIS 2000, a limited partnership formed under the laws of the
State of Texas, with offices at ________________________________("ISIS 2000"),
and Wyndham Hotel Corporation, a corporation incorporated under the laws of the
State of Delaware with offices at ___________
("Wyndham").
W I T N E S S E T H:
WHEREAS, ISIS 2000 is willing to make ISIS Workstations available to Wyndham by
providing Wyndham with certain equipment and software; and
WHEREAS, Wyndham desires to utilize ISIS Workstations and desires therefore to
install and utilize certain related equipment and software; and
WHEREAS, Wyndham desires to lease the equipment and license the software
specified herein;
NOW, THEREFORE, in consideration of the premises and the mutual obligations
hereinafter set forth, ISIS 2000 and Wyndham hereby agree as follows:
1. DEFINITIONS
For purposes of this Agreement: All definitions set forth in the
Centralized Reservations Service Agreement executed between the parties hereto
on ___________________________ ("Service Agreement") are applicable hereto and
incorporated by reference herein.
2. INSTALLATION
A. ISIS 2000 will, pursuant to the Service Agreement, lease and
install or cause to be installed the applicable Equipment as detailed in
Exhibit A at the location or locations set forth on Exhibit B attached hereto
and made a part hereof and additional locations to be requested by Wyndham at
additional prices to be agreed upon between the parties, and will interconnect
the Equipment to ISIS Central.
B. Each Wyndham Location will be reviewed by a ISIS 2000
representative to determine what, if any, physical modifications will be
required to support the ISIS Workstation at the Wyndham designated spot(s).
After the placement review is completed, ISIS 2000 will issue a placement
survey for each Wyndham location. The placement survey will detail the layout
of all terminals, cables, and back room support for Equipment (e.g., CPUs and
modems). At its own
<PAGE> 41
cost and expense, Wyndham will undertake the responsibility to implement any
physical modification required by the placement survey, including without
limitation, the furnishing of electrical power, the installation of data
cables, and access to telephone lines.
C. Wyndham will not relocate any installed Equipment further than the
length of the wire installed by ISIS 2000 that connects such Equipment without
first obtaining ISIS 2000's written consent. Any approved relocation must be
accomplished by ISIS 2000 or its designee at Wyndham's sole cost and expense.
D. ISIS 2000 will use its best efforts to install and interconnect
the Equipment at the Wyndham locations by the respective dates set forth on
Exhibit A, or in the event of subsequently requested locations, by dates to be
agreed upon.
E. Wyndham warrants and represents that each location at which the
Equipment is to be installed is owned or controlled by Wyndham and that it has
authority to enter into this Agreement on behalf of each said location.
3. TRAINING
Only qualified personnel who have satisfactorily completed ISIS
2000's training program, as described in the Service Agreement, will be
permitted to operate any Equipment or access ISIS Central.
4. SOFTWARE LICENSE - RESTRICTIONS
ISIS 2000 hereby grants Wyndham a nonexclusive license to the
software resident in the ISIS Workstation in connection with Wyndham's use of
the ISIS Workstation. The software may not be used, in whole or in part, by
Wyndham on other than the Equipment set forth on Exhibit A to this Agreement or
subsequently designated Equipment as agreed to by the parties, without the
prior written consent of ISIS 2000. This license will terminate upon
termination of this Agreement.
It is expressly understood and agreed that all provisions the Service
Agreement regarding title, ownership and nondisclosure apply to this Lease
Agreement and are incorporated herein by reference.
Except with the prior written consent of ISIS 2000, Wyndham will not
use ISIS Workstation for any functions other than those set forth in the ISIS
Workstation operations manuals.
ISIS 2000 provides ISIS Workstation pursuant to license agreements
with various third party software providers. Certain of these providers may
require ISIS 2000 to obtain Wyndham's agreement to and compliance with software
sublicenses, and Wyndham agrees to abide by all
<PAGE> 42
such sublicenses. If Wyndham fails to agree to or abide by a sublicense, ISIS
2000 may refuse to install, or may deinstall, ISIS Workstation.
Wyndham will not sell, lease, or otherwise transfer Macros that
have been created by ISIS 2000 or by Wyndham.
5. THIRD PARTY-PROVIDED SOFTWARE
A. Wyndham may not use software that is provided by any party other
than ISIS 2000 in connection with Wyndham's use of the ISIS Workstation, unless
Wyndham obtains ISIS 2000's prior written consent to the use of such third
party-provided software ("Third Party Software"). If ISIS 2000 consents to
Wyndham's use of Third Party Software, ISIS 2000 will have no liability for any
associated license or sub-license fees and will have no responsibility for
loading the software. In addition, regardless of whether it has provided its
prior consent to Wyndham's use of Third Party Software, ISIS 2000 will have no
liability to Wyndham if subsequent enhancements or modifications of the ISIS
Workstation render the Third Party Software incompatible with the ISIS
Workstation.
B. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Software, ISIS 2000 will have no liability
whatsoever to Wyndham for, and Wyndham releases ISIS 2000 from any
responsibility for, any defects, malfunctions, failure to perform, and errors
of any kind by the Third Party Software. In addition, ISIS 2000's consent to
Wyndham's use of Third Party Software will not obligate ISIS 2000 to provide
support services of any kind for Third-Party Software.
C. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Software, ISIS 2000 will have no liability
whatsoever to Wyndham for, and Wyndham releases ISIS 2000 from any
responsibility for, any malfunction, interruption, or failure to perform of the
ISIS Workstation or Equipment caused by the Third Party Software.
D. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Software, Wyndham will be liable to ISIS 2000 for
any loss or damage to the ISIS Workstation or ISIS Central that is caused by
the Third Party Software's performance or failure to perform, including all
costs incurred by ISIS 2000 in connection with the service and repair required
to restore Wyndham's interconnection to ISIS Central.
E. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Software, Wyndham will indemnify and hold harmless
ISIS 2000 and its partners, officers, directors, agents, and employees against
and from any and all liabilities, damages, losses, expenses, claims, demands,
suits, fines or judgments, including, but not limited to, attorneys' fees,
costs and expenses incident thereto, which may be suffered by, accrue against,
be charged to, or be recovered from ISIS 2000, its partners, officers,
directors, agents, or employees, by reason of any injuries to or deaths of
persons, the loss of, damage to, or destruction of property, including loss of
the use thereof, or economic loss arising out of or in
<PAGE> 43
connection with (i) any act, error or omission of Wyndham, its officers,
directors, agents, or employees in the installation and operation of the Third
Party Software, (ii) any act, error, or omission of the provider of the Third
Party Software in the installation and operation of the Third Party Software,
(iii) any defect, malfunction, failure to perform, and error of any kind by the
Third Party Software; and (iv) any misuse or negligent use of, or failure to
adhere to operating guidelines and procedures with respect to the Third Party
Software by Wyndham, its agents or employees; and (v) any damage or loss to the
Wyndham Database.
6. THIRD PARTY-PROVIDED HARDWARE
A. Wyndham may not use hardware that is provided by any party other
than ISIS 2000 in connection with Wyndham's use of the ISIS Workstation or ISIS
Central, unless Wyndham obtains ISIS 2000's prior written consent to the use of
such third-party provided hardware ("Third Party Hardware"). If ISIS 2000
consents to Wyndham's use of such Third Party Hardware, ISIS 2000 will have no
liability whatsoever for the costs associated with Wyndham's use of same and
will have no responsibility for installing the Third Party Hardware. If
Wyndham's existing Equipment must be reconfigured to accommodate the Third
Party Hardware, ISIS 2000 will perform or cause to be performed such
reconfiguration, at Wyndham's expense. In addition, regardless of whether it
has provided its prior consent to Wyndham's use of Third Party Hardware, ISIS
2000 will have no liability to Wyndham if subsequent enhancements or
modifications of the ISIS Workstation System render the Third Party Hardware
incompatible with the ISIS Workstation.
B. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Hardware, ISIS 2000 will have no liability
whatsoever to Wyndham for, and Wyndham releases ISIS 2000, its partners,
officers, directors, employees and agents from any and all responsibility for,
any defects, malfunctions, failure to perform, and errors of any kind by the
Third Party Hardware. In addition, ISIS 2000's consent to Wyndham's use of
Third Party Hardware will not obligate ISIS 2000 to provide repair and
maintenance services of any kind in connection with said Third Party Hardware.
C. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Hardware, ISIS 2000 will have no liability
whatsoever to Wyndham for, and Wyndham releases ISIS 2000, its partners,
officers, directors, employees and agents from any and all responsibility for,
any malfunction, interruption, or failure to perform of ISIS Workstation caused
by the Third Party Hardware.
D. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Hardware, Wyndham will be liable to ISIS 2000 for
any loss or damage to the ISIS Workstation that is caused by the Third Party
Hardware's performance or failure to perform, including all costs incurred by
ISIS 2000 in connection with the service and repair required to restore
Wyndham's interconnection to ISIS Workstation.
<PAGE> 44
E. Regardless of whether ISIS 2000 has provided its prior consent to
Wyndham's use of Third Party Hardware, Wyndham will indemnify and hold harmless
ISIS 2000, its partners, officers, directors, agents, and employees against and
from any and all liabilities, damages, losses, expenses, claims, demands,
suits, fines or judgments, including, but not limited to, attorneys' fees,
costs and expenses incident thereto, which may be suffered by, accrue against,
be charged to, or be recovered from ISIS 2000, its partners, officers,
directors, agents, or employees, by reason of any injuries to or deaths of
persons, the loss of, damage to, or destruction of property, including loss of
the use thereof, or economic loss arising out of or in connection with (i) any
act, error or omission of Wyndham, its officers, directors, agents, or
employees in the installation and operation of the Third Party Hardware, (ii)
any act, error, or omission of the provider of the Third Party Hardware in the
installation and operation of the Third Party Hardware, and (iii) any defect,
malfunction, failure to perform, and error of any kind by the Third Party
Hardware.
7. REPAIR AND MAINTENANCE
A. ISIS 2000 will provide or cause to be provided to Wyndham
certain repair and maintenance services required for the Equipment during
normal business hours.
B. Neither Wyndham nor any third party, other than a third
party designated by ISIS 2000, will perform or attempt to perform maintenance,
repair work, alterations or modifications, of any nature whatsoever, to the
Equipment or the ISIS Workstation.
C. Except where damage results from the fault or negligence of
ISIS 2000 or its designated agent, maintenance and repair services set forth in
this Article 7 do not apply to:
(i) any damage resulting from (a) accident, transportation,
neglect or misuse, (b) failure or variation of electrical power, (c) failure to
properly maintain the installation site, air conditioning or humidity control,
or (d) causes other than ordinary use; and
(ii) any damage resulting from any maintenance, parts,
attachments or modification to the Equipment or software performed or provided
by anyone other than ISIS 2000 or its designated agent.
D. Any repair or maintenance required because of any damages
as described in Article 7C will be performed by ISIS 2000 or its designated
agent at Wyndham's sole cost and expense.
8. OPERATION OF EQUIPMENT, INDEMNITY AND INSURANCE
A. (i) The ISIS Workstation must be used and operated (a)
in strict accordance with operating instructions provided by ISIS 2000 in the
procedures manuals and materials, and (b) solely for the performance of the
specific business functions designated in the
<PAGE> 45
procedures manuals and materials. Any undesignated business use and all
nonbusiness uses are strictly prohibited.
(ii) Wyndham will take all precautions necessary to
prevent unauthorized operation or use of ISIS Workstation.
B. Wyndham will take all necessary precautions to protect the ISIS
Workstation.
C. (i) At its own cost, Wyndham must procure and maintain insurance,
from an insurer and on terms and conditions acceptable to ISIS 2000, insuring
the Equipment against all risk of loss or damage, including, without
limitation, the risks of fire, theft and such other risks as are customarily
insured in a standard all-risk policy. Such insurance shall also provide the
following:
(a) Full replacement value coverage for the
Equipment which value is stipulated to be not less than the
Insurance Value as specified on Exhibit A attached hereto;
(b) An endorsement naming ISIS 2000 as a
co-insured and as a loss payee to the extent of its interest in
the Equipment; and
(c) An endorsement requiring the insurer to
give ISIS 2000 at least 30 days' prior written notice of any
intended cancellation, nonrenewal, material change in coverage or
any default in the payment of a premium.
(ii) Prior to the installation of the Equipment,
ISIS 2000 must receive from the insurer certificates of insurance evidencing
the insurance and endorsements specified in Article 8C(i) hereof.
(iii) If Wyndham fails to maintain or pay the
premium on the insurance required in Article 8C(i) hereof, then ISIS 2000 may
secure equivalent insurance coverage or pay any delinquent premium. If ISIS
2000 elects to do so, then ISIS 2000 may, at its option:
(a) Demand that Wyndham immediately reimburse
ISIS 2000 to the extent of ISIS 2000's cost of such equivalent
insurance or delinquent premium payment plus interest at the rate
of eighteen percent (18%) per annum or the maximum amount
permitted by law, whichever is less, from the date of ISIS 2000's
expenditure until the date of reimbursement to ISIS 2000 and
Wyndham will immediately pay all such amounts to ISIS 2000, or
(b) Deduct from amounts due to Wyndham from
ISIS 2000 an amount equal to ISIS 2000's cost of such equivalent
insurance or delinquent premium payment.
<PAGE> 46
D. (i) Notwithstanding anything stated herein to the
contrary, Wyndham will be liable to ISIS 2000 for any loss or damage to the
Equipment, regardless of the cause thereof, occurring while leased to Wyndham
or while in the possession, custody, or control of Wyndham.
(ii) If any Equipment is lost, totally destroyed, damaged
beyond repair, or so damaged to constitute a constructive total loss, then,
within 60 days after such loss or damage, Wyndham will pay to ISIS 2000 an
amount equal to the replacement value of such equipment on the date of such
loss or damage less any insurance proceeds paid to ISIS 2000 in accordance with
Article 8C hereof.
9. ENTRY AND INSPECTION
ISIS 2000 or its designee will have the right to enter upon any
Wyndham Location during Wyndham's business hours for the purpose of monitoring
Wyndham's operation of the Equipment and the ISIS Workstation, inspecting the
Equipment, performing such repairs, maintenance, or support services as may be
necessary, or removing the Equipment; provided, however, that ISIS 2000 will
not during the course of such monitoring, inspection, repair, or removal
unreasonably interfere with Wyndham's business.
10. REPRESENTATIONS AND WARRANTIES
A. ISIS 2000'S REPRESENTATIONS AND WARRANTIES AND LIABILITY FOR
BREACH THEREOF ARE LIMITED TO THOSE EXPRESSLY SET FORTH IN THE SERVICE
AGREEMENT.
B. WYNDHAM WAIVES CERTAIN CLAIMS AND RELEASES ISIS 2000 FROM
LIABILITIES AS SET FORTH IN THE SERVICE AGREEMENT.
C. INDEMNIFICATIONS SET FORTH IN THE SERVICE AGREEMENT APPLY HERETO.
11. TERM
This Agreement commences on the date hereof and terminates upon
termination of the Service Agreement, and will terminate with respect to the
Equipment located on any Property on the date that Property ceases to be owned
or controlled by Wyndham.
12. TERMINATION
ISIS 2000's right to terminate this Agreement shall be identical to
and coextensive with the termination rights of the parties as set forth in the
Service Agreement.
<PAGE> 47
13. OWNERSHIP OF EQUIPMENT
It is understood and agreed that: (1) all Equipment will remain the
sole property of ISIS 2000 unless sold to Wyndham pursuant to a separate sales
agreement; (2) Wyndham will not remove any identifying marks from any
Equipment; (3) Wyndham will not subject the Equipment to any lien or
encumbrance; and (4) Wyndham will return the Equipment immediately upon the
termination of this Agreement. ISIS 2000 is granted the right to enter the
premises on which Equipment is located and remove the Equipment, without
liability for doing so, upon termination of this Agreement.
14. ENTIRE AGREEMENT
Exhibits A and B are a part of this Agreement. This Agreement,
together with the Service Agreement and Schedules thereto, constitutes the
entire agreement and understanding of the parties on the subject matter hereof
and, as of the effective date, supersedes all prior agreements, whether written
or oral, between the parties hereto concerning the subject matter hereof. This
Agreement may be amended or modified only by written amendment or supplement
signed by the party to be bound thereby. All provisions of the Service
Agreement which do not contradict this Agreement apply to this Agreement and
are incorporated herein by reference.
15. SERVICE AGREEMENT CONTROLLING/CROSS DEFAULTS
The parties hereto agree that this Agreement and the Service
Agreement shall be construed and interpreted in such a manner as to be
consistent and complimentary. However, in the event of an ambiguity, conflict
or inconsistency, the terms and provisions of the Service Agreement shall
control and be the sole authority. A breach of the Service Agreement shall be
deemed a breach of this Agreement and shall entitle the non-defaulting party to
exercise all rights and remedies permitted herein and in the Service Agreement.
IN WITNESS WHEREOF, Wyndham and ISIS 2000 have executed this Agreement as of
the day and year first above written.
WYNDHAM HOTEL CORPORATION ISIS 2000 Limited Partnership
a Texas limited partnership
By: /s/ ANNE L. RAYMOND By: ISIS CRO, Inc. a Texas
------------------------- corporation, its general
partner
Title:
-----------------------
Date: By: /s/ STANLEY MACK KOONCE JR.
----------------------- ----------------------------
Stanley Mack Koonce, Jr.
President
<PAGE> 48
SCHEDULE 2.2
GDS INTERFACES
Subject to Customer's agreements with the following GDS Vendor and any other
generally accepted and recognized GDS (in accordance with Section 2.2.2 of the
Agreement), ISIS 2000 will implement interfaces between ISIS Central and such
GDS Vendor:
Amadeus
Galileo
Gemini
Sabre
System One
Worldspan
<PAGE> 49
SCHEDULE 3.2.2
ONLINE DATA STORAGE
ISIS 2000 will maintain sufficient disk capacity on ISIS Central to accommodate
Wyndham's data storage requirements for current and future reservations,
property descriptions, and frequent guest records. Sufficient disk capacity
will be maintained for historical reservation data for a minimum of thirty days
after the departure date of such reservations.
Historical reservation records will be transferred to tape before purging.
The computer tape will be formatted to microfiche and provided to Wyndham at
cost.
<PAGE> 50
SCHEDULE 5.1
OTHER SERVICES
Pouches - ISIS 2000 will initiate daily (except weekends) courier pouch service
to the Wyndham Caribbean resort properties for delivery of deposit, customer
service, reservations and administrative information. For such services, ISIS
2000 will charge Wyndham a fee equal to 120% of ISIS 2000's fully allocated
cost of providing such services.
Brochure Fulfillment - ISIS 2000 will provide address labels and fulfillment
instructions to be forwarded for fulfillment as specified by Wyndham. Brochure
labels are included in the booking fee.
Customer Service - ISIS 2000 will document initial customer service calls and
forward the information to a Wyndham customer service representative as
specified by Wyndham. ISIS 2000 will forward all follow-up calls to Wyndham's
customer service representative. ISIS 2000 will include this service in the
booking fee.
<PAGE> 51
SCHEDULE 7.1.2
BOOKING FEES
Booking Fee: A booking fee will be charged for each net reservation
created on the ISIS System or in GDS on behalf of the Property. This
fee will be based full absorption of all ISIS costs, including costs
of capital leases, 10% return on capital, interest and principal
repayment on loans, and taxes. The booking fee for a reservation will
be based upon the category of booking. These categories are GDS
Bookings, TRC Number Bookings for a commercial hotel, TRC Number
Bookings for a resort hotel, Terminal Bookings and Bookings made for a
wholesaler. Each of these fees will be computed by including all
directly assignable costs such as labor, telephone charges, GDS
booking fee, and dedicated supervision. In addition to directly
assignable costs, indirect costs including overhead costs and
financing costs will be distributed to categories of bookings on a
basis agreeable to Wyndham. The total of directly assignable and
indirect costs will be accumulated for each category of booking and
divided by the number of bookings in each category. The booking fee
will be computed based upon actual cost for each month.
<PAGE> 52
SCHEDULE 14.1
FAILURE OR DELAY OF SERVICE; WARRANTY
In cases of failure or delay in providing the ISIS Services, ISIS 2000's
liability to Wyndham will be as follows:
1. For programming enhancements failure or delay: liability limited to an
amount equal to ISIS 2000's charge to Wyndham for the specific enhancement
request that fails or is delayed except that, in the case of a delay, the
amount may be reduced to an amount equivalent to the ratio of days delayed to
days originally estimated multiplied by the amount of the charge to Wyndham for
the specific enhancement.
2. For failure or delay in the functional capabilities or data content of the
ISIS System: liability limited to ISIS 2000 correcting the function or data at
its own expense in a timely manner.
3. For failure or delay in the reservation service or non-delivery of
reservations to Wyndham properties: liability not to exceed the ISIS 2000 price
to Wyndham for the subject reservations.
<PAGE> 1
EXHIBIT 10.29
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of GHMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 2
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 3
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of MBAH, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 4
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 5
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of CHMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 6
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a
Delaware corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 7
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of Waterfront Management Corporation
(the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 8
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 9
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of PSMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 10
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 11
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of MTMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 12
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 13
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of MDMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 14
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 15
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of AMMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 16
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 17
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of OHMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 18
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 19
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of WNMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 20
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 21
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of MBWD, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 22
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 23
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of MBWH, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 24
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a Delaware
corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 25
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 24th day of May, 1996, by and between Elise Turner (the "Indemnitee")
and Wyndham Management Corporation, a Delaware corporation ("Wyndham").
Recitals:
The Indemnitee is the Secretary of BHMB, Inc. (the "Corporation").
The Corporation is the holder of liquor licenses for one or more hotels
managed by Wyndham.
The Indemnitee has requested that Wyndham indemnify and hold the
Indemnitee harmless from any and claims, demands, liabilities, costs, fines and
expenses (including reasonable attorneys' fees) (collectively, "Liabilities")
(WITH "LIABILITIES" TO INCLUDE, WITHOUT LIMITATION, ALL LIABILITIES CAUSED BY
THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE
MAY BE STRICTLY LIABLE) incurred, resulting from or arising out of the
Indemnitee's service as an officer of the Corporation, except for such
Liabilities caused by the gross negligence, willful misconduct or willful
violation of applicable law by the Indemnitee. Wyndham is willing to provide
such indemnification on the terms and conditions set forth herein.
For and in consideration of the premises and of the mutual covenants and
agreements set forth herein, the Indemnitee and Wyndham agree as follows:
1. Indemnification. WYNDHAM SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEE FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED, RESULTING FROM OR
ARISING OUT OF THE INDEMNITEE'S SERVICE AS AN OFFICER OF THE CORPORATION,
EXCEPT FOR SUCH LIABILITIES CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR WILLFUL VIOLATION OF APPLICABLE LAW BY THE INDEMNITEE. WYNDHAM ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, AN AGREEMENT BY
WYNDHAM 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.
2. Cooperation. In consideration of the indemnification provided
pursuant to paragraph 1 above, the Indemnitee agrees that, upon the request of
Wyndham, whether made before, upon or after any termination of the Indemnitee's
employment by Wyndham, the Indemnitee will cooperate with Wyndham to effect the
transfer of any liquor license or licenses owned or held by the Corporation to
Wyndham or Wyndham's designee.
<PAGE> 26
3. Further Assurances. Promptly upon the request of either party,
the other party hereto will execute any and all documents, instruments and
agreements as may be requested by the requesting party in order to carry out
the intent of this Agreement and to perfect or give further assurances of any
of the rights granted or provided for herein.
4. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
assigns. This Agreement shall be governed by and construed under the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
/s/ ELISE TURNER
----------------------------------
Elise Turner
WYNDHAM MANAGEMENT CORPORATION, a
Delaware corporation
("Wyndham")
By: /s/ JAMES D. CARREKER
----------------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 1
EXHIBIT 21.1
Subsidiaries of Wyndham Hotel Corporation
<TABLE>
<CAPTION>
Jurisdiction
of
Incorporation/ Names Under Which
Name Organization Entity Does Business
---- ------------ --------------------
<S> <C> <C>
Wyndham Management Corporation Delaware Wyndham Management Corporation
Wyndham Hotels & Resorts
Wyndham Garden Hotels
Wyndham Hotels
GHALP Corporation Delaware GHALP Corporation
Wyndham IP Corporation Delaware Wyndham IP Corporation
WH Interest, Inc. Texas WH Interest, Inc.
Rose Hall Associates Limited Partnership Texas Rose Hall Associates Limited Partnership
WHC Caribbean Limited Jamaica WHC Caribbean Limited
Waterfront Management Corporation Delaware Waterfront Management Corporation
Wyndham Hotels & Resorts (Aruba) N.V. Aruba Wyndham Hotels & Resorts (Aruba) N.V.
Xerxes Limited Jamaica Xerxes Limited
WHC Vinings Corporation Delaware WHC Vinings Corporation
WHC Salt Lake City Corporation Delaware WHC Salt Lake City Corporation
WHC Franchise Corporation Delaware WHC Franchise Corporation
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form
S-1 (File No. 333-18507) of our reports dated March 8, 1996, on
our audits of the financial statements and financial statements schedules of
Wyndham Hotel Corporation; dated February 27, 1996, on our audits of the
financial statements and financial statement schedules of Garden Hotel
Associates LP; dated November 7, 1996, on our audit of the financial statements
of Wyndham Hotel Corporation Acquisition Hotel - The Bristol Place Hotel
Toronto. We also consent to the reference to our Firm under the caption
"Experts."
Coopers & Lybrand
Dallas, Texas
January 27,1997
